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Loans and Leases and Allowance for Loan and Lease Losses (Tables)

9 Months Ended

Sep. 30, 2022

Major categories of loans and leases are summarized as follows (in thousands):


	September 30, 2022						December 31, 2021
	PCI		All Other				PCI		All Other
	Loans and Leases¹		Loans and Leases		Total		Loans and Leases¹		Loans and Leases		Total
Commercial real estate	$	16,148	$	1,520,903	$	1,537,051	$	20,875	$	1,363,281	$	1,384,156
Consumer real estate		8,695		553,713		562,408		11,833		465,439		477,272
Construction and land development		1,557		403,450		405,007		2,882		275,504		278,386
Commercial and industrial		2,523		511,757		514,280		2,516		485,508		488,024
Leases		1,472		63,326		64,798		3,170		50,538		53,708
Consumer and other		6		15,566		15,572		71		11,780		11,851
Total loans and leases		30,401		3,068,715		3,099,116		41,347		2,652,050		2,693,397
Less: Allowance for loan and lease losses		(167)		(22,602)		(22,769)		(179)		(19,173)		(19,352)
Loans and leases, net	$	30,234	$	3,046,113	$	3,076,347	$	41,168	$	2,632,877	$	2,674,045

¹Purchased Credit Impaired loans and leases (“PCI loans and leases”) are loans and leases with evidence of credit deterioration at purchase.

Schedule of Impaired and Performing Loans Receivable

The composition of loans and leases by loan classification for performing, impaired and PCI loan and leases status is summarized in the tables below (in thousands):


					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
September 30, 2022:
Performing loans and leases	$	1,520,598	$	552,076	$	402,592	$	511,757	$	63,326	$	15,566	$	3,065,915
Impaired loans and leases		305		1,637		858		—		—		—		2,800
		1,520,903		553,713		403,450		511,757		63,326		15,566		3,068,715
PCI loans and leases		16,148		8,695		1,557		2,523		1,472		6		30,401
Total loans and leases	$	1,537,051	$	562,408	$	405,007	$	514,280	$	64,798	$	15,572	$	3,099,116

December 31, 2021:
Performing loans and leases	$	1,362,423	$	463,374	$	275,504	$	485,411	$	50,538	$	11,780	$	2,649,030
Impaired loans and leases		858		2,065		—		97		—		—		3,020
		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050
PCI loans and leases		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

Schedule of Allowance for Loan Losses for Impaired and Performing Loans Receivable

The following tables show the allowance for loan and lease losses allocation by loan and lease classification for impaired, PCI, and performing (in thousands):


					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
September 30, 2022:
Performing loans and leases	$	10,552	$	3,868	$	2,781	$	3,835	$	1,034	$	137	$	22,207
Impaired loans and leases		—		—		395		—		—		—		395
		10,552		3,868		3,176		3,835		1,034		137		22,602
PCI loans and leases		27		140		—		—		—		—		167
Total loans and leases	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769

December 31, 2021:
Performing loans and leases	$	9,355	$	3,237	$	1,882	$	3,685	$	330	$	123	$	18,612
Impaired loans and leases		396		69		—		96		—		—		561
		9,751		3,306		1,882		3,781		330		123		19,173
PCI loans and leases		30		148		—		—		—		1		179
Total loans and leases	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352

Schedule of Allowance for Loan Losses

The following tables detail the changes in the allowance for loan and lease losses by loan and lease classification (in thousands):


	Three Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	10,600	$	3,835	$	2,904	$	3,659	$	807	$	133	$	21,938
Charged-off loans and leases		—		—		—		(51)		—		(180)		(231)
Recoveries of charge-offs		—		7		—		19		29		33		88
Provision charged to expense		(21)		166		272		208		198		151		974
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769


	Three Months Ended September 30, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	8,382	$	3,323	$	2,061	$	4,442	$	—	$	102	$	18,310
Charged-off loans and leases		—		—		—		(41)		(68)		(132)		(241)
Recoveries of charge-offs		23		13		—		3		5		33		77
Provision charged to expense		1,000		205		157		(603)		288		102		1,149
Ending balance	$	9,405	$	3,541	$	2,218	$	3,801	$	225	$	105	$	19,295


	Nine Months Ended September 30, 2022
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	9,781	$	3,454	$	1,882	$	3,781	$	330	$	124	$	19,352
Charged-off loans and leases		—		(33)		—		(240)		(108)		(482)		(863)
Recoveries of charge-offs		4		561		—		162		192		131		1,050
Provision charged to expense		794		26		1,294		132		620		364		3,230
Ending balance	$	10,579	$	4,008	$	3,176	$	3,835	$	1,034	$	137	$	22,769


	Nine Months Ended September 30, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346
Charged-off loans and leases		—		(60)		—		(45)		(68)		(341)		(514)
Recoveries of charge-offs		29		34		—		13		5		171		252
Provision charged to expense		1,797		96		142		(1,274)		288		162		1,211
Ending balance	$	9,405	$	3,541	$	2,218	$	3,801	$	225	$	105	$	19,295

Loan Credit Quality Indicators

The following tables outline the amount of each loan and lease classification and the amount categorized into each risk rating (in thousands):


	September 30, 2022
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,490,337	$	550,409	$	402,317	$	506,920	$	63,326	$	15,535	$	3,028,844
Watch		23,663		1,207		227		4,647		—		21		29,765
Special mention		6,519		36		—		73		—		—		6,628
Substandard		384		2,061		906		117		—		10		3,478
Doubtful		—		—		—		—		—		—		—
Total		1,520,903		553,713		403,450		511,757		63,326		15,566		3,068,715

PCI Loans and Leases:
Pass		12,901		7,299		1,075		2,523		1,472		6		25,276
Watch		1,437		194		47		—		—		—		1,678
Special mention		12		55		—		—		—		—		67
Substandard		1,798		1,147		435		—		—		—		3,380
Doubtful		—		—		—		—		—		—		—
Total		16,148		8,695		1,557		2,523		1,472		6		30,401
Total loans and leases	$	1,537,051	$	562,408	$	405,007	$	514,280	$	64,798	$	15,572	$	3,099,116


	December 31, 2021
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,330,888	$	460,190	$	275,124	$	480,677	$	50,538	$	11,724	$	2,609,141
Watch		27,246		1,334		237		4,345		—		42		33,204
Special mention		4,120		1,525		70		228		—		—		5,943
Substandard		1,027		2,390		73		213		—		14		3,717
Doubtful		—		—		—		45		—		—		45
Total		1,363,281		465,439		275,504		485,508		50,538		11,780		2,652,050

PCI Loans and Leases:
Pass		16,019		9,714		2,335		2,516		3,170		71		33,825
Watch		1,271		539		91		—		—		—		1,901
Special mention		15		68		—		—		—		—		83
Substandard		3,570		1,512		456		—		—		—		5,538
Doubtful		—		—		—		—		—		—		—
Total		20,875		11,833		2,882		2,516		3,170		71		41,347
Total loans and leases	$	1,384,156	$	477,272	$	278,386	$	488,024	$	53,708	$	11,851	$	2,693,397

Past Due Loans and Leases

The following tables present an aging analysis of our loan and lease portfolio (in thousands):


	September 30, 2022
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	103	$	—	$	—	$	305	$	408	$	16,148	$	1,520,495	$	1,537,051
Consumer real estate		271		132		—		2,061		2,464		8,695		551,249		562,408
Construction and land development		—		—		—		858		858		1,557		402,592		405,007
Commercial and industrial		96		58		—		117		271		2,523		511,486		514,280
Leases		143		—		20		29		192		1,472		63,134		64,798
Consumer and other		175		27		—		9		211		6		15,355		15,572
Total	$	788	$	217	$	20	$	3,379	$	4,404	$	30,401	$	3,064,311	$	3,099,116


	December 31, 2021
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	172	$	—	$	—	$	858	$	1,030	$	20,875	$	1,362,251	$	1,384,156
Consumer real estate		884		10		—		2,139		3,033		11,833		462,406		477,272
Construction and land development		91		—		—		—		91		2,882		275,413		278,386
Commercial and industrial		1,191		119		45		116		1,471		2,516		484,037		488,024
Leases		361		—		—		—		361		3,170		50,177		53,708
Consumer and other		99		4		19		11		133		71		11,647		11,851
Total	$	2,798	$	133	$	64	$	3,124	$	6,119	$	41,347	$	2,645,931	$	2,693,397

Impaired Loans

The following is an analysis of the impaired loan and lease portfolio, including PCI loans and leases, detailing the related allowance recorded (in thousands):


	September 30, 2022						December 31, 2021
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	305	$	305	$	—	$	—	$	—	$	—
Consumer real estate		1,637		1,638		—		1,805		1,806		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		1,942		1,943		—		1,805		1,806		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—		—		858		859		396
Consumer real estate		—		—		—		260		262		69
Construction and land development		858		858		395		—		—		—
Commercial and industrial		—		—		—		97		96		96
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		858		858		395		1,215		1,217		561
PCI loans and leases:
Commercial real estate		522		597		27		707		926		30
Consumer real estate		873		835		140		1,129		1,251		148
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		5		3		1
		1,395		1,432		167		1,841		2,180		179
Total impaired loans and leases	$	4,195	$	4,233	$	562	$	4,861	$	5,203	$	740


	Three Months Ended September 30,
	2022				2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	304	$	—	$	—	$	—
Consumer real estate		1,742		72		2,171		19
Construction and land development		—		—		—		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		2,046		72		2,171		19
Impaired loans and leases with a valuation allowance:
Commercial real estate		—		—		858		—
Consumer real estate		—		—		261		3
Construction and land development		858		—		—		—
Commercial and industrial		—		—		154		2
Leases		—		—		—		—
Consumer and other		—		—		—		—
		858		—		1,273		5
PCI loans and leases:
Commercial real estate		525		11		1,230		27
Consumer real estate		880		12		1,176		21
Construction and land development		—		—		—		—
Commercial and industrial		—		—		258		1
Leases		—		—		—		—
Consumer and other		—		—		10		—
		1,405		23		2,674		49
Total impaired loans and leases	$	4,309	$	95	$	6,118	$	73


	Nine Months Ended September 30,
	2022				2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	152	$	—	$	1,000	$	1
Consumer real estate		1,839		92		1,778		39
Construction and land development		—		—		—		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,991		92		2,778		40
Impaired loans and leases with a valuation allowance:
Commercial real estate		429		—		1,218		104
Consumer real estate		87		—		352		11
Construction and land development		429		—		—		—
Commercial and industrial		32		—		141		7
Leases		—		—		—		—
Consumer and other		—		—		—		—
		977		—		1,711		122
PCI loans and leases:
Commercial real estate		765		46		410		27
Consumer real estate		879		40		1,169		64
Construction and land development		—		—		—		—
Commercial and industrial		—		—		263		3
Leases		—		—		—		—
Consumer and other		2		—		15		—
		1,646		86		1,857		94
Total impaired loans and leases	$	4,614	$	178	$	6,346	$	256

Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Acquired During Period Carrying Amount Of Loans

The Company has acquired loans and leases where there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans and leases are as follows (in thousands):


	September 30,		December 31,
	2022		2021
Commercial real estate	$	26,622	$	31,600
Consumer real estate		10,599		14,215
Construction and land development		3,052		3,699
Commercial and industrial		2,470		3,424
Leases		1,754		3,557
Consumer and other		34		125
Total loans and leases		44,531		56,620
Less: Remaining purchase discount		(14,130)		(15,273)
Total loans and leases, net of purchase discount		30,401		41,347
Less: Allowance for loan and leases losses		(167)		(179)
Carrying amount, net of allowance	$	30,234	$	41,168

Schedule of Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement

Activity related to the accretable yield on loans and leases acquired with deteriorated credit quality is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Accretable yield, beginning of period	$	15,736	$	14,522	$	14,618	$	16,889
Additions		—		4,072		—		4,721
Accretion income		(839)		(2,151)		(2,780)		(5,180)
Reclassification		1,729		254		2,127		1,931
Other changes, net		(415)		(1,034)		2,246		(2,698)
Accretable yield, end of period	$	16,211	$	15,663	$	16,211	$	15,663