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Note 4 - Loans and Allowance for Credit Losses on Loans

6 Months Ended

Jun. 30, 2021

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

(4)

Loans and Allowance for Credit Losses on Loans

Composition of loans by class follows:

(in thousands)	June 30, 2021		December 31, 2020

Commercial real estate - non-owner occupied	$	1,170,461	$	833,470
Commercial real estate - owner occupied		604,120		508,672
Total commercial real estate		1,774,581		1,342,142

Commercial and industrial - term		544,316		525,776
Commercial and industrial - term - PPP		377,021		550,186
Commercial and industrial - lines of credit		327,990		276,646
Total commercial and industrial		1,249,327		1,352,608

Residential real estate - owner occupied		377,783		239,191
Residential real estate - non-owner occupied		273,782		140,930
Total residential real estate		651,565		380,121

Construction and land development		281,149		291,764
Home equity lines of credit		142,468		95,366
Consumer		78,171		44,606
Leases		14,171		14,786
Credits cards		14,960		10,203
Total loans (1)	$	4,206,392	$	3,531,596

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

Loans totaling $755 million were acquired as a result of the KB acquisition.

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $13 million and $12 million at June 30, 2021 and December 31, 2020, respectively, and was included in the consolidated balance sheets.

Loans with carrying amounts of $2.5 billion and $2.0 billion were pledged to secure FHLB borrowing capacity at June 30, 2021 and December 31, 2020, respectively.

Loans to directors and their related interests, including loans to companies for which directors are principal owners and executive officers, totaled $50 million and $43 million as of June 30, 2021 and December 31, 2020, respectively.

PCD Loans

In connection with the acquisition of KB, Bancorp acquired loans both with and without evidence of credit quality deterioration since origination. Acquired loans are recorded at their fair value at the time of acquisition with no carryover from the acquired institution’s previously recorded allowance for loan and lease losses. Acquired loans are accounted for under ASC 362, Financial Instruments – Credit Losses.

The fair value of acquired loans recorded at the time of acquisition is based upon several factors, including the timing and payment of expected cash flows, as adjusted for estimated credit losses and prepayments, and then discounting these cash flows using comparable market rates. The resulting fair value adjustment is recorded in the form of a premium or discount to the unpaid principal balance of the respective loans. As it relates to acquired loans that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination (“PCD”), the net premium or net discount is adjusted to reflect Bancorp’s allowance for credit losses recorded for PCD loans at the time of acquisition, and the remaining fair value adjustment is accreted or amortized into interest income over the remaining life of the respective loans. As it relates to loans not classified as PCD (“non-PCD”) loans, the credit loss and yield components of their fair value adjustment are aggregated, and the resulting net premium or net discount is accreted or amortized into interest income over the remaining life of the respective loans. Bancorp records an ACL for non-PCD loans at the time of acquisition through provision expense, and therefore, no further adjustments are made to the net premium or net discount for non-PCD loans.

Bancorp purchased loans through the acquisition of KB for which there was, at the time of acquisition, more-than-insignificant deterioration of credit quality since origination. The carrying amount of loans acquired and classified as PCD was as follows at June 30, 2021:

(in thousands)	June 1, 2021

Purchase price of PCD loans at acquisition	$	32,765
Allowance for credit losses at acquisition		(6,757	)
Non-credit discount (premium) at acquisition		(735	)
Fair value of PCD loans at acquisition	$	25,273

Allowance for Credit Losses on Loans

The table below reflects activity in the ACL related to loans:

(in thousands) Three Months Ended June 30, 2021	Beginning Balance		Initial Allowance on PCD Loans		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	20,062	$	1,491	$	1,255		$	(3,065	)	$	4	$	19,747
Commercial real estate - owner occupied		7,065		2,112		(184	)		-			555		9,548
Total commercial real estate		27,127		3,603		1,071			(3,065	)		559		29,295

Commercial and industrial - term (1)		8,469		1,022		355			(114	)		16		9,748
Commercial and industrial - lines of credit		2,983		1,755		502			-			-		5,240
Total commercial and industrial		11,452		2,777		857			(114	)		16		14,988

Residential real estate - owner occupied		3,292		142		953			(40	)		3		4,350
Residential real estate - non-owner occupied		1,709		88		1,624			-			1		3,422
Total residential real estate		5,001		230		2,577			(40	)		4		7,772

Construction and land development		5,527		-		(337	)		-			3		5,193
Home equity lines of credit		843		147		239			-			1		1,230
Consumer		395		-		285			(223	)		115		572
Leases		235		-		(3	)		-			-		232
Credit cards		134		-		8			-			-		142
Total	$	50,714	$	6,757	$	4,697		$	(3,442	)	$	698	$	59,424

(in thousands) Six Months Ended June 30, 2021	Beginning Balance		Initial Allowance on PCD Loans		Provision for Credit Losses			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	19,396	$	1,491	$	1,890		$	(3,065	)	$	35	$	19,747
Commercial real estate - owner occupied		6,983		2,112		(102	)		-			555		9,548
Total commercial real estate		26,379		3,603		1,788			(3,065	)		590		29,295

Commercial and industrial - term (1)		8,970		1,022		(97	)		(169	)		22		9,748
Commercial and industrial - lines of credit		3,614		1,755		(129	)		-			-		5,240
Total commercial and industrial		12,584		2,777		(226	)		(169	)		22		14,988

Residential real estate - owner occupied		3,389		142		859			(43	)		3		4,350
Residential real estate - non-owner occupied		1,818		88		1,514			-			2		3,422
Total residential real estate		5,207		230		2,373			(43	)		5		7,772

Construction and land development		6,119		-		(929	)		-			3		5,193
Home equity lines of credit		895		147		187			-			1		1,230
Consumer		340		-		326			(287	)		193		572
Leases		261		-		(29	)		-			-		232
Credit cards		135		-		7			-			-		142
Total	$	51,920	$	6,757	$	3,497		$	(3,564	)	$	814	$	59,424

(1)

The allowance allocated for the commercial & industrial –term segment includes $813,000 related to PCD PPP loans.

(in thousands) Three Months Ended June 30, 2020	Beginning Balance		Impact of Adopting ASC 326		Initial ACL on Loans Purchased with Credit Deterioration		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	13,435	$	-	$	-	$	5,403		$	-		$	1	$	18,839
Commercial real estate - owner occupied		6,509		-		-		197			-			-		6,706
Total commercial real estate		19,944		-		-		5,600			-			1		25,545

Commercial and industrial - term		7,990		-		-		(651	)		-			-		7,339
Commercial and industrial - lines of credit		3,866		-		-		(624	)		-			-		3,242
Total commercial and industrial		11,856		-		-		(1,275	)		-			-		10,581

Residential real estate - owner occupied		2,702		-		-		162			(18	)		2		2,848
Residential real estate - non-owner occupied		1,419		-		-		175			-			-		1,594
Total residential real estate		4,121		-		-		337			(18	)		2		4,442

Construction and land development		5,185		-		-		423			-			-		5,608
Home equity lines of credit		623		-		-		209			-			-		832
Consumer		198		-		-		134			(80	)		110		362
Leases		159		-		-		64			-			-		223
Credit cards		57		-		-		58			-			-		115
Total	$	42,143	$	-	$	-	$	5,550		$	(98	)	$	113	$	47,708

(in thousands) Six Months Ended June 30, 2020	Beginning Balance		Impact of Adopting ASC 326			Initial ACL on Loans Purchased with Credit Deterioration		Provision for Credit Losses			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	5,235	$	2,946		$	152	$	10,503		$	-		$	3	$	18,839
Commercial real estate - owner occupied		3,327		1,542			1,350		487			-			-		6,706
Total commercial real estate		8,562		4,488			1,502		10,990			-			3		25,545

Commercial and industrial - term		6,782		365			-		185			-			7		7,339
Commercial and industrial - lines of credit		5,657		(1,528	)		-		(887	)		-			-		3,242
Total commercial and industrial		12,439		(1,163	)		-		(702	)		-			7		10,581

Residential real estate - owner occupied		1,527		1,087			99		151			(18	)		2		2,848
Residential real estate - non-owner occupied		947		429			-		218			-			-		1,594
Total residential real estate		2,474		1,516			99		369			(18	)		2		4,442

Construction and land development		2,105		3,056			-		447			-			-		5,608
Home equity lines of credit		728		114			-		(10	)		-			-		832
Consumer		100		264			34		(3	)		(254	)		221		362
Leases		237		(4	)		-		(10	)		-			-		223
Credit cards		146		(50	)		-		19			-			-		115
Total	$	26,791	$	8,221		$	1,635	$	11,100		$	(272	)	$	233	$	47,708

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:

	Non-accrual Loans						Past Due 90-Days-
(in thousands)	*With No*		*Total*		*Troubled Debt*		*or-More and Still*
June 30, 2021	*Recorded ACL*		*Non-accrual*		*Restructurings*		*Accruing Interest*

Commercial real estate - non-owner occupied	$	6,634	$	9,100	$	—	$	77
Commercial real estate - owner occupied		155		696		—		888
Total commercial real estate		6,789		9,796		—		965

Commercial and industrial - term		94		900		14		—
Commercial and industrial - lines of credit		—		—		—		20
Total commercial and industrial		94		900		14		20

Residential real estate - owner occupied		—		1,591		—		19
Residential real estate - non-owner occupied		—		154		—		—
Total residential real estate		—		1,745		—		19

Construction and land development		—		—		—		—
Home equity lines of credit		—		366		—		46
Consumer		—		7		—		—
Leases		—		—		—		—
Credit cards		—		—		—		—
Total	$	6,883	$	12,814	$	14	$	1,050

	Non-accrual Loans						Past Due 90-Days-
(in thousands)	*With No*		*Total*		*Troubled Debt*		*or-More and Still*
December 31, 2020	*Recorded ACL*		*Non-accrual*		*Restructurings*		*Accruing Interest*

Commercial real estate - non-owner occupied	$	186	$	10,278	$	—	$	—
Commercial real estate - owner occupied		1,048		1,403		—		156
Total commercial real estate		1,234		11,681		—		156

Commercial and industrial - term		6		6		16		—
Commercial and industrial - lines of credit		88		88		—		—
Total commercial and industrial		94		94		16		—

Residential real estate - owner occupied		413		413		—		178
Residential real estate - non-owner occupied		101		101		—		301
Total residential real estate		514		514		—		479

Construction and land development		—		—		—		—
Home equity lines of credit		221		221		—		14
Consumer		4		4		—		—
Leases		—		—		—		—
Credit cards		—		—		—		—
Total	$	2,067	$	12,514	$	16	$	649

For the three and six month periods ended June 30, 2021 and 2020, 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 and six month periods ended June 30, 2021 and 2020, no interest income was recognized on loans on non-accrual status.

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

(in thousands) June 30, 2021	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL Allocation

Commercial real estate - non-owner occupied	$	9,600	$	-	$	-	$	9,600	$	1,449
Commercial real estate - owner occupied		6,115		-		-		6,115		2,100
Total commercial real estate		15,715		-		-		15,715		3,549

Commercial and industrial - term		14		1,010		58		1,082		399
Commercial and industrial - lines of credit		-		-		-		-		-
Total commercial and industrial		14		1,010		58		1,082		399

Residential real estate - owner occupied		1,804		-		-		1,804		116
Residential real estate - non-owner occupied		154		-		-		154		-
Total residential real estate		1,958		-		-		1,958		116

Construction and land development		-		-		-		-		-
Home equity lines of credit		366		-		-		366		100
Consumer		7		-		-		7		-
Leases		-		-		-		-		-
Credit cards		-		-		-		-		-
Total collateral dependent loans	$	18,060	$	1,010	$	58	$	19,128	$	4,164

(in thousands) December 31, 2020	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL Allocation

Commercial real estate - non-owner occupied	$	10,278	$	-	$	-	$	10,278	$	3,037
Commercial real estate - owner occupied		1,403		-		-		1,403		13
Total commercial real estate		11,681		-		-		11,681		3,050

Commercial and industrial - term		16		7		-		23		16
Commercial and industrial - lines of credit		-		88		-		88		-
Total commercial and industrial		16		95		-		111		16

Residential real estate - owner occupied		413		-		-		413		-
Residential real estate - non-owner occupied		101		-		-		101		-
Total residential real estate		514		-		-		514		-

Construction and land development		-		-		-		-		-
Home equity lines of credit		221		-		-		221		-
Consumer		-		-		4		4		-
Leases		-		-		-		-		-
Credit cards		-		-		-		-		-
Total collateral dependent loans	$	12,432	$	95	$	3	$	12,531	$	3,066

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

The following tables present the aging of contractually past due loans by portfolio class:

(in thousands)			30-59 days		60-89 days		90 or more		Total		Total
June 30, 2021*	Current		Past Due		Past Due		Days Past Due		Past Due		Loans

Commercial real estate - non-owner occupied	$	1,159,299	$	3,555	$	6,835	$	772	$	11,162	$	1,170,461
Commercial real estate - owner occupied		601,961		607		—		1,552		2,159		604,120
Total commercial real estate		1,761,260		4,162		6,835		2,324		13,321		1,774,581

Commercial and industrial - term		543,413		35		14		854		903		544,316
Commercial and industrial - term - PPP		377,021		—		—		—		—		377,021
Commercial and industrial - lines of credit		327,747		223		—		20		243		327,990
Total commercial and industrial		1,248,181		258		14		874		1,146		1,249,327

Residential real estate - owner occupied		375,468		1,762		19		534		2,315		377,783
Residential real estate - non-owner occupied		273,397		108		177		100		385		273,782
Total residential real estate		648,865		1,870		196		634		2,700		651,565

Construction and land development		281,149		—		—		—		—		281,149
Home equity lines of credit		141,854		342		172		100		614		142,468
Consumer		78,106		58		—		7		65		78,171
Leases		14,171		—		—		—		—		14,171
Credit cards		14,951		9		—		—		9		14,960
Total	$	4,188,537	$	6,699	$	7,217	$	3,939	$	17,855	$	4,206,392

(in thousands)			30-59 days		60-89 days		90 or more		Total		Total
December 31, 2020*	Current		Past Due		Past Due		Days Past Due		Past Due		Loans

Commercial real estate - non-owner occupied	$	822,199	$	-	$	10,600	$	671	$	11,271	$	833,470
Commercial real estate - owner occupied		507,265		278		—		1,129		1,407		508,672
Total commercial real estate		1,329,464		278		10,600		1,800		12,678		1,342,142

Commercial and industrial - term		523,936		1,404		430		6		1,840		525,776
Commercial and industrial - term - PPP		550,186		—		—		—		—		550,186
Commercial and industrial - lines of credit		276,472		86		—		88		174		276,646
Total commercial and industrial		1,350,594		1,490		430		94		2,014		1,352,608

Residential real estate - owner occupied		237,902		585		247		457		1,289		239,191
Residential real estate - non-owner occupied		140,234		294		—		402		696		140,930
Total residential real estate		378,136		879		247		859		1,985		380,121

Construction and land development		291,764		—		—		—		—		291,764
Home equity lines of credit		95,206		7		139		14		160		95,366
Consumer		44,510		90		4		2		96		44,606
Leases		14,786		—		—		—		—		14,786
Credit cards		10,197		5		—		1		6		10,203
Total	$	3,514,657	$	2,749	$	11,420	$	2,770	$	16,939	$	3,531,596

* - Pursuant to the CARES Act, loan deferrals granted to borrowers experiencing business interruptions related to the pandemic were not classified as TDRs and not included in past due and/or non-performing loan statistics. As of June 30, 2021 and December 31, 2020, outstanding CARES Act loan deferrals of $8 million and $37 million are reflected as current, respectively.

Loan Risk Ratings

Consistent with regulatory guidance, Bancorp categorizes loans into credit risk rating 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 include 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. Beginning in 2021, Bancorp has elected not to disclose revolving loans that have converted to term loans, as activity relating to this disclosure, which is included in the tables presented below as of December 31, 2020, is currently immaterial to Bancorp’s loan portfolio and is expected to be in the future. As of June 30, 2021, the risk rating of loans based on year of origination was as follows:

														Revolving
														loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year													amortized
June 30, 2021	2021		2020		2019		2018		2017		Prior			cost basis	Total

Commercial real estate -non-owner occupied:
Risk rating
Pass	$	173,784	$	309,370	$	144,543	$	114,151	$	98,517	$	255,973	$	18,399	$	1,114,737
OAEM		44		-		1,003		-		-		32,934		867		34,848
Substandard		6,643		-		1,750		-		-		2,927		456		11,776
Substandard non-performing		-		6,644		25		-		605		1,799		27		9,100
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate non-owner occupied	$	180,471	$	316,014	$	147,321	$	114,151	$	99,122	$	293,633	$	19,749	$	1,170,461

Commercial real estate - owner occupied:
Risk rating
Pass	$	92,187	$	197,160	$	99,854	$	81,249	$	46,080	$	55,358	$	5,705	$	577,593
OAEM		1,299		70		6,461		727		1,547		59		-		10,163
Substandard		2,483		5,451		4,656		1,306		667		108		997		15,668
Substandard non-performing		-		-		-		-		-		696		-		696
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate owner occupied	$	95,969	$	202,681	$	110,971	$	83,282	$	48,294	$	56,221	$	6,702	$	604,120

Commercial and industrial - term:
Risk rating
Pass	$	110,845	$	185,618	$	75,276	$	80,400	$	33,531	$	45,040	$	-	$	530,710
OAEM		71		1,187		2,315		5,453		-		263		-		9,289
Substandard		229		218		2,771		5		118		76		-		3,417
Substandard non-performing		-		-		-		-		35		865		-		900
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - term	$	111,145	$	187,023	$	80,362	$	85,858	$	33,684	$	46,244	$	-	$	544,316

Commercial and industrial - PPP
Risk rating
Pass	$	254,535	$	121,673	$	-	$	-	$	-	$	-	$	-	$	376,208
OAEM		-		-		-		-		-		-		-		-
Substandard		-		813		-		-		-		-		-		813
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - PPP	$	254,535	$	122,486	$	-	$	-	$	-	$	-	$	-	$	377,021

(continued)

														Revolving
														loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year													amortized
June 30, 2021	2021		2020		2019		2018		2017		Prior			cost basis	Total

Commercial and industrial - lines of credit
Risk rating
Pass	$	14,410	$	17,983	$	11,677	$	1,879	$	1,970	$	257	$	271,816	$	319,992
OAEM		-		-		-		-		-		-		1,214		1,214
Substandard		-		-		2,088		-		-		-		4,696		6,784
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - lines of credit	$	14,410	$	17,983	$	13,765	$	1,879	$	1,970	$	257	$	277,726	$	327,990

Residential real estate - owner occupied
Risk rating
Pass	$	103,210	$	113,596	$	42,309	$	21,773	$	19,925	$	72,481	$	-	$	373,294
OAEM		103		-		171		-		84		567		-		925
Substandard		169		-		129		141		112		1,422		-		1,973
Substandard non-performing		-		-		-		-		837		754		-		1,591
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - owner occupied	$	103,482	$	113,596	$	42,609	$	21,914	$	20,958	$	75,224	$	-	$	377,783

Residential real estate - non-owner occupied
Risk rating
Pass	$	42,043	$	92,346	$	52,842	$	38,226	$	20,296	$	24,181	$	-	$	269,934
OAEM		445		221		2,139		357		52		327		-		3,541
Substandard		-		-		-		-		-		153		-		153
Substandard non-performing		-		-		-		28		-		126		-		154
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - non-owner occupied	$	42,488	$	92,567	$	54,981	$	38,611	$	20,348	$	24,787	$	-	$	273,782


Construction and land development
Risk rating
Pass	$	68,305	$	110,136	$	53,643	$	19,562	$	14,859	$	1,339	$	13,056	$	280,900
OAEM		-		-		-		-		-		-		249		249
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Construction and land development	$	68,305	$	110,136	$	53,643	$	19,562	$	14,859	$	1,339	$	13,305	$	281,149

Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	140,790	$	140,790
OAEM		-		-		-		-		-		-		223		223
Substandard		-		-		-		-		-		-		1,089		1,089
Substandard non-performing		-		-		-		-		-		-		366		366
Doubtful		-		-		-		-		-		-		-		-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-	$	142,468	$	142,468

(continued)

													Revolving
													loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												amortized
June 30, 2021	2021		2020		2019		2018		2017		Prior		cost basis		Total

Consumer
Risk rating
Pass*	$	20,050	$	13,869	$	6,594	$	1,905	$	879	$	897	$	33,722	$	77,916
OAEM		-		-		178		-		-		-		-		178
Substandard		-		4		50		10		4		1		1		70
Substandard non-performing		-		7		-		-		-		-		-		7
Doubtful		-		-		-		-		-		-		-		-
Total Consumer	$	20,050	$	13,880	$	6,822	$	1,915	$	883	$	898	$	33,723	$	78,171

Leases
Risk rating
Pass	$	1,927	$	4,203	$	1,628	$	1,727	$	844	$	3,811	$	-	$	14,140
OAEM		-		-		-		-		-		31		-		31
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Leases	$	1,927	$	4,203	$	1,628	$	1,727	$	844	$	3,842	$	-	$	14,171

Credit cards
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	14,960	$	14,960
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Credit cards	$	-	$	-	$	-	$	-	$	-	$	-	$	14,960	$	14,960

Total loans
Risk rating
Pass	$	881,295	$	1,165,955	$	488,366	$	360,872	$	236,901	$	459,337	$	498,448	$	4,091,174
OAEM		1,962		1,478		12,267		6,537		1,683		34,181		2,553		60,661
Substandard		9,524		6,486		11,444		1,462		901		4,687		7,239		41,743
Substandard non-performing		-		6,651		25		28		1,477		4,240		393		12,814
Doubtful		-		-		-		-		-		-		-		-
Total Loans	$	892,781	$	1,180,570	$	512,102	$	368,899	$	240,962	$	502,445	$	508,633	$	4,206,392

*Revolving loans include $450,000 in overdrawn demand deposit balances.

As of December 31, 2020, the risk rating of loans based on year of origination was as follows:

													Revolving		Revolving
													loans		loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												amortized		converted
December 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total

Commercial real estate - non-owner occupied:
Risk rating
Pass	$	303,246	$	114,731	$	102,147	$	105,981	$	77,925	$	57,221	$	12,439	$	11,717	$	785,407
OAEM		3,867		16,587		-		-		7,707		615		-		-		28,776
Substandard		4,174		1,901		-		-		1,513		991		430		-		9,009
Substandard non-performing		9,644		-		-		609		-		-		-		25		10,278
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial real estate non-owner occupied	$	320,931	$	133,219	$	102,147	$	106,590	$	87,145	$	58,827	$	12,869	$	11,742	$	833,470

Commercial real estate - owner occupied:
Risk rating
Pass	$	183,666	$	94,462	$	83,592	$	47,506	$	39,638	$	30,533	$	7,693	$	2,418	$	489,508
OAEM		74		6,534		1,575		796		115		-		200		-		9,294
Substandard		1,408		5,360		1,335		247		117		-		-		-		8,467
Substandard non-performing		91		-		15		500		-		471		-		326		1,403
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial real estate owner occupied	$	185,239	$	106,356	$	86,517	$	49,049	$	39,870	$	31,004	$	7,893	$	2,744	$	508,672

Commercial and industrial -term:
Risk rating
Pass	$	215,629	$	94,563	$	104,871	$	42,929	$	36,016	$	8,412	$	-	$	7,690	$	510,110
OAEM		60		2,969		7,878		-		283		8		-		-		11,198
Substandard		1,229		2,521		-		91		163		74		-		384		4,462
Substandard non-performing		-		-		-		-		-		6		-		-		6
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial and industrial - term	$	216,918	$	100,053	$	112,749	$	43,020	$	36,462	$	8,500	$	-	$	8,074	$	525,776

Commercial and industrial - PPP
Risk rating
Pass	$	550,186	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	550,186
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial and industrial - PPP	$	550,186	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	550,186

(continued)

													Revolving		Revolving
													loans		loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												amortized		converted
December 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total

Commercial and industrial - lines of credit
Risk rating
Pass	$	26,351	$	14,405	$	2,229	$	1,990	$	290	$	85	$	223,172	$	-	$	268,522
OAEM		-		2,222		-		-		-		-		1,596		-		3,818
Substandard		-		-		-		-		-		-		4,218		-		4,218
Substandard non-performing		-		-		-		-		-		-		88		-		88
Doubtful		-		-		-		-		-		-		-		-		-
Total Commercial and industrial - lines of credit	$	26,351	$	16,627	$	2,229	$	1,990	$	290	$	85	$	229,074	$	-	$	276,646

Residential real estate - owner occupied
Risk rating
Pass	$	94,023	$	34,631	$	23,748	$	19,567	$	27,791	$	37,362	$	-	$	1,528	$	238,650
OAEM		-		-		-		-		-		-		-		-		-
Substandard		13		-		-		115		-		-		-		-		128
Substandard non-performing		49		58		-		100		38		73		-		95		413
Doubtful		-		-		-		-		-		-		-		-		-
Total Residential real estate - owner occupied	$	94,085	$	34,689	$	23,748	$	19,782	$	27,829	$	37,435	$	-	$	1,623	$	239,191

Residential real estate - non-owner occupied
Risk rating
Pass	$	63,537	$	22,422	$	25,466	$	10,587	$	9,609	$	6,451	$	-	$	788	$	138,860
OAEM		137		1,600		140		-		-		92		-		-		1,969
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		29		-		-		72		-		-		101
Doubtful		-		-		-		-		-		-		-		-		-
Total Residential real estate - non-owner occupied	$	63,674	$	24,022	$	25,635	$	10,587	$	9,609	$	6,615	$	-	$	788	$	140,930

Construction and land development
Risk rating
Pass	$	139,611	$	94,066	$	32,539	$	15,384	$	1,175	$	553	$	6,304	$	1,883	$	291,515
OAEM		-		-		-		-		-		-		249		-		249
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Construction and land development	$	139,611	$	94,066	$	32,539	$	15,384	$	1,175	$	553	$	6,553	$	1,883	$	291,764

Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	95,145	$	-	$	95,145
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		221		-		221
Doubtful		-		-		-		-		-		-		-		-		-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-	$	95,366	$	-	$	95,366

(continued)

													Revolving		Revolving
													loans		loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												amortized		converted
December 31, 2020	2020		2019		2018		2017		2016		Prior		cost basis		to term		Total

Consumer
Risk rating
Pass*	$	10,334	$	2,897	$	1,687	$	243	$	420	$	466	$	28,363	$	192	$	44,602
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		2		-		2		-		4
Doubtful		-		-		-		-		-		-		-		-		-
Total Consumer	$	10,334	$	2,897	$	1,687	$	243	$	422	$	466	$	28,365	$	192	$	44,606

Leases
Risk rating
Pass	$	4,674	$	1,875	$	2,144	$	1,300	$	2,550	$	2,168	$	-	$	-	$	14,711
OAEM		-		-		-		-		69		-		-		-		69
Substandard		-		-		6		-		-		-		-		-		6
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Leases	$	4,674	$	1,875	$	2,150	$	1,300	$	2,619	$	2,168	$	-	$	-	$	14,786

Credit cards
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	10,203	$	-	$	10,203
OAEM		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total Credit cards	$	-	$	-	$	-	$	-	$	-	$	-	$	10,203	$	-	$	10,203

Total loans
Risk rating
Pass	$	1,591,257	$	474,052	$	378,423	$	245,487	$	195,414	$	143,251	$	383,319	$	26,216	$	3,437,419
OAEM		4,138		29,912		9,593		796		8,174		715		2,045		-		55,373
Substandard		6,824		9,782		1,341		453		1,793		1,065		4,648		384		26,290
Substandard non-performing		9,784		58		44		1,209		40		622		311		446		12,514
Doubtful		-		-		-		-		-		-		-		-		-
Total Loans	$	1,612,003	$	513,804	$	389,401	$	247,945	$	205,421	$	145,653	$	390,323	$	27,046	$	3,531,596

* - Revolving loans include $536,000 in overdrawn demand deposit balances.

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:

	June 30,		December 31,
(in thousands)	2021		2020

Credit cards
Performing	$	14,960	$	10,203
Non-performing		—		—
Total credit cards	$	14,960	$	10,203

In accordance with Section 4013 of the CARES Act and in response to requests from borrowers who experienced business or personal cash flow interruptions related to the pandemic, Bancorp extended payment deferrals for those affected borrowers. Depending on the demonstrated need of the customer, Bancorp deferred either the full loan payment or the principal-only portion of respective loan payments, typically for 90 or 180 days, for some borrowers directly impacted by the pandemic. Pursuant to the CARES Act, these loan deferrals were not classified as TDRs and not included in past due and/or non-performing loan statistics. As of June 30, 2021, outstanding loan deferrals totaled $8 million, representing 0.21% of the total loan portfolio (excluding PPP loans) compared to $37 million, or 1.24% of the total loan portfolio (excluding PPP loans) at December 31, 2020.

Troubled Debt Restructurings

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

	June 30, 2021						December 31, 2020
			Specific		Additional				Specific		Additional
			reserve		commitment				reserve		commitment
(in thousands)	Balance		allocation		to lend		Balance		allocation		to lend

Commercial and industrial - term	$	14	$	14	$	—	$	16	$	16	$	—
Residential real estate		—		—		—		—		—		—
Total TDRs	$	14	$	14	$	—	$	16	$	16	$	—

During the three and six month periods ended June 30, 2021 and 2020, 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.

At both June 30, 2021 and December 31, 2020, Bancorp had $147,000, respectively, in residential real estate loans for which formal foreclosure proceedings were in process.