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Note 5 - Loans and ACL for Loans

12 Months Ended

Dec. 31, 2023

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

(5) Loans and ACL for Loans

Composition of loans by class follows:

December 31, (in thousands)	2023		2022

Commercial real estate - non-owner occupied	$	1,561,689	$	1,397,346
Commercial real estate - owner occupied		907,424		834,629
Total commercial real estate		2,469,113		2,231,975

Commercial and industrial - term		863,061		765,163
Commercial and industrial - term - PPP		4,319		18,593
Commercial and industrial - lines of credit		439,748		465,813
Total commercial and industrial		1,307,128		1,249,569

Residential real estate - owner occupied		708,893		591,515
Residential real estate - non-owner occupied		358,715		313,248
Total residential real estate		1,067,608		904,763

Construction and land development		531,324		445,690
Home equity lines of credit		211,390		200,725
Consumer		145,340		139,461
Leases		15,503		13,322
Credit cards		23,632		20,413
Total loans (1)	$	5,771,038	$	5,205,918

(1)

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

Fees and costs of originating loans are deferred at origination and amortized over the life of the loan. At December 31, 2023 and 2022, net deferred loan origination fees exceeded deferred loan origination costs, resulting in a net reduction of loan balances totaling $2 million and $1 million, respectively.

Bancorp’s credit exposure is diversified with secured and unsecured loans to individuals and businesses. No specific industry concentration exceeds 10% of loans outstanding. While Bancorp has a diversified loan portfolio, a customer’s ability to honor contracts is somewhat dependent upon the economic stability and/or industry in which that customer does business. Loans outstanding and related unfunded commitments are primarily concentrated within Bancorp’s current market areas, which encompass Louisville, central, eastern and northern Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets.

Bancorp occasionally enters into loan participation agreements with other banks in the ordinary course of business to diversify credit risk. For certain sold participation loans, Bancorp has retained effective control of the loans, typically by restricting the participating institutions from pledging or selling their share of the loan without permission from Bancorp. GAAP requires the participated portion of these loans to be recorded as secured borrowings. The participated portions of these loans are included in the C&I totals above with a corresponding liability reflected in other liabilities. At December 31, 2023 and 2022, the total participated portions of loans of this nature totaled $4 million and $5 million, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $21 million and $17 million at December 31, 2023 and 2022, respectively, and was included in the consolidated balance sheets.

Loans with carrying amounts of $3.15 billion and $2.77 billion were pledged to secure FHLB borrowing capacity at December 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 are presented in the following table:

Years ended December 31, (in thousands)	2023			2022
Balance at beginning of period	$	78,685		$	53,574
Effect of change in composition of directors and executive officers		(97	)		1,124
New term loans		-			15,000
Repayment of term loans		(1,216	)		(1,588	)
Changes in balances of revolving lines of credit		(14,960	)		10,575
Balance at end of period	$	62,412		$	78,685

PCD Loans

In connection with the acquisition of CB on March 7, 2022, Bancorp acquired loans both with and without evidence of credit quality deterioration subsequent to origination. Acquired loans are recorded at their fair value at the time of acquisition with no carryover from the acquired institution’s previously recorded ACL. Acquired loans are accounted for under ASC 326, 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 CB 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 acquisition date:

(in thousands)	March 7, 2022

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

At December 31, 2023, the book balance of PCD loans acquired as a result of the CB acquisition totaled $53 million. Interest income recognized on loans classified as PCD totaled $5.0 million and $5.2 million for the years ended December 31, 2023 and 2022, respectively.

ACL for Loans

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

(in thousands) Year ended December 31, 2023	Beginning Balance		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	22,641	$	(599	)	$	-		$	91	$	22,133
Commercial real estate - owner occupied		10,827		831			-			9		11,667
Total commercial real estate		33,468		232			-			100		33,800

Commercial and industrial - term		12,991		3,607			(2,298	)		59		14,359
Commercial and industrial - lines of credit		6,389		3,582			(3,633	)		157		6,495
Total commercial and industrial		19,380		7,189			(5,931	)		216		20,854

Residential real estate - owner occupied		6,717		2,597			(43	)		45		9,316
Residential real estate - non-owner occupied		3,597		683			-			2		4,282
Total residential real estate		10,314		3,280			(43	)		47		13,598

Construction and land development		7,186		407			-			-		7,593
Home equity lines of credit		1,613		59			(12	)		-		1,660
Consumer		1,158		628			(865	)		486		1,407
Leases		201		19			-			-		220
Credit cards		211		657			(661	)		35		242
Total	$	73,531	$	12,471		$	(7,512	)	$	884	$	79,374

(in thousands) Year ended December 31, 2022	Beginning Balance		Initial ACL for PCD Loans		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	15,960	$	3,508	$	3,173		$	(37	)	$	37	$	22,641
Commercial real estate - owner occupied		9,595		2,121		(1,061	)		(41	)		213		10,827
Total commercial real estate		25,555		5,629		2,112			(78	)		250		33,468

Commercial and industrial - term		8,577		1,358		2,497			(724	)		1,283		12,991
Commercial and industrial - lines of credit		4,802		1,874		(87	)		(200	)		-		6,389
Total commercial and industrial		13,379		3,232		2,410			(924	)		1,283		19,380

Residential real estate - owner occupied		4,316		590		1,777			(30	)		64		6,717
Residential real estate - non-owner occupied		3,677		-		(75	)		(27	)		22		3,597
Total residential real estate		7,993		590		1,702			(57	)		86		10,314

Construction and land development		4,789		419		2,050			(72	)		-		7,186
Home equity lines of credit		1,044		2		567			-			-		1,613
Consumer		772		78		750			(1,080	)		638		1,158
Leases		204		-		(3	)		-			-		201
Credit cards		162		-		94			(96	)		51		211
Total	$	53,898	$	9,950	$	9,682		$	(2,307	)	$	2,308	$	73,531

(in thousands) Year ended December 31, 2021	Beginning Balance		Initial ACL for PCD Loans		Provision for Credit Losses on Loans			Charge-offs			Recoveries		Ending Balance

Commercial real estate - non-owner occupied	$	19,396	$	1,491	$	(2,031	)	$	(3,065	)	$	169	$	15,960
Commercial real estate - owner occupied		6,983		2,112		1,826			(1,909	)		583		9,595
Total commercial real estate		26,379		3,603		(205	)		(4,974	)		752		25,555

Commercial and industrial - term		8,970		1,022		(112	)		(1,337	)		34		8,577
Commercial and industrial - lines of credit		3,614		1,755		(567	)		-			-		4,802
Total commercial and industrial		12,584		2,777		(679	)		(1,337	)		34		13,379

Residential real estate - owner occupied		3,389		142		1,134			(383	)		34		4,316
Residential real estate - non-owner occupied		1,818		88		1,766			-			5		3,677
Total residential real estate		5,207		230		2,900			(383	)		39		7,993

Construction and land development		6,119		-		(1,333	)		-			3		4,789
Home equity lines of credit		895		147		1			-			1		1,044
Consumer		340		-		743			(987	)		676		772
Leases		261		-		(57	)		-			-		204
Credit cards		135		-		27			-			-		162
Total	$	51,920	$	6,757	$	1,397		$	(7,681	)	$	1,505	$	53,898

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*
December 31, 2023	*Recorded ACL*		*Non-accrual*		*Accruing Interest*
Commercial real estate - non-owner occupied	$	1,714	$	8,649	$	—
Commercial real estate - owner occupied		—		885		—
Total commercial real estate		1,714		9,534		—

Commercial and industrial - term		688		4,456		—
Commercial and industrial - lines of credit		—		215		—
Total commercial and industrial		688		4,671		—

Residential real estate - owner occupied		230		3,667		—
Residential real estate - non-owner occupied		—		372		—
Total residential real estate		230		4,039		—

Construction and land development		—		—		—
Home equity lines of credit		343		467		—
Consumer		—		337		—
Leases		—		—		—
Credit cards		—		10		110
Total	$	2,975	$	19,058	$	110

	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*		*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 reflected in the non-accrual column.

For the years ended December 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 years ended December 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) December 31, 2023	Real Estate		Accounts Receivable / Equipment		Other		Total		ACL Allocation

Commercial real estate - non-owner occupied	$	15,419	$	-	$	-	$	15,419	$	1,604
Commercial real estate - owner occupied		2,586		-		-		2,586		812
Total commercial real estate		18,005		-		-		18,005		2,416

Commercial and industrial - term		302		4,088		-		4,390		377
Commercial and industrial - lines of credit		2,781		101		-		2,882		708
Total commercial and industrial		3,083		4,189		-		7,272		1,085

Residential real estate - owner occupied		4,205		-		-		4,205		198
Residential real estate - non-owner occupied		558		-		-		558		116
Total residential real estate		4,763		-		-		4,763		314

Construction and land development		-		-		-		-		-
Home equity lines of credit		467		-		-		467		-
Consumer		-		-		335		335		18
Leases		-		-		-		-		-
Credit cards		-		-		-		-		-
Total collateral dependent loans	$	26,318	$	4,189	$	335	$	30,842	$	3,833

(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

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

Commercial real estate - non-owner occupied	$	1,558,756	$	768	$	318	$	1,847	$	2,933	$	1,561,689
Commercial real estate - owner occupied		906,385		758		260		21		1,039		907,424
Total commercial real estate		2,465,141		1,526		578		1,868		3,972		2,469,113

Commercial and industrial - term		861,770		244		2		1,045		1,291		863,061
Commercial and industrial - term - PPP		4,319		—		—		—		—		4,319
Commercial and industrial - lines of credit		439,671		77		—		—		77		439,748
Total commercial and industrial		1,305,760		321		2		1,045		1,368		1,307,128

Residential real estate - owner occupied		699,475		5,290		1,612		2,516		9,418		708,893
Residential real estate - non-owner occupied		357,763		621		94		237		952		358,715
Total residential real estate		1,057,238		5,911		1,706		2,753		10,370		1,067,608

Construction and land development		531,324		—		—		—		—		531,324
Home equity lines of credit		210,823		67		33		467		567		211,390
Consumer		144,640		258		145		297		700		145,340
Leases		15,503		—		—		—		—		15,503
Credit cards		23,287		191		44		110		345		23,632
Total	$	5,753,716	$	8,274	$	2,508	$	6,540	$	17,322	$	5,771,038

(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 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. Loans are usually 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. A loan is typically charged off once it is classified as doubtful.

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 December 31, 2023, 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
December 31, 2023	2023			2022			2021			2020			2019			Prior			cost basis		Total

Commercial real estate - non-owner occupied:
Risk rating
Pass	$	302,787		$	370,728		$	346,600		$	220,144		$	122,732		$	136,624		$	26,187	$	1,525,802
OAEM		76			-			2,902			-			1,947			3,727			-		8,652
Substandard		290			1,093			997			3,587			12,278			243			98		18,586
Substandard non-performing		5,806			286			-			-			1,472			1,085			-		8,649
Doubtful		-			-			-			-			-			-			-		-
Total Commercial real estate non-owner occupied	$	308,959		$	372,107		$	350,499		$	223,731		$	138,429		$	141,679		$	26,285	$	1,561,689
Current period gross charge offs	$	-		$	-		$	-		$	-		$	-		$	-		$	-	$	-

Commercial real estate - owner occupied:
Risk rating
Pass	$	148,498		$	164,087		$	191,350		$	179,450		$	90,575		$	100,988		$	13,941	$	888,889
OAEM		4,175			221			592			757			395			691			-		6,831
Substandard		1,675			4,258			-			4,370			458			58			-		10,819
Substandard non-performing		-			21			793			71			-			-			-		885
Doubtful		-			-			-			-			-			-			-		-
Total Commercial real estate owner occupied	$	154,348		$	168,587		$	192,735		$	184,648		$	91,428		$	101,737		$	13,941	$	907,424
Current period gross charge offs	$	-		$	-		$	-		$	-		$	-		$	-		$	-	$	-

Commercial and industrial - term:
Risk rating
Pass	$	279,002		$	298,204		$	169,941		$	54,977		$	24,939		$	26,790		$	-	$	853,853
OAEM		585			819			2,520			87			139			-			-		4,150
Substandard		218			80			31			-			-			273			-		602
Substandard non-performing		3,395			592			29			338			101			1			-		4,456
Doubtful		-			-			-			-			-			-			-		-
Total Commercial and industrial - term	$	283,200		$	299,695		$	172,521		$	55,402		$	25,179		$	27,064		$	-	$	863,061
Current period gross charge offs	$	(1,315	)	$	(734	)	$	(37	)	$	(93	)	$	(37	)	$	(82	)	$	-	$	(2,298	)

Commercial and industrial - PPP
Risk rating
Pass	$	-		$	-		$	2,347		$	1,972		$	-		$	-		$	-	$	4,319
OAEM		-			-			-			-			-			-			-		-
Substandard		-			-			-			-			-			-			-		-
Substandard non-performing		-			-			-			-			-			-			-		-
Doubtful		-			-			-			-			-			-			-		-
Total Commercial and industrial - PPP	$	-		$	-		$	2,347		$	1,972		$	-		$	-		$	-	$	4,319
Current period gross charge offs	$	-		$	-		$	-		$	-		$	-		$	-		$	-	$	-

(continued)

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

Commercial and industrial - lines of credit
Risk rating
Pass	$	30,553	$	22,409	$	3,232	$	348	$	8,931	$	1,783		$	356,237		$	423,493
OAEM		-		-		-		723		20		-			8,585			9,328
Substandard		-		-		-		-		-		-			6,712			6,712
Substandard non-performing		157		-		-		-		-		-			58			215
Doubtful		-		-		-		-		-		-			-			-
Total Commercial and industrial - lines of credit	$	30,710	$	22,409	$	3,232	$	1,071	$	8,951	$	1,783		$	371,592		$	439,748
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-		$	(3,633	)	$	(3,633	)

Residential real estate - owner occupied
Risk rating
Pass	$	170,446	$	178,088	$	175,561	$	86,105	$	24,354	$	70,213		$	-		$	704,767
OAEM		-		-		89		-		-		-			-			89
Substandard		-		15		-		-		-		355			-			370
Substandard non-performing		1,138		1,122		297		192		162		756			-			3,667
Doubtful		-		-		-		-		-		-			-			-
Total Residential real estate - owner occupied	$	171,584	$	179,225	$	175,947	$	86,297	$	24,516	$	71,324		$	-		$	708,893
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	(43	)	$	-		$	(43	)

Residential real estate - non-owner occupied
Risk rating
Pass	$	83,913	$	84,278	$	77,868	$	49,555	$	31,325	$	30,546		$	-		$	357,485
OAEM		-		7		-		-		262		277			-			546
Substandard		-		-		-		-		-		312			-			312
Substandard non-performing		-		233		19		-		45		75			-			372
Doubtful		-		-		-		-		-		-			-			-
Total Residential real estate - non-owner occupied	$	83,913	$	84,518	$	77,887	$	49,555	$	31,632	$	31,210		$	-		$	358,715
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-		$	-		$	-

Construction and land development
Risk rating
Pass	$	157,832	$	239,807	$	69,131	$	34,591	$	478	$	3,711		$	15,623		$	521,173
OAEM		-		-		3,682		-		-		-			999			4,681
Substandard		5,470		-		-		-		-		-			-			5,470
Substandard non-performing		-		-		-		-		-		-			-			-
Doubtful		-		-		-		-		-		-			-			-
Total Construction and land development	$	163,302	$	239,807	$	72,813	$	34,591	$	478	$	3,711		$	16,622		$	531,324
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-		$	-		$	-

Home equity lines of credit
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-		$	210,886		$	210,886
OAEM		-		-		-		-		-		-			-			-
Substandard		-		-		-		-		-		-			37			37
Substandard non-performing		-		-		-		-		-		-			467			467
Doubtful		-		-		-		-		-		-			-			-
Total Home equity lines of credit	$	-	$	-	$	-	$	-	$	-	$	-		$	211,390		$	211,390
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-		$	(12	)	$	(12	)

(continued)

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

Consumer
Risk rating
Pass	$	30,823		$	18,399		$	10,148		$	2,832		$	1,931		$	1,765		$	79,105		$	145,003
OAEM		-			-			-			-			-			-			-			-
Substandard		-			-			-			-			-			-			-			-
Substandard non-performing		41			145			91			27			3			14			16			337
Doubtful		-			-			-			-			-			-			-			-
Total Consumer	$	30,864		$	18,544		$	10,239		$	2,859		$	1,934		$	1,779		$	79,121		$	145,340
Current period gross charge offs	$	(683	)	$	(22	)	$	(29	)	$	(43	)	$	(41	)	$	(27	)	$	(20	)	$	(865	)

Leases
Risk rating
Pass	$	6,801		$	3,442		$	3,117		$	1,723		$	155		$	265		$	-		$	15,503
OAEM		-			-			-			-			-			-			-			-
Substandard		-			-			-			-			-			-			-			-
Substandard non-performing		-			-			-			-			-			-			-			-
Doubtful		-			-			-			-			-			-			-			-
Total Leases	$	6,801		$	3,442		$	3,117		$	1,723		$	155		$	265		$	-		$	15,503
Current period gross charge offs	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Credit cards
Risk rating
Pass	$	-		$	-		$	-		$	-		$	-		$	-		$	23,622		$	23,622
OAEM		-			-			-			-			-			-			-			-
Substandard		-			-			-			-			-			-			-			-
Substandard non-performing		-			-			-			-			-			-			10			10
Doubtful		-			-			-			-			-			-			-			-
Total Credit cards	$	-		$	-		$	-		$	-		$	-		$	-		$	23,632		$	23,632
Current period gross charge offs	$	-		$	-		$	-		$	-		$	-		$	-		$	(661	)	$	(661	)

Total loans
Risk rating
Pass	$	1,207,296		$	1,379,117		$	1,047,901		$	630,129		$	305,493		$	379,258		$	725,601		$	5,674,795
OAEM		4,836			1,047			9,785			1,567			2,763			4,695			9,584			34,277
Substandard		7,653			5,446			1,028			7,957			12,736			1,241			6,847			42,908
Substandard non-performing		10,537			2,399			1,229			628			1,783			1,931			551			19,058
Doubtful		-			-			-			-			-			-			-			-
Total Loans	$	1,230,322		$	1,388,009		$	1,059,943		$	640,281		$	322,775		$	387,125		$	742,583		$	5,771,038
Current period gross charge offs	$	(1,998	)	$	(756	)	$	(66	)	$	(136	)	$	(78	)	$	(152	)	$	(4,326	)	$	(7,512	)

As of December 31, 2022, 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
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)

													Revolving
													loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												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)

													Revolving
													loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year												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:

(in thousands)
December 31,	2023		2022

Credit cards
Performing	$	23,512	$	20,413
Non-performing		120		—
Total credit cards	$	23,632	$	20,413

Bancorp had $668,000 and $317,000, respectively, in residential real estate loans for which formal foreclosure proceedings were in process at December 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 year ended December 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 Restructurings Disclosures Prior to the Adoption of ASU 2022-02

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

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

Commercial real estate - owner occupied	$	850	$	202	$	—
Total TDRs	$	850	$	202	$	—

At December 31, 2022, Bancorp had one loan classified as a TDR totaling $850,000.

During the year ended December 31, 2022, there were no loans modified as TDRs and there were no payment defaults of existing TDRs within 12 months following modification. Default is determined at 90 or more days past due, charge-off, or foreclosure.