| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
(5) Loans
Composition of loans by class as reported under ASC 326 follows:
| December 31, (in thousands) | | 2020 | | | 2019 | |
| | | | | | | | | |
| Commercial real estate - non-owner occupied | | $ | 833,470 | | | $ | 746,283 | |
| Commercial real estate - owner occupied | | | 508,672 | | | | 474,329 | |
| Total commercial real estate | | | 1,342,142 | | | | 1,220,612 | |
| | | | | | | | | |
| Commercial and industrial - term | | | 525,776 | | | | 457,298 | |
| Commercial and industrial - term - PPP | | | 550,186 | | | | - | |
| Commercial and industrial - lines of credit | | | 276,646 | | | | 381,502 | |
| Total commercial and industrial | | | 1,352,608 | | | | 838,800 | |
| | | | | | | | | |
| Residential real estate - owner occupied | | | 239,191 | | | | 217,606 | |
| Residential real estate - non-owner occupied | | | 140,930 | | | | 134,995 | |
| Total residential real estate | | | 380,121 | | | | 352,601 | |
| | | | | | | | | |
| Construction and land development | | | 291,764 | | | | 255,816 | |
| Home equity lines of credit | | | 95,366 | | | | 103,854 | |
| Consumer | | | 44,606 | | | | 47,467 | |
| Leases | | | 14,786 | | | | 16,003 | |
| Credit cards - commercial | | | 10,203 | | | | 9,863 | |
| Total loans (1) | | $ | 3,531,596 | | | $ | 2,845,016 | |
(1) Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs.
For historical comparative purposes, the composition of loans by class pre-ASC 326 adoption follows:
| (in thousands) | | December 31, 2019 | |
| | | | | |
| Commercial and industrial | | $ | 870,511 | |
| Construction and development | | | 213,822 | |
| Undeveloped land | | | 46,360 | |
| | | | | |
| Real estate mortgage: | | | | |
| Commercial investment | | | 736,618 | |
| Owner occupied commercial | | | 473,783 | |
| 1-4 family residential | | | 334,358 | |
| Home equity - first lien | | | 48,620 | |
| Home equity - junior lien | | | 73,477 | |
| Total: real estate mortgage | | | 1,666,856 | |
| Consumer | | | 47,467 | |
| Total loans (1) | | $ | 2,845,016 | |
(1) Total loans are presented inclusive of premiums, discounts and net of loan origination fees and costs.
Fees and costs of originating loans are deferred at origination and amortized over the life of the loan. Loan balances reported herein include deferred loan origination fees, net of deferred loan costs. At December 31, 2020 and 2019, net deferred loan origination costs exceeded deferred loan origination fees, resulting in net negative balances of $12 million and $564,000. The large increase over prior year is the result of fees received from the SBA related to the origination of PPP loans in 2020 that were unearned at December 31, 2020.
Bancorp’s credit exposure is diversified with secured and unsecured loans to individuals and businesses. No specific industry concentration exceeds 10% of loans outstanding. While Bancorp has a diversified loan portfolio, a customer’s ability to honor contracts is somewhat dependent upon the economic stability and/or industry in which that customer does business. Loans outstanding and related unfunded commitments are primarily concentrated within Bancorp’s current market areas, which encompass the Louisville, Indianapolis and Cincinnati MSAs.
Bancorp occasionally enters into loan participation agreements with other banks in the ordinary course of business to diversify credit risk. For certain sold participation loans, Bancorp has retained effective control of the loans, typically by restricting the participating institutions from pledging or selling their share of the loan without permission from Bancorp. GAAP requires the participated portion of these loans to be recorded as secured borrowings. The participated portions of these loans are included in the C&I totals above with a corresponding liability reflected in other liabilities. At December 31, 2020 and 2019, the total participated portions of loans of this nature were $10 million and $8 million respectively.
Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $12 million and $7 million at December 31, 2020 and 2019, respectively, and was included in the consolidated balance sheets.
Loans with carrying amounts of $2 billion and $1.6 billion at December 31, 2020 and 2019, respectively, were pledged to secure FHLB borrowing capacity, the increase stemming from pledging a portion of the PPP portfolio this year.
Loans to directors and their related interests, including loans to companies for which directors are principal owners and executive officers are presented in the following table.
| Years ended December 31, (in thousands) | | 2020 | | | 2019 | |
| Balance as of January 1 | | $ | 43,224 | | | $ | 52,687 | |
| Effect of change in composition of directors and executive officers | | | — | | | | — | |
| Repayment of term loans | | | (737 | ) | | | (184 | ) |
| Changes in balances of revolving lines of credit | | | 604 | | | | (9,279 | ) |
| Balance as of December 31 | | $ | 43,091 | | | $ | 43,224 | |
The following table summarizes loans acquired in Bancorp’s acquisition of KSB, as recasted:
| | | May 1, 2019 | |
| | | Contractual | | | Non-accretable | | | Accretable | | | Acquisition-day | |
| (in thousands) | | Receivable | | | Yield | | | Yield | | | Fair Value | |
| | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 8,249 | | | $ | — | | | $ | (23 | ) | | $ | 8,226 | |
| Construction and land development | | | 18,738 | | | | — | | | | 86 | | | | 18,824 | |
| Real estate mortgage: | | | | | | | | | | | | | | | | |
| Commercial real estate | | | 84,219 | | | | — | | | | (456 | ) | | | 83,763 | |
| Residential real estate | | | 50,556 | | | | — | | | | 322 | | | | 50,878 | |
| Home equity lines of credit | | | 875 | | | | — | | | | 8 | | | | 883 | |
| Subtotal: Real estate mortgage | | | 135,650 | | | | — | | | | (126 | ) | | | 135,524 | |
| | | | | | | | | | | | | | | | | |
| Consumer | | | 1,528 | | | | — | | | | (73 | ) | | | 1,455 | |
| | | | | | | | | | | | | | | | | |
| Total loans acquired under ASC 310-20 | | | 164,165 | | | | — | | | | (136 | ) | | | 164,029 | |
| | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | — | | | | — | | | | — | | | | — | |
| Construction and land development | | | — | | | | — | | | | — | | | | — | |
| Real estate mortgage: | | | | | | | | | | | | | | | | |
| Commercial real estate | | | 1,351 | | | | (1,351 | ) | | | — | | | | — | |
| Residential real estate | | | 228 | | | | (228 | ) | | | — | | | | — | |
| Home equity lines of credit | | | — | | | | — | | | | — | | | | — | |
| Subtotal: Real estate mortgage | | | 1,579 | | | | (1,579 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Consumer | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total purchased credit impaired loans acquired under ASC 310-30 | | | 1,579 | | | | (1,579 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total loans | | $ | 165,744 | | | $ | (1,579 | ) | | $ | (136 | ) | | $ | 164,029 | |
Effective March 31, 2020, management finalized the fair values of the acquired assets and assumed liabilities in advance of 12 months post acquisition date, as allowed by GAAP.
The Bank acquired PCI loans related to its 2019 and 2013 acquisitions. At acquisition date, these loans were accounted for under ASC 310-30. On January 1, 2020, Bancorp adopted ASC 326 using the prospective transition approach for loans purchased with credit deterioration that were previously classified as PCI and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI loans met the criteria of PCD loans as of the adoption date. On January 1, 2020, non-accretable yield marks of $1.6 million related to formerly classified PCI loans were reclassed between the amortized cost basis of loans and corresponding ACL. The majority of these marks were subsequently charged off in the third quarter of 2020.
Bancorp’s estimate of the ACL on loans reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications. The table below reflects activity in the ACL related to loans for the year ended December 31, 2020, presented in accordance with ASC 326:
| Year Ended December 31, 2020 (in thousands) | | Beginning Balance | | | Impact of Adopting ASC 326 | | | Initial ACL on Loans Purchased with Credit Deterioration | | | Provision for Credit Losses | | | Charge-offs | | | Recoveries | | | Ending Balance | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate - non-owner occupied | | $ | 5,235 | | | $ | 2,946 | | | $ | 152 | | | $ | 11,194 | | | $ | (143 | ) | | $ | 12 | | | $ | 19,396 | |
| Commercial real estate - owner occupied | | | 3,327 | | | | 1,542 | | | | 1,350 | | | | 2,115 | | | | (1,351 | ) | | | - | | | | 6,983 | |
| Total commercial real estate | | | 8,562 | | | | 4,488 | | | | 1,502 | | | | 13,309 | | | | (1,494 | ) | | | 12 | | | | 26,379 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial - term | | | 6,782 | | | | 365 | | | | - | | | | 1,832 | | | | (18 | ) | | | 9 | | | | 8,970 | |
| Commercial and industrial - lines of credit | | | 5,657 | | | | (1,528 | ) | | | - | | | | (515 | ) | | | - | | | | - | | | | 3,614 | |
| Total commercial and industrial | | | 12,439 | | | | (1,163 | ) | | | - | | | | 1,317 | | | | (18 | ) | | | 9 | | | | 12,584 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential real estate - owner occupied | | | 1,527 | | | | 1,087 | | | | 99 | | | | 737 | | | | (79 | ) | | | 18 | | | | 3,389 | |
| Residential real estate - non-owner occupied | | | 947 | | | | 429 | | | | - | | | | 442 | | | | (2 | ) | | | 2 | | | | 1,818 | |
| Total residential real estate | | | 2,474 | | | | 1,516 | | | | 99 | | | | 1,179 | | | | (81 | ) | | | 20 | | | | 5,207 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Construction and land development | | | 2,105 | | | | 3,056 | | | | - | | | | 902 | | | | - | | | | 56 | | | | 6,119 | |
| Home equity lines of credit | | | 728 | | | | 114 | | | | - | | | | 53 | | | | - | | | | - | | | | 895 | |
| Consumer | | | 100 | | | | 264 | | | | 34 | | | | 91 | | | | (508 | ) | | | 359 | | | | 340 | |
| Leases | | | 237 | | | | (4 | ) | | | - | | | | 28 | | | | - | | | | - | | | | 261 | |
| Credit cards - commercial | | | 146 | | | | (50 | ) | | | - | | | | 39 | | | | - | | | | - | | | | 135 | |
| Total net loan (charge-offs) recoveries | | $ | 26,791 | | | $ | 8,221 | | | $ | 1,635 | | | $ | 16,918 | | | $ | (2,101 | ) | | $ | 456 | | | $ | 51,920 | |
The tables below reflect activity in the ACL related to loans for the years ended December 31, 2019 and 2018, presented in accordance with ASC 310 prior to the adoption of ASC 326:
| Year Ended December 31, 2019 (in thousands) | | Beginning Balance | | | Provision for Credit Losses | | | Charge-offs | | | Recoveries | | | Ending Balance | |
| | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage | | $ | 10,681 | | | $ | 1,021 | | | $ | (38 | ) | | $ | 100 | | | $ | 11,764 | |
| Commercial and industrial | | | 11,965 | | | | 684 | | | | (94 | ) | | | 267 | | | | 12,822 | |
| Construction and development | | | 1,760 | | | | (644 | ) | | | - | | | | 203 | | | | 1,319 | |
| Undeveloped land | | | 752 | | | | 34 | | | | - | | | | - | | | | 786 | |
| Consumer | | | 376 | | | | (95 | ) | | | (552 | ) | | | 371 | | | | 100 | |
| | | $ | 25,534 | | | $ | 1,000 | | | $ | (684 | ) | | $ | 941 | | | $ | 26,791 | |
| Year Ended December 31, 2018 (in thousands) | | Beginning Balance | | | Provision for Credit Losses | | | Charge-offs | | | Recoveries | | | Ending Balance | |
| | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage | | $ | 11,012 | | | $ | (261 | ) | | $ | (132 | ) | | $ | 62 | | | $ | 10,681 | |
| Commercial and industrial | | | 11,276 | | | | 2,539 | | | | (2,404 | ) | | | 554 | | | | 11,965 | |
| Construction and development | | | 1,724 | | | | 36 | | | | - | | | | - | | | | 1,760 | |
| Undeveloped land | | | 521 | | | | 231 | | | | - | | | | - | | | | 752 | |
| Consumer | | | 352 | | | | 160 | | | | (476 | ) | | | 340 | | | | 376 | |
| | | $ | 24,885 | | | $ | 2,705 | | | $ | (3,012 | ) | | $ | 956 | | | $ | 25,534 | |
Upon adoption of ASC 326 on January 1, 2020, Bancorp recorded an increase of $8.2 million to the ACL on loans and a corresponding decrease to retained earnings, net of the DTA impact. In addition, non-accretable yield marks of $1.6 million related to formerly classified PCI loans were reclassed between the amortized cost basis of loans and corresponding ACL. The majority of these marks were subsequently charged off in the third quarter of 2020. The adjustment upon adoption of ASC 326 raised the ACL on loans balance to $37 million on January 1, 2020. In addition to CECL adoption, Bancorp’s national unemployment forecast adjustments within the CECL model have had a significant impact on the ACL in 2020, along with changes in the loan mix and the addition of a large specific reserve during the second quarter of 2020.
Subsequent to January 1, 2020, based on the economic crisis caused by COVID-19 and measures taken to protect public health such as stay-at-home orders and mandatory businesses closures, economic activity halted significantly and job losses surged. As such, national unemployment rose to a high of 14.7% in April and declined to 6.70% at December 31, 2020.
| | | Dec 20 | | | Sep 20 | | | Jun 20 | | | Mar 20 | | | Dec 19 | |
| | | | | | | | | | | | | | | | | | | | | |
| Seasonally Adjusted National Civilian Unemployment Rate | | | 6.70 | % | | | 7.90 | % | | | 11.10 | % | | | 4.40 | % | | | 3.50 | % |
During the fourth quarter, the FRB released its forecasted Seasonally Adjusted National Civilian Unemployment Rate for the 12 months ended December 31, 2020, 2021, 2022 and 2023 as follows:
| | | 2020 | | | 2021 | | | 2022 | | | 2023 | |
| | | | | | | | | | | | | | | | | |
| Upper end of range | | | 6.9 | % | | | 6.8 | % | | | 5.8 | % | | | 4.4 | % |
| Median | | | 6.7 | % | | | 5.0 | % | | | 4.2 | % | | | 3.7 | % |
| Lower end of range | | | 6.6 | % | | | 4.0 | % | | | 3.5 | % | | | 3.5 | % |
As of December 31, 2020, Bancorp elected to forecast for one quarter of national unemployment utilizing the FRB’s 2021 median unemployment forecast released in December then stepping down to the FRB’s 2021 median unemployment forecast over the next four quarters before reverting back to Bancorp’s long-term average.
The following table presents the amortized cost basis of non-performing loans and the amortized cost basis of loans on non-accrual status for which there was no related ACL losses of December 31, 2020:
| | | Non-accrual Loans | | | | | | | | | | | Past Due 90-Days- | |
| December 31, 2020 | | With No | | | Total | | | Troubled Debt | | | or-More and Still | |
| (in thousands) | | Recorded ACL | | | Non-accrual | | | Restructurings | | | Accruing Interest | |
| | | | | | | | | | | | | | | | | |
| Commercial real estate - non-owner occupied | | $ | 186 | | | $ | 10,278 | | | $ | — | | | $ | — | |
| Commercial real estate - owner occupied | | | 1,048 | | | | 1,403 | | | | — | | | | 156 | |
| Total commercial real estate | | | 1,234 | | | | 11,681 | | | | — | | | | 156 | |
| | | | | | | | | | | | | | | | | |
| Commercial and industrial - term | | | 6 | | | | 6 | | | | 16 | | | | — | |
| Commercial and industrial - lines of credit | | | 88 | | | | 88 | | | | — | | | | — | |
| Total commercial and industrial | | | 94 | | | | 94 | | | | 16 | | | | — | |
| | | | | | | | | | | | | | | | | |
| Residential real estate - owner occupied | | | 413 | | | | 413 | | | | — | | | | 178 | |
| Residential real estate - non-owner occupied | | | 101 | | | | 101 | | | | — | | | | 301 | |
| Total residential real estate | | | 514 | | | | 514 | | | | — | | | | 479 | |
| | | | | | | | | | | | | | | | | |
| Construction and land development | | | — | | | | — | | | | — | | | | — | |
| Home equity lines of credit | | | 221 | | | | 221 | | | | — | | | | 14 | |
| Consumer | | | 4 | | | | 4 | | | | — | | | | — | |
| Leases | | | — | | | | — | | | | — | | | | — | |
| Credit cards - commercial | | | — | | | | — | | | | — | | | | — | |
| Total | | $ | 2,067 | | | $ | 12,514 | | | $ | 16 | | | $ | 649 | |
For the years ended December 31, 2020 and 2019, the amount of accrued interest income previously recorded as revenue and subsequently reversed due to the change in accrual status was immaterial.
For the years ended December 31, 2020 and 2019, no interest income was recognized on loans on non-accrual status.
The following table presents the recorded investment in non-performing loans by portfolio class as of December 31, 2019:
| December 31, 2019 (in thousands) | | Non-accrual | | | Troubled Debt Restructurings | | | Past Due 90-Days-or-More and Still Accruing Interest | |
| | | | | | | | | | | | | |
| Commercial and industrial | | $ | 8,202 | | | $ | 21 | | | $ | — | |
| Construction and devlopment | | | — | | | | — | | | | — | |
| Undeveloped land | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
| Real estate mortgage: | | | | | | | | | | | | |
| Commercial investment | | | 740 | | | | — | | | | 396 | |
| Owner occupied commercial | | | 2,278 | | | | — | | | | — | |
| 1-4 family residential | | | 123 | | | | 13 | | | | 104 | |
| Home equity - first lien | | | — | | | | — | | | | — | |
| Home equity - junior lien | | | 151 | | | | — | | | | 35 | |
| Total: Real estate mortgage | | | 3,292 | | | | 13 | | | | 535 | |
| Consumer | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
| Total | | $ | 11,494 | | | $ | 34 | | | $ | 535 | |
The following table presents the amortized cost basis and ACL allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses:
| December 31, 2020 (in thousands) | | Real Estate | | | Accounts Receivable / Equipment | | | Other | | | Total | | | ACL Allocation | |
| | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate - non-owner occupied | | $ | 10,278 | | | $ | - | | | $ | - | | | $ | 10,278 | | | $ | 3,037 | |
| Commercial real estate - owner occupied | | | 1,403 | | | | - | | | | - | | | | 1,403 | | | | 13 | |
| Total commercial real estate | | | 11,681 | | | | - | | | | - | | | | 11,681 | | | | 3,050 | |
| | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial - term | | | 16 | | | | 7 | | | | - | | | | 23 | | | | 16 | |
| Commercial and industrial - lines of credit | | | - | | | | 88 | | | | - | | | | 88 | | | | - | |
| Total commercial and industrial | | | 16 | | | | 95 | | | | - | | | | 111 | | | | 16 | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate - owner occupied | | | 413 | | | | - | | | | - | | | | 413 | | | | - | |
| Residential real estate - non-owner occupied | | | 101 | | | | - | | | | - | | | | 101 | | | | - | |
| Total residential real estate | | | 514 | | | | - | | | | - | | | | 514 | | | | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Construction and land development | | | - | | | | - | | | | - | | | | - | | | | - | |
| Home equity lines of credit | | | 221 | | | | - | | | | - | | | | 221 | | | | - | |
| Consumer | | | - | | | | - | | | | 4 | | | | 4 | | | | - | |
| Leases | | | - | | | | - | | | | - | | | | - | | | | - | |
| Credit cards - commercial | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total collateral dependent loans | | $ | 12,432 | | | $ | 95 | | | $ | 4 | | | $ | 12,531 | | | $ | 3,066 | |
There have been no significant changes to the types of collateral securing Bancorp’s collateral dependent loans.
The following table presents loans individually and collectively evaluated for impairment and the respective ACL allocation as of December 31, 2019, as determined in accordance with ASC 310 prior to the adoption of ASC 326:
| | | Loans | | | ACL | |
| December 31, 2019 (in thousands) | | Loans individually evaluated for impairment | | | Loans collectively evaluated for impairment | | | Loans acquired with deteriorated credit quality | | | Total loans | | | Loans individually evaluated for impairment | | | Loans collectively evaluated for impairment | | | Loans acquired with deteriorated credit quality | | | Total ACL | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 8,223 | | | $ | 862,288 | | | $ | — | | | $ | 870,511 | | | $ | 1,150 | | | $ | 11,672 | | | $ | — | | | $ | 12,822 | |
| Construction and development | | | — | | | | 213,822 | | | | — | | | | 213,822 | | | | — | | | | 1,319 | | | | — | | | | 1,319 | |
| Undeveloped land | | | — | | | | 46,360 | | | | — | | | | 46,360 | | | | — | | | | 786 | | | | — | | | | 786 | |
| Real estate mortgage | | | 3,307 | | | | 1,663,549 | | | | — | | | | 1,666,856 | | | | 13 | | | | 11,751 | | | | — | | | | 11,764 | |
| Consumer | | | — | | | | 47,467 | | | | — | | | | 47,467 | | | | — | | | | 100 | | | | — | | | | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 11,530 | | | $ | 2,833,486 | | | $ | — | | | $ | 2,845,016 | | | $ | 1,163 | | | $ | 25,628 | | | $ | — | | | $ | 26,791 | |
The following table presents information pertaining to impaired loans as of December 31, 2019 and 2018, as determined in accordance with ASC 310:
| | | As of | | | Twelve months ended | |
| | | December 31, 2019 | | | December 31, 2019 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Unpaid | | | | | | | Average | | | Interest | |
| | | Recorded | | | principal | | | Related | | | recorded | | | income | |
| (in thousands) | | investment | | | balance | | | ACL | | | investment | | | recognized | |
| | | | | | | | | | | | | | | | | | | | | |
| Impaired loans with no related ACL | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 174 | | | $ | 174 | | | $ | — | | | $ | 166 | | | $ | — | |
| Construction and development | | | — | | | | — | | | | — | | | | 64 | | | | — | |
| Undeveloped land | | | — | | | | — | | | | — | | | | 95 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage | | | | | | | | | | | | | | | | | | | | |
| Commercial investment | | | 741 | | | | 741 | | | | — | | | | 448 | | | | — | |
| Owner occupied commercial | | | 2,276 | | | | 2,736 | | | | — | | | | 1,437 | | | | — | |
| 1-4 family residential | | | 124 | | | | 124 | | | | — | | | | 516 | | | | — | |
| Home equity - junior lien | | | 151 | | | | 151 | | | | — | | | | 293 | | | | — | |
| Total: real estate mortgage | | | 3,292 | | | | 3,752 | | | | — | | | | 2,694 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Subtotal | | $ | 3,466 | | | $ | 3,926 | | | $ | — | | | $ | 3,019 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Impaired loans with an ACL | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 8,049 | | | $ | 8,049 | | | $ | 1,150 | | | $ | 1,631 | | | $ | — | |
| Real estate mortgage | | | | | | | | | | | | | | | | | | | | |
| 1-4 family residential | | | 13 | | | | 13 | | | | 13 | | | | 13 | | | | — | |
| Total: real estate mortgage | | | 13 | | | | 13 | | | | 13 | | | | 13 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Subtotal | | $ | 8,062 | | | $ | 8,062 | | | $ | 1,163 | | | $ | 1,644 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total impaired loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 8,223 | | | $ | 8,223 | | | $ | 1,150 | | | $ | 1,797 | | | $ | — | |
| Construction and development | | | — | | | | — | | | | — | | | | 64 | | | | — | |
| Undeveloped land | | | — | | | | — | | | | — | | | | 95 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage | | | | | | | | | | | | | | | | | | | | |
| Commercial investment | | | 741 | | | | 741 | | | | — | | | | 448 | | | | — | |
| Owner occupied commercial | | | 2,276 | | | | 2,736 | | | | — | | | | 1,437 | | | | — | |
| 1-4 family residential | | | 137 | | | | 137 | | | | 13 | | | | 529 | | | | — | |
| Home equity - junior lien | | | 151 | | | | 151 | | | | — | | | | 293 | | | | — | |
| Total: real estate mortgage | | | 3,305 | | | | 3,765 | | | | 13 | | | | 2,707 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 11,528 | | | $ | 11,988 | | | $ | 1,163 | | | $ | 4,663 | | | $ | — | |
| | | As of | | | Twelve Months Ended | |
| | | December 31, 2018 | | | December 31, 2018 | |
| | | | | | | Unpaid | | | | | | | Average | | | Interest | |
| | | Recorded | | | principal | | | Related | | | recorded | | | income | |
| (in thousands) | | investment | | | balance | | | allowance | | | investment | | | recognized | |
| | | | | | | | | | | | | | | | | | | | | |
| Impaired loans with no related allowance: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 192 | | | $ | 707 | | | $ | — | | | $ | 161 | | | $ | — | |
| Construction and development | | | 318 | | | | 489 | | | | — | | | | 437 | | | | — | |
| Undeveloped land | | | 474 | | | | 506 | | | | — | | | | 474 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage | | | | | | | | | | | | | | | | | | | | |
| Commercial investment | | | 138 | | | | 138 | | | | — | | | | 35 | | | | — | |
| Owner occupied commercial | | | 586 | | | | 1,023 | | | | — | | | | 1,503 | | | | — | |
| 1-4 family residential | | | 760 | | | | 760 | | | | — | | | | 1,242 | | | | — | |
| Home equity - junior lien | | | 143 | | | | 143 | | | | — | | | | 73 | | | | — | |
| Total: real estate mortgage | | | 1,627 | | | | 2,064 | | | | — | | | | 2,853 | | | | — | |
| Consumer | | | — | | | | — | | | | — | | | | 23 | | | | — | |
| Subtotal | | $ | 2,611 | | | $ | 3,766 | | | $ | — | | | $ | 3,948 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Impaired loans with an allowance: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 28 | | | $ | 28 | | | $ | 28 | | | $ | 1,851 | | | $ | 2 | |
| Construction and development | | | — | | | | — | | | | — | | | | — | | | | — | |
| Undeveloped land | | | — | | | | — | | | | — | | | | 24 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage | | | | | | | | | | | | | | | | | | | | |
| Commercial investment | | | — | | | | — | | | | — | | | | — | | | | — | |
| Owner occupied commercial | | | — | | | | — | | | | — | | | | 897 | | | | — | |
| 1-4 family residential | | | 14 | | | | 14 | | | | 14 | | | | 14 | | | | 1 | |
| Home equity - junior lien | | | — | | | | — | | | | — | | | | — | | | | — | |
| Total: real estate mortgage | | | 14 | | | | 14 | | | | 14 | | | | 911 | | | | 1 | |
| Consumer | | | — | | | | — | | | | — | | | | — | | | | — | |
| Subtotal | | $ | 42 | | | $ | 42 | | | $ | 42 | | | $ | 2,786 | | | $ | 3 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 220 | | | $ | 735 | | | $ | 28 | | | $ | 2,012 | | | $ | 2 | |
| Construction and development | | | 318 | | | | 489 | | | | — | | | | 437 | | | | — | |
| Undeveloped land | | | 474 | | | | 506 | | | | — | | | | 498 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage | | | | | | | | | | | | | | | | | | | | |
| Commercial investment | | | 138 | | | | 138 | | | | — | | | | 35 | | | | — | |
| Owner occupied commercial | | | 586 | | | | 1,023 | | | | — | | | | 2,400 | | | | — | |
| 1-4 family residential | | | 774 | | | | 774 | | | | 14 | | | | 1,256 | | | | 1 | |
| Home equity - first lien | | | — | | | | — | | | | — | | | | — | | | | — | |
| Home equity - junior lien | | | 143 | | | | 143 | | | | — | | | | 73 | | | | — | |
| Total: real estate mortgage | | | 1,641 | | | | 2,078 | | | | 14 | | | | 3,764 | | | | 1 | |
| Consumer | | | — | | | | — | | | | — | | | | 23 | | | | — | |
| Total impaired loans | | $ | 2,653 | | | $ | 3,808 | | | $ | 42 | | | $ | 6,734 | | | $ | 3 | |
Differences between recorded investment amounts and unpaid principal balance amounts less related ACL are due to partial charge-offs which have occurred over the lives of certain loans.
The following tables present the aging of contractually past due loans by portfolio class (2020 is presented in accordance with ASC 326 and 2019 in accordance with ASC 310):
| | | | | | | 30-59 days | | | 60-89 days | | | 90 or more | | | Total | | | Total | |
| December 31, 2020 (in thousands)* | | Current | | | Past Due | | | Past Due | | | Days Past Due | | | Past Due | | | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate - non-owner occupied | | $ | 822,199 | | | $ | — | | | $ | 10,600 | | | $ | 671 | | | $ | 11,271 | | | $ | 833,470 | |
| Commercial real estate - owner occupied | | | 507,265 | | | | 278 | | | | — | | | | 1,129 | | | | 1,407 | | | | 508,672 | |
| Total commercial real estate | | | 1,329,464 | | | | 278 | | | | 10,600 | | | | 1,800 | | | | 12,678 | | | | 1,342,142 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial - term | | | 523,936 | | | | 1,404 | | | | 430 | | | | 6 | | | | 1,840 | | | | 525,776 | |
| Commercial and industrial - term - PPP | | | 550,186 | | | | — | | | | — | | | | — | | | | — | | | | 550,186 | |
| Commercial and industrial - lines of credit | | | 276,472 | | | | 86 | | | | — | | | | 88 | | | | 174 | | | | 276,646 | |
| Total commercial and industrial | | | 1,350,594 | | | | 1,490 | | | | 430 | | | | 94 | | | | 2,014 | | | | 1,352,608 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential real estate - owner occupied | | | 237,902 | | | | 585 | | | | 247 | | | | 457 | | | | 1,289 | | | | 239,191 | |
| Residential real estate - non-owner occupied | | | 140,234 | | | | 294 | | | | — | | | | 402 | | | | 696 | | | | 140,930 | |
| Total residential real estate | | | 378,136 | | | | 879 | | | | 247 | | | | 859 | | | | 1,985 | | | | 380,121 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Construction and land development | | | 291,764 | | | | — | | | | — | | | | — | | | | — | | | | 291,764 | |
| Home equity lines of credit | | | 95,206 | | | | 7 | | | | 139 | | | | 14 | | | | 160 | | | | 95,366 | |
| Consumer | | | 44,510 | | | | 90 | | | | 4 | | | | 2 | | | | 96 | | | | 44,606 | |
| Leases | | | 14,786 | | | | — | | | | — | | | | — | | | | — | | | | 14,786 | |
| Credit cards - commercial | | | 10,197 | | | | 5 | | | | — | | | | 1 | | | | 6 | | | | 10,203 | |
| Total | | $ | 3,514,657 | | | $ | 2,749 | | | $ | 11,420 | | | $ | 2,770 | | | $ | 16,939 | | | $ | 3,531,596 | |
| *Pursuant to the CARES Act, loan deferrals granted to borrowers experiencing business interruptions related to the pandemic were not classified as TDRs and not included in past due and/or non-performing loan statistics. As of December 31, 2020, outstanding deferrals totaling $37 million are reflected as current. |
| | | | | | | | | | | | | | | 90 or more | | | | | | | | | |
| | | | | | | | | | | | | | | Days Past Due | | | | | | | | | |
| | | | | | | 30-59 days | | | 60-89 days | | | (includes all | | | Total | | | Total | |
| December 31, 2019 (in thousands) | | Current | | | Past Due | | | Past Due | | | non-accrual) | | | Past Due | | | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 861,860 | | | $ | 253 | | | $ | 194 | | | $ | 8,204 | | | $ | 8,651 | | | $ | 870,511 | |
| Construction and development | | | 213,766 | | | | 6 | | | | 50 | | | | — | | | | 56 | | | | 213,822 | |
| Undeveloped land | | | 46,360 | | | | — | | | | — | | | | — | | | | — | | | | 46,360 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage: | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial investment | | | 735,387 | | | | 94 | | | | — | | | | 1,137 | | | | 1,231 | | | | 736,618 | |
| Owner occupied commercial | | | 470,951 | | | | 467 | | | | 86 | | | | 2,279 | | | | 2,832 | | | | 473,783 | |
| 1-4 family residential | | | 332,718 | | | | 1,368 | | | | 33 | | | | 239 | | | | 1,640 | | | | 334,358 | |
| Home equity - first lien | | | 48,441 | | | | 179 | | | | — | | | | — | | | | 179 | | | | 48,620 | |
| Home equity - junior lien | | | 72,995 | | | | 196 | | | | 100 | | | | 186 | | | | 482 | | | | 73,477 | |
| Total: real estate mortgage | | | 1,660,492 | | | | 2,304 | | | | 219 | | | | 3,841 | | | | 6,364 | | | | 1,666,856 | |
| Consumer | | | 47,379 | | | | 84 | | | | 4 | | | | — | | | | 88 | | | | 47,467 | |
| Total | | $ | 2,829,857 | | | $ | 2,647 | | | $ | 467 | | | $ | 12,045 | | | $ | 15,159 | | | $ | 2,845,016 | |
Loan Risk Ratings
Consistent with regulatory guidance, Bancorp categorizes loans into credit risk rating categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends. Pass-rated loans include all risk-rated loans other than those classified as OAEM, substandard, and doubtful, which are defined below:
OAEM – Loans classified as OAEM have potential weaknesses requiring management's heightened attention. These potential weaknesses may result in deterioration of repayment prospects for the loan or of Bancorp's credit position at some future date.
Substandard – Loans classified as substandard are inadequately protected by the paying capacity of the obligor or of collateral pledged, if any. Loans so classified have well-defined weaknesses that jeopardize ultimate repayment of the debt. Default is a distinct possibility if the deficiencies are not corrected.
Substandard non-performing – Loans classified as substandard non-performing have all the characteristics of substandard loans and have been placed on non-accrual status or have been accounted for as TDRs. Loans are placed on non-accrual status when prospects for recovering both principal and accrued interest are considered doubtful or when a default of principal or interest has existed for 90 days or more.
Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. As of December 31, 2020, the risk rating of loans based on year of origination is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | Revolving | | | Revolving | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | loans | | | loans | | | | | |
| (in thousands) | | Term Loans Amortized Cost Basis by Origination Year | | | amortized | | | converted | | | | | |
| December 31, 2020 | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | Prior | | | cost basis | | | to term | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate - non-owner occupied: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 303,246 | | | $ | 114,731 | | | $ | 102,147 | | | $ | 105,981 | | | $ | 77,925 | | | $ | 57,221 | | | $ | 12,439 | | | $ | 11,717 | | | $ | 785,407 | |
| OAEM | | | 3,867 | | | | 16,587 | | | | - | | | | - | | | | 7,707 | | | | 615 | | | | - | | | | - | | | | 28,776 | |
| Substandard | | | 4,174 | | | | 1,901 | | | | - | | | | - | | | | 1,513 | | | | 991 | | | | 430 | | | | - | | | | 9,009 | |
| Substandard non-performing | | | 9,644 | | | | - | | | | - | | | | 609 | | | | - | | | | - | | | | - | | | | 25 | | | | 10,278 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Commercial real estate non-owner occupied | | $ | 320,931 | | | $ | 133,219 | | | $ | 102,147 | | | $ | 106,590 | | | $ | 87,145 | | | $ | 58,827 | | | $ | 12,869 | | | $ | 11,742 | | | $ | 833,470 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate - owner occupied: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 183,666 | | | $ | 94,462 | | | $ | 83,592 | | | $ | 47,506 | | | $ | 39,638 | | | $ | 30,533 | | | $ | 7,693 | | | $ | 2,418 | | | $ | 489,508 | |
| OAEM | | | 74 | | | | 6,534 | | | | 1,575 | | | | 796 | | | | 115 | | | | - | | | | 200 | | | | - | | | | 9,294 | |
| Substandard | | | 1,408 | | | | 5,360 | | | | 1,335 | | | | 247 | | | | 117 | | | | - | | | | - | | | | - | | | | 8,467 | |
| Substandard non-performing | | | 91 | | | | - | | | | 15 | | | | 500 | | | | - | | | | 471 | | | | - | | | | 326 | | | | 1,403 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Commercial real estate owner occupied | | $ | 185,239 | | | $ | 106,356 | | | $ | 86,517 | | | $ | 49,049 | | | $ | 39,870 | | | $ | 31,004 | | | $ | 7,893 | | | $ | 2,744 | | | $ | 508,672 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial - term: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 215,629 | | | $ | 94,563 | | | $ | 104,871 | | | $ | 42,929 | | | $ | 36,016 | | | $ | 8,412 | | | $ | - | | | $ | 7,690 | | | $ | 510,110 | |
| OAEM | | | 60 | | | | 2,969 | | | | 7,878 | | | | - | | | | 283 | | | | 8 | | | | - | | | | - | | | | 11,198 | |
| Substandard | | | 1,229 | | | | 2,521 | | | | - | | | | 91 | | | | 163 | | | | 74 | | | | - | | | | 384 | | | | 4,462 | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6 | | | | - | | | | - | | | | 6 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Commercial and industrial - term | | $ | 216,918 | | | $ | 100,053 | | | $ | 112,749 | | | $ | 43,020 | | | $ | 36,462 | | | $ | 8,500 | | | $ | - | | | $ | 8,074 | | | $ | 525,776 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial - PPP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 550,186 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 550,186 | |
| OAEM | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Commercial and industrial - PPP | | $ | 550,186 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 550,186 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Revolving | | | Revolving | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | loans | | | loans | | | | | |
| (in thousands) | | Term Loans Amortized Cost Basis by Origination Year | | | amortized | | | converted | | | | | |
| December 31, 2020 | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | Prior | | | cost basis | | | to term | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial - lines of credit | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 26,351 | | | $ | 14,405 | | | $ | 2,229 | | | $ | 1,990 | | | $ | 290 | | | $ | 85 | | | $ | 223,172 | | | $ | - | | | $ | 268,522 | |
| OAEM | | | - | | | | 2,222 | | | | - | | | | - | | | | - | | | | - | | | | 1,596 | | | | - | | | | 3,818 | |
| Substandard | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,218 | | | | - | | | | 4,218 | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 88 | | | | - | | | | 88 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Commercial and industrial - lines of credit | | $ | 26,351 | | | $ | 16,627 | | | $ | 2,229 | | | $ | 1,990 | | | $ | 290 | | | $ | 85 | | | $ | 229,074 | | | $ | - | | | $ | 276,646 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential real estate - owner occupied | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 94,023 | | | $ | 34,631 | | | $ | 23,748 | | | $ | 19,567 | | | $ | 27,791 | | | $ | 37,362 | | | $ | - | | | $ | 1,528 | | | $ | 238,650 | |
| OAEM | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard | | | 13 | | | | - | | | | - | | | | 115 | | | | - | | | | - | | | | - | | | | - | | | | 128 | |
| Substandard non-performing | | | 49 | | | | 58 | | | | - | | | | 100 | | | | 38 | | | | 73 | | | | - | | | | 95 | | | | 413 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Residential real estate - owner occupied | | $ | 94,085 | | | $ | 34,689 | | | $ | 23,748 | | | $ | 19,782 | | | $ | 27,829 | | | $ | 37,435 | | | $ | - | | | $ | 1,623 | | | $ | 239,191 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential real estate - non-owner occupied | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 63,537 | | | $ | 22,422 | | | $ | 25,466 | | | $ | 10,587 | | | $ | 9,609 | | | $ | 6,451 | | | $ | - | | | $ | 788 | | | $ | 138,860 | |
| OAEM | | | 137 | | | | 1,600 | | | | 140 | | | | - | | | | - | | | | 92 | | | | - | | | | - | | | | 1,969 | |
| Substandard | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard non-performing | | | - | | | | - | | | | 29 | | | | - | | | | - | | | | 72 | | | | - | | | | - | | | | 101 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Residential real estate - non-owner occupied | | $ | 63,674 | | | $ | 24,022 | | | $ | 25,635 | | | $ | 10,587 | | | $ | 9,609 | | | $ | 6,615 | | | $ | - | | | $ | 788 | | | $ | 140,930 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Construction and land development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 139,611 | | | $ | 94,066 | | | $ | 32,539 | | | $ | 15,384 | | | $ | 1,175 | | | $ | 553 | | | $ | 6,304 | | | $ | 1,883 | | | $ | 291,515 | |
| OAEM | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 249 | | | | - | | | | 249 | |
| Substandard | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Construction and land development | | $ | 139,611 | | | $ | 94,066 | | | $ | 32,539 | | | $ | 15,384 | | | $ | 1,175 | | | $ | 553 | | | $ | 6,553 | | | $ | 1,883 | | | $ | 291,764 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Home equity lines of credit | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 95,145 | | | $ | - | | | $ | 95,145 | |
| OAEM | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 221 | | | | - | | | | 221 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Home equity lines of credit | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 95,366 | | | $ | - | | | $ | 95,366 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Revolving | | | Revolving | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | loans | | | loans | | | | | |
| (in thousands) | | Term Loans Amortized Cost Basis by Origination Year | | | amortized | | | converted | | | | | |
| December 31, 2020 | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | Prior | | | cost basis | | | to term | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass* | | $ | 10,334 | | | $ | 2,897 | | | $ | 1,687 | | | $ | 243 | | | $ | 420 | | | $ | 466 | | | $ | 28,363 | | | $ | 192 | | | $ | 44,602 | |
| OAEM | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | 2 | | | | - | | | | 2 | | | | - | | | | 4 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Consumer | | $ | 10,334 | | | $ | 2,897 | | | $ | 1,687 | | | $ | 243 | | | $ | 422 | | | $ | 466 | | | $ | 28,365 | | | $ | 192 | | | $ | 44,606 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Leases | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 4,674 | | | $ | 1,875 | | | $ | 2,144 | | | $ | 1,300 | | | $ | 2,550 | | | $ | 2,168 | | | $ | - | | | $ | - | | | $ | 14,711 | |
| OAEM | | | - | | | | - | | | | - | | | | - | | | | 69 | | | | - | | | | - | | | | - | | | | 69 | |
| Substandard | | | - | | | | - | | | | 6 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6 | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Leases | | $ | 4,674 | | | $ | 1,875 | | | $ | 2,150 | | | $ | 1,300 | | | $ | 2,619 | | | $ | 2,168 | | | $ | - | | | $ | - | | | $ | 14,786 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Credit cards - commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 10,203 | | | $ | - | | | $ | 10,203 | |
| OAEM | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Substandard non-performing | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Credit cards | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 10,203 | | | $ | - | | | $ | 10,203 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Risk rating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | $ | 1,591,257 | | | $ | 474,052 | | | $ | 378,423 | | | $ | 245,487 | | | $ | 195,414 | | | $ | 143,251 | | | $ | 383,319 | | | $ | 26,216 | | | $ | 3,437,419 | |
| OAEM | | | 4,138 | | | | 29,912 | | | | 9,593 | | | | 796 | | | | 8,174 | | | | 715 | | | | 2,045 | | | | - | | | | 55,373 | |
| Substandard | | | 6,824 | | | | 9,782 | | | | 1,341 | | | | 453 | | | | 1,793 | | | | 1,065 | | | | 4,648 | | | | 384 | | | | 26,290 | |
| Substandard non-performing | | | 9,784 | | | | 58 | | | | 44 | | | | 1,209 | | | | 40 | | | | 622 | | | | 311 | | | | 446 | | | | 12,514 | |
| Doubtful | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total Loans | | $ | 1,612,003 | | | $ | 513,804 | | | $ | 389,401 | | | $ | 247,945 | | | $ | 205,421 | | | $ | 145,653 | | | $ | 390,323 | | | $ | 27,046 | | | $ | 3,531,596 | |
* - Revolving loans include $506,000 in overdrawn demand deposit balances.
Bancorp considers the performance of the loan portfolio and its impact on the ACL. For certain loan classes, such as credit cards, credit quality is evaluated based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in commercial credit cards based on payment activity:
| | | December 31, | |
| (in thousands) | | 2020 | |
| | | | | |
| Credit cards - commercial | | | | |
| Performing | | $ | 10,203 | |
| Non-performing | | | — | |
| Total credit cards - commercial | | $ | 10,203 | |
In accordance with Section 4013 of the CARES Act and in response to requests from borrowers who experienced business interruptions related to the pandemic, Bancorp extended payment deferrals for those affected borrowers. Depending on the demonstrated need of the customer, Bancorp deferred either the full loan payment or the principal-only portion of respective loan payments for 90 or 180 days for some borrowers directly impacted by the pandemic. Pursuant to the CARES Act, these loan deferrals were not classified as TDRs and not included in past due and/or non-performing loan statistics. As of December 31, 2020, outstanding loan deferrals totaled $37 million, representing 1.24% of the loan portfolio (excluding PPP loans).
Internally assigned risk ratings of loans by loan portfolio class classification category as of December 31, 2019 follows:
| | | | | | | | | | | | | | | Substandard | | | | | | | Total | |
| December 31, 2019 (in thousands) | | Pass | | | OAEM | | | Substandard | | | Non-performing | | | Doubtful | | | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | $ | 840,105 | | | $ | 704 | | | $ | 21,500 | | | $ | 8,202 | | | $ | — | | | $ | 870,511 | |
| Construction and development | | | 213,822 | | | | — | | | | — | | | | — | | | | — | | | | 213,822 | |
| Undeveloped land | | | 46,360 | | | | — | | | | — | | | | — | | | | — | | | | 46,360 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Real estate mortgage: | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial investment | | | 722,747 | | | | 6,459 | | | | 6,275 | | | | 1,137 | | | | — | | | | 736,618 | |
| Owner occupied commercial | | | 460,981 | | | | 1,375 | | | | 9,050 | | | | 2,377 | | | | — | | | | 473,783 | |
| 1-4 family residential | | | 332,294 | | | | 1,701 | | | | 122 | | | | 241 | | | | — | | | | 334,358 | |
| Home equity - first lien | | | 48,620 | | | | — | | | | — | | | | — | | | | — | | | | 48,620 | |
| Home equity - junior lien | | | 73,273 | | | | — | | | | 17 | | | | 187 | | | | — | | | | 73,477 | |
| Total: real estate mortgage | | | 1,637,915 | | | | 9,535 | | | | 15,464 | | | | 3,942 | | | | — | | | | 1,666,856 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Consumer | | | 47,429 | | | | — | | | | 38 | | | | — | | | | — | | | | 47,467 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 2,785,631 | | | $ | 10,239 | | | $ | 37,002 | | | $ | 12,144 | | | $ | — | | | $ | 2,845,016 | |
Troubled Debt Restructurings
Detail of outstanding TDRs included in total non-performing loans follows:
| | | December 31, 2020 | | | December 31, 2019 | |
| | | | | | | Specific | | | Additional | | | | | | | Specific | | | Additional | |
| | | | | | | reserve | | | commitment | | | | | | | reserve | | | commitment | |
| (in thousands) | | Balance | | | allocation | | | to lend | | | Balance | | | allocation | | | to lend | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial - term | | $ | 16 | | | $ | 16 | | | $ | — | | | $ | 21 | | | $ | 21 | | | $ | — | |
| Residential real estate | | | — | | | | — | | | | — | | | | 13 | | | | 13 | | | | — | |
| Total TDRs | | $ | 16 | | | $ | 16 | | | $ | — | | | $ | 34 | | | $ | 34 | | | $ | — | |
During the years ended December 31, 2020 and 2019, there were no loans modified as TDRs and there were no payment defaults of existing TDRs within 12 months following the modification. Default is determined at 90 or more days past due, charge-off, or foreclosure.
At December 31, 2020 and December 31, 2019, Bancorp had $147,000 and $239,000, respectively, in residential real estate loans for which formal foreclosure proceedings were in process.
Purchased Credit Impaired Loans (Prior to the Adoption of ASC 326)
Management utilized the following criteria in determining which loans were classified as PCI loans for its 2019 acquisition:
| | ● | Loans classified by management as substandard, doubtful or loss |
| | ● | Loans classified as non-accrual when acquired |
| | ● | Loans past due 90 days or more when acquired |
| | ● | Loans for which management assigned a non-accretable mark |
The Bank acquired $1.6 million in PCI loans in connection with its 2019 acquisition. Under ASC 310-30, the non-accretable amount attributed to these loans equaled the contractually required principal at acquisition date and as of December 31, 2020.
The following table presents loans acquired during 2019 for which it was probable at acquisition date that all contractually required payments would not be collected:
| December 31, (in thousands) | | 2019 | |
| | | | | |
| Contractually-required principal | | $ | 1,579 | |
| Non-accretable amount | | | (1,579 | ) |
| Accretable amount | | | - | |
| Carrying value of loans | | $ | - | |
The following table presents a roll forward of the accretable amount of PCI loans acquired in its 2013 acquisition:
| Years ended December 31, (in thousands) | | 2020 | | | 2019 | | | 2018 | |
| | | | | | | | | | | | | |
| Balance, beginning of period | | $ | - | | | $ | (69 | ) | | $ | (106 | ) |
| Transfers between non-accretable and accretable | | | - | | | | - | | | | - | |
| Net accretion into interest income on loans, including loan fees | | | - | | | | 69 | | | | 37 | |
| Balance, end of period | | $ | - | | | $ | - | | | $ | (69 | ) |
|