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NOTE 3 - LOANS/LEASES RECEIVABLE

6 Months Ended

Jun. 30, 2021

NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio by classes of loans/leases as of June 30, 2021 and December 31, 2020 is presented as follows:


	June 30, 2021
	(dollars in thousands)

C&I:
C&I - revolving	$	182,882
C&I - other *		1,505,384
		1,688,266

CRE - owner occupied		427,734
CRE - non-owner occupied		618,879
Construction and land development		708,289
Multi-family		466,804
Direct financing leases**		56,153
1-4 family real estate***		382,142
Consumer		69,438
		4,417,705
Allowance for credit losses		(78,894)
	$	4,338,811
** Direct financing leases:
Net minimum lease payments to be received	$	61,781
Estimated unguaranteed residual values of leased assets		165
Unearned lease/residual income		(5,793)
		56,153
Plus deferred lease origination costs, net of fees		783
		56,936
Less allowance for credit losses		(1,976)
	$	54,960


	December 31, 2020


C&I loans*	$	1,726,723
CRE loans
Owner-occupied CRE		496,471
Commercial construction, land development, and other land		541,455
Other non owner-occupied CRE		1,069,703
		2,107,629

Direct financing leases **		66,016
Residential real estate loans ***		252,121
Installment and other consumer loans		91,302
		4,243,791
Plus deferred loan/lease origination costs, net of fees		7,338
		4,251,129
Less allowance		(84,376)
	$	4,166,753
** Direct financing leases:
Net minimum lease payments to be received	$	72,940
Estimated unguaranteed residual values of leased assets		239
Unearned lease/residual income		(7,163)
		66,016
Plus deferred lease origination costs, net of fees		1,072
		67,088
Less allowance		(1,764)
	$	65,324

* Includes equipment financing agreements outstanding at m2, totaling $202.4 million and $171.5 million as of June 30, 2021 and December 31, 2020, respectively and PPP loans totaling $147.5 million and $273.1 million as of June 30, 2021 and December 31, 2020, 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 $4.5 million and $3.8 million as of June 30, 2021 and December 31, 2020, respectively.

Changes in accretable yield for acquired loans were as follows:


	Three months ended June 30, 2021						Six months ended June 30, 2021
	PCI		Performing				PCI		Performing
	Loans		Loans		Total		Loans		Loans		Total

	(dollars in thousands)

Balance at the beginning of the period	$	—	$	(2,530)	$	(2,530)	$	—	$	(3,139)	$	(3,139)
Accretion recognized		—		341		341		—		950		950
Balance at the end of the period	$	—	$	(2,189)	$	(2,189)	$	—	$	(2,189)	$	(2,189)


	Three months ended June 30, 2020						Six months ended June 30, 2020
	PCI		Performing				PCI		Performing
	Loans		Loans		Total		Loans		Loans		Total

	(dollars in thousands)

Balance at the beginning of the period	$	(59)	$	(5,725)	$	(5,784)	$	(57)	$	(6,378)	$	(6,435)
Reclassification of nonaccretable discount to accretable		—		—		—		(30)		—		(30)
Accretion recognized		1		790		791		29		1,443		1,472
Balance at the end of the period	$	(58)	$	(4,935)	$	(4,993)	$	(58)	$	(4,935)	$	(4,993)

The aging of the loan/lease portfolio by classes of loans/leases as of June 30, 2021 and December 31, 2020 is presented as follows:


	As of June 30, 2021
										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:
C&I - revolving	$	182,882		$	—		$	—		$	—		$	—	$		182,882
C&I - other		1,498,911			1,252			205			57			4,959			1,505,384
CRE - owner occupied		426,603			865			266			—			—			427,734
CRE - non-owner occupied		618,483			—			396			—			—			618,879
Construction and land development		708,214			—			—			—			75			708,289
Multi-family		466,804			—			—			—			—			466,804
Direct financing leases		55,779			76			137			—			161			56,153
1-4 family real estate		378,314			228			631			—			2,969			382,142
Consumer		69,320			52			—			—			66			69,438
	$	4,405,310		$	2,473		$	1,635		$	57		$	8,230		$	4,417,705

As a percentage of total loan/lease portfolio		99.72	%		0.05	%		0.04	%		0.00	%		0.19	%		100.00	%


	As of December 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	$	1,720,058		$	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	%

NPLs by classes of loans/leases as of June 30, 2021 and December 31, 2020 are presented as follows:


	As of June 30, 2021
	Accruing Past		Nonaccrual		Nonaccrual
	Due 90 Days or		Loans/Leases		Loans/Leases				Percentage of
Classes of Loans/Leases	More		with an ACL		without an ACL		Total NPLs		Total NPLs

	(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	-	%
C&I - other		57		4,736		223		5,016	60.52
CRE - owner occupied		—		—		—		—	-
CRE - non-owner occupied		—		—		—		—	-
Construction and land development		—		75		—		75	0.91
Multi-family		—		—		—		—	-
Direct financing leases		—		110		51		161	1.94
1-4 family real estate		—		2,969		—		2,969	35.83
Consumer		—		66		—		66	0.80
	$	57	$	7,956	$	274	$	8,287	100.00	%

The Company did not recognize any interest income on nonaccrual loans during the three and six months ended June 30, 2021.


	As of December 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	$	—	$	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	%

* Nonaccrual loans/leases included $984 thousand of TDRs, including $836 thousand in CRE loans, $100 thousand in direct financing leases, $48 thousand in installment loans.

Changes in the ACL-loans/leases by portfolio segment for the three and six months ended June 30, 2021 and 2020, respectively, are presented as follows:


	Three Months Ended June 30, 2021
									CRE		CRE		Construction				Direct		Residential		1-4
			C&I -		C&I -				Owner		Non-Owner		and Land		Multi-		Financing		Real		Family
	C&I		Revolving		Other*		CRE		Occupied		Occupied		Development		Family		Leases		Estate		Real Estate		Consumer		Total

	(dollars in thousands)

Balance, beginning	$	—	$	3,547	$	33,167	$	—	$	9,147	$	11,155	$	12,327	$	6,278	$	—	$	—	$	5,165	$	1,045	$	81,831
Provision		—		(370)		(2)		—		(1,121)		(376)		1,313		849		—		—		(105)		(329)		(141)
Charge-offs		—		—		(998)		—		—		(1,876)		—		(150)		—		—		(646)		(4)		(3,674)
Recoveries		—		—		158		—		(6)		8		—		—		—		—		511		207		878
Balance, ending	$	—	$	3,177	$	32,325	$	—	$	8,020	$	8,911	$	13,640	$	6,977	$	—	$	—	$	4,925	$	919	$	78,894


	Six Months Ended June 30, 2021
									CRE -		CRE -		Construction				Direct		Residential
			C&I -		C&I -				Owner		Non-Owner		and Land			Multi	Financing		Real			1-4
	C&I		Revolving		Other**		CRE		Occupied		Occupied		Development		Family		Leases		Estate		Family		Consumer		Total

	(dollars in thousands)

Balance, beginning	$	35,421	$	—	$	—	$	42,161	$	—	$	—	$	—	$	—	$	1,764	$	3,732	$	—	$	1,298	$	84,376
Adoption of ASU 2016-13		(35,421)		2,982		29,130		(42,161)		8,696		11,428		11,999		5,836		(1,764)		(3,732)		5,042		(137)		(8,102)
Provision		—		195		4,547		—		(670)		(662)		1,641		1,291		—		—		56		(546)		5,852
Charge-offs		—		—		(1,666)		—		—		(1,876)		—		(150)		—		—		(690)		(5)		(4,387)
Recoveries		—		—		314		—		(6)		21		—		—		—		—		517		309		1,155
Balance, ending	$	—	$	3,177	$	32,325	$	—	$	8,020	$	8,911	$	13,640	$	6,977	$	—	$	—	$	4,925	$	919	$	78,894

* Included within the C&I – Other column are ACL on leases with a beginning balance of $2.2 million, negative provision of $144 thousand, charge-offs of $130 thousand and recoveries of $58 thousand. ACL on leases was $2.0 million as of June 30, 2021.

** Included within the C&I – Other column are ACL on leases with a beginning balance of $1.8 million, adoption impact of $685 thousand, negative provision of $279 thousand, charge-offs of $328 thousand and recoveries of $134 thousand. ACL on leases was $2.0 million as of June 30, 2021.


	Three Months Ended June 30, 2020
					Direct Financing		Residential Real		Installment and
	C&I		CRE		Leases		Estate		Other Consumer		Total

	(dollars in thousands)

Balance, beginning	$	18,151	$	19,269	$	1,303	$	2,313	$	1,197	$	42,233
Provision		7,859		10,365		887		697		107		19,915
Charge-offs		(340)		(511)		(595)		—		(4)		(1,450)
Recoveries		78		—		44		—		7		129
Balance, ending	$	25,748	$	29,123	$	1,639	$	3,010	$	1,307	$	60,827



	Six Months Ended June 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		11,556		14,181		1,281		1,033		231		28,282
Charge-offs		(1,979)		(511)		(1,195)		—		(100)		(3,785)
Recoveries		99		74		89		29		38		329
Balance, ending	$	25,748	$	29,123	$	1,639	$	3,010	$	1,307	$	60,827

The composition of the ACL-loans/leases by portfolio segment based on evaluation method are as follows:


	As of June 30, 2021
	Amortized Cost of Loans Receivable						Allowance for Credit Losses
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Credit Losses		Credit Losses		Total		Credit Losses		Credit Losses		Total

	(dollars in thousands)
C&I :
C&I – Revolving	$	2,725	$	180,157	$	182,882	$	189	$	2,988	$	3,177
C&I - Other*		40,175		1,521,362		1,561,537		3,762		28,563		32,325
		42,900		1,701,519		1,744,419		3,951		31,551		35,502
CRE - owner occupied		5,425		422,309		427,734		283		7,737		8,020
CRE - non-owner occupied		19,879		599,000		618,879		46		8,865		8,911
Construction and Land Development		10,553		697,736		708,289		12		13,628		13,640
Multi-family		—		466,804		466,804		—		6,977		6,977
1-4 family real estate		4,683		377,459		382,142		491		4,434		4,925
Consumer		271		69,167		69,438		36		883		919
	$	83,711	$	4,333,994	$	4,417,705	$	4,819	$	74,075	$	78,894

* Included within the C&I – Other category are leases individually evaluated of $161 thousand with a related allowance for credit losses of $33 thousand and leases collectively evaluated of $56.0 million with a related allowance for credit losses of $1.9 million.

Information for impaired loans/leases prior to adoption of ASU 2016-13 on January 1, 2021, is presented in the tables below. The recorded investment represents customer balances net of any partial charge-offs recognized on the loan/lease. The unpaid principal balance represents the recorded balance outstanding on the loan/lease prior to any partial charge-offs.

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the six months ended June 30, 2020 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	$	1,978	$	2,051	$	—	$	1,512	$	25	$	25
CRE
Owner-occupied CRE		320		577		—		128		—		—
Commercial construction, land development, and other land		—		—		—		—		—		—
Other non-owner occupied CRE		965		965		—		742		14		14
Direct financing leases		1,364		1,364		—		1,379		11		11
Residential real estate		624		652		—		474		—		—
Installment and other consumer		562		562		—		525		—		—
	$	5,813	$	6,171	$	—	$	4,760	$	50	$	50

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	569	$	569	$	341	$	479	$	—	$	—
CRE
Owner-occupied CRE		—		—		—		—		—		—
Commercial construction, land development, and other land		—		—		—		—		—		—
Other non-owner occupied CRE		6,530		6,530		1,692		5,329		—		—
Direct financing leases		55		55		20		59		—		—
Residential real estate		260		260		23		206		—		—
Installment and other consumer		78		78		78		67		—		—
	$	7,492	$	7,492	$	2,154	$	6,140	$	—	$	—

Total Impaired Loans/Leases:
C&I	$	2,547	$	2,620	$	341	$	1,991	$	25	$	25
CRE
Owner-occupied CRE		320		577		—		128		—		—
Commercial construction, land development, and other land		—		—		—		—		—		—
Other non-owner occupied CRE		7,495		7,495		1,692		6,071		14		14
Direct financing leases		1,419		1,419		20		1,438		11		11
Residential real estate		884		912		23		680		—		—
Installment and other consumer		640		640		78		592		—		—
	$	13,305	$	13,663	$	2,154	$	10,900	$	50	$	50

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


	Three Months Ended June 30, 2020
					Interest Income
	Average				Recognized for
	Recorded		Interest Income		Cash Payments
Classes of Loans/Leases	Investment		Recognized		Received


Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	1,742	$	13	$	13
CRE
Owner-Occupied CRE		174		—		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		978		7		7
Direct Financing Leases		1,411		6		6
Residential Real Estate		524		—		—
Installment and Other Consumer		550		—		—
	$	5,379	$	26	$	26

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	568	$	—	$	—
CRE
Owner-Occupied CRE		—		—		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		6,560		—		—
Direct Financing Leases		57		—		—
Residential Real Estate		220		—		—
Installment and Other Consumer		70		—		—
	$	7,475	$	—	$	—

Total Impaired Loans/Leases:
C&I	$	2,310	$	13	$	13
CRE
Owner-Occupied CRE		174		—		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		7,538		7		7
Direct Financing Leases		1,468		6		6
Residential Real Estate		744		—		—
Installment and Other Consumer		620		—		—
	$	12,854	$	26	$	26

Loans/leases, by classes of financing receivable, considered to be impaired as of December 31, 2020 are presented as

follows:


	December 31, 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

Impaired loans/leases prior to adoption of ASU 2016-13 and those individually evaluated under ASU 2016-13 for which no allowance has been provided have adequate collateral, based on management’s current estimates.

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses:



	As of June 30, 2021
			Non
	Commercial		Owner-Occupied		Owner Occupied
	Assets		Real Estate		Real Estate		Securities		Equipment		Other		Total

	(dollars in thousands)
C & I:
C&I - Revolving	$	2,475	$	—	$	—	$	—	$	250	$	—	$	2,725
C&I - Other*		852		—		2,591		6,224		30,508		—		40,175
		3,327		—		2,591		6,224		30,758		—		42,900
CRE - owner occupied		—		—		5,425		—		—		—		5,425
CRE - non-owner occupied		—		19,879		—		—		—		—		19,879
Construction and Land Development		—		10,478		75		—		—		—		10,553
Multi-family		—		—		—		—		—		—		—
1-4 Family Real Estate		—		2,532		2,151		—		—		—		4,683
Consumer		—		—		248		—		—		23		271
	$	3,327	$	32,889	$	10,490	$	6,224	$	30,758	$	23	$	83,711

* Included within the C&I – Other category are leases individually evaluated of $161 thousand with primary collateral of equipment.

For certain C&I loans, all CRE loans, certain construction and land development loans, all multifamily loans and certain 1-4 family residential loans, the Company’s credit quality indicator consists of internally assigned risk ratings. Each such loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

For certain C&I loans (including equipment financing agreements and direct financing leases), certain construction and land development, certain 1-4 family real estate loans, and all consumer loans, the Company’s credit quality indicator is performance determined by delinquency status. Prior to adoption of ASU 2016-13, this included C&I equipment financing agreements, direct financing leases, residential real estate loans, and installment and other consumer loans. Delinquency status is updated daily by the Company’s loan system.

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of June 30, 2021:


	As of June 30, 2021
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2021		2020		2019		2018		2017		Prior		Cost Basis		Total

	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	177,045	$	177,045
Special Mention (Rating 6)		—		—		—		—		—		—		3,112		3,112
Substandard (Rating 7)		—		—		—		—		—		—		2,725		2,725
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	182,882	$	182,882

C&I - other
Pass (Ratings 1 through 5)	$	316,725	$	437,339	$	208,611	$	125,116	$	117,406	$	56,478	$	—	$	1,261,675
Special Mention (Rating 6)		146		693		—		69		495		1,259		—		2,662
Substandard (Rating 7)		8,481		6,952		16,690		366		60		6,131		—		38,680
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	325,352	$	444,984	$	225,301	$	125,551	$	117,961	$	63,868	$	—	$	1,303,017

CRE - owner occupied
Pass (Ratings 1 through 5)	$	65,781	$	159,219	$	63,344	$	32,677	$	23,452	$	64,232	$	10,344	$	419,049
Special Mention (Rating 6)		901		—		178		244		672		1,266		—		3,261
Substandard (Rating 7)		214		—		1,921		1,261		2,028		—		—		5,424
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	66,896	$	159,219	$	65,443	$	34,182	$	26,152	$	65,498	$	10,344	$	427,734

CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	81,897	$	177,081	$	91,579	$	76,121	$	72,401	$	51,555	$	6,570	$	557,204
Special Mention (Rating 6)		5,019		8,617		1,846		15,288		4,201		5,673		1,151		41,795
Substandard (Rating 7)		419		—		17,000		499		957		—		1,005		19,880
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	87,335	$	185,698	$	110,425	$	91,908	$	77,559	$	57,228	$	8,726	$	618,879

Construction and land development
Pass (Ratings 1 through 5)	$	144,416	$	231,399	$	171,796	$	117,381	$	7,770	$	2,613	$	8,634	$	684,009
Special Mention (Rating 6)		—		—		—		593		—		—		—		593
Substandard (Rating 7)		—		—		10,478		—		—		—		—		10,478
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	144,416	$	231,399	$	182,274	$	117,974	$	7,770	$	2,613	$	8,634	$	695,080

Multi-family
Pass (Ratings 1 through 5)	$	125,743	$	206,255	$	66,161	$	47,105	$	7,420	$	11,359	$	2,761	$	466,804
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		—		—		—		—		—		—		—		—
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	125,743	$	206,255	$	66,161	$	47,105	$	7,420	$	11,359	$	2,761	$	466,804

1-4 family real estate
Pass (Ratings 1 through 5)	$	27,769	$	33,721	$	19,874	$	12,928	$	7,333	$	8,990	$	6,122	$	116,737
Special Mention (Rating 6)		38		—		—		—		152		—		—		190
Substandard (Rating 7)		2,532		—		—		—		—		—		—		2,532
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	30,339	$	33,721	$	19,874	$	12,928	$	7,485	$	8,990	$	6,122	$	119,459

Total	$	780,081	$	1,261,276	$	669,478	$	429,648	$	244,347	$	209,556	$	219,469	$	3,813,855


	As of June 30, 2021
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2021		2020		2019		2018		2017			Prior	Cost Basis		Total

	(dollars in thousands)
C&I - other
Performing	$	63,299	$	65,043	$	43,563	$	21,207	$	7,542	$	751	$	—	$	201,405
Nonperforming		69		290		423		72		85		23		—		962
Total C&I - other	$	63,368	$	65,333	$	43,986	$	21,279	$	7,627	$	774	$	—	$	202,367

Direct financing leases
Performing	$	4,358	$	15,240	$	15,002	$	12,725	$	6,349	$	2,318	$	—	$	55,992
Nonperforming		—		—		—		57		31		73		—		161
Total Direct financing leases	$	4,358	$	15,240	$	15,002	$	12,782	$	6,380	$	2,391	$	—	$	56,153

Construction and land development
Performing	$	3,111	$	9,299	$	213	$	511	$	—	$	—	$	—	$	13,134
Nonperforming		—		—		—		—		75		—		—		75
Total Construction and land development	$	3,111	$	9,299	$	213	$	511	$	75	$	—	$	—	$	13,209

1-4 family real estate
Performing	$	67,843	$	86,487	$	24,356	$	13,340	$	13,954	$	56,239	$	28	$	262,247
Nonperforming		—		—		72		—		—		364		—		436
Total 1-4 family real estate	$	67,843	$	86,487	$	24,428	$	13,340	$	13,954	$	56,603	$	28	$	262,683

Consumer
Performing	$	3,418	$	6,882	$	2,788	$	2,321	$	848	$	3,034	$	50,081	$	69,372
Nonperforming		47		—		—		—		17		1		1		66
Total Consumer	$	3,465	$	6,882	$	2,788	$	2,321	$	865	$	3,035	$	50,082	$	69,438

Total	$	142,145	$	183,241	$	86,417	$	50,233	$	28,901	$	62,803	$	50,110	$	603,850

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

For each class of financing receivable, the following table presents the recorded investment by credit quality indicator as of December 31, 2020:



	As of December 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)	$	1,506,578	$	488,478	$	530,297	$	999,931	$	3,525,284	96.25	%
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)		—		—		—		—		—	—	%
	$	1,555,217	$	496,471	$	541,455	$	1,069,703	$	3,662,846	100.00	%


	As of December 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	$	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	%

* Prior to Adoption of ASU 2016-13: 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 TDRs.

As of June 30, 2021 and December 31, 2020, TDRs totaled $3.1 million and $1.7 million, respectively.

For each class of financing receivable, the following presents the number and recorded investment of TDRs, by type of concession, that were restructured during the three and six months ended June 30, 2021 and June 30, 2020. The difference between the pre-modification recorded investment and the post-modification recorded investment would be any partial charge-offs at the time of the restructuring.


	For the three months ended June 30, 2021							For the six months ended June 30, 2021
		Pre-		Post-					Pre-		Post-
	Number of	Modification		Modification				Number of	Modification		Modification
	Loans/	Recorded		Recorded		Specific		Loans/	Recorded		Recorded		Specific
Classes of Loans/Leases	Leases	Investment		Investment		Allowance		Leases	Investment		Investment		Allowance

	(dollars in thousands)
CONCESSION - Extension of Maturity
Consumer	1	$	2,532	$	2,532	$	182	1	$	2,532	$	2,532	$	182

CONCESSION - Interest Rate Adjusted Below Market
1-4 Family	1	$	54	$	54	$	6	1	$	54	$	54	$	6
Consumer	1		13		13		1	1		13		13		1
	2	$	67	$	67	$	7	2	$	67	$	67	$	7

TOTAL	3	$	2,599	$	2,599	$	189	3	$	2,599	$	2,599	$	189


	For the three months ended June 30, 2020							For the six months ended June 30, 2020
		Pre-		Post-					Pre-		Post-
	Number of	Modification		Modification				Number of	Modification		Modification
	Loans/	Recorded		Recorded		Specific		Loans/	Recorded		Recorded		Specific
Classes of Loans/Leases	Leases	Investment		Investment		Allowance		Leases	Investment		Investment		Allowance

	(dollars in thousands)
CONCESSION - Significant Payment Delay
C&I	—	$	—	$	—	$	—	2	$	111	$	111	$	—
Direct Financing Leases	2		78		78		—	3		145		145		—
	2	$	78	$	78	$	—	5	$	256	$	256	$	—

TOTAL	2	$	78	$	78	$	—	5	$	256	$	256	$	—

Of the loans restructured during the three and six months ended June 30, 2021, two with a post-modification recorded investment totaling $2.6 million were on nonaccrual and of the loans restructured during the three and six months ended June 30, 2020, none were on nonaccrual.

For the three and six months ended June 30, 2021, none of the Company's TDRs redefaulted within 12 months subsequent to restructure, where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status.

For the three months ended June 30, 2020, two of the Company's TDRs redefaulted within 12 months subsequent to restructure, where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status. These TDRs were related to one equipment financing agreement customer whose loans were restructured in fourth quarter of 2019 with pre-modification balances totaling $93 thousand. For the six months ended June 30, 2020, three of the Company’s TDRs redefaulted within 12 months subsequent to restructure, where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status. These TDRs included the two that defaulted in the three months ended June 30, 2020 as well as a lease that was restructured in the fourth quarter of 2019 with pre-modification balances totaling $55 thousand.

Not included in the table above are seven TDRs that were restructured and charged off for the six months ended June 30, 2020, totaling $354 thousand.

On March 22, 2020, federal banking regulators issued an interagency statement that included guidance on their approach for the accounting of loan modifications in light of the economic impact of the COVID-19 pandemic. The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented. The agencies confirmed in working with the staff of the FASB that short-term modifications made on a good faith basis in response to

COVID-19 to borrowers who were current prior to any relief are not TDRs. The regulators clarified that this guidance may continue to be applied in 2021.

In addition, the CARES Act provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. To be eligible, the modification must be (1) related to COVID-19, (2) executed on a loan that was not more than 30 days past due as of December 31, 2019 and (3) executed between March 1, 2020 and the earlier of (A) 60 days after the termination of the National Emergency or (B) December 31, 2020. If a modification does not meet the criteria of the CARES Act, a deferral can still be excluded from TDR treatment as long as the modifications meet the banking regulatory criteria discussed in the preceding paragraph.

The Company implemented its LRP offering to extend qualifying customers’ payments for 90 days. As of June 30, 2021, there were no bank modifications and 29 m2 modifications of loans and leases totaling $4.7 million, representing 0.11% of the total loan and lease portfolio, that were on deferral as of such date.

On December 27, 2020, former President Trump signed the Consolidated Appropriations Act, which extended the debt relief program to the earlier of 60 days after the national emergency termination date or January 1, 2022. The Company intends to allow qualifying commercial and consumer clients to defer payments under the new guidance.

The adoption of ASU 2016-13 required an allowance for OBS exposures, specifically on unfunded commitments. Changes in the ACL for OBS exposures for the three and six months ended June 30, 2021 and 2020 are presented as follows:


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020

	(dollars in thousands)

Balance, beginning	$	9,846	$	—	$	—	$	—
Impact of adopting ASU 2016-13		—		—		9,117		—
Provisions charged to expense		141		—		870		—
Balance, ending	$	9,987	$	—	$	9,987	$	—