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NOTE 3 - LOANS/LEASES RECEIVABLE

9 Months Ended

Sep. 30, 2021

NOTE 3 – LOANS/LEASES RECEIVABLE

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


	September 30, 2021
	(dollars in thousands)

C&I:
C&I - revolving	$	175,155
C&I - other *		1,465,580
		1,640,735

CRE - owner occupied		434,014
CRE - non-owner occupied		644,850
Construction and land development		852,418
Multi-family		529,727
Direct financing leases**		50,237
1-4 family real estate***		376,067
Consumer		71,682
		4,599,730
Allowance for credit losses		(80,670)
	$	4,519,060
** Direct financing leases:
Net minimum lease payments to be received	$	55,042
Estimated unguaranteed residual values of leased assets		165
Unearned lease/residual income		(4,970)
		50,237
Plus deferred lease origination costs, net of fees		652
		50,889
Less allowance for credit losses		(1,744)
	$	49,145


	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 $212.7 million and $171.5 million as of September 30, 2021 and December 31, 2020, respectively and PPP loans totaling $83.6 million and $273.1 million as of September 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 $3.5 million and $3.8 million as of September 30, 2021 and December 31, 2020, respectively.

Changes in accretable yield for acquired loans were as follows:


	Three months ended September 30, 2021						Nine months ended September 30, 2021
	PCI		Performing				PCI		Performing
	Loans		Loans		Total		Loans		Loans		Total

	(dollars in thousands)

Balance at the beginning of the period	$	—	$	(2,189)	$	(2,189)	$	—	$	(3,139)	$	(3,139)
Accretion recognized		—		505		505		—		1,455		1,455
Balance at the end of the period	$	—	$	(1,684)	$	(1,684)	$	—	$	(1,684)	$	(1,684)


	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)

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


	As of September 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	$	175,155		$	—		$	—		$	—		$	—	$		175,155
C&I - other		1,459,194			874			137			14			5,361			1,465,580
CRE - owner occupied		433,361			653			—			—			—			434,014
CRE - non-owner occupied		638,613			—			6,237			—			—			644,850
Construction and land development		852,343			—			—			—			75			852,418
Multi-family		529,727			—			—			—			—			529,727
Direct financing leases		49,215			167			11			—			844			50,237
1-4 family real estate		375,366			96			130			—			475			376,067
Consumer		71,606			13			—			—			63			71,682
	$	4,584,580		$	1,803		$	6,515		$	14		$	6,818		$	4,599,730

As a percentage of total loan/lease portfolio		99.67	%		0.04	%		0.14	%		0.00	%		0.15	%		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 September 30, 2021 and December 31, 2020 are presented as follows:


	As of September 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		14		5,024		337		5,375	78.68
CRE - owner occupied		—		—		—		—	-
CRE - non-owner occupied		—		—		—		—	-
Construction and land development		—		75		—		75	1.10
Multi-family		—		—		—		—	-
Direct financing leases		—		112		732		844	12.35
1-4 family real estate		—		475		—		475	6.95
Consumer		—		63		—		63	0.92
	$	14	$	5,749	$	1,069	$	6,832	100.00	%

The Company did not recognize any interest income on nonaccrual loans during the three and nine months ended September 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 nine months ended September 30, 2021 and 2020, respectively, are presented as follows:


	Three Months Ended September 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	$	—	$	3,177	$	32,325	$	—	$	8,020	$	8,911	$	13,640	$	6,977	$	—	$	—	$	4,925	$	919	$	78,894
Provision		—		(262)		(276)		—		(62)		25		2,141		923		—		—		(558)		(36)		1,895
Charge-offs		—		—		(283)		—		—		—		—		—		—		—		—		(4)		(287)
Recoveries		—		—		109		—		4		50		—		—		—		—		—		5		168
Balance, ending	$	—	$	2,915	$	31,875	$	—	$	7,962	$	8,986	$	15,781	$	7,900	$	—	$	—	$	4,367	$	884	$	80,670


	Nine Months Ended September 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		—		(67)		4,271		—		(732)		(637)		3,782		2,214		—		—		(502)		(582)		7,747
Charge-offs		—		—		(1,949)		—		—		(1,876)		—		(150)		—		—		(690)		(9)		(4,674)
Recoveries		—		—		423		—		(2)		71		—		—		—		—		517		314		1,323
Balance, ending	$	—	$	2,915	$	31,875	$	—	$	7,962	$	8,986	$	15,781	$	7,900	$	—	$	—	$	4,367	$	884	$	80,670

* Included within the C&I – Other column are ACL on leases with a beginning balance of $2.0 million, negative provision of $212 thousand, charge-offs of $72 thousand and recoveries of $52 thousand. ACL on leases was $1.7 million as of September 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 negative $491 thousand, charge-offs of $400 thousand and recoveries of $186 thousand. ACL on leases was $1.7 million as of September 30, 2021.


	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
Provision		9,008		10,428		608		253		45		20,342
Charge-offs		(1,079)		(362)		(358)		—		(20)		(1,819)
Recoveries		150		64		13		—		5		232
Balance, ending	$	33,827	$	39,253	$	1,902	$	3,263	$	1,337	$	79,582


	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

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


	As of September 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	$	2,650	$	172,505	$	175,155	$	188	$	2,727	$	2,915
C&I - other*		26,124		1,489,693		1,515,817		3,173		28,702		31,875
		28,774		1,662,198		1,690,972		3,361		31,429		34,790
CRE - owner occupied		3,883		430,131		434,014		287		7,675		7,962
CRE - non-owner occupied		19,183		625,667		644,850		—		8,986		8,986
Construction and land development		10,507		841,911		852,418		12		15,769		15,781
Multi-family		—		529,727		529,727		—		7,900		7,900
1-4 family real estate		1,527		374,540		376,067		203		4,164		4,367
Consumer		227		71,455		71,682		28		856		884
	$	64,101	$	4,535,629	$	4,599,730	$	3,891	$	76,779	$	80,670

* Included within the C&I – Other category are leases individually evaluated of $844 thousand with a related allowance for credit losses of $34 thousand and leases collectively evaluated of $49.4 million with a related allowance for credit losses of $1.7 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 nine months ended September 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	$	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 are presented as follows:


	Three Months Ended September 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	$	1,825	$	11	$	11
CRE
Owner-Occupied CRE		292		—		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		668		7		7
Direct Financing Leases		953		6		6
Residential Real Estate		512		—		—
Installment and Other Consumer		146		—		—
	$	4,396	$	24	$	24

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		9,757		—		—
Direct Financing Leases		—		—		—
Residential Real Estate		260		—		—
Installment and Other Consumer		77		—		—
	$	10,094	$	—	$	—

Total Impaired Loans/Leases:
C&I	$	1,825	$	11	$	11
CRE
Owner-Occupied CRE		292		—		—
Commercial Construction, Land Development, and Other Land		—		—		—
Other Non Owner-Occupied CRE		10,425		7		7
Direct Financing Leases		953		6		6
Residential Real Estate		772		—		—
Installment and Other Consumer		223		—		—
	$	14,490	$	24	$	24

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 September 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	$	2,400	$	—	$	—	$	—	$	250	$	—	$	2,650
C&I - other*		746		—		2,530		145		22,404		299		26,124
		3,146		—		2,530		145		22,654		299		28,774
CRE - owner occupied		—		—		3,883		—		—		—		3,883
CRE - non-owner occupied		—		19,183		—		—		—		—		19,183
Construction and land development		—		10,431		76		—		—		—		10,507
Multi-family		—		—		—		—		—		—		—
1-4 family real estate		—		—		1,527		—		—		—		1,527
Consumer		—		—		207		—		—		20		227
	$	3,146	$	29,614	$	8,223	$	145	$	22,654	$	319	$	64,101

* Included within the C&I – Other category are leases individually evaluated of $844 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 September 30, 2021:


	As of September 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)	$	—	$	—	$	—	$	—	$	—	$	—	$	171,646	$	171,646
Special Mention (Rating 6)		—		—		—		—		—		—		859		859
Substandard (Rating 7)		—		—		—		—		—		—		2,650		2,650
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	175,155	$	175,155

C&I - other
Pass (Ratings 1 through 5)	$	389,930	$	414,997	$	158,888	$	109,194	$	91,950	$	58,973	$	—	$	1,223,932
Special Mention (Rating 6)		3,572		381		—		67		381		1,263		—		5,664
Substandard (Rating 7)		411		6,439		15,945		355		59		50		—		23,259
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	393,913	$	421,817	$	174,833	$	109,616	$	92,390	$	60,286	$	—	$	1,252,855

CRE - owner occupied
Pass (Ratings 1 through 5)	$	99,294	$	154,383	$	57,484	$	30,136	$	19,636	$	52,166	$	12,616	$	425,715
Special Mention (Rating 6)		889		—		177		237		1,875		1,234		—		4,412
Substandard (Rating 7)		197		—		1,913		1,250		527		—		—		3,887
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	100,380	$	154,383	$	59,574	$	31,623	$	22,038	$	53,400	$	12,616	$	434,014

CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	142,226	$	168,609	$	90,613	$	67,934	$	62,429	$	38,946	$	8,336	$	579,093
Special Mention (Rating 6)		6,807		15,462		2,226		12,299		4,144		5,627		19		46,584
Substandard (Rating 7)		386		628		15,605		1,126		950		—		478		19,173
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	149,419	$	184,699	$	108,444	$	81,359	$	67,523	$	44,573	$	8,833	$	644,850

Construction and land development
Pass (Ratings 1 through 5)	$	304,504	$	244,267	$	155,738	$	110,633	$	4,904	$	182	$	6,860	$	827,088
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		—		—		10,433		—		—		—		—		10,433
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	304,504	$	244,267	$	166,171	$	110,633	$	4,904	$	182	$	6,860	$	837,521

Multi-family
Pass (Ratings 1 through 5)	$	191,982	$	203,030	$	69,276	$	48,093	$	5,719	$	8,638	$	2,989	$	529,727
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		—		—		—		—		—		—		—		—
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	191,982	$	203,030	$	69,276	$	48,093	$	5,719	$	8,638	$	2,989	$	529,727

1-4 family real estate
Pass (Ratings 1 through 5)	$	34,087	$	30,604	$	18,906	$	8,462	$	6,001	$	6,744	$	6,267	$	111,071
Special Mention (Rating 6)		37		179		—		545		354		—		—		1,115
Substandard (Rating 7)		—		—		—		—		—		—		—		—
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	34,124	$	30,783	$	18,906	$	9,007	$	6,355	$	6,744	$	6,267	$	112,186

Total	$	1,174,322	$	1,238,979	$	597,204	$	390,331	$	198,929	$	173,823	$	212,720	$	3,986,308


	As of September 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	$	90,454	$	59,480	$	38,136	$	17,435	$	5,160	$	515	$	—	$	211,180
Nonperforming		90		236		722		435		47		15		—		1,545
Total C&I - other	$	90,544	$	59,716	$	38,858	$	17,870	$	5,207	$	530	$	—	$	212,725

Direct financing leases
Performing	$	5,448	$	13,473	$	13,211	$	10,874	$	5,026	$	1,361	$	—	$	49,393
Nonperforming		—		732		—		41		23		48		—		844
Total Direct financing leases	$	5,448	$	14,205	$	13,211	$	10,915	$	5,049	$	1,409	$	—	$	50,237

Construction and land development
Performing	$	7,131	$	6,697	$	212	$	502	$	—	$	—	$	280	$	14,822
Nonperforming		—		—		—		—		75		—		—		75
Total Construction and land development	$	7,131	$	6,697	$	212	$	502	$	75	$	—	$	280	$	14,897

1-4 family real estate
Performing	$	85,172	$	82,206	$	20,469	$	12,210	$	12,232	$	51,088	$	28	$	263,405
Nonperforming		—		—		72		—		—		404		—		476
Total 1-4 family real estate	$	85,172	$	82,206	$	20,541	$	12,210	$	12,232	$	51,492	$	28	$	263,881

Consumer
Performing	$	4,218	$	6,190	$	2,517	$	2,132	$	674	$	2,391	$	53,497	$	71,619
Nonperforming		45		—		—		—		16		2		—		63
Total Consumer	$	4,263	$	6,190	$	2,517	$	2,132	$	690	$	2,393	$	53,497	$	71,682

Total	$	192,558	$	169,014	$	75,339	$	43,629	$	23,253	$	55,824	$	53,805	$	613,422

* 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 September 30, 2021 and December 31, 2020, TDRs totaled $591 thousand 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 nine months ended September 30, 2021 and during the three and nine months ended September 30, 2020. There were no loans restructured during the three months ended September 30, 2021. 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 September 30, 2021							For the nine months ended September 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
1-4 family real estate	—	$	—	$	—	$	—	1	$	2,532	$	2,532	$	—

CONCESSION - Interest Rate Adjusted Below Market
1-4 family real estate	—	$	—	$	—	$	—	1	$	54	$	54	$	6
Consumer	—		—		—		—	1		13		13		6
	—	$	—	$	—	$	—	2	$	67	$	67	$	12

TOTAL	—	$	—	$	—	$	—	3	$	2,599	$	2,599	$	12


	For the three months ended September 30, 2020							For the nine months ended September 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	3	$	197	$	197	$	—	5	$	308	$	308	$	—
Direct financing leases	—		—		—		—	3		145		145		—
	3	$	197	$	197	$	—	8	$	453	$	453	$	—

TOTAL	3	$	197	$	197	$	—	8	$	453	$	453	$	—

Of the loans restructured during the nine months ended September 30, 2021, one with a post-modification recorded investment totaling $54 thousand was on nonaccrual and of the loans restructured during the three and nine months ended September 30, 2020, none were on nonaccrual.

For the three and nine months ended September 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 September 30, 2020, one 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. This TDR was a lease restructured in the fourth quarter of 2019 with a pre-modification balance totaling $32 thousand. For the nine months ended September 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 TDR that defaulted in the three months ended September 30, 2020 as well as a lease that was restructured in the fourth quarter of 2019 with pre-modification balance totaling $55 thousand and a commercial loan that was restructured in the fourth quarter of 2019 with a pre-modification balance of $48 thousand.

Not included in the table above are 10 TDRs that were restructured and charged off for the nine months ended September 30, 2020, totaling $482 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 September 30, 2021, there were no bank modifications and eight m2 modifications of loans and leases totaling $2.9 million, representing 0.06% 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 nine months ended September 30, 2021 and 2020 are presented as follows:


	Three Months Ended				Nine Months Ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020

	(dollars in thousands)

Balance, beginning	$	9,987	$	—	$	—	$	—
Impact of adopting ASU 2016-13		—		—		9,117		—
Provisions credited to expense		(1,895)		—		(1,025)		—
Balance, ending	$	8,092	$	—	$	8,092	$	—