Note 4 - Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

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

(4) Loans and Allowance for Credit Losses

Composition of loans by class as reported under ASC 326 follows:

(in thousands)	March 31, 2020		December 31, 2019
Commercial real estate - non-owner occupied	$	799,284	$	746,283
Commercial real estate - owner occupied		476,534		474,329
Total commercial real estate		1,275,818		1,220,612
Commercial and industrial - term		535,325		457,298
Commercial and industrial - lines of credit		348,543		381,502
Total commercial and industrial		883,868		838,800
Residential real estate - owner occupied		219,221		217,606
Residential real estate - non-owner occupied		134,734		134,995
Total residential real estate		353,955		352,601
Construction and land development		246,040		255,816
Home equity lines of credit		107,121		103,854
Consumer		44,939		47,467
Leases		15,476		16,003
Credits cards - commercial		10,149		9,863
Total loans (1)	$	2,937,366	$	2,845,016

(1) Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs

For comparative purposes, the composition of loans by class pre-ASC 326 adoption follows:

(in thousands)	December 31, 2019
Commercial and industrial	$	870,511
Construction and development, excluding undeveloped land(1)		213,822
Undeveloped land		46,360
Real estate mortgage:
Commercial investment		736,618
Owner occupied commercial		473,783
1-4 family residential		334,358
Home equity - first lien		48,620
Home equity - junior lien		73,477
Subtotal: Real estate mortgage		1,666,856
Consumer		47,467
Total loans(2)	$	2,845,016

(1) Consists of land acquired for development by the borrower, but for which no development has yet taken place.

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

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $7 million at both March 31, 2020 and December 31, 2019 and was included in other assets in the consolidated balance sheets.

Loans with carrying amounts of $1.7 billion and $1.6 billion at March 31, 2020 and December 31, 2019, respectively, were pledged to secure FHLB borrowing capacity.

Loans to directors and their related interests, including loans to companies for which directors are principal owners and executive officers, totaled $41 million and $43 million as of March 31, 2020 and December 31, 2019.

The following table summarizes loans acquired in Bancorp’s May 1, 2019 acquisition, as recasted:

	May 1, 2019
	Contractual		Non-accretable			Accretable			Acquisition-day
(in thousands)	receivable		amount			amount			fair value
Commercial and industrial	$	8,249	$	—		$	(23	)	$	8,226
Construction and land development		18,738		—			86			18,824
Real estate mortgage:
Commercial real estate		84,219		—			(456	)		83,763
Residential real estate		50,556		—			322			50,878
Home equity lines of credit		875		—			8			883
Subtotal: Real estate mortgage		135,650		—			(126	)		135,524
Consumer		1,528		—			(73	)		1,455
Total loans ASC 310-20		164,165		—			(136	)		164,029
Commercial and industrial		—		—			—			—
Construction and land development		—		—			—			—
Real estate mortgage:
Commercial real estate		1,351		(1,351	)		—			—
Residential real estate		228		(228	)		—			—
Home equity lines of credit		—		—			—			—
Subtotal: Real estate mortgage		1,579		(1,579	)		—			—
Consumer		—		—			—			—
Total loans ASC 310-30 purchased credit impaired loans		1,579		(1,579	)		—			—
Total loans	$	165,744	$	(1,579	)	$	(136	)	$	164,029

The Bank acquired PCI loans related to its 2019 and 2013 acquisitions. At acquisition date, these loans were accounted for under ASC 310-30. On January 1, 2020, Bancorp adopted ASC 326 using the prospective transition approach for loans purchased with PCD that were previously classified as PCI and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI loans met the criteria of PCD loans as of the adoption date. On January 1, 2020, non-accretable yield marks of $1.6 million related to formerly classified PCI loans were reclassed between the amortized cost basis of loans and corresponding ACL.

Bancorp’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications. The activity in the ACL related to loans follows (2020 is presented in accordance with ASC 326 and 2019 in accordance with ASC 310):

(in thousands)	Beginning		Impact of adopting ASC			Initial ACL on loans purchased with credit		Provision for								Ending
Three Months Ended March 31, 2020	Balance		ASC 326			deterioration		credit losses			Charge-offs			Recoveries		Balance
Commercial real estate - non-owner occupied	$	5,235	$	2,946		$	152	$	5,100		$	-		$	2	$	13,435
Commercial real estate - owner occupied		3,327		1,542			1,350		290			-			-		6,509
Total commercial real estate		8,562		4,488			1,502		5,390			-			2		19,944
Commercial and industrial - term		6,782		365			-		837			(3	)		9		7,990
Commercial and industrial - lines of credit		5,657		(1,528	)		-		(263	)		-			-		3,866
Total commercial and industrial		12,439		(1,163	)		-		574			(3	)		9		11,856
Residential real estate - owner occupied		1,527		1,087			99		(11	)		(10	)		10		2,702
Residential real estate - non-owner occupied		947		429			-		43			-			-		1,419
Total residential real estate		2,474		1,516			99		32			(10	)		10		4,121
Construction and land development		2,105		3,056			-		24			-			-		5,185
Home equity lines of credit		728		114			-		(219	)		-			-		623
Consumer		100		264			34		(138	)		(177	)		115		198
Leases		237		(4	)		-		(74	)		-			-		159
Credit cards - commercial		146		(50	)		-		(39	)		-			-		57
Total net loan (charge-offs) recoveries	$	26,791	$	8,221		$	1,635	$	5,550		$	(190	)	$	136	$	42,143

(in thousands)	Beginning		Provision for								Ending
Three Months Ended March 31, 2019	Balance		credit losses			Charge-offs			Recoveries		Balance
Real estate mortgage	$	10,681	$	1,300		$	-		$	20	$	12,001
Commercial and industrial		11,965		(302	)		(3	)		102		11,762
Construction and development		1,760		(79	)		-			203		1,884
Undeveloped land		752		(90	)		-			-		662
Consumer		376		(229	)		(96	)		104		155
	$	25,534	$	600		$	(99	)	$	429	$	26,464

The ACL increased $15.4 million, or 57% from December 31, 2019 to March 31, 2020. Effective January 1, 2020, Bancorp began accounting for credit losses under ASC 326, or CECL. The adoption of this standard increased the opening balance for the ACL by $8.2 million with the offset to retained earnings. Also, on January 1, 2020, non-accretable yield marks of $1.6 million related to formerly classified PCI loans were reclassed between the amortized cost basis of loans and corresponding ACL. In addition to the CECL adoption, the first quarter 2020 ACL was significantly impacted by a model forecast adjustment discussed in detail below, as well as changes in the loan mix and a nominal impact from net charge-offs.

Bancorp measures expected credit losses of financial assets on a collective (pool) basis, when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, Bancorp has measured its portfolio classes as follows:

Loan Portfolio Segment	ACL Methodology
Commercial real estate - non-owner occupied	Discounted cash flow
Commercial real estate - owner occupied	Discounted cash flow
Commercial and industrial - term	Static pool
Commercial and industrial - line of credit	Static pool
Residential real estate - owner occupied	Discounted cash flow
Residential real estate - non-owner occupied	Discounted cash flow
Construction and land development	Static pool
Home equity lines of credit	Static pool
Consumer	Static pool
Leases	Static pool
Credit cards - commercial	Static pool

For the above loan pools utilizing the DCF method, Bancorp utilized regression analysis of historical internal and peer data to identify a suitable loss driver to utilize when modeling lifetime probability of default and loss given default. The regression analysis was used to measure how the expected probability of default and loss given default would react to changes in forecasted levels of the loss driver. Based on this, management determined that the forecasted Seasonally Adjusted National Civilian Unemployment Rate best correlated to historical losses and would be utilized as its primary loss driver to be consistently applied across all applicable loan segments over a reasonable and supportable forecast period under its CECL model.

On January 1, 2020, management determined that four quarters represented a reasonable and supportable forecast period with reversion back to a historical loss rate over eight quarters on a straight-line basis. However, based on the uncertain magnitude and duration of the economic crisis caused by COVID-19, at March 31, 2020, Bancorp elected to forecast for only one quarter versus the four quarters used as of January 1, 2020 and modified its forecast to reflect a significant increase in national unemployment (utilizing the highest unemployment rate in the Company’s observed history) reverting back to the long-term average in the third quarter of 2020, with the loss driver remaining significantly worse compared to recent trends. The impact of the increased unemployment forecast was muted by a decline in qualitative factors attributed to the massive federal stimulus programs enacted at the end of the first quarter.

The static pool methodology is utilized for the loan portfolio segments that typically have shorter durations. For each of these loan segments, Bancorp applies an expected loss ratio based on historical losses adjusted as appropriate for qualitative factors. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions.

The following table presents the amortized cost basis and ACL allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses:

(in thousands)			Accounts Receivable /						ACL
March 31, 2020	Real Estate		Equipment		Other		Total		Allocation
Commercial real estate - non-owner occupied	$	718	$	-	$	-	$	718	$	201
Commercial real estate - owner occupied		3,034		-		-		3,034		1,351
Total commercial real estate		3,752		-		-		3,752		1,552
Commercial and industrial - term		-		-		20		20		20
Commercial and industrial - lines of credit		-		-		-		-		-
Total commercial and industrial		-		-		20		20		20
Residential real estate - owner occupied		420		-		-		420		98
Residential real estate - non-owner occupied		63		-		-		63		-
Total residential real estate		483		-		-		483		98
Construction and land development		-		-		-		-		-
Home equity lines of credit		-		-		-		-		-
Consumer		-		-		32		32		32
Leases		-		-		-		-		-
Credit cards - commercial		-		-		-		-		-
Total collateral dependent loans	$	4,235	$	-	$	52	$	4,287	$	1,702

There have been no significant changes to the types of collateral securing Bancorp’s collateral dependent loans.

The following table presents loans individually and collectively evaluated for impairment and the respective ACL allocation as of December 31, 2019, as determined in accordance with ASC 310 prior to the adoption of ASC 326:

	Loans								ACL
(in thousands)	Loans individually evaluated for		Loans collectively evaluated for		Loans acquired with deteriorated				Loans individually evaluated for		Loans collectively evaluated for		Loans acquired with deteriorated
December 31, 2019	impairment		impairment		credit quality		Total loans		impairment		impairment		credit quality		Total ACL
Commercial and industrial	$	8,223	$	862,288	$	—	$	870,511	$	1,150	$	11,672	$	—	$	12,822
Construction and development, excluding undeveloped land		—		213,822		—		213,822		—		1,319		—		1,319
Undeveloped land		—		46,360		—		46,360		—		786		—		786
Real estate mortgage		3,307		1,663,549		—		1,666,856		13		11,751		—		11,764
Consumer		—		47,467		—		47,467		—		100		—		100
Total	$	11,530	$	2,833,486	$	—	$	2,845,016	$	1,163	$	25,628	$	—	$	26,791

The following table presents information pertaining to impaired loans as of December 31, 2019 and the three months ended March 31, 2019, as determined in accordance with ASC 310:

	As of						Three months ended
	December 31, 2019						March 31, 2019
			Unpaid				Average		Interest
	Recorded		principal		Related		recorded		income
(in thousands)	investment		balance		ACL		investment		recognized
Impaired loans with no related ACL
Commercial and industrial	$	174	$	174	$	—	$	192	$	—
Construction and development, excluding undeveloped land		—		—		—		159		—
Undeveloped land		—		—		—		237		—
Real estate mortgage
Commercial investment		741		741		—		227		—
Owner occupied commercial		2,278		2,736		—		1,026		—
1-4 family residential		124		124		—		801		—
Home equity - junior lien		151		151		—		299		—
Subtotal: Real estate mortgage		3,294		3,752		—		2,353		—
Subtotal	$	3,468	$	3,926	$	-	$	2,941	$	-
Impaired loans with an ACL
Commercial and industrial	$	8,049	$	8,049	$	1,150	$	27	$	1
Real estate mortgage
1-4 family residential		13		13		13		14		—
Subtotal: Real estate mortgage		13		13		13		14		—
Subtotal	$	8,062	$	8,062	$	1,163	$	41	$	1
Total impaired loans:
Commercial and industrial	$	8,223	$	8,223	$	1,150	$	219	$	1
Construction and development, excluding undeveloped land		—		—		—		159		—
Undeveloped land		—		—		—		237		—
Real estate mortgage
Commercial investment		741		741		—		227		—
Owner occupied commercial		2,278		2,736		—		1,026		—
1-4 family residential		137		137		13		815		—
Home equity - first lien		—		—		—		—		—
Home equity - junior lien		151		151		—		299		—
Subtotal: Real estate mortgage		3,307		3,765		13		2,367		—
Total	$	11,530	$	11,988	$	1,163	$	2,982	$	1

Differences between recorded investment amounts and unpaid principal balance amounts less related allowance are due to partial charge-offs which have occurred over the lives of certain loans.

The following tables present the aging of contractually past due loans by portfolio class (2020 is presented in accordance with ASC 326 and 2019 in accordance with ASC 310):

							90 or more
							Days Past Due
(in thousands)			30-59 days		60-89 days		(includes all		Total		Total
March 31, 2020	Current		Past Due		Past Due		non-accrual)		Past Due		Loans
Commercial real estate - non-owner occupied	$	797,923	$	50	$	245	$	1,066	$	1,361	$	799,284
Commercial real estate - owner occupied		472,700		627		—		3,207		3,834		476,534
Total commercial real estate		1,270,623		677		245		4,273		5,195		1,275,818
Commercial and industrial - term		532,418		2,704		—		203		2,907		535,325
Commercial and industrial - line of credit		346,598		1,131		24		790		1,945		348,543
Total commercial and industrial		879,016		3,835		24		993		4,852		883,868
Residential real estate - owner occupied		217,300		1,352		54		515		1,921		219,221
Residential real estate - non-owner occupied		134,225		342		—		167		509		134,734
Total residential real estate		351,525		1,694		54		682		2,430		353,955
Construction and land development		245,837		154		—		49		203		246,040
Home equity lines of credit		106,950		171		—		—		171		107,121
Consumer		44,829		86		24		—		110		44,939
Leases		15,476		—		—		—		—		15,476
Credit cards - commercial		10,149		—		—		—		—		10,149
Total	$	2,924,405	$	6,617	$	347	$	5,997	$	12,961	$	2,937,366

							90 or more
							Days Past Due
(in thousands)			30-59 days		60-89 days		(includes all		Total		Total
December 31, 2019	Current		Past Due		Past Due		non-accrual)		Past Due		Loans
Commercial and industrial	$	861,860	$	253	$	194	$	8,204	$	8,651	$	870,511
Construction and development, excluding undeveloped land		213,766		6		50		—		56		213,822
Undeveloped land		46,360		—		—		—		—		46,360
Real estate mortgage:
Commercial investment		735,387		94		—		1,137		1,231		736,618
Owner occupied commercial		470,951		467		86		2,279		2,832		473,783
1-4 family residential		332,718		1,368		33		239		1,640		334,358
Home equity - first lien		48,441		179		—		—		179		48,620
Home equity - junior lien		72,995		196		100		186		482		73,477
Subtotal: Real estate mortgage		1,660,492		2,304		219		3,841		6,364		1,666,856
Consumer		47,379		84		4		—		88		47,467
Total	$	2,829,857	$	2,647	$	467	$	12,045	$	15,159	$	2,845,016

The following table presents the amortized cost basis of non-performing loans and the amortized cost basis of loans on non-accrual status for which there was no related ACL losses of March 31, 2020:

					Past Due 90-Days-
(In thousands)	Non-accrual		Total		or-More and Still
March 31, 2020	with no ACL		Non-accrual		Accruing Interest
Commercial real estate - non-owner occupied	$	130	$	718	$	348
Commercial real estate - owner occupied		1,683		3,034		174
Total commercial real estate		1,813		3,752		522
Commercial and industrial - term		—		—		203
Commercial and industrial - lines of credit		—		—		790
Total commercial and industrial		—		—		993
Residential real estate - owner occupied		322		420		95
Residential real estate - non-owner occupied		63		63		103
Total residential real estate		385		483		198
Construction and land development		—		—		49
Home equity lines of credit		—		—		—
Consumer		—		—		—
Leases		—		—		—
Credit cards - commercial		—		—		—
Total	$	2,198	$	4,235	$	1,762

For the three months ended March 31, 2020 and 2019, the amount of accrued interest income previously recorded as revenue and subsequently reversed due to the change in accrual status was immaterial.

For the three months ended March 31, 2020 and 2019, no interest income was recognized on loans on non-accrual status.

The following table presents the recorded investment in non-performing loan by loan portfolio class as of December 31, 2019:

December 31, 2019 (in thousands)	Non-accrual		Past Due 90-Days-or- More and Still Accruing Interest
Commercial and industrial	$	8,202	$	—
Construction and development, excluding undeveloped land		—		—
Undeveloped land		—		—
Real estate mortgage:
Commercial investment		740		396
Owner occupied commercial		2,278		—
1-4 family residential		123		104
Home equity - first lien		—		—
Home equity - junior lien		151		35
Subtotal: Real estate mortgage		3,292		535
Consumer		—		—
Total	$	11,494	$	535

Loan Risk Ratings

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

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

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

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

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

Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. As of March 31, 2020 the risk rating of loans based on year of origination is as follows:

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Commercial real estate - non-owner occupied:
Risk rating
Pass	$	102,344	$	188,733	$	138,493	$	121,130	$	110,666	$	101,335	$	15,055	$	8,073	$	785,829
OAEM		-		2,368		1,153		-		1,954		485		500		-		6,460
Substandard		4,200		2,076		-		-		-		-		-		-		6,276
Substandard non-performing		-		-		-		571		-		148		-		-		719
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial real estate non-owner occupied	$	106,544	$	193,177	$	139,646	$	121,701	$	112,620	$	101,968	$	15,555	$	8,073	$	799,284
Commercial real estate - owner occupied:
Risk rating
Pass	$	44,581	$	139,414	$	100,913	$	61,732	$	46,766	$	61,445	$	7,946	$	351	$	463,148
OAEM		-		66		121		827		258		76		-		-		1,348
Substandard		-		7,031		1,377		107		131		366		-		-		9,012
Substandard non-performing		351		-		20		501		-		2,154		-		-		3,026
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial real estate owner occupied	$	44,932	$	146,511	$	102,431	$	63,167	$	47,155	$	64,041	$	7,946	$	351	$	476,534

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Commercial and industrial - term:
Risk rating
Pass	$	86,952	$	166,849	$	134,989	$	57,583	$	45,755	$	25,565	$	-	$	8,728	$	526,421
OAEM		-		474		505		169		223		19		-		-		1,390
Substandard		280		4,271		2,641		44		199		79		-		-		7,514
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial and industrial - term	$	87,232	$	171,594	$	138,135	$	57,796	$	46,177	$	25,663	$	-	$	8,728	$	535,325
Commercial and industrial - lines of credit
Risk rating
Pass	$	5,658	$	31,000	$	4,340	$	5,801	$	364	$	707	$	286,326	$	-	$	334,196
OAEM		-		-		-		-		-		-		2,097		-		2,097
Substandard		-		-		-		-		-		-		12,250		-		12,250
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial and industrial - lines of credit	$	5,658	$	31,000	$	4,340	$	5,801	$	364	$	707	$	300,673	$	-	$	348,543

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Residential real estate - owner occupied
Risk rating
Pass	$	19,368	$	45,817	$	31,753	$	30,724	$	36,377	$	54,621	$	-	$	-	$	218,660
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		17		-		120		-		-		-		-		137
Substandard non-performing		-		-		147		102		38		137		-		-		424
Doubtful		-		-		-		-		-		-		-		-		-
Total Residential real estate - owner occupied	$	19,368	$	45,834	$	31,900	$	30,946	$	36,415	$	54,758	$	-	$	-	$	219,221
Residential real estate - non-owner occupied
Risk rating
Pass	$	14,437	$	35,602	$	39,848	$	15,136	$	12,311	$	15,609	$	-	$	-	$	132,943
OAEM		-		1,600		-		-		-		93		-		-		1,693
Substandard		-		-		32		-		-		-		-		-		32
Substandard non-performing		-		-		-		-		-		66		-		-		66
Doubtful		-		-		-		-		-		-		-		-		-
Total Residential real estate - non-owner occupied	$	14,437	$	37,202	$	39,880	$	15,136	$	12,311	$	15,768	$	-	$	-	$	134,734

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Construction and land development
Risk rating
Pass	$	27,232	$	108,954	$	65,166	$	27,259	$	6,479	$	2,865	$	6,202	$	1,883		246,040
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Construction and land development	$	27,232	$	108,954	$	65,166	$	27,259	$	6,479	$	2,865	$	6,202	$	1,883	$	246,040

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	107,121	$	-		107,121
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-	$	107,121	$	-	$	107,121

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Consumer
Risk rating
Pass *	$	2,327	$	7,737	$	4,432	$	631	$	571	$	1,880	$	27,012	$	317	$	44,907
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		32		-		-		-		-		-		-		32
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Consumer	$	2,327	$	7,769	$	4,432	$	631	$	571	$	1,880	$	27,012	$	317	$	44,939

* - Revolving loans include $538,000 in overdraft balances.

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Leases
Risk rating
Pass	$	829	$	2,770	$	2,696	$	1,952	$	3,577	$	2,675	$	-	$	-	$	14,499
OAEM		-		-		38		-		-		10		-		-		48
Substandard		-		-		18		-		911		-		-		-		929
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Consumer	$	829	$	2,770	$	2,752	$	1,952	$	4,488	$	2,685	$	-	$	-	$	15,476

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Credit cards - commercial
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	10,149	$	-	$	10,149
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Consumer	$	-	$	-	$	-	$	-	$	—	$	-	$	10,149	$	-	$	10,149

	Term Loans Amortized Cost Basis by Origination Year
													Revolving		Revolving
													loans		loans
(In thousands)													amortized		converted
March 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total
Total loans
Risk rating
Pass	$	303,728	$	726,876	$	522,630	$	321,948	$	262,866	$	266,702	$	459,811	$	19,352	$	2,883,913
OAEM		-		4,508		1,817		996		2,435		683		2,597		-		13,036
Substandard		4,480		13,427		4,068		271		1,241		445		12,250		-		36,182
Substandard non-performing		351		-		167		1,174		38		2,505		-		-		4,235
Doubtful		-		-		-		-		-		-		-		-		-
Total Consumer	$	308,559	$	744,811	$	528,682	$	324,389	$	266,580	$	270,335	$	474,658	$	19,352	$	2,937,366

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

	March, 31
(in thousands)	2020
Credit cards - commercial
Performing	$	10,149
Non-performing		—
Total Credit cards - commercial	$	10,149

Internally assigned risk ratings of loans by loan portfolio class classification category as of December 31, 2019 follows:

(in thousands)							Substandard				Total
December 31, 2019	Pass		OAEM		Substandard		Non-performing		Doubtful		Loans
Commercial and industrial	$	840,105	$	704	$	21,500	$	8,202	$	—	$	870,511
Construction and development, excluding undeveloped land		213,822		—		—		—		—		213,822
Undeveloped land		46,360		—		—		—		—		46,360
Real estate mortgage:
Commercial investment		722,747		6,459		6,275		1,137		—		736,618
Owner occupied commercial		460,981		1,375		9,050		2,377		—		473,783
1-4 family residential		332,294		1,701		122		241		—		334,358
Home equity - first lien		48,620		—		—		—		—		48,620
Home equity - junior lien		73,273		—		17		187		—		73,477
Subtotal: Real estate mortgage		1,637,915		9,535		15,464		3,942		—		1,666,856
Consumer		47,429		—		38		—		—		47,467
Total	$	2,785,631	$	10,239	$	37,002	$	12,144	$	—	$	2,845,016

Troubled Debt Restructurings

Detail of outstanding TDRs included in total non-performing loans follows:

	March 31, 2020						December 31, 2019
			Specific		Additional				Specific		Additional
			reserve		commitment				reserve		commitment
(in thousands)	Balance		allocation		to lend		Balance		allocation		to lend
Commercial and industrial - term	$	20	$	20	$	—	$	21	$	21	$	—
Residential real estate		—		—		—		13		13		—
Consumer		32		32		—		—		—		—
Total TDRs	$	52	$	52	$	—	$	34	$	34	$	—

During the three months ended March 31, 2020 and 2019, there were no loans modified as TDRs and there were no payment defaults of existing TDRs within 12 months following the modification. Default is determined at 90 or more days past due, charge-off, or foreclosure.  

As of April 30, 2020, Bancorp has executed 974 deferrals (predominantly 90 days) on outstanding loan balances of $413 million. In accordance with interagency guidance issued in March 2020, these short-term deferrals are not considered TDRs.

At both March 31, 2020 and December 31, 2019, Bancorp had $239,000 in residential real estate loans for which formal foreclosure proceedings were in process.

Purchased Credit Impaired Loans (Prior to the Adoption of ASC 326)

The Bank acquired $1.6 million in PCI loans in connection with its 2019 acquisition. Under ASC 310-30, the non-accretable amount attributed to these loans equaled the contractually required principal at acquisition date.

Management utilized the following criteria in determining which loans were classified as PCI loans for its 2019 acquisition:

● Loans classified by management as substandard, doubtful or loss

● Loans classified as non-accrual when acquired

● Loans past due 90 days or more when acquired

● Loans for which management assigned a non-accretable mark

The following table presents a rollforward of the accretable amount of PCI loans acquired in its 2013 acquisition:

Three months ended March 31, (in thousands)	2019
Balance, beginning of period	$	(69	)
Transfers between non-accretable and accretable		—
Net accretion into interest income on loans, including loan fees		7
Balance, end of period	$	(62	)