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Loans | 9 Months Ended
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Sep. 30, 2021
Receivables [Abstract] |
Portfolio Loans | LOANS The following table presents a summary of loans by category:
(in thousands) | September 30, 2021 |  | December 31, 2020
Commercial and industrial | $ | 3,386,599 |  |  | $ | 3,100,299 |
Real estate: |  |  |
Commercial - investor owned | 2,121,251 |  |  | 1,589,419 |
Commercial - owner occupied | 2,058,460 |  |  | 1,498,408 |
Construction and land development | 747,759 |  |  | 546,686 |
Residential | 542,690 |  |  | 319,179 |
Total real estate loans | 5,470,160 |  |  | 3,953,692 |
Other | 270,037 |  |  | 187,083 |
Loans, before unearned loan fees | 9,126,796 |  |  | 7,241,074 |
Unearned loan fees, net | (10,213) |  |  | (16,139) |
Loans, including unearned loan fees | $ | 9,116,583 |  |  | $ | 7,224,935 |
PPP loans totaled $446.4 million at September 30, 2021, or $439.0 million net of deferred fees of $7.4 million. The loan balance at September 30, 2021 includes a net premium on acquired loans of $4.1 million. At September 30, 2021 loans of $2.7 billion were pledged to FHLB and the Federal Reserve Bank. PPP loans totaled $709.9 million at December 31, 2020, or $698.6 million net of unearned fees of $11.3 million. The loan balance includes a net premium on acquired loans of $16.1 million at December 31, 2020. At December 31, 2020 loans of $2.5 billion were pledged to FHLB and the Federal Reserve Bank. The Company has elected to present the accrued interest receivable balance separate from amortized cost basis, to exclude accrued interest receivable balances from the tabular disclosures, and not to estimate an ACL on accrued interest receivable as these amounts are timely written off as a credit loss expense. Accrued interest receivable totaled $31.6 million and $31.1 million at September 30, 2021 and December 31, 2020, respectively, and was reported in Other Assets on the consolidated balance sheets. A summary of the activity in the ACL on loans by category for the three and nine months ended September 30, 2021 is as follows:
(in thousands) | Commercial and industrial |  | CRE - investor owned |  | CRE - owner occupied |  | Construction and land development |  | Residential real estate |  | Other |  |  |  | Total
Allowance for credit losses on loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at June 30, 2021 | $ | 53,351 |  |  | $ | 36,003 |  |  | $ | 15,564 |  |  | $ | 11,632 |  |  | $ | 4,677 |  |  | $ | 6,958 |  |  |  |  | $ | 128,185 |
Initial allowance on acquired PCD loans | 1,077 |  |  | 3,651 |  |  | 1,504 |  |  | 37 |  |  | — |  |  | 737 |  |  |  |  | 7,006 |
Provision for credit losses | 9,836 |  |  | 1,475 |  |  | 1,909 |  |  | 2,215 |  |  | 5,271 |  |  | (1,951) |  |  |  |  | 18,755 |
Charge-offs | (2,829) |  |  | (117) |  |  | (259) |  |  | (3) |  |  | (840) |  |  | (203) |  |  |  |  | (4,251) |
Recoveries | 452 |  |  | 1,623 |  |  | 15 |  |  | 171 |  |  | 115 |  |  | 25 |  |  |  |  | 2,401 |
Balance at September 30, 2021 | $ | 61,887 |  |  | $ | 42,635 |  |  | $ | 18,733 |  |  | $ | 14,052 |  |  | $ | 9,223 |  |  | $ | 5,566 |  |  |  |  | $ | 152,096 |
(in thousands) | Commercial and industrial |  | CRE - investor owned |  | CRE - owner occupied |  | Construction and land development |  | Residential real estate |  | Other |  |  |  | Total
Allowance for credit losses on loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2020 | $ | 58,812 |  |  | $ | 32,062 |  |  | $ | 17,012 |  |  | $ | 21,413 |  |  | $ | 4,585 |  |  | $ | 2,787 |  |  |  |  | $ | 136,671 |
Initial allowance on acquired PCD loans | 1,077 |  |  | 3,651 |  |  | 1,504 |  |  | 37 |  |  | — |  |  | 737 |  |  |  |  | 7,006 |
Provision (benefit) for credit losses | 8,538 |  |  | 7,715 |  |  | 686 |  |  | (7,833) |  |  | 5,374 |  |  | 2,305 |  |  |  |  | 16,785 |
Charge-offs | (8,019) |  |  | (2,489) |  |  | (503) |  |  | (3) |  |  | (1,155) |  |  | (389) |  |  |  |  | (12,558) |
Recoveries | 1,479 |  |  | 1,696 |  |  | 34 |  |  | 438 |  |  | 419 |  |  | 126 |  |  |  |  | 4,192 |
Balance at September 30, 2021 | $ | 61,887 |  |  | $ | 42,635 |  |  | $ | 18,733 |  |  | $ | 14,052 |  |  | $ | 9,223 |  |  | $ | 5,566 |  |  |  |  | $ | 152,096 |
The ACL on sponsor finance loans, which is included in the categories above, represented $17.2 million and $19.0 million, respectively, as of September 30, 2021 and December 30, 2020. A summary of the activity in the ACL on loans by category for the three and nine months ended September 30, 2020 is as follows:
(in thousands) | Commercial and industrial |  | CRE - investor owned |  | CRE - owner occupied |  | Construction and land development |  | Residential real estate |  | Other |  |  |  | Total
Allowance for credit losses on loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at June 30, 2020 | $ | 50,139 |  |  | $ | 25,019 |  |  | $ | 11,088 |  |  | $ | 15,962 |  |  | $ | 6,333 |  |  | $ | 1,729 |  |  |  |  | $ | 110,270 |
Provision for credit losses | 8,929 |  |  | 4,869 |  |  | (1,854) |  |  | 2,873 |  |  | (1,132) |  |  | 342 |  |  |  |  | 14,027 |
Charge-offs | (2,006) |  |  | (272) |  |  | (30) |  |  | — |  |  | (173) |  |  | (103) |  |  |  |  | (2,584) |
Recoveries | 808 |  |  | 55 |  |  | 268 |  |  | 83 |  |  | 303 |  |  | 40 |  |  |  |  | 1,557 |
Balance at September 30, 2020 | $ | 57,870 |  |  | $ | 29,671 |  |  | $ | 9,472 |  |  | $ | 18,918 |  |  | $ | 5,331 |  |  | $ | 2,008 |  |  |  |  | $ | 123,270 |
(in thousands) | Commercial and industrial |  | CRE - investor owned |  | CRE - owner occupied |  | Construction and land development |  | Residential real estate |  | Other |  |  |  | Total
Allowance for credit losses on loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2019 | $ | 27,455 |  |  | $ | 5,935 |  |  | $ | 4,873 |  |  | $ | 2,611 |  |  | $ | 1,280 |  |  | $ | 1,134 |  |  |  |  | $ | 43,288 |
CECL adoption | 6,494 |  |  | 10,726 |  |  | 2,598 |  |  | 5,183 |  |  | 3,470 |  |  | (84) |  |  |  |  | 28,387 |
PCD loans immediately charged off | — |  |  | (5) |  |  | (57) |  |  | (217) |  |  | (1,401) |  |  | — |  |  |  |  | (1,680) |
Balance at January 1, 2020 | $ | 33,949 |  |  | $ | 16,656 |  |  | $ | 7,414 |  |  | $ | 7,577 |  |  | $ | 3,349 |  |  | $ | 1,050 |  |  |  |  | $ | 69,995 |
Provision for credit losses | 27,688 |  |  | 10,692 |  |  | 1,740 |  |  | 11,220 |  |  | 1,623 |  |  | 1,150 |  |  |  |  | 54,113 |
Charge-offs | (5,372) |  |  | (498) |  |  | (30) |  |  | (31) |  |  | (327) |  |  | (294) |  |  |  |  | (6,552) |
Recoveries | 1,605 |  |  | 2,821 |  |  | 348 |  |  | 152 |  |  | 686 |  |  | 102 |  |  |  |  | 5,714 |
Balance at September 30, 2020 | $ | 57,870 |  |  | $ | 29,671 |  |  | $ | 9,472 |  |  | $ | 18,918 |  |  | $ | 5,331 |  |  | $ | 2,008 |  |  |  |  | $ | 123,270 |
The CECL methodology incorporates various economic scenarios. The Company utilizes three forecasts in the model: Moody’s baseline, a stronger near-term growth upside and a moderate recession downside forecast. The Company weights these scenarios at 40%, 30%, and 30%, respectively, which added approximately $18.3 million to the ACL over the baseline model. These forecasts incorporate an accommodative monetary policy and the current and anticipated impact of government stimulus. The Company has also recognized the risk posed by loans that have received multiple deferrals of principal and interest payments, loans in the hospitality sector, and loans with other specific identified risks by allocating additional reserves to those segments. Some of the key risks to the forecasts that could result in future provision for credit losses are additional shutdowns and self-quarantines if another significant wave of COVID hits, the vaccination process stalls, supply chain issues persist, small-business bankruptcies occur at higher levels, or unemployment increases. Loans acquired during the period are initially recorded at fair value at the date of acquisition, which includes a credit related discount. In addition, a provision for credit losses is recorded in the period of acquisition for estimated lifetime credit losses on non-PCD acquired loans. The following tables present the recorded investment in nonperforming loans by category:
|  |  |  |  | September 30, 2021
(in thousands) |  |  |  |  | Nonaccrual |  | Restructured, accruing |  | Loans over 90 days past due and still accruing interest |  | Total nonperforming loans |  | Nonaccrual loans with no allowance
Commercial and industrial |  |  |  |  | $ | 27,655 |  |  | $ | 2,870 |  |  | $ | 5 |  |  | $ | 30,530 |  |  | $ | 12,137 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - investor owned |  |  |  |  | 1,846 |  |  | — |  |  | — |  |  | 1,846 |  |  | 425 |
Commercial - owner occupied |  |  |  |  | 6,892 |  |  | — |  |  | — |  |  | 6,892 |  |  | 2,800 |
Residential |  |  |  |  | 2,185 |  |  | 77 |  |  | — |  |  | 2,262 |  |  | 1,562 |
Other |  |  |  |  | 13 |  |  | — |  |  | 11 |  |  | 24 |  |  | 12 |
Total |  |  |  |  | $ | 38,591 |  |  | $ | 2,947 |  |  | $ | 16 |  |  | $ | 41,554 |  |  | $ | 16,936 |
| December 31, 2020
(in thousands) | Nonaccrual |  | Restructured, accruing |  | Loans over 90 days past due and still accruing interest |  | Total nonperforming loans |  | Nonaccrual loans with no allowance
Commercial and industrial | $ | 18,158 |  |  | $ | 3,482 |  |  | $ | 130 |  |  | $ | 21,770 |  |  | $ | 8,316 |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 9,579 |  |  | — |  |  | — |  |  | 9,579 |  |  | 716 |
Commercial - owner occupied | 2,940 |  |  | — |  |  | — |  |  | 2,940 |  |  | 6,024 |
Residential | 4,112 |  |  | 77 |  |  | — |  |  | 4,189 |  |  | — |
Other | 29 |  |  | — |  |  | — |  |  | 29 |  |  | 3,190 |
Total | $ | 34,818 |  |  | $ | 3,559 |  |  | $ | 130 |  |  | $ | 38,507 |  |  | $ | 18,246 |
The total nonperforming loan balances at September 30, 2021 and December 31, 2020 exclude government guaranteed balances of $5.1 million and $5.4 million, respectively. No interest income was recognized on nonaccrual loans during the three and nine months ended September 30, 2021 or 2020. The amortized cost basis of collateral-dependent nonperforming loans by class of loan is presented for the periods indicated:
| September 30, 2021
| Type of Collateral
(in thousands) | Commercial Real Estate |  | Residential Real Estate |  | Blanket Lien |  | Other
Commercial and industrial | $ | 10,804 |  |  | $ | 300 |  |  | $ | 11,761 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |
Commercial - investor owned | 426 |  |  | 1,209 |  |  | — |  |  | — |
Commercial - owner occupied | 6,689 |  |  | 88 |  |  | — |  |  | — |
Residential | — |  |  | 2,262 |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |  |  | 12 |
Total | $ | 17,919 |  |  | $ | 3,859 |  |  | $ | 11,761 |  |  | $ | 12 |
| December 31, 2020
| Type of Collateral
(in thousands) | Commercial Real Estate |  | Residential Real Estate |  | Blanket Lien |  | Other
Commercial and industrial | $ | 8,316 |  |  | $ | — |  |  | $ | 394 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |
Commercial - investor owned | 9,579 |  |  | — |  |  | — |  |  | — |
Commercial - owner occupied | 2,940 |  |  | — |  |  | — |  |  | — |
Residential | — |  |  | 4,135 |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |  |  | 17 |
Total | $ | 20,835 |  |  | $ | 4,135 |  |  | $ | 394 |  |  | $ | 17 |
During the three and nine months ended September 30, 2021, one residential real estate loan totaling $0.2 million was modified as a troubled debt restructuring. The recorded investment by category for troubled debt restructurings that occurred during the three months ended September 30, 2020 are as follows:
|  |  | September 30, 2020
(in thousands, except for number of loans) |  |  |  |  |  |  | Number of loans |  | Pre-Modification Outstanding Recorded Balance |  | Post-Modification Outstanding Recorded Balance
Commercial and industrial |  |  |  |  |  |  | 2 |  |  | $ | 3,716 |  |  | $ | 3,716 |
Real estate: |  |  |  |  |  |  |  |  |  |  |
Residential |  |  |  |  |  |  | 1 |  |  | 217 |  |  | 217 |
Total |  |  |  |  |  |  | 3 |  |  | $ | 3,933 |  |  | $ | 3,933 |
The recorded investment by category for troubled debt restructurings that occurred during the nine months ended September 30, 2020 are as follows:
|  |  | September 30, 2020
(in thousands, except for number of loans) |  |  |  |  |  |  | Number of loans |  | Pre-Modification Outstanding Recorded Balance |  | Post-Modification Outstanding Recorded Balance
Commercial and industrial |  |  |  |  |  |  | 3 |  |  | $ | 7,447 |  |  | $ | 7,447 |
Real estate: |  |  |  |  |  |  |  |  |  |  |
Residential |  |  |  |  |  |  | 3 |  |  | 372 |  |  | 372 |
Total |  |  |  |  |  |  | 6 |  |  | $ | 7,819 |  |  | $ | 7,819 |
No troubled debt restructurings subsequently defaulted during the three and nine months ended September 30, 2021 or 2020. In response to the COVID-19 pandemic, the Company has implemented short-term deferral programs allowing customers to primarily defer payments for up to 90 days. Deferrals under the CARES Act or interagency guidance are not included above as troubled debt restructurings. As of September 30, 2021, nearly all of these loans have returned to a paying status. The aging of the recorded investment in past due loans by class is presented for the periods indicated.
| September 30, 2021
(in thousands) | 30-89 Days Past Due |  | 90 or More Days Past Due |  | Total Past Due |  | Current |  | Total
Commercial and industrial | $ | 17,470 |  |  | $ | 11,752 |  |  | $ | 29,222 |  |  | $ | 3,349,949 |  |  | $ | 3,379,171 |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 298 |  |  | — |  |  | 298 |  |  | 2,120,953 |  |  | 2,121,251 |
Commercial - owner occupied | 9,900 |  |  | 4,560 |  |  | 14,460 |  |  | 2,044,000 |  |  | 2,058,460 |
Construction and land development | 169 |  |  | — |  |  | 169 |  |  | 747,590 |  |  | 747,759 |
Residential | 138 |  |  | 1,309 |  |  | 1,447 |  |  | 541,243 |  |  | 542,690 |
Other | 274 |  |  | 11 |  |  | 285 |  |  | 266,967 |  |  | 267,252 |
Total | $ | 28,249 |  |  | $ | 17,632 |  |  | $ | 45,881 |  |  | $ | 9,070,702 |  |  | $ | 9,116,583 |
| December 31, 2020
(in thousands) | 30-89 Days Past Due |  | 90 or More Days Past Due |  | Total Past Due |  | Current |  | Total
Commercial and industrial | $ | 8,652 |  |  | $ | 12,928 |  |  | $ | 21,580 |  |  | $ | 3,067,415 |  |  | $ | 3,088,995 |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 734 |  |  | 9,301 |  |  | 10,035 |  |  | 1,579,384 |  |  | 1,589,419 |
Commercial - owner occupied | 328 |  |  | 4,647 |  |  | 4,975 |  |  | 1,493,433 |  |  | 1,498,408 |
Construction and land development | 13 |  |  | — |  |  | 13 |  |  | 546,673 |  |  | 546,686 |
Residential | 2,071 |  |  | 2,118 |  |  | 4,189 |  |  | 314,990 |  |  | 319,179 |
Other | 1,731 |  |  | 50 |  |  | 1,781 |  |  | 180,467 |  |  | 182,248 |
Total | $ | 13,529 |  |  | $ | 29,044 |  |  | $ | 42,573 |  |  | $ | 7,182,362 |  |  | $ | 7,224,935 |
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: •Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry. •Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow. •Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow. •Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating. •Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated at this time, due to strong collateral and/or guarantor support. •Grade 8 – Substandard credits include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted. •Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on nonaccrual. The recorded investment by risk category of loans by class and year of origination is presented in the following tables as of the dates indicated:
|  | September 30, 2021
|  | Term Loans by Origination Year |  |  |  |  |  |
(in thousands) |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | Prior |  | Revolving Loans Converted to Term Loans |  | Revolving Loans |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 1,025,274 |  |  | $ | 600,089 |  |  | $ | 359,330 |  |  | $ | 156,889 |  |  | $ | 127,622 |  |  | $ | 95,642 |  |  | $ | 15,631 |  |  | $ | 773,641 |  |  | $ | 3,154,118 |
Watch (7) |  | 37,465 |  |  | 27,305 |  |  | 10,397 |  |  | 9,662 |  |  | 3,520 |  |  | 14,758 |  |  | 6,128 |  |  | 62,883 |  |  | 172,118 |
Classified (8-9) |  | 19,268 |  |  | 2,554 |  |  | 5,443 |  |  | 2,426 |  |  | 271 |  |  | 911 |  |  | 1,944 |  |  | 13,718 |  |  | 46,535 |
Total Commercial and industrial |  | $ | 1,082,007 |  |  | $ | 629,948 |  |  | $ | 375,170 |  |  | $ | 168,977 |  |  | $ | 131,413 |  |  | $ | 111,311 |  |  | $ | 23,703 |  |  | $ | 850,242 |  |  | $ | 3,372,771 |
Commercial real estate-investor owned |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 497,726 |  |  | $ | 499,617 |  |  | $ | 367,055 |  |  | $ | 153,179 |  |  | $ | 133,202 |  |  | $ | 235,601 |  |  | $ | 3,668 |  |  | $ | 62,184 |  |  | $ | 1,952,232 |
Watch (7) |  | 9,701 |  |  | 44,311 |  |  | 33,781 |  |  | 8,944 |  |  | 2,365 |  |  | 47,826 |  |  | — |  |  | 3,231 |  |  | 150,159 |
Classified (8-9) |  | 1,396 |  |  | 8,744 |  |  | 264 |  |  | 341 |  |  | 1,167 |  |  | 4,364 |  |  | — |  |  | — |  |  | 16,276 |
Total Commercial real estate-investor owned |  | $ | 508,823 |  |  | $ | 552,672 |  |  | $ | 401,100 |  |  | $ | 162,464 |  |  | $ | 136,734 |  |  | $ | 287,791 |  |  | $ | 3,668 |  |  | $ | 65,415 |  |  | $ | 2,118,667 |
Commercial real estate-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 495,546 |  |  | $ | 462,729 |  |  | $ | 285,680 |  |  | $ | 182,073 |  |  | $ | 155,216 |  |  | $ | 255,326 |  |  | $ | — |  |  | $ | 47,128 |  |  | $ | 1,883,698 |
Watch (7) |  | 16,007 |  |  | 13,284 |  |  | 25,665 |  |  | 33,631 |  |  | 10,725 |  |  | 17,548 |  |  | — |  |  | 352 |  |  | 117,212 |
Classified (8-9) |  | 1,868 |  |  | 653 |  |  | 12,257 |  |  | 4,750 |  |  | 6,581 |  |  | 6,651 |  |  | — |  |  | 63 |  |  | 32,823 |
Total Commercial real estate-owner occupied |  | $ | 513,421 |  |  | $ | 476,666 |  |  | $ | 323,602 |  |  | $ | 220,454 |  |  | $ | 172,522 |  |  | $ | 279,525 |  |  | $ | — |  |  | $ | 47,543 |  |  | $ | 2,033,733 |
Construction real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 298,041 |  |  | $ | 232,249 |  |  | $ | 79,465 |  |  | $ | 36,419 |  |  | $ | 15,157 |  |  | $ | 9,394 |  |  | $ | 388 |  |  | $ | 3,487 |  |  | $ | 674,600 |
Watch (7) |  | 38,496 |  |  | 16,080 |  |  | 60 |  |  | 1,208 |  |  | 11,143 |  |  | 2,377 |  |  | — |  |  | — |  |  | 69,364 |
Classified (8-9) |  | 53 |  |  | — |  |  | 379 |  |  | 423 |  |  | — |  |  | 24 |  |  | 96 |  |  | — |  |  | 975 |
Total Construction real estate |  | $ | 336,590 |  |  | $ | 248,329 |  |  | $ | 79,904 |  |  | $ | 38,050 |  |  | $ | 26,300 |  |  | $ | 11,795 |  |  | $ | 484 |  |  | $ | 3,487 |  |  | $ | 744,939 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 136,636 |  |  | $ | 78,641 |  |  | $ | 41,755 |  |  | $ | 15,737 |  |  | $ | 26,345 |  |  | $ | 114,292 |  |  | $ | 283 |  |  | $ | 101,199 |  |  | $ | 514,888 |
Watch (7) |  | 1,277 |  |  | 16,881 |  |  | 2,450 |  |  | 1,284 |  |  | 261 |  |  | 1,286 |  |  | — |  |  | 87 |  |  | 23,526 |
Classified (8-9) |  | 879 |  |  | 222 |  |  | 563 |  |  | 76 |  |  | 12 |  |  | 2,245 |  |  | — |  |  | 75 |  |  | 4,072 |
Total residential real estate |  | $ | 138,792 |  |  | $ | 95,744 |  |  | $ | 44,768 |  |  | $ | 17,097 |  |  | $ | 26,618 |  |  | $ | 117,823 |  |  | $ | 283 |  |  | $ | 101,361 |  |  | $ | 542,486 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 110,977 |  |  | $ | 70,441 |  |  | $ | 20,206 |  |  | $ | 24,006 |  |  | $ | 7,781 |  |  | $ | 20,193 |  |  | $ | — |  |  | $ | 10,683 |  |  | $ | 264,287 |
Watch (7) |  | — |  |  | — |  |  | — |  |  | 4 |  |  | — |  |  | 2,490 |  |  | — |  |  | 1 |  |  | 2,495 |
Classified (8-9) |  | — |  |  | — |  |  | 13 |  |  | 14 |  |  | — |  |  | 18 |  |  | — |  |  | 1 |  |  | 46 |
Total Other |  | $ | 110,977 |  |  | $ | 70,441 |  |  | $ | 20,219 |  |  | $ | 24,024 |  |  | $ | 7,781 |  |  | $ | 22,701 |  |  | $ | — |  |  | $ | 10,685 |  |  | $ | 266,828 |
|  | December 31, 2020
|  | Term Loans by Origination Year |  |  |  |  |  |
(in thousands) |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior |  | Revolving Loans Converted to Term Loans |  | Revolving Loans |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 1,402,276 |  |  | $ | 454,729 |  |  | $ | 262,258 |  |  | $ | 132,832 |  |  | $ | 25,057 |  |  | $ | 58,315 |  |  | $ | 14,118 |  |  | $ | 527,170 |  |  | $ | 2,876,755 |
Watch (7) |  | 44,922 |  |  | 15,369 |  |  | 9,585 |  |  | 7,509 |  |  | 19,613 |  |  | 110 |  |  | — |  |  | 60,448 |  |  | 157,556 |
Classified (8-9) |  | 6,602 |  |  | 9,219 |  |  | 3,115 |  |  | 3,964 |  |  | 4,490 |  |  | 1,080 |  |  | 1,281 |  |  | 22,432 |  |  | 52,183 |
Total Commercial and industrial |  | $ | 1,453,800 |  |  | $ | 479,317 |  |  | $ | 274,958 |  |  | $ | 144,305 |  |  | $ | 49,160 |  |  | $ | 59,505 |  |  | $ | 15,399 |  |  | $ | 610,050 |  |  | $ | 3,086,494 |
Commercial real estate-investor owned |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 481,867 |  |  | $ | 338,843 |  |  | $ | 189,305 |  |  | $ | 131,718 |  |  | $ | 138,288 |  |  | $ | 161,439 |  |  | $ | 6,509 |  |  | $ | 32,058 |  |  | $ | 1,480,027 |
Watch (7) |  | 32,308 |  |  | 19,722 |  |  | 6,656 |  |  | — |  |  | 9,647 |  |  | 17,370 |  |  | — |  |  | — |  |  | 85,703 |
Classified (8-9) |  | — |  |  | 5,278 |  |  | 8,716 |  |  | 5,830 |  |  | 1,245 |  |  | 2,620 |  |  | — |  |  | — |  |  | 23,689 |
Total Commercial real estate-investor owned |  | $ | 514,175 |  |  | $ | 363,843 |  |  | $ | 204,677 |  |  | $ | 137,548 |  |  | $ | 149,180 |  |  | $ | 181,429 |  |  | $ | 6,509 |  |  | $ | 32,058 |  |  | $ | 1,589,419 |
Commercial real estate-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 419,142 |  |  | $ | 287,001 |  |  | $ | 215,181 |  |  | $ | 179,382 |  |  | $ | 104,470 |  |  | $ | 167,456 |  |  | $ | 2,672 |  |  | $ | 45,323 |  |  | $ | 1,420,627 |
Watch (7) |  | 13,657 |  |  | 5,257 |  |  | 3,113 |  |  | 6,198 |  |  | 4,338 |  |  | 8,460 |  |  | 1,776 |  |  | 941 |  |  | 43,740 |
Classified (8-9) |  | 2,420 |  |  | 7,427 |  |  | 5,822 |  |  | 6,140 |  |  | 1,309 |  |  | 10,860 |  |  | — |  |  | 63 |  |  | 34,041 |
Total Commercial real estate-owner occupied |  | $ | 435,219 |  |  | $ | 299,685 |  |  | $ | 224,116 |  |  | $ | 191,720 |  |  | $ | 110,117 |  |  | $ | 186,776 |  |  | $ | 4,448 |  |  | $ | 46,327 |  |  | $ | 1,498,408 |
Construction real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 223,069 |  |  | $ | 156,360 |  |  | $ | 45,460 |  |  | $ | 18,579 |  |  | $ | 11,539 |  |  | $ | 9,144 |  |  | $ | — |  |  | $ | 28,880 |  |  | $ | 493,031 |
Watch (7) |  | 2,544 |  |  | 86 |  |  | 34,179 |  |  | 11,632 |  |  | — |  |  | 2,499 |  |  | — |  |  | — |  |  | 50,940 |
Classified (8-9) |  | 56 |  |  | 2,124 |  |  | 503 |  |  | 1 |  |  | — |  |  | 31 |  |  | — |  |  | — |  |  | 2,715 |
Total Construction real estate |  | $ | 225,669 |  |  | $ | 158,570 |  |  | $ | 80,142 |  |  | $ | 30,212 |  |  | $ | 11,539 |  |  | $ | 11,674 |  |  | $ | — |  |  | $ | 28,880 |  |  | $ | 546,686 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 57,059 |  |  | $ | 27,907 |  |  | $ | 17,718 |  |  | $ | 17,138 |  |  | $ | 27,443 |  |  | $ | 92,657 |  |  | $ | 1,172 |  |  | $ | 66,902 |  |  | $ | 307,996 |
Watch (7) |  | 210 |  |  | 840 |  |  | 526 |  |  | — |  |  | 514 |  |  | 1,603 |  |  | 287 |  |  | 511 |  |  | 4,491 |
Classified (8-9) |  | 571 |  |  | 733 |  |  | 121 |  |  | 14 |  |  | 898 |  |  | 3,181 |  |  | — |  |  | 253 |  |  | 5,771 |
Total residential real estate |  | $ | 57,840 |  |  | $ | 29,480 |  |  | $ | 18,365 |  |  | $ | 17,152 |  |  | $ | 28,855 |  |  | $ | 97,441 |  |  | $ | 1,459 |  |  | $ | 67,666 |  |  | $ | 318,258 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 43,526 |  |  | $ | 28,195 |  |  | $ | 30,074 |  |  | $ | 9,646 |  |  | $ | 5,641 |  |  | $ | 17,027 |  |  | $ | — |  |  | $ | 40,779 |  |  | $ | 174,888 |
Watch (7) |  | — |  |  | 1 |  |  | 8 |  |  | — |  |  | — |  |  | 2,637 |  |  | — |  |  | 1 |  |  | 2,647 |
Classified (8-9) |  | — |  |  | 18 |  |  | 19 |  |  | 13 |  |  | — |  |  | 17 |  |  | 8 |  |  | 4 |  |  | 79 |
Total Other |  | $ | 43,526 |  |  | $ | 28,214 |  |  | $ | 30,101 |  |  | $ | 9,659 |  |  | $ | 5,641 |  |  | $ | 19,681 |  |  | $ | 8 |  |  | $ | 40,784 |  |  | $ | 177,614 |
In the tables above, loan originations in 2021 and 2020 with a classification of watch or classified primarily represent renewals or modifications initially underwritten and originated in prior years. For certain loans, primarily credit cards, the Company evaluates credit quality based on the aging status. The following tables presents the recorded investment on loans based on payment activity as of the periods indicated:
| September 30, 2021
(in thousands) | Performing |  | Non Performing |  | Total
Commercial and industrial | $ | 6,395 |  |  | $ | 5 |  |  | $ | 6,400 |
Real estate: |  |  |  |  |
Commercial - investor owned | 2,584 |  |  | — |  |  | 2,584 |
Commercial - owner occupied | 24,727 |  |  | — |  |  | 24,727 |
Construction and land development | 2,820 |  |  | — |  |  | 2,820 |
Residential | 204 |  |  | — |  |  | 204 |
Other | 413 |  |  | 11 |  |  | 424 |
Total | $ | 37,143 |  |  | $ | 16 |  |  | $ | 37,159 |
| December 31, 2020
(in thousands) | Performing |  | Non Performing |  | Total
Commercial and industrial | $ | 2,502 |  |  | $ | — |  |  | $ | 2,502 |
Real estate: |  |  |  |  |
Residential | 921 |  |  | — |  |  | 921 |
Other | 4,612 |  |  | 21 |  |  | 4,633 |
Total | $ | 8,035 |  |  | $ | 21 |  |  | $ | 8,056 |
The Company has purchased loans through the FCBP acquisition, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:
($ in thousands) | At July 21, 2021
Par value of acquired loans | $ | 180,440 |
Allowance for credit losses | (7,006) |
Non-credit discount | (6,428) |
Purchase price of acquired loans | $ | 167,006 |

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