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Loans | 12 Months Ended
--- | ---
Dec. 31, 2024
Receivables [Abstract] |
Loans | LOANS The following table presents a summary of loans by category:
($ in thousands) | December 31, 2024 |  | December 31, 2023
Commercial and industrial | $ | 4,720,428 |  |  | $ | 4,674,056 |
Real estate loans: |  |  |
Commercial - investor owned | 2,607,755 |  |  | 2,452,402 |
Commercial - owner occupied | 2,359,956 |  |  | 2,344,117 |
Construction and land development | 892,563 |  |  | 760,122 |
Residential | 358,923 |  |  | 371,995 |
Total real estate loans | 6,219,197 |  |  | 5,928,636 |
Other | 281,193 |  |  | 285,653 |
Loans, before unearned loan fees | 11,220,818 |  |  | 10,888,345 |
Unearned loan fees, net | (463) |  |  | (4,227) |
Loans, including unearned loan fees | $ | 11,220,355 |  |  | $ | 10,884,118 |
The loan balance includes a net premium on acquired loans of $7.8 million and $9.6 million at December 31, 2024 and 2023, respectively. At December 31, 2024 and 2023, loans of $5.7 billion and $4.8 billion, respectively, were pledged to the FHLB and the Federal Reserve. The Company had no consumer mortgage loans secured by residential real estate in process of foreclosure as of December 31, 2024. Consumer mortgage loans secured by residential real estate in process of foreclosure totaled $1.0 million at December 31, 2023. Loans to executive officers and directors, or to entities in which such individuals had beneficial interests as a shareholder, officer, or director were immaterial and $0.1 million for the years ended December 31, 2024 and 2023, respectively. Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers and did not involve more than the normal risk of collectibility. A summary of the activity, by loan category, in the allowance for credit losses on loans for 2022, 2023, and 2024 is as follows:
($ in thousands) | Commercial and industrial |  | CRE - investor owned |  | CRE - owner occupied |  | Construction and land development |  | Residential real estate |  | Other |  |  |  | Total
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses on loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 63,825 |  |  | $ | 35,877 |  |  | $ | 17,560 |  |  | $ | 14,536 |  |  | $ | 7,927 |  |  | $ | 5,316 |  |  |  |  | $ | 145,041 |
Provision (benefit) for credit losses | (6,121) |  |  | 46 |  |  | 4,867 |  |  | (3,145) |  |  | 540 |  |  | (397) |  |  |  |  | (4,210) |
Charge-offs | (6,082) |  |  | (478) |  |  | (395) |  |  | — |  |  | (2,068) |  |  | (370) |  |  |  |  | (9,393) |
Recoveries | 2,213 |  |  | 746 |  |  | 720 |  |  | 53 |  |  | 1,529 |  |  | 233 |  |  |  |  | 5,494 |
Balance, end of year | $ | 53,835 |  |  | $ | 36,191 |  |  | $ | 22,752 |  |  | $ | 11,444 |  |  | $ | 7,928 |  |  | $ | 4,782 |  |  |  |  | $ | 136,932 |
2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses on loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 53,835 |  |  | $ | 36,191 |  |  | $ | 22,752 |  |  | $ | 11,444 |  |  | $ | 7,928 |  |  | $ | 4,782 |  |  |  |  | $ | 136,932 |
Provision (benefit) for credit losses | 38,308 |  |  | (335) |  |  | 523 |  |  | (1,300) |  |  | (2,109) |  |  | 796 |  |  |  |  | 35,883 |
Charge-offs | (36,302) |  |  | (4,869) |  |  | — |  |  | (9) |  |  | (656) |  |  | (1,379) |  |  |  |  | (43,215) |
Recoveries | 3,045 |  |  | 293 |  |  | 130 |  |  | 63 |  |  | 979 |  |  | 661 |  |  |  |  | 5,171 |
Balance, end of year | $ | 58,886 |  |  | $ | 31,280 |  |  | $ | 23,405 |  |  | $ | 10,198 |  |  | $ | 6,142 |  |  | $ | 4,860 |  |  |  |  | $ | 134,771 |
2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses on loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 58,886 |  |  | $ | 31,280 |  |  | $ | 23,405 |  |  | $ | 10,198 |  |  | $ | 6,142 |  |  | $ | 4,860 |  |  |  |  | $ | 134,771 |
Provision (benefit) for credit losses | 14,770 |  |  | 3,502 |  |  | (60) |  |  | 2,764 |  |  | 128 |  |  | (475) |  |  |  |  | 20,629 |
Charge-offs | (13,073) |  |  | (700) |  |  | (3,074) |  |  | (3,224) |  |  | (878) |  |  | (925) |  |  |  |  | (21,874) |
Recoveries | 2,648 |  |  | 135 |  |  | 129 |  |  | 99 |  |  | 1,142 |  |  | 271 |  |  |  |  | 4,424 |
Balance, end of year | $ | 63,231 |  |  | $ | 34,217 |  |  | $ | 20,400 |  |  | $ | 9,837 |  |  | $ | 6,534 |  |  | $ | 3,731 |  |  |  |  | $ | 137,950 |
The Company recorded a provision for credit losses on loans of $20.6 million and $35.9 million for the years ended December 31, 2024 and 2023, respectively. An additional provision for credit losses of $0.9 million and $0.7 million was recorded in 2024 and 2023, respectively, for securities, unfunded commitments and accrued interest on nonaccrual loans. 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 downside forecast. The Company weights these scenarios at 40%, 30%, and 30%, respectively, which added approximately $14.8 million to the ACL over the baseline model at December 31, 2024. The forecasts at the end of 2024 incorporate an expectation that the federal funds rate will continue to fall in 2025. The Company has also recognized various risks posed by loans in certain segments, including the commercial office sector, 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 market reactions to the Federal Reserve policy actions that could push the economy into a recession, persistently higher inflation (including the impact of tariffs), tightening in the credit markets, and further weakness in the financial system. In addition to the CECL methodology, the Company incorporates qualitative adjustments into the ACL on loans to capture credit risks inherent within the loan portfolio that are not captured in the DCF model. Included in these risks are 1) changes in lending policies and procedures, 2) actual and expected changes in business and economic conditions, 3) changes in the nature and volume of the portfolio, 4) changes in lending management, 5) changes in volume and the severity of past due loans, 6) changes in the quality of the loan review system, 7) changes in the value of underlying collateral, 8) the existence and effect of concentrations of credit and 9) other factors such as the regulatory, legal and competitive environments and events such as natural disasters and pandemics. At December 31, 2024, the ACL on loans included a qualitative adjustment of $44.3 million. Of this amount, $14.5 million was allocated to Sponsor Finance loans due to their unsecured nature. Gross charge-offs by loan class and year of origination is presented in the following table:
|  | December 31, 2024
|  | Term Loans by Origination Year |  |  |  |  |  |
($ in thousands) |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Revolving Loans Converted to Term Loans |  | Revolving Loans |  | Total
Commercial and industrial |  | $ | 312 |  |  | $ | 2,646 |  |  | $ | 3,043 |  |  | $ | 35 |  |  | $ | 166 |  |  | $ | 772 |  |  | $ | 2,205 |  |  | $ | 3,589 |  |  | $ | 12,768 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - investor owned |  | — |  |  | — |  |  | — |  |  | 252 |  |  | — |  |  | 448 |  |  | — |  |  | — |  |  | 700 |
Commercial - owner occupied |  | — |  |  | — |  |  | 41 |  |  | 475 |  |  | 10 |  |  | 2,548 |  |  | — |  |  | — |  |  | 3,074 |
Construction and land development |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,224 |  |  | — |  |  | — |  |  | — |  |  | 3,224 |
Residential |  | — |  |  | — |  |  | 166 |  |  | 15 |  |  | — |  |  | 471 |  |  | 202 |  |  | 24 |  |  | 878 |
Other |  | 4 |  |  | 17 |  |  | — |  |  | 58 |  |  | — |  |  | 79 |  |  | 103 |  |  | 1 |  |  | 262 |
Total charge-offs by origination year |  | $ | 316 |  |  | $ | 2,663 |  |  | $ | 3,250 |  |  | $ | 835 |  |  | $ | 3,400 |  |  | $ | 4,318 |  |  | $ | 2,510 |  |  | $ | 3,614 |  |  | $ | 20,906 |
Total gross charge-offs by performing status |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 968 |
Total gross charge-offs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 21,874 |
|  | December 31, 2023
|  | Term Loans by Origination Year |  |  |  |  |  |
($ in thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans Converted to Term Loans |  | Revolving Loans |  | Total
Commercial and industrial |  | $ | 600 |  |  | $ | 2,999 |  |  | $ | 1,940 |  |  | $ | 2,539 |  |  | $ | — |  |  | $ | — |  |  | $ | 12,533 |  |  | $ | 15,178 |  |  | $ | 35,789 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - investor owned |  | — |  |  | — |  |  | 170 |  |  | — |  |  | 4,692 |  |  | 7 |  |  | — |  |  | — |  |  | 4,869 |
Construction and land development |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9 |  |  | — |  |  | — |  |  | 9 |
Residential |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 480 |  |  | 176 |  |  | — |  |  | 656 |
Other |  | — |  |  | 3 |  |  | 459 |  |  | — |  |  | — |  |  | 319 |  |  | 12 |  |  | — |  |  | 793 |
Total charge-offs by origination year |  | $ | 600 |  |  | $ | 3,002 |  |  | $ | 2,569 |  |  | $ | 2,539 |  |  | $ | 4,692 |  |  | $ | 815 |  |  | $ | 12,721 |  |  | $ | 15,178 |  |  | $ | 42,116 |
Total gross charge-offs by performing status |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,099 |
Total gross charge-offs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 43,215 |
The following tables present the recorded investment in nonperforming loans by category, excluding government guaranteed balances:
| December 31, 2024
($ in thousands) | Non-accrual |  |  |  | Loans over 90 days past due and still accruing interest |  | Total nonperforming loans |  | Nonaccrual loans with no allowance
Commercial and industrial | $ | 15,810 |  |  |  |  | $ | 11 |  |  | $ | 15,821 |  |  | $ | 4,279 |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 14,186 |  |  |  |  | — |  |  | 14,186 |  |  | 2,106 |
Commercial - owner occupied | 10,910 |  |  |  |  | — |  |  | 10,910 |  |  | 8,235 |
Construction and land development | 1,503 |  |  |  |  | — |  |  | 1,503 |  |  | 1,503 |
Residential | 258 |  |  |  |  | — |  |  | 258 |  |  | — |
Other | — |  |  |  |  | 9 |  |  | 9 |  |  | — |
Total | $ | 42,667 |  |  |  |  | $ | 20 |  |  | $ | 42,687 |  |  | $ | 16,123 |
| December 31, 2023
($ in thousands) | Non-accrual |  |  |  | Loans over 90 days past due and still accruing interest |  | Total nonperforming loans |  | Nonaccrual loans with no allowance
Commercial and industrial | $ | 7,641 |  |  |  |  | $ | 115 |  |  | $ | 7,756 |  |  | $ | 6,179 |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 20,404 |  |  |  |  | — |  |  | 20,404 |  |  | 19,466 |
Commercial - owner occupied | 12,972 |  |  |  |  | 363 |  |  | 13,335 |  |  | 9,010 |
Construction and land development | 1,205 |  |  |  |  | 64 |  |  | 1,269 |  |  | 464 |
Residential | 959 |  |  |  |  | — |  |  | 959 |  |  | 959 |
Other | — |  |  |  |  | 5 |  |  | 5 |  |  | — |
Total | $ | 43,181 |  |  |  |  | $ | 547 |  |  | $ | 43,728 |  |  | $ | 36,078 |
The nonperforming loan balances at December 31, 2024 and December 31, 2023 exclude government guaranteed balances of $22.0 million and $10.7 million, respectively. Interest income recognized on nonaccrual loans was immaterial in the years ending December 31, 2024, 2023, and 2022. Collateral-dependent nonperforming loans by class of loan is presented as of the dates indicated:
| December 31, 2024
| Type of Collateral
($ in thousands) | Commercial Real Estate |  | Residential Real Estate |  | Blanket Lien |  | Other
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | 4,279 |  |  | $ | 3,495 |
Real estate: |  |  |  |  |  |  |
Commercial - investor owned | 14,136 |  |  | — |  |  | — |  |  | — |
Commercial - owner occupied | 7,521 |  |  | 482 |  |  | 486 |  |  | — |
Total | $ | 21,657 |  |  | $ | 482 |  |  | $ | 4,765 |  |  | $ | 3,495 |
| December 31, 2023
| Type of Collateral
($ in thousands) | Commercial Real Estate |  | Residential Real Estate |  | Blanket Lien |  | Other |  |
Commercial and industrial | $ | 527 |  |  | $ | 1,864 |  |  | $ | 344 |  |  | $ | 3,445 |  |  |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 19,467 |  |  | — |  |  | — |  |  | — |  |  |
Commercial - owner occupied | 5,904 |  |  | 1,638 |  |  | 1,831 |  |  | — |  |  |
Construction and land development | 528 |  |  | 741 |  |  | — |  |  | — |  |  |
Residential | — |  |  | 959 |  |  | — |  |  | — |  |  |
Total | $ | 26,426 |  |  | $ | 5,202 |  |  | $ | 2,175 |  |  | $ | 3,445 |  |  |
The aging of the recorded investment in past due loans by class and category is presented as of the dates indicated.
| December 31, 2024
($ in thousands) | 30-89 Days Past Due |  | 90 or More Days Past Due |  | Total Past Due |  | Current |  | Total
Commercial and industrial | $ | 1,948 |  |  | $ | 12,228 |  |  | $ | 14,176 |  |  | $ | 4,706,252 |  |  | $ | 4,720,428 |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 1,377 |  |  | 14,333 |  |  | 15,710 |  |  | 2,592,045 |  |  | 2,607,755 |
Commercial - owner occupied | 10,542 |  |  | 18,591 |  |  | 29,133 |  |  | 2,330,823 |  |  | 2,359,956 |
Construction and land development | 101 |  |  | 5,620 |  |  | 5,721 |  |  | 886,842 |  |  | 892,563 |
Residential | 2,833 |  |  | 258 |  |  | 3,091 |  |  | 355,832 |  |  | 358,923 |
Other | 34 |  |  | 9 |  |  | 43 |  |  | 281,150 |  |  | 281,193 |
Loans, before unearned loan fees | $ | 16,835 |  |  | $ | 51,039 |  |  | $ | 67,874 |  |  | $ | 11,152,944 |  |  | 11,220,818 |
Unearned loan fees, net |  |  |  |  |  |  |  |  | (463) |
Total |  |  |  |  |  |  |  |  | $ | 11,220,355 |
| December 31, 2023
($ in thousands) | 30-89 Days Past Due |  | 90 or More Days Past Due |  | Total Past Due |  | Current |  | Total
Commercial and industrial | $ | 3,445 |  |  | $ | 9,037 |  |  | $ | 12,482 |  |  | $ | 4,661,574 |  |  | $ | 4,674,056 |
Real estate: |  |  |  |  |  |  |  |  |
Commercial - investor owned | 1,905 |  |  | 18,395 |  |  | 20,300 |  |  | 2,432,102 |  |  | 2,452,402 |
Commercial - owner occupied | 8,409 |  |  | 14,142 |  |  | 22,551 |  |  | 2,321,566 |  |  | 2,344,117 |
Construction and land development | 770 |  |  | 1,908 |  |  | 2,678 |  |  | 757,444 |  |  | 760,122 |
Residential | 1,620 |  |  | 959 |  |  | 2,579 |  |  | 369,416 |  |  | 371,995 |
Other | 82 |  |  | 4 |  |  | 86 |  |  | 285,567 |  |  | 285,653 |
Loans, before unearned loan fees | $ | 16,231 |  |  | $ | 44,445 |  |  | $ | 60,676 |  |  | $ | 10,827,669 |  |  | 10,888,345 |
Unearned loan fees, net |  |  |  |  |  |  |  |  | (4,227) |
Total |  |  |  |  |  |  |  |  | $ | 10,884,118 |
The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default and loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. The effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The most common concession the Company provides to borrowers experiencing financial difficulty is a term extension. In limited circumstances, the Company may modify loans by providing principal forgiveness or an interest rate reduction. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. In some cases, the Company will modify a loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as an interest rate reduction or principal forgiveness, may be granted. The following tables show the recorded investment at the end of the dates listed for loans modified to borrowers experiencing financial difficulty, disaggregated by loan class and type of concession granted:
| Term Extension |  | Payment Delay |  | Total
| Twelve months ended |  | Twelve months ended |  | Twelve months ended
($ in thousands) | December 31, 2024 |  | Percent of Total Loan Class |  | December 31, 2024 |  | Percent of Total Loan Class |  | December 31, 2024 |  | Percent of Total Loan Class
Commercial and industrial | $ | 43,094 |  |  | 0.91 | % |  | $ | 567 |  |  | 0.01 | % |  | $ | 43,661 |  |  | 0.92 | %
Real estate: |  |  |  |  |  |  |  |  |  |  |
Commercial - investor owned | 256 |  |  | 0.01 | % |  | — |  |  | — | % |  | 256 |  |  | 0.01 | %
Commercial - owner occupied | 12,890 |  |  | 0.54 | % |  | — |  |  | — | % |  | 12,890 |  |  | 0.54 | %
Residential | 69 |  |  | 0.02 | % |  | — |  |  | — | % |  | 69 |  |  | 0.02 | %
Total | $ | 56,309 |  |  | 0.50 | % |  | $ | 567 |  |  | 0.01 | % |  | $ | 56,876 |  |  | 0.51 | %
| Term Extension
| Twelve months ended
($ in thousands) | December 31, 2023 |  | Percent of Total Loan Class
Commercial and industrial | $ | 39,437 |  |  | 0.84 | %
Real estate: |  |  |
Commercial - investor owned | 9,411 |  |  | 0.38 | %
Commercial - owner occupied | 94 |  |  | — | %
Construction and land development | 1,137 |  |  | 0.15 | %
Residential | 7,601 |  |  | 2.04 | %
Other | 4 |  |  | — | %
Total | $ | 57,684 |  |  |
The Company had $3.3 million in commitments to lend additional funds to borrowers experiencing financial difficulty included in the previous table at December 31, 2024. There were $6.6 million and $0.7 million of loans modified to borrowers experiencing financial difficulty that were also included in nonperforming loans, excluding government guaranteed balances, as of December 31, 2024 and December 31, 2023, respectively. The following tables summarize the financial impacts of loan modifications made to borrowers experiencing financial difficulty and outstanding at the date indicated:
| Weighted Average Term Extension (in months) |  | Amount of Payment Delay
| Twelve months ended |  | Twelve months ended
($ in thousands) | December 31, 2024 |  | December 31, 2024
Commercial and industrial | 6 |  | $ | 85 |
Real estate: |  |  |
Commercial - investor owned | 12 |  | — |
Commercial - owner occupied | 22 |  | — |
Residential | 24 |  | — |
| Weighted Average Term Extension (in months)
| Twelve months ended
| December 31, 2023
Commercial and industrial | 5
Real estate: |
Commercial - investor owned | 4
Commercial - owner occupied | 3
Construction and land development | 7
Residential | 3
Other | 48
The following tables show the aging of the recorded investment in modified loans in the last 12 months by class at the date indicated:
| December 31, 2024
($ in thousands) | Current |  | 30-89 Days Past Due |  | 90 or More Days Past Due |  | Total
Commercial and industrial | $ | 42,243 |  |  | $ | 567 |  |  | $ | 851 |  |  | $ | 43,661 |
Real estate: |  |  |  |  |  |  |
Commercial - investor owned | 256 |  |  | — |  |  | — |  |  | 256 |
Commercial - owner occupied | 11,972 |  |  | — |  |  | 918 |  |  | 12,890 |
Residential | 69 |  |  | — |  |  | — |  |  | 69 |
Total | $ | 54,540 |  |  | $ | 567 |  |  | $ | 1,769 |  |  | $ | 56,876 |
| December 31, 2023
($ in thousands) | Current |  | 30-89 Days Past Due |  | 90 or More Days Past Due |  | Total
Commercial and industrial | $ | 39,187 |  |  | $ | 250 |  |  | $ | — |  |  | $ | 39,437 |
Real estate: |  |  |  |  |  |  |
Commercial - investor owned | 9,411 |  |  | — |  |  | — |  |  | 9,411 |
Commercial - owner occupied | — |  |  | 94 |  |  | — |  |  | 94 |
Construction and land development | 1,137 |  |  | — |  |  | — |  |  | 1,137 |
Residential | 7,527 |  |  | 74 |  |  | — |  |  | 7,601 |
Other | — |  |  | 4 |  |  | — |  |  | 4 |
Total | $ | 57,262 |  |  | $ | 422 |  |  | $ | — |  |  | $ | 57,684 |
The following table summarizes loans that experienced a default during the twelve months ended December 31, 2024, subsequent to being granted a modification in the preceding twelve months. All of these loans were charged-off during the preceding period. Default is defined as movement to nonperforming status, foreclosure or charge-off.
|  |  |  |  | Term Extension
|  |  | Twelve months ended
($ in thousands) |  |  |  |  | December 31, 2024 |  | Percent of Total Loan Class
Commercial and industrial |  |  |  |  | $ | 1,000 |  |  | 0.02 | %
Other |  |  |  |  | 4 |  |  | NM
Total |  |  |  |  | $ | 1,004 |  |  |
There were no loans that experienced a default during the twelve months ended December 31, 2023 subsequent to being granted a modification in the preceding twelve months. As of December 31, 2024 and December 31, 2023, the Company allocated an immaterial amount in specific reserves to loans that have been restructured. 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 – Special Mention 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, 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 non-accrual. The recorded investment by risk category of the loans by class and year of origination is presented in the following tables as of the dates indicated:
|  | December 31, 2024
|  | Term Loans by Origination Year |  |  |  |  |  |
($ in thousands) |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Revolving Loans Converted to Term Loans |  | Revolving Loans |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 1,477,552 |  |  | $ | 958,327 |  |  | $ | 607,626 |  |  | $ | 172,201 |  |  | $ | 117,845 |  |  | $ | 69,236 |  |  | $ | 87,059 |  |  | $ | 942,991 |  |  | $ | 4,432,837 |
Special Mention (7) |  | 32,479 |  |  | 40,804 |  |  | 4,982 |  |  | 2,373 |  |  | 796 |  |  | 64 |  |  | 14,783 |  |  | 55,100 |  |  | 151,381 |
Classified (8-9) |  | 29,999 |  |  | 868 |  |  | 9,271 |  |  | — |  |  | 142 |  |  | 809 |  |  | 9,681 |  |  | 20,791 |  |  | 71,561 |
Total Commercial and industrial |  | $ | 1,540,030 |  |  | $ | 999,999 |  |  | $ | 621,879 |  |  | $ | 174,574 |  |  | $ | 118,783 |  |  | $ | 70,109 |  |  | $ | 111,523 |  |  | $ | 1,018,882 |  |  | $ | 4,655,779 |
Commercial real estate-investor owned |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 587,403 |  |  | $ | 402,899 |  |  | $ | 479,131 |  |  | $ | 374,155 |  |  | $ | 266,044 |  |  | $ | 281,232 |  |  | $ | 4,566 |  |  | $ | 48,808 |  |  | $ | 2,444,238 |
Special Mention (7) |  | 12,195 |  |  | 4,901 |  |  | — |  |  | 43,506 |  |  | 2,389 |  |  | 9,623 |  |  | 31,321 |  |  | 1,999 |  |  | 105,934 |
Classified (8-9) |  | 256 |  |  | — |  |  | 821 |  |  | 20,274 |  |  | 13,564 |  |  | 4,702 |  |  | — |  |  | — |  |  | 39,617 |
Total Commercial real estate-investor owned |  | $ | 599,854 |  |  | $ | 407,800 |  |  | $ | 479,952 |  |  | $ | 437,935 |  |  | $ | 281,997 |  |  | $ | 295,557 |  |  | $ | 35,887 |  |  | $ | 50,807 |  |  | $ | 2,589,789 |
Commercial real estate-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 420,774 |  |  | $ | 329,001 |  |  | $ | 437,731 |  |  | $ | 408,210 |  |  | $ | 246,024 |  |  | $ | 352,095 |  |  | $ | 890 |  |  | $ | 29,239 |  |  | $ | 2,223,964 |
Special Mention (7) |  | 6,914 |  |  | 10,764 |  |  | 5,323 |  |  | 12,324 |  |  | 8,426 |  |  | 18,389 |  |  | — |  |  | — |  |  | 62,140 |
Classified (8-9) |  | 13,794 |  |  | 3,727 |  |  | 4,063 |  |  | 6,452 |  |  | 3,765 |  |  | 22,319 |  |  | — |  |  | 250 |  |  | 54,370 |
Total Commercial real estate-owner occupied |  | $ | 441,482 |  |  | $ | 343,492 |  |  | $ | 447,117 |  |  | $ | 426,986 |  |  | $ | 258,215 |  |  | $ | 392,803 |  |  | $ | 890 |  |  | $ | 29,489 |  |  | $ | 2,340,474 |
Construction real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 404,286 |  |  | $ | 211,573 |  |  | $ | 198,278 |  |  | $ | 38,131 |  |  | $ | 6,110 |  |  | $ | 3,823 |  |  | $ | 9,513 |  |  | $ | 5,338 |  |  | $ | 877,052 |
Special Mention (7) |  | 11,250 |  |  | 33 |  |  | 49 |  |  | 294 |  |  | — |  |  | 223 |  |  | — |  |  | — |  |  | 11,849 |
Classified (8-9) |  | — |  |  | — |  |  | 1,573 |  |  | — |  |  | — |  |  | 585 |  |  | — |  |  | — |  |  | 2,158 |
Total Construction real estate |  | $ | 415,536 |  |  | $ | 211,606 |  |  | $ | 199,900 |  |  | $ | 38,425 |  |  | $ | 6,110 |  |  | $ | 4,631 |  |  | $ | 9,513 |  |  | $ | 5,338 |  |  | $ | 891,059 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 46,454 |  |  | $ | 37,371 |  |  | $ | 35,082 |  |  | $ | 27,784 |  |  | $ | 22,350 |  |  | $ | 78,113 |  |  | $ | 5,880 |  |  | $ | 79,284 |  |  | $ | 332,318 |
Special Mention (7) |  | 1,539 |  |  | 26 |  |  | 239 |  |  | — |  |  | — |  |  | 1,435 |  |  | — |  |  | 887 |  |  | 4,126 |
Classified (8-9) |  | — |  |  | 2,979 |  |  | 107 |  |  | 11,976 |  |  | 5,538 |  |  | 1,572 |  |  | — |  |  | — |  |  | 22,172 |
Total residential real estate |  | $ | 47,993 |  |  | $ | 40,376 |  |  | $ | 35,428 |  |  | $ | 39,760 |  |  | $ | 27,888 |  |  | $ | 81,120 |  |  | $ | 5,880 |  |  | $ | 80,171 |  |  | $ | 358,616 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 31,286 |  |  | $ | 6,058 |  |  | $ | 50,351 |  |  | $ | 55,844 |  |  | $ | 49,519 |  |  | $ | 31,061 |  |  | $ | 44 |  |  | $ | 40,578 |  |  | $ | 264,741 |
Special Mention (7) |  | — |  |  | 2,326 |  |  | — |  |  | — |  |  | — |  |  | 1,780 |  |  | — |  |  | 7,660 |  |  | 11,766 |
Classified (8-9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5 |  |  | — |  |  | — |  |  | 5 |
Total Other |  | $ | 31,286 |  |  | $ | 8,384 |  |  | $ | 50,351 |  |  | $ | 55,844 |  |  | $ | 49,519 |  |  | $ | 32,846 |  |  | $ | 44 |  |  | $ | 48,238 |  |  | $ | 276,512 |
Total loans classified by risk category |  | $ | 3,076,181 |  |  | $ | 2,011,657 |  |  | $ | 1,834,627 |  |  | $ | 1,173,524 |  |  | $ | 742,512 |  |  | $ | 877,066 |  |  | $ | 163,737 |  |  | $ | 1,232,925 |  |  | $ | 11,112,229 |
Total loans classified by performing status |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 108,126 |
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 11,220,355 |
|  | December 31, 2023
|  | Term Loans by Origination Year |  |  |  |  |  |
($ in thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans Converted to Term Loans |  | Revolving Loans |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 1,567,738 |  |  | $ | 1,052,462 |  |  | $ | 345,292 |  |  | $ | 194,972 |  |  | $ | 123,425 |  |  | $ | 71,205 |  |  | $ | 12,163 |  |  | $ | 1,108,233 |  |  | $ | 4,475,490 |
Special Mention (7) |  | 52,523 |  |  | 6,845 |  |  | 8,597 |  |  | 544 |  |  | 453 |  |  | 242 |  |  | 272 |  |  | 19,590 |  |  | 89,066 |
Classified (8-9) |  | 12,824 |  |  | 19,306 |  |  | 1,833 |  |  | 812 |  |  | 339 |  |  | 363 |  |  | 508 |  |  | 45,830 |  |  | 81,815 |
Total Commercial and industrial |  | $ | 1,633,085 |  |  | $ | 1,078,613 |  |  | $ | 355,722 |  |  | $ | 196,328 |  |  | $ | 124,217 |  |  | $ | 71,810 |  |  | $ | 12,943 |  |  | $ | 1,173,653 |  |  | $ | 4,646,371 |
Commercial real estate-investor owned |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 495,131 |  |  | $ | 544,223 |  |  | $ | 492,974 |  |  | $ | 323,175 |  |  | $ | 165,343 |  |  | $ | 236,914 |  |  | $ | 5,222 |  |  | $ | 51,413 |  |  | $ | 2,314,395 |
Special Mention (7) |  | 3,626 |  |  | 22,725 |  |  | 51,851 |  |  | 1,657 |  |  | 164 |  |  | 5,526 |  |  | — |  |  | — |  |  | 85,549 |
Classified (8-9) |  | 9,411 |  |  | 1,034 |  |  | 43 |  |  | 15,838 |  |  | 2,831 |  |  | 4,919 |  |  | 48 |  |  | — |  |  | 34,124 |
Total Commercial real estate-investor owned |  | $ | 508,168 |  |  | $ | 567,982 |  |  | $ | 544,868 |  |  | $ | 340,670 |  |  | $ | 168,338 |  |  | $ | 247,359 |  |  | $ | 5,270 |  |  | $ | 51,413 |  |  | $ | 2,434,068 |
Commercial real estate-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 407,901 |  |  | $ | 486,701 |  |  | $ | 489,589 |  |  | $ | 301,399 |  |  | $ | 183,872 |  |  | $ | 313,474 |  |  | $ | 5,083 |  |  | $ | 30,036 |  |  | $ | 2,218,055 |
Special Mention (7) |  | 13,739 |  |  | 2,521 |  |  | 4,652 |  |  | 10,492 |  |  | 5,439 |  |  | 15,833 |  |  | — |  |  | 1,493 |  |  | 54,169 |
Classified (8-9) |  | 3,389 |  |  | 3,413 |  |  | 2,247 |  |  | 3,181 |  |  | 8,878 |  |  | 24,857 |  |  | 5,056 |  |  | — |  |  | 51,021 |
Total Commercial real estate-owner occupied |  | $ | 425,029 |  |  | $ | 492,635 |  |  | $ | 496,488 |  |  | $ | 315,072 |  |  | $ | 198,189 |  |  | $ | 354,164 |  |  | $ | 10,139 |  |  | $ | 31,529 |  |  | $ | 2,323,245 |
Construction real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 292,689 |  |  | $ | 325,010 |  |  | $ | 96,426 |  |  | $ | 30,956 |  |  | $ | 1,413 |  |  | $ | 3,408 |  |  | $ | 10 |  |  | $ | 3,700 |  |  | $ | 753,612 |
Special Mention (7) |  | 42 |  |  | 2,958 |  |  | 1,046 |  |  | 210 |  |  | 123 |  |  | 114 |  |  | — |  |  | — |  |  | 4,493 |
Classified (8-9) |  | 1,137 |  |  | 704 |  |  | — |  |  | — |  |  | 13 |  |  | 466 |  |  | — |  |  | — |  |  | 2,320 |
Total Construction real estate |  | $ | 293,868 |  |  | $ | 328,672 |  |  | $ | 97,472 |  |  | $ | 31,166 |  |  | $ | 1,549 |  |  | $ | 3,988 |  |  | $ | 10 |  |  | $ | 3,700 |  |  | $ | 760,425 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 59,259 |  |  | $ | 41,956 |  |  | $ | 51,436 |  |  | $ | 30,713 |  |  | $ | 17,793 |  |  | $ | 77,327 |  |  | $ | 1,464 |  |  | $ | 78,351 |  |  | $ | 358,299 |
Special Mention (7) |  | 322 |  |  | — |  |  | — |  |  | — |  |  | 75 |  |  | 1,801 |  |  | — |  |  | 614 |  |  | 2,812 |
Classified (8-9) |  | 127 |  |  | 1,073 |  |  | 69 |  |  | — |  |  | 30 |  |  | 1,492 |  |  | 74 |  |  | 7,500 |  |  | 10,365 |
Total residential real estate |  | $ | 59,708 |  |  | $ | 43,029 |  |  | $ | 51,505 |  |  | $ | 30,713 |  |  | $ | 17,898 |  |  | $ | 80,620 |  |  | $ | 1,538 |  |  | $ | 86,465 |  |  | $ | 371,476 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-6) |  | $ | 10,071 |  |  | $ | 55,923 |  |  | $ | 67,766 |  |  | $ | 53,569 |  |  | $ | 9,382 |  |  | $ | 19,657 |  |  | $ | 7 |  |  | $ | 28,464 |  |  | $ | 244,839 |
Special Mention (7) |  | — |  |  | — |  |  | 14,472 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,645 |  |  | 26,117 |
Classified (8-9) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | — |  |  | — |  |  | 8 |
Total Other |  | $ | 10,071 |  |  | $ | 55,923 |  |  | $ | 82,238 |  |  | $ | 53,569 |  |  | $ | 9,382 |  |  | $ | 19,665 |  |  | $ | 7 |  |  | $ | 40,109 |  |  | $ | 270,964 |
Total loans classified by risk category |  | $ | 2,929,929 |  |  | $ | 2,566,854 |  |  | $ | 1,628,293 |  |  | $ | 967,518 |  |  | $ | 519,573 |  |  | $ | 777,606 |  |  | $ | 29,907 |  |  | $ | 1,386,869 |  |  | $ | 10,806,549 |
Total loans classified by performing status |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 77,569 |
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 10,884,118 |
In the tables above, loan originations in 2024 and 2023 with a classification of “special mention” or “classified” primarily represent renewals or modifications initially underwritten and originated in prior years. For certain loans the Company evaluates credit quality based on the aging status. The following tables present the recorded investment in loans based on payment activity as of the dates indicated:
| December 31, 2024
($ in thousands) | Performing |  | Non Performing |  | Total
Commercial and industrial | $ | 60,899 |  |  | $ | 11 |  |  | $ | 60,910 |
Real estate: |  |  |  |  |
Commercial - investor owned | 17,175 |  |  | — |  |  | 17,175 |
Commercial - owner occupied | 27,349 |  |  | — |  |  | 27,349 |
Residential | 647 |  |  | — |  |  | 647 |
Other | 2,036 |  |  | 9 |  |  | 2,045 |
Total | $ | 108,106 |  |  | $ | 20 |  |  | $ | 108,126 |
| December 31, 2023
($ in thousands) | Performing |  | Non Performing |  | Total
Commercial and industrial | $ | 26,076 |  |  | $ | 112 |  |  | $ | 26,188 |
Real estate: |  |  |  |  |
Commercial - investor owned | 17,885 |  |  | — |  |  | 17,885 |
Commercial - owner occupied | 28,373 |  |  | — |  |  | 28,373 |
Residential | 712 |  |  | — |  |  | 712 |
Other | 4,406 |  |  | 5 |  |  | 4,411 |
Total | $ | 77,452 |  |  | $ | 117 |  |  | $ | 77,569 |

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