
($ in thousands)	December 31, 2021		December 31, 2020
Commercial and industrial	$	3,396,590	$	3,100,299
Real estate loans:
Commercial - investor owned	2,141,143		1,589,419
Commercial - owner occupied	2,035,785		1,498,408
Construction and land development	734,073		546,686
Residential	454,052		319,179
Total real estate loans	5,365,053		3,953,692
Other	265,137		187,083
Loans, before unearned loan fees	9,026,780		7,241,074
Unearned loan fees, net	(9,138)		(16,139)
Loans, including unearned loan fees	$	9,017,642	$	7,224,935

PPP loans totaled $276.2 million at December 31, 2021, or $272.0 million net of unearned fees of $4.2 million. PPP loans totaled $709.9 million at December 31, 2020, or $698.6 million net of unearned fees of $11.3 million. The loan balance includes a net premium on acquired loans of $11.9 million and $16.1 million at December 31, 2021 and 2020, respectively. At December 31, 2021 loans of $2.5 billion were pledged to the FHLB and the Federal Reserve.

Loans to executive officers and directors, or to entities in which such individuals had beneficial interests as a shareholder, officer, or director totaled $5.7 million for each year ended December 31, 2021 and 2020. Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers and did not involve more than the normal risk of collectibility.

A summary of the activity, by loan category, in the allowance for loan losses for 2019, excluding the allowance on PCI loans, and the ACL on loans for 2020 and 2021 is as follows:


($ in thousands)	Commercial and industrial		CRE - investor owned		CRE - owner occupied		Construction and land development		Residential real estate		Other		Total
Balance at December 31, 2019
Allowance for loan losses:
Balance, beginning of year	$	29,039	$	4,683	$	4,239	$	1,987	$	1,616	$	731	$	42,295
Provision for loan losses	4,801		1,708		673		(237)		(330)		67		6,682
Charge-offs	(6,882)		(551)		(58)		(54)		(667)		(382)		(8,594)
Recoveries	338		95		19		776		661		295		2,184
Balance, end of year	$	27,296	$	5,935	$	4,873	$	2,472	$	1,280	$	711	$	42,567

Balance at December 31, 2020
Allowance for loan losses:
Balance at December 31, 2019	$	27,296	$	5,935	$	4,873	$	2,472	$	1,280	$	711	$	42,567
PCI allowance at December 31, 2019	159		—		—		139		—		423		721
CECL adoption	6,494		10,726		2,598		5,183		3,470		(84)		28,387
PCD loans immediately charged off	—		(5)		(57)		(217)		(1,401)		—		(1,680)
Balance, beginning of year	$	33,949	$	16,656	$	7,414	$	7,577	$	3,349	$	1,050	$	69,995
Provision for loan losses	28,373		11,037		7,845		13,438		674		2,012		63,379
Initial allowance on acquired PCD loans	23		2,026		1,427		45		3		—		3,524
Charge-offs	(5,381)		(498)		(30)		(31)		(408)		(391)		(6,739)
Recoveries	1,848		2,841		356		384		967		116		6,512
Balance, end of year	$	58,812	$	32,062	$	17,012	$	21,413	$	4,585	$	2,787	$	136,671

Balance at December 31, 2021
Allowance for credit losses:
Balance, beginning of year	$	58,812	$	32,062	$	17,012	$	21,413	$	4,585	$	2,787	$	136,671
Provision (benefit) for loan losses	14,361		568		(550)		(7,365)		3,900		2,079		12,993
Initial allowance on acquired PCD loans	1,077		3,651		1,504		37		—		737		7,006
Charge-offs	(12,113)		(2,487)		(602)		(3)		(1,521)		(459)		(17,185)
Recoveries	1,688		2,083		196		454		963		172		5,556
Balance, end of year	$	63,825	$	35,877	$	17,560	$	14,536	$	7,927	$	5,316	$	145,041

The ACL on sponsor finance loans, which is included in the categories above, represented $18.2 million and $19.0 million as of December 31, 2021 and 2020, respectively.

On January 1, 2020, the Company adopted the CECL methodology which added $28.4 million to the ACL on loans. Upon adoption, $1.7 million of nonaccrual PCD loans with individual outstanding balances of less than $100,000 were immediately charged-off. Under the CECL method, the Company recorded $13.0 million and $63.4 million in provision for credit losses on loans for the years ended December 31, 2021 and 2020, respectively. An additional provision for credit losses of $0.4 million and $2.0 million was recorded in 2021 and 2020, respectively, for HTM securities, unfunded commitments and the recapture of accrued interest on nonaccrual loans. In 2019, a $6.7 million provision for loan losses (excluding the allowance release on PCI loans) was recorded under the incurred loss method. Acquisition-related provision expense of $25.4 million and $8.6 million in 2021 and 2020, respectively, was included in the provision for credit losses. This expense, commonly referred to as the “CECL double-count”, is recognized when a loan portfolio is acquired.

The CECL methodology incorporates various economic scenarios. The Company utilizes three forecasts in the model; Moody’s baseline, a stronger near-term growth upside and a moderate recession downside forecast. The Company weights these scenarios at 40%, 30%, and 30%, respectively, which added approximately $17.5 million to the ACL over the baseline model. These forecasts incorporate an expectation that government stimulus will decline, the Federal Reserve will wind down quantitative easing and begin raising the federal funds rate, and that the

pandemic will begin to slowly recede. The Company has also recognized the risk posed by loans that have received multiple deferrals of principal and interest payments, including the hospitality sector, by allocating additional reserves to those segments. Some of the key risks to the forecasts that could result in future provision for credit losses are additional shutdowns and self-quarantines from another significant wave of COVID, continued or worsening supply-chain issues, labor supply and job growth worsens, or financial market conditions tighten.

In addition to the CECL methodology, the Company incorporates qualitative adjustments into the ACL on loans to capture credit risks inherent within the loan portfolio that are not captured in the DCF model. Included in these risks are 1) changes in lending policies and procedures, 2) actual and expected changes in business and economic conditions, 3) changes in the nature and volume of the portfolio, 4) changes in lending management, 5) changes in volume and the severity of past due loans, 6) changes in the quality of the loan review system, 7) changes in the value of underlying collateral, 8) the existence and effect of concentrations of credit and 9) other factors such as the regulatory, legal and competitive environments and events such as natural disasters and pandemics. At December 31, 2021, the ACL on loans included a qualitative adjustment of approximately $39.1 million. Of this amount, approximately $8.6 million was allocated to Sponsor Finance loans due to their unsecured nature.

The recorded investment in nonperforming loans by category at December 31, 2021 and 2020 is as follows:


	December 31, 2021
($ in thousands)	Non-accrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans		Nonaccrual loans with no allowance
Commercial and industrial	$	17,052	$	2,783	$	1,703	$	21,538	$	5,685
Real estate:
Commercial - investor owned	1,575		—		—		1,575		168
Commercial - owner occupied	2,839		—		—		2,839		2,550

Residential	1,971		76		1		2,048		1,348
Other	12		—		12		24		—
Total	$	23,449	$	2,859	$	1,716	$	28,024	$	9,751


	December 31, 2020
($ in thousands)	Non-accrual		Restructured, accruing		Loans over 90 days past due and still accruing interest		Total nonperforming loans		Nonaccrual loans with no allowance
Commercial and industrial	$	18,158	$	3,482	$	130	$	21,770	$	8,316
Real estate:
Commercial - investor owned	9,579		—		—		9,579		716
Commercial - owner occupied	2,940		—		—		2,940		6,024

Residential	4,112		77		—		4,189		—
Other	29		—		—		29		3,190
Total	$	34,818	$	3,559	$	130	$	38,507	$	18,246

The amortized cost basis of collateral-dependent nonperforming loans by class of loan is presented for the periods indicated:


	December 31, 2021
	Type of Collateral
(in thousands)	Commercial Real Estate		Residential Real Estate		Blanket Lien
Commercial and industrial	$	4,271	$	209	$	9,312
Real estate:
Commercial - investor owned	169		1,200		—
Commercial - owner occupied	2,807		32		—

Residential	—		2,048		—

Total	$	7,247	$	3,489	$	9,312


	December 31, 2020
	Type of Collateral
(in thousands)	Commercial Real Estate		Residential Real Estate		Blanket Lien		Other
Commercial and industrial	$	8,316	$	—	$	394	$	—
Real estate:
Commercial - investor owned	9,579		—		—		—
Commercial - owner occupied	2,940		—		—		—

Residential	—		4,135		—		—
Other	—		—		—		17
Total	$	20,835	$	4,135	$	394	$	17

The recorded investment by category for loans restructured during the years ended December 31, 2021 and 2020 is as follows:


	Year ended December 31, 2021					Year ended December 31, 2020
($ in thousands, except for number of loans)	Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Number of Loans	Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial and industrial	—	$	—	$	—	3	$	7,447	$	7,447
Real estate:



Residential	1	221		221		3	372		372

Total	1	$	221	$	221	6	$	7,819	$	7,819

Restructured loans primarily resulted from interest rate concessions. As of December 31, 2021, the Company allocated an immaterial amount in specific reserves to loans that have been restructured.

Loans restructured that subsequently defaulted during the year ended December 31, 2021 are as follows:

Year ended December 31, 2021

($ in thousands, except for number of loans)

Number of Loans

Recorded Balance

Real Estate:

Residential

148

There were no restructured loans that subsequently defaulted during the year ended December 31, 2020.

In response to the COVID-19 pandemic, the Company implemented short-term deferral programs allowing customers to primarily defer payments for up to 90 days. Deferrals under the CARES Act or interagency guidance are not included above as troubled debt restructurings. As of December 31, 2021, substantially all of these loans have returned to a current payment status.

The aging of the recorded investment in past due loans by class and category at December 31, 2021 and 2020 is shown below:


	December 31, 2021
($ in thousands)	30-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total
Commercial and industrial	$	24,447	$	14,158	$	38,605	$	3,353,770	$	3,392,375
Real estate:
Commercial - investor owned	3,880		—		3,880		2,137,263		2,141,143
Commercial - owner occupied	10,070		289		10,359		2,025,426		2,035,785
Construction and land development	24		—		24		734,049		734,073
Residential	3,181		1,305		4,486		449,566		454,052
Other	37		11		48		260,166		260,214
Total	$	41,639	$	15,763	$	57,402	$	8,960,240	$	9,017,642


	December 31, 2020
($ in thousands)	30-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total
Commercial and industrial	$	8,652	$	12,928	$	21,580	$	3,067,415	$	3,088,995
Real estate:
Commercial - investor owned	734		9,301		10,035		1,579,384		1,589,419
Commercial - owner occupied	328		4,647		4,975		1,493,433		1,498,408
Construction and land development	13		—		13		546,673		546,686
Residential	2,071		2,118		4,189		314,990		319,179
Other	1,731		50		1,781		180,467		182,248
Total	$	13,529	$	29,044	$	42,573	$	7,182,362	$	7,224,935

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

•Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry.

•Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow.

•Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow.

•Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating.

•Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated, due to strong collateral and/or guarantor support.

•Grade 8 – Substandard credits will include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted.

•Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on non-accrual.

The recorded investment by risk category of the loans by class and year of origination is presented in the following tables as of the dates indicated:


	December 31, 2021
	Term Loans by Origination Year
(in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Converted to Term Loans		Revolving Loans		Total
Commercial and industrial
Pass (1-6)	$	1,180,601	$	477,374	$	317,869	$	132,851	$	116,738	$	82,846	$	11,648	$	854,102	$	3,174,029
Watch (7)	35,005		17,502		9,404		9,880		12,217		10,979		4,037		53,595		152,619
Classified (8-9)	14,917		3,530		3,840		1,689		2,988		813		787		10,996		39,560
Total Commercial and industrial	$	1,230,523	$	498,406	$	331,113	$	144,420	$	131,943	$	94,638	$	16,472	$	918,693	$	3,366,208

Commercial real estate-investor owned
Pass (1-6)	$	651,740	$	476,946	$	346,245	$	146,107	$	112,043	$	217,808	$	3,625	$	68,236	$	2,022,750
Watch (7)	16,871		35,908		32,755		1,003		502		17,478		300		2,062		106,879
Classified (8-9)	1,376		3,135		835		817		1,159		4,141		—		50		11,513
Total Commercial real estate-investor owned	$	669,987	$	515,989	$	379,835	$	147,927	$	113,704	$	239,427	$	3,925	$	70,348	$	2,141,142

Commercial real estate-owner occupied
Pass (1-6)	$	604,975	$	423,263	$	278,830	$	164,210	$	140,515	$	235,973	$	250	$	48,349	$	1,896,365
Watch (7)	12,825		13,585		4,301		16,774		10,274		15,764		—		300		73,823
Classified (8-9)	2,048		556		9,181		17,016		6,432		6,959		—		—		42,192
Total Commercial real estate-owner occupied	$	619,848	$	437,404	$	292,312	$	198,000	$	157,221	$	258,696	$	250	$	48,649	$	2,012,380

Construction real estate
Pass (1-6)	$	310,140	$	229,396	$	70,531	$	35,936	$	14,860	$	7,180	$	568	$	2,992	$	671,603
Watch (7)	28,947		15,348		60		1,199		11,068		2,330		—		—		58,952
Classified (8-9)	—		—		387		419		—		22		—		—		828
Total Construction real estate	$	339,087	$	244,744	$	70,978	$	37,554	$	25,928	$	9,532	$	568	$	2,992	$	731,383

Residential real estate
Pass (1-6)	$	116,352	$	66,481	$	21,356	$	14,841	$	24,778	$	103,840	$	9,980	$	87,146	$	444,774
Watch (7)	2,425		2		622		1,157		248		1,305		—		79		5,838
Classified (8-9)	414		169		554		—		12		2,024		—		—		3,173
Total residential real estate	$	119,191	$	66,652	$	22,532	$	15,998	$	25,038	$	107,169	$	9,980	$	87,225	$	453,785

Other
Pass (1-6)	$	108,209	$	68,806	$	22,684	$	23,145	$	6,924	$	13,832	$	1,500	$	9,166	$	254,266
Watch (7)	—		—		—		4		—		2,440		—		1		2,445
Classified (8-9)	—		—		10		10		—		16		—		2		38
Total Other	$	108,209	$	68,806	$	22,694	$	23,159	$	6,924	$	16,288	$	1,500	$	9,169	$	256,749

Total loans classified by risk category	$	3,086,845	$	1,832,001	$	1,119,464	$	567,058	$	460,758	$	725,750	$	32,695	$	1,137,076	$	8,961,647
Total loans classified by performing status																	55,995
Total loans																	$	9,017,642


	December 31, 2020
	Term Loans by Origination Year
(in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Converted to Term Loans		Revolving Loans		Total
Commercial and industrial
Pass (1-6)	$	1,402,276	$	454,729	$	262,258	$	132,832	$	25,057	$	58,315	$	14,118	$	527,170	$	2,876,755
Watch (7)	44,922		15,369		9,585		7,509		19,613		110		—		60,448		157,556
Classified (8-9)	6,602		9,219		3,115		3,964		4,490		1,080		1,281		22,432		52,183
Total Commercial and industrial	$	1,453,800	$	479,317	$	274,958	$	144,305	$	49,160	$	59,505	$	15,399	$	610,050	$	3,086,494

Commercial real estate-investor owned
Pass (1-6)	$	481,867	$	338,843	$	189,305	$	131,718	$	138,288	$	161,439	$	6,509	$	32,058	$	1,480,027
Watch (7)	32,308		19,722		6,656		—		9,647		17,370		—		—		85,703
Classified (8-9)	—		5,278		8,716		5,830		1,245		2,620		—		—		23,689
Total Commercial real estate-investor owned	$	514,175	$	363,843	$	204,677	$	137,548	$	149,180	$	181,429	$	6,509	$	32,058	$	1,589,419

Commercial real estate-owner occupied
Pass (1-6)	$	419,142	$	287,001	$	215,181	$	179,382	$	104,470	$	167,456	$	2,672	$	45,323	$	1,420,627
Watch (7)	13,657		5,257		3,113		6,198		4,338		8,460		1,776		941		43,740
Classified (8-9)	2,420		7,427		5,822		6,140		1,309		10,860		—		63		34,041
Total Commercial real estate-owner occupied	$	435,219	$	299,685	$	224,116	$	191,720	$	110,117	$	186,776	$	4,448	$	46,327	$	1,498,408

Construction real estate
Pass (1-6)	$	223,069	$	156,360	$	45,460	$	18,579	$	11,539	$	9,144	$	—	$	28,880	$	493,031
Watch (7)	2,544		86		34,179		11,632		—		2,499		—		—		50,940
Classified (8-9)	56		2,124		503		1		—		31		—		—		2,715
Total Construction real estate	$	225,669	$	158,570	$	80,142	$	30,212	$	11,539	$	11,674	$	—	$	28,880	$	546,686

Residential real estate
Pass (1-6)	$	57,059	$	27,907	$	17,718	$	17,138	$	27,443	$	92,657	$	1,172	$	66,902	$	307,996
Watch (7)	210		840		526		—		514		1,603		287		511		4,491
Classified (8-9)	571		733		121		14		898		3,181		—		253		5,771
Total residential real estate	$	57,840	$	29,480	$	18,365	$	17,152	$	28,855	$	97,441	$	1,459	$	67,666	$	318,258

Other
Pass (1-6)	$	43,526	$	28,195	$	30,074	$	9,646	$	5,641	$	17,027	$	—	$	40,779	$	174,888
Watch (7)	—		1		8		—		—		2,637		—		1		2,647
Classified (8-9)	—		18		19		13		—		17		8		4		79
Total Other	$	43,526	$	28,214	$	30,101	$	9,659	$	5,641	$	19,681	$	8	$	40,784	$	177,614

Total loans classified by risk category	$	2,730,229	$	1,359,109	$	832,359	$	530,596	$	354,492	$	556,506	$	27,823	$	825,765	$	7,216,879
Total loans classified by performing status																	8,056
Total loans																	$	7,224,935

In the tables above, loan originations in 2021 and 2020 with a classification of watch or classified primarily represent renewals or modifications initially underwritten and originated in prior years.

For certain loans, primarily credit cards, the Company evaluates credit quality based on the aging status.

The following tables present the recorded investment on loans based on aging status:


	December 31, 2021
(in thousands)	Performing		Non Performing		Total
Commercial and industrial	$	26,166	$	1	$	26,167
Real estate:
Commercial - investor owned	1		—		1
Commercial - owner occupied	23,405		—		23,405
Construction and land development	2,690		—		2,690
Residential	267		—		267
Other	3,453		12		3,465
Total	$	55,982	$	13	$	55,995


	December 31, 2020
(in thousands)	Performing		Non Performing		Total
Commercial and industrial	$	2,502	$	—	$	2,502
Real estate:



Residential	921		—		921
Other	4,612		21		4,633
Total	$	8,035	$	21	$	8,056

The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:


($ in thousands)	At July 21, 2021
Par value of acquired loans	$	180,440
Allowance for credit losses	(7,006)
Non-credit discount	(6,428)
Purchase price of acquired loans	$	167,006