
	December 31,
	2020		2019
Commercial loans
Commercial and industrial	$	75,387	$	96,420
Owner-occupied commercial real estate	89,785		86,726
Investor commercial real estate	13,902		12,567
Construction	110,385		60,274
Single tenant lease financing	950,172		995,879
Public finance	622,257		687,094
Healthcare finance	528,154		300,612
Small business lending	125,589		46,945
Total commercial loans	2,515,631		2,286,517
Consumer loans
Residential mortgage	186,787		313,849
Home equity	19,857		24,306
Other consumer	275,692		295,309
Total consumer loans	482,336		633,464
Total commercial and consumer loans	2,997,967		2,919,981
Net deferred loan origination costs and premiums and discounts on purchased loans and other(1)	61,264		43,566
Total loans	3,059,231		2,963,547
Allowance for loan losses	(29,484)		(21,840)
Net loans	$	3,029,747	$	2,941,707

Commercial and Industrial: Commercial and industrial loans’ sources of repayment are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Loans are made for working capital, equipment purchases, or other purposes. Most commercial and industrial loans are secured by the assets being financed and may incorporate a personal guarantee. This portfolio segment is generally concentrated in Central Indiana and adjacent markets and the greater Phoenix, Arizona market.

Owner-Occupied Commercial Real Estate: The primary source of repayment is the cash flow from the ongoing operations and activities conducted by the borrower, or an affiliate of the borrower, who owns the property. This portfolio segment is generally concentrated in Central Indiana and adjacent markets and the greater Phoenix, Arizona market and its loans are often secured by manufacturing and service facilities, as well as office buildings.

Investor Commercial Real Estate: These loans are underwritten primarily based on the cash flow expected to be generated from the property and are secondarily supported by the value of the real estate. These loans typically incorporate a personal guarantee from the primary sponsor or sponsors. This portfolio segment generally involves larger loan amounts with repayment primarily dependent on the successful leasing and operation of the property securing the loan or the business conducted on the property securing the loan. Investor commercial real estate loans may be more adversely affected by changing economic conditions in the real estate markets, industry dynamics or the overall health of the local economy where the property is located. The properties securing the Company’s investor commercial real estate portfolio tend to be diverse in terms of property type and are generally located in the state of Indiana or markets immediately adjacent to Indiana. Management monitors and evaluates commercial real estate loans based on property financial performance, collateral value, guarantor strength, economic and industry conditions together with other risk grade criteria. As a general rule, the Company avoids financing special use projects or properties outside of its designated market areas unless other underwriting factors are present to mitigate these additional risks.

Construction: Construction loans are secured by land and related improvements and are made to assist in the construction of new structures, which may include commercial (retail, industrial, office, multi-family) properties or single family residential properties offered for sale by the builder. These loans generally finance a variety of project costs, including land, site preparation, architectural services, construction, closing and soft costs and interim financing needs. The cash flows of builders, while initially predictable, may fluctuate with market conditions, and the value of the collateral securing these loans may be subject to fluctuations based on general economic changes. This portfolio segment is generally concentrated in Central Indiana.

Single Tenant Lease Financing: These loans are made on a nationwide basis to property owners of real estate subject to long-term lease arrangements with single tenant operators. The real estate is typically operated by regionally, nationally or globally branded businesses. The loans are underwritten based on the financial strength of the borrower, characteristics of the real estate, cash flows generated from the lease arrangements and the financial strength of the tenant. Similar to the other loan portfolio segments, management monitors and evaluates these loans based on borrower and tenant financial performance, collateral value, industry trends and other risk grade criteria.

Public Finance: These loans are made to governmental and not-for-profit entities to provide both tax-exempt and taxable loans for a variety of purposes including: short-term cash-flow needs; debt refinancing; economic development; quality of life projects; infrastructure improvements; energy conservation; renewable energy and equipment financing. The primary sources of repayment for public finance loans include pledged revenue sources including but not limited to: general obligations; property taxes; income taxes; tax increment revenue; utility revenue; gaming revenues; sales tax; and pledged general revenue. Certain loans may also include an additional collateral pledge of mortgaged property or a security interest in financed equipment. Public finance lending has been conducted primarily in the Midwest, but continues to expand nationwide.

Healthcare Finance: These loans are made to healthcare providers, primarily dentists, for practice acquisition financing or refinancing that occasionally includes owner-occupied commercial real estate and equipment purchases. The sources of repayment are primarily based on the identified cash flows from operations of the borrower and related entities if the real estate is held in a separate entity and secondarily on the underlying collateral provided by the borrower and guarantor resources. This portfolio segment was initially concentrated in the Western United States but has been growing rapidly throughout the rest of the country with the addition of a growing sales force located in Eastern and Midwestern markets.

Small Business Lending: These loans are to small businesses and generally carry a partial guaranty from the U.S. Small Business Administration ("SBA") under its 7(a) loan program. We generally sell the government guaranteed portion of SBA loans into the secondary market while retaining the non-guaranteed portion of the loan and the servicing rights. Loans in the small business lending portfolio have sources of repayment that are primarily based on the identified cash flows of the borrower and secondarily on any underlying collateral provided by the borrower. Loans may, but do not always, have a collateral shortfall. For SBA loans where the guaranteed portion is retained, the SBA guaranty provides a tertiary source of repayment to the Bank in event of borrower default. Cash flows of borrowers, however, may not be as expected and collateral securing these loans may fluctuate in value. Loans are made for a broad array of purposes including, but not limited to, providing operating cash flow, funding ownership changes, and facilitating equipment purchases. These loans also include loans originated by the Bank under the SBA’s Paycheck Protection Program, which are fully guaranteed by the SBA. This portfolio segment has an emerging geography, with a nationwide focus.

Residential Mortgage: With respect to residential loans that are secured by 1 to 4 family residences and are generally owner occupied, the Company typically establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the financial circumstances of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country.

Home Equity: Home equity loans and lines of credit are typically secured by a subordinate interest in 1 to 4 family residences. The properties securing the home equity portfolio segment are generally geographically diverse as the Company offers these products on a nationwide basis. Repayment of these loans and lines of credit is primarily dependent on the financial circumstances of the borrowers and may be impacted by changes in unemployment levels and property values on residential properties, among other economic conditions in the market.

Other Consumer: These loans primarily consist of consumer loans and credit cards. Consumer loans may be secured by consumer assets such as horse trailers or recreational vehicles. Some consumer loans are unsecured, such as small installment loans, home improvement loans and certain lines of credit. Repayment of consumer loans is primarily dependent upon the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country.


	Twelve Months Ended December 31, 2020
	Balance, beginning of period		Provision (credit) charged to expense		Losses charged off		Recoveries		Balance, end of period
Allowance for loan losses:
Commercial and industrial	$	1,521	$	80	$	(461)	$	6	$	1,146
Owner-occupied commercial real estate	561		545		(24)		—		1,082
Investor commercial real estate	109		46		—		—		155
Construction	380		812		—		—		1,192
Single tenant lease financing	11,175		1,815		—		—		12,990
Public finance	1,580		152		—		—		1,732
Healthcare finance	3,247		4,894		(743)		87		7,485
Small business lending	54		665		(110)		19		628
Residential mortgage	657		(122)		(20)		4		519
Home equity	46		(9)		—		11		48
Other consumer	2,510		447		(804)		354		2,507
Total	$	21,840	$	9,325	$	(2,162)	$	481	$	29,484


	Twelve Months Ended December 31, 2019
	Balance, beginning of period		Provision (credit) charged to expense		Losses charged off		Recoveries		Balance, end of period
Allowance for loan losses:
Commercial and industrial	$	1,384	$	1,029	$	(921)	$	29	$	1,521
Owner-occupied commercial real estate	783		(222)		—		—		561
Investor commercial real estate	61		48		—		—		109
Construction	251		129		—		—		380
Single tenant lease financing	8,827		2,348		—		—		11,175
Public finance	1,670		(90)		—		—		1,580
Healthcare finance	1,264		1,983		—		—		3,247
Small business lending	203		(154)		—		5		54
Residential mortgage	1,079		(350)		(76)		4		657
Home equity	53		51		(68)		10		46
Other consumer	2,321		1,194		(1,292)		287		2,510
Total	$	17,896	$	5,966	$	(2,357)	$	335	$	21,840


	Twelve Months Ended December 31, 2018
	Balance, beginning of period		Provision (credit) charged to expense		Losses charged off		Recoveries		Balance, end of period
Allowance for loan losses:
Commercial and industrial	$	1,724	$	(251)	$	(92)	$	3	$	1,384
Owner-occupied commercial real estate	762		21		—		—		783
Investor commercial real estate	85		(24)		—		—		61
Construction	423		(172)		—		—		251
Single tenant lease financing	7,872		955		—		—		8,827
Public finance	959		711		—		—		1,670
Healthcare finance	313		951		—		—		1,264
Small business lending	55		148		—		—		203
Residential mortgage	956		127		(9)		5		1,079
Home equity	70		(33)		—		16		53
Other consumer	1,751		1,459		(1,176)		287		2,321
Total	$	14,970	$	3,892	$	(1,277)	$	311	$	17,896


	Loans						Allowance for Loan Losses
December 31, 2020	Ending Balance: Collectively Evaluated for Impairment		Ending Balance: Individually Evaluated for Impairment		Ending Balance		Ending Balance: Collectively Evaluated for Impairment		Ending Balance: Individually Evaluated for Impairment		Ending Balance
Commercial and industrial	$	74,870	$	517	$	75,387	$	1,146	$	—	$	1,146
Owner-occupied commercial real estate	87,947		1,838		89,785		1,082		—		1,082
Investor commercial real estate	13,902		—		13,902		155		—		155
Construction	110,385		—		110,385		1,192		—		1,192
Single tenant lease financing	942,848		7,324		950,172		9,900		3,090		12,990
Public finance	622,257		—		622,257		1,732		—		1,732
Healthcare finance	527,144		1,010		528,154		7,485		—		7,485
Small business lending	125,589		—		125,589		628		—		628
Residential mortgage	185,241		1,546		186,787		519		—		519
Home equity	19,857		—		19,857		48		—		48
Other consumer	275,642		50		275,692		2,507		—		2,507
Total	$	2,985,682	$	12,285	$	2,997,967	$	26,394	$	3,090	$	29,484


	Loans						Allowance for Loan Losses
December 31, 2019	Ending Balance: Collectively Evaluated for Impairment		Ending Balance: Individually Evaluated for Impairment		Ending Balance		Ending Balance: Collectively Evaluated for Impairment		Ending Balance: Individually Evaluated for Impairment		Ending Balance
Commercial and industrial	$	93,520	$	2,900	$	96,420	$	1,412	$	109	$	1,521
Owner-occupied commercial real estate	81,063		5,663		86,726		561		—		561
Investor commercial real estate	12,567		—		12,567		109		—		109
Construction	60,274		—		60,274		380		—		380
Single tenant lease financing	991,199		4,680		995,879		9,515		1,660		11,175
Public finance	687,094		—		687,094		1,580		—		1,580
Healthcare finance	300,612		—		300,612		3,247		—		3,247
Small business lending	46,945		—		46,945		54		—		54
Residential mortgage	312,714		1,135		313,849		657		—		657
Home equity	24,306		—		24,306		46		—		46
Other consumer	295,266		43		295,309		2,510		—		2,510
Total	$	2,905,560	$	14,421	$	2,919,981	$	20,071	$	1,769	$	21,840

•“Substandard” - Loans that possess a defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

•“Doubtful” - Such loans have been placed on nonaccrual status and may be heavily dependent upon collateral possessing a value that is difficult to determine or based upon some near-term event which lacks clear certainty. These loans have all of the weaknesses of those classified as Substandard; however, based on existing conditions, these weaknesses make full collection of the principal balance highly improbable.


	December 31, 2020
	Pass		Special Mention		Substandard		Total
Commercial and industrial	$	74,138	$	732	$	517	$	75,387
Owner-occupied commercial real estate	84,292		3,655		1,838		89,785
Investor commercial real estate	13,902		—		—		13,902
Construction	110,385		—		—		110,385
Single tenant lease financing	932,830		10,018		7,324		950,172
Public finance	622,257		—		—		622,257
Healthcare finance	526,517		627		1,010		528,154
Small business lending	117,474		2,930		5,185		125,589
Total commercial loans	$	2,481,795	$	17,962	$	15,874	$	2,515,631


	December 31, 2019
	Pass		Special Mention		Substandard		Total
Commercial and industrial	$	89,818	$	3,973	$	2,629	$	96,420
Owner-occupied commercial real estate	79,329		3,462		3,935		86,726
Investor commercial real estate	12,567		—		—		12,567
Construction	60,274		—		—		60,274
Single tenant lease financing	983,448		7,751		4,680		995,879
Public finance	687,094		—		—		687,094
Healthcare finance	300,612		—		—		300,612
Small business lending	46,945		—		—		46,945
Total commercial loans	$	2,260,087	$	15,186	$	11,244	$	2,286,517


	December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total loans		Nonaccrual Loans		Total Loans 90 Days or More Past Due and Accruing
Commercial and industrial	$	—	$	—	$	—	$	—	$	75,387	$	75,387	$	—	$	—
Owner-occupied commercial real estate	—		—		—		—		89,785		89,785		1,838		—
Investor commercial real estate	—		—		—		—		13,902		13,902		—		—
Construction	—		—		—		—		110,385		110,385		—		—
Single tenant lease financing	—		—		4,680		4,680		945,492		950,172		7,116		—
Public finance	—		—		—		—		622,257		622,257		—		—
Healthcare finance	—		—		—		—		528,154		528,154		—		—
Small business lending	—		—		—		—		125,589		125,589		—		—
Residential mortgage	49		—		269		318		186,469		186,787		1,183		—
Home equity	—		15		—		15		19,842		19,857		—		—
Other consumer	176		51		5		232		275,460		275,692		46		—
Total	$	225	$	66	$	4,954	$	5,245	$	2,992,722	$	2,997,967	$	10,183	$	—


	December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total loans		Nonaccrual Loans		Total Loans 90 Days or More Past Due and Accruing
Commercial and industrial	$	15	$	96	$	122	$	233	$	96,187	$	96,420	$	226	$	—
Owner-occupied commercial real estate	—		—		464		464		86,262		86,726		464		—
Investor commercial real estate	—		—		—		—		12,567		12,567		—		—
Construction	—		—		—		—		60,274		60,274		—		—
Single tenant lease financing	—		4,680		—		4,680		991,199		995,879		4,680		—
Public finance	—		—		—		—		687,094		687,094		—		—
Healthcare finance	—		—		—		—		300,612		300,612		—		—
Small business lending	54		—		—		54		46,891		46,945		—		—
Residential mortgage	—		—		1,177		1,177		312,672		313,849		761		416
Home equity	—		—		—		—		24,306		24,306		—		—
Other consumer	240		107		—		347		294,962		295,309		33		—
Total	$	309	$	4,883	$	1,763	$	6,955	$	2,913,026	$	2,919,981	$	6,164	$	416


	December 31, 2020						December 31, 2019
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific valuation allowance
Commercial and industrial	$	517	$	517	$	—	$	2,693	$	2,694	$	—
Owner-occupied commercial real estate	1,838		1,850		—		5,663		5,665		—


Single tenant lease financing	1,315		1,334		—		—		—		—

Healthcare finance	$	1,010	$	1,010	$	—	$	—	$	—	$	—

Residential mortgage	1,546		1,652		—		1,135		1,209		—

Other consumer	50		120		—		43		107		—
Total	6,276		6,483		—		9,534		9,675		—
Loans with a specific valuation allowance
Commercial and industrial	$	—	$	—	$	—	$	207	$	244	$	109



Single tenant lease financing	6,009		6,036		3,090		4,680		4,680		1,660



Residential mortgage	—		—		—		—		—		—


Total	6,009		6,036		3,090		4,887		4,924		1,769
Total impaired loans	$	12,285	$	12,519	$	3,090	$	14,421	$	14,599	$	1,769


	Twelve Months Ended
	December 31, 2020				December 31, 2019				December 31, 2018
	Average Balance		Interest Income		Average Balance		Interest Income		Average Balance		Interest Income
Loans without a specific valuation allowance
Commercial and industrial	$	1,037	$	57	$	3,293	$	289	$	5,961	$	426
Owner-occupied commercial real estate	3,790		60		3,292		170		833		44




Healthcare finance	386		16		—		—		—		—
Small business lending	—		—		331		94		60		15
Residential mortgage	1,333		—		2,265		—		720		—
Home equity	—		—		10		—		61		—
Other consumer	57		—		68		1		108		—
Total	6,603		133		9,259		554		7,743		485
Loans with a specific valuation allowance
Commercial and industrial	169		3		1,077		—		—		—



Single tenant lease financing	5,671		4		1,464		—		—		—






Total	5,840		7		2,541		—		—		—
Total impaired loans	$	12,443	$	140	$	11,800	$	554	$	7,743	$	485

The loan portfolio includes TDRs, which are loans that have been modified to grant economic concessions to borrowers who have experienced financial difficulties. These concessions typically result from loss mitigation efforts and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally not less than six consecutive months.

When loans are modified in a TDR, any possible impairment similar to other impaired loans is evaluated based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, or using the current fair value of the collateral, less selling costs for collateral-dependent loans. If it is determined that the value of the modified loan is less than the recorded balance of the loan, impairment is recognized through a specific allowance or charge-off to the allowance. In periods subsequent to modification, all TDRs, including those that have payment defaults, are evaluated for possible impairment, and impairment is recognized through the allowance.

In the course of working with troubled borrowers, the Company may choose to restructure the contractual terms of certain loans in an effort to work out an alternative payment schedule with the borrower in order to optimize the collectability of the loan. Any loan modification is reviewed by the Company to identify whether a TDR has occurred when the Company grants a concession to the borrower that it would not otherwise consider based on economic or legal reasons related to a borrower’s financial difficulties. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status or the loan may be restructured to secure additional collateral and/or guarantees to support the debt, or a combination of the two.

There were three commercial and industrial loan classified as new TDRs during the twelve months ended December 31, 2020 with a pre-modification and post-modification outstanding recorded investment of $2.6 million. The Company did not allocate a specific allowance for these loans as of December 31, 2020 and the modifications consisted of interest only payments for a period of time and an extension of the maturity date. There were four commercial and industrial loans classified as new TDRs during the twelve months ended December 31, 2019 with a pre-modification and post-modification outstanding recorded investment of $2.0 million. The Company did not allocate a specific allowance for these loans as of December 31, 2019 and the modifications consisted of interest only payments for a period of time. There were no loans classified as new TDRs during the twelve months ended December 31, 2018.

The “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” was issued by our banking regulators on March 22, 2020. This guidance encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19.

Additionally, Section 4013 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) provides that loan modifications due to the impact of COVID-19 that would otherwise be classified as TDRs under GAAP will not be so classified. Modifications within the scope of this relief are in effect from the period beginning March 1, 2020 until January 1, 2022 or 60 days after the date on which the national emergency related to the COVID-19 pandemic formally terminates. As of December 31, 2020, the Company had $11.9 million in non-TDR loan modifications due to COVID-19.