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Allowance for Credit Losses

9 Months Ended

Sep. 30, 2021

Note 4 — Allowance for Credit Losses

The estimation of the ACL is based on a loss-rate methodology that measures lifetime losses on loan pools that have similar risk characteristics. Loans that do not have similar risk characteristics are evaluated on an individual basis. The segmentation of the loan portfolio into pools requires a balancing process between capturing similar risk characteristics and containing sufficient loss history to provide meaningful results. Our segmentation starts at the general loan category with further sub-segmentation based on collateral types that may be of meaningful size and/or may contain sufficient differences in risk characteristics based on management’s judgement that would warrant further segmentation. The general loan categories along with primary risk characteristics used in our calculation are as follows:

Commercial and industrial loans. This category includes loans extended to a diverse array of businesses for working capital or equipment purchases. These loans are mostly secured by the collateral pledged by the borrower that is directly related to the business activities of the company such as equipment, accounts receivable and inventory. The borrower’s abilities to generate revenues from equipment purchases, collect accounts receivable, and to turn inventory into sales are risk factors in the repayment of the loan. A small portion of this loan category is related to loans secured by oil & gas production and loans secured by aircraft.

Construction and land development loans. This category includes the development of land from unimproved land to lot development for both residential and commercial use and vertical construction across residential and commercial real estate classes. These loans carry risk of repayment when projects incur cost overruns, have an increase in the price of construction materials, encounter zoning, entitlement and environmental issues, or encounter other factors that may affect the completion of a project on time and on budget. Additionally, repayment risk may be negatively impacted when the market experiences a deterioration in the value of real estate. Risks specifically related to 1-4 family development loans also include mortgage rate risk and the practice by the mortgage industry of more restrictive underwriting standards, which inhibits the buyer from obtaining long term financing creating excessive housing and lot inventory in the market.

Commercial real estate loans. This category includes loans secured by farmland, multifamily properties, owner occupied commercial properties, and non-owner occupied commercial properties. Owner occupied commercial properties include warehouses often along the border for import/export operations, office space where the borrower is the primary tenant, restaurants and other single-tenant retail. Non-owner occupied commercial properties include hotels, retail centers, office and professional buildings, and leased warehouses. These loans carry risk of repayment when market values deteriorate, the business experiences turnover in key management, the business has an inability to attract or keep occupancy levels stable, or when the market experiences an exit of a specific business type that is significant to the local economy, such as a manufacturing plant.

1-4 family mortgages. This category includes both first and second lien mortgages for the purpose of home purchases or refinancing of existing mortgage loans. A small portion of this loan category is related to home equity

lines of credits, lots purchases, and home construction. Loan repayments may be affected by unemployment or underemployment and deteriorating market values of real estate.

Consumer loans. This category includes deposit secured, vehicle secured, and unsecured loans, including overdrafts, made to individuals. Repayment is primarily affected by unemployment or underemployment.

The loan pools are further broken down using a risk-based segmentation based on internal classifications for commercial loans and past due status for consumer mortgage loans. Non-mortgage consumer loans are evaluated as one segment. On a weekly basis, commercial loan past due reports are reviewed by the credit quality committee to determine if a loan has any potential problems and if a loan should be placed on our internal Watch List report. Additionally, our credit department reviews the majority of our loans for proper internal classification purposes regardless of whether they are past due and segregates any loans with potential problems for further review. The credit department will discuss the potential problem loans with the servicing loan officers to determine any relevant issues that were not discovered in the evaluation. Also, an analysis of loans that is provided through examinations by regulatory authorities is considered in the review process. After the above analysis is completed, we will determine if a loan should be placed on an internal Watch List report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

Our internal Watch List report is segregated into the following categories: (i) Pass, (ii) Economic Monitoring, (iii) Special Review, (iv) Watch List—Pass, (v) Watch List—Substandard, and (vi) Watch List—Doubtful. The loans placed in the Special Review category and lower rated credits reflect our opinion that the loans reflect potential weakness which require monitoring on a more frequent basis. Credits in those categories are reviewed and discussed on a regular basis, no less frequently than quarterly, with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the Watch List—Pass category and lower rated credits reflect our opinion that the credit contains weaknesses which represent a greater degree of risk, which warrant “extra attention.” Credits in this category are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. The loans placed in the Watch List—Substandard category are considered to be potentially inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These credit obligations, even if apparently protected by collateral value, have shown defined weaknesses related to adverse financial, managerial, economic, market or political conditions which may jeopardize repayment of principal and interest. Furthermore, there is the possibility that we may sustain some future loss if such weaknesses are not corrected. The loans placed in the Watch List—Doubtful category have shown defined weaknesses and it is likely, based on current information and events, that we will be unable to collect all principal and/or interest amounts contractually due. Watch List—Doubtful loans are placed on non-accrual when they are moved to that category.

For the purposes of the ACL, in order to maintain segments with sufficient history for meaningful results, the credits in the Pass and Economic Monitoring categories are aggregated, the credits in the Special Review and Watch List—Pass credits are aggregated, and the credits in the Watch List—Substandard category remain in their own segment. For loans that are classified as Watch List—Doubtful, management evaluates these credits in accordance with ASC 310-10, “Receivables,” and, if deemed necessary, a specific reserve is allocated to the loan. The specific reserve allocated under ASC 310-10, is based on (i) the present value of expected future cash flows discounted at the loan’s effective interest rate; (ii) the loan’s observable market price; or (iii) net realizable value of the fair value of the collateral if the loan is collateral dependent. Substantially all of our loans evaluated as Watch List—Doubtful under ASC 310-10 are measured using the fair value of collateral method. In rare cases, we may use other methods to determine the specific reserve of a loan under ASC 310-10 if such loan is not collateral dependent.

Within each collectively evaluated pool, the robustness of the lifetime historical loss-rate is evaluated and, if needed, is supplemented with peer loss rates through a model risk adjustment. Certain qualitative loss factors are then evaluated to incorporate management’s two-year reasonable and supportable forecast period followed by a reversion to the pool’s average lifetime loss-rate. Those qualitative loss factors are: (i) trends in portfolio volume and composition, (ii) volume and trends in classified loans, delinquencies, non-accruals and TDR’s, (iii) concentration risk, (iv) trends in underlying collateral value, (v) changes in policies, procedures, and strategies, and (vi) economic conditions. Qualitative factors also include potential losses stemming from operational risk factors arising from fraud, natural disasters,

pandemics and geopolitical events. Should any of the factors considered by management in evaluating the adequacy of the ACL change, our estimate could also change, which could affect the level of future credit loss expense.

We have elected to not measure an ACL for accrued interest receivable given our timely approach in identifying and writing off uncollectible accrued interest. An ACL for off-balance sheet exposure is derived from a projected usage rate of any unfunded commitment multiplied by the historical loss rate, plus model risk adjustment, if any, of the on-balance sheet loan pools.

Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate for current expected credit losses change, our estimate of current expected credit losses could also change, which could affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control, including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in interest rates and the view of regulatory authorities towards loan classifications.

A summary of the transactions in the allowance for credit loan losses by loan class is as follows:


	Three Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total

	(Dollars in Thousands)

Balance at June 30, 2021	$	23,063	$	33,603	$	34,238	$	4,206	$	3,916	$	8,196	$	268	$	791	$	108,281
Losses charged to allowance		(2,287)		(2)		—		—		(73)		(4)		(64)		—		(2,430)
Recoveries credited to allowance		473		—		141		—		12		28		19		—		673
Net (losses) recoveries charged to allowance		(1,814)		(2)		141		—		(61)		24		(45)		—		(1,757)

Credit loss expense		1,955		503		871		9		(110)		(496)		47		22		2,801

Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325


	Three Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total

	(Dollars in Thousands)

Balance at June 30, 2020	$	20,079	$	40,924	$	18,711	$	1,864	$	3,208	$	8,964	$	288	$	516	$	94,554

Losses charged to allowance		(1,735)		—		—		—		(87)		(3)		(62)		—		(1,887)
Recoveries credited to allowance		523		14		86		—		8		51		46		—		728
Net (losses) recoveries charged to allowance		(1,212)		14		86		—		(79)		48		(16)		—		(1,159)

Credit loss expense		3,277		(2,855)		4,892		2,639		400		293		2		122		8,770

Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165


	Nine Months Ended September 30, 2021
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total

	(Dollars in Thousands)

Balance at December 31, 2020	$	21,908	$	37,612	$	30,000	$	5,051	$	3,874	$	9,570	$	291	$	753	$	109,059

Losses charged to allowance		(5,835)		(2)		(356)		—		(262)		(25)		(151)		—		(6,631)
Recoveries credited to allowance		1,429		—		160		—		47		86		38		—		1,760
Net (losses) recoveries charged to allowance		(4,406)		(2)		(196)		—		(215)		61		(113)		—		(4,871)

Credit loss expense		5,702		(3,506)		5,446		(836)		86		(1,907)		92		60		5,137

Balance at September 30, 2021	$	23,204	$	34,104	$	35,250	$	4,215	$	3,745	$	7,724	$	270	$	813	$	109,325


	Nine Months Ended September 30, 2020
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total

	(Dollars in Thousands)

Balance at December 31, 2019	$	11,145	$	18,152	$	16,533	$	1,786	$	3,762	$	7,535	$	542	$	823	$	60,278

Adoption of ASU 2016-13		4,247		13,391		(4,292)		(355)		(1,580)		(429)		(225)		(410)		10,347

Losses charged to allowance		(6,696)		(19)		(55)		—		(123)		(124)		(192)		—		(7,209)
Recoveries credited to allowance		1,793		15		107		—		10		171		58		—		2,154
Net (losses) recoveries charged to allowance		(4,903)		(4)		52		—		(113)		47		(134)		—		(5,055)

Credit loss expense		11,655		6,544		11,396		3,072		1,460		2,152		91		225		36,595

Balance at September 30, 2020	$	22,144	$	38,083	$	23,689	$	4,503	$	3,529	$	9,305	$	274	$	638	$	102,165

The credit loss expense charged to operations increased throughout 2020 as a result of increases in the ACL due to deteriorating economic conditions as a result of the novel Coronavirus Disease 2019 (“COVID-19”) and its variant strains the impact of those conditions on certain segments of our loan portfolio. Economic conditions during the first nine months of 2021 have stabilized and, in some segments, improved. The pool specific qualitative loss factors management deemed appropriate for the ACL calculation at December 31, 2020 remained constant in the September 30, 2021 ACL calculation, which positively impacted the calculation and resulted in a decrease in the credit loss expense charged to operations for the three and nine months ended September 30, 2021 compared to the same period of 2020.

The table below provides additional information on the balance of loans individually or collectively evaluated for impairment and their related allowance, by loan class as of September 30, 2021 and December 31, 2020:


	September 30, 2021
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance

	(Dollars in Thousands)
Domestic
Commercial	$	331	$	29	$	1,596,518	$	23,175
Commercial real estate: other construction & land development		646		70		1,670,566		34,034
Commercial real estate: farmland & commercial		414		—		2,715,663		35,250
Commercial real estate: multifamily		137		—		367,028		4,215
Residential: first lien		89		—		385,544		3,745
Residential: junior lien		33		—		490,647		7,724
Consumer		—		—		40,699		270
Foreign		—		—		135,843		813

Total	$	1,650	$	99	$	7,402,508	$	109,226


	December 31, 2020
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance

	(Dollars in Thousands)
Domestic
Commercial	$	1,189	$	209	$	1,784,747	$	21,699
Commercial real estate: other construction & land development		17,496		70		1,829,261		37,542
Commercial real estate: farmland & commercial		439		—		2,288,869		30,000
Commercial real estate: multifamily		134		—		440,910		5,051
Residential: first lien		151		—		404,968		3,874
Residential: junior lien		38		—		593,987		9,570
Consumer		—		—		40,595		291
Foreign		—		—		138,970		753

Total	$	19,447	$	279	$	7,522,307	$	108,780

The table below provides additional information on loans accounted for on a non-accrual basis by loan class at September 30, 2021 and December 31, 2020:


	September 30, 2021		December 31, 2020

	(Dollars in Thousands)
Domestic
Commercial	$	331	$	1,189
Commercial real estate: other construction & land development		646		17,496
Commercial real estate: farmland & commercial		414		439
Commercial real estate: multifamily		137		134
Residential: first lien		342		526
Residential: junior lien		33		38
Total non-accrual loans	$	1,903	$	19,822

The following table details loans accounted for as “troubled debt restructuring,” segregated by loan class. Loans accounted for as troubled debt restructuring are included in Watch List—Doubtful loans.


	September 30, 2021		December 31, 2020

		(Dollars in Thousands)
Domestic
Residential: first lien	$	1,934	$	4,078
Residential: junior lien		106		521
Consumer		862		989
Foreign		17		233
Total troubled debt restructuring	$	2,919	$	5,821

We are actively working with our customers affected by the current economic crisis arising from COVID-19. We have been offering and are prepared to continue to offer assistance in accordance with current regulatory guidance. That includes continuously reaching out to our customers and, in some cases, offering short-term payment deferral plans. As of November 1, 2021, we had approximately $226,831,000 in loans with some degree of payment deferrals in our system. In accordance with interagency regulatory guidance, these short-term deferrals are not considered troubled debt restructurings. The $226,831,000 is comprised primarily of loans related to industries that have been significantly impacted by the COVID-19 pandemic, including the hospitality sector, special use facilities, including child care centers, and retail developments.

With the passage of the Paycheck Protection Program (“PPP”), administered by the Small Business Association (“SBA”), we assisted our customers with applications for loans through the PPP. PPP loans earn interest at 1% and PPP loans made prior to June 5, 2020 have a two-year term, while those made after June 5, 2020 have a five-year term; however, PPP loans also include forgiveness provisions that we expect most customers will utilize. Customers began submitting applications for the forgiveness program in the third quarter of 2020. PPP loans were intended to support up to 24 weeks of payroll and certain other costs to help those businesses remain viable and allow their employees to pay their bills. As of November 1, 2021, we had 2,634 PPP loans totaling approximately $169,511,000 outstanding. The PPP loans are fully guaranteed by the U.S. government through the SBA.

The Subsidiary Banks charge-off that portion of any loan which management considers to represent a loss as well as that portion of any other loan which is classified as a “loss” by bank examiners. Commercial and industrial or real estate loans are generally considered by management to represent a loss, in whole or part, when an exposure beyond any collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition and general economic conditions in the borrower’s industry. Generally, unsecured consumer loans are charged-off when 90 days past due.

While our management believes that it is generally able to identify borrowers with financial problems reasonably early and to monitor credit extended to such borrowers carefully, there is no precise method of predicting loan losses. The determination that a loan is likely to be uncollectible and that it should be wholly or partially charged-

off as a loss is an exercise of judgment. Similarly, the determination of the adequacy of the ACL can be made only on a subjective basis. It is the judgment of our management that the ACL at September 30, 2021 was adequate to absorb probable losses from loans in the portfolio at that date.

The following tables present information regarding the aging of past due loans by loan class at September 30, 2021 and December 31, 2020:


	September 30, 2021
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio

	(Dollars in Thousands)
Domestic
Commercial	$	5,123	$	221	$	89	$	89	$	5,433	$	1,591,416	$	1,596,849
Commercial real estate: other construction & land development		21,433		188		—		—		21,621		1,649,591		1,671,212
Commercial real estate: farmland & commercial		6,535		2,104		185		—		8,824		2,707,253		2,716,077
Commercial real estate: multifamily		—		—		—		—		—		367,165		367,165
Residential: first lien		2,266		655		4,930		4,735		7,851		377,782		385,633
Residential: junior lien		515		104		1,842		1,842		2,461		488,219		490,680
Consumer		240		70		46		46		356		40,343		40,699
Foreign		1,231		1,482		360		360		3,073		132,770		135,843
Total past due loans	$	37,343	$	4,824	$	7,452	$	7,072	$	49,619	$	7,354,539	$	7,404,158


	December 31, 2020
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio

		(Dollars in Thousands)
Domestic
Commercial	$	1,931	$	1,109	$	563	$	318	$	3,603	$	1,782,333	$	1,785,936
Commercial real estate: other construction & land development		1,059		854		16,587		—		18,500		1,828,257		1,846,757
Commercial real estate: farmland & commercial		2,435		219		186		186		2,840		2,286,468		2,289,308
Commercial real estate: multifamily		126		—		—		—		126		440,918		441,044
Residential: first lien		2,399		926		6,165		5,890		9,490		395,629		405,119
Residential: junior lien		561		247		1,197		1,197		2,005		592,020		594,025
Consumer		318		71		79		79		468		40,127		40,595
Foreign		478		180		568		568		1,226		137,744		138,970
Total past due loans	$	9,307	$	3,606	$	25,345	$	8,238	$	38,258	$	7,503,496	$	7,541,754

The decrease in Commercial Real Estate – Other Construction and Land Development Loans 90 days or greater past due at September 30, 2021 can be primarily attributed to a relationship secured by commercial property that was placed on non-accrual in the fourth quarter of 2020 and foreclosed upon in the first quarter of 2021.

A summary of the loan portfolio by credit quality indicator by loan class and by year of origination at September 30, 2021 and December 31, 2020 is presented below:



		2021	2020		2019		2018		2017		Prior		Total

	(Dollars in Thousands)
Balance at September 30, 2021
Domestic
Commercial
Pass	$	775,702	$	398,790	$	126,858	$	104,736	$	67,433	$	8,398	$	1,481,917
Special Review		1,517		74,691		139		81		—		—		76,428
Watch List - Pass		33,793		—		—		—		—		10		33,803
Watch List - Substandard		3,232		297		781		60		—		—		4,370
Watch List - Doubtful		106		134		—		—		91		—		331
Total Commercial	$	814,350	$	473,912	$	127,778	$	104,877	$	67,524	$	8,408	$	1,596,849
Commercial real estate: other construction & land development
Pass	$	657,381	$	441,333	$	413,856	$	83,925	$	15,826	$	3,406	$	1,615,727
Special Review		31,527		—		211		—		—		—		31,738
Watch List - Pass		—		23,101		—		—		—		—		23,101
Watch List - Doubtful		539		107		—		—		—		—		646
Total Commercial real estate: other construction & land development	$	689,447	$	464,541	$	414,067	$	83,925	$	15,826	$	3,406	$	1,671,212
Commercial real estate: farmland & commercial
Pass	$	771,884	$	699,685	$	326,176	$	455,899	$	197,313	$	131,756	$	2,582,713
Special Review		2,849		1,314		910		3,617		63		194		8,947
Watch List - Pass		17,503		44,143		—		—		94		1		61,741
Watch List - Substandard		1,304		54,124		4,178		—		2,195		461		62,262
Watch List - Doubtful		—		229		185		—		—		—		414
Total Commercial real estate: farmland & commercial	$	793,540	$	799,495	$	331,449	$	459,516	$	199,665	$	132,412	$	2,716,077
Commercial real estate: multifamily
Pass	$	40,569	$	81,107	$	98,720	$	76,109	$	63,220	$	7,303	$	367,028
Watch List - Doubtful		—		137		—		—		—		—		137
Total Commercial real estate: multifamily	$	40,569	$	81,244	$	98,720	$	76,109	$	63,220	$	7,303	$	367,165
Residential: first lien
Pass	$	85,763	$	56,687	$	65,531	$	51,959	$	31,709	$	93,611	$	385,260
Watch List - Substandard		57		—		103		—		123		1		284
Watch List - Doubtful		—		89		—		—		—		—		89
Total Residential: first lien	$	85,820	$	56,776	$	65,634	$	51,959	$	31,832	$	93,612	$	385,633
Residential: junior lien
Pass	$	103,570	$	141,368	$	71,211	$	35,364	$	46,503	$	92,631	$	490,647
Watch List- Doubtful		—		33		—		—		—		—		33
Total Residential: junior lien	$	103,570	$	141,401	$	71,211	$	35,364	$	46,503	$	92,631	$	490,680
Residential: junior lien
Consumer
Pass	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Total Consumer	$	26,613	$	10,196	$	1,910	$	332	$	67	$	1,581	$	40,699
Foreign
Pass	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Foreign	$	69,895	$	37,503	$	9,082	$	9,347	$	5,238	$	4,778	$	135,843
Total Loans	$	2,623,804	$	2,065,068	$	1,119,851	$	821,429	$	429,875	$	344,131	$	7,404,158



		2020	2019		2018		2017		2016		Prior		Total

	(Dollars in Thousands)
Balance at December 31, 2020
Domestic
Commercial
Pass	$	1,168,671	$	240,869	$	145,670	$	85,434	$	13,901	$	10,000	$	1,664,545
Special Review		75,638		—		—		—		—		—		75,638
Watch List - Pass		39,886		11		—		3		—		17		39,917
Watch List - Substandard		3,360		683		289		—		315		—		4,647
Watch List - Doubtful		777		161		92		159		—		—		1,189
Total Commercial	$	1,288,332	$	241,724	$	146,051	$	85,596	$	14,216	$	10,017	$	1,785,936
Commercial
Commercial real estate: other construction & land development
Pass	$	773,165	$	576,707	$	320,308	$	78,174	$	10,534	$	3,343	$	1,762,231
Special Review		20,828		21,650		—		—		—		—		42,478
Watch List - Pass		23,101		1,451		—		—		—		—		24,552
Watch List - Doubtful		16,702		794		—		—		—		—		17,496
Total Commercial real estate: other construction & land development	$	833,796	$	600,602	$	320,308	$	78,174	$	10,534	$	3,343	$	1,846,757
Commercial real estate: farmland & commercial
Pass	$	884,070	$	373,993	$	386,268	$	189,639	$	202,500	$	116,729	$	2,153,199
Special Review		3,041		—		4,758		177		3,218		—		11,194
Watch List - Pass		61,637		942		277		80		—		—		62,936
Watch List - Substandard		53,809		4,986		—		2,269		475		1		61,540
Watch List - Doubtful		—		202		—		—		—		237		439
Total Commercial real estate: farmland & commercial	$	1,002,557	$	380,123	$	391,303	$	192,165	$	206,193	$	116,967	$	2,289,308
Commercial real estate: multifamily
Pass	$	74,577	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	440,910
Watch List - Doubtful		134		—		—		—		—		—		134
Total Commercial real estate: multifamily	$	74,711	$	208,356	$	82,818	$	64,110	$	6,801	$	4,248	$	441,044
Residential: first lien
Pass	$	81,004	$	62,165	$	72,299	$	54,593	$	29,250	$	105,463	$	404,774
Watch List - Pass		—		14		131		—		—		—		145
Watch List - Substandard		—		—		—		—		49		—		49
Watch List - Doubtful		86		—		—		—		—		65		151
Total Residential: first lien	$	81,090	$	62,179	$	72,430	$	54,593	$	29,299	$	105,528	$	405,119
Residential: junior lien
Pass	$	196,308	$	108,276	$	61,636	$	75,056	$	56,705	$	94,454	$	592,435
Special Review		740		—		—		812		—		—		1,552
Watch List- Doubtful		—		—		38		—		—		—		38
Total Residential: junior lien	$	197,048	$	108,276	$	61,674	$	75,868	$	56,705	$	94,454	$	594,025
Consumer
Pass	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Total Consumer	$	30,910	$	7,159	$	875	$	225	$	55	$	1,371	$	40,595
Foreign
Pass	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Foreign	$	93,236	$	19,092	$	11,572	$	6,192	$	3,533	$	5,345	$	138,970
Total Loans	$	3,601,680	$	1,627,511	$	1,087,031	$	556,923	$	327,336	$	341,273	$	7,541,754

The decrease in Special Review Commercial Real Estate – Other Construction and Land development loans at September 30, 2021 compared to December 31, 2020 can be primarily attributed to the payoff of a loan secured by commercial property in the first quarter of 2021. The decrease in Watch List-Doubtful loans in the same category for the same period can be primarily attributed to a relationship secured by commercial property that was placed on non-accrual status in the fourth quarter of 2020 and subsequently foreclosed upon in the first quarter of 2021.