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LOAN LOSS ALLOWANCE | 6 Months Ended
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Jun. 30, 2019
Receivables [Abstract] |
LOAN LOSS ALLOWANCE | LOAN LOSS ALLOWANCE Activity in the allowance for loan losses for the three and six months ended June 30, 2019 and 2018 was as follows:
|  | At or for the three months ended June 30, 2019
Business Activities Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 22,521 |  |  | $ | 18,247 |  |  | $ | 9,209 |  |  | $ | 6,235 |  |  | $ | 56,212 |
Charged-off loans |  | 702 |  |  | 1,180 |  |  | 206 |  |  | 857 |  |  | 2,945 |
Recoveries on charged-off loans |  | 67 |  |  | 119 |  |  | 43 |  |  | 79 |  |  | 308 |
Provision/(releases) for loan losses |  | 522 |  |  | 1,663 |  |  | (212 | ) |  | (116 | ) |  | 1,857 |
Balance at end of period |  | $ | 22,408 |  |  | $ | 18,849 |  |  | $ | 8,834 |  |  | $ | 5,341 |  |  | $ | 55,432 |
|  | At or for the six months ended June 30, 2019
Business Activities Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 21,732 |  |  | $ | 16,504 |  |  | $ | 10,535 |  |  | $ | 7,368 |  |  | $ | 56,139 |
Charged-off loans |  | 1,958 |  |  | 2,856 |  |  | 248 |  |  | 1,776 |  |  | 6,838 |
Recoveries on charged-off loans |  | 275 |  |  | 426 |  |  | 58 |  |  | 133 |  |  | 892 |
Provision/(releases) for loan losses |  | 2,359 |  |  | 4,775 |  |  | (1,511 | ) |  | (384 | ) |  | 5,239 |
Balance at end of period |  | $ | 22,408 |  |  | $ | 18,849 |  |  | $ | 8,834 |  |  | $ | 5,341 |  |  | $ | 55,432 |
|  | At or for the three months ended June 30, 2018
Business Activities Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 17,841 |  |  | $ | 13,229 |  |  | $ | 8,598 |  |  | $ | 7,609 |  |  | $ | 47,277 |
Charged-off loans |  | 1,392 |  |  | 1,706 |  |  | 27 |  |  | 837 |  |  | 3,962 |
Recoveries on charged-off loans |  | 26 |  |  | 447 |  |  | 6 |  |  | 135 |  |  | 614 |
Provision/(releases) for loan losses |  | 2,676 |  |  | 2,685 |  |  | 853 |  |  | 171 |  |  | 6,385 |
Balance at end of period |  | $ | 19,151 |  |  | $ | 14,655 |  |  | $ | 9,430 |  |  | $ | 7,078 |  |  | $ | 50,314 |
|  | At or for the six months ended June 30, 2018
Business Activities Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 16,843 |  |  | $ | 13,850 |  |  | $ | 9,420 |  |  | $ | 5,807 |  |  | $ | 45,920 |
Charged-off loans |  | 1,498 |  |  | 2,596 |  |  | 27 |  |  | 1,777 |  |  | 5,898 |
Recoveries on charged-off loans |  | 49 |  |  | 491 |  |  | 6 |  |  | 209 |  |  | 755 |
Provision/(releases) for loan losses |  | 3,757 |  |  | 2,910 |  |  | 31 |  |  | 2,839 |  |  | 9,537 |
Balance at end of period |  | $ | 19,151 |  |  | $ | 14,655 |  |  | $ | 9,430 |  |  | $ | 7,078 |  |  | $ | 50,314 |
|  | At or for the three months ended June 30, 2019
Acquired Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 3,910 |  |  | $ | 879 |  |  | $ | 622 |  |  | $ | 415 |  |  | $ | 5,826 |
Charged-off loans |  | 624 |  |  | 109 |  |  | 31 |  |  | 257 |  |  | 1,021 |
Recoveries on charged-off loans |  | 24 |  |  | 175 |  |  | 55 |  |  | 55 |  |  | 309 |
Provision/(releases) for loan losses |  | 1,252 |  |  | (75 | ) |  | 236 |  |  | 197 |  |  | 1,610 |
Balance at end of period |  | $ | 4,562 |  |  | $ | 870 |  |  | $ | 882 |  |  | $ | 410 |  |  | $ | 6,724 |
|  | At or for the six months ended June 30, 2019
Acquired Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 3,153 |  |  | $ | 1,064 |  |  | $ | 630 |  |  | $ | 483 |  |  | $ | 5,330 |
Charged-off loans |  | 804 |  |  | 371 |  |  | 104 |  |  | 428 |  |  | 1,707 |
Recoveries on charged-off loans |  | 500 |  |  | 226 |  |  | 60 |  |  | 86 |  |  | 872 |
Provision/(releases) for loan losses |  | 1,713 |  |  | (49 | ) |  | 296 |  |  | 269 |  |  | 2,229 |
Balance at end of period |  | $ | 4,562 |  |  | $ | 870 |  |  | $ | 882 |  |  | $ | 410 |  |  | $ | 6,724 |
|  | At or for the three months ended June 30, 2018
Acquired Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 3,995 |  |  | $ | 1,243 |  |  | $ | 1,046 |  |  | $ | 298 |  |  | $ | 6,582 |
Charged-off loans |  | 972 |  |  | — |  |  | 622 |  |  | 164 |  |  | 1,758 |
Recoveries on charged-off loans |  | 259 |  |  | 66 |  |  | 11 |  |  | 304 |  |  | 640 |
Provision/(releases) for loan losses |  | 100 |  |  | (182 | ) |  | 183 |  |  | 46 |  |  | 147 |
Balance at end of period |  | $ | 3,382 |  |  | $ | 1,127 |  |  | $ | 618 |  |  | $ | 484 |  |  | $ | 5,611 |
|  | At or for the six months ended June 30, 2018
Acquired Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Balance at beginning of period |  | $ | 3,856 |  |  | $ | 1,125 |  |  | $ | 598 |  |  | $ | 335 |  |  | $ | 5,914 |
Charged-off loans |  | 1,712 |  |  | 155 |  |  | 1,053 |  |  | 693 |  |  | 3,613 |
Recoveries on charged-off loans |  | 265 |  |  | 95 |  |  | 36 |  |  | 344 |  |  | 740 |
Provision/(releases) for loan losses |  | 973 |  |  | 62 |  |  | 1,037 |  |  | 498 |  |  | 2,570 |
Balance at end of period |  | $ | 3,382 |  |  | $ | 1,127 |  |  | $ | 618 |  |  | $ | 484 |  |  | $ | 5,611 |
The following tables present a summary of the allowance for loan losses as of June 30, 2019 and December 31, 2018:
|  | At June 30, 2019
Business Activities Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Individually evaluated for impairment |  | 7 |  |  | 42 |  |  | 78 |  |  | 7 |  |  | 134 |
Collectively evaluated for impairment |  | 22,401 |  |  | 18,807 |  |  | 8,756 |  |  | 5,334 |  |  | 55,298 |
Total |  | $ | 22,408 |  |  | $ | 18,849 |  |  | $ | 8,834 |  |  | $ | 5,341 |  |  | $ | 55,432 |
|  | At December 31, 2018
Business Activities Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Individually evaluated for impairment |  | 9 |  |  | 49 |  |  | 128 |  |  | 11 |  |  | 197 |
Collectively evaluated for impairment |  | 21,723 |  |  | 16,455 |  |  | 10,407 |  |  | 7,357 |  |  | 55,942 |
Total |  | 21,732 |  |  | 16,504 |  |  | 10,535 |  |  | 7,368 |  |  | 56,139 |
|  | At June 30, 2019
Acquired Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Individually evaluated for impairment |  | 84 |  |  | — |  |  | 8 |  |  | 7 |  |  | 99 |
Collectively evaluated for impairment |  | 4,478 |  |  | 870 |  |  | 874 |  |  | 403 |  |  | 6,625 |
Total |  | $ | 4,562 |  |  | $ | 870 |  |  | $ | 882 |  |  | $ | 410 |  |  | $ | 6,724 |
|  | At December 31, 2018
Acquired Loans (In thousands) |  | Commercial real estate |  | Commercial and industrial loans |  | Residential mortgages |  | Consumer |  | Total
Individually evaluated for impairment |  | 9 |  |  | 4 |  |  | 36 |  |  | 48 |  |  | 97 |
Collectively evaluated for impairment |  | 3,144 |  |  | 1,060 |  |  | 594 |  |  | 435 |  |  | 5,233 |
Total |  | 3,153 |  |  | 1,064 |  |  | 630 |  |  | 483 |  |  | 5,330 |
Credit Quality Information Business Activities Loans Credit Quality Analysis The Company monitors the credit quality of its portfolio by using internal risk ratings that are based on regulatory guidance. Loans that are given a Pass rating are not considered a problem credit. Loans that are classified as Special Mention loans are considered to have potential weaknesses and are evaluated closely by management. Substandard and non-accruing loans are loans for which a definitive weakness has been identified and which may make full collection of contractual cash flows questionable. Doubtful loans are those with identified weaknesses that make full collection of contractual cash flows, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. For commercial credits, the Company assigns an internal risk rating at origination and reviews the rating annually, semiannually or quarterly depending on the risk rating. The rating is also reassessed at any point in time when management becomes aware of information that may affect the borrower’s ability to fulfill their obligations. The Company risk rates its residential mortgages, including 1-4 family and residential construction loans, based on a three rating system: Pass, Special Mention, and Substandard. Loans that are current within 59 days are rated Pass. Residential mortgages that are 60-89 days delinquent are rated Special Mention. Loans delinquent for 90 days or greater are rated Substandard and generally placed on non-accrual status. Home equity loans are risk rated based on the same rating system as the Company’s residential mortgages. Ratings for other consumer loans, including auto loans, are based on a two rating system. Loans that are current within 119 days are rated Performing while loans delinquent for 120 days or more are rated Non-performing. Other consumer loans are placed on non-accrual at such time as they become Non-performing. Acquired Loans Credit Quality Analysis Upon acquiring a loan portfolio, the Company's internal loan review function assigns risk ratings to the acquired loans, utilizing the same methodology as it does with business activities loans. This may differ from the risk rating policy of the predecessor bank. Loans which are rated Substandard or worse according to the rating process outlined below are deemed to be credit impaired loans accounted for under ASC 310-30, regardless of whether they are classified as performing or non-performing. The Bank utilizes an eleven grade internal loan rating system for each of its acquired commercial real estate, construction and commercial loans as outlined in the Credit Quality Information section of this Note. The ratings system is similar to loans originated through business activities. The Company subjects loans that do not meet the ASC 310-30 criteria to ASC 450-20 (Loss Contingencies) by collectively evaluating these loans for an allowance for loan loss. The Company applies a methodology similar to the methodology prescribed for business activities loans, which includes the application of environmental factors to each category of loans. The methodology to collectively evaluate the acquired loans outside the scope of ASC 310-30 includes the application of a number of environmental factors that reflect management’s best estimate of the level of incremental credit losses that might be recognized given current conditions. This is reviewed as part of the allowance for loan loss adequacy analysis. As the loan portfolio matures and environmental factors change, the loan portfolio will be reassessed each quarter to determine an appropriate reserve allowance. Additionally, the Company considers the need for a reserve for acquired loans accounted for outside of the scope of ASC 310-30 under ASC 310-20. At acquisition date, the Bank determined a fair value mark with credit and interest rate components. Under the Company’s model, the impairment evaluation process involves comparing the carrying value of acquired loans, including the entire unamortized premium or discount, to the calculated reserve allowance. If necessary, the Company books a reserve to account for shortfalls identified through this calculation. Fair value marks are not bifurcated when evaluating for impairment. A decrease in the expected cash flows in subsequent periods requires the establishment of an allowance for loan losses at that time for ASC 310-30 loans. At June 30, 2019, the allowance for loan losses related to acquired loans under ASC 310-30 and ASC 310-20 was $6.7 million using the above mentioned criteria. The following tables present the Company’s loans by risk rating at June 30, 2019 and December 31, 2018: Business Activities Loans Commercial Real Estate Credit Risk Profile by Creditworthiness Category
|  | Construction |  | Real Estate |  | Total commercial real estate
(In thousands) |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 300,996 |  |  | $ | 327,792 |  |  | $ | 2,283,244 |  |  | $ | 2,198,129 |  |  | $ | 2,584,240 |  |  | $ | 2,525,921 |
Special mention |  | — |  |  | — |  |  | 24,154 |  |  | 9,805 |  |  | 24,154 |  |  | 9,805 |
Substandard |  | — |  |  | — |  |  | 51,104 |  |  | 52,985 |  |  | 51,104 |  |  | 52,985 |
Total |  | $ | 300,996 |  |  | $ | 327,792 |  |  | $ | 2,358,502 |  |  | $ | 2,260,919 |  |  | $ | 2,659,498 |  |  | $ | 2,588,711 |
Commercial and Industrial Loans Credit Risk Profile by Creditworthiness Category
|  |  | Total comm. and industrial loans
(In thousands) |  |  | June 30, 2019 |  | December 31, 2018
Grade: |  |  |  |  |  |  |
Pass |  |  | $ | 1,385,702 |  |  | $ | 1,469,139 |
Special mention |  |  | 53,543 |  |  | 14,279 |
Substandard |  |  | 31,617 |  |  | 29,176 |
Doubtful |  |  | 904 |  |  | 944 |
Total |  |  | $ | 1,471,766 |  |  | $ | 1,513,538 |
Residential Mortgages Credit Risk Profile by Internally Assigned Grade
|  | 1-4 family |  | Construction |  | Total residential mortgages
(In thousands) |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 2,264,398 |  |  | $ | 2,314,657 |  |  | $ | 9,170 |  |  | $ | 9,582 |  |  | $ | 2,273,568 |  |  | $ | 2,324,239 |
Special mention |  | 543 |  |  | 1,619 |  |  | — |  |  | — |  |  | 543 |  |  | 1,619 |
Substandard |  | 3,504 |  |  | 1,440 |  |  | — |  |  | — |  |  | 3,504 |  |  | 1,440 |
Total |  | $ | 2,268,445 |  |  | $ | 2,317,716 |  |  | $ | 9,170 |  |  | $ | 9,582 |  |  | $ | 2,277,615 |  |  | $ | 2,327,298 |
Consumer Loans Credit Risk Profile Based on Payment Activity
|  | Home equity |  | Auto and other |  | Total consumer loans
(In thousands) |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018
Performing |  | $ | 280,440 |  |  | $ | 289,028 |  |  | $ | 602,469 |  |  | $ | 645,537 |  |  | $ | 882,909 |  |  | $ | 934,565 |
Nonperforming |  | 814 |  |  | 933 |  |  | 1,803 |  |  | 1,699 |  |  | 2,617 |  |  | 2,632 |
Total |  | $ | 281,254 |  |  | $ | 289,961 |  |  | $ | 604,272 |  |  | $ | 647,236 |  |  | $ | 885,526 |  |  | $ | 937,197 |
Acquired Loans Commercial Real Estate Credit Risk Profile by Creditworthiness Category
|  | Construction |  | Real Estate |  | Total commercial real estate
(In thousands) |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 56,384 |  |  | $ | 24,519 |  |  | $ | 1,231,162 |  |  | $ | 743,684 |  |  | $ | 1,287,546 |  |  | $ | 768,203 |
Special mention |  | 1,411 |  |  | — |  |  | 14,147 |  |  | 9,086 |  |  | 15,558 |  |  | 9,086 |
Substandard |  | 702 |  |  | 701 |  |  | 42,043 |  |  | 33,520 |  |  | 42,745 |  |  | 34,221 |
Total |  | $ | 58,497 |  |  | $ | 25,220 |  |  | $ | 1,287,352 |  |  | $ | 786,290 |  |  | $ | 1,345,849 |  |  | $ | 811,510 |
Commercial and Industrial Loans Credit Risk Profile by Creditworthiness Category
|  |  | Total comm. and industrial loans
(In thousands) |  |  | June 30, 2019 |  | December 31, 2018
Grade: |  |  |  |  |  |  |
Pass |  |  | $ | 483,151 |  |  | $ | 439,602 |
Special mention |  |  | 12,893 |  |  | 11,374 |
Substandard |  |  | 19,487 |  |  | 15,532 |
Total |  |  | $ | 515,531 |  |  | $ | 466,508 |
Residential Mortgages Credit Risk Profile by Internally Assigned Grade
|  | 1-4 family |  | Construction |  | Total residential mortgages
(In thousands) |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018
Grade: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 590,578 |  |  | $ | 235,173 |  |  | $ | 8,158 |  |  | $ | 174 |  |  | $ | 598,736 |  |  | $ | 235,347 |
Special mention |  | 696 |  |  | 144 |  |  | — |  |  | — |  |  | 696 |  |  | 144 |
Substandard |  | 5,333 |  |  | 3,635 |  |  | — |  |  | — |  |  | 5,333 |  |  | 3,635 |
Total |  | $ | 596,607 |  |  | $ | 238,952 |  |  | $ | 8,158 |  |  | $ | 174 |  |  | $ | 604,765 |  |  | $ | 239,126 |
Consumer Loans Credit Risk Profile Based on Payment Activity
|  | Home equity |  | Auto and other |  | Total consumer loans
(In thousands) |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018 |  | June 30, 2019 |  | December 31, 2018
Performing |  | $ | 121,931 |  |  | $ | 85,968 |  |  | $ | 58,393 |  |  | $ | 72,195 |  |  | $ | 180,324 |  |  | $ | 158,163 |
Nonperforming |  | 645 |  |  | 751 |  |  | 309 |  |  | 451 |  |  | 954 |  |  | 1,202 |
Total |  | $ | 122,576 |  |  | $ | 86,719 |  |  | $ | 58,702 |  |  | $ | 72,646 |  |  | $ | 181,278 |  |  | $ | 159,365 |
The following table summarizes information about total loans rated Special Mention or lower as of June 30, 2019 and December 31, 2018. The table below includes consumer loans that are special mention and substandard accruing that are classified in the above table as performing based on payment activity.
|  | June 30, 2019 |  | December 31, 2018
(In thousands) |  | Business Activities Loans |  | Acquired Loans |  | Total |  | Business Activities Loans |  | Acquired Loans |  | Total
Non-Accrual |  | $ | 30,704 |  |  | $ | 5,067 |  |  | $ | 35,771 |  |  | $ | 26,478 |  |  | $ | 5,947 |  |  | $ | 32,425 |
Substandard Accruing |  | 59,206 |  |  | 63,606 |  |  | 122,812 |  |  | 60,698 |  |  | 48,792 |  |  | 109,490 |
Total Classified |  | 89,910 |  |  | 68,673 |  |  | 158,583 |  |  | 87,176 |  |  | 54,739 |  |  | 141,915 |
Special Mention |  | 79,484 |  |  | 29,187 |  |  | 108,671 |  |  | 26,333 |  |  | 20,833 |  |  | 47,166 |
Total Criticized |  | $ | 169,394 |  |  | $ | 97,860 |  |  | $ | 267,254 |  |  | $ | 113,509 |  |  | $ | 75,572 |  |  | $ | 189,081 |

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- Definition The entire disclosure for allowance for credit losses. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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