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Note 4 - Loans and Allowance for Credit Losses on Loans

3 Months Ended

Mar. 31, 2023

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)	March 31, 2023		December 31, 2022

Commercial real estate - non-owner occupied	$	1,421,660	$	1,397,346
Commercial real estate - owner occupied		850,766		834,629
Total commercial real estate		2,272,426		2,231,975

Commercial and industrial - term		769,479		765,163
Commercial and industrial - term - PPP		9,557		18,593
Commercial and industrial - lines of credit		435,743		465,813
Total commercial and industrial		1,214,779		1,249,569

Residential real estate - owner occupied		620,417		591,515
Residential real estate - non-owner occupied		323,519		313,248
Total residential real estate		943,936		904,763

Construction and land development		439,673		445,690
Home equity lines of credit		200,933		200,725
Consumer		136,412		139,461
Leases		13,207		13,322
Credits cards		21,738		20,413
Total loans (1)	$	5,243,104	$	5,205,918

(1) 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 $16 million and $17 million at March 31, 2023 and December 31, 2022, respectively, and was included in the condensed consolidated balance sheets.

Loans with carrying amounts of $2.85 billion and $2.77 billion were pledged to secure FHLB borrowing capacity at March 31, 2023 and December 31, 2022, respectively.

Loans to directors and their related interests, including loans to companies for which directors are principal owners and executive officers, totaled $71 million and $79 million as of March 31, 2023 and December 31, 2022, respectively.

PCD Loans

In connection with the acquisitions of CB on March 7, 2022, 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 326, Financial Instruments – Credit Losses.

Bancorp purchased loans through the prior year acquisition 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 the respective acquisition dates:

	CB
(in thousands)	March 7, 2022

Purchase price of PCD loans at acquisition	$	88,549
Allowance for credit losses at acquisition		(9,950	)
Non-credit discount at acquisition		(4,094	)
Fair value of PCD loans at acquisition	$	74,505

At March 31, 2023, the book balance of PCD loans acquired as a result of the CB acquisition totaled $59 million. Interest income recognized on loans classified as PCD totaled $1.1 million and $459,000 for the three month periods ended March 31, 2023 and 2022, respectively.

ACL for Loans

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

(in thousands) Three Months Ended March 31, 2023	Beginning Balance		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	22,641	$	(991	)	$	-		$	19	$	21,669
Commercial real estate - owner occupied		10,827		602			-			-		11,429
Total commercial real estate		33,468		(389	)		-			19		33,098

Commercial and industrial - term		12,991		991			(71	)		87		13,982
Commercial and industrial - lines of credit		6,389		(364	)		-			-		6,041
Total commercial and industrial		19,380		627			(71	)		87		20,023

Residential real estate - owner occupied		6,717		1,478			-			10		8,205
Residential real estate - non-owner occupied		3,597		546			-			1		4,144
Total residential real estate		10,314		2,024			-			11		12,349

Construction and land development		7,186		(451	)		-			-		6,735
Home equity lines of credit		1,613		17			(12	)		-		1,618
Consumer		1,158		88			(199	)		139		1,186
Leases		201		(2	)		-			-		199
Credit cards		211		336			(88	)		6		465
Total	$	73,531	$	2,250		$	(370	)	$	262	$	75,673

(in thousands) Three Months Ended March 31, 2022	Beginning Balance		Initial ACL on PCD Loans		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	15,960	$	3,508	$	1,140		$	-		$	12	$	20,620
Commercial real estate - owner occupied		9,595		2,121		(411	)		-			21		11,326
Total commercial real estate		25,555		5,629		729			-			33		31,946

Commercial and industrial - term		8,577		1,358		567			(113	)		719		11,108
Commercial and industrial - lines of credit		4,802		1,874		(132	)		(36	)		-		6,508
Total commercial and industrial		13,379		3,232		435			(149	)		719		17,616

Residential real estate - owner occupied		4,316		590		460			(6	)		3		5,363
Residential real estate - non-owner occupied		3,677		-		(319	)		-			3		3,361
Total residential real estate		7,993		590		141			(6	)		6		8,724

Construction and land development		4,789		419		656			-			-		5,864
Home equity lines of credit		1,044		2		421			-			-		1,467
Consumer		772		78		262			(254	)		191		1,049
Leases		204		-		7			-			-		211
Credit cards		162		-		28			-			-		190
Total	$	53,898	$	9,950	$	2,679		$	(409	)	$	949	$	67,067

The following tables present 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*		*or-More and Still*
March 31, 2023	*Recorded ACL*		*Non-accrual Loans*		*Accruing Interest*

Commercial real estate - non-owner occupied	$	—	$	7,349	$	622
Commercial real estate - owner occupied		—		1,297		—
Total commercial real estate		—		8,646		622

Commercial and industrial - term		402		5,214		227
Commercial and industrial - PPP		—		—		—
Commercial and industrial - lines of credit		273		348		—
Total commercial and industrial		675		5,562		227

Residential real estate - owner occupied		247		2,183		—
Residential real estate - non-owner occupied		—		390		43
Total residential real estate		247		2,573		43

Construction and land development		—		—		—
Home equity lines of credit		—		100		—
Consumer		—		265		—
Leases		—		—		—
Credit cards		—		243		2
Total	$	922	$	17,389	$	894

	Non-accrual Loans						Past Due 90-Days-
(in thousands)	*With No*		*Total*		*Troubled Debt*		*or-More and Still*
December 31, 2022	*Recorded ACL*		*Non-accrual Loans*		*Restructurings (1)*		*Accruing Interest*

Commercial real estate - non-owner occupied	$	—	$	7,707	$	—	$	78
Commercial real estate - owner occupied		1,370		2,525		—		—
Total commercial real estate		1,370		10,232		—		78

Commercial and industrial - term		403		1,182		—		259
Commercial and industrial - PPP		—		21		—		28
Commercial and industrial - lines of credit		273		348		—		300
Total commercial and industrial		676		1,551		—		587

Residential real estate - owner occupied		249		1,801		—		—
Residential real estate - non-owner occupied		—		219		—		220
Total residential real estate		249		2,020		—		220

Construction and land development		—		—		—		—
Home equity lines of credit		—		205		—		—
Consumer		—		234		—		—
Leases		—		—		—		—
Credit cards		—		—		—		7
Total	$	2,295	$	14,242	$	—	$	892

(1) Does not include TDRs captured in the non-accrual column.

For the three month periods ended March 31, 2023 and 2022, 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 month periods ended March 31, 2023 and 2022, 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) March 31, 2023	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL Allocation

Commercial real estate - non-owner occupied	$	14,336	$	-	$	-	$	14,336	$	2,357
Commercial real estate - owner occupied		3,157		-		-		3,157		845
Total commercial real estate		17,493		-		-		17,493		3,202

Commercial and industrial - term		4,541		330		470		5,341		1,463
Commercial and industrial - lines of credit		2,777		169		272		3,218		756
Total commercial and industrial		7,318		499		742		8,559		2,219

Residential real estate - owner occupied		2,578		-		-		2,578		217
Residential real estate - non-owner occupied		584		-		-		584		116
Total residential real estate		3,162		-		-		3,162		333

Construction and land development		-		-		-		-		-
Home equity lines of credit		100		-		-		100		-
Consumer		-		-		270		270		20
Leases		-		-		-		-		-
Credit cards		-		-		-		-		-
Total collateral dependent loans	$	28,073	$	499	$	1,012	$	29,584	$	5,774

(in thousands) December 31, 2022	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL Allocation

Commercial real estate - non-owner occupied	$	14,764	$	-	$	-	$	14,764	$	2,652
Commercial real estate - owner occupied		4,415		-		-		4,415		846
Total commercial real estate		19,179		-		-		19,179		3,498

Commercial and industrial - term		39		2,207		-		2,246		1,205
Commercial and industrial - lines of credit		422		2,821		-		3,243		761
Total commercial and industrial		461		5,028		-		5,489		1,966

Residential real estate - owner occupied		2,199		-		-		2,199		222
Residential real estate - non-owner occupied		415		-		-		415		116
Total residential real estate		2,614		-		-		2,614		338

Construction and land development		-		-		-		-		-
Home equity lines of credit		205		-		-		205		-
Consumer		-		-		219		219		20
Leases		-		-		-		-		-
Credit cards		-		-		-		-		-
Total collateral dependent loans	$	22,459	$	5,028	$	219	$	27,706	$	5,822

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 Past		Total
March 31, 2023	Current		Past Due		Past Due		days Past Due		Due Loans		Loans

Commercial real estate - non-owner occupied	$	1,420,520	$	93	$	77	$	970	$	1,140	$	1,421,660
Commercial real estate - owner occupied		849,361		1,082		76		247		1,405		850,766
Total commercial real estate		2,269,881		1,175		153		1,217		2,545		2,272,426

Commercial and industrial - term		764,893		20		2,554		2,012		4,586		769,479
Commercial and industrial - term - PPP		9,557		—		—		—		—		9,557
Commercial and industrial - lines of credit		435,296		99		—		348		447		435,743
Total commercial and industrial		1,209,746		119		2,554		2,360		5,033		1,214,779

Residential real estate - owner occupied		618,228		1,170		297		722		2,189		620,417
Residential real estate - non-owner occupied		323,142		—		—		377		377		323,519
Total residential real estate		941,370		1,170		297		1,099		2,566		943,936

Construction and land development		439,673		—		—		—		—		439,673
Home equity lines of credit		199,880		923		80		50		1,053		200,933
Consumer		135,993		115		64		240		419		136,412
Leases		13,207		—		—		—		—		13,207
Credit cards		21,688		45		3		2		50		21,738
Total	$	5,231,438	$	3,547	$	3,151	$	4,968	$	11,666	$	5,243,104

(in thousands)			30-59 days		60-89 days		90 or more		Total Past		Total
December 31, 2022	Current		Past Due		Past Due		days Past Due		Due Loans		Loans

Commercial real estate - non-owner occupied	$	1,393,016	$	3,404	$	460	$	466	$	4,330	$	1,397,346
Commercial real estate - owner occupied		831,731		225		2,592		81		2,898		834,629
Total commercial real estate		2,224,747		3,629		3,052		547		7,228		2,231,975

Commercial and industrial - term		763,793		157		292		921		1,370		765,163
Commercial and industrial - term - PPP		17,719		748		77		49		874		18,593
Commercial and industrial - lines of credit		464,494		389		300		630		1,319		465,813
Total commercial and industrial		1,246,006		1,294		669		1,600		3,563		1,249,569

Residential real estate - owner occupied		587,830		1,613		974		1,098		3,685		591,515
Residential real estate - non-owner occupied		312,249		373		331		295		999		313,248
Total residential real estate		900,079		1,986		1,305		1,393		4,684		904,763

Construction and land development		445,618		—		72		—		72		445,690
Home equity lines of credit		200,036		566		40		83		689		200,725
Consumer		138,846		342		85		188		615		139,461
Leases		13,322		—		—		—		—		13,322
Credit cards		20,401		3		2		7		12		20,413
Total	$	5,189,055	$	7,820	$	5,225	$	3,818	$	16,863	$	5,205,918

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, including 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. 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. 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 is currently immaterial to Bancorp’s loan portfolio and is expected to be in the future.

As of March 31, 2023, the risk rating of loans based on year of origination was as follows:

(in thousands)	Term Loans Amortized Cost Basis by Origination Year															Revolving loans amortized
March 31, 2023	2023		2022		2021			2020			2019		Prior			cost basis		Total

Commercial real estate - non-owner occupied:
Risk rating
Pass	$	54,428	$	354,920	$	379,689		$	250,448		$	124,052	$	194,552		$	23,852	$	1,381,941
OAEM		-		-		1,991			-			3,507		2,189			-		7,687
Substandard		-		1,381		1,012			3,703			18,261		229			97		24,683
Substandard non-performing		-		-		-			-			-		7,349			-		7,349
Doubtful		-		-		-			-			-		-			-		-
Total Commercial real estate non-owner occupied	$	54,428	$	356,301	$	382,692		$	254,151		$	145,820	$	204,319		$	23,949	$	1,421,660
Current period gross charge offs	$	-	$	-	$	-		$	-		$	-	$	-		$	-	$	-

Commercial real estate - owner occupied:
Risk rating
Pass	$	51,338	$	159,590	$	207,031		$	184,700		$	99,251	$	120,853		$	11,742	$	834,505
OAEM		-		2,889		617			5,299			1,104		1,126			846		11,881
Substandard		-		-		1,140			-			680		1,262			-		3,082
Substandard non-performing		-		389		832			-			-		77			-		1,298
Doubtful		-		-		-			-			-		-			-		-
Total Commercial real estate owner occupied	$	51,338	$	162,868	$	209,620		$	189,999		$	101,035	$	123,318		$	12,588	$	850,766
Current period gross charge offs	$	-	$	-	$	-		$	-		$	-	$	-		$	-	$	-

Commercial and industrial - term:
Risk rating
Pass	$	150,625	$	262,762	$	196,467		$	70,680		$	45,180	$	33,750		$	-	$	759,464
OAEM		-		831		2,795			-			261		454			-		4,341
Substandard		126		40		-			-			184		112			-		462
Substandard non-performing		-		3,772		64			540			106		730			-		5,212
Doubtful		-		-		-			-			-		-			-		-
Total Commercial and industrial - term	$	150,751	$	267,405	$	199,326		$	71,220		$	45,731	$	35,046		$	-	$	769,479
Current period gross charge offs	$	-	$	-	$	(6	)	$	(37	)	$	-	$	(28	)	$	-	$	(71	)

Commercial and industrial - PPP
Risk rating
Pass	$	-	$	-	$	6,858		$	2,699		$	-	$	-		$	-	$	9,557
OAEM		-		-		-			-			-		-			-		-
Substandard		-		-		-			-			-		-			-		-
Substandard non-performing		-		-		-			-			-		-			-		-
Doubtful		-		-		-			-			-		-			-		-
Total Commercial and industrial - PPP	$	-	$	-	$	6,858		$	2,699		$	-	$	-		$	-	$	9,557
Current period gross charge offs	$	-	$	-	$	-		$	-		$	-	$	-		$	-	$	-

(continued)

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
March 31, 2023	2023		2022		2021		2020		2019		Prior		cost basis			Total

Commercial and industrial - lines of credit
Risk rating
Pass	$	4,329	$	45,595	$	4,083	$	769	$	10,222	$	2,376	$	349,426		$	416,800
OAEM		-		-		-		-		-		-		17,092			17,092
Substandard		-		-		-		879		-		-		624			1,503
Substandard non-performing		-		-		-		-		273		-		75			348
Doubtful		-		-		-		-		-		-		-			-
Total Commercial and industrial - lines of credit	$	4,329	$	45,595	$	4,083	$	1,648	$	10,495	$	2,376	$	367,217		$	435,743
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-		$	-

Residential real estate - owner occupied
Risk rating
Pass	$	43,469	$	185,699	$	188,309	$	93,506	$	26,152	$	80,500	$	-		$	617,635
OAEM		-		-		94		-		65		-		-			159
Substandard		-		17		-		10		-		413		-			440
Substandard non-performing		24		486		180		214		60		1,219		-			2,183
Doubtful		-		-		-		-		-		-		-			-
Total Residential real estate - owner occupied	$	43,493	$	186,202	$	188,583	$	93,730	$	26,277	$	82,132	$	-		$	620,417
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-		$	-

Residential real estate - non-owner occupied
Risk rating
Pass	$	21,218	$	92,239	$	82,276	$	53,823	$	33,894	$	38,678	$	-		$	322,128
OAEM		-		14		-		112		262		286		-			674
Substandard		-		-		-		-		-		327		-			327
Substandard non-performing		-		259		20		-		-		111		-			390
Doubtful		-		-		-		-		-		-		-			-
Total Residential real estate - non-owner occupied	$	21,218	$	92,512	$	82,296	$	53,935	$	34,156	$	39,402	$	-		$	323,519
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-		$	-

Construction and land development
Risk rating
Pass	$	27,791	$	243,747	$	73,360	$	52,361	$	549	$	6,973	$	29,719		$	434,500
OAEM		-		-		-		-		-		-		999			999
Substandard		4,174		-		-		-		-		-		-			4,174
Substandard non-performing		-		-		-		-		-		-		-			-
Doubtful		-		-		-		-		-		-		-			-
Total Construction and land development	$	31,965	$	243,747	$	73,360	$	52,361	$	549	$	6,973	$	30,718		$	439,673
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-		$	-

Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	200,794		$	200,794
OAEM		-		-		-		-		-		-		-			-
Substandard		-		-		-		-		-		-		39			39
Substandard non-performing		-		-		-		-		-		-		100			100
Doubtful		-		-		-		-		-		-		-			-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-	$	200,933		$	200,933
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-	$	(12	)	$	(12	)

(continued)

(in thousands)	Term Loans Amortized Cost Basis by Origination Year																		Revolving loans amortized
March 31, 2023	2023			2022			2021			2020			2019			Prior			cost basis			Total

Consumer
Risk rating
Pass	$	10,645		$	24,848		$	15,791		$	4,729		$	3,628		$	3,260		$	73,246		$	136,147
OAEM		-			-			-			-			-			-			-			-
Substandard		-			-			-			-			-			-			-			-
Substandard non-performing		-			111			37			44			37			36			-			265
Doubtful		-			-			-			-			-			-			-			-
Total Consumer	$	10,645		$	24,959		$	15,828		$	4,773		$	3,665		$	3,296		$	73,246		$	136,412
Current period gross charge offs	$	(154	)	$	(5	)	$	(1	)	$	(15	)	$	(8	)	$	(15	)	$	(1	)	$	(199	)

Leases
Risk rating
Pass	$	4,202		$	4,066		$	2,359		$	454		$	476		$	1,650		$	-		$	13,207
OAEM		-			-			-			-			-			-			-			-
Substandard		-			-			-			-			-			-			-			-
Substandard non-performing		-			-			-			-			-			-			-			-
Doubtful		-			-			-			-			-			-			-			-
Total Leases	$	4,202		$	4,066		$	2,359		$	454		$	476		$	1,650		$	-		$	13,207
Current period gross charge offs	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Credit cards
Risk rating
Pass	$	-		$	-		$	-		$	-		$	-		$	-		$	21,494		$	21,494
OAEM		-			-			-			-			-			-			-			-
Substandard		-			-			-			-			-			-			-			-
Substandard non-performing		-			-			-			-			-			-			244			244
Doubtful		-			-			-			-			-			-			-			-
Total Credit cards	$	-		$	-		$	-		$	-		$	-		$	-		$	21,738		$	21,738
Current period gross charge offs	$	-		$	-		$	-		$	-		$	-		$	-		$	(88	)	$	(88	)

Total loans
Risk rating
Pass	$	368,045		$	1,373,466		$	1,156,223		$	714,169		$	343,404		$	482,592		$	710,273		$	5,148,172
OAEM		-			3,734			5,497			5,411			5,199			4,055			18,937			42,833
Substandard		4,300			1,438			2,152			4,592			19,125			2,343			760			34,710
Substandard non-performing		24			5,017			1,133			798			476			9,522			419			17,389
Doubtful		-			-			-			-			-			-			-			-
Total Loans	$	372,369		$	1,383,655		$	1,165,005		$	724,970		$	368,204		$	498,512		$	730,389		$	5,243,104
Current period gross charge offs	$	(154	)	$	(5	)	$	(7	)	$	(52	)	$	(8	)	$	(43	)	$	(101	)	$	(370	)

As of December 31, 2022, the risk rating of loans based on year of origination was as follows:

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
December 31, 2022	2022		2021		2020		2019		2018		Prior		cost basis		Total

Commercial real estate - non-owner occupied:
Risk rating
Pass	$	338,460	$	380,612	$	264,833	$	128,407	$	76,359	$	139,095	$	24,875	$	1,352,641
OAEM		-		2,006		-		3,534		-		5,414		-		10,954
Substandard		1,381		1,012		3,744		19,574		-		233		100		26,044
Substandard non-performing		-		-		-		-		-		7,707		-		7,707
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate non-owner occupied	$	339,841	$	383,630	$	268,577	$	151,515	$	76,359	$	152,449	$	24,975	$	1,397,346

Commercial real estate - owner occupied:
Risk rating
Pass	$	165,711	$	202,599	$	194,052	$	104,148	$	60,899	$	74,356	$	13,062	$	814,827
OAEM		2,895		1,777		4,540		1,891		676		216		510		12,505
Substandard		-		1,152		-		1,623		1,928		69		-		4,772
Substandard non-performing		1,533		911		-		-		-		81		-		2,525
Doubtful		-		-		-		-		-		-		-		-
Total Commercial real estate owner occupied	$	170,139	$	206,439	$	198,592	$	107,662	$	63,503	$	74,722	$	13,572	$	834,629

Commercial and industrial - term:
Risk rating
Pass	$	357,470	$	210,906	$	90,063	$	39,068	$	29,901	$	27,354	$	-	$	754,762
OAEM		3,835		2,935		-		303		1,426		-		-		8,499
Substandard		178		-		-		201		-		341		-		720
Substandard non-performing		539		39		486		101		17		-		-		1,182
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - term	$	362,022	$	213,880	$	90,549	$	39,673	$	31,344	$	27,695	$	-	$	765,163

Commercial and industrial - PPP
Risk rating
Pass	$	-	$	14,212	$	4,047	$	-	$	-	$	-	$	-	$	18,259
OAEM		-		-		313		-		-		-		-		313
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		21		-		-		-		-		21
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - PPP	$	-	$	14,212	$	4,381	$	-	$	-	$	-	$	-	$	18,593

(continued)

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
December 31, 2022	2022		2021		2020		2019		2018		Prior		cost basis		Total

Commercial and industrial - lines of credit
Risk rating
Pass	$	54,948	$	13,999	$	991	$	9,179	$	1,188	$	1,033	$	367,688	$	449,026
OAEM		-		-		-		-		-		366		12,491		12,857
Substandard		-		-		905		1,915		-		-		762		3,582
Substandard non-performing		-		-		-		273		-		-		75		348
Doubtful		-		-		-		-		-		-		-		-
Total Commercial and industrial - lines of credit	$	54,948	$	13,999	$	1,896	$	11,367	$	1,188	$	1,399	$	381,016	$	465,813

Residential real estate - owner occupied
Risk rating
Pass	$	188,765	$	189,007	$	96,818	$	28,316	$	15,281	$	70,556	$	-	$	588,743
OAEM		360		96		-		70		-		-		-		526
Substandard		18		-		10		-		140		277		-		445
Substandard non-performing		65		191		70		292		122		1,061		-		1,801
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - owner occupied	$	189,208	$	189,294	$	96,898	$	28,678	$	15,543	$	71,894	$	-	$	591,515

Residential real estate - non-owner occupied
Risk rating
Pass	$	97,313	$	83,458	$	55,787	$	34,304	$	19,300	$	21,720	$	-	$	311,882
OAEM		15		-		115		271		124		290		-		815
Substandard		-		-		-		-		-		332		-		332
Substandard non-performing		86		21		-		-		-		112		-		219
Doubtful		-		-		-		-		-		-		-		-
Total Residential real estate - non-owner occupied	$	97,414	$	83,479	$	55,902	$	34,575	$	19,424	$	22,454	$	-	$	313,248

Construction and land development
Risk rating
Pass	$	257,559	$	99,204	$	45,427	$	580	$	5,959	$	1,123	$	30,378	$	440,230
OAEM		-		-		-		-		-		-		999		999
Substandard		4,461		-		-		-		-		-		-		4,461
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Construction and land development	$	262,020	$	99,204	$	45,427	$	580	$	5,959	$	1,123	$	31,377	$	445,690

Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	200,481	$	200,481
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		39		39
Substandard non-performing		-		-		-		-		-		-		205		205
Doubtful		-		-		-		-		-		-		-		-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-	$	200,725	$	200,725

(continued)

(in thousands)	Term Loans Amortized Cost Basis by Origination Year												Revolving loans amortized
December 31, 2022	2022		2021		2020		2019		2018		Prior		cost basis		Total

Consumer
Risk rating
Pass	$	27,308	$	18,396	$	5,536	$	5,450	$	2,270	$	1,621	$	78,646	$	139,227
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		21		56		40		62		9		31		15		234
Doubtful		-		-		-		-		-		-		-		-
Total Consumer	$	27,329	$	18,452	$	5,576	$	5,512	$	2,279	$	1,652	$	78,661	$	139,461

Leases
Risk rating
Pass	$	4,643	$	4,344	$	2,589	$	535	$	576	$	635	$	-	$	13,322
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Leases	$	4,643	$	4,344	$	2,589	$	535	$	576	$	635	$	-	$	13,322

Credit cards
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	20,413	$	20,413
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Substandard non-performing		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Total Credit cards	$	-	$	-	$	-	$	-	$	-	$	-	$	20,413	$	20,413

Total loans
Risk rating
Pass	$	1,492,177	$	1,216,737	$	760,143	$	349,987	$	211,733	$	337,493	$	735,543	$	5,103,813
OAEM		7,105		6,814		4,968		6,069		2,226		6,286		14,000		47,468
Substandard		6,038		2,164		4,659		23,313		2,068		1,252		901		40,395
Substandard non-performing		2,244		1,218		617		728		148		8,992		295		14,242
Doubtful		-		-		-		-		-		-		-		-
Total Loans	$	1,507,564	$	1,226,933	$	770,387	$	380,097	$	216,175	$	354,023	$	750,739	$	5,205,918

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 credit cards based on payment activity:

	March 31,		December 31,
(in thousands)	2023		2022

Credit cards
Performing	$	21,494	$	20,413
Non-performing		244		—
Total credit cards	$	21,738	$	20,413

Bancorp had $290,000 and $317,000, respectively, in residential real estate loans for which formal foreclosure proceedings were in process at March 31, 2023 and December 31, 2022.

Modifications to Borrowers Experiencing Financial Difficulty

Bancorp adopted ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures,” effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measure of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

During the three months ended March 31, 2023, there were no modifications made to loans for borrowers experiencing financial difficulty and there were no payment defaults of existing modified loans within 12 months following modification. Default is determined at 90 days or more past due, charge off, or foreclosure.

Troubled Debt Restructuring Disclosures Prior to the Adoption of ASU 2022-02

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

	March 31, 2022
			Specific		Additional
			reserve		commitment
(in thousands)	Balance		allocation		to lend

Commercial real estate - owner occupied	$	888	$	202	$	—
Commercial & industrial - term		10		10		—
Total TDRs	$	898	$	212	$	—

During the three month periods ended March 31, 2022, 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.