Note 3 - LOANS/LEASES RECEIVABLE

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

LOANS/LEASES RECEIVABLE

NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of September 30, 2023 and December 31, 2022 is presented as follows:

	September 30, 2023		December 31, 2022
	(dollars in thousands)
C&I:
C&I - revolving	$	299,588	$	296,869
C&I - other * / **		1,487,568		1,451,693
		1,787,156		1,748,562
CRE - owner occupied		610,618		629,367
CRE - non-owner occupied		955,552		963,239
Construction and land development**		1,394,054		1,192,061
Multi-family**		1,156,980		963,803
Direct financing leases***		34,401		31,889
1-4 family real estate****		539,931		499,529
Consumer		127,615		110,421
		6,606,307		6,138,871
Allowance for credit losses		(87,669)		(87,706)
	$	6,518,638	$	6,051,165
*** Direct financing leases:
Net minimum lease payments to be received	$	38,729	$	34,754
Estimated unguaranteed residual values of leased assets		165		165
Unearned lease/residual income		(4,493)		(3,030)
		34,401		31,889
Plus deferred lease origination costs, net of fees		100		226
		34,501		32,115
Less allowance for credit losses		(1,081)		(970)
	$	33,420	$	31,145

*      Includes equipment financing agreements outstanding at m2, totaling $306.6 million and $278.0 million as of September 30, 2023 and December 31, 2022, respectively.

**     As of September 30, 2023, there were C&I – other, construction and land development and multi-family loans held for sale in preparation for securitization totaling $278.0 million. The balances in these loan classes as of September 30, 2023 were $359 thousand, $12.7 million and $265.0 million, respectively. There were no loans held for sale in preparation for securitization at December 31, 2022.

***   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 held for sale totaling $898 thousand and $1.5 million as of September 30, 2023 and December 31, 2022, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $31.3 million and $24.3 million at September 30, 2023 and December 31, 2022, respectively, and was included in other assets on the consolidated balance sheets.

Changes in discounts on acquired loans for the three and nine months ended September 30, 2023 and 2022, respectively, are presented as follows:

	For the Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	Performing		Performing			Performing	Performing
	Loans		Loans		Loans		Loans
	(dollars in thousands)
Balance at the beginning of the period	$	(5,104)	$	(12,989)	$	(6,088)	$	(1,533)
Discount added at acquisition		—		—		—		(13,381)
Accretion recognized		540		1,148		1,524		3,073
Balance at the end of the period	$	(4,564)	$	(11,841)	$	(4,564)	$	(11,841)

The aging of the loan/lease portfolio by classes of loans/leases as of September 30, 2023 and December 31, 2022 is presented as follows:

	As of September 30, 2023
										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	$	299,588		$	—		$	—		$	—		$	—	$		299,588
C&I - other		1,464,582			6,609			6,155			—			10,222			1,487,568
CRE - owner occupied		606,998			133			—			—			3,487			610,618
CRE - non-owner occupied		950,286			88			—			—			5,178			955,552
Construction and land development		1,389,601			—			—			—			4,453			1,394,054
Multi-family		1,148,808			—			—			—			8,172			1,156,980
Direct financing leases		33,694			315			151			—			241			34,401
1-4 family real estate		537,271			—			405			—			2,255			539,931
Consumer		126,983			20			52			—			560			127,615
	$	6,557,811		$	7,165		$	6,763		$	—		$	34,568		$	6,606,307
As a percentage of total loan/lease portfolio		99.27	%		0.11	%		0.10	%		—	%		0.52	%		100.00	%

	As of December 31, 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	%

NPLs by classes of loans/leases as of September 30, 2023 and December 31, 2022 are presented as follows:

	As of September 30, 2023
	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		—		7,521		2,701		10,222	29.57
CRE - owner occupied		—		1,225		2,262		3,487	10.09
CRE - non-owner occupied		—		2,040		3,138		5,178	14.98
Construction and land development		—		1,930		2,523		4,453	12.88
Multi-family		—		—		8,172		8,172	23.64
Direct financing leases		—		152		89		241	0.70
1-4 family real estate		—		1,861		394		2,255	6.52
Consumer		—		560		—		560	1.62
	$	—	$	15,289	$	19,279	$	34,568	100.00	%

	As of December 31, 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	%

The Company did not recognize any interest income on nonaccrual loans during the three and nine months ended September 30, 2023 and 2022.

Changes in the ACL loans/leases by portfolio segment for the three and nine months ended September 30, 2023 and 2022, respectively, are presented as follows:

	Three Months Ended September 30, 2023
					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	$	4,101	$	27,162	$	8,731	$	11,968	$	15,888	$	11,229	$	5,213	$	1,505	$	85,797
Change in ACL for writedown of LHFS to fair value		—		—		—		—		—		175		—		—		175
Provision		368		1,111		192		(313)		992		875		(45)		80		3,260
Charge-offs		—		(1,734)		(14)		—		(38)		—		—		(30)		(1,816)
Recoveries		—		215		3		26		—		—		—		9		253
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

	Nine Months Ended September 30, 2023
					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	$	4,457	$	27,753	$	9,965	$	11,749	$	14,262	$	13,186	$	4,963	$	1,371	$	87,706
Change in ACL for writedown of LHFS to fair value		—		(5)		—		—		(147)		(3,659)		—		—		(3,811)
Provision		12		3,986		(834)		(99)		2,777		2,752		200		237		9,031
Charge-offs		—		(5,709)		(222)		—		(50)		—		—		(57)		(6,038)
Recoveries		—		729		3		31		—		—		5		13		781
Balance, ending	$	4,469	$	26,754	$	8,912	$	11,681	$	16,842	$	12,279	$	5,168	$	1,564	$	87,669

*   Included within the C&I – Other column are ACL on leases with a beginning balance of $1.0 million, provision of $165 thousand, charge-offs of $133 thousand and recoveries of $43 thousand. ACL on leases was $1.1 million as of September 30, 2023.

**   Included within the C&I – Other column are ACL on leases with a beginning balance of $970 thousand, provision of $224 thousand, charge-offs of $186 thousand and recoveries of $73 thousand. ACL on leases was $1.1 million as of September 30, 2023.

	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

	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

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

**    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.

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

	As of September 30, 2023
	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	$	3,358	$	296,230	$	299,588	$	944	$	3,525	$	4,469
C&I - other*		19,468		1,502,501		1,521,969		2,380		24,374		26,754
		22,826		1,798,731		1,821,557		3,324		27,899		31,223
CRE - owner occupied		23,952		586,666		610,618		2,844		6,068		8,912
CRE - non-owner occupied		20,456		935,096		955,552		836		10,845		11,681
Construction and land development		4,453		1,389,601		1,394,054		307		16,535		16,842
Multi-family		9,539		1,147,441		1,156,980		427		11,852		12,279
1-4 family real estate		2,906		537,025		539,931		253		4,915		5,168
Consumer		717		126,898		127,615		72		1,492		1,564
	$	84,849	$	6,521,458	$	6,606,307	$	8,063	$	79,606	$	87,669

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with a related allowance for credit losses of $55 thousand and leases collectively evaluated of $34.2 million with a related allowance for credit losses of $1.0 million.

	As of 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.

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, 2023 and December 31, 2022:

	As of September 30, 2023
					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	$	3,253	$	—	$	—	$	—	$	—	$	105	$	—	$	3,358
C&I - other*		631		—		—		—		5,533		12,916		388		19,468
		3,884		—		—		—		5,533		13,021		388		22,826
CRE - owner occupied		—		23,888		—		64		—		—		—		23,952
CRE - non-owner occupied		—		—		20,456		—		—		—		—		20,456
Construction and land development		—		150		4,303		—		—		—		—		4,453
Multi-family		—		—		9,539		—		—		—		—		9,539
1-4 family real estate		—		—		27		2,879		—		—		—		2,906
Consumer		—		—		119		526		—		—		72		717
	$	3,884	$	24,038	$	34,444	$	3,469	$	5,533	$	13,021	$	460	$	84,849

*   Included within the C&I – Other category are leases individually evaluated of $241 thousand with primary collateral of equipment.

	As of 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.

For certain C&I loans, all CRE loans, certain construction and land development loans, all multifamily loans, certain 1-4 family residential 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, 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.

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of September 30, 2023:

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year
													Revolving
													Loans
Internally Assigned													Amortized
Risk Rating	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - revolving
Pass (Ratings 1 through 5)	$	—	$	—	$	—	$	—	$	—	$	—	$	272,848	$	272,848
Special Mention (Rating 6)		—		—		—		—		—		—		23,632		23,632
Substandard (Rating 7)		—		—		—		—		—		—		3,108		3,108
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	299,588	$	299,588
C&I - other
Pass (Ratings 1 through 5)	$	372,511	$	318,783	$	156,021	$	85,298	$	69,736	$	139,089	$	—	$	1,141,438
Special Mention (Rating 6)		12,149		8,936		4,225		3,757		801		321		—		30,189
Substandard (Rating 7)		101		123		250		—		3,152		5,675		—		9,301
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total C&I - other	$	384,761	$	327,842	$	160,496	$	89,055	$	73,689	$	145,085	$	—	$	1,180,928
CRE - owner occupied
Pass (Ratings 1 through 5)	$	71,080	$	130,033	$	148,170	$	112,315	$	30,875	$	62,220	$	11,670	$	566,363
Special Mention (Rating 6)		5,046		720		8,873		5,820		470		386		871		22,186
Substandard (Rating 7)		1,945		711		1,044		16,045		1,186		1,138		—		22,069
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - owner occupied	$	78,071	$	131,464	$	158,087	$	134,180	$	32,531	$	63,744	$	12,541	$	610,618
CRE - non-owner occupied
Pass (Ratings 1 through 5)	$	107,668	$	290,689	$	199,435	$	131,797	$	74,778	$	84,855	$	6,412	$	895,634
Special Mention (Rating 6)		12,623		59		250		17,277		2,385		6,868		—		39,462
Substandard (Rating 7)		3,919		1,331		—		157		14,996		—		53		20,456
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total CRE - non-owner occupied	$	124,210	$	292,079	$	199,685	$	149,231	$	92,159	$	91,723	$	6,465	$	955,552
Construction and land development
Pass (Ratings 1 through 5)	$	353,940	$	491,807	$	286,614	$	187,894	$	8,686	$	8,083	$	26,905	$	1,363,929
Special Mention (Rating 6)		—		—		10,109		—		—		—		—		10,109
Substandard (Rating 7)		413		2,773		1,267		—		—		—		—		4,453
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Construction and land development	$	354,353	$	494,580	$	297,990	$	187,894	$	8,686	$	8,083	$	26,905	$	1,378,491
Multi-family
Pass (Ratings 1 through 5)	$	246,633	$	224,208	$	239,039	$	230,271	$	110,450	$	95,149	$	96	$	1,145,846
Special Mention (Rating 6)		1,595		—		—		—		—		—		—		1,595
Substandard (Rating 7)		—		—		8,208		1,331		—		—		—		9,539
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Multi-family	$	248,228	$	224,208	$	247,247	$	231,602	$	110,450	$	95,149	$	96	$	1,156,980
1-4 family real estate
Pass (Ratings 1 through 5)	$	55,287	$	48,557	$	53,234	$	26,292	$	11,171	$	6,963	$	3,606	$	205,110
Special Mention (Rating 6)		29		—		—		—		—		—		—		29
Substandard (Rating 7)		25		—		—		—		2		—		—		27
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total 1-4 family real estate	$	55,341	$	48,557	$	53,234	$	26,292	$	11,173	$	6,963	$	3,606	$	205,166
Consumer
Pass (Ratings 1 through 5)	$	89	$	416	$	373	$	447	$	24	$	727	$	8,279	$	10,355
Special Mention (Rating 6)		—		—		—		—		—		—		—		—
Substandard (Rating 7)		43		280		—		—		—		93		—		416
Doubtful (Rating 8)		—		—		—		—		—		—		—		—
Total Consumer	$	132	$	696	$	373	$	447	$	24	$	820	$	8,279	$	10,771
Total	$	1,245,096	$	1,519,426	$	1,117,112	$	818,701	$	328,712	$	411,567	$	357,480	$	5,798,094

	As of September 30, 2023
	Term Loans
	Amortized Cost Basis by Origination Year												Revolving
													Loans
													Amortized
Delinquency Status *	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
	(dollars in thousands)
C&I - other
Performing	$	113,677	$	116,539	$	47,024	$	15,549	$	3,665	$	326	$	—	$	296,780
Nonperforming		616		6,437		2,442		293		67		5		—		9,860
Total C&I - other	$	114,293	$	122,976	$	49,466	$	15,842	$	3,732	$	331	$	—	$	306,640
Construction and land development
Performing	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Nonperforming		—		—		—		—		—		—		—		—
Total Construction and land development	$	13,912	$	1,306	$	274	$	10	$	2	$	59	$	—	$	15,563
Direct financing leases
Performing	$	12,138	$	12,548	$	3,706	$	3,248	$	2,075	$	445	$	—	$	34,160
Nonperforming		—		16		22		187		16		—		—		241
Total Direct financing leases	$	12,138	$	12,564	$	3,728	$	3,435	$	2,091	$	445	$	—	$	34,401
1-4 family real estate
Performing	$	56,490	$	58,926	$	80,455	$	69,330	$	15,705	$	51,527	$	80	$	332,513
Nonperforming		—		219		642		418		327		646		—		2,252
Total 1-4 family real estate	$	56,490	$	59,145	$	81,097	$	69,748	$	16,032	$	52,173	$	80	$	334,765
Consumer
Performing	$	15,252	$	10,104	$	2,562	$	2,973	$	710	$	1,310	$	83,653	$	116,564
Nonperforming		—		5		21		13		—		187		54		280
Total Consumer	$	15,252	$	10,109	$	2,583	$	2,986	$	710	$	1,497	$	83,707	$	116,844
Total	$	212,085	$	206,100	$	137,148	$	92,021	$	22,567	$	54,505	$	83,787	$	808,213

* 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 table shows the gross charge-offs of loans and leases by class of receivable and year of origination for the three and nine months ended September 30, 2023:

	Three Months Ended September 30, 2023														Nine Months Ended September 30, 2023
	Gross Charge-off by Origination Year														Gross Charge-off by Origination Year
Classes of Loans/Leases	2023		2022		2021		2020		2019		Prior		Total		2023		2022		2021		2020		2019		Prior		Total
	(dollars in thousands)														(dollars in thousands)
C&I:
C&I - revolving	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
C&I - other		41		1,130		192		204		5		29		1,601		41		2,990		1,063		1,053		238		138		5,523
CRE - owner occupied		—		—		—		—		—		14		14		—		—		208		—		—		14		222
CRE - non-owner occupied		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Construction and land development		—		38		—		—		—		—		38		—		50		—		—		—		—		50
Multi-family		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Direct financing leases		—		34		55		41		3		—		133		—		71		55		41		18		1		186
1-4 family real estate		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Consumer		—		22		7		1		—		—		30		—		41		10		1		5		—		57
	$	41	$	1,224	$	254	$	246	$	8	$	43	$	1,816	$	41	$	3,152	$	1,336	$	1,095	$	261	$	153	$	6,038

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of December 31, 2022:

	As of December 31, 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

	As of December 31, 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
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
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
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.

The following table shows the amortized cost basis of the loans and leases modified to borrowers experiencing financial difficulty by class of receivable and type of concession granted for the three and nine months ended September 30, 2023.

	For the three months ended				For the nine months ended
	September 30, 2023				September 30, 2023
	Amortized Cost				Amortized Cost
	Payment		% of Class of		Payment		% of Class of
Classes of Loans/Leases	Delay		Receivable		Delay		Receivable
	(dollars in thousands)
Direct Financing Leases	$	90	—	%	$	325	1	%

At September 30, 2023, there were no commitments to extend credit to any of the borrowers experiencing financial difficulty.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three and nine months ended September 30, 2023, that had been modified in the twelve-month period prior to the default.

The Company closely monitors the performance of the loans and leases that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. None of these loan or lease modifications were past due as of September 30, 2023.

Changes in the ACL for OBS exposures for the three and nine months ended September 30, 2023 and 2022 are presented as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(dollars in thousands)
Balance, beginning	$	6,326	$	6,878	$	5,552	$	6,886
Provisions (credited) to expense		546		(331)		1,320		(339)
Balance, ending	$	6,872	$	6,547	$	6,872	$	6,547