NOTE 3 - LOANS/LEASES RECEIVABLE (Tables)

3 Months Ended

Mar. 31, 2020


	2020		2019
	(dollars in thousands)

C&I loans*	$	1,484,979	$	1,507,825
CRE loans
Owner-occupied CRE		454,955		443,989
Commercial construction, land development, and other land		410,383		378,797
Other non owner-occupied CRE		917,748		913,610
		1,783,086		1,736,396

Direct financing leases **		83,324		87,869
Residential real estate loans ***		237,742		239,904
Installment and other consumer loans		106,728		109,352
		3,695,859		3,681,346
Plus deferred loan/lease origination costs, net of fees		8,809		8,859
		3,704,668		3,690,205
Less allowance		(42,233)		(36,001)
	$	3,662,435	$	3,654,204
** Direct financing leases:
Net minimum lease payments to be received	$	92,139	$	97,025
Estimated unguaranteed residual values of leased assets		616		547
Unearned lease/residual income		(9,431)		(9,703)
		83,324		87,869
Plus deferred lease origination costs, net of fees		1,649		1,892
		84,973		89,761
Less allowance		(1,303)		(1,464)
	$	83,670	$	88,297

* Includes equipment financing agreements outstanding at m2, totaling $145.3 million and $142.0 million as of March 31, 2020 and December 31, 2019, respectively.

** Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal.

*** Includes residential real estate loans held for sale totaling $4.0 million and $3.7 million as of March 31, 2020 and December 31, 2019, respectively.

Changes in accretable yield for acquired loans


	Three months ended March 31, 2020
	PCI		Performing
	Loans		Loans		Total


Balance at the beginning of the period	$	(57)	$	(6,378)	$	(6,435)
Reclassification of nonaccretable discount to accretable		(30)		—		(30)
Accretion recognized		28		653		681
Balance at the end of the period	$	(59)	$	(5,725)	$	(5,784)


	Three months ended March 31, 2019
	PCI		Performing
	Loans		Loans		Total


Balance at the beginning of the period	$	(667)	$	(9,656)	$	(10,323)
Accretion recognized		348		826		1,174
Balance at the end of the period	$	(319)	$	(8,830)	$	(9,149)

Aging of the loan/lease portfolio by classes of loans/leases


	As of March 31, 2020
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)

C&I	$	1,479,395		$	3,445		$	612		$	—		$	1,527		$	1,484,979
CRE
Owner-Occupied CRE		454,670			—			186			—			99			454,955
Commercial Construction, Land Development, and Other Land		408,392			767			—			1,224			—			410,383
Other Non Owner-Occupied CRE		905,607			4,577			—			—			7,564			917,748
Direct Financing Leases		81,459			487			213			—			1,165			83,324
Residential Real Estate		231,288			5,047			667			82			658			237,742
Installment and Other Consumer		105,677			319			4			113			615			106,728
	$	3,666,488		$	14,642		$	1,682		$	1,419		$	11,628		$	3,695,859

As a percentage of total loan/lease portfolio		99.20	%		0.40	%		0.05	%		0.04	%		0.31	%		100.00	%


	As of December 31, 2019
										Accruing Past
				30-59 Days			60-89 Days			Due 90 Days or			Nonaccrual
Classes of Loans/Leases	Current			Past Due			Past Due			More			Loans/Leases			Total
	(dollars in thousands)

C&I	$	1,499,891		$	6,126		$	572		$	—		$	1,236		$	1,507,825
CRE
Owner-Occupied CRE		443,707			177			71			—			34			443,989
Commercial Construction, Land Development, and Other Land		375,940			2,857			—			—			—			378,797
Other Non Owner-Occupied CRE		909,684			73			—			—			3,853			913,610
Direct Financing Leases		85,636			463			253			—			1,517			87,869
Residential Real Estate		235,845			2,939			414			—			706			239,904
Installment and Other Consumer		108,750			3			10			33			556			109,352
	$	3,659,453		$	12,638		$	1,320		$	33		$	7,902		$	3,681,346

As a percentage of total loan/lease portfolio		99.41	%		0.34	%		0.04	%		0.00	%		0.21	%		100.00	%

NPLs by classes of loans/leases


	As of March 31, 2020
	Accruing Past
	Due 90 Days or		Nonaccrual						Percentage of
Classes of Loans/Leases	More		Loans/Leases **		Accruing TDRs		Total NPLs		Total NPLs
	(dollars in thousands)

C&I	$	—	$	1,527	$	359	$	1,886	13.88	%
CRE
Owner-Occupied CRE		—		99		—		99	0.73	%
Commercial Construction, Land Development, and Other Land		1,224		—		—		1,224	9.01	%
Other Non Owner-Occupied CRE		—		7,564		—		7,564	55.64	%
Direct Financing Leases		—		1,165		186		1,351	9.94	%
Residential Real Estate		82		658		—		740	5.44	%
Installment and Other Consumer		113		615		—		728	5.36	%
	$	1,419	$	11,628	$	545	$	13,592	100.00	%

** Nonaccrual loans/leases included $298 thousand of TDRs, including $50 thousand in commercial and industrial loans, $163 thousand in direct financing leases, $31 thousand in residential real estate loans, and $54 thousand in installment loans.


	As of December 31, 2019
	Accruing Past
	Due 90 Days or		Nonaccrual						Percentage of
Classes of Loans/Leases	More		Loans/Leases **		Accruing TDRs		Total NPLs		Total NPLs
		(dollars in thousands)

C&I	$	—	$	1,236	$	646	$	1,882	21.12	%
CRE
Owner-Occupied CRE		—		34		—		34	0.38	%
Commercial Construction, Land Development, and Other Land		—		—		—		—	-	%
Other Non Owner-Occupied CRE		—		3,853		—		3,853	43.22	%
Direct Financing Leases		—		1,517		333		1,850	20.75	%
Residential Real Estate		—		706		—		706	7.92	%
Installment and Other Consumer		33		556		—		589	6.61	%
	$	33	$	7,902	$	979	$	8,914	100.00	%

** Nonaccrual loans/leases included $747 thousand of TDRs, including $98 thousand in C&I loans, $269 thousand in CRE loans, $294 thousand in direct financing leases, $31 thousand in residential real estate loans, and $55 thousand in installment loans.

Allowance for credit losses on financing receivables

Changes in the allowance by portfolio segment for the three months ended March 31, 2020 and 2019, respectively, are presented as follows:


	Three Months Ended March 31, 2020
					Direct Financing		Residential Real		Installment and
	C&I		CRE		Leases		Estate		Other Consumer		Total
	(dollars in thousands)

Balance, beginning	$	16,072	$	15,379	$	1,464	$	1,948	$	1,138	$	36,001
Provisions (credits) charged to expense		3,697		3,816		394		336		124		8,367
Loans/leases charged off		(1,639)		—		(600)		—		(96)		(2,335)
Recoveries on loans/leases previously charged off		21		74		45		29		31		200
Balance, ending	$	18,151	$	19,269	$	1,303	$	2,313	$	1,197	$	42,233


	Three Months Ended March 31, 2019
					Direct Financing		Residential Real		Installment and
	C&I		CRE		Leases		Estate		Other Consumer		Total
	(dollars in thousands)

Balance, beginning	$	16,420	$	17,719	$	1,792	$	2,557	$	1,359	$	39,847
Provisions (credits) charged to expense		1,007		534		445		(18)		166		2,134
Loans/leases charged off		(334)		—		(652)		—		(74)		(1,060)
Recoveries on loans/leases previously charged off		166		50		21		—		6		243
Balance, ending	$	17,259	$	18,303	$	1,606	$	2,539	$	1,457	$	41,164

The allowance by impairment evaluation and by portfolio segment as of March 31, 2020 and December 31, 2019 is presented as follows:


	As of March 31, 2020
							Direct Financing			Residential Real			Installment and
	C&I			CRE			Leases			Estate			Other Consumer			Total
	(dollars in thousands)

Allowance for impaired loans/leases	$	86		$	1,228		$	20		$	15		$	78		$	1,427
Allowance for nonimpaired loans/leases		18,065			18,041			1,283			2,298			1,119			40,806
	$	18,151		$	19,269		$	1,303		$	2,313		$	1,197		$	42,233

Impaired loans/leases	$	2,346		$	7,681		$	1,574		$	603		$	615		$	12,819
Nonimpaired loans/leases		1,482,633			1,775,405			81,750			237,139			106,113			3,683,040
	$	1,484,979		$	1,783,086		$	83,324		$	237,742		$	106,728		$	3,695,859

Allowance as a percentage of impaired loans/leases		3.67	%		15.99	%		1.27	%		2.49	%		12.68	%		11.13	%
Allowance as a percentage of nonimpaired loans/leases		1.22	%		1.02	%		1.57	%		0.97	%		1.05	%		1.11	%
Total allowance as a percentage of total loans/leases		1.22	%		1.08	%		1.56	%		0.97	%		1.12	%		1.14	%


	As of December 31, 2019
							Direct Financing			Residential Real			Installment and
	C&I			CRE			Leases			Estate			Other Consumer			Total
	(dollars in thousands)

Allowance for impaired loans/leases	$	170		$	125		$	270		$	15		$	80		$	660
Allowance for nonimpaired loans/leases		15,902			15,254			1,194			1,933			1,058			35,341
	$	16,072		$	15,379		$	1,464		$	1,948		$	1,138		$	36,001

Impaired loans/leases	$	1,846		$	3,585		$	2,025		$	649		$	556		$	8,661
Nonimpaired loans/leases		1,505,979			1,732,811			85,844			239,255			108,796			3,672,685
	$	1,507,825		$	1,736,396		$	87,869		$	239,904		$	109,352		$	3,681,346

Allowance as a percentage of impaired loans/leases		9.21	%		3.49	%		13.33	%		2.31	%		14.41	%		7.62	%
Allowance as a percentage of nonimpaired loans/leases		1.06	%		0.88	%		1.39	%		0.81	%		0.97	%		0.96	%
Total allowance as a percentage of total loans/leases		1.07	%		0.89	%		1.67	%		0.81	%		1.04	%		0.98	%

Impaired financing receivables

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the three months ended March 31, 2020 are presented as follows:


	2020

											Interest Income
							Average				Recognized for
	Recorded		Unpaid Principal		Related		Recorded		Interest Income		Cash Payments
Classes of Loans/Leases	Investment		Balance		Allowance		Investment		Recognized		Received
	(dollars in thousands)

Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	2,260	$	2,332	$	—	$	1,895	$	12	$	12
CRE
Owner-Occupied CRE		99		115		—		102		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		1,054		1,054		—		662		7		7
Direct Financing Leases		1,515		1,515		—		1,440		6		6
Residential Real Estate		423		407		—		399		—		—
Installment and Other Consumer		538		538		—		507		—		—
	$	5,889	$	5,961	$	—	$	5,005	$	25	$	25

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	86	$	86	$	86	$	43	$	—	$	—
CRE
Owner-Occupied CRE		—		—		—		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		6,528		6,528		1,228		4,698		—		—
Direct Financing Leases		59		59		20		61		—		—
Residential Real Estate		180		180		15		180		—		—
Installment and Other Consumer		77		77		78		79		—		—
	$	6,930	$	6,930	$	1,427	$	5,061	$	—	$	—

Total Impaired Loans/Leases:
C&I	$	2,346	$	2,418	$	86	$	1,938	$	12	$	12
CRE
Owner-Occupied CRE		99		115		—		102		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		7,582		7,582		1,228		5,360		7		7
Direct Financing Leases		1,574		1,574		20		1,501		6		6
Residential Real Estate		603		587		15		579		—		—
Installment and Other Consumer		615		615		78		586		—		—
	$	12,819	$	12,891	$	1,427	$	10,066	$	25	$	25

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the three months ended March 31, 2019 are presented as follows:


											Interest Income
							Average				Recognized for
	Recorded		Unpaid Principal		Related		Recorded		Interest Income		Cash Payments
Classes of Loans/Leases	Investment		Balance		Allowance		Investment		Recognized		Received
	(dollars in thousands)
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	2,256	$	2,300	$	—	$	2,124	$	23	$	23
CRE
Owner-Occupied CRE		104		104		—		106		6		6
Commercial Construction, Land Development, and Other Land		500		500		—		503		7		7
Other Non Owner-Occupied CRE		1,675		1,675		—		1,687		22		22
Direct Financing Leases		1,948		1,948		—		2,011		11		11
Residential Real Estate		705		779		—		713		—		—
Installment and Other Consumer		778		778		—		770		3		3
	$	7,966	$	8,084	$	—	$	7,914	$	72	$	72

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	2,045	$	2,045	$	841	$	1,946	$	9	$	9
CRE
Owner-Occupied CRE		289		646		33		297		—		—
Commercial Construction, Land Development, and Other Land		144		144		28		146		—		—
Other Non Owner-Occupied CRE		7,443		7,443		2,052		7,510		48		48
Direct Financing Leases		237		237		142		206		—		—
Residential Real Estate		988		988		236		915		1		1
Installment and Other Consumer		147		147		107		137		—		—
	$	11,293	$	11,650	$	3,439	$	11,157	$	58	$	58

Total Impaired Loans/Leases:
C&I	$	4,301	$	4,345	$	841	$	4,070	$	32	$	32
CRE
Owner-Occupied CRE		393		750		33		403		6		6
Commercial Construction, Land Development, and Other Land		644		644		28		649		7		7
Other Non Owner-Occupied CRE		9,118		9,118		2,052		9,197		70		70
Direct Financing Leases		2,185		2,185		142		2,217		11		11
Residential Real Estate		1,693		1,767		236		1,628		1		1
Installment and Other Consumer		925		925		107		907		3		3
	$	19,259	$	19,734	$	3,439	$	19,071	$	130	$	130

Loans/leases, by classes of financing receivable, considered to be impaired as of December 31, 2019 are presented as

follows:


			Unpaid
	Recorded		Principal		Related
Classes of Loans/Leases	Investment		Balance		Allowance
	(dollars in thousands)
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	1,607	$	1,647	$	—
CRE
Owner-Occupied CRE		34		50		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		684		686		—
Direct Financing Leases		1,642		1,642		—
Residential Real Estate		469		614		—
Installment and Other Consumer		476		476		—
	$	4,912	$	5,115	$	—

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	239	$	239	$	170
CRE
Owner-Occupied CRE		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		2,867		2,867		125
Direct Financing Leases		383		383		270
Residential Real Estate		180		180		15
Installment and Other Consumer		80		80		80
	$	3,749	$	3,749	$	660

Total Impaired Loans/Leases:
C&I	$	1,846	$	1,886	$	170
CRE
Owner-Occupied CRE		34		50		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		3,551		3,553		125
Direct Financing Leases		2,025		2,025		270
Residential Real Estate		649		794		15
Installment and Other Consumer		556		556		80
	$	8,661	$	8,864	$	660

Financing receivable credit quality indicators



	As of March 31, 2020
			CRE
					Non-Owner Occupied
					Commercial
					Construction,
					Land
			Owner-Occupied		Development,						As a % of
Internally Assigned Risk Rating	C&I		CRE		and Other Land		Other CRE		Total		Total
	(dollars in thousands)

Pass (Ratings 1 through 5)	$	1,309,540	$	449,463	$	408,341	$	884,112	$	3,051,456	97.72	%
Special Mention (Rating 6)		11,805		3,665		722		18,546		34,738	1.11	%
Substandard (Rating 7)		18,375		1,827		1,320		15,090		36,612	1.17	%
Doubtful (Rating 8)		—		—		—		—		—	—	%
	$	1,339,720	$	454,955	$	410,383	$	917,748	$	3,122,806	100.00	%



	As of December 31, 2019
			CRE
					Non-Owner Occupied
					Commercial
					Construction,
					Land
			Owner-Occupied		Development,						As a % of
Internally Assigned Risk Rating	C&I		CRE		and Other Land		Other CRE		Total		Total
	(dollars in thousands)

Pass (Ratings 1 through 5)	$	1,334,446	$	439,418	$	378,572	$	896,206	$	3,048,642	98.28	%
Special Mention (Rating 6)		12,962		3,044		41		3,905		19,952	0.65	%
Substandard (Rating 7)		18,439		1,527		184		13,499		33,649	1.09	%
Doubtful (Rating 8)		—		—		—		—		—	0.01	%
	$	1,365,847	$	443,989	$	378,797	$	913,610	$	3,102,243	100.00	%

Financing receivable credit quality indicators performance status



	As of March 31, 2020
			Direct Financing		Residential Real		Installment and				As a % of
Delinquency Status *	C&I		Leases		Estate		Other Consumer		Total		Total
	(dollars in thousands)

Performing	$	144,148	$	81,973	$	237,002	$	106,000	$	569,123	99.31	%
Nonperforming		1,111		1,351		740		728		3,930	0.69	%
	$	145,259	$	83,324	$	237,742	$	106,728	$	573,053	100.00	%


	As of December 31, 2019
			Direct Financing		Residential Real		Installment and				As a % of
Delinquency Status *	C&I		Leases		Estate		Other Consumer		Total		Total
	(dollars in thousands)

Performing	$	140,992	$	86,019	$	239,198	$	108,763	$	574,972	99.29	%
Nonperforming		986		1,850		706		589		4,131	0.71	%
	$	141,978	$	87,869	$	239,904	$	109,352	$	579,103	100.00	%

Number and recorded investment of TDRs, by type of concession


	For the three months ended March 31, 2020
		Pre-		Post-
		Modification		Modification
	Number of	Recorded		Recorded		Specific
Classes of Loans/Leases	Loans / Leases	Investment		Investment		Allowance

CONCESSION - Significant Payment Delay
C&I	2	$	111	$	111	$	—
Direct Financing Leases	1		68		68		—
	3	$	179	$	179	$	—


	For the three months ended March 31, 2019
		Pre-		Post-
		Modification		Modification
	Number of	Recorded		Recorded		Specific
Classes of Loans/Leases	Loans / Leases	Investment		Investment		Allowance

CONCESSION - Significant Payment Delay
Direct Financing Leases	4		122		122		—
	4	$	122	$	122	$	—