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Loans
 12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Loans LOANS
The following table presents a summary of loans by category:
 
($ in thousands)December 31, 2023December 31, 2022
Commercial and industrial$4,674,056 $3,859,964 
Real estate loans:
Commercial - investor owned2,452,402 2,357,820 
Commercial - owner occupied2,344,117 2,270,551 
Construction and land development760,122 611,565 
Residential371,995 395,537 
Total real estate loans5,928,636 5,635,473 
Other285,653 248,990 
Loans, before unearned loan fees10,888,345 9,744,427 
Unearned loan fees, net(4,227)(7,289)
    Loans, including unearned loan fees$10,884,118 $9,737,138 

The loan balance includes a net premium on acquired loans of $9.6 million and $11.9 million at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022 loans of $4.8 billion and $2.8 billion, respectively, were pledged to the FHLB and the Federal Reserve.

Consumer mortgage loans secured by residential real estate in process of foreclosure totaled $1.0 million at December 31, 2023. There were no consumer mortgage loans secured by residential real estate in process of foreclosure at December 31, 2022.

Loans to executive officers and directors, or to entities in which such individuals had beneficial interests as a shareholder, officer, or director totaled $0.1 million and $0.1 million for the year ended December 31, 2023 and 2022, respectively. Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers and did not involve more than the normal risk of collectibility.
A summary of the activity, by loan category, in the allowance for credit losses on loans for 2021, 2022, and 2023 is as follows:
($ in thousands)Commercial and industrialCRE - investor ownedCRE - owner occupiedConstruction and land developmentResidential real estateOtherTotal
Balance at December 31, 2021
Allowance for credit losses on loans:       
Balance, beginning of year$58,812 $32,062 $17,012 $21,413 $4,585 $2,787 $136,671 
Provision (benefit) for credit losses14,361 568 (550)(7,365)3,900 2,079 12,993 
Initial allowance on acquired PCD loans1,077 3,651 1,504 37 — 737 7,006 
Charge-offs(12,113)(2,487)(602)(3)(1,521)(459)(17,185)
Recoveries1,688 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 
Balance at December 31, 2022
Allowance for credit losses on loans:       
Balance, beginning of year$63,825 $35,877 $17,560 $14,536 $7,927 $5,316 $145,041 
Provision (benefit) for credit losses(6,121)46 4,867 (3,145)540 (397)(4,210)
Charge-offs(6,082)(478)(395)— (2,068)(370)(9,393)
Recoveries2,213 746 720 53 1,529 233 5,494 
Balance, end of year$53,835 $36,191 $22,752 $11,444 $7,928 $4,782 $136,932 
Balance at December 31, 2023
Allowance for credit losses on loans:       
Balance, beginning of year$53,835 $36,191 $22,752 $11,444 $7,928 $4,782 $136,932 
Provision (benefit) for credit losses38,308 (335)523 (1,300)(2,109)796 35,883 
Charge-offs(36,302)(4,869)— (9)(656)(1,379)(43,215)
Recoveries3,045 293 130 63 979 661 5,171 
Balance, end of year$58,886 $31,280 $23,405 $10,198 $6,142 $4,860 $134,771 

The Company recorded a provision for credit losses on loans of $35.9 million and a provision benefit for credit losses of $4.2 million for the years ended December 31, 2023 and 2022, respectively. An additional provision for credit losses of $0.7 million and $3.6 million was recorded in 2023 and 2022, respectively, for securities, unfunded commitments and accrued interest on nonaccrual loans. Acquisition-related provision expense of $25.4 million in 2021 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 $12.3 million to the ACL over the baseline model at December 31, 2023. The forecasts at the end of 2023 incorporate an expectation that the federal funds rate has peaked at the range of 5.25% to 5.50% and will begin falling in the latter half of 2024. It is also assumed that the bank failures in early 2023 were not an indication of a broader problem in the industry. The Company has also recognized various risks posed by loans in certain segments, including the commercial office 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 market reactions to the Federal Reserve policy actions that could push the economy into a recession, persistently higher inflation, tightening in the credit markets, and further weakness in the financial system.
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, 2023, the ACL on loans included a qualitative adjustment of $37.4 million. Of this amount, $15.2 million was allocated to Sponsor Finance loans due to their unsecured nature.

Gross charge-offs by loan class and year of origination is presented in the following table:
December 31, 2023
Term Loans by Origination Year
($ in thousands)20232022202120202019PriorRevolving Loans Converted to Term LoansRevolving LoansTotal
Commercial and industrial$600 $2,999 $1,940 $2,539 $— $— $12,533 $15,178 $35,789 
Real estate:
Commercial - investor owned— — 170 — 4,692 7 — — 4,869 
Construction and land development— — — — — 9 — — 9 
Residential— — — — — 480 176 — 656 
Other— 3 459 — — 319 12 — 793 
Total charge-offs by origination year$600 $3,002 $2,569 $2,539 $4,692 $815 $12,721 $15,178 $42,116 
Total gross charge-offs by performing status1,099 
Total gross charge-offs$43,215 

The following tables present the recorded investment in nonperforming loans by category, excluding government guaranteed balances: 
 
December 31, 2023
($ in thousands)Non-accrualRestructured, accruingLoans over 90 days past due and still accruing interestTotal nonperforming loansNonaccrual loans with no allowance
Commercial and industrial$7,641 $— $115 $7,756 $6,179 
Real estate:   
    Commercial - investor owned20,404 — — 20,404 19,466 
    Commercial - owner occupied12,972 — 363 13,335 9,010 
    Construction and land development1,205 — 64 1,269 464 
    Residential959 — — 959 959 
Other— — 5 5 — 
       Total$43,181 $— $547 $43,728 $36,078 
December 31, 2022
($ in thousands)Non-accrualRestructured, accruingLoans over 90 days past due and still accruing interestTotal nonperforming loansNonaccrual loans with no allowance
Commercial and industrial$4,373 $— $70 $4,443 $1,047 
Real estate: 
    Commercial - investor owned3,023 — — 3,023 — 
    Commercial - owner occupied1,177 — — 1,177 — 
    Construction and land development1,192 — — 1,192 1,192 
    Residential— 73 — 73 — 
Other1 — 72 73 — 
       Total$9,766 $73 $142 $9,981 $2,239 


The nonperforming loan balances at December 31, 2023 and December 31, 2022 exclude government guaranteed balances of $10.7 million and $6.7 million, respectively. Interest income recognized on nonaccrual loans was immaterial in the years ending December 31, 2021, 2022 and 2023.

Collateral-dependent nonperforming loans by class of loan is presented as of the dates indicated:

December 31, 2023
Type of Collateral
($ in thousands)Commercial Real EstateResidential Real EstateBlanket LienOther
Commercial and industrial$527 $1,864 $344 $3,445 
Real estate:
Commercial - investor owned19,467 — — — 
Commercial - owner occupied5,904 1,638 1,831 — 
Construction and land development528 741 — — 
Residential— 959 — — 
Total$26,426 $5,202 $2,175 $3,445 

December 31, 2022
Type of Collateral
($ in thousands)Commercial Real EstateResidential Real EstateBlanket Lien
Commercial and industrial$— $— $1,047 
Real estate:
Commercial - investor owned2,238 785 — 
Commercial - owner occupied1,177 — — 
Construction and land development— 1,192 — 
Residential— 73 — 
Total$3,415 $2,050 $1,047 
The aging of the recorded investment in past due loans by class and category is presented as of the dates indicated.
December 31, 2023
($ in thousands)30-89 Days
 Past Due		90 or More
Days
Past Due		Total
Past Due		CurrentTotal
Commercial and industrial$3,445 $9,037 $12,482 $4,661,574 $4,674,056 
Real estate:     
Commercial - investor owned1,905 18,395 20,300 2,432,102 2,452,402 
Commercial - owner occupied8,409 14,142 22,551 2,321,566 2,344,117 
Construction and land development770 1,908 2,678 757,444 760,122 
Residential1,620 959 2,579 369,416 371,995 
Other82 4 86 285,567 285,653 
Loans, before unearned loan fees16,231 44,445 60,676 10,827,669 10,888,345 
Unearned loan fees, net(4,227)
Total$10,884,118 

December 31, 2022
($ in thousands)30-89 Days
 Past Due		90 or More
Days
Past Due		Total
Past Due		CurrentTotal
Commercial and industrial$555 $2,373 $2,928 $3,857,036 $3,859,964 
Real estate: 
Commercial - investor owned— 1,135 1,135 2,356,685 2,357,820 
Commercial - owner occupied8,628 164 8,792 2,261,759 2,270,551 
Construction and land development9 1,192 1,201 610,364 611,565 
Residential1,227 — 1,227 394,310 395,537 
Other18 72 90 248,900 248,990 
Loans, before unearned loan fees10,437 4,936 15,373 9,729,054 9,744,427 
Unearned loan fees, net(7,289)
Total$9,737,138 

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default and loss given default model to determine the allowance for credit losses.

An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. The effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance.

The most common concession the Company provides to borrowers experiencing financial difficulty is a term extension. In limited circumstances, the Company may modify loans by providing principal forgiveness or an interest rate reduction. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as an interest rate reduction or principal forgiveness, may be granted.
The following table shows the recorded investment at the end of the reporting period for loans modified to borrowers experiencing financial difficulty, disaggregated by loan class and type of concession granted:
Term Extension
Twelve months ended
($ in thousands)December 31, 2023Percent of Total Loan Class
Commercial and industrial$39,437 0.84 %
Real estate:
Commercial - investor owned9,411 0.38 %
Commercial - owner occupied94 — %
Construction and land development1,137 0.15 %
Residential7,601 2.04 %
Other4 — %
Total$57,684 

The following table summarizes the financial impacts of loan modifications made to borrowers experiencing financial difficulty and outstanding at the end of the year:
Weighted Average Term Extension (in months)
Twelve months ended
December 31, 2023
Commercial and industrial5
Real estate:
Commercial - investor owned4
Commercial - owner occupied3
Construction and land development7
Residential3
Other48

The following table shows the aging of the recorded investment in modified loans by class:

December 31, 2023
($ in thousands)Current30-89 Days
 Past Due		90 or More
Days
Past Due		Total
Commercial and industrial$39,187 $250 $— $39,437 
Real estate:
Commercial - investor owned9,411 — — 9,411 
Commercial - owner occupied— 94 — 94 
Construction and land development1,137 — — 1,137 
Residential7,527 74 — 7,601 
Other— 4 — 4 
Total$57,262 $422 $— $57,684 

As of December 31, 2023, no loans experienced a default subsequent to being granted a term extension modification in the prior twelve months. Default is defined as movement to nonperforming status, foreclosure or charge-off. As of December 31, 2023, the Company allocated an immaterial amount in specific reserves to loans that have been restructured.
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, 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 – Special Mention 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 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, 2023
Term Loans by Origination Year
($ in thousands)20232022202120202019PriorRevolving Loans Converted to Term LoansRevolving LoansTotal
Commercial and industrial
Pass (1-6)$1,567,738 $1,052,462 $345,292 $194,972 $123,425 $71,205 $12,163 $1,108,233 $4,475,490 
Special Mention (7)52,523 6,845 8,597 544 453 242 272 19,590 89,066 
Classified (8-9)12,824 19,306 1,833 812 339 363 508 45,830 81,815 
Total Commercial and industrial$1,633,085 $1,078,613 $355,722 $196,328 $124,217 $71,810 $12,943 $1,173,653 $4,646,371 
Commercial real estate-investor owned
Pass (1-6)$495,131 $544,223 $492,974 $323,175 $165,343 $236,914 $5,222 $51,413 $2,314,395 
Special Mention (7)3,626 22,725 51,851 1,657 164 5,526 — — 85,549 
Classified (8-9)9,411 1,034 43 15,838 2,831 4,919 48 — 34,124 
Total Commercial real estate-investor owned$508,168 $567,982 $544,868 $340,670 $168,338 $247,359 $5,270 $51,413 $2,434,068 
Commercial real estate-owner occupied
Pass (1-6)$407,901 $486,701 $489,589 $301,399 $183,872 $313,474 $5,083 $30,036 $2,218,055 
Special Mention (7)13,739 2,521 4,652 10,492 5,439 15,833 — 1,493 54,169 
Classified (8-9)3,389 3,413 2,247 3,181 8,878 24,857 5,056 — 51,021 
Total Commercial real estate-owner occupied$425,029 $492,635 $496,488 $315,072 $198,189 $354,164 $10,139 $31,529 $2,323,245 
Construction real estate
Pass (1-6)$292,689 $325,010 $96,426 $30,956 $1,413 $3,408 $10 $3,700 $753,612 
Special Mention (7)42 2,958 1,046 210 123 114 — — 4,493 
Classified (8-9)1,137 704 — — 13 466 — — 2,320 
Total Construction real estate$293,868 $328,672 $97,472 $31,166 $1,549 $3,988 $10 $3,700 $760,425 
Residential real estate
Pass (1-6)$59,259 $41,956 $51,436 $30,713 $17,793 $77,327 $1,464 $78,351 $358,299 
Special Mention (7)322 — — — 75 1,801 — 614 2,812 
Classified (8-9)127 1,073 69 — 30 1,492 74 7,500 10,365 
Total residential real estate$59,708 $43,029 $51,505 $30,713 $17,898 $80,620 $1,538 $86,465 $371,476 
Other
Pass (1-6)$10,071 $55,923 $67,766 $53,569 $9,382 $19,657 $7 $28,464 $244,839 
Special Mention (7)— — 14,472 — — — — 11,645 26,117 
Classified (8-9)— — — — — 8 — — 8 
Total Other$10,071 $55,923 $82,238 $53,569 $9,382 $19,665 $7 $40,109 $270,964 
Total loans classified by risk category$2,929,929 $2,566,854 $1,628,293 $967,518 $519,573 $777,606 $29,907 $1,386,869 $10,806,549 
Total loans classified by performing status77,569 
Total loans$10,884,118 
December 31, 2022
Term Loans by Origination Year
($ in thousands)20222021202020192018PriorRevolving Loans Converted to Term LoansRevolving LoansTotal
Commercial and industrial
Pass (1-6)$1,403,381 $635,275 $332,740 $172,127 $62,729 $66,152 $8,388 $964,592 $3,645,384 
Special Mention (7)37,048 10,836 13,858 423 7,995 4,102 — 72,944 147,206 
Classified (8-9)16,176 4,457 1,627 24 166 183 — 21,349 43,982 
Total Commercial and industrial$1,456,605 $650,568 $348,225 $172,574 $70,890 $70,437 $8,388 $1,058,885 $3,836,572 
Commercial real estate-investor owned
Pass (1-6)$667,107 $584,644 $392,402 $240,033 $115,530 $202,661 $1,457 $53,051 $2,256,885 
Special Mention (7)18,844 5,751 23,502 11,605 — 13,063 — — 72,765 
Classified (8-9)1,823 — 465 953 193 6,092 49 — 9,575 
Total Commercial real estate-investor owned$687,774 $590,395 $416,369 $252,591 $115,723 $221,816 $1,506 $53,051 $2,339,225 
Commercial real estate-owner occupied
Pass (1-6)$539,610 $555,690 $362,150 $232,335 $123,095 $270,613 $— $57,308 $2,140,801 
Special Mention (7)11,164 3,801 16,856 4,455 13,043 9,009 — 800 59,128 
Classified (8-9)— 1,572 3,483 8,910 15,873 11,387 — — 41,225 
Total Commercial real estate-owner occupied$550,774 $561,063 $382,489 $245,700 $152,011 $291,009 $— $58,108 $2,241,154 
Construction real estate
Pass (1-6)$290,146 $232,998 $53,129 $2,909 $2,061 $8,480 $— $1,769 $591,492 
Special Mention (7)17,331 — 681 146 111 106 — — 18,375 
Classified (8-9)1,192 — — 14 471 21 — — 1,698 
Total Construction real estate$308,669 $232,998 $53,810 $3,069 $2,643 $8,607 $— $1,769 $611,565 
Residential real estate
Pass (1-6)$63,317 $60,910 $48,796 $20,943 $11,259 $88,795 $579 $96,304 $390,903 
Special Mention (7)331 — — 79 352 781 — — 1,543 
Classified (8-9)121 73 — 53 1,102 994 — 5 2,348 
Total residential real estate$63,769 $60,983 $48,796 $21,075 $12,713 $90,570 $579 $96,309 $394,794 
Other
Pass (1-6)$38,753 $88,613 $56,252 $10,556 $20,508 $10,796 $— $9,536 $235,014 
Special Mention (7)— — — — — — — — — 
Classified (8-9)— — — 4 3 11 3 4 25 
Total Other$38,753 $88,613 $56,252 $10,560 $20,511 $10,807 $3 $9,540 $235,039 
Total loans classified by risk category$3,106,344 $2,184,620 $1,305,941 $705,569 $374,491 $693,246 $10,476 $1,277,662 $9,658,349 
Total loans classified by performing status78,789 
Total loans$9,737,138 
In the tables above, loan originations in 2023 and 2022 with a classification of “special mention” or “classified” primarily represent renewals or modifications initially underwritten and originated in prior years. For certain loans the Company evaluates credit quality based on the aging status. The following tables present the recorded investment in loans based on payment activity as of the dates indicated:
December 31, 2023
($ in thousands)PerformingNon PerformingTotal
Commercial and industrial$26,076 $112 $26,188 
Real estate:
Commercial - investor owned17,885 — 17,885 
Commercial - owner occupied28,373 — 28,373 
Residential712 — 712 
Other4,406 5 4,411 
Total$77,452 $117 $77,569 
December 31, 2022
($ in thousands)PerformingNon PerformingTotal
Commercial and industrial$23,240 $70 $23,310 
Real estate:
Commercial - investor owned18,595 — 18,595 
Commercial - owner occupied29,397 — 29,397 
Residential743 — 743 
Other6,672 72 6,744 
Total$78,647 $142 $78,789