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Note 4- LOANS LEASES RECEIVABLE

9 Months Ended

Sep. 30, 2022

NOTE 4 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of September 30, 2022 and December 31, 2021 is presented as follows:


	September 30, 2022		December 31, 2021

	(dollars in thousands)

C&I:
C&I - revolving	$	332,996	$	248,483
C&I - other *		1,415,996		1,346,602
		1,748,992		1,595,085

CRE - owner occupied		627,558		421,701
CRE - non-owner occupied		920,876		646,500
Construction and land development		1,149,503		918,571
Multi-family		933,118		600,412
Direct financing leases**		33,503		45,191
1-4 family real estate***		487,508		377,361
Consumer		107,552		75,311
		6,008,610		4,680,132
Allowance for credit losses		(90,489)		(78,721)
	$	5,918,121	$	4,601,411
** Direct financing leases:
Net minimum lease payments to be received	$	36,541	$	49,362
Estimated unguaranteed residual values of leased assets		165		165
Unearned lease/residual income		(3,203)		(4,336)
		33,503		45,191
Plus deferred lease origination costs, net of fees		288		568
		33,791		45,759
Less allowance for credit losses		(1,037)		(1,546)
	$	32,754	$	44,213

* Includes equipment financing agreements outstanding at m2, totaling $267.2 million and $225.1 million as of September 30, 2022 and December 31, 2021, respectively and PPP loans totaling $79 thousand and $28.2 million as of September 30, 2022 and December 31, 2021, 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 $3.1 million and $3.8 million as of September 30, 2022 and December 31, 2021, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $23.4 million and $15.0 million at September 30, 2022 and December 31, 2021, respectively, and was included in other assets on the consolidated balance sheets.

Changes in remaining discounts on acquired loans for the three and nine months ended September 30, 2022 and 2021, respectively, are presented as follows:



	Three months ended		Nine months ended
	September 30, 2022		September 30, 2022

	(dollars in thousands)

Balance at the beginning of the period	$	(12,989)	$	(1,533)
Discount added at acquisition		—		(13,381)
Accretion recognized		1,148		3,073
Balance at the end of the period	$	(11,841)	$	(11,841)


	Three months ended		Nine months ended
	September 30, 2021		September 30, 2021

	(dollars in thousands)

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

The aging of the loan/lease portfolio by classes of loans/leases as of September 30, 2022 and December 31, 2021 is presented as follows:


	As of September 30, 2022
										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	$	332,996		$	—		$	—		$	—		$	—	$		332,996
C&I - other		1,408,004			3,721			674			3			3,594			1,415,996
CRE - owner occupied		624,534			—			—			—			3,024			627,558
CRE - non-owner occupied		913,366			565			—			—			6,945			920,876
Construction and land development		1,148,080			255			—			—			1,168			1,149,503
Multi-family		933,118			—			—			—			—			933,118
Direct financing leases		33,288			59			27			—			129			33,503
1-4 family real estate		484,322			—			809			—			2,377			487,508
Consumer		107,163			115			—			—			274			107,552
	$	5,984,871		$	4,715		$	1,510		$	3		$	17,511		$	6,008,610

As a percentage of total loan/lease portfolio		99.60	%		0.08	%		0.03	%		0.00	%		0.29	%		100.00	%


	As of December 31, 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		99.57	%		0.05	%		0.17	%		0.00	%		0.06	%		100.00	%

NPLs by classes of loans/leases as of September 30, 2022 and December 31, 2021 are presented as follows:


	As of September 30, 2022
	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		3		3,292		302		3,597	20.54
CRE - owner occupied		—		1,669		1,355		3,024	17.27
CRE - non-owner occupied		—		68		6,877		6,945	39.65
Construction and land development		—		889		279		1,168	6.67
Multi-family		—		—		—		—	-
Direct financing leases		—		54		75		129	0.74
1-4 family real estate		—		1,076		1,301		2,377	13.57
Consumer		—		274		—		274	1.56
	$	3	$	7,322	$	10,189	$	17,514	100.00	%


	As of December 31, 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 three and nine months ended September 30, 2022 and 2021.

Changes in the ACL loans/leases by portfolio segment for the three and nine months ended September 30, 2022 and 2021, respectively, are presented as follows:


	Three Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other*		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total

	(dollars in thousands)

Balance, beginning	$	5,179	$	28,093	$	11,065	$	12,049	$	16,388	$	12,783	$	5,513	$	1,355	$	92,425
Provision		1		1,652		(606)		(161)		(693)		437		(276)		(23)		331
Charge-offs		—		(1,915)		—		—		(562)		—		(5)		(7)		(2,489)
Recoveries		—		176		—		—		—		43		—		3		222
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

* Included within the C&I – Other column are ACL on leases with a beginning balance of $1.6 million, provision of $91 thousand, charge-offs of $708 thousand and recoveries of $65 thousand. ACL on leases was $1.0 million as of September 30, 2022.


	Nine Months Ended September 30, 2022
					CRE		CRE		Construction				1-4
	C&I -		C&I -		Owner		Non-Owner		and Land		Multi-		Family
	Revolving		Other***		Occupied		Occupied		Development		Family		Real Estate		Consumer		Total

	(dollars in thousands)

Balance, beginning	$	3,907	$	25,982	$	8,501	$	8,549	$	16,972	$	9,339	$	4,541	$	930	$	78,721
Initial ACL recorded for PCD loans		600		7		2,481		1,076		1,100		481		137		20		5,902
Provision**		673		4,185		(529)		2,328		(2,377)		3,400		559		384		8,623
Charge-offs		—		(2,790)		—		(193)		(562)		—		(5)		(15)		(3,565)
Recoveries		—		622		6		128		—		43		—		9		808
Balance, ending	$	5,180	$	28,006	$	10,459	$	11,888	$	15,133	$	13,263	$	5,232	$	1,328	$	90,489

** Provision for the nine months ended September 30, 2022, included $11.0 million related to the acquired Guaranty Bank non-PCD loans.

*** Included within the C&I - Other column are ACL on leases with a beginning balance of $1.5 million, provision of $249 thousand, charge-offs of $931 thousand and recoveries of $173 thousand. ACL on leases was $1.0 million as of September 30, 2022.


	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

* Included within the C&I – Other column are ACL on leases with adoption impact 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.


	Nine 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	$	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 $1.8 million, adoption impact of $685 thousand, negative provision of $491 thousand, charge-offs of $400 thousand and recoveries of $186 thousand. ACL on leases was $1.7 million as of September 30, 2021.

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


	As of September 30, 2022
	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	$	3,475	$	329,521	$	332,996	$	1,123	$	4,057	$	5,180
C&I - other*		10,704		1,438,795		1,449,499		2,679		25,327		28,006
		14,179		1,768,316		1,782,495		3,802		29,384		33,186
CRE - owner occupied		25,531		602,027		627,558		2,925		7,534		10,459
CRE - non-owner occupied		28,537		892,339		920,876		814		11,074		11,888
Construction and land development		11,480		1,138,023		1,149,503		472		14,661		15,133
Multi-family		1,305		931,813		933,118		397		12,866		13,263
1-4 family real estate		4,139		483,369		487,508		355		4,877		5,232
Consumer		601		106,951		107,552		57		1,271		1,328
	$	85,772	$	5,922,838	$	6,008,610	$	8,822	$	81,667	$	90,489

* Included within the C&I – Other category are leases individually evaluated of $129 thousand with a related allowance for credit losses of $17 thousand and leases collectively evaluated of $33.4 million with a related allowance for credit losses of $1.0 million.


	As of December 31, 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.

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, 2022 and December 31, 2021:



	As of September 30, 2022
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		Real Estate		Real Estate		Securities		Equipment		Other		Total

	(dollars in thousands)
C & I:
C&I - revolving	$	3,370	$	—	$	—	$	—	$	—	$	105	$	—	$	3,475
C&I - other*		2,192		213		—		—		115		6,457		1,727		10,704
		5,562		213		—		—		115		6,562		1,727		14,179
CRE - owner occupied		—		25,465		—		66		—		—		—		25,531
CRE - non-owner occupied		—		—		28,537		—		—		—		—		28,537
Construction and land development		—		—		11,480		—		—		—		—		11,480
Multi-family		—		—		1,305		—		—		—		—		1,305
1-4 family real estate		—		—		1,087		3,052		—		—		—		4,139
Consumer		—		—		—		586		—		—		15		601
	$	5,562	$	25,891	$	42,409	$	3,704	$	115	$	6,562	$	1,742	$	85,772

* Included within the C&I – Other category are leases individually evaluated of $129 thousand with primary collateral of equipment.


	As of December 31, 2021
					Non
	Commercial		Owner-occupied		Owner-Occupied		Owner Occupied
	Assets		CRE		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 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. 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, 2022:


	As of September 30, 2022
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2022		2021		2020		2019		2018		Prior		Cost Basis		Total

	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	321,834	$	321,834
Special Mention (Rating 6)		—		—		—		—		—		—		7,687		7,687
Substandard (Rating 7)		—		—		—		—		—		—		3,475		3,475
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	332,996	$	332,996

C&I - other
Pass (Ratings 1 through 5)	$	370,548	$	285,959	$	199,399	$	91,020	$	76,707	$	114,363	$	—	$	1,137,996
Special Mention (Rating 6)		411		446		303		808		—		315		—		2,283
Substandard (Rating 7)		2,065		70		743		5,142		329		117		—		8,466
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	373,024	$	286,475	$	200,445	$	96,970	$	77,036	$	114,795	$	—	$	1,148,745

CRE - owner occupied
Pass (Ratings 1 through 5)	$	118,943	$	182,373	$	160,151	$	34,834	$	30,025	$	50,994	$	11,166	$	588,486
Special Mention (Rating 6)		4,647		—		2,884		—		998		1,747		4,852		15,128
Substandard (Rating 7)		2,625		1,452		16,502		1,662		1,208		495		—		23,944
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	126,215	$	183,825	$	179,537	$	36,496	$	32,231	$	53,236	$	16,018	$	627,558

CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	233,256	$	220,873	$	189,327	$	90,524	$	64,557	$	50,156	$	7,082	$	855,775
Special Mention (Rating 6)		1,168		912		15,692		—		12,873		6,262		—		36,907
Substandard (Rating 7)		1,089		694		10,833		15,306		—		—		272		28,194
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	235,513	$	222,479	$	215,852	$	105,830	$	77,430	$	56,418	$	7,354	$	920,876

Construction and land development
Pass (Ratings 1 through 5)	$	327,140	$	337,617	$	250,387	$	31,708	$	30,447	$	—	$	22,788	$	1,000,087
Special Mention (Rating 6)		324		160		—		—		—		—		—		484
Substandard (Rating 7)		486		10,471		—		—		—		—		—		10,957
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	327,950	$	348,248	$	250,387	$	31,708	$	30,447	$	—	$	22,788	$	1,011,528

Multi-family
Pass (Ratings 1 through 5)	$	188,557	$	264,565	$	225,525	$	134,853	$	104,267	$	9,735	$	2,861	$	930,363
Special Mention (Rating 6)		—		46		—		1,404		—		—		—		1,450
Substandard (Rating 7)		—		—		1,305		—		—		—		—		1,305
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	188,557	$	264,611	$	226,830	$	136,257	$	104,267	$	9,735	$	2,861	$	933,118

1-4 family real estate
Pass (Ratings 1 through 5)	$	33,264	$	37,161	$	17,381	$	11,533	$	5,119	$	5,128	$	3,093	$	112,679
Special Mention (Rating 6)		—		34		—		—		—		—		—		34
Substandard (Rating 7)		198		—		177		—		430		52		—		857
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	33,462	$	37,195	$	17,558	$	11,533	$	5,549	$	5,180	$	3,093	$	113,570

Consumer
Pass (Ratings 1 through 5)	$	168	$	824	$	457	$	42	$	200	$	671	$	1,985	$	4,347
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		—		—		—		—		119		—		—		119
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	168	$	824	$	457	$	42	$	319	$	671	$	1,985	$	4,466

Total	$	1,284,889	$	1,343,657	$	1,091,066	$	418,836	$	327,279	$	240,035	$	387,095	$	5,092,857


	As of September 30, 2022
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2022		2021		2020		2019		2018		Prior		Cost Basis		Total

	(dollars in thousands)
C&I - other
Performing	$	144,806	$	78,379	$	29,596	$	10,530	$	2,580	$	172	$	—	$	266,063
Nonperforming		288		747		56		97		—		—		—		1,188
Total C&I - other	$	145,094	$	79,126	$	29,652	$	10,627	$	2,580	$	172	$	—	$	267,251

Construction and land development
Performing	$	80,160	$	48,094	$	4,391	$	3,379	$	211	$	458	$	758	$	137,451
Nonperforming		524		—		—		—		—		—		—		524
Total Construction and land development	$	80,684	$	48,094	$	4,391	$	3,379	$	211	$	458	$	758	$	137,975

Direct financing leases
Performing	$	13,169	$	5,636	$	6,640	$	5,135	$	2,237	$	557	$	—	$	33,374
Nonperforming		—		35		75		9		10		—		—		129
Total Direct financing leases	$	13,169	$	5,671	$	6,715	$	5,144	$	2,247	$	557	$	—	$	33,503

1-4 family real estate
Performing	$	75,114	$	116,168	$	94,924	$	19,598	$	12,461	$	53,145	$	1,008	$	372,418
Nonperforming		29		174		955		6		—		356		—		1,520
Total 1-4 family real estate	$	75,143	$	116,342	$	95,879	$	19,604	$	12,461	$	53,501	$	1,008	$	373,938

Consumer
Performing	$	10,533	$	4,427	$	3,988	$	1,332	$	1,394	$	1,408	$	79,730	$	102,812
Nonperforming		159		12		12		13		32		46		—		274
Total Consumer	$	10,692	$	4,439	$	4,000	$	1,345	$	1,426	$	1,454	$	79,730	$	103,086

Total	$	324,782	$	253,672	$	140,637	$	40,099	$	18,925	$	56,142	$	81,496	$	915,753

* 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.

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



	As of December 31, 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




	As of December 31, 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

As of September 30, 2022 and December 31, 2021, TDRs totaled $227 thousand and $494 thousand, 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 nine months ended September 30, 2022 and 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 restructuring.

For the three months ended September 30, 2022

For the nine months ended September 30, 2022

Pre-

Post-

Pre-

Post-

Number of

Modification

Number of

Modification

Loans/

Recorded

Specific

Loans/

Recorded

Specific

Classes of Loans/Leases

Leases

Investment

Allowance

Leases

Investment

Allowance

(dollars in thousands)

Direct Financing Leases

—

122

—


	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 and nine months ended September 30, 2022 and 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. There were no TDRs that were restructured and charged off for the three and nine months ended September 30, 2022.

Changes in the ACL for OBS exposures for the three and nine months ended September 30, 2022 and 2021 are presented as follows:


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021

	(dollars in thousands)

Balance, beginning	$	6,878	$	9,987	$	6,886	$	—
Impact of adopting ASU 2016-13		—		—		—		9,117
Provisions (credited) to expense		(331)		(1,895)		(339)		(1,025)
Balance, ending	$	6,547	$	8,092	$	6,547	$	8,092

* Provision for the nine months ended September 30, 2022 included $1.4 million related to the acquired Guaranty Bank OBS exposures