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Loans and Loans Held for Sale | 9 Months Ended
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Sep. 30, 2016
Receivables [Abstract] |
Loans and Loans Held for Sale | Loans are presented net of unearned income of $4.6 million and $3.2 million at September 30, 2016 and December 31, 2015 and net of a discount related to purchase accounting fair value adjustments of $8.2 million and $10.9 million at September 30, 2016 and December 31, 2015. The following table indicates the composition of loans as of the dates presented:
(dollars in thousands) | September 30, 2016 |  | December 31, 2015
Commercial |  |  |
Commercial real estate | $ | 2,427,164 |  |  | $ | 2,166,603 |
Commercial and industrial | 1,344,297 |  |  | 1,256,830 |
Commercial construction | 402,124 |  |  | 413,444 |
Total Commercial Loans | 4,173,585 |  |  | 3,836,877 |
Consumer |  |  |
Residential mortgage | 692,574 |  |  | 639,372 |
Home equity | 483,935 |  |  | 470,845 |
Installment and other consumer | 62,288 |  |  | 73,939 |
Consumer construction | 5,852 |  |  | 6,579 |
Total Consumer Loans | 1,244,649 |  |  | 1,190,735 |
Total Portfolio Loans | 5,418,234 |  |  | 5,027,612 |
Loans held for sale | 11,694 |  |  | 35,321 |
Total Loans | $ | 5,429,928 |  |  | $ | 5,062,933 |
We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, geography, collateral and industry and actively managing concentrations. When concentrations exist in certain segments, we monitor this risk by reviewing the relevant economic indicators and internal risk rating trends and through stress testing of the loans in these segments. Total commercial loans represented 77 percent of total portfolio loans at September 30, 2016 and 76 percent of total portfolio loans at December 31, 2015. Within our commercial portfolio, the CRE and Commercial Construction portfolios combined comprised $2.8 billion or 68 percent of total commercial loans and 52 percent of total portfolio loans at September 30, 2016 and comprised of $2.6 billion or 67 percent of total commercial loans and 51 percent of total portfolio loans at December 31, 2015. Further segmentation of the CRE and Commercial Construction portfolios by collateral type reveals no concentration in excess of seven percent of total loans at September 30, 2016 and December 31, 2015. Our market area includes Pennsylvania and the contiguous states of Ohio, West Virginia, New York and Maryland. The majority of our commercial and consumer loans are made to businesses and individuals in this market area, resulting in a geographic concentration. We believe our knowledge and familiarity with customers and conditions locally outweighs this geographic concentration risk. The conditions of the local and regional economies are monitored closely through publicly available data as well as information supplied by our customers. Our CRE and Commercial Construction portfolios have out-of-market exposure of 5.4 percent of the combined portfolio and 2.8 percent of total loans at September 30, 2016 and 5.8 percent of the combined portfolio and 3.0 percent of total loans at December 31, 2015. The decrease in loans held for sale of $23.6 million primarily related to the sale of our credit card portfolio, which was sold for $25.0 million and resulted in a $2.1 million gain for the nine months ended September 30, 2016. Troubled debt restructurings, or TDRs, are loans where we, for economic or legal reasons related to a borrower’s financial difficulties, grant a concession to the borrower. We strive to identify borrowers with financial difficulty early and work with them to come to a mutual resolution to modify the terms of their loan before the loan goes nonaccrual. These modified terms generally include extensions of maturity dates at a stated interest rate lower than the current market rate for a new loan with similar risk characteristics, reductions in contractual interest rates or principal deferment. While unusual, there may be instances of principal forgiveness. These modifications are generally for longer term periods that would not be considered insignificant. Additionally, we classify loans where the debt obligation has been discharged through a Chapter 7 Bankruptcy and not reaffirmed as TDRs. We individually evaluate all substandard commercial loans that have experienced a forbearance or change in terms agreement, as well as all substandard consumer and residential mortgage loans that entered into an agreement to modify their existing loan to determine if they should be designated as TDRs. All TDRs are considered to be impaired loans and will be reported as impaired loans for the remaining life of the loan, unless the restructuring agreement specifies an interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is fully expected that the remaining principal and interest will be collected according to the restructured agreement. Further, all impaired loans are reported as nonaccrual loans unless the loan is a TDR that has met the requirements to be returned to accruing status. TDRs can be returned to accruing status if the ultimate collectability of all contractual amounts due, according to the restructured agreement, is not in doubt and there is a period of a minimum of six months of satisfactory payment performance by the borrower either immediately before or after the restructuring. The following table summarizes the restructured loans as of the dates presented:
| September 30, 2016 |  | December 31, 2015
(dollars in thousands) | Performing TDRs | Nonperforming TDRs | Total TDRs |  | Performing TDRs | Nonperforming TDRs | Total TDRs
Commercial real estate | $ | 3,054 |  | $ | 866 |  | $ | 3,920 |  |  | $ | 6,822 |  | $ | 3,548 |  | $ | 10,370 |
Commercial and industrial | 863 |  | 7,007 |  | 7,870 |  |  | 6,321 |  | 1,570 |  | 7,891 |
Commercial construction | 3,460 |  | 992 |  | 4,452 |  |  | 5,013 |  | 1,265 |  | 6,278 |
Residential mortgage | 2,453 |  | 5,248 |  | 7,701 |  |  | 2,590 |  | 665 |  | 3,255 |
Home equity | 3,084 |  | 973 |  | 4,057 |  |  | 3,184 |  | 523 |  | 3,707 |
Installment and other consumer | 22 |  | 9 |  | 31 |  |  | 25 |  | 88 |  | 113 |
Total | $ | 12,936 |  | $ | 15,095 |  | $ | 28,031 |  |  | $ | 23,955 |  | $ | 7,659 |  | $ | 31,614 |
There were no TDRs returned to accruing status during the three and nine months ended September 30, 2016 and there were six TDRs that returned to accruing status totaling $0.3 million during the three and nine months ended September 30, 2015. The following tables present the restructured loans during the periods presented:
| Three Months Ended September 30, 2016 |  | Three Months Ended September 30, 2015
(dollars in thousands) | Number of Loans | Pre-Modification Outstanding Recorded Investment(1) | Post-Modification Outstanding Recorded Investment(1) | Total Difference in Recorded Investment |  | Number of Loans | Pre-Modification Outstanding Recorded Investment(1) | Post-Modification Outstanding Recorded Investment(1) | Total Difference in Recorded Investment
Commercial real estate |  |  |  |  |  |  |  |  |
Interest rate reduction | 1 |  | $ | 250 |  | $ | 248 |  | $ | (2 | ) |  | — |  | $ | — |  | $ | — |  | $ | — |
Maturity date extension | — |  | — |  | — |  | — |  |  | 1 |  | 264 |  | 260 |  | (4 | )
Commercial and industrial |  |  |  |  |  |  |  |  |  |
Maturity date extension | 2 |  | 4,105 |  | 4,162 |  | 57 |  |  | — |  | — |  | — |  | — |
Commercial Construction |  |  |  |  |  |  |  |  |  |
Maturity date extension | — |  | — |  | — |  | — |  |  | 2 |  | 813 |  | 812 |  | (1 | )
Residential mortgage |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 3 |  | 153 |  | 152 |  | (1 | ) |  | 2 |  | 74 |  | 74 |  | — |
Maturity date extension | — |  | — |  | — |  | — |  |  | 1 |  | 180 |  | 180 |  | — |
Maturity date extension and interest rate reduction | 1 |  | 280 |  | 280 |  | — |  |  | — |  | — |  | — |  | — |
Home equity |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 7 |  | 163 |  | 161 |  | (2 | ) |  | 5 |  | 115 |  | 110 |  | (5 | )
Maturity date extension and interest rate reduction | — |  | — |  | — |  | — |  |  | 2 |  | 138 |  | 138 |  | — |
Installment and other consumer |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | — |  | — |  | — |  | — |  |  | 1 |  | 9 |  | 4 |  | (5 | )
Total by Concession Type |  |  |  |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 10 |  | $ | 316 |  | $ | 313 |  | $ | (3 | ) |  | 8 |  | $ | 198 |  | $ | 188 |  | $ | (10 | )
Interest rate reduction | 1 |  | 250 |  | 248 |  | (2 | ) |  | — |  | — |  | — |  | — |
Maturity date extension and interest rate reduction | 1 |  | 280 |  | 280 |  | — |  |  | 2 |  | 138 |  | 138 |  | — |
Maturity date extension | 2 |  | 4,105 |  | 4,162 |  | 57 |  |  | 4 |  | 1,257 |  | 1,252 |  | (5 | )
Total | 14 |  | $ | 4,951 |  | $ | 5,003 |  | $ | 52 |  |  | 14 |  | $ | 1,593 |  | $ | 1,578 |  | $ | (15 | )
(1) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end. (2) Chapter 7 bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
| Nine Months Ended September 30, 2016 |  | Nine Months Ended September 30, 2015
(dollars in thousands) | Number of Loans | Pre-Modification Outstanding Recorded Investment(1) | Post-Modification Outstanding Recorded Investment(1) | Total Difference in Recorded Investment |  | Number of Loans | Pre-Modification Outstanding Recorded Investment(1) | Post-Modification Outstanding Recorded Investment(1) | Total Difference in Recorded Investment
Commercial real estate |  |  |  |  |  |  |  |  |
Principal deferral | 1 |  | $ | 4,721 |  | $ | 2,270 |  | $ | (2,451 | ) |  | 2 |  | $ | 2,851 |  | $ | 1,841 |  | $ | (1,010 | )
Chapter 7 bankruptcy(2) | 1 |  | 709 |  | 681 |  | (28 | ) |  | — |  | — |  | — |  | — |
Interest rate reduction | 1 |  | 250 |  | 248 |  | (2 | ) |  | — |  | — |  | — |  | — |
Maturity date extension | — |  | — |  | — |  | — |  |  | 1 |  | 264 |  | 260 |  | (4 | )
Commercial and industrial |  |  |  |  |  |  |  |  |
Principal forgiveness | — |  | — |  | — |  | — |  |  | 1 |  | 400 |  | 273 |  | (127 | )
Principal deferral | 5 |  | 985 |  | 985 |  | — |  |  | 6 |  | 661 |  | 363 |  | (298 | )
Chapter 7 bankruptcy(2) | — |  | — |  | — |  | — |  |  | 1 |  | 3 |  | — |  | (3 | )
Maturity date extension | 5 |  | 4,860 |  | 4,891 |  | 31 |  |  | 1 |  | 780 |  | 720 |  | (60 | )
Commercial Construction |  |  |  |  |  |  |  |  |
Principal deferral | — |  | — |  | — |  | — |  |  | 1 |  | 104 |  | — |  | (104 | )
Maturity date extension | 5 |  | 1,357 |  | 1,302 |  | (55 | ) |  | 2 |  | 813 |  | 812 |  | (1 | )
Residential mortgage |  |  |  |  |  |  |  |  |
Principal deferral | 1 |  | 3,273 |  | 3,273 |  | — |  |  | — |  | — |  | — |  | — |
Chapter 7 bankruptcy(2) | 7 |  | 439 |  | 433 |  | (6 | ) |  | 2 |  | 74 |  | 74 |  | — |
Maturity date extension | 1 |  | 483 |  | 483 |  | — |  |  | 1 |  | 180 |  | 180 |  | — |
Maturity date extension and interest rate reduction | 1 |  | 280 |  | 280 |  | — |  |  | 2 |  | 225 |  | 229 |  | 4 |
Home equity |  |  |  |  |  |  |  |  |
Principal deferral | 1 |  | 47 |  | 46 |  | (1 | ) |  | — |  | — |  | — |  | — |
Chapter 7 bankruptcy(2) | 16 |  | 481 |  | 470 |  | (11 | ) |  | 17 |  | 428 |  | 389 |  | (39 | )
Maturity date extension and interest rate reduction | 1 |  | 130 |  | 128 |  | (2 | ) |  | 2 |  | 138 |  | 138 |  | — |
Maturity date extension | 4 |  | 274 |  | 272 |  | (2 | ) |  | 1 |  | 71 |  | 70 |  | (1 | )
Installment and other consumer |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 2 |  | 16 |  | 13 |  | (3 | ) |  | 1 |  | 9 |  | 4 |  | (5 | )
Total by Concession Type |  |  |  |  |  |  |  |  |
Principal forgiveness | — |  | $ | — |  | $ | — |  | $ | — |  |  | 1 |  | $ | 400 |  | $ | 273 |  | $ | (127 | )
Principal deferral | 8 |  | 9,026 |  | 6,574 |  | (2,452 | ) |  | 9 |  | 3,616 |  | 2,204 |  | (1,412 | )
Chapter 7 bankruptcy(2) | 26 |  | 1,645 |  | 1,597 |  | (48 | ) |  | 21 |  | 514 |  | 467 |  | (47 | )
Interest rate reduction | 1 |  | 250 |  | 248 |  | (2 | ) |  |  |  |  |  |  |  | — |
Maturity date extension and interest rate reduction | 2 |  | 410 |  | 408 |  | (2 | ) |  | 4 |  | 363 |  | 367 |  | 4 |
Maturity date extension | 15 |  | 6,974 |  | 6,948 |  | (26 | ) |  | 6 |  | 2,108 |  | 2,042 |  | (66 | )
Total | 52 |  | $ | 18,305 |  | $ | 15,775 |  | $ | (2,530 | ) |  | 41 |  | $ | 7,001 |  | $ | 5,353 |  | $ | (1,648 | )
(1) Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end. (2) Chapter 7 bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.
For the three months ended September 30, 2016, we modified 12 C&I loan totaling $16.9 million and one CRE loan totaling $1.9 million that were not considered to be TDRs. For the nine months ended September 30, 2016, we modified 15 C&I loans totaling $25.6 million and two CRE loans totaling $2.5 million that were not considered to be TDRs. The modifications were administrat ive extensions of maturity dates that were determined not to be a concession. As of September 30, 2016, we have $0.3 million of commitments to lend additional funds on TDRs. Defaulted TDRs are defined as loans having a payment default of 90 days or more after the restructuring takes place. The following tables present a summary of TDRs which defaulted during the periods presented that had been restructured within the last 12 months prior to defaulting:
| Defaulted TDRs
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2016 |  | 2015 |  | 2016 |  | 2015
(dollars in thousands) | Number of Defaults | Recorded Investment |  |  | Number of Defaults | Recorded Investment |  |  | Number of Defaults | Recorded Investment |  |  | Number of Defaults | Recorded Investment |
Commercial real estate | — | $ | — |  |  | — | $ | — |  |  | — | $ | — |  |  | — | $ | — |
Commercial and Industrial | — | — |  |  | — | — |  |  | — | — |  |  | — | — |
Commercial construction | — | — |  |  | — | — |  |  | — | — |  |  | — | — |
Residential mortgage | — | — |  |  | — | — |  |  | — | — |  |  | 1 | 183 |
Home equity | — | — |  |  | — | — |  |  | — | — |  |  | 3 | 124 |
Installment and other consumer | — | — |  |  | — | — |  |  | — | — |  |  | — | — |
Consumer construction | — | — |  |  | — | — |  |  | — | — |  |  | — | — |
Total | — | $ | — |  |  | — | $ | — |  |  | — | $ | — |  |  | 4 | $ | 307 |
The following table is a summary of nonperforming assets as of the dates presented:
| Nonperforming Assets
(dollars in thousands) | September 30, 2016 |  | December 31, 2015
Nonperforming Assets |  |  |
Nonaccrual loans | $ | 25,398 |  |  | $ | 27,723 |
Nonaccrual TDRs | 15,095 |  |  | 7,659 |
Total nonaccrual loans | 40,493 |  |  | 35,382 |
OREO | 512 |  |  | 354 |
Total Nonperforming Assets | $ | 41,005 |  |  | $ | 35,736 |

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