Note 4 - Loans/Leases Receivable (Tables)

12 Months Ended

Dec. 31, 2020

Notes Tables

Composition of the loan/lease portfolio

	2020		2019
	(dollars in thousands)
C&I loans*	$	1,726,723	$	1,507,825
CRE loans
Owner-occupied CRE		496,471		443,989
Commercial construction, land development, and other land		541,455		378,797
Other non owner-occupied CRE		1,069,703		913,610
		2,107,629		1,736,396
Direct financing leases **		66,016		87,869
Residential real estate loans ***		252,121		239,904
Installment and other consumer loans		91,302		109,352
		4,243,791		3,681,346
Plus deferred loan/lease origination costs, net of fees		7,338		8,859
		4,251,129		3,690,205
Less allowance		(84,376)		(36,001)
	$	4,166,753	$	3,654,204
** Direct financing leases:
Net minimum lease payments to be received	$	72,940	$	97,025
Estimated unguaranteed residual values of leased assets		239		547
Unearned lease/residual income		(7,163)		(9,703)
		66,016		87,869
Plus deferred lease origination costs, net of fees		1,072		1,892
		67,088		89,761
Less allowance		(1,764)		(1,464)
	$	65,324	$	88,297

*   Includes equipment financing agreements outstanding at m2, totaling $171.5 million and $142.0 million as of December 31, 2020 and 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 and 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.

At December 31, 2020, the Company had three leases remaining with residual values totaling $239 thousand that were not protected with a lease end options rider. At December 31, 2019, the Company had six leases remaining with residual values totaling approximately $547 thousand that were not protected with a lease end options rider. Management has performed specific evaluations of these unguaranteed residual values and determined that the valuations are appropriate. There were no losses related to unguaranteed residual values during the years ended December 31, 2020, 2019, and 2018.

***Includes residential real estate loans held for sale totaling $3.8 million and $3.7 million as of December 31, 2020 and 2019, respectively.

Changes in accretable yield for acquired loans

	For the year ended December 31, 2020
	PCI		Performing
	Loans		Loans		Total
	(dollars in thousands)
Balance at the beginning of the period	$	(57)	$	(6,378)	$	(6,435)
Reclassification of nonaccretable discount to accretable		(530)		—		(530)
Reclassification of nonaccretable discount to allowance		—		353		353
Accretion recognized		587		2,886		3,473
Balance at the end of the period	$	—	$	(3,139)	$	(3,139)

	For the year ended December 31, 2019
	PCI		Performing
	Loans		Loans		Total
	(dollars in thousands)
Balance at the beginning of the period	$	(667)	$	(10,127)	$	(10,794)
Reclassification of nonaccretable discount to accretable		(275)		—		(275)
Accretion recognized		885		3,749		4,634
Balance at the end of the period	$	(57)	$	(6,378)	$	(6,435)
	For the year ended December 31, 2018
	PCI		Performing
	Loans		Loans		Total
	(dollars in thousands)
Balance at the beginning of the period	$	(191)	$	(6,280)	$	(6,471)
Discount added at acquisition		(293)		(7,800)		(8,093)
Reclassification of nonaccretable discount to accretable		(892)		(470)		(1,362)
Accretion recognized		709		4,423		5,132
Balance at the end of the period	$	(667)	$	(10,127)	$	(10,794)

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

	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	$	1,720,058		$	1,535		$	323		$	—		$	4,807		$	1,726,723
CRE
Owner-Occupied CRE		496,459			—			—			—			12			496,471
Commercial Construction, Land Development, and Other Land		541,455			—			—			—			—			541,455
Other Non Owner-Occupied CRE		1,062,215			—			—			—			7,488			1,069,703
Direct Financing Leases		64,918			501			191			—			406			66,016
Residential Real Estate		249,364			1,512			223			—			1,022			252,121
Installment and Other Consumer		91,047			43			4			3			205			91,302
	$	4,225,516		$	3,591		$	741		$	3		$	13,940		$	4,243,791
As a percentage of total loan/lease portfolio		99.57	%		0.08	%		0.02	%		0.00	%		0.33	%		100.00	%

	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

	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	$	—	$	4,807	$	606	$	5,413	36.87	%
CRE
Owner-Occupied CRE		—		12		—		12	0.08	%
Commercial Construction, Land Development, and Other Land		—		—		—		—	-	%
Other Non Owner-Occupied CRE		—		7,488		—		7,488	50.99	%
Direct Financing Leases		—		406		135		541	3.68	%
Residential Real Estate		—		1,022		—		1,022	6.96	%
Installment and Other Consumer		3		205		—		208	1.42	%
	$	3	$	13,940	$	741	$	14,684	100.00	%

*     At December 31, 2020, nonaccrual loans/leases included $984 thousand of TDRs, including $836 thousand in CRE loans, $100 thousand in direct financing leases, and $48 thousand in installment loans.

	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	%

*  At December 31, 2019, accruing past due 90 days or more included $747 thousand of TDRs, including $98 thousand in C&I loans and $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 years ended December 31, 2020, 2019, and 2018 are presented as follows:

	Year Ended December 31, 2020
					Direct Financing		Residential  Real
	C&I		CRE		Leases		Estate		Consumer		Total
	(dollars in thousands)
Balance, beginning	$	16,072	$	15,379	$	1,464	$	1,948	$	1,138	$	36,001
Provisions charged to expense		22,899		28,671		2,148		1,755		231		55,704
Loans/leases charged off		(4,199)		(2,071)		(1,993)		—		(120)		(8,383)
Recoveries on loans/leases previously charged off		649		182		145		29		49		1,054
Balance, ending	$	35,421	$	42,161	$	1,764	$	3,732	$	1,298	$	84,376

	Year Ended December 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
Reclassification of allowance related to held for sale assets		(2,814)		(2,392)		—		(628)		(288)		(6,122)
Provisions (credits) charged to expense*		3,666		1,566		1,129		163		114		6,638
Loans/leases charged off		(1,476)		(1,722)		(1,647)		(191)		(98)		(5,134)
Recoveries on loans/leases previously charged off		276		208		190		47		51		772
Balance, ending	$	16,072	$	15,379	$	1,464	$	1,948	$	1,138	$	36,001

*Excludes provision related to loans included in assets held for sale during the year of $428 thousand for the year ending December 31, 2019.

	Year Ended December 31, 2018
					Direct Financing		Residential Real		Installment and
	C&I		CRE		Leases		Estate		Other Consumer		Total
	(dollars in thousands)
Balance, beginning	$	14,323	$	13,963	$	2,382	$	2,466	$	1,222	$	34,356
Provisions charged to expense		7,161		4,094		1,068		193		142		12,658
Loans/leases charged off		(5,359)		(387)		(2,002)		(127)		(44)		(7,919)
Recoveries on loans/leases previously charged off		295		49		344		25		39		752
Balance, ending	$	16,420	$	17,719	$	1,792	$	2,557	$	1,359	$	39,847

Note 4. Loans/Leases Receivable (continued)

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

	2020
							Direct Financing			Residential Real			Installment and
	C&I			CRE			Leases			Estate			Other Consumer			Total
	(dollars in thousands)
Allowance for impaired loans/leases	$	650		$	1,938		$	—		$	20		$	72		$	2,680
Allowance for nonimpaired loans/leases		34,771			40,223			1,764			3,712			1,226			81,696
	$	35,421		$	42,161		$	1,764		$	3,732		$	1,298		$	84,376
Impaired loans/leases	$	5,381		$	7,487		$	578		$	977		$	205		$	14,628
Nonimpaired loans/leases		1,721,342			2,100,142			65,438			251,144			91,097			4,229,163
	$	1,726,723		$	2,107,629		$	66,016		$	252,121		$	91,302		$	4,243,791
Allowance as a percentage of impaired loans/leases		12.08	%		25.88	%		—	%		2.05	%		35.12	%		18.32	%
Allowance as a percentage of nonimpaired loans/leases		2.02	%		1.92	%		2.70	%		1.48	%		1.35	%		1.93	%
Total allowance as a percentage of total loans/leases		2.05	%		2.00	%		2.67	%		1.48	%		1.42	%		1.99	%

	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	%		14.39	%		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

	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	$	1,361	$	1,441	$	—	$	1,002	$	33	$	33
CRE
Owner-Occupied CRE		—		—		—		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		1,133		1,933		—		494		29		29
Direct Financing Leases		578		578		—		483		17		17
Residential Real Estate		719		719		—		476		—		—
Installment and Other Consumer		133		133		—		121		—		—
	$	3,924	$	4,804	$	—	$	2,576	$	79	$	79
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,020	$	4,020	$	650	$	1,555	$	—	$	—
CRE
Owner-Occupied CRE		—		—		—		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		6,354		6,354		1,938		5,726		—		—
Direct Financing Leases		—		—		—		—		—		—
Residential Real Estate		258		258		20		227		—		—
Installment and Other Consumer		72		72		72		70		—		—
	$	10,704	$	10,704	$	2,680	$	7,578	$	—	$	—
Total Impaired Loans/Leases:
C&I	$	5,381	$	5,461	$	650	$	2,557	$	33	$	33
CRE
Owner-Occupied CRE		—		—		—		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		7,487		8,287		1,938		6,220		29		29
Direct Financing Leases		578		578		—		483		17		17
Residential Real Estate		977		977		20		703		—		—
Installment and Other Consumer		205		205		72		191		—		—
	$	14,628	$	15,508	$	2,680	$	10,154	$	79	$	79

Note 4. Loans/Leases Receivable (continued)

	2019
											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	$	1,607	$	1,647	$	—	$	970	$	27	$	27
CRE
Owner-Occupied CRE		34		50		—		24		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		684		686		—		738		29		29
Direct Financing Leases		1,642		1,642		—		1,322		30		30
Residential Real Estate		469		614		—		481		—		—
Installment and Other Consumer		476		476		—		474		—		—
	$	4,912	$	5,115	$	—	$	4,009	$	86	$	86
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	239	$	239	$	170	$	124	$	—	$	—
CRE
Owner-Occupied CRE		—		—		—		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		2,867		2,867		125		1,958		—		—
Direct Financing Leases		383		383		270		196		2		2
Residential Real Estate		180		180		15		72		—		—
Installment and Other Consumer		80		80		80		62		—		—
	$	3,749	$	3,749	$	660	$	2,412	$	2	$	2
Total Impaired Loans/Leases:
C&I	$	1,846	$	1,886	$	170	$	1,094	$	27	$	27
CRE
Owner-Occupied CRE		34		50		—		24		—		—
Commercial Construction, Land Development, and Other Land		—		—		—		—		—		—
Other Non Owner-Occupied CRE		3,551		3,553		125		2,696		29		29
Direct Financing Leases		2,025		2,025		270		1,518		32		32
Residential Real Estate		649		794		15		553		—		—
Installment and Other Consumer		556		556		80		536		—		—
	$	8,661	$	8,864	$	660	$	6,421	$	88	$	88

Note 4. Loans/Leases Receivable (continued)

	2018
											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	$	1,846	$	4,540	$	—	$	2,346	$	210	$	210
CRE
Owner-Occupied CRE		106		106		—		107		—		—
Commercial Construction, Land Development, and Other Land		507		507		—		101		—		—
Other Non Owner-Occupied CRE		1,804		1,804		—		540		—		—
Direct Financing Leases		1,929		1,929		—		2,193		60		60
Residential Real Estate		984		1,058		—		723		9		9
Installment and Other Consumer		762		762		—		198		—		—
	$	7,938	$	10,706	$	—	$	6,208	$	279	$	279
Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	2,653	$	2,653	$	973	$	1,118	$	43	$	43
CRE
Owner-Occupied CRE		304		660		39		177		—		—
Commercial Construction, Land Development, and Other Land		149		149		33		159		—		—
Other Non Owner-Occupied CRE		7,577		7,577		2,052		3,055		58		58
Direct Financing Leases		320		320		194		273		—		—
Residential Real Estate		1,126		1,126		257		553		12		12
Installment and Other Consumer		136		136		111		125		—		—
	$	12,265	$	12,621	$	3,659	$	5,460	$	113	$	113
Total Impaired Loans/Leases:
C&I	$	4,499	$	7,193	$	973	$	3,464	$	253	$	253
CRE
Owner-Occupied CRE		410		766		39		284		—		—
Commercial Construction, Land Development, and Other Land		656		656		33		260		—		—
Other Non Owner-Occupied CRE		9,381		9,381		2,052		3,595		58		58
Direct Financing Leases		2,249		2,249		194		2,466		60		60
Residential Real Estate		2,110		2,184		257		1,276		21		21
Installment and Other Consumer		898		898		111		323		—		—
	$	20,203	$	23,327	$	3,659	$	11,668	$	392	$	392

Financing receivable credit quality indicators

	2020
			CRE
					Non-Owner Occupied
					Commercial
					Construction,
Internally Assigned					Land
Risk Rating			Owner-Occupied		Development,						As a % of
	C&I		CRE		and Other Land		Other CRE		Total		Total
	(dollars in thousands)
Pass (Ratings 1 through 5)	$	1,506,578	$	488,478	$	530,297	$	999,931	$	3,525,284	96	%
Special Mention (Rating 6)		23,929		3,087		680		43,785		71,481	1.95
Substandard (Rating 7)		24,710		4,906		10,478		25,987		66,081	1.80
Doubtful (Rating 8)		—		—		—		—		—	—
Total	$	1,555,217	$	496,471	$	541,455	$	1,069,703	$	3,662,846	100.00	%

	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	0.64	%
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

	2020
			Direct Financing		Residential Real		Installment and				As a % of
Delinquency Status *	C&I		Leases		Estate		Other Consumer		Total		Total
	(dollars in thousands)
Performing	$	170,712	$	65,475	$	251,099	$	91,094	$	578,380	99.56	%
Nonperforming		794		541		1,022		208		2,565	0.44
	$	171,506	$	66,016	$	252,121	$	91,302	$	580,945	100.00	%

	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	%

*    Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing troubled debt restructurings.

Number and recorded investment of TDRs, by type of concession

	2020
		Pre-		Post-
		Modification		Modification
	Number of	Recorded		Recorded		Specific
Classes of Loans/Leases	Loans / Leases	Investment		Investment		Allowance
	(dollars in thousands)
CONCESSION - Significant Payment Delay
C&I	1	$	75	$	75	$	—
Direct Financing Leases	2		112		112		—
	3	$	187	$	187	$	—
CONCESSION - Extension of Maturity
CRE Other	1	$	835	$	835	$	—
TOTAL	4	$	1,022	$	1,022	$	—

	2019
		Pre-		Post-
		Modification		Modification
	Number of	Recorded		Recorded		Specific
Classes of Loans/Leases	Loans / Leases	Investment		Investment		Allowance
	(dollars in thousands)
CONCESSION - Significant Payment Delay
C & I	3	$	112	$	112	$	—
Direct Financing Leases	10		388		388		35
	13	$	500	$	500	$	35
CONCESSION - Forgiveness of Principal
C & I	1	$	587	$	537	$	—
CONCESSION - Extension of Maturity
Installment and Other Consumer	1	$	56	$	56	$	54
TOTAL	15	$	1,143	$	1,093	$	89

Analysis of changes in aggregated amounts of loans

	2020		2019		2018
	(dollars in thousands)
Balance, beginning	$	112,830	$	125,496	$	66,442
Net increase (decrease) due to change in related parties		(1,601)		(12,161)		41,797
Advances		43,238		98,708		43,453
Repayments		(54,106)		(99,213)		(26,196)
Balance, ending	$	100,361	$	112,830	$	125,496

Loan concentration by segment

	2020				2019
			Percentage of				Percentage of
			Total				Total
Industry Name	Balance		Loans/Leases		Balance		Loans/Leases
	(dollars in thousands)
Lessors of Residential Buildings	$	1,134,178	27	%	$	745,770	22	%
Lessors of Non-Residential Buildings		591,398	14	%		574,058	17	%
Administration of Urban Planning & Community & Rural Development		138,514	3	%		133,157	4	%