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Note 4 - Loans and Allowance for Credit Losses on Loans

6 Months Ended

Jun. 30, 2022

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

(4)

Loans and Allowance for Credit Losses on Loans

Composition of loans by class follows:

(in thousands)	June 30, 2022		December 31, 2021

Commercial real estate - non-owner occupied	$	1,397,330	$	1,128,244
Commercial real estate - owner occupied		787,559		678,405
Total commercial real estate		2,184,889		1,806,649

Commercial and industrial - term		667,338		596,710
Commercial and industrial - term - PPP		36,767		140,734
Commercial and industrial - lines of credit		423,066		370,312
Total commercial and industrial		1,127,171		1,107,756

Residential real estate - owner occupied		533,577		400,695
Residential real estate - non-owner occupied		293,852		281,018
Total residential real estate		827,429		681,713

Construction and land development		372,197		299,206
Home equity lines of credit		192,102		138,976
Consumer		137,278		104,294
Leases		14,611		13,622
Credits cards		21,647		17,087
Total loans (1)	$	4,877,324	$	4,169,303

(1)

Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs.

As a result of the CB acquisition on March 7, 2022, $632 million in loans (net of purchase accounting adjustments) were added to the portfolio.

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $12 million and $11 million at June 30, 2022 and December 31, 2021, respectively, and was included in the consolidated balance sheets.

Loans with carrying amounts of $2.66 billion and $2.20 billion were pledged to secure FHLB borrowing capacity at June 30, 2022 and December 31, 2021, respectively.

Loans to directors and their related interests, including loans to companies for which directors are principal owners and executive officers, totaled $59 million and $54 million as of June 30, 2022 and December 31, 2021, respectively.

PCD Loans

In connection with the acquisitions of CB on March 7, 2022, and KB on May 31, 2021, Bancorp acquired loans both with and without evidence of credit quality deterioration since origination. Acquired loans are recorded at their fair value at the time of acquisition with no carryover from the acquired institution’s previously recorded allowance for loan and lease losses. Acquired loans are accounted for under ASC 326, Financial Instruments – Credit Losses.

The fair value of acquired loans recorded at the time of acquisition is based upon several factors, including the timing and payment of expected cash flows, as adjusted for estimated credit losses and prepayments, and then discounting these cash flows using comparable market rates. The resulting fair value adjustment is recorded in the form of a premium or discount to the unpaid principal balance of the respective loans. As it relates to acquired loans that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination (“PCD”), the net premium or net discount is adjusted to reflect Bancorp’s allowance for credit losses recorded for PCD loans at the time of acquisition, and the remaining fair value adjustment is accreted or amortized into interest income over the remaining life of the respective loans. As it relates to loans not classified as PCD (“non-PCD”) loans, the credit loss and yield components of their fair value adjustment are aggregated, and the resulting net premium or net discount is accreted or amortized into interest income over the remaining life of the respective loans. Bancorp records an ACL for non-PCD loans at the time of acquisition through provision expense, and therefore, no further adjustments are made to the net premium or net discount for non-PCD loans.

Bancorp purchased loans through the acquisitions of CB and KB for which there was, at the time of acquisition, more-than-insignificant deterioration of credit quality since origination. The carrying amount of loans acquired and classified as PCD was as follows at the respective acquisition dates:

	CB			KB
(in thousands)	March 7, 2022			May 31, 2021

Purchase price of PCD loans at acquisition	$	88,549		$	32,765
Allowance for credit losses at acquisition		(9,950	)		(6,757	)
Non-credit discount at acquisition		(4,094	)		(735	)
Fair value of PCD loans at acquisition	$	74,505		$	25,273

At June 30, 2022, the book balance of PCD loans acquired as a result of the CB and KB acquisitions totaled $69 million and $12 million, respectively. Interest income recognized on loans classified as PCD totaled $2.0 million and $151,000 for the three month periods ended June 30, 2022 and 2021, respectively. For the six month periods ended June 30, 2022 and 2021, interest income recognized on loans classified as PCD totaled $2.9 million and $151,000, respectively.

Allowance for Credit Losses on Loans

The table below reflects activity in the ACL related to loans:

(in thousands)	Beginning		Initial Allowance on PCD		Provision for Credit Losses								Ending
Three Months Ended June 30, 2022	Balance		Loans		on Loans			Charge-offs			Recoveries		Balance

Commercial real estate - non-owner occupied	$	20,620	$	-	$	101		$	-		$	2	$	20,723
Commercial real estate - owner occupied		11,326		-		(1,464	)		(41	)		21		9,842
Total commercial real estate		31,946		-		(1,363	)		(41	)		23		30,565

Commercial and industrial - term		11,108		-		1,174			(15	)		75		12,342
Commercial and industrial - lines of credit		6,508		-		(1,508	)		-			-		5,000
Total commercial and industrial		17,616		-		(334	)		(15	)		75		17,342

Residential real estate - owner occupied		5,363		-		575			(7	)		57		5,988
Residential real estate - non-owner occupied		3,361		-		(176	)		-			5		3,190
Total residential real estate		8,724		-		399			(7	)		62		9,178

Construction and land development		5,864		-		422			(72	)		-		6,214
Home equity lines of credit		1,467		-		54			-			-		1,521
Consumer		1,049		-		141			(235	)		158		1,113
Leases		211		-		10			-			-		221
Credit cards		190		-		(29	)		-			47		208
Total	$	67,067	$	-	$	(700	)	$	(370	)	$	365	$	66,362

(in thousands)	Beginning		Initial Allowance on PCD		Provision for Credit Losses								Ending
Six Months Ended June 30, 2022	Balance		Loans		on Loans			Charge-offs			Recoveries		Balance

Commercial real estate - non-owner occupied	$	15,960	$	3,508	$	1,242		$	-		$	13	$	20,723
Commercial real estate - owner occupied		9,595		2,121		(1,876	)		(41	)		43		9,842
Total commercial real estate		25,555		5,629		(634	)		(41	)		56		30,565

Commercial and industrial - term (1)		8,577		1,358		1,741			(128	)		794		12,342
Commercial and industrial - lines of credit		4,802		1,874		(1,640	)		(36	)		-		5,000
Total commercial and industrial		13,379		3,232		101			(164	)		794		17,342

Residential real estate - owner occupied		4,316		590		1,035			(13	)		60		5,988
Residential real estate - non-owner occupied		3,677		-		(495	)		-			8		3,190
Total residential real estate		7,993		590		540			(13	)		68		9,178

Construction and land development		4,789		419		1,078			(72	)		-		6,214
Home equity lines of credit		1,044		2		475			-			-		1,521
Consumer		772		78		403			(489	)		349		1,113
Leases		204		-		17			-			-		221
Credit cards		162		-		(1	)		-			47		208
Total	$	53,898	$	9,950	$	1,979		$	(779	)	$	1,314	$	66,362

(in thousands)	Beginning		Initial Allowance on PCD		Provision for Credit Losses								Ending
Three Months Ended June 30, 2021	Balance		Loans		on Loans			Charge-offs			Recoveries		Balance

Commercial real estate - non-owner occupied	$	20,062	$	1,491	$	1,255		$	(3,065	)	$	4	$	19,747
Commercial real estate - owner occupied		7,065		2,112		(184	)		-			555		9,548
Total commercial real estate		27,127		3,603		1,071			(3,065	)		559		29,295

Commercial and industrial - term		8,469		1,022		355			(114	)		16		9,748
Commercial and industrial - lines of credit		2,983		1,755		502			-			-		5,240
Total commercial and industrial		11,452		2,777		857			(114	)		16		14,988

Residential real estate - owner occupied		3,292		142		953			(40	)		3		4,350
Residential real estate - non-owner occupied		1,709		88		1,624			-			1		3,422
Total residential real estate		5,001		230		2,577			(40	)		4		7,772

Construction and land development		5,527		-		(337	)		-			3		5,193
Home equity lines of credit		843		147		239			-			1		1,230
Consumer		395		-		285			(223	)		115		572
Leases		235		-		(3	)		-			-		232
Credit cards		134		-		8			-			-		142
Total	$	50,714	$	6,757	$	4,697		$	(3,442	)	$	698	$	59,424

(in thousands)	Beginning		Initial ACL on Loans Purchased with Credit		Provision for Credit Losses								Ending
Six Months Ended June 30, 2021	Balance		Deterioration		on Loans			Charge-offs			Recoveries		Balance

Commercial real estate - non-owner occupied	$	19,396	$	1,491	$	1,890		$	(3,065	)	$	35	$	19,747
Commercial real estate - owner occupied		6,983		2,112		(102	)		-			555		9,548
Total commercial real estate		26,379		3,603		1,788			(3,065	)		590		29,295

Commercial and industrial - term		8,970		1,022		(97	)		(169	)		22		9,748
Commercial and industrial - lines of credit		3,614		1,755		(129	)		-			-		5,240
Total commercial and industrial		12,584		2,777		(226	)		(169	)		22		14,988

Residential real estate - owner occupied		3,389		142		859			(43	)		3		4,350
Residential real estate - non-owner occupied		1,818		88		1,514			-			2		3,422
Total residential real estate		5,207		230		2,373			(43	)		5		7,772

Construction and land development		6,119		-		(929	)		-			3		5,193
Home equity lines of credit		895		147		187			-			1		1,230
Consumer		340		-		326			(287	)		193		572
Leases		261		-		(29	)		-			-		232
Credit cards		135		-		7			-			-		142
Total	$	51,920	$	6,757	$	3,497		$	(3,564	)	$	814	$	59,424

The following table presents the amortized cost basis of non-performing loans and the amortized cost basis of loans on non-accrual status for which there was no related ACL losses:

	Non-accrual Loans						Past Due 90-Days-
(in thousands)	*With No*		*Total*		*Troubled Debt*		*or-More and Still*
June 30, 2022	*Recorded ACL*		*Non-accrual Loans*		*Restructurings (1)*		*Accruing Interest*

Commercial real estate - non-owner occupied	$	—	$	647	$	—	$	27
Commercial real estate - owner occupied		298		1,593		—		528
Total commercial real estate		298		2,240		—		555

Commercial and industrial - term		419		1,023		—		224
Commercial and industrial - PPP		—		—		—		33
Commercial and industrial - lines of credit		—		164		—		49
Total commercial and industrial		419		1,187		—		306

Residential real estate - owner occupied		1,081		3,348		—		—
Residential real estate - non-owner occupied		—		233		—		180
Total residential real estate		1,081		3,581		—		180

Construction and land development		—		—		—		—
Home equity lines of credit		—		378		—		40
Consumer		—		441		—		75
Leases		—		—		—		—
Credit cards		—		—		—		20
Total	$	1,798	$	7,827	$	—	$	1,176

(1) Does not include TDRs captured in the non-accrual column.

	Non-accrual Loans						Past Due 90-Days-
(in thousands)	*With No*		*Total*		*Troubled Debt*		*or-More and Still*
December 31, 2021	*Recorded ACL*		*Non-accrual Loans*		*Restructurings (1)*		*Accruing Interest*

Commercial real estate - non-owner occupied	$	486	$	720	$	—	$	—
Commercial real estate - owner occupied		665		1,748		—		—
Total commercial real estate		1,151		2,468		—		—

Commercial and industrial - term		419		670		12		—
Commercial and industrial - PPP		—		—		—		592
Commercial and industrial - lines of credit		—		228		—		56
Total commercial and industrial		419		898		12		648

Residential real estate - owner occupied		805		1,997		—		36
Residential real estate - non-owner occupied		—		293		—		—
Total residential real estate		805		2,290		—		36

Construction and land development		—		—		—		—
Home equity lines of credit		—		646		—		—
Consumer		—		410		—		—
Leases		—		—		—		—
Credit cards		—		—		—		—
Total	$	2,375	$	6,712	$	12	$	684

(1) Does not include TDRs captured in the non-accrual column

For the three and six month periods ended June 30, 2022 and 2021, the amount of accrued interest income previously recorded as revenue and subsequently reversed due to the change in accrual status was immaterial.

For the three and six month periods ended June 30, 2022 and 2021, no interest income was recognized on loans on non-accrual status.

The following table presents the amortized cost basis and ACL allocated for collateral dependent loans, which are individually evaluated to determine expected credit losses:

(in thousands)			Accounts Receivable /						ACL
June 30, 2022	Real Estate		Equipment		Other		Total		Allocation

Commercial real estate - non-owner occupied	$	4,216	$	-	$	-	$	4,216	$	588
Commercial real estate - owner occupied		3,601		-		-		3,601		851
Total commercial real estate		7,817		-		-		7,817		1,439

Commercial and industrial - term		537		485		284		1,306		354
Commercial and industrial - lines of credit		2,008		1,032		-		3,040		770
Total commercial and industrial		2,545		1,517		284		4,346		1,124

Residential real estate - owner occupied		4,029		-		-		4,029		370
Residential real estate - non-owner occupied		438		-		-		438		116
Total residential real estate		4,467		-		-		4,467		486

Construction and land development		3,852		-		-		3,852		419
Home equity lines of credit		378		-		-		378		-
Consumer		-		-		229		229		19
Leases		-		-		-		-		-
Credit cards		-		-		-		-		-
Total collateral dependent loans	$	19,059	$	1,517	$	513	$	21,089	$	3,487

(in thousands)			Accounts Receivable /						ACL
December 31, 2021	Real Estate		Equipment		Other		Total		Allocation

Commercial real estate - non-owner occupied	$	720	$	-	$	-	$	720	$	-
Commercial real estate - owner occupied		7,652		-		-		7,652		1,652
Total commercial real estate		8,372		-		-		8,372		1,652

Commercial and industrial - term		-		598		-		598		-
Commercial and industrial - lines of credit		-		200		-		200		-
Total commercial and industrial		-		798		-		798		-

Residential real estate - owner occupied		1,997		-		-		1,997		-
Residential real estate - non-owner occupied		502		-		-		502		116
Total residential real estate		2,499		-		-		2,499		116

Construction and land development		-		-		-		-		-
Home equity lines of credit		646		-		-		646		-
Consumer		-		-		247		247		-
Leases		-		-		-		-		-
Credit cards		-		-		-		-		-
Total collateral dependent loans	$	11,517	$	798	$	247	$	12,562	$	1,768

The following tables present the aging of contractually past due loans by portfolio class:

(in thousands)			30-59 days		60-89 days		90 or more		Total		Total
June 30, 2022	Current		Past Due		Past Due		Days Past Due		Past Due		Loans

Commercial real estate - non-owner occupied	$	1,393,506	$	3,303	$	308	$	213	$	3,824	$	1,397,330
Commercial real estate - owner occupied		785,831		446		624		658		1,728		787,559
Total commercial real estate		2,179,337		3,749		932		871		5,552		2,184,889

Commercial and industrial - term		665,752		600		280		706		1,586		667,338
Commercial and industrial - term - PPP		34,421		2,236		77		33		2,346		36,767
Commercial and industrial - lines of credit		421,888		917		176		85		1,178		423,066
Total commercial and industrial		1,122,061		3,753		533		824		5,110		1,127,171

Residential real estate - owner occupied		529,094		1,945		410		2,128		4,483		533,577
Residential real estate - non-owner occupied		292,839		692		46		275		1,013		293,852
Total residential real estate		821,933		2,637		456		2,403		5,496		827,429

Construction and land development		371,869		328		—		—		328		372,197
Home equity lines of credit		191,475		258		184		185		627		192,102
Consumer		136,447		395		84		352		831		137,278
Leases		14,611		—		—		—		—		14,611
Credit cards		21,618		4		5		20		29		21,647
Total	$	4,859,351	$	11,124	$	2,194	$	4,655	$	17,973	$	4,877,324

(in thousands)			30-59 days		60-89 days		90 or more		Total		Total
December 31, 2021	Current		Past Due		Past Due		Days Past Due		Past Due		Loans

Commercial real estate - non-owner occupied	$	1,127,448	$	-	$	81	$	715	$	796	$	1,128,244
Commercial real estate - owner occupied		677,231		360		327		487		1,174		678,405
Total commercial real estate		1,804,679		360		408		1,202		1,970		1,806,649

Commercial and industrial - term		595,070		1,032		44		564		1,640		596,710
Commercial and industrial - term - PPP		139,718		128		296		592		1,016		140,734
Commercial and industrial - lines of credit		369,963		271		22		56		349		370,312
Total commercial and industrial		1,104,751		1,431		362		1,212		3,005		1,107,756

Residential real estate - owner occupied		397,415		1,399		137		1,744		3,280		400,695
Residential real estate - non-owner occupied		280,257		403		258		100		761		281,018
Total residential real estate		677,672		1,802		395		1,844		4,041		681,713

Construction and land development		299,206		—		—		—		—		299,206
Home equity lines of credit		138,141		279		47		509		835		138,976
Consumer		103,109		724		102		359		1,185		104,294
Leases		13,622		—		—		—		—		13,622
Credit cards		17,087		—		—		—		—		17,087
Total	$	4,158,267	$	4,596	$	1,314	$	5,126	$	11,036	$	4,169,303

Loan Risk Ratings

Consistent with regulatory guidance, Bancorp categorizes loans into credit risk rating categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends. Pass-rated loans include all risk-rated loans other than those classified as OAEM, substandard, and doubtful, which are defined below:

OAEM – Loans classified as OAEM have potential weaknesses requiring management's heightened attention. These potential weaknesses may result in deterioration of repayment prospects for the loan or of Bancorp's credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the paying capacity of the obligor or of collateral pledged, if any. Loans so classified have well-defined weaknesses that jeopardize ultimate repayment of the debt. Default is a distinct possibility if the deficiencies are not corrected.

Substandard non-performing – Loans classified as substandard non-performing have all the characteristics of substandard loans and have been placed on non-accrual status or have been accounted for as TDRs. Loans are placed on non-accrual status when prospects for recovering both principal and accrued interest are considered doubtful or when a default of principal or interest has existed for 90 days or more.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. Bancorp has elected not to disclose revolving loans that have converted to term loans, as activity relating to this disclosure, which is included in the tables is currently immaterial to Bancorp’s loan portfolio and is expected to be in the future. As of June 30, 2022, the risk rating of loans based on year of origination was as follows:

													Revolving
													loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												amortized
June 30, 2022	2022		2021		2020		2019		2018		Prior		cost basis		Total

Commercial real estate - non-owner occupied:
Risk rating
Pass	$	232,985	$	390,203	$	283,758	$	143,894	$	82,816	$	179,300	$	21,526	$	1,334,482
OAEM		168		5,740		2,340		19,201		-		5,542		6,095		39,086
Substandard		4,174		298		3,041		8,124		-		7,378		100		23,115
Substandard non-performing		-		-		39		-		-		608		-		647
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate non-owner occupied	$	237,327	$	396,241	$	289,178	$	171,219	$	82,816	$	192,828	$	27,721	$	1,397,330

Commercial real estate - owner occupied:
Risk rating
Pass	$	81,564	$	206,021	$	198,696	$	105,386	$	73,275	$	92,744	$	8,592	$	766,278
OAEM		-		1,681		1,401		1,942		413		140		1,630		7,207
Substandard		2,279		1,170		-		6,965		1,993		74		-		12,481
Substandard non-performing		-		1,234		-		-		-		359		-		1,593
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate owner occupied	$	83,843	$	210,106	$	200,097	$	114,293	$	75,681	$	93,317	$	10,222	$	787,559

Commercial and industrial - term:
Risk rating
Pass	$	119,240	$	279,221	$	121,168	$	51,121	$	43,235	$	42,936	$	-	$	656,921
OAEM		4,043		290		-		387		2,187		4		-		6,911
Substandard		201		1		-		1,742		151		388		-		2,483
Substandard non-performing		448		-		537		-		38		-		-		1,023
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - term	$	123,932	$	279,512	$	121,705	$	53,250	$	45,611	$	43,328	$	-	$	667,338

Commercial and industrial - PPP
Risk rating
Pass	$	-	$	31,798	$	4,969	$	-	$	-	$	-	$	-	$	36,767
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - PPP	$	-	$	31,798	$	4,969	$	-	$	-	$	-	$	-	$	36,767

(continued)

													Revolving
													loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												amortized
June 30, 2022	2022		2021		2020		2019		2018		Prior		cost basis		Total

Commercial and industrial - lines of credit
Risk rating
Pass	$	24,723	$	20,389	$	6,400	$	11,627	$	1,348	$	1,425	$	348,812	$	414,724
OAEM		-		-		-		-		-		415		4,319		4,734
Substandard		-		-		952		1,950		-		-		542		3,444
Substandard non-performing		-		38		-		-		-		-		126		164
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - lines of credit	$	24,723	$	20,427	$	7,352	$	13,577	$	1,348	$	1,840	$	353,799	$	423,066

Residential real estate - owner occupied
Risk rating
Pass	$	100,970	$	196,501	$	101,346	$	32,169	$	17,044	$	81,166	$	-	$	529,196
OAEM		-		98		-		80		-		-		-		178
Substandard		-		-		10		-		144		701		-		855
Substandard non-performing		48		202		73		500		299		2,226		-		3,348
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - owner occupied	$	101,018	$	196,801	$	101,429	$	32,749	$	17,487	$	84,093	$	-	$	533,577

Residential real estate - non-owner occupied
Risk rating
Pass	$	55,304	$	88,711	$	61,711	$	37,971	$	20,982	$	27,693	$	-	$	292,372
OAEM		-		-		121		271		128		375		-		895
Substandard		-		-		-		-		-		352		-		352
Substandard non-performing		94		23		-		-		-		116		-		233
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - non-owner occupied	$	55,398	$	88,734	$	61,832	$	38,242	$	21,110	$	28,536	$	-	$	293,852

Construction and land development
Risk rating
Pass	$	107,261	$	120,471	$	93,015	$	15,495	$	6,116	$	1,740	$	24,295	$	368,393
OAEM		-		-		-		-		-		87		-		87
Substandard		-		340		-		3,090		-		287		-		3,717
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Construction and land development	$	107,261	$	120,811	$	93,015	$	18,585	$	6,116	$	2,114	$	24,295	$	372,197

Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	191,685	$	191,685
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		39		39
Substandard non-performing		-		-		-		-		-		-		378		378
Doubtful		-		-		-		-		-		-		-		-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-	$	192,102	$	192,102

(continued)

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
June 30, 2022	2022		2021		2020		2019		2018		Prior		cost basis		Total

Consumer
Risk rating
Pass	$	12,199	$	21,563	$	7,733	$	7,333	$	3,662	$	2,829	$	81,518	$	136,837
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		49		159		107		21		85		20		441
Doubtful		-		-		-		-		-		-		-		-
Total Consumer	$	12,199	$	21,612	$	7,892	$	7,440	$	3,683	$	2,914	$	81,538	$	137,278

Leases
Risk rating
Pass	$	3,503	$	4,837	$	3,041	$	1,095	$	962	$	1,173	$	-	$	14,611
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Leases	$	3,503	$	4,837	$	3,041	$	1,095	$	962	$	1,173	$	-	$	14,611

Credit cards
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	21,647	$	21,647
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Credit cards	$	-	$	-	$	-	$	-	$	-	$	-	$	21,647	$	21,647

Total loans
Risk rating
Pass	$	737,751	$	1,359,715	$	881,837	$	406,091	$	249,440	$	431,005	$	698,074	$	4,763,913
OAEM		4,211		7,809		3,862		21,880		2,728		6,563		12,044		59,097
Substandard		6,654		1,808		4,003		21,871		2,288		9,181		682		46,487
Substandard non-performing		589		1,545		807		606		358		3,397		525		7,827
Doubtful		-		-		-		-		-		-		-		-
Total Loans	$	749,205	$	1,370,877	$	890,509	$	450,448	$	254,814	$	450,146	$	711,325	$	4,877,324

As of December 31, 2021, the risk rating of loans based on year of origination was as follows:

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
December 31, 2021	2021		2020		2019		2018		2017		Prior		cost basis		Total

Commercial real estate - non-owner occupied:
Risk rating
Pass	$	381,014	$	298,177	$	134,286	$	86,638	$	85,110	$	81,635	$	19,465	$	1,086,325
OAEM		3,186		2,666		19,784		-		353		1,619		248		27,856
Substandard		4,174		1,440		-		-		-		7,629		100		13,343
Substandard non-performing		-		39		78		-		592		11		-		720
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate non-owner occupied	$	388,374	$	302,322	$	154,148	$	86,638	$	86,055	$	90,894	$	19,813	$	1,128,244

Commercial real estate - owner occupied:
Risk rating
Pass	$	203,545	$	192,322	$	91,078	$	75,062	$	33,713	$	44,364	$	9,236	$	649,320
OAEM		1,681		1,480		3,568		469		1,506		124		570		9,398
Substandard		5,051		3,605		5,985		1,275		627		-		1,396		17,939
Substandard non-performing		1,259		-		-		-		32		457		-		1,748
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate owner occupied	$	211,536	$	197,407	$	100,631	$	76,806	$	35,878	$	44,945	$	11,202	$	678,405

Commercial and industrial - term:
Risk rating
Pass	$	283,150	$	143,211	$	58,988	$	52,388	$	26,081	$	24,421	$	-	$	588,239
OAEM		738		86		254		3,382		8		-		-		4,468
Substandard		170		42		2,667		176		111		167		-		3,333
Substandard non-performing		-		543		72		55		-		-		-		670
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - term	$	284,058	$	143,882	$	61,981	$	56,001	$	26,200	$	24,588	$	-	$	596,710

Commercial and industrial - PPP
Risk rating
Pass	$	128,409	$	12,325	$	-	$	-	$	-	$	-	$	-	$	140,734
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - PPP	$	128,409	$	12,325	$	-	$	-	$	-	$	-	$	-	$	140,734

(continued)

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
December 31, 2021	2021		2020		2019		2018		2017		Prior		cost basis		Total

Commercial and industrial - lines of credit
Risk rating
Pass	$	33,875	$	8,352	$	11,103	$	1,039	$	207	$	193	$	303,682	$	358,451
OAEM		-		-		-		-		-		-		6,355		6,355
Substandard		-		-		1,916		-		1,549		-		1,813		5,278
Substandard non-performing		-		-		-		-		-		-		228		228
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - lines of credit	$	33,875	$	8,352	$	13,019	$	1,039	$	1,756	$	193	$	312,078	$	370,312

Residential real estate - owner occupied
Risk rating
Pass	$	176,487	$	99,936	$	31,327	$	17,259	$	16,599	$	56,639	$	-	$	398,247
OAEM		101		-		174		-		-		-		-		275
Substandard		-		-		-		-		108		68		-		176
Substandard non-performing		164		103		136		230		714		650		-		1,997
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - owner occupied	$	176,752	$	100,039	$	31,637	$	17,489	$	17,421	$	57,357	$	-	$	400,695

Residential real estate - non-owner occupied
Risk rating
Pass	$	94,482	$	78,785	$	46,177	$	27,494	$	16,171	$	15,909	$	-	$	279,018
OAEM		352		126		281		132		-		462		-		1,353
Substandard		-		-		-		-		-		354		-		354
Substandard non-performing		103		-		45		28		-		117		-		293
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - non-owner occupied	$	94,937	$	78,911	$	46,503	$	27,654	$	16,171	$	16,842	$	-	$	281,018

Construction and land development
Risk rating
Pass	$	160,696	$	99,699	$	16,665	$	6,262	$	1,890	$	1,156	$	12,736	$	299,104
OAEM		-		-		-		-		102		-		-		102
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Construction and land development	$	160,696	$	99,699	$	16,665	$	6,262	$	1,992	$	1,156	$	12,736	$	299,206

Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	138,239	$	138,239
OAEM		-		-		-		-		-		-		91		91
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		646		646
Doubtful		-		-		-		-		-		-		-		-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-	$	138,976	$	138,976

(continued)

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
December 31, 2021	2021		2020		2019		2018		2017		Prior		cost basis		Total

Consumer
Risk rating
Pass	$	23,866	$	9,316	$	5,014	$	1,260	$	555	$	646	$	63,227	$	103,884
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		55		304		30		11		-		4		6		410
Doubtful		-		-		-		-		-		-		-		-
Total Consumer	$	23,921	$	9,620	$	5,044	$	1,271	$	555	$	650	$	63,233	$	104,294

Leases
Risk rating
Pass	$	5,375	$	3,596	$	1,375	$	1,331	$	406	$	1,539	$	-	$	13,622
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Leases	$	5,375	$	3,596	$	1,375	$	1,331	$	406	$	1,539	$	-	$	13,622

Credit cards
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	17,087	$	17,087
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Credit cards	$	-	$	-	$	-	$	-	$	-	$	-	$	17,087	$	17,087

Total loans
Risk rating
Pass	$	1,490,899	$	945,719	$	396,013	$	268,733	$	180,732	$	226,502	$	563,672	$	4,072,270
OAEM		6,058		4,358		24,061		3,983		1,969		2,205		7,264		49,898
Substandard		9,395		5,087		10,568		1,451		2,395		8,218		3,309		40,423
Substandard non-performing		1,581		989		361		324		1,338		1,239		880		6,712
Doubtful		-		-		-		-		-		-		-		-
Total Loans	$	1,507,933	$	956,153	$	431,003	$	274,491	$	186,434	$	238,164	$	575,125	$	4,169,303

For certain loan classes, such as credit cards, credit quality is evaluated based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in credit cards based on payment activity:

	June 30,		December 31,
(in thousands)	2022		2021

Credit cards
Performing	$	21,647	$	17,087
Non-performing		—		—
Total credit cards	$	21,647	$	17,087

Troubled Debt Restructurings

Detail of outstanding TDRs classified as non-performing loans follows:

	June 30, 2022						December 31, 2021
			Specific		Additional				Specific		Additional
			reserve		commitment				reserve		commitment
(in thousands)	Balance		allocation		to lend		Balance		allocation		to lend

Commercial real estate - owner occupied	$	917	$	202	$	—	$	950	$	202	$	—
Commercial & industrial - term		—		—		—		12		12		—
Total TDRs	$	917	$	202	$	—	$	962	$	214	$	—

During the three and six month periods ended June 30, 2022 and 2021, there were no loans modified as TDRs and there were no payment defaults of existing TDRs within 12 months following the modification. Default is determined at 90 or more days past due, charge-off, or foreclosure.

Bancorp had $1.2 million and $917,000, respectively, in residential real estate loans for which formal foreclosure proceedings were in process at June 30, 2022 and December 31, 2021.