LOANS (Tables)

3 Months Ended

Mar. 31, 2020

LOANS

Summary of loans

	March 31,		December 31,
(dollars in thousands)	2020		2019
Commercial:
Commercial	$	649,403	$	628,056
Commercial Other		443,376		427,129
Commercial real estate:
Commercial real estate non-owner occupied		809,628		825,874
Commercial real estate owner occupied		471,360		464,601
Multi-family		142,770		146,795
Farmland		83,522		89,234
Construction and land development		208,361		208,733
Total commercial loans		2,808,420		2,790,422
Residential real estate:
Residential first lien		441,495		456,107
Other residential		106,519		112,184
Consumer:
Consumer		85,162		100,732
Consumer Other		588,242		609,384
Lease financing		346,366		332,581
Total loans, gross	$	4,376,204	$	4,401,410

Summary of changes in allowance for loan losses, by loan portfolio

	Commercial Loan Portfolio						Other Loan Portfolio
			Commercial		Construction		Residential
			Real		and Land		Real				Lease
(dollars in thousands)	Commercial		Estate		Development		Estate		Consumer		Financing		Total
Changes in allowance for credit losses on loans for the three months ended March 31, 2020:
Balance, beginning of period	$	10,031	$	10,272	$	290	$	2,499	$	2,642	$	2,294	$	28,028
Impact of adopting ASC 326		2,327		4,104		724		1,211		(594)		774		8,546
Provision for credit losses on loans		1,730		5,755		(549)		257		256		3,120		10,569
Initial PCD Allowance		1,045		1,311		809		1,015		57		—		4,237
Charge-offs		(3,398)		(7,873)		(12)		(388)		(598)		(948)		(13,217)
Recoveries		5		14		59		44		191		69		382
Balance, end of period	$	11,740	$	13,583	$	1,321	$	4,638	$	1,954	$	5,309	$	38,545
Changes in allowance for credit losses on loans for the three months ended March 31, 2019:
Balance, beginning of period	$	9,524	$	4,723	$	372	$	2,041	$	2,154	$	2,089	$	20,903
Provision for credit losses on loans		118		1,945		63		514		329		274		3,243
Charge-offs		(112)		(58)		(44)		(153)		(556)		(459)		(1,382)
Recoveries		15		7		7		22		210		66		327
Balance, end of period	$	9,545	$	6,617	$	398	$	2,424	$	2,137	$	1,970	$	23,091

The following table represents, by loan portfolio segment, details regarding the balance in the allowance for loan loss and the recorded investment in loans as of December 31, 2019 by impairment evaluation method:

	Commercial Loan Portfolio						Other Loan Portfolio
			Commercial		Construction		Residential
			Real		and Land		Real				Lease
(dollars in thousands)	Commercial		Estate		Development		Estate		Consumer		Financing		Total
Allowance for credit losses on loans:
Loans individually evaluated for impairment	$	3,563	$	5,968	$	—	$	290	$	—	$	156	$	9,977
Loans collectively evaluated for impairment		69		100		14		444		39		122		788
Non-impaired loans collectively evaluated for impairment		6,380		3,643		272		1,269		2,500		2,016		16,080
Loans acquired with deteriorated credit quality (1)		19		561		4		496		103		—		1,183
Total allowance for credit losses on loans	$	10,031	$	10,272	$	290	$	2,499	$	2,642	$	2,294	$	28,028
Recorded investment (loan balance):
Impaired loans individually evaluated for impairment	$	5,767	$	22,698	$	1,245	$	5,329	$	—	$	697	$	35,736
Impaired loans collectively evaluated for impairment		511		764		104		3,695		376		896		6,346
Non-impaired loans collectively evaluated for impairment		1,045,829		1,482,935		201,707		546,630		708,528		330,988		4,316,617
Loans acquired with deteriorated credit quality (1)		3,078		20,107		5,677		12,637		1,212		—		42,711
Total recorded investment (loan balance)	$	1,055,185	$	1,526,504	$	208,733	$	568,291	$	710,116	$	332,581	$	4,401,410

(1) Loans acquired with deteriorated credit quality were originally recorded at fair value at the acquisition date and the risk of credit loss was recognized at that date based on estimates of expected cash flows.

Schedule of transitioning risk states for each asset pool within the expected credit loss model

		Consumer Loans and
	Commercial Loans	Equipment Finance Loans and Leases
Risk State	Risk Rating	Days Past Due
1	0-5	0-14
2	6	15-29
3	7	30-59
4	8	60-89
Default	9+ and nonaccrual	90+ and nonaccrual

Schedule of amortized cost basis of individually evaluated loans on nonaccrual status

	March 31, 2020				December 31, 2019
			Nonaccrual				Nonaccrual
			with no Allowance				with no Allowance
(dollars in thousands)	Nonaccrual		for Credit Loss		Nonaccrual		for Credit Loss
Commercial:
Commercial	$	1,948	$	—	$	1,492	$	119
Commercial Other		2,504		371		4,351		1,519
Commercial real estate:
Commercial real estate non-owner occupied		9,639		4,489		10,915		4,572
Commercial real estate owner occupied		11,672		6,613		4,396		2,648
Multi-family		10,557		2,392		6,231		1,430
Farmland		—		—		200		150
Construction and land development		4,954		693		1,304		1,245
Total commercial loans		41,274		14,558		28,889		11,683
Residential real estate:
Residential first lien		8,414		789		6,140		2,416
Other residential		2,289		—		1,656		912
Consumer:
Consumer		480		—		341		7
Consumer Other		—		—		—		—
Lease financing		1,775		—		1,375		116
Total loans	$	54,232	$	15,347	$	38,401	$	15,134

Schedule of collateral dependent loans

(dollars in thousands)	March 31, 2020
Commercial
Commercial Other	$	371
Commercial Real Estate
Non-Owner Occupied		8,874
Owner Occupied		7,264
Multi-Family		10,338
Construction and Land Development		2,941
Residential Real Estate
Residential First Lien		110
Total Collateral Dependent Loans	$	29,898

Summary of aging status of recorded investments in loans by portfolio (excluding PCI loans)

The aging status of the recorded investment in loans by portfolio as of March 31, 2020 is as follows:

	Accruing Loans
	30-59		60-89		Past Due
	Days		Days		90 Days		Total
(dollars in thousands)	Past Due		Past Due		or More		Past Due		Current		Total
Commercial:
Commercial	$	214	$	498	$	—	$	712	$	646,743	$	647,455
Commercial Other		7,367		3,474		147		10,988		429,884		440,872
Commercial real estate:
Commercial real estate non-owner occupied		7,754		176		—		7,930		792,059		799,989
Commercial real estate owner occupied		149		93		—		242		459,446		459,688
Multi-family		—		—		—		—		132,213		132,213
Farmland		108		—		—		108		83,414		83,522
Construction and land development		2,410		156		8		2,574		200,833		203,407
Total commercial loans		18,002		4,397		155		22,554		2,744,592		2,767,146
Residential real estate:
Residential first lien		1,151		—		248		1,399		431,682		433,081
Other residential		888		—		—		888		103,342		104,230
Consumer:
Consumer		357		75		—		432		84,250		84,682
Consumer Other		4,913		4,063		—		8,976		579,266		588,242
Lease financing		5,601		945		376		6,922		337,669		344,591
Total loans	$	30,912	$	9,480	$	779	$	41,171	$	4,280,801	$	4,321,972

The aging status of the recorded investment in loans by portfolio (excluding PCI) as of December 31, 2019 is as follows:

	Accruing Loans
	30-59		60-89		Past Due
	Days		Days		90 Days		Total
(dollars in thousands)	Past Due		Past Due		or More		Past Due		Current		Total
Commercial	$	5,910	$	3,086	$	—	$	8,996	$	1,037,268	$	1,046,264
Commercial real estate		2,895		399		—		3,294		1,481,361		1,484,655
Construction and land development		1,539		72		—		1,611		200,141		201,752
Residential real estate		588		1,561		145		2,294		545,564		547,858
Consumer		6,701		4,154		—		10,855		697,708		708,563
Lease financing		1,783		1,188		218		3,189		328,017		331,206
Total loans (excluding PCI)	$	19,416	$	10,460	$	363	$	30,239	$	4,290,059	$	4,320,298

Summary of TDRs loans

	March 31, 2020						December 31, 2019 (3)
(dollars in thousands)	Accruing (1)		Non-accrual (2)		Total		Accruing (1)		Non-accrual (2)		Total
Commercial	$	60	$	1,181	$	1,241	$	435	$	369	$	804
Commercial real estate		1,692		6,032		7,724		1,720		9,834		11,554
Construction and land development		43		163		206		45		167		212
Residential real estate		1,328		2,414		3,742		1,083		1,993		3,076
Consumer		32		—		32		35		—		35
Lease financing		—		52		52		—		55		55
Total loans	$	3,155	$	9,842	$	12,997	$	3,318	$	12,418	$	15,736

(1) These loans are still accruing interest.

(2) These loans are included in non-accrual loans in the preceding tables.

(3) TDRs as of December 31, 2019 exclude PCI loans.

The ACL on TDRs totaled $760,000 and $2.0 million as of March 31, 2020 and December 31, 2019, respectively. The Company had no unfunded commitments in connection with TDRs at March 31, 2020 and December 31, 2019.

The following table presents a summary of loans by portfolio that were restructured during the three months ended March 31, 2020 and 2019 and the loans by portfolio that were modified as TDRs within the previous twelve months that subsequently defaulted during the three months ended March 31, 2020 and 2019:

	Commercial Loan Portfolio						Other Loan Portfolio
			Commercial		Construction		Residential
			Real		and Land		Real				Lease
(dollars in thousands)	Commercial		Estate		Development		Estate		Consumer		Financing		Total
For the three months ended March 31, 2020
Troubled debt restructurings:
Number of loans		—		—		—		6		—		—		6
Pre-modification outstanding balance	$	—	$	—	$	—	$	675	$	—	$	—	$	675
Post-modification outstanding balance		—		—		—		670		—		—		670
Troubled debt restructurings that subsequently defaulted
Number of loans		—		—		—		—		—		—		—
Recorded balance	$	—	$	—	$	—	$	—	$	—	$	—	$	—
For the three months ended March 31, 2019:
Troubled debt restructurings:
Number of loans		—		3		1		7		1		—		12
Pre-modification outstanding balance	$	—	$	1,924	$	62	$	224	$	15	$	—	$	2,225
Post-modification outstanding balance		—		1,838		17		222		15		—		2,092
Troubled debt restructurings that subsequently defaulted
Number of loans		—		—		1		—		—		—		1
Recorded balance	$	—	$	—	$	43	$	—	$	—	$	—	$	43

Schedule of loans credit quality indicators

				Term Loans
			Amortized Cost Basis by Origination Year
(dollars in thousands)			2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Commercial	Commercial	Acceptable credit quality	$	36,244	$	118,192	$	50,709	$	79,205	$	39,003	$	64,281	$	226,404	$	614,038
		Special mention		945		379		3,643		34		431		4,314		7,795		17,541
		Substandard		—		823		692		849		89		4,633		8,790		15,876
		Substandard – nonaccrual		—		—		66		38		433		514		897		1,948
		Doubtful		—		—		—		—		—		—		—		—
		Not graded		—		—		—		—		—		—		—		—
		Subtotal		37,189		119,394		55,110		80,126		39,956		73,742		243,886		649,403
	Commercial Other	Acceptable credit quality		63,535		197,784		69,918		1,046		537		1,253		96,875		430,948
		Special mention		152		1,188		825		5		15		—		2,050		4,235
		Substandard		76		58		572		30		46		5		4,772		5,559
		Substandard – nonaccrual		—		1,229		836		—		49		12		378		2,504
		Doubtful		—		—		—		—		—		—		—		—
		Not graded		61		—		—		—		—		—		69		130
		Subtotal		63,824		200,259		72,151		1,081		647		1,270		104,144		443,376
Commercial Real Estate	Non-Owner Occupied	Acceptable credit quality		21,416		124,691		84,571		125,985		147,992		252,159		9,777		766,591
		Special mention		—		4,479		110		271		27		10,647		—		15,534
		Substandard		906		—		282		5,204		474		10,707		250		17,823
		Substandard – nonaccrual		—		456		111		—		3,495		5,577		—		9,639
		Doubtful		—		—		—		—		—		—		—		—
		Not graded		—		41		—		—		—		—		—		41
		Subtotal		22,322		129,667		85,074		131,460		151,988		279,090		10,027		809,628
	Owner Occupied	Acceptable credit quality		27,644		59,290		37,062		65,814		77,379		150,209		4,084		421,482
		Special mention		—		1,723		253		380		3,037		8,538		—		13,931
		Substandard		—		368		796		169		2,630		19,708		604		24,275
		Substandard – nonaccrual		—		264		170		249		33		9,962		994		11,672
		Doubtful		—		—		—		—		—		—		—		—
		Not graded		—		—		—		—		—		—		—		—
		Subtotal		27,644		61,645		38,281		66,612		83,079		188,417		5,682		471,360
	Multi-Family	Acceptable credit quality		795		15,248		21,586		32,871		22,933		32,045		1,101		126,579
		Special mention		—		—		—		—		—		1,348		—		1,348
		Substandard		—		198		—		—		4,008		80		—		4,286
		Substandard – nonaccrual		—		—		—		—		8,029		2,528		—		10,557
		Doubtful		—		—		—		—		—		—		—		—
		Not graded		—		—		—		—		—		—		—		—
		Subtotal		795		15,446		21,586		32,871		34,970		36,001		1,101		142,770
	Farmland	Acceptable credit quality		1,702		11,046		8,414		11,405		8,071		36,196		2,358		79,192
		Special mention		—		465		193		—		18		280		105		1,061
		Substandard		—		52		602		323		—		2,146		146		3,269
		Substandard – nonaccrual		—		—		—		—		—		—		—		—
		Doubtful		—		—		—		—		—		—		—		—
		Not graded		—		—		—		—		—		—		—		—
		Subtotal		1,702		11,563		9,209		11,728		8,089		38,622		2,609		83,522
Construction and Land Development		Acceptable credit quality		2,604		102,813		29,700		25,183		5,151		9,022		19,590		194,063
		Special mention		—		—		—		2,410		—		1,447		—		3,857
		Substandard		—		153		225		—		—		919		—		1,297
		Substandard – nonaccrual		—		—		—		—		150		4,804		—		4,954
		Doubtful		—		—		—		—		—		—		—		—
		Not graded				4,190		—		—		—		—		—		4,190
		Subtotal		2,604		107,156		29,925		27,593		5,301		16,192		19,590		208,361
Total
		Acceptable credit quality		153,940		629,064		301,960		341,509		301,066		545,165		360,189		2,632,893
		Special mention		1,097		8,234		5,024		3,100		3,528		26,574		9,950		57,507
		Substandard		982		1,652		3,169		6,575		7,247		38,198		14,562		72,385
		Substandard – nonaccrual		—		1,949		1,183		287		12,189		23,397		2,269		41,274
		Doubtful		—		—		—		—		—		—		—		—
		Not graded		61		4,231		—		—		—		—		69		4,361
Total Commercial Loans			$	156,080	$	645,130	$	311,336	$	351,471	$	324,030	$	633,334	$	387,039	$	2,808,420

	December 31, 2019
			Commercial		Construction
			Real		and Land
(dollars in thousands)	Commercial		Estate		Development		Total
Acceptable credit quality	$	1,005,442	$	1,398,400	$	194,992	$	2,598,834
Special mention		17,435		18,450		2,420		38,305
Substandard		23,387		67,805		1,250		92,442
Substandard – nonaccrual		5,843		21,742		1,304		28,889
Doubtful		—		—		—		—
Not graded		—		—		3,090		3,090
Total (excluding PCI)	$	1,052,107	$	1,506,397	$	203,056	$	2,761,560

The Company evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and lease financing loans, based primarily on the aging status of the loan and payment activity. Accordingly, loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be nonperforming for purposes of credit quality evaluation. The following tables present the recorded investment of our other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming as of March 31, 2020 and December 31, 2019:

			Term Loans
			Amortized Cost Basis by Origination Year
(dollars in thousands)			2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
Residential Real Estate	Residential First Lien	Performing	$	2,041	$	29,994	$	68,525	$	149,262	$	107,088	$	74,763	$	371	$	432,044
		Nonperforming		—		110		572		920		698		7,151		—		9,451
		Subtotal		2,041		30,104		69,097		150,182		107,786		81,914		371		441,495
	Other Residential	Performing		242		3,235		4,495		2,999		1,872		2,746		88,102		103,691
		Nonperforming		—		15		24		158		8		199		2,424		2,828
		Subtotal		242		3,250		4,519		3,157		1,880		2,945		90,526		106,519
Consumer	Consumer	Performing		2,970		19,553		23,622		14,689		11,131		9,753		2,932		84,650
		Nonperforming		—		29		81		120		101		178		3		512
		Subtotal		2,970		19,582		23,703		14,809		11,232		9,931		2,935		85,162
	Consumer Other	Performing		146,912		337,739		53,885		12,215		14,943		2,249		20,299		588,242
		Nonperforming		—		—		—		—		—		—		—		—
		Subtotal		146,912		337,739		53,885		12,215		14,943		2,249		20,299		588,242
Leases Financing		Performing		44,905		147,056		89,465		32,284		24,106		6,399		—		344,215
		Nonperforming		—		62		865		563		533		128		—		2,151
		Subtotal		44,905		147,118		90,330		32,847		24,639		6,527		—		346,366
Total
		Performing		197,070		537,577		239,992		211,449		159,140		95,910		111,704		1,552,842
		Nonperforming		—		216		1,542		1,761		1,340		7,656		2,427		14,942
Total Other Loans			$	197,070	$	537,793	$	241,534	$	213,210	$	160,480	$	103,566	$	114,131	$	1,567,784

	December 31, 2019
	Residential				Lease
(dollars in thousands)	Real Estate		Consumer		Financing		Total
Performing	$	546,630	$	708,528	$	330,988	$	1,586,146
Nonperforming		9,024		376		1,593		10,993
Total (excluding PCI)	$	555,654	$	708,904	$	332,581	$	1,597,139