XML 30 R17.htm IDEA: XBRL DOCUMENT v3.20.4
Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
ALLOWANCE FOR CREDIT LOSSES ALLOWANCE FOR CREDIT LOSSES
We maintain an ACL at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date. We develop and document a systematic ACL methodology based on the following portfolio segments: 1) CRE, 2) C&I, 3) Commercial Construction, 4) Business Banking, 5) Consumer Real Estate and 6) Other Consumer.
The following are key risks within each portfolio segment:
CRE—Loans secured by commercial purpose real estate, including both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The primary sources of repayment for these loans are the operations of the individual projects and global cash flows of the debtors. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee, if the project is not owner-occupied.
C&I—Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The primary source of repayment for these loans is cash flow from the operations of the company. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. Collateral for these types of loans often does not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt.
Commercial Construction—Loans made to finance construction of buildings or other structures, as well as to finance the
acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.
Business Banking—Commercial loans made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards that meet small business market customers’ needs. The business banking portfolio is monitored by utilizing a standard and closely managed process focusing on behavioral and performance criteria. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and business.
Consumer Real Estate—Loans secured by first and second liens such as home equity loans, home equity lines of credit and 1-4 family residential mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.
Other Consumer—Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes auto loans, unsecured loans and lines and credit cards. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.
Management monitors various credit quality indicators for the commercial, business banking and consumer loan portfolios, including changes in risk ratings, nonperforming status and delinquency on a monthly basis.
We monitor the commercial loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans within the pass rating generally have a lower risk of loss than loans risk rated as special mention or substandard.
Our risk ratings are consistent with regulatory guidance and are as follows:
Pass—The loan is currently performing and is of high quality.
Special Mention—A special mention loan has potential weaknesses that warrant management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects or in the strength of our credit position at some future date.
Substandard—A substandard loan is not adequately protected by the net worth and/or paying capacity of the borrower or by the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.
Doubtful—Loans classified doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.
The following table presents loan balances by year of origination and internally assigned risk rating for our portfolio segments as of December 31, 2020:
Risk Rating
(dollars in thousands)202020192018201720162015 and PriorRevolvingRevolving-TermTotal
Commercial Real Estate
Pass$334,086 $422,800 $394,963 $277,724 $307,321 $615,217 $46,330 — $2,398,441 
Special Mention— 35,499 10,200 22,502 55,174 75,022 — — 198,397 
Substandard— 17,259 12,781 19,914 50,700 83,792 1,500 — 185,946 
Doubtful— 645 — — 1,989 6,529 — — 9,163 
Total Commercial Real Estate334,086 476,203 417,944 320,140 415,184 780,560 47,830 — 2,791,947 
Commercial and Industrial
Pass454,131 199,453 140,049 68,607 27,645 206,782 383,082 — 1,479,749 
Special Mention3,697 8,211 2,628 697 768 1,046 23,527 — 40,574 
Substandard— 7,793 2,613 8,544 75 13,781 2,022 — 34,828 
Doubtful— — — 4,401 — — — — 4,401 
Total Commercial and Industrial457,828 215,457 145,290 82,249 28,488 221,609 408,631 — 1,559,552 
Commercial Construction
Pass131,235 224,794 59,649 2,420 6,346 4,555 12,778 — 441,777 
Special Mention1,578 2,533 3,886 — — 8,593 — — 16,590 
Substandard— 3,580 — 501 — 3,629 — — 7,710 
Doubtful— — — — — — — — — 
Total Commercial Construction132,813 230,907 63,535 2,921 6,346 16,777 12,778 — 466,077 
Business Banking
Pass296,254 154,335 123,207 86,552 77,238 266,042 103,571 291 1,107,490 
Special Mention— 1,060 1,147 1,602 1,084 6,866 637 123 12,519 
Substandard103 1,078 3,896 3,209 3,880 25,871 1,341 680 40,058 
Doubtful— — — — — — — — — 
Total Business Banking296,357 156,473 128,250 91,363 82,202 298,779 105,549 1,094 1,160,067 
Consumer Real Estate
Pass120,736 122,171 67,700 63,653 73,805 243,939 438,888 22,667 1,153,559 
Special Mention— — 1,489 — — 150 132 — 1,771 
Substandard— 373 742 1,480 2,449 6,958 — — 12,002 
Doubtful— — — — — — — — — 
Total Consumer Real Estate120,736 122,544 69,931 65,133 76,254 251,047 439,020 22,667 1,167,332 
Other consumer
Pass18,849 13,162 6,784 3,395 2,082 687 26,647 2,767 74,373 
Special Mention— — — — — — — — — 
Substandard15 — — — — 3,367 744 2,386 6,512 
Doubtful— — — — — — — — — 
Total Other Consumer18,864 13,162 6,784 3,395 2,082 4,054 27,391 5,153 80,885 
Total Loan Balance$1,360,684 $1,214,746 $831,734 $565,201 $610,556 $1,572,826 $1,041,199 $28,914 $7,225,860 
We monitor the delinquent status of the commercial and consumer portfolios on a monthly basis. Loans are considered nonperforming when interest and principal are 90 days or more past due or management has determined that a material deterioration in the borrower’s financial condition exists. The risk of loss is generally highest for nonperforming loans.
The following table presents loan balances by year of origination and performing and nonperforming status for our portfolio segments as of December 31, 2020:
(dollars in thousands)202020192018201720162015 and PriorRevolvingRevolving-TermTotal
Commercial Real Estate
Performing$334,086 $459,799 $417,944 $313,465 $394,972 $722,782 $47,830 $— $2,690,879 
Nonperforming— 16,404 — 6,675 20,212 57,778 — — 101,070 
Total Commercial Real Estate334,086 476,203 417,944 320,140 415,184 780,560 47,830 — 2,791,947 
Commercial and Industrial
Performing457,828 214,144 143,706 69,411 28,426 220,701 408,350 — 1,542,566 
Nonperforming— 1,313 1,584 12,838 62 908 281 — 16,985 
Total Commercial and Industrial457,828 215,457 145,290 82,249 28,488 221,609 408,631 — 1,559,552 
Commercial Construction
Performing132,813 230,907 63,535 2,921 6,346 16,393 12,778 — 465,692 
Nonperforming— — — — — 384 — — 384 
Total Commercial Construction132,813 230,907 63,535 2,921 6,346 16,777 12,778 — 466,077 
Business Banking
Performing296,327 156,164 126,432 90,414 80,106 286,970 105,494 1,037 1,142,944 
Nonperforming30 309 1,818 949 2,096 11,809 55 57 17,123 
Total Business Banking296,357 156,473 128,250 91,363 82,202 298,779 105,549 1,094 1,160,067 
Consumer Real Estate
Performing120,736 122,315 69,225 63,647 74,690 245,331 438,702 21,572 1,156,216 
Nonperforming— 229 706 1,486 1,564 5,716 318 1,096 11,116 
Total Consumer Real Estate120,736 122,544 69,931 65,133 76,254 251,047 439,020 22,667 1,167,332 
Other Consumer
Performing18,864 13,162 6,784 3,395 2,082 3,958 27,391 5,153 80,789 
Nonperforming— — — — — 96 — — 96 
Total Other Consumer18,864 13,162 6,784 3,395 2,082 4,054 27,391 5,153 80,885 
Performing1,360,654 1,196,491 827,625 543,253 586,622 1,496,135 1,040,544 27,762 7,079,086 
Nonperforming30 18,254 4,108 21,948 23,934 76,691 654 1,153 146,774 
Total Loan Balance$1,360,684 $1,214,746 $831,734 $565,201 $610,556 $1,572,826 $1,041,199 $28,914 $7,225,860 
The following tables present the age analysis of past due loans segregated by class of loans as of the dates presented:
December 31, 2020(2)
(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due
90 Days + Past Due(1)
Non-
performing		Total
Past Due
Loans		Total Loans
Commercial real estate$2,690,877 $— $— $— $101,070 $101,070 $2,791,947 
Commercial and industrial1,542,567 — — — 16,985 16,985 1,559,552 
Commercial construction462,094 19 3,580 — 384 3,983 466,077 
Business banking1,140,581 1,614 379 371 17,122 19,486 1,160,067 
Consumer real estate1,153,028 1,087 1,968 132 11,117 14,304 1,167,332 
Other consumer80,583 168 37 — 96 302 80,885 
Total$7,069,730 $2,888 $5,965 $503 $146,774 $156,130 $7,225,860 
(1) Represents acquired loans that were recorded at fair value at the acquisition date and remain performing at December 31, 2020.
(2) We had 52 loans that were modified totaling $195.6 million under the CARES Act at December 31, 2020. These customers were not considered past due as a result of their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Due to the modification program, this delinquency table may not accurately reflect the credit risk associated with these loans.
December 31, 2019
(dollars in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days + Past DueNon-
performing		Total
Past Due
Loans		Total Loans
Commercial real estate$3,025,505 $7,749 $71 $911 $25,356 $34,087 $3,059,592 
Commercial and industrial1,466,460 126 1,589 1,443 10,911 14,069 1,480,529 
Commercial construction367,204 956 1,163 — 737 2,856 370,060 
Business banking830,735 5,093 1,099 — 9,863 16,055 846,790 
Consumer real estate1,283,591 2,620 1,758 1,175 6,063 11,616 1,295,207 
Other consumer81,866 1,448 305 228 1,127 3,108 84,974 
Total$7,055,361 $17,992 $5,985 $3,757 $54,057 $81,791 $7,137,152 

The following table presents loans on nonaccrual status and loans past due 90 days or more and still accruing by class of loan:
December 31, 2020
December 31, 2020For the twelve months ended
(dollars in thousands)Beginning of Period NonaccrualEnd of Period Nonaccrual Nonaccrual With No Related AllowancePast Due 90+ Days Still Accruing
Interest Income Recognized on Nonaccrual(1)
Commercial real estate$25,356 $101,070 $60,401 $— $22 
Commercial and industrial10,911 16,985 6,436 — 101 
Commercial construction737 384 285 — — 
Business banking9,863 17,122 3,890 371 275 
Consumer real estate6,063 11,117 398 132 423 
Other consumer1,127 96 — — 4 
Total$54,057 $146,774 $71,410 $503 $826 
(1) Represents only cash payments received and applied to interest on nonaccrual loans.
The following table presents collateral-dependent loans by class of loan:
December 31, 2020
Type of Collateral
(dollars in thousands)Real EstateBlanket LienInvestment/CashOther
Commercial real estate$100,450 $— $— $— 
Commercial and industrial1,040 15,080 — — 
Commercial construction3,552 — — — 
Business banking3,085 1,619 — 689 
Consumer real estate398 — — — 
Total$108,525 $16,699 $— $689 
The following table presents activity in the ACL for year ended December 31, 2020:
 
Twelve Months Ended December 31, 2020
(dollars in thousands)Commercial
Real Estate
Commercial and
Industrial (2)
Commercial
Construction
Business Banking(1)
Consumer
Real Estate		Other
Consumer		Total
Loans
Allowance for credit losses on loans:
Balance at beginning of period$30,577 $15,681 $7,900 $— $6,337 $1,729 $62,224 
Impact of CECL adoption4,810 7,853 (3,376)12,898 4,525 636 27,346 
Provision for credit losses on loans56,489 65,288 2,986 5,303 (368)1,723 131,421 
Charge-offs(26,460)(74,282)(454)(2,612)(667)(1,890)(106,365)
Recoveries240 1,560 183 328 187 488 2,986 
Net (Charge-offs)/Recoveries(26,220)(72,722)(271)(2,284)(480)(1,402)(103,379)
Balance at End of Period$65,656 $16,100 $7,239 $15,917 $10,014 $2,686 $117,612 
(1) In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the
allowance under CECL. Our new segmentation breaks out business banking loans from our other loan segments: CRE, C&I, commercial construction, consumer real estate and other consumer. The business banking allowance balance at the beginning of period is included in the other segments and reclassified to business banking through the impact of CECL adoption line.
(2) During the three months ended June 30, 2020, we experienced a pre-tax loss of $58.7 million related to a customer fraud resulting from a check kiting scheme.

The adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments resulted in an increase to our ACL of $27.4 million on January 1, 2020. The increase included $8.2 million for S&T legacy loans and $9.3 million for acquired loans from the DNB merger. We also recorded a day one adjustment of $9.9 million primarily related to a C&I relationship that was charged off in the first quarter of 2020. We obtained information on the relationship subsequent to filing our December 31, 2019 10-K, but before the end of the first quarter of 2020. The updated information supported a loss existed at January 1, 2020.
We recognized a charge-off of $58.7 million related to a customer fraud from a check kiting scheme during the second quarter of 2020. The fraud was perpetrated by a single business customer and the customer has plead guilty in an ongoing criminal investigation. We continue to pursue all available sources of recovery to mitigate the loss. The customer also had a lending relationship of $14.8 million, including a $14.0 million commercial real estate loan and an $0.8 million line of credit which resulted in an additional $8.9 million charge-off in 2020. At December 31, 2020, $5.9 million remains outstanding as a nonperforming loan that has been fully charged down to the estimated sale price of the collateral.
The impact of COVID-19 was captured in our quantitative reserve as certain impacted loans were downgraded to special mention and substandard and in our qualitative reserve through our economic forecast and other qualitative adjustments. Commercial special mention, substandard and doubtful loans increased $281 million to $571 million compared to $290 million at December 31, 2019, with an increase of $162 million in substandard loans, $113 million in special mention loans and $11.4 million in doubtful loans. The increase in both special mention and substandard loans was mainly due to downgrades in our hotel portfolio. Specific reserves on loans individually assessed increased $11.3 million to $13.5 million compared to $2.2 million in 2019. Included in the $13.5 million of specific reserves was $6.7 million for loans in our hotel portfolio. Specific reserves for hotels were based on liquidation values from appraisals received in the fourth quarter of 2020. Our qualitative reserve increased $14.1 million in 2020 which included $8.6 million for the economic forecast, $3.2 million for portfolio allocations made in our hotel, business banking and C&I portfolios due to the COVID-19 pandemic, and $2.3 million for current conditions. The change in reserve attributed to the economic forecast reflected reductions in the second and third quarters due to an improved economic forecast. Our forecast covers a period of two years and is driven primarily by national unemployment data. The change attributed to the portfolio allocations was primarily due to $3.0 million of ACL added for our business banking portfolio.
The C&I portfolio included $465.0 million of loans originated under the PPP at December 31, 2020. The loans are 100 percent guaranteed by the SBA, therefore, we have not assigned any ACL to these loans at December 31, 2020.
Prior to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, we calculated our allowance for loan losses using an incurred loan loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods.
The following table presents the recorded investment in commercial loan classes by internally assigned risk ratings as of the date presented:
December 31, 2019
(dollars in thousands)Commercial
Real Estate		% of
Total		Commercial
and Industrial		% of
Total		Commercial
Construction		% of
Total		Total% of
Total
Pass$3,270,437 95.7 %$1,636,314 95.1 %$347,324 92.5 %$5,254,056 95.3 %
Special mention57,285 1.7 %36,484 2.1 %10,109 2.7 %103,878 1.9 %
Substandard86,772 2.5 %47,980 2.8 %17,899 4.8 %152,651 2.8 %
Doubtful2,023 0.1 %55 — %133 — %2,211 — %
Total$3,416,518 100.0 %$1,720,833 100.0 %$375,445 100.0 %$5,512,796 100.0 %
The following table presents the recorded investment in consumer loan classes by performing and nonperforming status as of the date presented:
December 31, 2019
(dollars in
thousands)		Residential
Mortgage		% of
Total		Home
Equity		% of
Total		Installment
and other
consumer		% of
Total		Consumer
Construction		% of
Total		Total% of
Total
Performing$991,066 99.2 %$535,709 99.5 %$78,993 99.9 %$8,390 100.0 %$1,614,158 99.4 %
Nonperforming7,519 0.8 %2,639 0.5 %40 0.1 %— — %10,198 0.6 %
Total$998,585 100.0 %$538,348 100.0 %$79,033 100.0 %$8,390 100.0 %$1,624,356 100.0 %

The following table presents investments in loans considered to be impaired and related information on those impaired loans as of December 31, 2019:
December 31, 2019
(dollars in thousands)Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With a related allowance recorded:
Commercial real estate$13,011 $14,322 $2,023 
Commercial and industrial10,001 10,001 55 
Commercial construction489 489 113 
Consumer real estate— — — 
Other consumer9 9 9 
Total with a Related Allowance Recorded23,510 24,821 2,200 
Without a related allowance recorded:
Commercial real estate34,909 40,201 — 
Commercial and industrial7,605 10,358 — 
Commercial construction1,425 2,935 — 
Consumer real estate7,884 8,445 — 
Other consumer4 11 — 
Total without a Related Allowance Recorded51,827 61,950 — 
Total:
Commercial real estate47,920 54,523 2,023 
Commercial and industrial17,606 20,359 55 
Commercial construction1,914 3,424 113 
Consumer real estate7,884 8,445 — 
Other consumer13 20 9 
Total$75,337 $86,771 $2,200 
The following table summarizes average recorded investment and interest income recognized on loans considered to be impaired for the year presented:
For the Year Ended
December 31, 2019
(dollars in thousands)Average
Recorded
Investment		Interest
Income
Recognized
With a related allowance recorded:
Commercial real estate$14,018 $— 
Commercial and industrial10,135 576 
Commercial construction489 — 
Consumer real estate— — 
Other consumer13 1 
Total with a Related Allowance Recorded24,655 577 
Without a related allowance recorded:
Commercial real estate35,739 943 
Commercial and industrial5,565 368 
Commercial construction1,831 131 
Consumer real estate8,190 397 
Other consumer7 — 
Total without a Related Allowance Recorded51,332 1,839 
Total:
Commercial real estate49,757 943 
Commercial and industrial15,700 944 
Commercial construction2,320 131 
Consumer real estate8,190 397 
Other consumer20 1 
Total$75,987 $2,416 
The following table details activity in the ALL for the period presented:
2019
(dollars in thousands)Commercial
Real Estate		Commercial
and Industrial		Commercial
Construction		Consumer
Real Estate		Other
Consumer		Total
Balance at beginning of year$33,707 $11,596 $7,983 $6,187 $1,523 $60,996 
Charge-offs(3,664)(8,928)(406)(1,353)(1,838)(16,189)
Recoveries137 1,388 5 637 377 2,544 
Net (Charge-offs)(3,527)(7,540)(401)(716)(1,461)(13,645)
Provision for loan losses397 11,625 318 866 1,667 14,873 
Balance at End of Year$30,577 $15,681 $7,900 $6,337 $1,729 $62,224 
Loans acquired in the DNB merger were recorded at fair value of $909.0 million with no carryover of the related ALL.
The following table presents the ALL and recorded investments in loans by category as of December 31:
2019
Allowance for Loan LossesPortfolio Loans
(dollars in thousands)Individually
Evaluated for
Impairment		Collectively
Evaluated for
Impairment		TotalIndividually
Evaluated for
Impairment		Collectively
Evaluated for
Impairment		Total
Commercial real estate$2,023 $28,554 $30,577 $47,920 $3,368,598 $3,416,518 
Commercial and industrial55 15,626 15,681 17,606 1,703,227 1,720,833 
Commercial construction113 7,787 7,900 1,914 373,531 375,445 
Consumer real estate— 6,337 6,337 7,884 1,537,439 1,545,323 
Other consumer9 1,720 1,729 13 79,020 79,033 
Total$2,200 $60,024 $62,224 $75,337 $7,061,815 $7,137,152