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Loans and Loans Held for Sale | 9 Months Ended
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Sep. 30, 2017
Receivables [Abstract] |
LOANS AND LOANS HELD FOR SALE | Loans are presented net of unearned income of $3.6 million and $5.2 million at September 30, 2017 and December 31, 2016 and net of a discount related to purchase accounting fair value adjustments of $4.6 million and $7.1 million at September 30, 2017 and December 31, 2016. The following table indicates the composition of loans as of the dates presented:
(dollars in thousands) | September 30, 2017 |  | December 31, 2016
Commercial |  |  |
Commercial real estate | $ | 2,681,693 |  |  | $ | 2,498,476 |
Commercial and industrial | 1,446,811 |  |  | 1,401,035 |
Commercial construction | 432,887 |  |  | 455,884 |
Total Commercial Loans | 4,561,391 |  |  | 4,355,395 |
Consumer |  |  |
Residential mortgage | 697,367 |  |  | 701,982 |
Home equity | 487,806 |  |  | 482,284 |
Installment and other consumer | 69,644 |  |  | 65,852 |
Consumer construction | 4,550 |  |  | 5,906 |
Total Consumer Loans | 1,259,367 |  |  | 1,256,024 |
Total Portfolio Loans | 5,820,758 |  |  | 5,611,419 |
Loans held for sale | 47,936 |  |  | 3,793 |
Total Loans | $ | 5,868,694 |  |  | $ | 5,615,212 |
As of September 30, 2017, our acquired loans from the 2015 Integrity Bancshares, Inc. merger, or the Merger, were $415 million which included $219 million of Commercial Real Estate, or CRE, $103 million of Commercial & Industrial, or C&I, $15 million of commercial construction, $60 million of residential mortgage and $18 million of home equity, installment and other consumer construction. As of December 31, 2016 acquired loans were $543 million which included $273 million of CRE, $141 million of C&I, $33.0 million of commercial construction, $74.0 million of residential mortgage and $22.0 million of home equity, installment and other consumer construction. 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 78 percent of total portfolio loans at September 30, 2017 and December 31, 2016. Within our commercial portfolio, the CRE and commercial construction portfolios comprised $3.1 billion or 68 percent of total commercial loans and 54 percent of total portfolio loans at September 30, 2017 and comprised of $3.0 billion or 68 percent of total commercial loans and 53 percent of total portfolio loans at December 31, 2016. Further segmentation of the CRE and Commercial Construction portfolios by collateral type reveals no concentration in excess of 14 percent of total CRE and Commercial Construction loans at September 30, 2017 and December 31, 2016. 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 regional 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 5.1 percent of the total CRE and Commercial Construction portfolios and 2.7 percent of total loans at September 30, 2017. This compares to 5.2 percent of the total CRE and Commercial Construction portfolios and 2.7 percent of total loans at December 31, 2016. The increase in loans held for sale of $44.1 million related to $43.4 million of loans that were held for sale due to a branch sale that is expected to close in the fourth quarter of 2017. 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 troubled debt restructurings, or 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 restructured loans as of the dates presented:
| September 30, 2017 |  | December 31, 2016
(dollars in thousands) | Performing TDRs |  | Nonperforming TDRs |  | Total TDRs |  | Performing TDRs |  | Nonperforming TDRs |  | Total TDRs
Commercial real estate | $ | 2,618 |  |  | $ | 1,083 |  |  | $ | 3,701 |  |  | $ | 2,994 |  |  | $ | 646 |  |  | $ | 3,640 |
Commercial and industrial | 4,063 |  |  | 3,580 |  |  | 7,643 |  |  | 1,387 |  |  | 4,493 |  |  | 5,880 |
Commercial construction | 2,914 |  |  | 421 |  |  | 3,335 |  |  | 2,966 |  |  | 430 |  |  | 3,396 |
Residential mortgage | 2,096 |  |  | 4,095 |  |  | 6,191 |  |  | 2,375 |  |  | 5,068 |  |  | 7,443 |
Home equity | 3,871 |  |  | 1,013 |  |  | 4,884 |  |  | 3,683 |  |  | 954 |  |  | 4,637 |
Installment and other consumer | 43 |  |  | 11 |  |  | 54 |  |  | 18 |  |  | 7 |  |  | 25 |
Total | $ | 15,605 |  |  | $ | 10,203 |  |  | $ | 25,808 |  |  | $ | 13,423 |  |  | $ | 11,598 |  |  | $ | 25,021 |
There were no TDRs that returned to accruing status during the three months ended September 30, 2017 and one TDR, totaling $2.0 million, that returned to accruing status during the nine months ended September 30, 2017. There were no TDRs returned to accruing status during the three and nine months ended September 30, 2016. The following tables present details related to loans identified as TDRs during the three and nine months ended September 30, 2017 and 2016:
| Three Months Ended September 30, 2017 |  | Three months ended September 30, 2016
(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 |  |  | 248 |  |  | 250 |  |  | 2 |
Maturity date extension | 1 |  |  | 400 |  |  | 400 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Maturity date extension | 1 |  |  | 274 |  |  | 816 |  |  | 542 |  |  | 2 |  |  | 4,105 |  |  | 4,162 |  |  | 57 |
Residential mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 1 |  |  | 148 |  |  | — |  |  | (148 | ) |  | 3 |  |  | 153 |  |  | 152 |  |  | (1 | )
Maturity date extension and interest rate reduction | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 280 |  |  | 280 |  |  | — |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 4 |  |  | 72 |  |  | 70 |  |  | (2 | ) |  | 7 |  |  | 163 |  |  | 161 |  |  | (2 | )
Installment and other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 8 |  |  | 200 |  |  | 185 |  |  | (15 | ) |  | — |  |  | — |  |  | — |  |  | — |
Total by Concession Type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 13 |  |  | 420 |  |  | 255 |  |  | (165 | ) |  | 10 |  |  | 316 |  |  | 313 |  |  | (3 | )
Interest rate reduction | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 248 |  |  | 250 |  |  | 2 |
Maturity date extension and interest rate reduction | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 280 |  |  | 280 |  |  | — |
Maturity date extension | 2 |  |  | 674 |  |  | 1,216 |  |  | 542 |  |  | 2 |  |  | 4,105 |  |  | 4,162 |  |  | 57 |
Total | 15 |  |  | $ | 1,094 |  |  | $ | 1,471 |  |  | $ | 377 |  |  | 14 |  |  | $ | 4,949 |  |  | $ | 5,005 |  |  | $ | 56 |
(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, 2017 |  | Nine Months Ended September 30, 2016
(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 |  |  | $ | 100 |  |  | $ | 100 |  |  | $ | — |  |  | 1 |  |  | $ | 4,721 |  |  | $ | 2,270 |  |  | $ | (2,451 | )
Chapter 7 bankruptcy(2) | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 709 |  |  | 681 |  |  | (28 | )
Interest rate reduction | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 250 |  |  | 248 |  |  | (2 | )
Maturity date extension | 1 |  |  | 400 |  |  | 400 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Principal deferral | 1 |  |  | 429 |  |  | 429 |  |  | — |  |  | 5 |  |  | 985 |  |  | 985 |  |  | — |
Maturity Date extension and interest rate reduction | 2 |  |  | 1,799 |  |  | 1,799 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Maturity date extension | 1 |  |  | 274 |  |  | 816 |  |  | 542 |  |  | 5 |  |  | 4,860 |  |  | 4,891 |  |  | 31 |
Commercial Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Maturity date extension | — |  |  | — |  |  | — |  |  | — |  |  | 5 |  |  | 1,357 |  |  | 1,302 |  |  | (55 | )
Residential mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Principal deferral | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 3,273 |  |  | 3,273 |  |  | — |
Chapter 7 bankruptcy(2) | 2 |  |  | 181 |  |  | 32 |  |  | (149 | ) |  | 7 |  |  | 439 |  |  | 433 |  |  | (6 | )
Maturity date extension | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 483 |  |  | 483 |  |  | — |
Maturity date extension and interest rate reduction | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 280 |  |  | 280 |  |  | — |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Principal deferral | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 47 |  |  | 46 |  |  | (1 | )
Chapter 7 bankruptcy(2) | 13 |  |  | 380 |  |  | 375 |  |  | (5 | ) |  | 16 |  |  | 481 |  |  | 470 |  |  | (11 | )
Maturity date extension and interest rate reduction | 1 |  |  | 173 |  |  | 120 |  |  | (53 | ) |  | 1 |  |  | 130 |  |  | 128 |  |  | (2 | )
Maturity date extension | 1 |  |  | 231 |  |  | 231 |  |  | — |  |  | 4 |  |  | 274 |  |  | 272 |  |  | (2 | )
Installment and other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Chapter 7 bankruptcy(2) | 10 |  |  | 237 |  |  | 220 |  |  | (17 | ) |  | 2 |  |  | 16 |  |  | 13 |  |  | (3 | )
Total by Concession Type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Principal deferral | 2 |  |  | 529 |  |  | 529 |  |  | — |  |  | 8 |  |  | 9,026 |  |  | 6,574 |  |  | (2,452 | )
Chapter 7 bankruptcy(2) | 25 |  |  | 798 |  |  | 627 |  |  | (171 | ) |  | 26 |  |  | 1,645 |  |  | 1,597 |  |  | (48 | )
Interest rate reduction | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 250 |  |  | 248 |  |  | (2 | )
Maturity date extension and interest rate reduction | 3 |  |  | 1,972 |  |  | 1,919 |  |  | (53 | ) |  | 2 |  |  | 410 |  |  | 408 |  |  | (2 | )
Maturity date extension | 3 |  |  | 905 |  |  | 1,447 |  |  | 542 |  |  | 15 |  |  | 6,974 |  |  | 6,948 |  |  | (26 | )
Total | 33 |  |  | $ | 4,204 |  |  | $ | 4,522 |  |  | $ | 318 |  |  | 52 |  |  | $ | 18,305 |  |  | $ | 15,775 |  |  | $ | (2,530 | )
(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, 2017, we modified one CRE loan totaling $1.0 million that was not considered to be a TDR. For the nine months ended September 30, 2017, we modified 13 loans totaling $11.8 million of which nine were C&I loans totaling $10.3 million and four CRE loans totaling $1.5 million that were not considered to be TDRs. The 2017 modifications primarily represented insignificant delays in the timing of payments, concessions where we were adequately compensated through principal pay downs, fees or additional collateral or we concluded that no concession was granted. These modifications compare to 12 C&I loans totaling $16.9 million and one CRE loan totaling $1.9 million for the three months ended September 30, 2016 and 15 C&I loans totaling $25.6 million and two CRE loans totaling $2.5 million for the nine months ended September 30, 2016 that were not considered to be TDRs. The 2016 modifications were administrative extensions of maturity dates that were determined not to be a concession. As of September 30, 2017, we had no 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. There were no TDRs that defaulted during the three and nine months ended September 30, 2017 and September 30, 2016. The following table is a summary of nonperforming assets as of the dates presented:
| Nonperforming Assets
(dollars in thousands) | September 30, 2017 |  | December 31, 2016
Nonperforming Assets |  |  |
Nonaccrual loans | $ | 19,290 |  |  | $ | 31,037 |
Nonaccrual TDRs | 10,203 |  |  | 11,598 |
Total nonaccrual loans | 29,493 |  |  | 42,635 |
OREO | 1,033 |  |  | 679 |
Total Nonperforming Assets | $ | 30,526 |  |  | $ | 43,314 |

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