Note 6. Loans

The Company has several lending lines of business including SBA loans, direct lease financing, SBLOC and IBLOC and other specialty and consumer lending. The Company also originates loans for sale into commercial mortgage-backed securitizations or to secondary government guaranteed loan markets. At origination, the Company elected fair value treatment for these loans held-for-sale to better reflect the economics of the transactions. At March 31, 2020, the fair value of the loans held-for-sale was $1.72 billion and their amortized cost was $1.72 billion. Included in “Net realized and unrealized gains (losses) on loans originated for sale” in the consolidated statements of operations are changes in the estimate in fair value of unsold loans. For the three months ended March 31, 2020, unrealized losses recognized for such changes in fair value were $2.9 million. For the three months ended March 31, 2019, unrealized gains recognized for such changes in fair value were $329,000. There were no changes in fair value related to credit risk. Interest earned on loans held-for-sale during the period held is recorded in Interest Income-Loans, including fees, in the consolidated statements of operations. The Bank also pledged the majority of its loans to the Federal Reserve Bank for a line of credit which it generally has not used. However, in light of the impact of the Coronavirus, the Federal Reserve has encouraged banks to utilize their lines to maximize the amount of funding available for credit markets. Accordingly, the Bank has been borrowing on its line on an overnight basis. The amount of loans pledged varies and the collateral may be unpledged at any time to the extent the collateral exceeds advances. The line is maintained consistent with the Bank’s liquidity policy which maximizes potential liquidity.

The Company has periodically sponsored the structuring of commercial mortgage loan securitizations. The loans sold to the commercial mortgage-backed securitizations are transitional commercial mortgage loans which are made to improve and rehabilitate existing properties which are already cash flowing. Servicing rights are not retained. Each of the securitizations is considered a variable interest entity of which the Company is not the primary beneficiary. Further, true sale accounting has been applicable to each of the securitizations, as supported by a review performed by an independent third-party consultant. In each of the securitizations, the Company has obtained a tranche of certificates which are accounted for as available-for-sale debt securities. The securities are recorded at fair value at acquisition, which is determined by an independent third party based on the discounted cash flow method using unobservable (level 3) inputs. The loans securitized are structured with some prepayment protection and with extension options which are common for rehabilitation loans. It was expected that those factors would generally offset the impact of prepayments which would therefore not be significant. Accordingly, prepayments on CRE securities were not originally assumed in the first four securitizations. However, as a result of higher than expected prepayments on CRE2, annual prepayments of 15% on CRE5 were assumed, beginning after the first-year anniversary of the CRE5 securitization. For CRE6, there was no premium or discount associated with the tranche purchased and prepayments were accordingly not estimated.

Because of credit enhancements for each security, cash flows were not reduced by expected losses. For each of the securitizations, the Company has recorded a gain which is comprised of (i) the excess of consideration received by the Company in the transaction over the carrying value of the loans at securitization, less related transactions costs incurred; and (ii) the recognition of previously deferred origination and exit fees.

A summary of securitizations and securities obtained from those securitizations for the periods ended March 31, 2020 and 2019 is as follows:

In the first quarter of 2019, the Company sponsored The Bancorp Commercial Mortgage 2019-CRE5 Trust, securitizing $518.3 million of loans and recording a $11.2 million gain. The certificates obtained by the Company in the transaction had an acquisition date fair value of $41.6 million based upon an initial discount rate of 4.75%.

The Company analyzes credit risk prior to making loans on an individual loan basis. The Company considers relevant aspects of the borrowers’ financial position and cash flow, past borrower performance, management’s knowledge of market conditions, collateral and the ratio of loan amounts to estimated collateral value in making its credit determinations.

Major classifications of loans, excluding loans held-for-sale, are as follows (in thousands):



	March 31,	December 31,
	2020	2019

SBL non-real estate	$ 84,946	$ 84,579
SBL commercial mortgage	233,220	218,110
SBL construction	48,823	45,310
Small business loans *	366,989	347,999
Direct lease financing	445,967	434,460
SBLOC / IBLOC **	1,156,433	1,024,420
Other specialty lending	2,711	3,055
Other consumer loans ***	4,023	4,554
	1,976,123	1,814,488
Unamortized loan fees and costs	9,632	9,757
Total loans, net of unamortized loan fees and costs	$ 1,985,755	$ 1,824,245


	March 31,	December 31,
	2020	2019

SBL loans, including deferred fees and costs of $4,083 and $4,215
for March 31, 2020 and December 31, 2019, respectively	$ 371,072	$ 352,214
SBL loans included in held-for-sale	223,987	220,358
Total small business loans	$ 595,059	$ 572,572

* The preceding table shows small business loans (SBL) and SBL held-for-sale at the dates indicated (in thousands). While the majority of SBL are comprised of SBA loans, SBL also includes $20,923,000 of non-SBA loans as of March 31, 2020 and $16,952,000 at December 31, 2019.

** Securities Backed Lines of Credit (SBLOC) are collateralized by marketable securities, while Insurance Backed Lines of Credit (IBLOC) are collateralized by the cash surrender value of insurance policies. At March 31, 2020 and December 31, 2019, respectively, IBLOC loans amounted to $228.8 million and $144.6 million.

*** Included in the table above under other consumer loans are demand deposit overdrafts reclassified as loan balances totaling $455,000 and $882,000 at March 31, 2020 and December 31, 2019, respectively. Estimated overdraft charge-offs and recoveries are reflected in the allowance for credit losses.

The following table provides information about loans individually evaluated for credit loss at March 31, 2020 and December 31, 2019 (in thousands):



	March 31, 2020
	Recorded investment	Unpaid principal balance	Related allowance	Average recorded investment	Interest income recognized
Without an allowance recorded
SBL non-real estate	$ 266	$ 2,693	$ -	$ 301	$ 3
SBL commercial mortgage	76	76	-	76	-
SBL construction	-	-	-	-	-
Direct lease financing	15,620	15,620	-	7,953	278
Consumer - home equity	585	585	-	537	3
With an allowance recorded
SBL non-real estate	3,731	3,731	(2,805)	3,767	20
SBL commercial mortgage	971	971	(136)	971	-
SBL construction	711	711	(25)	711	-
Direct lease financing	-	-	-	-	-
Consumer - home equity	-	-	-	60	-
Total
SBL non-real estate	3,997	6,424	(2,805)	4,068	23
SBL commercial mortgage	1,047	1,047	(136)	1,047	-
SBL construction	711	711	(25)	711	-
Direct lease financing	15,620	15,620	-	7,953	278
Consumer - home equity	585	585	-	597	3
	$ 21,960	$ 24,387	$ (2,966)	$ 14,376	$ 304



	December 31, 2019
	Recorded investment	Unpaid principal balance	Related allowance	Average recorded investment	Interest income recognized
Without an allowance recorded
SBL non-real estate	$ 335	$ 2,717	$ -	$ 277	$ 5
SBL commercial mortgage	76	76	-	15	-
SBL construction	-	-	-	284	-
Direct lease financing	286	286	-	362	11
Consumer - home equity	489	489	-	1,161	9
With an allowance recorded
SBL non-real estate	3,804	4,371	(2,961)	3,925	30
SBL commercial mortgage	971	971	(136)	561	-
SBL construction	711	711	(36)	284	-
Direct lease financing	-	-	-	244	-
Consumer - home equity	121	121	(9)	344	-
Total
SBL non-real estate	4,139	7,088	(2,961)	4,202	35
SBL commercial mortgage	1,047	1,047	(136)	576	-
SBL construction	711	711	(36)	568	-
Direct lease financing	286	286	-	606	11
Consumer - home equity	610	610	(9)	1,505	9
	$ 6,793	$ 9,742	$ (3,142)	$ 7,457	$ 55

The following table summarizes non-accrual loans with and without allowance for credit losses as of the periods indicated (in thousands):


	March 31, 2020			December 31, 2019
	Non-accrual loans with a related ACL *	Non-accrual loans without a related ACL *	Total non-accrual loans	Total non-accrual loans
SBL non-real estate	$ 3,354	$ 211	$ 3,565	$ 3,693
SBL commercial mortgage	971	76	1,047	1,047
SBL construction	711	-	711	711
Consumer	-	322	322	345
	$ 5,036	$ 609	$ 5,645	$ 5,796

* Allowance for credit losses

The following tables summarize the Company’s non-accrual loans, loans past due 90 days and still accruing and other real estate owned for the periods indicated (the Company had no non-accrual leases at March 31, 2020 or December 31, 2019) (in thousands):



	March 31,	December 31,
	2020	2019

Non-accrual loans
SBL non-real estate	$ 3,565	$ 3,693
SBL commercial mortgage	1,047	1,047
SBL construction	711	711
Consumer	322	345
Total non-accrual loans	5,645	5,796

Loans past due 90 days or more and still accruing	2,245	3,264
Total non-performing loans	7,890	9,060
Other real estate owned	-	-
Total non-performing assets	$ 7,890	$ 9,060

Interest which would have been earned on loans classified as non-accrual for the three months ended March 31, 2020 and 2019, was $103,000 and $127,000, respectively. No income on non-accrual loans was recognized during the three months ended March 31, 2020.

In the three months ended March 31, 2020 a total of $134,000 was reversed from interest income, which represented interest accrued on loans placed into non-accrual status during that period.

The Company’s loans that were modified as of March 31, 2020 and December 31, 2019 and considered troubled debt restructurings are as follows (dollars in thousands):



	March 31, 2020			December 31, 2019
	Number	Pre-modification recorded investment	Post-modification recorded investment	Number	Pre-modification recorded investment	Post-modification recorded investment
SBL non-real estate	8	$ 1,296	$ 1,296	8	$ 1,309	$ 1,309
Direct lease financing	2	15,620	15,620	1	286	286
Consumer	2	484	484	2	489	489
Total	12	$ 17,400	$ 17,400	11	$ 2,084	$ 2,084

The balances below provide information as to how the loans were modified as troubled debt restructuring loans as of March 31, 2020 and December 31, 2019 (in thousands):



	March 31, 2020			December 31, 2019
	Adjusted interest rate	Extended maturity	Combined rate and maturity	Adjusted interest rate	Extended maturity	Combined rate and maturity
SBL non-real estate	$ -	$ 42	$ 1,254	$ -	$ 51	$ 1,258
Direct lease financing	-	286	15,333	-	286	-
Consumer	-	-	485	-	-	489
Total	$ -	$ 328	$ 17,072	$ -	$ 337	$ 1,747

As of March 31, 2020, the Company had no troubled debt restructured loans that had been restructured within the last 12 months that have subsequently defaulted.

The Company had no commitments to extend additional credit to loans classified as troubled debt restructurings as of March 31, 2020.

When loans are classified as troubled debt restructurings, their collateral is valued and a specific reserve is established if the collateral valuation, less deposition costs, is lower than the recorded value of the loan. As of March 31, 2020, there were 12 troubled debt restructured loans with a balance of $17.4 million which had specific reserves of $1.0 million. Approximately $1.0 million of these reserves related to the non-guaranteed portion of SBA loans for start-up businesses with the balance attributable to direct lease financing.

Effective in the first quarter of 2020 current expected credit loss accounting replaced the prior incurred loss model that recognized losses when it became probable that a credit loss would be incurred, with a new requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the allowance when they are deemed uncollectible. Loans are deemed uncollectible based on individual facts and circumstances including the quality of repayment sources, the length of collection efforts and the probability and timing of recoveries . During the first quarter of 2020, upon adoption of the guidance, the allowance for credit losses was increased by $2.6 million. Additionally, $569,000 was established as an allowance for off-balance sheet credit losses (for unfunded loan commitments) and recorded in other liabilities. These amounts did not impact the Consolidated Statement of Operations, as the guidance required these cumulative differences between the two accounting conventions to flow through retained earnings, net of their income tax benefit. The following table shows the effect of the adoption of CECL as of January 1, 2020 and the March 31, 2020 allowance for credit loss (in thousands).


	December 31, 2019		January 1, 2020		March 31, 2020
	Incurred loss method		CECL (day 1 adoption)		CECL
	Amount	% of Segment	Amount	% of Segment	Amount	% of Segment
Allowance for credit losses on loans and leases
SBL non real estate	$ 4,914	8.33%	$ 4,766	8.08%	$ 4,942	7.98%
SBL commercial mortgage	1,458	0.71%	2,009	0.98%	2,807	1.28%
SBL construction	432	0.95%	571	1.26%	795	1.63%
Direct lease financing	2,426	0.56%	4,788	1.10%	5,558	1.25%
SBLOC	440	0.05%	440	0.05%	462	0.05%
IBLOC	113	0.08%	72	0.05%	114	0.05%
Other specialty lending (1)	97	0.39%	170	0.40%	157	0.40%
Consumer - other	40	0.88%	58	1.27%	48	1.19%
Unallocated	318		-		-
	$ 10,238	0.56%	$ 12,874	0.71%	$ 14,883	0.75%

Liabilities:
Allowance for credit losses on off-balance sheet credit	-		569		786
Total allowance for credit losses	$ 10,238		$ 13,443		$ 15,669

(1) Included in other specialty lending are $36.4 million of SBA loans purchased for CRA purposes. These loans are classified as SBL loans in our loan tables.

Management estimates the allowance using relevant available internal and external historical loan performance information, current economic conditions and reasonable and supportable forecasts. Historical credit loss experience provides the initial basis for the estimation of expected credit losses over the lifetime of loans. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, credit quality, or term as well as for changes in economic conditions.

The methodology used in the estimation of the allowance, which is performed at least quarterly, is designed to be responsive to changes in portfolio credit quality and the impact of current and future economic conditions on loan performance. The review of the appropriateness of the allowance is performed by the Chief Credit Officer and presented to the audit committee for their review. The allowance for credit losses is comprised of reserves, based on loan pools with similar risk characteristics based on a lifetime loss-rate model. Loans that do not share risk characteristics are evaluated on an individual basis. If foreclosure is believed to be probable or repayment is expected from the sale of the collateral. Expected credit losses are based on the difference between loan principal and the estimated fair value of the collateral, adjusted for disposition costs as appropriate.

For purposes of determining the pool-basis reserve, the loans not assigned an individual reserve are segregated by product type, to recognize differing risk profiles within portfolio segments. A historical loss rate is calculated for each product type based upon historical net charge-offs for that product. The loss rate is projected over the estimated remaining loan lives to determine estimated lifetime losses. Additionally we add to the allowance a component for each pool based upon qualitative factors such as the Company’s current loan performance statistics as determined by pool. A similar process is employed to calculate a reserve assigned to off-balance sheet commitments, which are comprised of unfunded loan commitments and letters of credit. That reserve is recorded in other liabilities. The qualitative factors are intended to address factors that may not be reflected in historical loss rates and otherwise unaccounted for in the quantitative process. For periods beyond which we are able to develop reasonable and supportable forecasts, our model reverts to the historical loss rate. Even though portions of the allowance may be allocated to specific loans, the entire allowance is available for any credit that, in management’s judgment, should be charged off.

The Company ranks its qualitative factors in five levels: minimal risk, low, moderate, moderate-high and high. When the Company adopted CECL as of January 1, 2020, the management assumption was that some degree of economic slowdown should be considered over the next eighteen months. That belief reflected the length of the current economic expansion and the relatively high level of unsustainable deficit spending. Accordingly, certain of the Company’s qualitative factors were set at moderate as of January 1, 2020. Based on the uncertainty as to how the Coronavirus would impact the Company’s loan pools, the Company increased other economic qualitative factors to moderate at March 31, 2020. These changes increased the first quarter 2020 provision for credit losses by approximately $849,000.

Below are the portfolio segments used to pool loans with similar risk characteristics and align with our methodology for measuring expected credit losses. A summary of our primary portfolio pools is as follows:


As of March 31, 2020	2020	2019	2018	2017	2016	Prior	Revolving loans at amortized cost	Total
SBL non real estate
Non-rated	$ 1,936	$ -	$ -	$ -	$ -	$ -	$ -	$ 1,936
Pass (I-IV)	2,202	9,430	12,922	7,262	8,134	12,657	-	52,607
Special mention	-	-	1,193	44	541	985	-	2,763
Substandard	-	49	-	761	2,053	1,845	-	4,708
Total SBL non-real estate	4,138	9,479	14,115	8,067	10,728	15,487	-	62,014

SBL commercial mortgage
Non-rated	2,529	-	-	-	-	-	-	2,529
Pass (I-IV)	8,313	58,092	40,063	35,014	29,028	38,929	-	209,439
Special mention	-	-	-	-	-	264	-	264
Substandard	-	-	-	-	76	7,441	-	7,517
Total SBL commercial mortgage	10,842	58,092	40,063	35,014	29,104	46,634	-	219,749

SBL construction
Non-rated	-	-	-	-	-	-	-	-
Pass (I-IV)	-	13,148	23,603	8,425	2,936	-	-	48,112
Special mention	-	-	-	-	-	-	-	-
Substandard	-	-	-	-	711	-	-	711
Total SBL construction	-	13,148	23,603	8,425	3,647	-	-	48,823

Direct lease financing
Non-rated	15,021	1,549	556	-	-	-	-	17,126
Pass (I-IV)	60,757	161,908	92,587	56,292	26,452	8,748	-	406,744
Special mention	-	-	-	-	-	-	-	-
Substandard	-	15,641	2,664	1,848	1,680	264	-	22,097
Total direct lease financing	75,778	179,098	95,807	58,140	28,132	9,012	-	445,967

SBLOC
Non-rated	-	-	-	-	-	-	14,819	14,819
Pass (I-IV)	-	-	-	-	-	-	912,794	912,794
Special mention	-	-	-	-	-	-	-	-
Substandard	-	-	-	-	-	-	-	-
Total SBLOC	-	-	-	-	-	-	927,613	927,613

IBLOC
Non-rated	-	-	-	-	-	-	55,921	55,921
Pass (I-IV)	-	-	-	-	-	-	172,899	172,899
Special mention	-	-	-	-	-	-	-	-
Substandard	-	-	-	-	-	-	-	-
Total IBLOC	-	-	-	-	-	-	228,820	228,820

Other specialty
Non-rated	-	194	283	649	-	-	-	1,126
Pass (I-IV)	-	3,559	6,824	6,720	7,424	13,462	-	37,989
Special mention	-	-	-	-	-	-	-	-
Substandard	-	-	-	-	-	-	-	-
Total other specialty	-	3,753	7,107	7,369	7,424	13,462	-	39,115

Consumer
Non-rated	-	-	-	17	-	229	1,970	2,216
Pass (I-IV)	-	-	-	-	-	-	1,485	1,485
Special mention	-	-	-	-	-	-	-	-
Substandard	-	-	-	-	-	-	322	322
Total consumer	-	-	-	17	-	229	3,777	4,023
Total	$ 90,758	$ 263,570	$ 180,695	$ 117,032	$ 79,035	$ 84,824	$ 1,160,210	$ 1,976,124

SBL. Substantially all of our SBL or small business loans consist of SBA loans. We participate in two loan programs established by the SBA: the 7(a) Loan Guarantee Program and the 504 Fixed Asset Financing Program. The 7(a) Loan Guarantee Program is designed to help small business borrowers start or expand their businesses by providing partial guarantees of loans made by banks and non-bank lending institutions for specific business purposes, including long or short term working capital; funds for the purchase of equipment, machinery, supplies and materials; funds for the purchase, construction or renovation of real estate; and funds to acquire, operate or expand an existing business or refinance existing debt, all under conditions established by the SBA. The 504 Fixed Asset Financing Program includes the financing of real estate and commercial mortgages. We segment the SBL portfolio into three pools: non real estate, commercial mortgage and construction to capture the risk characteristics of each pool. The qualitive factors for SBL loans focus on pool loan performance, underlying collateral for collateral dependent loans and changes in economic conditions. Additionally, the construction segment adds a qualitative factor for general construction risk.

Direct lease financing. We provide lease financing for commercial and government vehicle fleets and, to a lesser extent, provide lease financing for other equipment. Our leases are either open-end or closed-end. An open-end lease is one in which, at the end of the lease term, the lessee must pay us the difference between the amount at which we sell the leased asset and the stated termination value. Termination value is a contractual value agreed to by the parties at the inception of a lease as to the value of the leased asset at the end of the lease term. A closed-end lease is one for which no such payment is due on lease termination. In a closed-end lease, the risk that the amount received on a sale of the leased asset will be less than the residual value is assumed by us, as lessor. The qualitative factors for all direct lease financing focus on underlying collateral for collateral dependent loans, portfolio loan performance, concentrations and changes in economic conditions.

SBLOC. Our SBLOC loans to individuals, trusts and entities are secured by a pledge of marketable securities maintained in one or more accounts with respect to which we obtain a securities account control agreement. The securities pledged may be either debt or equity securities or a combination thereof, but all such securities must be listed for trading on a national securities exchange or automated inter-dealer quotation system. SBLOCs are typically payable on demand. Maximum SBLOC line amounts are calculated by applying a standard ‘advance rate’ calculation against the eligible security type depending on asset class: typically up to 50% for equity securities and mutual fund securities and 80% for investment grade (Standard & Poor’s rating of BBB- or higher, or Moody’s rating of Baa3 or higher) municipal or corporate debt securities. Substantially all SBLOCs have full recourse to the borrower. The underlying securities collateral for our SBLOC loans are monitored on a daily basis to confirm the composition of the client portfolio and its daily market value. The primary qualitative factor in the SBLOC analysis is the ratio of loans outstanding to market value. This factor has been maintained at low levels, as no losses were incurred during the first quarter of 2020, notwithstanding historic declines in equity markets. Additionally, the advance rates noted above were set to anticipate even higher potential market declines in the future.

IBLOC. Our IBLOC loans are collateralized by the cash surrender value of insurance policies. Should a loan default, the primary risks for IBLOCs are if the insurance company issuing the policy were to become insolvent, or if that company would fail to recognize the Bank’s assignment of policy proceeds. To mitigate these risks, insurance company ratings are periodically evaluated for compliance with Bank standards. Additionally, the Bank utilizes assignments of cash surrender value which legal counsel has concluded are enforceable. The qualitative factors for IBLOC primarily focus on the concentration risk with insurance companies, should they err in their procedures.

Other Specialty Lending and consumer loans. Our other specialty lending loans and consumer loans are legacy loans related to our discontinued operation. The loans primarily are consumer loans and home equity loans. The qualitative factors for all other specialty lending and consumer loans focus on changes in the underlying collateral for collateral dependent loans, portfolio loan performance, concentrations and changes in economic conditions.

Expected credit losses are estimated over the estimated remaining lives of loans. The estimate excludes possible extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation that a loan will be restructured, or the extension or renewal options are included in the borrower contract and are not unconditionally cancellable by us.

We do not measure an allowance for credit losses on accrued interest receivable balances because these balances are written off in a timely manner as a reduction to interest income when loans are placed on non-accrual status.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted through the provision for credit losses. The estimate considers the likelihood that funding will occur over the estimated life of the commitment. The amount of the allowance in the liability account as of March 31, 2020 was $786,000.

A detail of the changes in the allowance for credit losses by loan category and summary of loans evaluated individually and collectively for impairment is as follows (in thousands):



	March 31, 2020
	SBL non-real estate	SBL commercial mortgage	SBL construction	Direct lease financing	SBLOC / IBLOC	Other specialty lending	Other consumer loans	Unallocated	Total
Beginning 12/31/2019	$ 4,985	$ 1,472	$ 432	$ 2,426	$ 553	$ 12	$ 40	$ 318	$ 10,238
1/1 CECL adjustment	(220)	537	139	2,362	(41)	158	20	(318)	2,637
Charge-offs	(265)	-	-	(1,193)	-	-	-	-	(1,458)
Recoveries	19	-	-	84	-	-	-	-	103
Provision (credit)	422	798	224	1,879	64	(13)	(11)	-	3,363
Ending balance	$ 4,941	$ 2,807	$ 795	$ 5,558	$ 576	$ 157	$ 49	$ -	$ 14,883

Ending balance: Individually evaluated for expected credit loss	$ 2,805	$ 136	$ 26	$ -	$ -	$ -	$ -	$ -	$ 2,967

Ending balance: Collectively evaluated for expected credit loss	$ 2,136	$ 2,671	$ 769	$ 5,558	$ 576	$ 157	$ 49	$ -	$ 11,916

Loans:
Ending balance	$ 84,946	$ 233,220	$ 48,823	$ 445,967	$ 1,156,433	$ 2,711	$ 4,023	$ 9,632	$ 1,985,755

Ending balance: Individually evaluated for expected credit loss	$ 3,997	$ 1,047	$ 711	$ 15,620	$ -	$ -	$ 585	$ -	$ 21,960

Ending balance: Collectively evaluated for expected credit loss	$ 80,949	$ 232,173	$ 48,112	$ 430,347	$ 1,156,433	$ 2,711	$ 3,438	$ 9,632	$ 1,963,795



	December 31, 2019
	SBL non-real estate	SBL commercial mortgage	SBL construction	Direct lease financing	SBLOC / IBLOC	Other specialty lending	Other consumer loans	Unallocated	Total
Beginning 1/1/2019	$ 4,636	$ 941	$ 250	$ 2,025	$ 393	$ 60	$ 108	$ 240	$ 8,653
Charge-offs	(1,362)	-	-	(528)	-	-	(1,103)	-	(2,993)
Recoveries	125	-	-	51	-	-	2	-	178
Provision (credit)	1,586	531	182	878	160	(48)	1,033	78	4,400
Ending balance	$ 4,985	$ 1,472	$ 432	$ 2,426	$ 553	$ 12	$ 40	$ 318	$ 10,238

Ending balance: Individually evaluated for impairment	$ 2,961	$ 136	$ 36	$ -	$ -	$ -	$ 9	$ -	$ 3,142

Ending balance: Collectively evaluated for impairment	$ 2,024	$ 1,336	$ 396	$ 2,426	$ 553	$ 12	$ 31	$ 318	$ 7,096

Loans:
Ending balance	$ 84,579	$ 218,110	$ 45,310	$ 434,460	$ 1,024,420	$ 3,055	$ 4,554	$ 9,757	$ 1,824,245

Ending balance: Individually evaluated for impairment	$ 4,139	$ 1,047	$ 711	$ 286	$ -	$ -	$ 610	$ -	$ 6,793

Ending balance: Collectively evaluated for impairment	$ 80,440	$ 217,063	$ 44,599	$ 434,174	$ 1,024,420	$ 3,055	$ 3,944	$ 9,757	$ 1,817,452



	March 31, 2019
	SBL non-real estate	SBL commercial mortgage	SBL construction	Direct lease financing	SBLOC	Other specialty lending	Other consumer loans	Unallocated	Total
Beginning 1/1/2019	$ 4,636	$ 941	$ 250	$ 2,025	$ 393	$ 60	$ 108	$ 240	$ 8,653
Charge-offs	(322)	-	-	(106)	-	-	-	-	(428)
Recoveries	17	-	-	12	-	-	-	-	29
Provision (credit)	846	538	(15)	362	3	22	(29)	(27)	1,700
Ending balance	$ 5,177	$ 1,479	$ 235	$ 2,293	$ 396	$ 82	$ 79	$ 213	$ 9,954

Ending balance: Individually evaluated for impairment	$ 3,324	$ 71	$ -	$ 151	$ -	$ -	$ 15	$ -	$ 3,561

Ending balance: Collectively evaluated for impairment	$ 1,853	$ 1,408	$ 235	$ 2,142	$ 396	$ 82	$ 64	$ 213	$ 6,393

Loans:
Ending balance	$ 76,112	$ 179,397	$ 23,979	$ 384,930	$ 791,986	$ 34,425	$ 9,301	$ 10,265	$ 1,510,395

Ending balance: Individually evaluated for impairment	$ 4,614	$ 458	$ 711	$ 812	$ -	$ -	$ 1,732	$ -	$ 8,327

Ending balance: Collectively evaluated for impairment	$ 71,498	$ 178,939	$ 23,268	$ 384,118	$ 791,986	$ 34,425	$ 7,569	$ 10,265	$ 1,502,068

The Company did not have loans acquired with deteriorated credit quality at either March 31, 2020 or December 31, 2019.

A detail of the Company’s delinquent loans by loan category is as follows (in thousands):



	March 31, 2020
	30-59 Days	60-89 Days	90+ Days		Total		Total
	past due	past due	still accruing	Non-accrual	past due	Current	loans
SBL non-real estate	$ 185	$ 406	$ -	$ 3,565	$ 4,156	$ 80,790	$ 84,946
SBL commercial mortgage	-	-	-	1,047	1,047	232,173	233,220
SBL construction	-	-	-	711	711	48,112	48,823
Direct lease financing	9,079	1,459	2,245	-	12,783	433,184	445,967
SBLOC / IBLOC	10,835	-	-	-	10,835	1,145,598	1,156,433
Other specialty lending	-	-	-	-	-	2,711	2,711
Consumer - other	17	-	-	-	17	684	701
Consumer - home equity	-	-	-	322	322	3,000	3,322
Unamortized loan fees and costs	-	-	-	-	-	9,632	9,632
	$ 20,116	$ 1,865	$ 2,245	$ 5,645	$ 29,871	$ 1,955,884	$ 1,985,755



	December 31, 2019
	30-59 Days	60-89 Days	90+ Days		Total		Total
	past due	past due	still accruing	Non-accrual	past due	Current	loans
SBL non-real estate	$ 36	$ 125	$ -	$ 3,693	$ 3,854	$ 80,725	$ 84,579
SBL commercial mortgage	-	1,983	-	1,047	3,030	215,080	218,110
SBL construction	-	-	-	711	711	44,599	45,310
Direct lease financing	2,008	2,692	3,264	-	7,964	426,496	434,460
SBLOC / IBLOC	290	75	-	-	365	1,024,055	1,024,420
Other specialty lending	-	-	-	-	-	3,055	3,055
Consumer - other	-	-	-	-	-	1,137	1,137
Consumer - home equity	-	-	-	345	345	3,072	3,417
Unamortized loan fees and costs	-	-	-	-	-	9,757	9,757
	$ 2,334	$ 4,875	$ 3,264	$ 5,796	$ 16,269	$ 1,807,976	$ 1,824,245

The Company evaluates its loans under an internal loan risk rating system as a means of identifying problem loans. The special mention classification indicates weaknesses that may, if not cured, threaten the borrower’s future repayment ability. A substandard classification reflects an existing weakness indicating the possible inadequacy of net worth and other repayment sources. These classifications are used both by regulators and peers as they have been correlated with an increased probability of credit losses. The following table provides information by credit risk rating indicator for each segment of the loan portfolio, excluding loans held-for-sale, at December 31, 2019 (in thousands):



	December 31, 2019
	Pass	Special mention	Substandard	Doubtful	Loss	Unrated subject to review *	Unrated not subject to review *	Total loans
SBL non-real estate	$ 76,108	$ 3,045	$ 4,430	$ -	$ -	$ -	$ 996	$ 84,579
SBL commercial mortgage	208,809	2,249	5,577	-	-	-	1,475	218,110
SBL construction	44,599	-	711	-	-	-	-	45,310
Direct lease financing	420,289	-	8,792	-	-	-	5,379	434,460
SBLOC / IBLOC	942,858	-	-	-	-	-	81,562	1,024,420
Other specialty lending	3,055	-	-	-	-	-	-	3,055
Consumer	2,545	-	345	-	-	-	1,664	4,554
Unamortized loan fees and costs	-	-	-	-	-	-	9,757	9,757
	$ 1,698,263	$ 5,294	$ 19,855	$ -	$ -	$ -	$ 100,833	$ 1,824,245

* For information on targeted loan review thresholds see “Allowance for Loan Losses” in the 2019 Form 10-K Report in the loans footnote and in this Form 10-Q in the Management’s Discussion and Analysis of Financial Condition and Results of Operations.