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Note 4- Loans/Leases Receivable
12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Loans/Leases Receivable

Note 4. Loans/Leases Receivable

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

    

December 31, 2022

December 31, 2021

(dollars in thousands)

C&I:

C&I - revolving

$

296,869

$

248,483

C&I - other *

1,451,693

1,346,602

1,748,562

1,595,085

 

  

 

  

CRE - owner occupied

 

629,367

 

421,701

CRE - non-owner occupied

 

963,239

646,500

Construction and land development

 

1,192,061

 

918,571

Multi-family

963,803

600,412

Direct financing leases**

 

31,889

 

45,191

1-4 family real estate***

499,529

377,361

Consumer

 

110,421

 

75,311

 

6,138,871

 

4,680,132

Allowance for credit losses

 

(87,706)

 

(78,721)

$

6,051,165

$

4,601,411

** Direct financing leases:

 

  

 

  

Net minimum lease payments to be received

$

34,754

$

49,362

Estimated unguaranteed residual values of leased assets

 

165

 

165

Unearned lease/residual income

 

(3,030)

 

(4,336)

 

31,889

 

45,191

Plus deferred lease origination costs, net of fees

 

226

 

568

 

32,115

 

45,759

Less allowance for credit losses

 

(970)

 

(1,546)

$

31,145

$

44,213

*   Includes equipment financing agreements outstanding at m2, totaling $278.0 million and $225.1 million as of December 31, 2022 and 2021, respectively and PPP loans totaling $68.3 thousand and $28.2 million as of December 31, 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 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 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, 2022 and 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. 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, 2022, 2021, and 2020.

***Includes residential real estate loans held for sale totaling $1.5 million and  $3.8 million as of December 31, 2022 and 2021, respectively.

Note 4. Loans/Leases Receivable (continued)

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $24.3 million and $15.3 million at December 31, 2022 and December 31, 2021, respectively, and was included in other assets on the consolidated balance sheets.

Changes in accretable discounts on acquired loans for the years ended December 31, 2022, 2021 and 2020, respectively, are presented as follows:

Year ended

December 31, 2022

December 31, 2021

Total

Total

(dollars in thousands)

Balance at the beginning of the period

$

(1,533)

$

(3,139)

Discount added at acquisition

(13,381)

Accretion recognized

 

8,826

 

1,606

Balance at the end of the period

$

(6,088)

$

(1,533)

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)

Note 4. Loans/Leases Receivable (continued)

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

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

$

296,869

$

$

$

$

$

296,869

C&I - other

1,442,629

4,800

1,124

5

3,135

1,451,693

CRE - owner occupied

 

625,611

 

1,166

 

 

 

2,590

 

629,367

CRE - non-owner occupied

 

962,444

 

421

 

 

 

374

 

963,239

Construction and land development

1,191,929

132

1,192,061

Multi-family

 

963,803

 

 

 

 

 

963,803

Direct financing leases

 

31,557

 

141

 

56

 

 

135

 

31,889

1-4 family real estate

 

495,936

 

1,030

 

517

 

 

2,046

 

499,529

Consumer

 

110,041

 

27

 

 

 

353

 

110,421

$

6,120,819

$

7,585

$

1,697

$

5

$

8,765

$

6,138,871

 

  

 

  

 

  

 

  

 

  

 

  

As a percentage of total loan/lease portfolio

 

99.71

%  

 

0.12

%  

 

0.03

%  

 

0.00

%  

 

0.14

%  

 

100.00

%

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

%

Note 4. Loans/Leases Receivable (continued)

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

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

5

2,775

360

3,140

35.80

CRE - owner occupied

 

 

1,738

 

852

 

2,590

 

29.53

CRE - non-owner occupied

 

 

68

 

306

 

374

 

4.26

Construction and land development

132

132

1.51

Multi-family

 

 

 

 

 

-

Direct financing leases

 

 

80

 

55

 

135

 

1.54

1-4 family real estate

 

 

1,641

 

405

 

2,046

 

23.33

Consumer

 

 

353

 

 

353

 

4.03

$

5

$

6,787

$

1,978

$

8,770

 

100.00

%

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, 2022 and 2021.

Note 4. Loans/Leases Receivable (continued)

Changes in the ACL loans/leases by portfolio segment for the years ended December 31, 2022, 2021, and 2020 are presented as follows:

Year Ended December 31, 2022

CRE

CRE

Construction

1-4

    

C&I -

C&I -

Owner

Non-Owner

and Land

Multi-

Family

C&I

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**

 

 

(50)

 

7,364

 

(1,023)

 

2,220

 

(2,981)

 

3,323

 

306

 

477

 

9,636

Charge-offs

 

 

 

(6,417)

 

 

(193)

 

(829)

 

 

(21)

 

(65)

 

(7,525)

Recoveries

 

 

 

817

 

6

 

97

 

 

43

 

 

9

 

972

Balance, ending

$

$

4,457

$

27,753

$

9,965

$

11,749

$

14,262

$

13,186

$

4,963

$

1,371

$

87,706

*Included within the C&I-other column are ACL on leases with a beginning balance of $1.5 million, provision of $269 thousand, charge-offs of $1.1 million and recoveries of $273 thousand. ACL on leases was $970 thousand as of December 31, 2022.

** Provision of the year ended December 31, 2022, included $11.0 million related to the acquired Guaranty Bank non-PCD loans.

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 $1.8.million, adoption impact of $685 thousand, negative provision of $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

Provisions charged to expense

 

22,899

28,671

 

2,148

 

1,755

 

231

 

55,704

Loans/leases charged off

 

(4,199)

(2,071)

 

(1,993)

 

 

(120)

 

(8,383)

Recoveries on loans/leases previously charged off

 

649

182

 

145

 

29

 

49

 

1,054

Balance, ending

$

35,421

$

42,161

$

1,764

$

3,732

$

1,298

$

84,376

Note 4. Loans/Leases Receivable (continued)

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

Year ended December 31, 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

$

3,386

$

293,483

$

296,869

$

961

$

3,496

$

4,457

C&I - other*

 

9,358

 

1,474,224

 

1,483,582

 

1,445

 

26,308

 

27,753

 

12,744

 

1,767,707

 

1,780,451

 

2,406

 

29,804

 

32,210

CRE - owner occupied

 

24,880

 

604,487

 

629,367

 

2,853

 

7,112

 

9,965

CRE - non-owner occupied

 

21,588

 

941,651

 

963,239

 

869

 

10,880

 

11,749

Construction and land development

 

10,394

 

1,181,667

 

1,192,061

 

13

 

14,249

 

14,262

Multi-family

1,302

962,501

963,803

395

12,791

13,186

1-4 family real estate

 

3,177

 

496,352

 

499,529

 

317

 

4,646

 

4,963

Consumer

 

741

 

109,680

 

110,421

 

75

 

1,296

 

1,371

$

74,826

$

6,064,045

$

6,138,871

$

6,928

$

80,778

$

87,706

*Included within the C&I – other category are leases individually evaluated of $135 thousand with a related allowance for credit losses of $24 thousand and leases collectively evaluated of $31.8 million with a related allowance for credit losses of $946 thousand.

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.

Note 4. Loans/Leases Receivable (continued)

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:

Year ended December 31, 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

$

3,281

$

$

$

$

$

105

$

$

3,386

C&I - other*

 

1,589

 

210

 

 

 

108

 

7,289

 

162

 

9,358

 

4,870

 

210

 

 

 

108

 

7,394

 

162

 

12,744

CRE - owner occupied

 

 

24,814

 

 

66

 

 

 

 

24,880

CRE - non-owner occupied

 

 

 

21,588

 

 

 

 

 

21,588

Construction and land development

 

 

 

10,394

 

 

 

 

 

10,394

Multi-family

1,302

1,302

1-4 family real estate

 

 

 

33

 

3,144

 

 

 

 

3,177

Consumer

 

 

 

120

 

608

 

 

 

13

 

741

$

4,870

$

25,024

$

33,437

$

3,818

$

108

$

7,394

$

175

$

74,826

*Included within the C&I – other category are leases individually evaluated of $135 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, certain 1-4 family real estate loans and certain consumer 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 loans, certain 1-4 family real estate loans, and certain 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.

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, 2022:

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)

$

$

$

$

$

$

$

275,888

$

275,888

Special Mention (Rating 6)

 

 

 

 

 

 

 

17,595

 

17,595

Substandard (Rating 7)

 

 

 

 

 

 

 

3,386

 

3,386

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total C&I - revolving

$

$

$

$

$

$

$

296,869

$

296,869

C&I - other

Pass (Ratings 1 through 5)

$

496,445

$

279,412

$

127,803

$

87,054

$

59,675

$

105,184

$

$

1,155,573

Special Mention (Rating 6)

 

9,542

 

679

 

901

 

723

 

 

308

 

 

12,153

Substandard (Rating 7)

 

187

 

125

 

661

 

4,535

 

310

 

106

 

 

5,924

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total C&I - other

$

506,174

$

280,216

$

129,365

$

92,312

$

59,985

$

105,598

$

$

1,173,650

CRE - owner occupied

Pass (Ratings 1 through 5)

$

146,211

$

182,440

$

142,596

$

33,571

$

27,088

$

45,993

$

13,460

$

591,359

Special Mention (Rating 6)

 

6,190

 

 

6,379

 

484

 

 

1,346

 

269

 

14,668

Substandard (Rating 7)

 

3,750

 

171

 

16,336

 

1,396

 

1,197

 

490

 

 

23,340

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total CRE - owner occupied

$

156,151

$

182,611

$

165,311

$

35,451

$

28,285

$

47,829

$

13,729

$

629,367

CRE - non-owner occupied

Pass (Ratings 1 through 5)

$

310,163

$

221,953

$

173,478

$

89,337

$

56,898

$

40,923

$

7,510

$

900,262

Special Mention (Rating 6)

 

2,824

 

882

 

18,920

 

 

12,917

 

6,198

 

 

41,741

Substandard (Rating 7)

 

5,651

 

 

157

 

15,217

 

 

 

211

 

21,236

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total CRE - non-owner occupied

$

318,638

$

222,835

$

192,555

$

104,554

$

69,815

$

47,121

$

7,721

$

963,239

Construction and land development

Pass (Ratings 1 through 5)

$

479,016

$

330,434

$

240,778

$

31,607

$

30,300

$

$

29,647

$

1,141,782

Special Mention (Rating 6)

 

1,465

 

9,200

 

 

 

 

 

 

10,665

Substandard (Rating 7)

 

132

 

10,262

 

 

 

 

 

 

10,394

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total Construction and land development

$

480,613

$

349,896

$

240,778

$

31,607

$

30,300

$

$

29,647

$

1,162,841

Multi-family

Pass (Ratings 1 through 5)

$

237,839

$

254,056

$

224,920

$

134,378

$

99,695

$

7,875

$

2,227

$

960,990

Special Mention (Rating 6)

 

 

44

 

 

1,467

 

 

 

 

1,511

Substandard (Rating 7)

 

 

 

1,302

 

 

 

 

 

1,302

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total Multi-family

$

237,839

$

254,100

$

226,222

$

135,845

$

99,695

$

7,875

$

2,227

$

963,803

1-4 family real estate

Pass (Ratings 1 through 5)

$

61,953

$

57,731

$

33,737

$

12,687

$

5,813

$

6,002

$

5,855

$

183,778

Special Mention (Rating 6)

 

 

 

 

 

 

 

 

Substandard (Rating 7)

 

28

 

 

 

5

 

 

 

 

33

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total 1-4 family real estate

$

61,981

$

57,731

$

33,737

$

12,692

$

5,813

$

6,002

$

5,855

$

183,811

Consumer

Pass (Ratings 1 through 5)

$

511

$

801

$

493

$

122

$

254

$

621

$

10,226

$

13,028

Special Mention (Rating 6)

 

 

 

 

 

 

 

 

Substandard (Rating 7)

 

282

 

 

12

 

 

112

 

 

 

406

Doubtful (Rating 8)

 

 

 

 

 

 

 

 

Total Consumer

$

793

$

801

$

505

$

122

$

366

$

621

$

10,226

$

13,434

Total

$

1,762,189

$

1,348,190

$

988,473

$

412,583

$

294,259

$

215,046

$

366,274

$

5,387,014

Note 4. Loans/Leases Receivable (continued)

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

$

170,180

$

69,694

$

25,540

$

8,066

$

1,804

$

79

$

$

275,363

Nonperforming

 

1,110

 

1,320

 

155

 

95

 

 

 

 

2,680

Total C&I - other

$

171,290

$

71,014

$

25,695

$

8,161

$

1,804

$

79

$

$

278,043

Construction and land development

Performing

$

28,785

$

360

$

10

$

3

$

62

$

$

$

29,220

Nonperforming

 

 

 

 

 

 

 

 

Total Construction and land development

$

28,785

$

360

$

10

$

3

$

62

$

$

$

29,220

Direct financing leases

Performing

$

14,578

$

5,172

$

5,700

$

4,398

$

1,536

$

370

$

$

31,754

Nonperforming

 

 

32

 

88

 

7

 

8

 

 

 

135

Total Direct financing leases

$

14,578

$

5,204

$

5,788

$

4,405

$

1,544

$

370

$

$

31,889

1-4 family real estate

Performing

$

69,094

$

92,762

$

75,153

$

17,089

$

11,381

$

48,136

$

90

$

313,705

Nonperforming

 

267

 

524

 

487

 

279

 

8

 

448

 

 

2,013

Total 1-4 family real estate

$

69,361

$

93,286

$

75,640

$

17,368

$

11,389

$

48,584

$

90

$

315,718

Consumer

Performing

$

14,685

$

3,844

$

3,717

$

1,123

$

1,140

$

1,325

$

70,974

$

96,808

Nonperforming

 

7

 

 

 

 

3

 

59

 

110

 

179

Total Consumer

$

14,692

$

3,844

$

3,717

$

1,123

$

1,143

$

1,384

$

71,084

$

96,987

Total

$

298,706

$

173,708

$

110,850

$

31,060

$

15,942

$

50,417

$

71,174

$

751,857

*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)

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

Note 4. Loans/Leases Receivable (continued)

TDRs totaled $331 thousand and $494 thousand as of December 31, 2022 and 2021, 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, 2022 and 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.

2022

    

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

  

 

  

 

  

 

  

Direct Financing Leases

3

$

232

$

232

$

TOTAL

3

$

232

$

232

$

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

Of the loans restructured reported above, none were on nonaccrual as of December 31, 2022 and one with a post-modification recorded investment totaling $54 thousand was on nonaccrual as of December 31, 2021.

For the year ended December 31, 2022 and 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. The Company did not have any TDRs that were restructured and charged off in 2022 or 2021.

Changes in the ACL for OBS exposures for the year ended December 31, 2022 and 2021 is presented as follows:

For the Year Ended

December 31, 2022

December 31, 2021

(dollars in thousands)

Balance, beginning

$

6,886

$

Impact of adopting ASU 2016-13

9,117

Provisions (credited) to expense

 

(1,334)

 

(2,231)

Balance, ending

$

5,552

$

6,886

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

Note 4. Loans/Leases Receivable (continued)

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, 2022, 2021, and 2020, is as follows:

    

2022

    

2021

    

2020

(dollars in thousands)

Balance, beginning

$

100,898

$

100,361

$

112,830

Net increase (decrease) due to change in related parties

 

3,496

 

(18,832)

 

(1,601)

Advances

 

51,683

 

42,817

 

43,238

Repayments

 

(42,877)

 

(23,448)

 

(54,106)

Balance, ending

$

113,200

$

100,898

$

100,361

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, 2022 and 2021 as follows:

2022

2021

 

Percentage of

Percentage of

 

Total

Total

 

Industry Name

    

Balance

    

Loans/Leases

    

Balance

    

Loans/Leases

 

(dollars in thousands)

Lessors of Residential Buildings*

$

2,168,431

 

35

%  

$

1,706,092

 

36

%

Lessors of Non-Residential Buildings

558,719

 

9

%  

586,672

 

13

%

* Includes loans on LIHTC projects