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Allowance for Credit Losses

9 Months Ended

Sep. 30, 2022

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, 2022
	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, 2022	$	25,577	$	36,713	$	35,270	$	2,856	$	4,137	$	6,894	$	270	$	855	$	112,572
Losses charged to allowance		(2,568)		—		—		—		(3)		—		(55)		—		(2,626)
Recoveries credited to allowance		562		100		7		—		13		27		15		—		724
Net (losses) recoveries charged to allowance		(2,006)		100		7		—		10		27		(40)		—		(1,902)

Credit loss expense		1,273		5,255		(303)		237		540		1,351		62		110		8,525

Balance at September 30, 2022	$	24,844	$	42,068	$	34,974	$	3,093	$	4,687	$	8,272	$	292	$	965	$	119,195


	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


	Nine Months Ended September 30, 2022
	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, 2021	$	23,178	$	35,390	$	35,654	$	3,291	$	4,073	$	7,754	$	272	$	762	$	110,374

Losses charged to allowance		(6,681)		(2)		—		—		(159)		(28)		(177)		—		(7,047)
Recoveries credited to allowance		1,672		103		21		—		211		89		31		—		2,127
Net (losses) recoveries charged to allowance		(5,009)		101		21		—		52		61		(146)		—		(4,920)

Credit loss expense		6,675		6,577		(701)		(198)		562		457		166		203		13,741

Balance at September 30, 2022	$	24,844	$	42,068	$	34,974	$	3,093	$	4,687	$	8,272	$	292	$	965	$	119,195


	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

The pool specific qualitative loss factors management deemed appropriate for the ACL calculation at December 31, 2021 remained constant in the September 30, 2022 ACL calculation.

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, 2022 and December 31, 2021:


	September 30, 2022
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance

	(Dollars in Thousands)
Domestic
Commercial	$	108	$	—	$	1,448,415	$	24,844
Commercial real estate: other construction & land development		562		70		1,835,485		41,998
Commercial real estate: farmland & commercial		537		—		2,461,342		34,974
Commercial real estate: multifamily		121		—		245,685		3,093
Residential: first lien		81		—		412,271		4,687
Residential: junior lien		—		—		439,812		8,272
Consumer		—		—		41,786		292
Foreign		—		—		164,545		965

Total	$	1,409	$	70	$	7,049,341	$	119,125


	December 31, 2021
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance

	(Dollars in Thousands)
Domestic
Commercial	$	298	$	29	$	1,501,554	$	23,149
Commercial real estate: other construction & land development		589		70		1,667,524		35,320
Commercial real estate: farmland & commercial		562		—		2,710,494		35,654
Commercial real estate: multifamily		131		—		284,405		3,291
Residential: first lien		87		—		403,571		4,073
Residential: junior lien		—		—		464,173		7,754
Consumer		—		—		40,966		272
Foreign		—		—		134,797		762

Total	$	1,667	$	99	$	7,207,484	$	110,275

The table below provides additional information on loans accounted for on a non-accrual basis by loan class at September 30, 2022 and December 31, 2021:


	September 30, 2022		December 31, 2021

	(Dollars in Thousands)
Domestic
Commercial	$	108	$	298
Commercial real estate: other construction & land development		562		589
Commercial real estate: farmland & commercial		537		562
Commercial real estate: multifamily		121		131
Residential: first lien		284		341
Total non-accrual loans	$	1,612	$	1,921

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, 2022		December 31, 2021

		(Dollars in Thousands)
Domestic
Residential: first lien	$	1,658	$	2,254
Residential: junior lien		323		105
Consumer		773		878
Foreign		57		16
Total troubled debt restructuring	$	2,811	$	3,253

We have worked with our customers affected by the prolonged economic crisis arising from COVID-19. We have offered and are prepared to continue to offer assistance in accordance with regulatory guidance. That includes continuously reaching out to our customers and, in some cases, offering deferral plans. As of October 31, 2022, we had approximately $54,405,000 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 $54,405,000 is comprised primarily of loans related to the hospitality sector, which has been significantly impacted by the COVID-19 pandemic.

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 October 31, 2022, we had 223 PPP loans totaling approximately $9,292,000 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, 2022 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, 2022 and December 31, 2021:


	September 30, 2022
							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	$	3,255	$	119	$	50	$	50	$	3,424	$	1,445,098	$	1,448,522
Commercial real estate: other construction & land development		1,130		—		465		—		1,595		1,834,452		1,836,047
Commercial real estate: farmland & commercial		1,119		844		1,458		921		3,421		2,458,459		2,461,880
Commercial real estate: multifamily		970		—		71		71		1,041		244,765		245,806
Residential: first lien		1,854		575		5,122		4,896		7,551		404,801		412,352
Residential: junior lien		617		84		1,289		1,289		1,990		437,822		439,812
Consumer		224		131		7		7		362		41,424		41,786
Foreign		1,221		310		16		16		1,547		162,998		164,545
Total past due loans	$	10,390	$	2,063	$	8,478	$	7,250	$	20,931	$	7,029,819	$	7,050,750


	December 31, 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	$	2,534	$	303	$	577	$	577	$	3,414	$	1,498,438	$	1,501,852
Commercial real estate: other construction & land development		499		334		188		188		1,021		1,667,092		1,668,113
Commercial real estate: farmland & commercial		18,164		172		644		307		18,980		2,692,076		2,711,056
Commercial real estate: multifamily		—		—		—		—		—		284,536		284,536
Residential: first lien		2,342		1,212		5,129		4,937		8,683		394,975		403,658
Residential: junior lien		747		115		1,055		1,055		1,917		462,256		464,173
Consumer		231		88		4		4		323		40,643		40,966
Foreign		1,319		232		1,574		1,574		3,125		131,672		134,797
Total past due loans	$	25,836	$	2,456	$	9,171	$	8,642	$	37,463	$	7,171,688	$	7,209,151

The decrease in Commercial real estate – farmland & commercial loans past due 30 – 59 days at September 30, 2022 can be primarily attributed to a relationship secured by a commercial property used as retail space being brought current.

A summary of the loan portfolio by credit quality indicator by loan class and by year of origination at September 30, 2022 and December 31, 2021 is presented below:



		2022	2021		2020		2019		2018		Prior		Total

	(Dollars in Thousands)
Balance at September 30, 2022
Domestic
Commercial
Pass	$	511,978	$	680,788	$	100,975	$	45,000	$	44,685	$	30,337	$	1,413,763
Special Review		381		225		—		—		—		—		606
Watch List - Pass		3,052		—		—		680		—		—		3,732
Watch List - Substandard		29,863		164		233		—		52		1		30,313
Watch List - Doubtful		—		100		—		—		—		8		108
Total Commercial	$	545,274	$	681,277	$	101,208	$	45,680	$	44,737	$	30,346	$	1,448,522
Commercial real estate: other construction & land development
Pass	$	639,785	$	765,586	$	196,473	$	173,829	$	32,907	$	6,713	$	1,815,293
Special Review		—		—		—		210		—		—		210
Watch List - Substandard		19,982		—		—		—		—		—		19,982
Watch List - Doubtful		—		465		97		—		—		—		562
Total Commercial real estate: other construction & land development	$	659,767	$	766,051	$	196,570	$	174,039	$	32,907	$	6,713	$	1,836,047
Commercial real estate: farmland & commercial
Pass	$	575,325	$	611,346	$	479,814	$	263,504	$	355,473	$	96,759	$	2,382,221
Special Review		173		662		851		—		—		—		1,686
Watch List - Pass		17,139		252		—		2,906		—		—		20,297
Watch List - Substandard		—		—		54,166		685		—		2,288		57,139
Watch List - Doubtful		—		—		204		333		—		—		537
Total Commercial real estate: farmland & commercial	$	592,637	$	612,260	$	535,035	$	267,428	$	355,473	$	99,047	$	2,461,880
Commercial real estate: multifamily
Pass	$	64,755	$	86,768	$	60,342	$	12,178	$	6,211	$	15,431	$	245,685
Watch List - Doubtful		—		—		121		—		—		—		121
Total Commercial real estate: multifamily	$	64,755	$	86,768	$	60,463	$	12,178	$	6,211	$	15,431	$	245,806
Residential: first lien
Pass	$	110,081	$	84,544	$	51,752	$	42,580	$	35,871	$	86,906	$	411,734
Watch List - Substandard		100		437		—		—		—		—		537
Watch List - Doubtful		81		—		—		—		—		—		81
Total Residential: first lien	$	110,262	$	84,981	$	51,752	$	42,580	$	35,871	$	86,906	$	412,352
Residential: junior lien
Pass	$	72,963	$	117,776	$	95,206	$	42,720	$	22,661	$	88,486	$	439,812
Total Residential: junior lien	$	72,963	$	117,776	$	95,206	$	42,720	$	22,661	$	88,486	$	439,812
Residential: junior lien
Consumer
Pass	$	27,147	$	10,697	$	1,527	$	620	$	37	$	1,758	$	41,786
Total Consumer	$	27,147	$	10,697	$	1,527	$	620	$	37	$	1,758	$	41,786
Foreign
Pass	$	113,709	$	30,255	$	6,256	$	5,167	$	5,445	$	3,713	$	164,545
Total Foreign	$	113,709	$	30,255	$	6,256	$	5,167	$	5,445	$	3,713	$	164,545
Total Loans	$	2,186,514	$	2,390,065	$	1,048,017	$	590,412	$	503,342	$	332,400	$	7,050,750



		2021	2020		2019		2018		2017		Prior		Total

	(Dollars in Thousands)
Balance at December 31, 2021
Domestic
Commercial
Pass	$	1,041,763	$	167,691	$	77,579	$	58,439	$	37,104	$	5,144	$	1,387,720
Special Review		74,559		497		139		81		—		—		75,276
Watch List - Pass		33,920		—		—		—		—		10		33,930
Watch List - Substandard		3,581		273		716		57		—		1		4,628
Watch List - Doubtful		224		—		—		—		74		—		298
Total Commercial	$	1,154,047	$	168,461	$	78,434	$	58,577	$	37,178	$	5,155	$	1,501,852
Commercial
Commercial real estate: other construction & land development
Pass	$	966,946	$	312,389	$	308,673	$	37,124	$	16,642	$	2,439	$	1,644,213
Special Review		—		—		211		—		—		—		211
Watch List - Pass		—		23,100		—		—		—		—		23,100
Watch List - Doubtful		485		104		—		—		—		—		589
Total Commercial real estate: other construction & land development	$	967,431	$	335,593	$	308,884	$	37,124	$	16,642	$	2,439	$	1,668,113
Commercial real estate: farmland & commercial
Pass	$	1,001,335	$	680,777	$	288,333	$	417,353	$	96,096	$	97,119	$	2,581,013
Special Review		929		1,292		—		3,448		61		—		5,730
Watch List - Pass		18,790		44,059		—		—		94		1		62,944
Watch List - Substandard		—		54,097		3,899		—		2,355		456		60,807
Watch List - Doubtful		—		224		337		—		—		1		562
Total Commercial real estate: farmland & commercial	$	1,021,054	$	780,449	$	292,569	$	420,801	$	98,606	$	97,577	$	2,711,056
Commercial real estate: multifamily
Pass	$	133,152	$	40,766	$	78,609	$	10,632	$	14,217	$	7,029	$	284,405
Watch List - Doubtful		—		131		—		—		—		—		131
Total Commercial real estate: multifamily	$	133,152	$	40,897	$	78,609	$	10,632	$	14,217	$	7,029	$	284,536
Residential: first lien
Pass	$	128,742	$	52,725	$	57,249	$	49,259	$	29,477	$	85,838	$	403,290
Watch List - Substandard		56		—		103		—		122		—		281
Watch List - Doubtful		—		87		—		—		—		—		87
Total Residential: first lien	$	128,798	$	52,812	$	57,352	$	49,259	$	29,599	$	85,838	$	403,658
Residential: junior lien
Pass	$	130,629	$	123,062	$	59,113	$	30,603	$	40,855	$	79,911	$	464,173
Total Residential: junior lien	$	130,629	$	123,062	$	59,113	$	30,603	$	40,855	$	79,911	$	464,173
Consumer
Pass	$	32,053	$	5,693	$	1,370	$	189	$	9	$	1,652	$	40,966
Total Consumer	$	32,053	$	5,693	$	1,370	$	189	$	9	$	1,652	$	40,966
Foreign
Pass	$	74,811	$	33,360	$	9,223	$	8,852	$	4,790	$	3,761	$	134,797
Total Foreign	$	74,811	$	33,360	$	9,223	$	8,852	$	4,790	$	3,761	$	134,797
Total Loans	$	3,641,975	$	1,540,327	$	885,554	$	616,037	$	241,896	$	283,362	$	7,209,151

The decrease in Commercial Special Review loans at September 30, 2022 compared to December 31, 2021 can be primarily attributed to a relationship in the oil and gas production industry that was upgraded to Pass. The decrease in Commercial Watch-List Pass loans at September 30, 2022 compared to December 31, 2021 can be primarily attributed to a relationship in energy production that was downgraded to Watch-List Substandard. The decrease in Commercial real estate: farmland & commercial Watch-List Pass loans can be primarily attributed to a relationship securing commercial property that was downgraded to Watch-List Substandard. The decrease in Watch-List Pass loans at September 30, 2022 compared to December 31, 2021 can be primarily attributed to a loan secured by commercial buildings that was paid off.