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LOANS | 3 Months Ended
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Mar. 31, 2020
LOANS [Abstract] |
LOANS | NOTE E: LOANS The segments of the Company’s loan portfolio are summarized as follows:
(000's omitted) |  | March 31, 2020 |  |  | December 31, 2019 |
Business lending |  | $ | 2,789,130 |  |  | $ | 2,775,876 |
Consumer mortgage |  |  | 2,424,656 |  |  |  | 2,430,902 |
Consumer indirect |  |  | 1,087,879 |  |  |  | 1,113,062 |
Consumer direct |  |  | 177,844 |  |  |  | 184,378 |
Home equity |  |  | 386,583 |  |  |  | 386,325 |
Gross loans, including deferred origination costs |  |  | 6,866,092 |  |  |  | 6,890,543 |
Allowance for credit losses |  |  | (55,652 | ) |  |  | (49,911 | )
Loans, net of allowance for credit losses |  | $ | 6,810,440 |  |  | $ | 6,840,632 |
The following table presents the aging of the amortized cost basis of the Company’s past due loans, by class as of March 31, 2020:
(000’s omitted) |  | Past Due 30 – 89 Days |  |  | 90+ Days Past Due and Still Accruing |  |  | Nonaccrual |  |  | Total Past Due |  |  | Purchased Credit Deteriorated (“PCD”) (1) |  |  | Current |  |  | Total Loans |
Business lending |  | $ | 13,157 |  |  | $ | 10,111 |  |  | $ | 4,394 |  |  | $ | 27,662 |  |  | $ | 9,781 |  |  | $ | 2,751,687 |  |  | $ | 2,789,130 |
Consumer mortgage |  |  | 15,614 |  |  |  | 1,821 |  |  |  | 12,674 |  |  |  | 30,109 |  |  |  | 0 |  |  |  | 2,394,547 |  |  |  | 2,424,656 |
Consumer indirect |  |  | 11,343 |  |  |  | 418 |  |  |  | 0 |  |  |  | 11,761 |  |  |  | 0 |  |  |  | 1,076,118 |  |  |  | 1,087,879 |
Consumer direct |  |  | 1,197 |  |  |  | 62 |  |  |  | 52 |  |  |  | 1,311 |  |  |  | 0 |  |  |  | 176,533 |  |  |  | 177,844 |
Home equity |  |  | 2,951 |  |  |  | 324 |  |  |  | 1,926 |  |  |  | 5,201 |  |  |  | 0 |  |  |  | 381,382 |  |  |  | 386,583 |
Total |  | $ | 44,262 |  |  | $ | 12,736 |  |  | $ | 19,046 |  |  | $ | 76,044 |  |  | $ | 9,781 |  |  | $ | 6,780,267 |  |  | $ | 6,866,092 |
(1) | PCD loans were not classified as nonperforming assets as the loans are considered to be performing under ASC 326-10. As a result, the noncredit discount, after the adjustment for the allowance for credit losses, is being accreted into interest income on all PCD loans.
The following is an aged analysis of the Company’s past due loans by class as of December 31, 2019: Legacy Loans (excludes loans acquired after January 1, 2009)
(000’s omitted) |  | Past Due 30 – 89 Days |  |  | 90+ Days Past Due and Still Accruing |  |  | Nonaccrual |  |  | Total Past Due |  |  | Current |  |  | Total Loans |
Business lending |  | $ | 3,936 |  |  | $ | 126 |  |  | $ | 3,840 |  |  | $ | 7,902 |  |  | $ | 1,848,683 |  |  | $ | 1,856,585 |
Consumer mortgage |  |  | 10,990 |  |  |  | 2,052 |  |  |  | 10,131 |  |  |  | 23,173 |  |  |  | 1,973,543 |  |  |  | 1,996,716 |
Consumer indirect |  |  | 12,673 |  |  |  | 125 |  |  |  | 0 |  |  |  | 12,798 |  |  |  | 1,094,510 |  |  |  | 1,107,308 |
Consumer direct |  |  | 1,455 |  |  |  | 76 |  |  |  | 0 |  |  |  | 1,531 |  |  |  | 174,445 |  |  |  | 175,976 |
Home equity |  |  | 1,508 |  |  |  | 328 |  |  |  | 1,444 |  |  |  | 3,280 |  |  |  | 310,727 |  |  |  | 314,007 |
Total |  | $ | 30,562 |  |  | $ | 2,707 |  |  | $ | 15,415 |  |  | $ | 48,684 |  |  | $ | 5,401,908 |  |  | $ | 5,450,592 |
Acquired Loans (includes loans acquired after January 1, 2009)
(000’s omitted) |  | Past Due 30 – 89 Days |  |  | 90+ Days Past Due and Still Accruing |  |  | Nonaccrual |  |  | Total Past Due |  |  | Acquired Impaired(1) |  |  | Current |  |  | Total Loans |
Business lending |  | $ | 8,518 |  |  | $ | 2,173 |  |  | $ | 570 |  |  | $ | 11,261 |  |  | $ | 11,797 |  |  | $ | 896,233 |  |  | $ | 919,291 |
Consumer mortgage |  |  | 890 |  |  |  | 277 |  |  |  | 2,386 |  |  |  | 3,553 |  |  |  | 0 |  |  |  | 430,633 |  |  |  | 434,186 |
Consumer indirect |  |  | 79 |  |  |  | 31 |  |  |  | 0 |  |  |  | 110 |  |  |  | 0 |  |  |  | 5,644 |  |  |  | 5,754 |
Consumer direct |  |  | 59 |  |  |  | 0 |  |  |  | 52 |  |  |  | 111 |  |  |  | 0 |  |  |  | 8,291 |  |  |  | 8,402 |
Home equity |  |  | 744 |  |  |  | 238 |  |  |  | 412 |  |  |  | 1,394 |  |  |  | 0 |  |  |  | 70,924 |  |  |  | 72,318 |
Total |  | $ | 10,290 |  |  | $ | 2,719 |  |  | $ | 3,420 |  |  | $ | 16,429 |  |  | $ | 11,797 |  |  | $ | 1,411,725 |  |  | $ | 1,439,951 |
(1) | Acquired impaired loans were not classified as nonperforming assets as the loans are considered to be performing under ASC 310-30. As a result interest income, through the accretion of the difference between the carrying amount of the loans and the expected cashflows, is being recognized on all acquired impaired loans.
The delinquency status for loans on payment deferment due to COVID-19 financial hardship were reported at March 31, 2020 based on their delinquency status as of March 20, 2020, the date most borrowers were impacted by COVID-19 due to stay at home orders in various states. No interest income on nonaccrual loans was recognized during the three months ended March 31, 2020. An immaterial amount of accrued interest was written off on nonaccrual loans by reversing interest income. The Company uses several credit quality indicators to assess credit risk in an ongoing manner. The Company’s primary credit quality indicator for its business lending portfolio is an internal credit risk rating system that categorizes loans as “pass”, “special mention”, “classified”, or “doubtful”. Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation. In general, the following are the definitions of the Company’s credit quality indicators:
Pass | The condition of the borrower and the performance of the loans are satisfactory or better.
Special Mention | The condition of the borrower has deteriorated although the loan performs as agreed. Loss may be incurred at some future date, if conditions deteriorate further.
Classified | The condition of the borrower has significantly deteriorated and the performance of the loan could further deteriorate and incur loss, if deficiencies are not corrected.
Doubtful | The condition of the borrower has deteriorated to the point that collection of the balance is improbable based on current facts and conditions and loss is likely.
The following tables show the amount of business lending loans by credit quality category at March 31, 2020 and December 31, 2019:
(000’s omitted) |  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |
March 31, 2020 |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Total |
Business lending: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 81,301 |  |  | $ | 386,281 |  |  | $ | 333,585 |  |  | $ | 239,020 |  |  | $ | 276,171 |  |  | $ | 606,390 |  |  | $ | 593,830 |  |  | $ | 2,516,578 |
Special mention |  |  | 4,128 |  |  |  | 12,290 |  |  |  | 6,887 |  |  |  | 13,213 |  |  |  | 4,516 |  |  |  | 52,457 |  |  |  | 31,223 |  |  |  | 124,714 |
Classified |  |  | 665 |  |  |  | 1,933 |  |  |  | 17,241 |  |  |  | 9,993 |  |  |  | 12,790 |  |  |  | 59,750 |  |  |  | 45,466 |  |  |  | 147,838 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total business lending |  | $ | 86,094 |  |  | $ | 400,504 |  |  | $ | 357,713 |  |  | $ | 262,226 |  |  | $ | 293,477 |  |  | $ | 718,597 |  |  | $ | 670,519 |  |  | $ | 2,789,130 |
|  | December 31, 2019 |
(000’s omitted) |  | Legacy |  |  | Acquired |  |  | Total |
Pass |  | $ | 1,655,280 |  |  | $ | 832,693 |  |  | $ | 2,487,973 |
Special mention |  |  | 98,953 |  |  |  | 45,324 |  |  |  | 144,277 |
Classified |  |  | 102,352 |  |  |  | 29,477 |  |  |  | 131,829 |
Doubtful |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Acquired impaired |  |  | 0 |  |  |  | 11,797 |  |  |  | 11,797 |
Total |  | $ | 1,856,585 |  |  | $ | 919,291 |  |  | $ | 2,775,876 |
All other loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are normally risk rated and monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or nonperforming. Performing loans include loans classified as current as well as those classified as 30 - 89 days past due. Nonperforming loans include 90+ days past due and still accruing and nonaccrual loans. The following table details the balances in all other loan categories at March 31, 2020:
(000’s omitted) |  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |
March 31, 2020 |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Total |
Consumer mortgage: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
FICO AB |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 47,527 |  |  | $ | 252,841 |  |  | $ | 194,612 |  |  | $ | 190,316 |  |  | $ | 187,254 |  |  | $ | 651,314 |  |  | $ | 0 |  |  | $ | 1,523,864 |
Nonperforming |  |  | 0 |  |  |  | 0 |  |  |  | 153 |  |  |  | 299 |  |  |  | 193 |  |  |  | 2,862 |  |  |  | 0 |  |  |  | 3,507 |
Total FICO AB |  |  | 47,527 |  |  |  | 252,841 |  |  |  | 194,765 |  |  |  | 190,615 |  |  |  | 187,447 |  |  |  | 654,176 |  |  |  | 0 |  |  |  | 1,527,371 |
FICO CDE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 22,589 |  |  |  | 111,126 |  |  |  | 89,451 |  |  |  | 88,630 |  |  |  | 94,419 |  |  |  | 467,433 |  |  |  | 12,649 |  |  |  | 886,297 |
Nonperforming |  |  | 0 |  |  |  | 0 |  |  |  | 142 |  |  |  | 524 |  |  |  | 1,327 |  |  |  | 8,995 |  |  |  | 0 |  |  |  | 10,988 |
Total FICO CDE |  |  | 22,589 |  |  |  | 111,126 |  |  |  | 89,593 |  |  |  | 89,154 |  |  |  | 95,746 |  |  |  | 476,428 |  |  |  | 12,649 |  |  |  | 897,285 |
Total consumer mortgage |  | $ | 70,116 |  |  | $ | 363,967 |  |  | $ | 284,358 |  |  | $ | 279,769 |  |  | $ | 283,193 |  |  | $ | 1,130,604 |  |  | $ | 12,649 |  |  | $ | 2,424,656 |
Consumer indirect: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 74,581 |  |  | $ | 397,442 |  |  | $ | 284,899 |  |  | $ | 133,402 |  |  | $ | 102,849 |  |  | $ | 94,288 |  |  | $ | 0 |  |  | $ | 1,087,461 |
Nonperforming |  |  | 0 |  |  |  | 98 |  |  |  | 78 |  |  |  | 63 |  |  |  | 99 |  |  |  | 80 |  |  |  | 0 |  |  |  | 418 |
Total consumer indirect |  | $ | 74,581 |  |  | $ | 397,540 |  |  | $ | 284,977 |  |  | $ | 133,465 |  |  | $ | 102,948 |  |  | $ | 94,368 |  |  |  | 0 |  |  | $ | 1,087,879 |
Consumer direct: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 20,080 |  |  | $ | 66,306 |  |  | $ | 42,399 |  |  | $ | 21,144 |  |  | $ | 11,049 |  |  | $ | 9,121 |  |  | $ | 7,631 |  |  | $ | 177,730 |
Nonperforming |  |  | 0 |  |  |  | 14 |  |  |  | 1 |  |  |  | 66 |  |  |  | 3 |  |  |  | 0 |  |  |  | 30 |  |  |  | 114 |
Total consumer direct |  | $ | 20,080 |  |  | $ | 66,320 |  |  | $ | 42,400 |  |  | $ | 21,210 |  |  | $ | 11,052 |  |  | $ | 9,121 |  |  | $ | 7,661 |  |  | $ | 177,844 |
Home equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 14,521 |  |  | $ | 51,149 |  |  | $ | 28,687 |  |  | $ | 23,194 |  |  | $ | 19,318 |  |  | $ | 35,395 |  |  | $ | 212,069 |  |  | $ | 384,333 |
Nonperforming |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 73 |  |  |  | 118 |  |  |  | 461 |  |  |  | 1,598 |  |  |  | 2,250 |
Total home equity |  | $ | 14,521 |  |  | $ | 51,149 |  |  | $ | 28,687 |  |  | $ | 23,267 |  |  | $ | 19,436 |  |  | $ | 35,856 |  |  | $ | 213,667 |  |  | $ | 386,583 |
The following table details the balances in all other loan categories at December 31, 2019: Legacy Loans (excludes loans acquired after January 1, 2009)
(000’s omitted) |  | Consumer Mortgage |  |  | Consumer Indirect |  |  | Consumer Direct |  |  | Home Equity |  |  | Total |
Performing |  | $ | 1,984,533 |  |  | $ | 1,107,183 |  |  | $ | 175,900 |  |  | $ | 312,235 |  |  | $ | 3,579,851 |
Nonperforming |  |  | 12,183 |  |  |  | 125 |  |  |  | 76 |  |  |  | 1,772 |  |  |  | 14,156 |
Total |  | $ | 1,996,716 |  |  | $ | 1,107,308 |  |  | $ | 175,976 |  |  | $ | 314,007 |  |  | $ | 3,594,007 |
Acquired Loans (includes loans acquired after January 1, 2009)
(000’s omitted) |  | Consumer Mortgage |  |  | Consumer Indirect |  |  | Consumer Direct |  |  | Home Equity |  |  | Total |
Performing |  | $ | 431,523 |  |  | $ | 5,723 |  |  | $ | 8,350 |  |  | $ | 71,668 |  |  | $ | 517,264 |
Nonperforming |  |  | 2,663 |  |  |  | 31 |  |  |  | 52 |  |  |  | 650 |  |  |  | 3,396 |
Total |  | $ | 434,186 |  |  | $ | 5,754 |  |  | $ | 8,402 |  |  | $ | 72,318 |  |  | $ | 520,660 |
All loan classes are collectively evaluated for impairment except business lending. A summary of individually evaluated impaired business loans as of March 31, 2020 and December 31, 2019 follows:
(000’s omitted) |  | March 31, 2020 |  |  | December 31, 2019 |
Loans with allowance allocation |  | $ | 0 |  |  | $ | 0 |
Loans without allowance allocation |  |  | 1,771 |  |  |  | 1,414 |
Carrying balance |  |  | 1,771 |  |  |  | 1,414 |
Contractual balance |  |  | 3,305 |  |  |  | 2,944 |
Specifically allocated allowance |  |  | 0 |  |  |  | 0 |
The average carrying balance of individually evaluated impaired loans was $2.2 million and $6.2 million for the three months ended March 31, 2020 and March 31, 2019, respectively. No interest income was recognized on individually evaluated impaired loans for the three months ended March 31, 2020 and March 31, 2019. In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In this scenario, the Company attempts to work-out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Company to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial standing and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. In accordance with the clarified guidance issued by the Office of the Comptroller of the Currency (“OCC”), loans that have been discharged in Chapter 7 bankruptcy but not reaffirmed by the borrower, are classified as TDRs, irrespective of payment history or delinquency status, even if the repayment terms for the loan have not been otherwise modified. The Company’s lien position against the underlying collateral remains unchanged. Pursuant to that guidance, the Company records a charge-off equal to any portion of the carrying value that exceeds the net realizable value of the collateral. The amount of loss incurred in the three months ended March 31, 2020 and 2019 was immaterial. TDRs that are less than $0.5 million are collectively included in the allowance for credit loss estimate. TDRs that are commercial loans and greater than $0.5 million are individually evaluated for impairment, and if necessary, a specific allocation of the allowance for credit losses is provided. As a result, the determination of the amount of allowance for credit losses related to TDRs is the same as detailed in the critical accounting policies. With respect to the Company’s lending activities, the Company implemented a customer payment deferral program for deferrals up to three months during the first quarter of 2020 to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19 related challenges. Business lending, consumer direct, and consumer indirect loans in deferment status will continue to accrue interest on the deferred principal during the deferment period unless otherwise classified as nonaccrual. Consumer mortgage and home equity loans will not accrue interest on the deferred payments during the deferment period. Consistent with industry regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral period. These payment deferrals were also deemed to be an insignificant borrower concession, and therefore, not classified as troubled-debt restructured loans during the first quarter. Borrowers that were delinquent in their payments to the Bank, prior to requesting a COVID-19 related financial hardship payment deferral were reviewed on a case by case basis for troubled debt restructure classification and non-performing loan status. Information regarding TDRs as of March 31, 2020 and December 31, 2019 is as follows:
|  | March 31, 2020 |  |  | December 31, 2019 |
(000’s omitted) |  | Nonaccrual |  |  | Accruing |  |  | Total |  |  | Nonaccrual |  |  | Accruing |  |  | Total |
|  |  | # |  |  | Amount |  |  |  | # |  |  | Amount |  |  |  | # |  |  | Amount |  |  |  | # |  |  | Amount |  |  |  | # |  |  | Amount |  |  |  | # |  |  | Amount |
Business lending |  |  | 8 |  |  | $ | 644 |  |  |  | 3 |  |  | $ | 197 |  |  |  | 11 |  |  | $ | 841 |  |  |  | 8 |  |  | $ | 681 |  |  |  | 3 |  |  | $ | 201 |  |  |  | 11 |  |  | $ | 882 |
Consumer mortgage |  |  | 60 |  |  |  | 2,646 |  |  |  | 47 |  |  |  | 2,160 |  |  |  | 107 |  |  |  | 4,806 |  |  |  | 59 |  |  |  | 2,638 |  |  |  | 47 |  |  |  | 1,892 |  |  |  | 106 |  |  |  | 4,530 |
Consumer indirect |  |  | 0 |  |  |  | 0 |  |  |  | 89 |  |  |  | 935 |  |  |  | 89 |  |  |  | 935 |  |  |  | 0 |  |  |  | 0 |  |  |  | 84 |  |  |  | 941 |  |  |  | 84 |  |  |  | 941 |
Consumer direct |  |  | 0 |  |  |  | 0 |  |  |  | 23 |  |  |  | 106 |  |  |  | 23 |  |  |  | 106 |  |  |  | 0 |  |  |  | 0 |  |  |  | 23 |  |  |  | 101 |  |  |  | 23 |  |  |  | 101 |
Home equity |  |  | 13 |  |  |  | 298 |  |  |  | 11 |  |  |  | 233 |  |  |  | 24 |  |  |  | 531 |  |  |  | 13 |  |  |  | 290 |  |  |  | 11 |  |  |  | 238 |  |  |  | 24 |  |  |  | 528 |
Total |  |  | 81 |  |  | $ | 3,588 |  |  |  | 173 |  |  | $ | 3,631 |  |  |  | 254 |  |  | $ | 7,219 |  |  |  | 80 |  |  | $ | 3,609 |  |  |  | 168 |  |  | $ | 3,373 |  |  |  | 248 |  |  | $ | 6,982 |
The following table presents information related to loans modified in a TDR during the three months ended March 31, 2020 and 2019. Of the loans noted in the table below, all consumer mortgage loans for the three months ended March 31, 2020 and 2019 were modified due to a Chapter 7 bankruptcy as described previously. The financial effects of these restructurings were immaterial
|  | Three Months Ended March 31, 2020 |  |  | Three Months Ended March 31, 2019 |
(000’s omitted) |  | Number of loans modified |  |  | Outstanding Balance |  |  | Number of loans modified |  |  | Outstanding Balance |
Business lending |  |  | 0 |  |  | $ | 0 |  |  |  | 0 |  |  | $ | 0 |
Consumer mortgage |  |  | 7 |  |  |  | 617 |  |  |  | 8 |  |  |  | 665 |
Consumer indirect |  |  | 14 |  |  |  | 127 |  |  |  | 11 |  |  |  | 98 |
Consumer direct |  |  | 1 |  |  |  | 12 |  |  |  | 0 |  |  |  | 0 |
Home equity |  |  | 0 |  |  |  | 0 |  |  |  | 1 |  |  |  | 4 |
Total |  |  | 22 |  |  | $ | 756 |  |  |  | 20 |  |  | $ | 767 |
Allowance for Credit Losses The following presents by segment the activity in the allowance for credit losses:
|  | Three Months Ended March 31, 2020 |
(000’s omitted) |  | Beginning balance, prior to the adoption of ASC 326 |  |  | Impact of ASC 326 |  |  | Beginning balance, after adoption of ASC 326 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Ending balance |
Business lending |  | $ | 19,426 |  |  | $ | 288 |  |  | $ | 19,714 |  |  | $ | (176 | ) |  | $ | 138 |  |  | $ | (187 | ) |  | $ | 19,489 |
Consumer mortgage |  |  | 10,269 |  |  |  | (1,051 | ) |  |  | 9,218 |  |  |  | (186 | ) |  |  | 8 |  |  |  | 3,390 |  |  |  | 12,430 |
Consumer indirect |  |  | 13,712 |  |  |  | (997 | ) |  |  | 12,715 |  |  |  | (2,079 | ) |  |  | 1,163 |  |  |  | 1,895 |  |  |  | 13,694 |
Consumer direct |  |  | 3,255 |  |  |  | (643 | ) |  |  | 2,612 |  |  |  | (533 | ) |  |  | 182 |  |  |  | 1,476 |  |  |  | 3,737 |
Home equity |  |  | 2,129 |  |  |  | 808 |  |  |  | 2,937 |  |  |  | (73 | ) |  |  | 6 |  |  |  | (386 | ) |  |  | 2,484 |
Unallocated |  |  | 957 |  |  |  | 43 |  |  |  | 1,000 |  |  |  | 0 |  |  |  | 0 |  |  |  | (228 | ) |  |  | 772 |
Purchased credit deteriorated |  |  | 0 |  |  |  | 3,072 |  |  |  | 3,072 |  |  |  | 0 |  |  |  | 0 |  |  |  | (26 | ) |  |  | 3,046 |
Purchased credit impaired |  |  | 163 |  |  |  | (163 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Allowance for credit losses – loans |  |  | 49,911 |  |  |  | 1,357 |  |  |  | 51,268 |  |  |  | (3,047 | ) |  |  | 1,497 |  |  |  | 5,934 |  |  |  | 55,652 |
Liabilities for off-balance-sheet credit exposures |  |  | 0 |  |  |  | 1,185 |  |  |  | 1,185 |  |  |  | 0 |  |  |  | 0 |  |  |  | (340 | ) |  |  | 845 |
Total allowance for credit losses |  | $ | 49,911 |  |  | $ | 2,542 |  |  | $ | 52,453 |  |  | $ | (3,047 | ) |  | $ | 1,497 |  |  | $ | 5,594 |  |  | $ | 56,497 |
|  | Three Months Ended March 31, 2019 |
(000’s omitted) |  | Business Lending |  |  | Consumer Mortgage |  |  | Consumer Indirect |  |  | Consumer Direct |  |  | Home Equity |  |  | Unallocated |  |  | Acquired Impaired |  |  | Total |
Beginning balance |  | $ | 18,522 |  |  | $ | 10,124 |  |  | $ | 14,366 |  |  | $ | 3,095 |  |  | $ | 2,144 |  |  | $ | 1,000 |  |  | $ | 33 |  |  | $ | 49,284 |
Charge-offs |  |  | (1,216 | ) |  |  | (253 | ) |  |  | (1,823 | ) |  |  | (535 | ) |  |  | (74 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (3,901 | )
Recoveries |  |  | 134 |  |  |  | 22 |  |  |  | 962 |  |  |  | 179 |  |  |  | 5 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,302 |
Provision |  |  | 831 |  |  |  | 424 |  |  |  | 746 |  |  |  | 317 |  |  |  | (8 | ) |  |  | (10 | ) |  |  | 122 |  |  |  | 2,422 |
Ending balance |  | $ | 18,271 |  |  | $ | 10,317 |  |  | $ | 14,251 |  |  | $ | 3,056 |  |  | $ | 2,067 |  |  | $ | 990 |  |  | $ | 155 |  |  | $ | 49,107 |
The decline in economic conditions associated with the COVID-19 pandemic have resulted in an allowance for credit losses to total loans ratio of 0.81% at March 31, 2020, three basis points higher than the level at March 31, 2019 and nine basis points higher than the level at December 31, 2019. Under CECL, the Company utilizes the historical loss rate on its loan portfolio as the initial basis for the estimate of credit losses using the cumulative loss, vintage loss and line loss methods which is derived from the Company’s historical loss experience from January 1, 2012 to December 31, 2019. Adjustments to historical loss experience were made for differences in current loan-specific risk characteristics and to address current period delinquencies, charge-off rates, risk ratings, lack of loan level data through an entire economic cycle, changes in loan sizes and underwriting standards as well as the addition of acquired loans which were not underwritten by the Company. The Company considered historical losses immediately prior, through and following the Great Recession of 2008 compared to the historical period used for modeling to adjust the historical information to account for longer-term expectations for loan credit performance. Under CECL, the Company is required to consider future economic conditions to determine expected losses under a life of loan concept. Management selected an eight quarter reasonable and supportable forecast period with a four quarter reversion to the historical mean to use as part of the economic forecast. Management determined that these qualitative adjustments were needed to adjust historical information to reflect changes as a result of current conditions. The Company uses third party forecasted economic data scenarios utilizing a base scenario and two alternative scenarios that were weighted based on guidance from the third party provider, with forecasts available as of March 31, 2020. These forecasts included the impact of COVID-19 and were factored into the qualitative portion of the calculation of the estimated credit losses. The scenarios utilized outline an immediate and precipitous decrease in economic activity in the second quarter of 2020 with peak unemployment ranging from 8% to 13% in that quarter and a general improvement in unemployment levels over the subsequent seven quarters. In addition to the economic forecast, the Company also considered additional qualitative adjustments as a result of COVID-19 and the impact on all industries, loan deferrals, delinquencies and downgrades, the Paycheck Protection Program and the Federal stimulus package. Management developed expected loss estimates considering factors for segments as outlined below:
| • | Business lending – non real estate: The Company considered projected unemployment and GDP as possible indicators of forecasted losses related to business lending. The Company also considered delinquencies, risk rating changes, recent charge-off history and acquired loans as part of the review of estimated losses.
| • | Business lending – real estate: The Company considered projected real estate values as possible indicators of forecasted losses related to commercial real estate loans in addition to the factors noted in business lending – non real estate.
| • | Consumer mortgages and home equity: The Company considered projected unemployment and real estate values as possible indicators of forecasted losses related to mortgage lending. In addition, current delinquencies, charge-offs and acquired loans were considered.
| • | Consumer indirect: The Company considered projected unemployment and vehicle valuation indices as possible indicators of forecasted losses related to indirect lending. In addition, current delinquencies, charge-offs and acquired loans were considered.
| • | Consumer direct: The Company considered projected unemployment as a possible indicator of forecasted losses related to direct lending. In addition, current delinquencies, charge-offs and acquired loans were considered.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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