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Note 4 - Loans Leases Receivable

12 Months Ended

Dec. 31, 2021

Note 4. Loans/Leases Receivable

The composition of the loan/lease portfolio as of December 31, 2021 and 2020 is presented as follows:


	December 31, 2021
	(dollars in thousands)

C&I:
C&I - revolving	$	248,483
C&I - other *		1,346,602
		1,595,085

CRE - owner occupied		421,701
CRE - non-owner occupied		646,500
Construction and land development		918,571
Multi-family		600,412
Direct financing leases**		45,191
1-4 family real estate***		377,361
Consumer		75,311
		4,680,132
Allowance for credit losses		(78,721)
	$	4,601,411
** Direct financing leases:
Net minimum lease payments to be received	$	49,362
Estimated unguaranteed residual values of leased assets		165
Unearned lease/residual income		(4,336)
		45,191
Plus deferred lease origination costs, net of fees		568
		45,759
Less allowance for credit losses		(1,546)
	$	44,213


	December 31, 2020
	(dollars in thousands)

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 $225.1 million and $171.5 million as of December 31, 2021 and 2020, respectively and PPP loans totaling $28.2 million and $273.1 million as of December 31, 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 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 majority of leases with residual values contain a lease options rider which requires the lessee to pay the residual

Note 4. Loans/Leases Receivable (continued)

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, 2021, the Company had two leases remaining with residual values totaling $165 thousand that were not protected with a lease end options rider. At December 31, 2020, the Company had three leases remaining with residual values totaling approximately $239 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, 2021, 2020, and 2019.

***Includes residential real estate loans held for sale totaling $3.8 million as of December 31, 2021 and 2020.

Changes in accretable yield for the loans acquired in mergers and acquisitions are as follows:


	For the year ended December 31, 2021
	PCI		Performing
	Loans		Loans		Total

	(dollars in thousands)

Balance at the beginning of the period	$	—	$	(3,139)	$	(3,139)
Accretion recognized		—		1,606		1,606
Balance at the end of the period	$	—	$	(1,533)	$	(1,533)


	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)

Note 4. Loans/Leases Receivable (continued)

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


	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	$	248,483		$	—		$	—		$	—		$	—	$		248,483
C&I - other		1,337,034			859			7,308			1			1,400			1,346,602
CRE - owner occupied		421,701			—			—			—			—			421,701
CRE - non-owner occupied		646,500			—			—			—			—			646,500
Construction and land development		918,498			—			—			—			73			918,571
Multi-family		600,412			—			—			—			—			600,412
Direct financing leases		44,174			10			160			—			847			45,191
1-4 family real estate		374,912			1,325			716			—			408			377,361
Consumer		75,272			8			—			—			31			75,311
	$	4,666,986		$	2,202		$	8,184		$	1		$	2,759		$	4,680,132

As a percentage of total loan/lease portfolio		99.72	%		0.05	%		0.17	%		0.00	%		0.06	%		100.00	%


	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	%

Note 4. Loans/Leases Receivable (continued)

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


	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		1		1,130		270		1,401	50.77
CRE - owner occupied		—		—		—		—	-
CRE - non-owner occupied		—		—		—		—	-
Construction and land development		—		73		—		73	2.64
Multi-family		—		—		—		—	-
Direct financing leases		—		115		732		847	30.69
1-4 family real estate		—		408		—		408	14.78
Consumer		—		31		—		31	1.12
	$	1	$	1,757	$	1,002	$	2,760	100.00	%

The Company did not recognize any interest income on nonaccrual loans during the year ended December 31, 2021.


	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, accruing past due 90 days or more included $984 thousand of TDRs, including $836 thousand in CRE loans, $100

thousand in direct financing leases, and $48 thousand in installment loans.

Note 4. Loans/Leases Receivable (continued)

Changes in the ACL loans/leases by portfolio segment for the years ended December 31, 2021, 2020, and 2019 are presented as follows:


	Year Ended December 31, 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	$	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		—		925		(1,451)		—		(198)		(1,088)		4,973		3,653		—		—		(603)		(509)		5,702
Charge-offs		—		—		(2,287)		—		—		(1,876)		—		(150)		—		—		(179)		(46)		(4,538)
Recoveries		—		—		590		—		3		85		—		—		—		—		281		324		1,283
Balance, ending	$	—	$	3,907	$	25,982	$	—	$	8,501	$	8,549	$	16,972	$	9,339	$	—	$	—	$	4,541	$	930	$	78,721

*Included within the C&I-other column are ACL on leases with a beginning balance of $1.78 million, adoption impact of $685 thousand, negative provision of negative $703 thousand, charge-offs of $458 thousand and recoveries of $258 thousand. ACL on leases was $1.5 million as of December 31, 2021.


	Year Ended December 31, 2020
					Direct Financing		Residential Real		Installment and
	C&I		CRE		Leases		Estate		Other Consumer		Total

	(dollars in thousands)

Balance, beginning	$	16,072	$	15,379	$	1,464	$	1,948	$	1,138	$	36,001
Provision		22,899		28,671		2,148		1,755		231		55,704
Charge-offs		(4,199)		(2,071)		(1,993)		—		(120)		(8,383)
Recoveries		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)
Provision		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.

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


	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	$	2,638	$	245,845	$	248,483	$	168	$	3,739	$	3,907
C&I - other*		13,456		1,378,337		1,391,793		743		25,239		25,982
		16,094		1,624,182		1,640,276		911		28,978		29,889
CRE - owner occupied		3,841		417,860		421,701		1,264		7,237		8,501
CRE - non-owner occupied		25,006		621,494		646,500		—		8,549		8,549
Construction and land development		10,436		908,135		918,571		11		16,961		16,972
Multi-family		—		600,412		600,412		—		9,339		9,339
1-4 family real estate		2,950		374,411		377,361		329		4,212		4,541
Consumer		350		74,961		75,311		39		891		930
	$	58,677	$	4,621,455	$	4,680,132	$	2,554	$	76,167	$	78,721

*Included within the C&I – other category are leases individually evaluated of $847 thousand with a related allowance for credit losses of $35 thousand and leases collectively evaluated of $44.4 million with a related allowance for credit losses of $1.5 million.

Note 4. Loans/Leases Receivable (continued)


	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	%

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.

Note 4. Loans/Leases Receivable (continued)

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the year ended December 31, 2020 and 2019 are presented as follows:


	2020

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

Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	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

*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.

Note 4. Loans/Leases Receivable (continued)

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



	2021
			Non
	Commercial		Owner-Occupied		Owner Occupied
	Assets		Real Estate		Real Estate		Securities		Equipment		Other		Total

	(dollars in thousands)
C & I:
C&I - revolving	$	2,518	$	—	$	—	$	—	$	120	$	—	$	2,638
C&I - other*		683		—		2,471		134		9,877		291		13,456
		3,201		—		2,471		134		9,997		291		16,094
CRE - owner occupied		—		—		3,841		—		—		—		3,841
CRE - non-owner occupied		—		25,006		—		—		—		—		25,006
Construction and land development		—		10,362		74		—		—		—		10,436
Multi-family		—		—		—		—		—		—		—
1-4 family real estate		—		817		2,133		—		—		—		2,950
Consumer		—		—		340		—		1		9		350
	$	3,201	$	36,185	$	8,859	$	134	$	9,998	$	300	$	58,677

*Included within the C&I – other category are leases individually evaluated of $847 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 real estate 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.

Note 4. Loans/Leases Receivable (continued)

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of December 31, 2021;


	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)	$	—	$	—	$	—	$	—	$	—	$	—	$	245,212	$	245,212
Special Mention (Rating 6)		—		—		—		—		—		—		633		633
Substandard (Rating 7)		—		—		—		—		—		—		2,638		2,638
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	248,483	$	248,483

C&I - other
Pass (Ratings 1 through 5)	$	391,532	$	362,256	$	133,678	$	82,177	$	83,419	$	53,310	$	—	$	1,106,372
Special Mention (Rating 6)		3,580		373		349		—		336		2		—		4,640
Substandard (Rating 7)		506		2,366		7,138		396		55		46		—		10,507
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	395,618	$	364,995	$	141,165	$	82,573	$	83,810	$	53,358	$	—	$	1,121,519

CRE - owner occupied
Pass (Ratings 1 through 5)	$	118,014	$	143,045	$	47,660	$	30,523	$	17,038	$	46,185	$	11,477	$	413,942
Special Mention (Rating 6)		637		—		—		233		1,846		1,202		—		3,918
Substandard (Rating 7)		—		—		2,080		1,239		522		—		—		3,841
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	118,651	$	143,045	$	49,740	$	31,995	$	19,406	$	47,387	$	11,477	$	421,701

CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	176,813	$	145,712	$	88,697	$	63,849	$	55,752	$	28,808	$	8,592	$	568,223
Special Mention (Rating 6)		7,295		20,881		1,802		12,230		5,494		5,580		—		53,282
Substandard (Rating 7)		1,105		6,297		15,563		1,087		943		—		—		24,995
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	185,213	$	172,890	$	106,062	$	77,166	$	62,189	$	34,388	$	8,592	$	646,500

Construction and land development
Pass (Ratings 1 through 5)	$	394,045	$	248,360	$	126,941	$	106,790	$	3,012	$	—	$	13,277	$	892,425
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		10,362		—		—		—		—		—		—		10,362
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	404,407	$	248,360	$	126,941	$	106,790	$	3,012	$	—	$	13,277	$	902,787

Multi-family
Pass (Ratings 1 through 5)	$	266,120	$	197,224	$	74,033	$	47,486	$	5,609	$	7,376	$	2,564	$	600,412
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		—		—		—		—		—		—		—		—
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	266,120	$	197,224	$	74,033	$	47,486	$	5,609	$	7,376	$	2,564	$	600,412

1-4 family real estate
Pass (Ratings 1 through 5)	$	47,097	$	24,029	$	16,188	$	7,569	$	5,845	$	5,213	$	3,079	$	109,020
Special Mention (Rating 6)		37		—		—		—		—		—		—		37
Substandard (Rating 7)		—		178		—		437		201		—		—		816
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	47,134	$	24,207	$	16,188	$	8,006	$	6,046	$	5,213	$	3,079	$	109,873

Consumer
Pass (Ratings 1 through 5)	$	1,558	$	487	$	108	$	216	$	—	$	824	$	2,031	$	5,224
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		—		—		—		137		—		—		—		137
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	1,558	$	487	$	108	$	353	$	—	$	824	$	2,031	$	5,361

Total	$	1,418,701	$	1,151,208	$	514,237	$	354,369	$	180,072	$	148,546	$	289,503	$	4,056,636

Note 4. Loans/Leases Receivable (continued)


	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	$	117,163	$	54,261	$	33,390	$	14,274	$	4,200	$	455	$	—	$	223,743
Nonperforming		95		177		644		368		42		14		—		1,340
Total C&I - other	$	117,258	$	54,438	$	34,034	$	14,642	$	4,242	$	469	$	—	$	225,083

Direct financing leases
Performing	$	6,690	$	12,130	$	11,638	$	9,235	$	3,695	$	956	$	—	$	44,344
Nonperforming		—		732		—		52		18		45		—		847
Total Direct financing leases	$	6,690	$	12,862	$	11,638	$	9,287	$	3,713	$	1,001	$	—	$	45,191

Construction and land development
Performing	$	12,857	$	2,080	$	—	$	494	$	—	$	—	$	280	$	15,711
Nonperforming		—		—		—		—		73		—		—		73
Total Construction and land development	$	12,857	$	2,080	$	—	$	494	$	73	$	—	$	280	$	15,784

1-4 family real estate
Performing	$	104,005	$	78,713	$	19,001	$	10,784	$	10,533	$	43,976	$	68	$	267,080
Nonperforming		—		—		—		106		—		302		—		408
Total 1-4 family real estate	$	104,005	$	78,713	$	19,001	$	10,890	$	10,533	$	44,278	$	68	$	267,488

Consumer
Performing	$	4,891	$	4,020	$	2,114	$	1,660	$	593	$	1,230	$	55,411	$	69,919
Nonperforming		—		—		15		—		15		1		—		31
Total Consumer	$	4,891	$	4,020	$	2,129	$	1,660	$	608	$	1,231	$	55,411	$	69,950

Total	$	245,701	$	152,113	$	66,802	$	36,973	$	19,169	$	46,979	$	55,759	$	623,496

*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.

Note 4. Loans/Leases Receivable (continued)

For each class of financing receivable, the following presents the recorded investment by credit quality indicator as of December 31, 2020 and 2019:



	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	%


	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
			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	%


	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	%

* 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.

Note 4. Loans/Leases Receivable (continued)

TDRs totaled $494 thousand and $1.7 million as of December 31, 2021 and 2020, 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 years ended December 31, 2021 and 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 restructuring.


	2021
		Pre-		Post-
		Modification		Modification
	Number of	Recorded		Recorded		Specific
Classes of Loans/Leases	Loans / Leases	Investment		Investment		Allowance

	(dollars in thousands)
CONCESSION - Extension of Maturity
1-4 family real estate	1	$	2,532	$	2,532	$	182

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

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


	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	$	—

Of the loans restructured reported above, one with a post-modification recorded investment totaling $54 thousand was on nonaccrual as of December 31, 2021 and two with a post-modification recorded investment totaling $880 thousand were on nonaccrual as of December 31, 2020.

For the year ended December 31, 2021, the Company did not have any TDRs that 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 year ended December 31, 2020, the Company had one TDR totaling $44 thousand that redefaulted within 12 months subsequent to restructure, where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status.

The Company did not have any TDRs that were restructured and charged off in 2021. There were five TDRs that were both restructured and charged off in 2020, totaling $266 thousand.

Note 4. Loans/Leases Receivable (continued)

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 could continue to be applied through December 31, 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 presidentially-declared 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. On December 27, 2020, the Consolidated Appropriations Act was established, which extended the eligibility window for TDR relief to the earlier of (A) 60 days after the termination of the presidentially-declared emergency or (B) January 1, 2022. Accordingly, the Company has ended the LRP.

The Company implemented its LRP during the first quarter of 2020 offering to extend qualifying customers’ payments for 90 days. As of December 31, 2021, there were no bank modifications of loans and six m2 modifications of loans and leases totaling $2.4 million, representing 0.05% of the total loan and lease portfolio that remained on deferral as of such date.

The adoption of ASU 2016-13 on January 1, 2021 required an allowance for OBS exposures, specifically on unfunded commitments. Changes in the ACL for OBS exposures for the year ended December 31, 2021 is presented as follows:


	For the Year Ended
	December 31, 2021
		(dollars in thousands)

Balance, beginning	$	—
Impact of adopting ASU 2016-13		9,117
Provisions credited to expense		(2,231)
Balance, ending	$	6,886

Note 4. Loans/Leases Receivable (continued)

Loans are made in the normal course of business to directors, executive officers, and their related interests. All such loans, in the opinion of management, were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the lenders and did not involve more than the normal risk of collectability or present other unfavorable features. An analysis of the changes in the aggregate committed amount of loans to insiders greater than or equal to $60,000 during the years ended December 31, 2021, 2020, and 2019, is as follows:


	2021		2020		2019

	(dollars in thousands)

Balance, beginning	$	100,361	$	112,830	$	125,496
Net decrease due to change in related parties		(18,832)		(1,601)		(12,161)
Advances		42,817		43,238		98,708
Repayments		(23,448)		(54,106)		(99,213)
Balance, ending	$	100,898	$	100,361	$	112,830

The Company’s loan portfolio includes a geographic concentration in the Midwest. Additionally, the loan portfolio includes a concentration of loans in certain industries as of December 31, 2021 and 2020 as follows:


	2021				2020
			Percentage of				Percentage of
			Total				Total
Industry Name	Balance		Loans/Leases		Balance		Loans/Leases

	(dollars in thousands)

Lessors of Residential Buildings*	$	1,706,092	36	%	$	1,134,178	27	%
Lessors of Non-Residential Buildings		586,672	13	%		591,398	14	%
Administration of Urban Planning & Community & Rural Development		120,416	3	%		138,514	3	%

* Includes loans on LIHTC projects