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Allowance for Credit Losses and Credit Quality of Loans | 12 Months Ended
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Dec. 31, 2021
Allowance for Credit Losses and Credit Quality of Loans [Abstract] |
Allowance for Credit Losses and Credit Quality of Loans | 6. Allowance for Credit Losses and Credit Quality of Loans As previously mentioned in Note 1 Summary of Significant Accounting Policies, the Company’s January 1, 2020 (“Day 1”) adoption of CECL resulted in a significant change to our methodology for estimating the allowance for credit losses since December 31, 2019. Portfolio segmentation has been redefined under CECL and therefore 2019 disclosures are presented separately. The allowance for credit losses totaled $92.0 million at December 31, 2021, compared to $110.0 million at December 31, 2020. The allowance for credit losses as a percentage of loans was 1.23% at December 31, 2021, compared to 1.47% at December 31, 2020. The Day 1 increase in the allowance for credit loss on loans relating to adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments was $3.0 million, which decreased retained earnings by $2.3 million and increased the deferred tax asset by $0.7 million. The Day 1, December 31, 2020 and December 31, 2021 allowance for credit losses calculation incorporated a 6-quarter forecast period to account for forecast economic conditions under each scenario utilized in the measurement. For periods beyond the 6-quarter forecast, the model reverts to long-term economic conditions over a 4-quarter reversion period on a straight-line basis. The Company considers a baseline, upside and downside economic forecast in measuring the allowance. The quantitative model as of December 31, 2021 incorporated a baseline economic outlook along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment initially above pre-COVID-19 levels at 4.8% but falling below pre-COVID-19 levels by the end of the forecast period to 3.5%. Northeast GDP’s annualized growth (on a quarterly basis) was expected to start the first quarter of 2022 at approximately 9% and hovering around 5% by the middle and end of the forecast period. Other utilized economic variables showed mixed changes in their respective forecasts, with northeast housing starts and national non-farm business output increasing from the prior year and a consistent level of national retail sales from the prior year. Key assumptions in the baseline economic outlook included continued abatement of COVID-19, enactment of the Build Back Better Act by the end of 2021, near-term peaking of consumer price acceleration, accelerated asset purchase tapering at the Federal Reserve, and full employment by the end of 2022. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 5.7% in the fourth quarter of 2021 to a peak of 8% in the first quarter of 2023, remaining around or above 7% for the entire forecast period. The alternative upside scenario incorporated a more optimistic outlook than the baseline scenario, with a swift return to full employment by the second quarter of 2022 and with northeast unemployment moving down to 3.1% by the end of the forecast period. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2021. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in the second and third quarters of 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government sponsored loan programs. The Company also continued to monitor the level of criticized and classified loans in the fourth quarter of 2021 compared to the level contemplated by the model during similar, historical economic conditions, and an adjustment was made to estimate potential additional losses above modeled losses. Additionally, qualitative adjustments were made for Moody’s baseline economic forecast to include impacts of the Build Back Better Act not passing by December 31, 2021 and to address potential economic deterioration due to Omicron, as well as isolated model limitations related to modeled outputs given abnormally high retail sales and business output growth rates in historical periods. These factors were considered through separate quantitative processes and incorporated into the estimate of current expected credit losses at December 31, 2021. The quantitative model as of December 31, 2020 incorporated a baseline economic outlook, along with alternative upside and downside scenarios sourced from a reputable third-party to accommodate other potential economic conditions in the model. The baseline outlook reflected an unemployment rate environment above pre-COVID-19 levels for the entire forecast period, though steadily improving, before returning to low single digits by the end of 2023. Northeast GDP’s annual growth was expected to start 2021 in the low to mid-single digits, with a peak growth rate of 8% in the fourth quarter of 2021 and steadily falling back down to normalized levels through 2023 and 2024. Other utilized economic variables show improvement in their respective forecasts, namely business output. Key assumptions in the baseline economic outlook included an additional stimulus package passed at the same timing and a comparable level to that of the actual $900 billion COVID-19 relief package passed in December 2020 along with no significant secondary surge in COVID-19 cases or pandemic-related business closures. The alternative downside scenario assumed deteriorated economic and epidemiological conditions from the baseline outlook. In the same way, the alternative upside scenario assumed a faster economic recovery and more effective management of the COVID-19 virus from the baseline outlook. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of December 31, 2020. Additional adjustments were made for COVID-19 related factors not incorporated in the forecasts, such as the mitigating impact of unprecedented stimulus in 2020, including direct payments to individuals, increased unemployment benefits, the Company’s loan deferral and modification initiatives and various government-sponsored loan programs. The commercial & industrial and consumer segment models were based upon percent change in unemployment with modeled values as of December 31, 2020 well outside the observed historical experience. Therefore, adjustments were required to produce outputs more aligned with default expectations given the forecast economic environment. Additionally, the Company identified a slightly higher level of criticized and classified loans during 2020 than those contemplated by the model during similar economic conditions in the past for which an adjustment was made for estimated expected additional losses above modeled output. These factors were considered through a separate quantitative process and incorporated into the estimate for allowance for credit losses at December 31, 2020. On August 3, 2020, the FFIEC issued a joint statement on additional loan accommodations related to COVID-19. The joint statement clarifies that for loan modifications in which Section 4013 is being applied, subsequent modifications could also be eligible under section 4013 (“Section 4013”) of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Accordingly, the Company is offering modifications made in response to COVID-19 to borrowers who were current and otherwise not past due in accordance with the criteria stated in Section 4013. These include short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment. Accordingly, the Company did not account for such loan modifications as TDRs. As of December 31, 2021 and 2020, there were $1.4 million and $110.8 million, respectively, in loans in modification programs related to COVID-19. On December 27, 2020, the Consolidated Appropriations Act amended section 2014 of the CARES Act extending the exemption of qualified loan modifications from classification as a troubled debt restructuring as defined by GAAP to the earlier of January 1, 2022, or 60 days after the National Emergency concerning COVID-19 ends. There were no loans purchased with credit deterioration during the year ended December 31, 2021 and 2020. During 2021, the Company purchased $58.9 million of residential loans at a 2%-5% premium and $92.5 million in consumer loans at par. The allowance for credit losses recorded for these loans on the purchase date was $6.8 million. During 2020, the Company purchased $51.9 million of consumer loans at a 1% discount. The allowance for credit losses recorded for these loans on the purchase date was $3.6 million. The Company made a policy election to report AIR in the other assets line item on the balance sheet. AIR on loans totaled $19.5 million at December 31, 2021 and $23.7 million at December 31, 2020 and was included in the allowance for loan credit losses to estimate the impact of accrued interest receivable related to loans with modifications due to the pandemic as the length of time between interest recognition and the write-off of uncollectible interest could exceed 120 days, exempting these loans from our policy election for accrued interest receivable. There was no estimated allowance for credit losses related to AIR at December 31, 2021 and $0.6 million at December 31, 2020. The provision for loan losses was a benefit of $8.3 million for the twelve months ended December 31, 2021, compared to provision expenses of $51.1 million for the twelve months ended December 31, 2020. The reduction to provision expense was driven by the improvement in economic condition forecasts during 2021 as compared to the deterioration of the economic forecast that took place in 2020 due to the COVID-19 pandemic, partly offset by providing for the increase in loan balances. The following tables present the activity in the allowance for credit losses by our portfolio segments:
(In thousands) |  | Commercial Loans |  |  | Consumer Loans |  |  | Residential |  |  | Total |
Balance as of December 31, 2020 |  | $ | 50,942 |  |  | $ | 37,803 |  |  | $ | 21,255 |  |  | $ | 110,000 |
Charge-offs |  |  | (4,638 | ) |  |  | (14,489 | ) |  |  | (979 | ) |  |  | (20,106 | )
Recoveries |  |  | 723 |  |  |  | 8,571 |  |  |  | 1,069 |  |  |  | 10,363 |
Provision |  |  | (18,086 | ) |  |  | 12,368 |  |  |  | (2,539 | ) |  |  | (8,257 | )
Ending Balance as of December 31, 2021 |  | $ | 28,941 |  |  | $ | 44,253 |  |  | $ | 18,806 |  |  | $ | 92,000 |
Balance as of January 1, 2020 (after adoption of ASC 326) |  | $ | 27,156 |  |  | $ | 32,122 |  |  | $ | 16,721 |  |  | $ | 75,999 |
Charge-offs |  |  | (4,005 | ) |  |  | (21,938 | ) |  |  | (1,135 | ) |  |  | (27,078 | )
Recoveries |  |  | 786 |  |  |  | 8,541 |  |  |  | 618 |  |  |  | 9,945 |
Provision |  |  | 27,005 |  |  |  | 19,078 |  |  |  | 5,051 |  |  |  | 51,134 |
Ending Balance as of December 31, 2020 |  | $ | 50,942 |  |  | $ | 37,803 |  |  | $ | 21,255 |  |  | $ | 110,000 |
The decrease in the allowance for credit losses from December 31, 2020 to December 31, 2021 was primarily due to the improvement in the economic forecast, partly offset by providing for the increase in loan balances. The increase in the allowance for credit losses from Day 1 to December 31, 2020 was primarily due to the deterioration of macroeconomic factors surrounding the COVID-19 pandemic. Individually Evaluated Loans As of December 31, 2021, there were five relationships identified to be evaluated for loss on an individual basis which had an amortized cost basis of $10.2 million and no allowance for credit loss. As of December 31, 2020, the same five relationships were identified to be evaluated for loss on an individual basis with an amortized cost basis of $15.2 million and an allowance for credit loss of $3.2 million. The decrease in the allowance for credit losses evaluated on an individual basis from December 31, 2020 to December 31, 2021 was primarily due to a decrease in the amortized cost basis on the loans due to principal payments and charge-offs. The following table sets forth information with regard to past due and nonperforming loans by loan segment:
(In thousands) |  | 31-60 Days Past Due Accruing |  |  | 61-90 Days Past Due Accruing |  |  | Greater Than 90 Days Past Due Accruing |  |  | Total Past Due Accruing |  |  | Nonaccrual |  |  | Current |  |  | Recorded Total Loans |
As of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 622 |  |  | $ | - |  |  | $ | - |  |  | $ | 622 |  |  | $ | 3,618 |  |  | $ | 1,126,430 |  |  | $ | 1,130,670 |
CRE |  |  | 1,219 |  |  |  | 132 |  |  |  | - |  |  |  | 1,351 |  |  |  | 12,726 |  |  |  | 2,550,910 |  |  |  | 2,564,987 |
PPP |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 101,222 |  |  |  | 101,222 |
Total commercial loans |  | $ | 1,841 |  |  | $ | 132 |  |  | $ | - |  |  | $ | 1,973 |  |  | $ | 16,344 |  |  | $ | 3,778,562 |  |  | $ | 3,796,879 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Auto |  | $ | 6,911 |  |  | $ | 1,547 |  |  | $ | 545 |  |  | $ | 9,003 |  |  | $ | 1,295 |  |  | $ | 816,210 |  |  | $ | 826,508 |
Other consumer |  |  | 3,789 |  |  |  | 1,816 |  |  |  | 1,105 |  |  |  | 6,710 |  |  |  | 233 |  |  |  | 832,447 |  |  |  | 839,390 |
Total consumer loans |  | $ | 10,700 |  |  | $ | 3,363 |  |  | $ | 1,650 |  |  | $ | 15,713 |  |  | $ | 1,528 |  |  | $ | 1,648,657 |  |  | $ | 1,665,898 |
Residential |  | $ | 2,481 |  |  | $ | 420 |  |  | $ | 808 |  |  | $ | 3,709 |  |  | $ | 12,413 |  |  | $ | 2,019,560 |  |  | $ | 2,035,682 |
Total loans |  | $ | 15,022 |  |  | $ | 3,915 |  |  | $ | 2,458 |  |  | $ | 21,395 |  |  | $ | 30,285 |  |  | $ | 7,446,779 |  |  | $ | 7,498,459 |
(In thousands) |  | 31-60 Days Past Due Accruing |  |  | 61-90 Days Past Due Accruing |  |  | Greater Than 90 Days Past Due Accruing |  |  | Total Past Due Accruing |  |  | Nonaccrual |  |  | Current |  |  | Recorded Total Loans |
As of December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  | $ | 2,235 |  |  | $ | 2,394 |  |  | $ | 23 |  |  | $ | 4,652 |  |  | $ | 4,278 |  |  | $ | 1,116,686 |  |  | $ | 1,125,616 |
CRE |  |  | 682 |  |  |  | - |  |  |  | 470 |  |  |  | 1,152 |  |  |  | 19,971 |  |  |  | 2,391,162 |  |  |  | 2,412,285 |
PPP |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 430,810 |  |  |  | 430,810 |
Total commercial loans |  | $ | 2,917 |  |  | $ | 2,394 |  |  | $ | 493 |  |  | $ | 5,804 |  |  | $ | 24,249 |  |  | $ | 3,938,658 |  |  | $ | 3,968,711 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Auto |  | $ | 9,125 |  |  | $ | 1,553 |  |  | $ | 866 |  |  | $ | 11,544 |  |  | $ | 2,730 |  |  | $ | 877,831 |  |  | $ | 892,105 |
Other consumer |  |  | 3,711 |  |  |  | 1,929 |  |  |  | 1,272 |  |  |  | 6,912 |  |  |  | 290 |  |  |  | 640,952 |  |  |  | 648,154 |
Total consumer loans |  | $ | 12,836 |  |  | $ | 3,482 |  |  | $ | 2,138 |  |  | $ | 18,456 |  |  | $ | 3,020 |  |  | $ | 1,518,783 |  |  | $ | 1,540,259 |
Residential |  | $ | 2,719 |  |  | $ | 309 |  |  | $ | 518 |  |  | $ | 3,546 |  |  | $ | 17,378 |  |  | $ | 1,968,991 |  |  | $ | 1,989,915 |
Total loans |  | $ | 18,472 |  |  | $ | 6,185 |  |  | $ | 3,149 |  |  | $ | 27,806 |  |  | $ | 44,647 |  |  | $ | 7,426,432 |  |  | $ | 7,498,885 |
As of December 31, 2021 and 2020, there were no loans in nonaccrual without an allowance for credit losses. Credit Quality Indicators The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk. The system focuses on, among other things, financial strength of borrowers, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and outlook on particular industries. The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provide management with an early warning system, enabling recognition and response to problem loans and potential problem loans. Commercial Grading System For Commercial and Industrial (“C&I”), Paycheck Protection Program (“PPP”) and Commercial Real Estate (“CRE”) loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available. This includes comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management. C&I and CRE loans are graded Doubtful, Substandard, Special Mention and Pass. Doubtful A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for Doubtful assets because of the high probability of loss. Substandard Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard. Special Mention Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (i.e., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher probability of default than a Pass asset, its default is not imminent. Pass Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention. Pass loans are in compliance with loan covenants and payments are generally made as agreed. Pass loans range from superior quality to fair quality. Pass loans also include any portion of a government guaranteed loan, including PPP loans. Consumer and Residential Grading System Consumer and Residential loans are graded as either Nonperforming or Performing. Nonperforming Nonperforming loans are loans that are (1) over 90 days past due and interest is still accruing or (2) on nonaccrual status. Performing All loans not meeting any of the above criteria are considered Performing. The following tables illustrate the Company’s credit quality by loan class by vintage:
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Revolving Loans Converted to Term |  |  | Total |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 335,685 |  |  | $ | 219,931 |  |  | $ | 114,617 |  |  | $ | 64,310 |  |  | $ | 20,137 |  |  | $ | 32,146 |  |  | $ | 280,476 |  |  | $ | 15,731 |  |  | $ | 1,083,033 |
Special mention |  |  | 148 |  |  |  | 5,255 |  |  |  | 4,641 |  |  |  | 2,430 |  |  |  | 2,699 |  |  |  | 1,111 |  |  |  | 11,835 |  |  |  | 522 |  |  |  | 28,641 |
Substandard |  |  | 1,482 |  |  |  | 874 |  |  |  | 7,010 |  |  |  | 187 |  |  |  | 2,582 |  |  |  | 3,272 |  |  |  | 3,512 |  |  |  | 34 |  |  |  | 18,953 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 42 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 43 |
Total C&I |  | $ | 337,315 |  |  | $ | 226,060 |  |  | $ | 126,268 |  |  | $ | 66,928 |  |  | $ | 25,460 |  |  | $ | 36,529 |  |  | $ | 295,823 |  |  | $ | 16,287 |  |  | $ | 1,130,670 |
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 489,300 |  |  | $ | 434,866 |  |  | $ | 370,377 |  |  | $ | 236,274 |  |  | $ | 251,082 |  |  | $ | 441,310 |  |  | $ | 141,367 |  |  | $ | 43,942 |  |  | $ | 2,408,518 |
Special mention |  |  | 789 |  |  |  | 826 |  |  |  | 11,235 |  |  |  | 3,544 |  |  |  | 15,379 |  |  |  | 53,372 |  |  |  | 780 |  |  |  | 420 |  |  |  | 86,345 |
Substandard |  |  | - |  |  |  | 77 |  |  |  | 4,539 |  |  |  | 12,934 |  |  |  | 12,424 |  |  |  | 34,563 |  |  |  | 744 |  |  |  | - |  |  |  | 65,281 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,843 |  |  |  | - |  |  |  | - |  |  |  | 4,843 |
Total CRE |  | $ | 490,089 |  |  | $ | 435,769 |  |  | $ | 386,151 |  |  | $ | 252,752 |  |  | $ | 278,885 |  |  | $ | 534,088 |  |  | $ | 142,891 |  |  | $ | 44,362 |  |  | $ | 2,564,987 |
PPP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 92,884 |  |  | $ | 8,338 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 101,222 |
Total PPP |  | $ | 92,884 |  |  | $ | 8,338 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 101,222 |
Auto |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 351,778 |  |  | $ | 129,419 |  |  | $ | 183,959 |  |  | $ | 101,441 |  |  | $ | 46,007 |  |  | $ | 12,064 |  |  | $ | - |  |  | $ | - |  |  | $ | 824,668 |
Nonperforming |  |  | 305 |  |  |  | 319 |  |  |  | 457 |  |  |  | 411 |  |  |  | 266 |  |  |  | 82 |  |  |  | - |  |  |  | - |  |  |  | 1,840 |
Total auto |  | $ | 352,083 |  |  | $ | 129,738 |  |  | $ | 184,416 |  |  | $ | 101,852 |  |  | $ | 46,273 |  |  | $ | 12,146 |  |  | $ | - |  |  | $ | - |  |  | $ | 826,508 |
Other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 427,401 |  |  | $ | 151,300 |  |  | $ | 116,451 |  |  | $ | 78,523 |  |  | $ | 29,705 |  |  | $ | 15,660 |  |  | $ | 19,011 |  |  | $ | 1 |  |  | $ | 838,052 |
Nonperforming |  |  | 216 |  |  |  | 429 |  |  |  | 249 |  |  |  | 134 |  |  |  | 238 |  |  |  | 33 |  |  |  | 18 |  |  |  | 21 |  |  |  | 1,338 |
Total other consumer |  | $ | 427,617 |  |  | $ | 151,729 |  |  | $ | 116,700 |  |  | $ | 78,657 |  |  | $ | 29,943 |  |  | $ | 15,693 |  |  | $ | 19,029 |  |  | $ | 22 |  |  | $ | 839,390 |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 345,338 |  |  | $ | 226,723 |  |  | $ | 179,087 |  |  | $ | 179,575 |  |  | $ | 146,611 |  |  | $ | 687,863 |  |  | $ | 246,103 |  |  | $ | 11,161 |  |  | $ | 2,022,461 |
Nonperforming |  |  | - |  |  |  | 1,411 |  |  |  | 643 |  |  |  | 1,072 |  |  |  | 1,534 |  |  |  | 8,522 |  |  |  | - |  |  |  | 39 |  |  |  | 13,221 |
Total residential |  | $ | 345,338 |  |  | $ | 228,134 |  |  | $ | 179,730 |  |  | $ | 180,647 |  |  | $ | 148,145 |  |  | $ | 696,385 |  |  | $ | 246,103 |  |  | $ | 11,200 |  |  | $ | 2,035,682 |
Total loans |  | $ | 2,045,326 |  |  | $ | 1,179,768 |  |  | $ | 993,265 |  |  | $ | 680,836 |  |  | $ | 528,706 |  |  | $ | 1,294,841 |  |  | $ | 703,846 |  |  | $ | 71,871 |  |  | $ | 7,498,459 |
(In thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Revolving Loans Converted to Term |  |  | Total |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 331,921 |  |  | $ | 182,329 |  |  | $ | 91,230 |  |  | $ | 41,856 |  |  | $ | 32,625 |  |  | $ | 32,609 |  |  | $ | 322,674 |  |  | $ | 412 |  |  | $ | 1,035,656 |
Special mention |  |  | 20,064 |  |  |  | 6,534 |  |  |  | 5,053 |  |  |  | 4,702 |  |  |  | 1,624 |  |  |  | 2,830 |  |  |  | 13,614 |  |  |  | - |  |  |  | 54,421 |
Substandard |  |  | 338 |  |  |  | 6,364 |  |  |  | 10,219 |  |  |  | 3,388 |  |  |  | 791 |  |  |  | 4,272 |  |  |  | 9,945 |  |  |  | 14 |  |  |  | 35,331 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 207 |  |  |  | - |  |  |  | 1 |  |  |  | - |  |  |  | - |  |  |  | 208 |
Total C&I |  | $ | 352,323 |  |  | $ | 195,227 |  |  | $ | 106,502 |  |  | $ | 50,153 |  |  | $ | 35,040 |  |  | $ | 39,712 |  |  | $ | 346,233 |  |  | $ | 426 |  |  | $ | 1,125,616 |
CRE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 469,919 |  |  | $ | 361,187 |  |  | $ | 256,154 |  |  | $ | 271,874 |  |  | $ | 212,197 |  |  | $ | 383,690 |  |  | $ | 113,128 |  |  | $ | 4,034 |  |  | $ | 2,072,183 |
Special mention |  |  | 2,051 |  |  |  | 44,034 |  |  |  | 22,260 |  |  |  | 55,039 |  |  |  | 36,830 |  |  |  | 43,537 |  |  |  | 1,297 |  |  |  | 11,524 |  |  |  | 216,572 |
Substandard |  |  | 536 |  |  |  | 5,307 |  |  |  | 18,298 |  |  |  | 15,691 |  |  |  | 6,018 |  |  |  | 62,168 |  |  |  | 1,501 |  |  |  | 4,642 |  |  |  | 114,161 |
Doubtful |  |  | - |  |  |  | 1,897 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,472 |  |  |  | - |  |  |  | - |  |  |  | 9,369 |
Total CRE |  | $ | 472,506 |  |  | $ | 412,425 |  |  | $ | 296,712 |  |  | $ | 342,604 |  |  | $ | 255,045 |  |  | $ | 496,867 |  |  | $ | 115,926 |  |  | $ | 20,200 |  |  | $ | 2,412,285 |
PPP |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By internally assigned grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 430,810 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 430,810 |
Total PPP |  | $ | 430,810 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 430,810 |
Auto |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 197,881 |  |  | $ | 314,034 |  |  | $ | 201,850 |  |  | $ | 115,977 |  |  | $ | 45,495 |  |  | $ | 13,250 |  |  | $ | 22 |  |  | $ | - |  |  | $ | 888,509 |
Nonperforming |  |  | 359 |  |  |  | 1,140 |  |  |  | 1,135 |  |  |  | 525 |  |  |  | 437 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,596 |
Total auto |  | $ | 198,240 |  |  | $ | 315,174 |  |  | $ | 202,985 |  |  | $ | 116,502 |  |  | $ | 45,932 |  |  | $ | 13,250 |  |  | $ | 22 |  |  | $ | - |  |  | $ | 892,105 |
Other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 234,628 |  |  | $ | 178,411 |  |  | $ | 127,549 |  |  | $ | 55,676 |  |  | $ | 14,255 |  |  | $ | 17,414 |  |  | $ | 18,588 |  |  | $ | 71 |  |  | $ | 646,592 |
Nonperforming |  |  | 339 |  |  |  | 418 |  |  |  | 307 |  |  |  | 265 |  |  |  | 90 |  |  |  | 133 |  |  |  | 10 |  |  |  | - |  |  |  | 1,562 |
Total other consumer |  | $ | 234,967 |  |  | $ | 178,829 |  |  | $ | 127,856 |  |  | $ | 55,941 |  |  | $ | 14,345 |  |  | $ | 17,547 |  |  | $ | 18,598 |  |  | $ | 71 |  |  | $ | 648,154 |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By payment activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 237,338 |  |  | $ | 210,505 |  |  | $ | 213,437 |  |  | $ | 182,993 |  |  | $ | 164,424 |  |  | $ | 684,495 |  |  | $ | 268,878 |  |  | $ | 9,991 |  |  | $ | 1,972,061 |
Nonperforming |  |  | 1,245 |  |  |  | 659 |  |  |  | 2,318 |  |  |  | 2,535 |  |  |  | 902 |  |  |  | 10,195 |  |  |  | - |  |  |  | - |  |  |  | 17,854 |
Total residential |  | $ | 238,583 |  |  | $ | 211,164 |  |  | $ | 215,755 |  |  | $ | 185,528 |  |  | $ | 165,326 |  |  | $ | 694,690 |  |  | $ | 268,878 |  |  | $ | 9,991 |  |  | $ | 1,989,915 |
Total loans |  | $ | 1,927,429 |  |  | $ | 1,312,819 |  |  | $ | 949,810 |  |  | $ | 750,728 |  |  | $ | 515,688 |  |  | $ | 1,262,066 |  |  | $ | 749,657 |  |  | $ | 30,688 |  |  | $ | 7,498,885 |
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures As of December 31, 2021, the allowance for losses on unfunded commitments totaled $5.1 million, compared to $6.4 million as of December 31, 2020. Troubled Debt Restructuring When the Company modifies a loan in a troubled debt restructuring (“TDR”), such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; or change in scheduled payment amount. Residential and Consumer TDRs occurring during 2021 and 2020 were due to the reduction in the interest rate or extension of the term. An allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs. If management determines that the value of the modified loan is less than the recorded investment in the loan an impairment charge would be recorded. The Company began offering loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act, along with a joint agency statement issued by banking regulatory agencies, provides that modifications made in response to COVID-19 do not need to be accounted for as a TDR. The Company evaluated the modification programs provided to its borrowers and has concluded the modifications were generally made in accordance with the CARES Act guidance to borrowers who were in good standing prior to the COVID-19 pandemic and are not required to be designated as TDRs. The following tables illustrate the recorded investment and number of modifications designated as TDRs, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring:
|  | Year Ended December 31, 2021 |  | Year Ended December 31, 2020 |
(Dollars in thousands) |  | Number of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Number of Contracts |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 22 |  |  | $ | 22 |
Total commercial loans |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 22 |  |  | $ | 22 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Auto |  |  | 2 |  |  | $ | 38 |  |  | $ | 38 |  |  |  | 1 |  |  | $ | 44 |  |  | $ | 44 |
Total consumer loans |  |  | 2 |  |  | $ | 38 |  |  | $ | 38 |  |  |  | 1 |  |  | $ | 44 |  |  | $ | 44 |
Residential |  |  | 10 |  |  | $ | 1,121 |  |  | $ | 1,236 |  |  |  | 35 |  |  | $ | 2,834 |  |  | $ | 2,960 |
Total TDRs |  |  | 12 |  |  | $ | 1,159 |  |  | $ | 1,274 |  |  |  | 37 |  |  | $ | 2,900 |  |  | $ | 3,026 |
The following table illustrates the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the year:
|  | Year Ended December 31, 2021 |  | Year Ended December 31, 2020 |
(Dollars in thousands) |  | Number of Contracts |  |  | Recorded Investment |  |  | Number of Contracts |  |  | Recorded Investment |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |
C&I |  |  | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 387 |
CRE |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 168 |
Total commercial loans |  |  | - |  |  | $ | - |  |  |  | 2 |  |  | $ | 555 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Auto |  |  | 3 |  |  | $ | 36 |  |  |  | 1 |  |  | $ | 6 |
Total consumer loans |  |  | 3 |  |  | $ | 36 |  |  |  | 1 |  |  | $ | 6 |
Residential |  |  | 49 |  |  | $ | 2,830 |  |  |  | 61 |  |  | $ | 3,213 |
Total TDRs |  |  | 52 |  |  | $ | 2,866 |  |  |  | 64 |  |  | $ | 3,774 |
Allowance for Loan Losses Prior to the adoption of ASU 2016-13 on January 1, 2020, the Company’s calculated allowance for loan losses under the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods. The following tables illustrate the changes in the allowance for loan losses by our portfolio segments:
(In thousands) |  | Commercial Loans |  |  | Consumer Loans |  |  | Residential Real Estate |  |  | Total |
Balance as of December 31, 2018 |  | $ | 32,759 |  |  | $ | 37,178 |  |  | $ | 2,568 |  |  | $ | 72,505 |
Charge-offs |  |  | (3,151 | ) |  |  | (28,398 | ) |  |  | (991 | ) |  |  | (32,540 | )
Recoveries |  |  | 534 |  |  |  | 6,913 |  |  |  | 141 |  |  |  | 7,588 |
Provision |  |  | 4,383 |  |  |  | 19,954 |  |  |  | 1,075 |  |  |  | 25,412 |
Ending Balance as of December 31, 2019 |  | $ | 34,525 |  |  | $ | 35,647 |  |  | $ | 2,793 |  |  | $ | 72,965 |
The following table summarizes the average recorded investments on loans specifically evaluated for impairment and the interest income recognized:
|  | December 31, 2019 |
(In thousands) |  | Average Recorded Investment |  |  | Interest Income Recognized |
Originated |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |
C&I |  | $ | 242 |  |  | $ | 1 |
CRE |  |  | 3,311 |  |  |  | 123 |
Business banking |  |  | 1,089 |  |  |  | 24 |
Total commercial loans |  | $ | 4,642 |  |  | $ | 148 |
Consumer loans: |  |  |  |  |  |  |  |
Indirect auto |  | $ | 192 |  |  | $ | 10 |
Direct |  |  | 7,387 |  |  |  | 382 |
Specialty lending |  |  | 7 |  |  |  | 1 |
Total consumer loans |  | $ | 7,586 |  |  | $ | 393 |
Residential real estate |  | $ | 7,505 |  |  | $ | 350 |
Total originated |  | $ | 19,733 |  |  | $ | 891 |
Total loans |  | $ | 19,733 |  |  | $ | 891 |

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