NOTE 3 - LOANS/LEASES RECEIVABLE (Tables)

9 Months Ended

Sep. 30, 2020

Notes Tables

Composition of the loan/lease portfolio

	2020		2019
	(dollars in thousands)
C&I loans*	$	1,823,049	$	1,507,825
CRE loans
Owner-occupied CRE		486,254		443,989
Commercial construction, land development, and other land		503,086		378,797
Other non owner-occupied CRE		1,010,375		913,610
		1,999,715		1,736,396
Direct financing leases **		73,011		87,869
Residential real estate loans ***		245,032		239,904
Installment and other consumer loans		102,471		109,352
		4,243,278		3,681,346
Plus deferred loan/lease origination costs, net of fees		4,699		8,859
		4,247,977		3,690,205
Less allowance		(79,582)		(36,001)
	$	4,168,395	$	3,654,204
** Direct financing leases:
Net minimum lease payments to be received	$	80,560	$	97,025
Estimated unguaranteed residual values of leased assets		616		547
Unearned lease/residual income		(8,165)		(9,703)
		73,011		87,869
Plus deferred lease origination costs, net of fees		1,270		1,892
		74,281		89,761
Less allowance		(1,902)		(1,464)
	$	72,379	$	88,297

*     Includes equipment financing agreements outstanding at m2, totaling $162.1 million and $142.0 million as of September 30, 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 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 $8.8 million and $3.7 million as of September 30, 2020 and December 31, 2019, respectively.

Changes in accretable yield for acquired loans

	Three months ended September 30, 2020						Nine months ended September 30, 2020
	PCI		Performing				PCI		Performing
	Loans		Loans		Total		Loans		Loans		Total
	(dollars in thousands)
Balance at the beginning of the period	$	(58)	$	(4,935)	$	(4,993)	$	(57)	$	(6,378)	$	(6,435)
Reclassification of nonaccretable discount to accretable		—		—		—		(30)		—		(30)
Accretion recognized		1		941		942		30		2,384		2,414
Balance at the end of the period	$	(57)	$	(3,994)	$	(4,051)	$	(57)	$	(3,994)	$	(4,051)

	Three months ended September 30, 2019						Nine months ended September 30, 2019
	PCI		Performing				PCI		Performing
	Loans		Loans		Total		Loans		Loans		Total
	(dollars in thousands)
Balance at the beginning of the period	$	(151)	$	(8,489)	$	(8,640)	$	(667)	$	(10,127)	$	(10,794)
Reclassification of nonaccretable discount to accretable		—		—		—		(159)		—		(159)
Accretion recognized		94		1,344		1,438		769		2,982		3,751
Balance at the end of the period	$	(57)	$	(7,145)	$	(7,202)	$	(57)	$	(7,145)	$	(7,202)

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

	As of September 30, 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	$	1,816,454		$	1,275		$	339		$	—		$	4,981		$	1,823,049
CRE
Owner-Occupied CRE		485,950			—			—			—			304			486,254
Commercial Construction, Land Development, and Other Land		503,086			—			—			—			—			503,086
Other Non Owner-Occupied CRE		999,369			378			—			—			10,628			1,010,375
Direct Financing Leases		71,692			619			51			—			649			73,011
Residential Real Estate		243,646			—			512			60			814			245,032
Installment and Other Consumer		102,107			34			83			26			221			102,471
	$	4,222,304		$	2,306		$	985		$	86		$	17,597		$	4,243,278
As a percentage of total loan/lease portfolio		99.52	%		0.05	%		0.02	%		0.00	%		0.41	%		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 September 30, 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	$	—	$	4,981	$	828	$	5,809	30.99	%
CRE
Owner-Occupied CRE		—		304		—		304	1.62	%
Commercial Construction, Land Development, and Other Land		—		—		—		—	-	%
Other Non Owner-Occupied CRE		—		10,628		—		10,628	56.70	%
Direct Financing Leases		—		649		233		882	4.71	%
Residential Real Estate		60		814		—		874	4.66	%
Installment and Other Consumer		26		221		—		247	1.32	%
	$	86	$	17,597	$	1,061	$	18,744	100.00	%

**   Nonaccrual loans/leases included $204 thousand of TDRs, including $48 thousand in commercial and industrial loans, $50 in commercial real estate loans, and $106 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 and nine months ended September 30, 2020 and 2019, respectively, are presented as follows:

	Three Months Ended September 30, 2020
					Direct Financing		Residential Real		Installment and
	C&I		CRE		Leases		Estate		Other Consumer		Total
	(dollars in thousands)
Balance, beginning	$	25,748	$	29,123	$	1,639	$	3,010	$	1,307	$	60,827
Provisions charged to expense		9,008		10,428		608		253		45		20,342
Loans/leases charged off		(1,079)		(362)		(358)		—		(20)		(1,819)
Recoveries on loans/leases previously charged off		150		64		13		—		5		232
Balance, ending	$	33,827	$	39,253	$	1,902	$	3,263	$	1,337	$	79,582

	Three Months Ended September 30, 2019
					Direct Financing		Residential Real		Installment and
	C&I		CRE		Leases		Estate		Other Consumer		Total
	(dollars in thousands)
Balance, beginning	$	18,248	$	17,363	$	1,459	$	2,582	$	1,452	$	41,104
Reclassification of allowance related to held for sale assets		(2,814)		(2,392)		—		(628)		(288)		(6,122)
Provisions (credits) charged to expense*		998		220		80		241		45		1,584
Loans/leases charged off		(349)		—		(351)		(37)		(4)		(741)
Recoveries on loans/leases previously charged off		68		100		114		—		9		291
Balance, ending	$	16,151	$	15,291	$	1,302	$	2,158	$	1,214	$	36,116

	Nine Months Ended September 30, 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 charged to expense		20,564		24,609		1,890		1,286		275		48,624
Loans/leases charged off		(3,058)		(873)		(1,554)		—		(119)		(5,604)
Recoveries on loans/leases previously charged off		249		138		102		29		43		561
Balance, ending	$	33,827	$	39,253	$	1,902	$	3,263	$	1,337	$	79,582

	Nine Months Ended September 30, 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
Reclassification of allowance related to held for sale assets		(2,814)		(2,392)		—		(628)		(288)		(6,122)
Provisions (credits) charged to expense*		3,120		1,168		856		309		206		5,659
Loans/leases charged off		(876)		(1,369)		(1,501)		(109)		(99)		(3,953)
Recoveries on loans/leases previously charged off		300		164		155		31		36		685
Balance, ending	$	16,151	$	15,291	$	1,302	$	2,158	$	1,214	$	36,116

*Excludes provision related to loans included in assets held for sale of $428 thousand for the three and nine months ended September 30, 2019.

The allowance by impairment evaluation and by portfolio segment as of September 30, 2020 and December 31, 2019 is presented as follows:

	As of September 30, 2020
							Direct Financing			Residential Real			Installment and
	C&I			CRE			Leases			Estate			Other Consumer			Total
	(dollars in thousands)
Allowance for impaired loans/leases	$	—		$	3,210		$	—		$	21		$	75		$	3,306
Allowance for nonimpaired loans/leases		33,827			36,043			1,902			3,242			1,262			76,276
	$	33,827		$	39,253		$	1,902		$	3,263		$	1,337		$	79,582
Impaired loans/leases	$	2,004		$	14,669		$	944		$	766		$	221		$	18,604
Nonimpaired loans/leases		1,821,045			1,985,046			72,067			244,266			102,250			4,224,674
	$	1,823,049		$	1,999,715		$	73,011		$	245,032		$	102,471		$	4,243,278
Allowance as a percentage of impaired loans/leases		—	%		21.88	%		—	%		2.74	%		33.94	%		17.77	%
Allowance as a percentage of nonimpaired loans/leases		1.86	%		1.82	%		2.64	%		1.33	%		1.23	%		1.81	%
Total allowance as a percentage of total loans/leases		1.86	%		1.96	%		2.61	%		1.33	%		1.30	%		1.88	%

	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 nine months ended September 30, 2020 are presented as follows:

	Nine Months Ended September 30, 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	$	2,004	$	2,114	$	—	$	1,418	$	35	$	35
CRE
Owner-Occupied CRE		287		528		—		146		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		1,336		1,336		—		334		22		22
Direct Financing Leases		944		944		—		792		16		16
Residential Real Estate		507		507		—		416		—		—
Installment and Other Consumer		146		146		—		119		—		—
	$	5,224	$	5,575	$	—	$	3,225	$	73	$	73
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	—	$	—	$	—	$	—	$	—	$	—
CRE
Owner-Occupied CRE		—		—		—		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		13,046		13,046		3,210		7,228		—		—
Direct Financing Leases		—		—		—		—		—		—
Residential Real Estate		259		259		21		220		—		—
Installment and Other Consumer		75		75		75		69		—		—
	$	13,380	$	13,380	$	3,306	$	7,517	$	—	$	—
Total Impaired Loans/Leases:
C&I	$	2,004	$	2,114	$	—	$	1,418	$	35	$	35
CRE
Owner-Occupied CRE		287		528		—		146		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		14,382		14,382		3,210		7,562		22		22
Direct Financing Leases		944		944		—		792		16		16
Residential Real Estate		766		766		21		636		—		—
Installment and Other Consumer		221		221		75		188		—		—
	$	18,604	$	18,955	$	3,306	$	10,742	$	73	$	73

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the three months ended September 30, 2020 and 2019 are presented as follows:

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
					Interest Income						Interest Income
	Average				Recognized for		Average				Recognized for
	Recorded		Interest Income		Cash Payments		Recorded		Interest Income		Cash Payments
Classes of Loans/Leases	Investment		Recognized		Received		Investment		Recognized		Received
	(dollars in thousands)
Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	1,825	$	11	$	11	$	1,433	$	6	$	6
CRE
Owner-Occupied CRE		292		—		—		42		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		668		7		7		739		7		7
Direct Financing Leases		953		6		6		1,359		6		6
Residential Real Estate		512		—		—		540		—		—
Installment and Other Consumer		146		—		—		543		—		—
	$	4,396	$	24	$	24	$	4,656	$	19	$	19
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	—	$	—	$	—	$	141	$	—	$	—
CRE
Owner-Occupied CRE		—		—		—		123		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		9,757		—		—		3,254		—		—
Direct Financing Leases		—		—		—		120		—		—
Residential Real Estate		260		—		—		390		—		—
Installment and Other Consumer		77		—		—		84		—		—
	$	10,094	$	—	$	—	$	4,112	$	—	$	—
Total Impaired Loans/Leases:
C&I	$	1,825	$	11	$	11	$	1,574	$	6	$	6
CRE
Owner-Occupied CRE		292		—		—		165		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		10,425		7		7		3,993		7		7
Direct Financing Leases		953		6		6		1,479		6		6
Residential Real Estate		772		—		—		930		—		—
Installment and Other Consumer		223		—		—		627		—		—
	$	14,490	$	24	$	24	$	8,768	$	19	$	19

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 September 30, 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)	$	1,610,503	$	478,852	$	491,928	$	929,398	$	3,510,681	95.91	%
Special Mention (Rating 6)		25,547		2,211		680		51,149		79,587	2.17	%
Substandard (Rating 7)		24,912		5,191		10,478		29,828		70,409	1.92	%
Doubtful (Rating 8)		—		—		—		—		—	—	%
	$	1,660,962	$	486,254	$	503,086	$	1,010,375	$	3,660,677	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	98.27	%
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	1.08	%
Doubtful (Rating 8)		—		—		—		—		—	—	%
	$	1,365,847	$	443,989	$	378,797	$	913,610	$	3,102,243	100.00	%

Financing receivable credit quality indicators performance status

	As of September 30, 2020
			Direct Financing		Residential Real		Installment and				As a % of
Delinquency Status *	C&I		Leases		Estate		Other Consumer		Total		Total
	(dollars in thousands)
Performing	$	162,043	$	72,129	$	244,157	$	102,224	$	580,553	99.65	%
Nonperforming		44		882		875		247		2,048	0.35	%
	$	162,087	$	73,011	$	245,032	$	102,471	$	582,601	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 September 30, 2020							For the three months ended September 30, 2019
		Pre-		Post-					Pre-		Post-
		Modification		Modification					Modification		Modification
	Number of	Recorded		Recorded		Specific		Number of	Recorded		Recorded		Specific
Classes of Loans/Leases	Loans / Leases	Investment		Investment		Allowance		Loans / Leases	Investment		Investment		Allowance
	(dollars in thousands)
CONCESSION - Significant Payment Delay
C&I	3	$	197	$	197	$	—	—	$	—	$	—	$	—
Direct Financing Leases	—		—		—		—	3		116		116		—
	3	$	197	$	197	$	—	3	$	116	$	116	$	—
CONCESSION - Extension of Maturity
Installment and Other Consumer	—		—		—		—	1	$	56	$	56	$	56
	—	$	—	$	—	$	—	1	$	56	$	56	$	56
TOTAL	3	$	197	$	197	$	—	4	$	172	$	172	$	56

	For the nine months ended September 30, 2020							For the nine months ended September 30, 2019
		Pre-		Post-					Pre-		Post-
		Modification		Modification					Modification		Modification
	Number of	Recorded		Recorded		Specific		Number of	Recorded		Recorded		Specific
Classes of Loans/Leases	Loans / Leases	Investment		Investment		Allowance		Loans / Leases	Investment		Investment		Allowance
	(dollars in thousands)
CONCESSION - Significant Payment Delay
C & I	5	$	308	$	308	$	—	1	$	19	$	19	$	—
Direct Financing Leases	3		145		145		—	6		219		219		20
	8	$	453	$	453	$	—	7	$	238	$	238	$	20
CONCESSION - Forgiveness of Principal
C & I	—	$	—	$	—	$	—	1		587		537		—
	—	$	—	$	—	$	—	1	$	587	$	537	$	—
CONCESSION - Extension of Maturity
Installment and Other Consumer	—	$	—	$	—	$	—	1		56		56		56
	—	$	—	$	—	$	—	1	$	56	$	56	$	56
TOTAL	8	$	453	$	453	$	—	9	$	881	$	831	$	76