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Loans, Allowance for Loan Losses and Credit Quality | 3 Months Ended
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Mar. 31, 2020
Loans, Allowance for Loan Losses and Credit Quality [Abstract] |
LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY | LOANS AND ALLOWANCE FOR LOAN LOSSES As disclosed in Note 4 - Loans, Allowance for Credit Losses and Credit Quality, the Company adopted the CECL standard, effective January 1, 2020. As required by disclosure guidance, the Company has included relevant disclosures from the prior year and prior to the adoption of CECL within this footnote, as it relates to loans and allowance for loan losses. The following table bifurcates the amount of loans and the allowance allocated to each loan category based on the type of impairment analysis as of December 31, 2019:
| December 31, 2019 |
| Commercial and Industrial |  | Commercial Real Estate |  | Commercial Construction |  | Small Business |  | Residential Real Estate |  | Home Equity |  | Other Consumer |  | Total |
| (Dollars in thousands) |
Financing receivables ending balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment | $ | 1,370,580 |  |  | $ | 3,987,848 |  |  | $ | 547,293 |  |  | $ | 173,960 |  |  | $ | 1,571,848 |  |  | $ | 1,127,963 |  |  | $ | 29,663 |  |  | $ | 8,809,155 |  |
Individually evaluated for impairment | 24,456 |  |  | 8,337 |  |  | — |  |  | 537 |  |  | 11,228 |  |  | 4,948 |  |  | 122 |  |  | 49,628 |  |
Purchased credit impaired loans | — |  |  | 6,174 |  |  | — |  |  | — |  |  | 7,493 |  |  | 887 |  |  | 302 |  |  | 14,856 |  |
Total loans by group | $ | 1,395,036 |  |  | $ | 4,002,359 |  |  | $ | 547,293 |  |  | $ | 174,497 |  |  | $ | 1,590,569 |  |  | $ | 1,133,798 |  |  | $ | 30,087 |  |  | $ | 8,873,639 |  | (1)
(1) | The amount of net deferred costs on originated loans included in the ending balance was $7.1 million at December 31, 2019. Net unamortized discounts on acquired loans not deemed to be purchased credit impaired ("PCI") included in the ending balance was $21.6 million at December 31, 2019.
At December 31, 2019, the reserve for unfunded loan commitments was $2.1 million. The following table summarizes changes in allowance for loan losses by loan category for the period indicated:
| Three Months Ended March 31, 2019
| (Dollars in thousands)
| Commercial and Industrial |  | Commercial Real Estate |  | Commercial Construction |  | Small Business |  | Residential Real Estate |  | Home Equity |  | Other Consumer |  | Total
Allowance for loan losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 15,760 |  |  | $ | 32,370 |  |  | $ | 5,158 |  |  | $ | 1,756 |  |  | $ | 3,219 |  |  | $ | 5,608 |  |  | $ | 422 |  |  | $ | 64,293 |
Charge-offs | — |  |  | — |  |  | — |  |  | (145 | ) |  | — |  |  | (113 | ) |  | (301 | ) |  | (559 | )
Recoveries | 124 |  |  | 33 |  |  | — |  |  | 27 |  |  | 1 |  |  | 66 |  |  | 155 |  |  | 406 |
Provision (benefit) | 988 |  |  | (354 | ) |  | 197 |  |  | 146 |  |  | 14 |  |  | (54 | ) |  | 63 |  |  | 1,000 |
Ending balance | $ | 16,872 |  |  | $ | 32,049 |  |  | $ | 5,355 |  |  | $ | 1,784 |  |  | $ | 3,234 |  |  | $ | 5,507 |  |  | $ | 339 |  |  | $ | 65,140 |
Ending balance: collectively evaluated for impairment | $ | 16,814 |  |  | $ | 31,974 |  |  | $ | 5,355 |  |  | $ | 1,783 |  |  | $ | 2,432 |  |  | $ | 5,346 |  |  | $ | 332 |  |  | $ | 64,036 |
Ending balance: individually evaluated for impairment | $ | 58 |  |  | $ | 75 |  |  | $ | — |  |  | $ | 1 |  |  | $ | 802 |  |  | $ | 161 |  |  | $ | 7 |  |  | $ | 1,104 |
The Company's historical approach to loan portfolio segmentation by risk characteristics and monitoring of credit quality for commercial loans under previous accounting guidance was consistent with that applied under the newly adopted CECL standard. See Note 4 - Loans, Allowance for Credit Losses and Credit Quality further discussion surrounding the Company's policies for loan segmentation and credit quality monitoring. The following tables detail the amount of outstanding principal balances relative to each of the risk-rating categories for the Company’s loan portfolio as of December 31, 2019:
|  |  | December 31, 2019
Category | Risk Rating |  | Commercial and Industrial |  | Commercial Real Estate |  | Commercial Construction |  | Small Business |  | Total
|  |  | (Dollars in thousands)
Pass | 1 - 6 |  | $ | 1,274,155 |  |  | $ | 3,860,555 |  |  | $ | 542,608 |  |  | $ | 171,213 |  |  | $ | 5,848,531 |
Potential weakness | 7 |  | 63,485 |  |  | 97,268 |  |  | 2,247 |  |  | 1,416 |  |  | 164,416 |
Definite weakness-loss unlikely | 8 |  | 57,396 |  |  | 44,536 |  |  | 2,438 |  |  | 1,868 |  |  | 106,238 |
Partial loss probable | 9 |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Definite loss | 10 |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  |  | $ | 1,395,036 |  |  | $ | 4,002,359 |  |  | $ | 547,293 |  |  | $ | 174,497 |  |  | $ | 6,119,185 |
Impaired Loans Under previous accounting guidance, a loan was considered impaired when, based on current information and events, it was probable that the Company would be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment included payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experienced insignificant payment delays and payment shortfalls generally were not classified as impaired. Management determined the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The table below sets forth information regarding the Company’s impaired loans by loan portfolio at the date indicated:
| December 31, 2019
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
| (Dollars in thousands)
With no related allowance recorded |  |  |  |  |
Commercial and industrial | $ | 23,786 |  |  | $ | 34,970 |  |  | $ | — |
Commercial real estate | 6,213 |  |  | 12,101 |  |  | — |
Small business | 469 |  |  | 484 |  |  | — |
Residential real estate | 4,976 |  |  | 5,123 |  |  | — |
Home equity | 3,764 |  |  | 3,893 |  |  | — |
Other consumer | 34 |  |  | 34 |  |  | — |
Subtotal | 39,242 |  |  | 56,605 |  |  | — |
With an allowance recorded |  |  |  |  |
Commercial and industrial | $ | 670 |  |  | $ | 670 |  |  | $ | 126 |
Commercial real estate | 2,124 |  |  | 2,124 |  |  | 48 |
Small business | 68 |  |  | 105 |  |  | 8 |
Residential real estate | 6,252 |  |  | 7,163 |  |  | 637 |
Home equity | 1,184 |  |  | 1,382 |  |  | 156 |
Other consumer | 88 |  |  | 91 |  |  | 5 |
Subtotal | 10,386 |  |  | 11,535 |  |  | 980 |
Total | $ | 49,628 |  |  | $ | 68,140 |  |  | $ | 980 |
The following table sets forth information regarding interest income recognized on impaired loans, by portfolio, for the period indicated:
| Three Months Ended
| March 31, 2019
| Average Recorded Investment |  | Interest Income Recognized
| (Dollars in thousands)
With no related allowance recorded |  |  |
Commercial and industrial | $ | 30,198 |  |  | $ | 35 |
Commercial real estate | 8,873 |  |  | 104 |
Commercial construction | 311 |  |  | — |
Small business | 323 |  |  | 2 |
Residential real estate | 4,421 |  |  | 54 |
Home equity | 4,952 |  |  | 55 |
Other consumer | 53 |  |  | 1 |
Subtotal | 49,131 |  |  | 251 |
With an allowance recorded |  |  |
Commercial and industrial | $ | 498 |  |  | $ | 3 |
Commercial real estate | 1,682 |  |  | 24 |
Small business | 181 |  |  | 2 |
Residential real estate | 7,665 |  |  | 64 |
Home equity | 985 |  |  | 12 |
Other consumer | 138 |  |  | 1 |
Subtotal | 11,149 |  |  | 106 |
Total | $ | 60,280 |  |  | $ | 357 |
Purchased Credit Impaired Loans Under previous accounting guidance, certain loans acquired by the Company which may have shown evidence of deterioration of credit quality since origination at purchase date and was therefore deemed unlikely that the Company would be able to collect all contractually required payments. As such, these loans were deemed to be PCI loans and the carrying value and prospective income recognition are predicated upon future cash flows expected to be collected. The following table displays certain information pertaining to PCI loans at the date indicated:
|  | December 31, 2019
|  | (Dollars in thousands)
Outstanding balance |  | $ | 18,358 |
Carrying amount |  | $ | 14,856 |
The following table summarizes activity in the accretable yield for the PCI loan portfolio for the period indicated:
|  | Three Months Ended March 31
|  | 2019
|  | (Dollars in thousands)
Beginning balance |  | $ | 1,191 |
Accretion |  | (141 | )
Other change in expected cash flows (1) |  | 114 |
Reclassification from nonaccretable difference for loans which have paid off |  | — |
Ending balance |  | $ | 1,164 |
(1) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).

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