| Loans and Allowance for Credit Losses | 4. Loans and Allowance for Credit Losses Loan Origination/Risk Management The Company has certain lending policies and procedures in place that are designed to minimize the level of risk within the loan portfolio. Diversification of the loan portfolio manages the risk associated with fluctuations in economic conditions. Authority levels are established for the extension of credit to ensure consistency throughout the Company. It is necessary that policies, processes, and practices implemented to control the risks of individual credit transactions and portfolio segments are sound and adhered to. The Company maintains an independent loan review department that reviews and validates the risk assessment on a continual basis. Management regularly evaluates the results of the loan reviews. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures. Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Commercial loans are made based on the identified cash flows of the borrower and on the underlying collateral provided by the borrower. The cash flows of the borrower, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts from its customers. Specialty lending loans include Asset-based loans, which are offered primarily in the form of revolving lines of credit to commercial borrowers that do not generally qualify for traditional bank financing. Asset-based loans are underwritten based primarily upon the value of the collateral pledged to secure the loan, rather than on the borrower’s general financial condition. The Company utilizes pre-loan due diligence techniques, monitoring disciplines, and loan management practices common within the asset-based lending industry to underwrite loans to these borrowers. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Company requires that an appraisal of the collateral be made at origination and on an as-needed basis, in conformity with current market conditions and regulatory requirements. The underwriting standards address both owner and non-owner-occupied real estate. Also included in Commercial real estate are Construction loans that are underwritten using feasibility studies, independent appraisal reviews, sensitivity analysis or absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are based upon estimates of costs and value associated with the complete project. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their repayment being sensitive to interest rate changes, governmental regulation of real property, economic conditions, completion of the construction project, and the availability of long-term financing. Consumer real estate loans, including residential real estate and home equity loans, are underwritten based on the borrower’s loan-to-value percentage, collection remedies, and overall credit history. Consumer loans are underwritten based on the borrower’s repayment ability. The Company monitors delinquencies on all of its consumer loans and leases. The underwriting and review practices combined with the relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Consumer loans and leases that are 90 days past due or more are considered non-performing. Credit cards include both commercial and consumer credit cards. Commercial credit cards are generally unsecured and are underwritten with criteria similar to commercial loans, including an analysis of the borrower’s cash flow, available business capital, and overall creditworthiness of the borrower. Consumer credit cards are underwritten based on the borrower’s repayment ability. The Company monitors delinquencies on all of its consumer credit cards and periodically reviews the distribution of credit scores relative to historical periods to monitor credit risk on its consumer credit card loans. During the first quarter of 2024, the Company purchased a co-branded credit card portfolio. The purchase included $ 109.4 million in credit card receivables. Credit risk is a potential loss resulting from nonpayment of either the primary or secondary exposure. Credit risk is mitigated with formal risk management practices and a thorough initial credit-granting process including consistent underwriting standards and approval process. Control factors or techniques to minimize credit risk include knowing the client, understanding total exposure, analyzing the client and debtor’s financial capacity, and monitoring the client’s activities. Credit risk and portions of the portfolio risk are managed through concentration considerations, average risk ratings, and other aggregate characteristics. Loan Aging Analysis The following tables provide a summary of loan classes and an aging of past due loans at September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
30-89 Greater than Nonaccrual Total Current Total Loans
Loans
Commercial and industrial $ 1,646 $ — $ 6,682 $ 8,328 $ 10,663,344 $ 10,671,672
Specialty lending — — — — 473,267 473,267
Commercial real estate 1,917 — 598 2,515 9,778,484 9,780,999
Consumer real estate 921 76 11,575 12,572 3,098,507 3,111,079
Consumer 136 8 29 173 166,258 166,431
Credit cards 11,350 7,049 407 18,806 562,930 581,736
Leases and other — — — — 205,607 205,607
Total loans $ 15,970 $ 7,133 $ 19,291 $ 42,394 $ 24,948,397 $ 24,990,791
December 31, 2023
30-89 Greater than Nonaccrual Total Current Total Loans
Loans
Commercial and industrial $ 2,851 $ — $ 7,033 $ 9,884 $ 9,920,045 $ 9,929,929
Specialty lending — — — — 498,786 498,786
Commercial real estate 1,848 — 737 2,585 8,891,341 8,893,926
Consumer real estate 1,137 — 5,058 6,195 2,954,437 2,960,632
Consumer 104 55 28 187 163,104 163,291
Credit cards 5,343 3,056 285 8,684 415,272 423,956
Leases and other — — 71 71 301,893 301,964
Total loans $ 11,283 $ 3,111 $ 13,212 $ 27,606 $ 23,144,878 $ 23,172,484 The Company sold consumer real estate loans with proceeds of $ 60.8 million and $ 49.7 million in the secondary market without recourse during the nine months ended September 30, 2024 and 2023, respectively. The Company has ceased the recognition of interest on loans with a carrying value of $ 19.3 million and $ 13.2 million at September 30, 2024 and December 31, 2023, respectively. Restructured loans totaled $ 200 thousand and $ 548 thousand at September 30, 2024 and December 31, 2023, respectively. Loans 90 days past due and still accruing interest amounted to $ 7.1 million and $ 3.1 million at September 30, 2024 and December 31, 2023, respectively. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. There was an insignificant amount of interest reversed related to loans on nonaccrual during 2024 and 2023. Nonaccrual loans with no related allowance for credit losses totaled $ 19.3 million and $ 13.2 million at September 30, 2024 and December 31, 2023, respectively. The following tables provide the amortized cost of nonaccrual loans with no related allowance for credit losses by loan class at September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Nonaccrual Amortized Cost of Nonaccrual Loans with no related Allowance
Loans
Commercial and industrial $ 6,682 $ 6,682
Specialty lending — —
Commercial real estate 598 598
Consumer real estate 11,575 11,575
Consumer 29 29
Credit cards 407 407
Leases and other — —
Total loans $ 19,291 $ 19,291
December 31, 2023
Nonaccrual Amortized Cost of Nonaccrual Loans with no related Allowance
Loans
Commercial and industrial $ 7,033 $ 7,033
Specialty lending — —
Commercial real estate 737 737
Consumer real estate 5,058 5,058
Consumer 28 28
Credit cards 285 285
Leases and other 71 71
Total loans $ 13,212 $ 13,212 Amortized Cost The following tables provide a summary of the amortized cost balance of each of the Company’s loan classes disaggregated by collateral type and origination year as of September 30, 2024 and December 31, 2023, as well as the gross charge-offs by loan class and origination year for the nine months ended September 30, 2024 (in thousands):
September 30, 2024
Amortized Cost Basis by Origination Year - Term Loans
Loan Segment 2024 2023 2022 2021 2020 Prior Amortized Cost - Revolving Loans Amortized Cost - Revolving Loans Converted to Term Loans Total
Commercial and industrial:
Equipment/Accounts Receivable/Inventory $ 1,662,078 $ 1,421,119 $ 1,061,876 $ 842,182 $ 317,214 $ 203,349 $ 4,989,858 $ 2,371 $ 10,500,047
Agriculture 12,739 5,889 3,605 2,697 462 246 135,047 400 161,085
Overdrafts — — — — — — 10,540 — 10,540
Total Commercial and industrial 1,674,817 1,427,008 1,065,481 844,879 317,676 203,595 5,135,445 2,771 10,671,672
Current period charge-offs — 599 43 22 11 404 807 — 1,886
Specialty lending:
Asset-based lending 5,116 — 8,794 31,436 30,811 — 397,110 — 473,267
Total Specialty lending 5,116 — 8,794 31,436 30,811 — 397,110 — 473,267
Current period charge-offs — — — — — — — — —
Commercial real estate:
Owner-occupied 247,729 283,630 608,943 453,630 303,346 299,824 50,839 540 2,248,481
Non-owner-occupied 521,219 563,528 889,388 783,800 408,997 329,944 33,080 — 3,529,956
Farmland 44,144 47,678 58,890 36,959 187,088 26,481 102,243 324 503,807
5+ Multi-family 73,224 34,690 184,269 228,306 29,018 20,091 8,751 — 578,349
1-4 Family construction 28,607 12,076 55,920 — — — 3,113 — 99,716
General construction 286,145 679,619 1,429,098 349,096 4,093 563 70,972 1,104 2,820,690
Total Commercial real estate 1,201,068 1,621,221 3,226,508 1,851,791 932,542 676,903 268,998 1,968 9,780,999
Current period charge-offs — — — 236 — 14 — — 250
Consumer real estate:
HELOC 90 — 460 202 284 4,868 366,946 1,271 374,121
First lien: 1-4 family 301,109 376,391 573,604 647,758 510,430 282,829 — — 2,692,121
Junior lien: 1-4 family 11,346 10,839 10,490 6,025 3,220 2,842 75 — 44,837
Total Consumer real estate 312,545 387,230 584,554 653,985 513,934 290,539 367,021 1,271 3,111,079
Current period charge-offs — 49 57 — — 27 175 — 308
Consumer:
Revolving line 35 — — — — — 84,132 316 84,483
Auto 7,559 8,378 4,077 2,362 976 392 — — 23,744
Other 4,984 3,155 14,303 25,743 372 832 8,815 — 58,204
Total Consumer 12,578 11,533 18,380 28,105 1,348 1,224 92,947 316 166,431
Current period charge-offs — 24 76 1 — 2 923 — 1,026
Credit cards:
Consumer — — — — — — 314,163 — 314,163
Commercial — — — — — — 267,573 — 267,573
Total Credit cards — — — — — — 581,736 — 581,736
Current period charge-offs — — — — — — 15,098 — 15,098
Leases and other:
Leases — — — — — 1,510 — — 1,510
Other 18,596 61,169 58,484 13,690 13,268 11,280 27,610 — 204,097
Total Leases and other 18,596 61,169 58,484 13,690 13,268 12,790 27,610 — 205,607
Current period charge-offs — — — — 4 — — — 4
Total loans $ 3,224,720 $ 3,508,161 $ 4,962,201 $ 3,423,886 $ 1,809,579 $ 1,185,051 $ 6,870,867 $ 6,326 $ 24,990,791
December 31, 2023
Amortized Cost Basis by Origination Year - Term Loans
Loan Segment 2023 2022 2021 2020 2019 Prior Amortized Cost - Revolving Loans Amortized Cost - Revolving Loans Converted to Term Loans Total
Commercial and industrial:
Equipment/Accounts Receivable/Inventory $ 1,787,301 $ 1,486,609 $ 1,123,732 $ 412,276 $ 202,827 $ 97,130 $ 4,615,872 $ 6,336 $ 9,732,083
Agriculture 13,934 5,840 3,785 920 477 239 169,173 — 194,368
Overdrafts — — — — — — 3,478 — 3,478
Total Commercial and industrial 1,801,235 1,492,449 1,127,517 413,196 203,304 97,369 4,788,523 6,336 9,929,929
Specialty lending:
Asset-based lending 13,938 16,103 35,466 32,229 — — 401,050 — 498,786
Total Specialty lending 13,938 16,103 35,466 32,229 — — 401,050 — 498,786
Commercial real estate:
Owner-occupied 276,284 629,514 499,020 335,133 152,539 215,373 30,842 — 2,138,705
Non-owner-occupied 556,369 901,614 849,496 449,547 293,531 185,679 36,313 — 3,272,549
Farmland 75,418 71,087 39,128 195,750 15,608 19,700 89,291 — 505,982
5+ Multi-family 34,714 27,668 240,724 29,840 16,861 4,982 9,274 — 364,063
1-4 Family construction 49,327 51,360 — — — — 3,286 3,394 107,367
General construction 574,661 1,340,152 515,289 4,220 636 130 70,172 — 2,505,260
Total Commercial real estate 1,566,773 3,021,395 2,143,657 1,014,490 479,175 425,864 239,178 3,394 8,893,926
Consumer real estate:
HELOC 150 650 — 497 82 4,958 355,105 1,364 362,806
First lien: 1-4 family 419,312 585,401 682,008 548,859 158,228 165,197 2 — 2,559,007
Junior lien: 1-4 family 12,117 11,943 6,861 3,927 2,117 1,769 85 — 38,819
Total Consumer real estate 431,579 597,994 688,869 553,283 160,427 171,924 355,192 1,364 2,960,632
Consumer:
Revolving line 48 — — — — — 56,272 — 56,320
Auto 11,509 6,013 3,922 2,170 1,088 158 — — 24,860
Other 4,853 22,147 26,125 574 365 1,243 26,804 — 82,111
Total Consumer 16,410 28,160 30,047 2,744 1,453 1,401 83,076 — 163,291
Credit cards:
Consumer — — — — — — 197,095 — 197,095
Commercial — — — — — — 226,861 — 226,861
Total Credit cards — — — — — — 423,956 — 423,956
Leases and other:
Leases — — — — 610 1,106 — — 1,716
Other 100,484 95,909 16,968 16,949 1,620 13,966 54,352 — 300,248
Total Leases and other 100,484 95,909 16,968 16,949 2,230 15,072 54,352 — 301,964
Total loans $ 3,930,419 $ 5,252,010 $ 4,042,524 $ 2,032,891 $ 846,589 $ 711,630 $ 6,345,327 $ 11,094 $ 23,172,484 Accrued interest on loans totaled $ 120.4 million and $ 119.6 million as of September 30, 2024 and December 31, 2023, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost basis of loans presented above. Further, the Company has elected not to measure an allowance for credit losses for accrued interest receivable. Credit Quality Indicators As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans, net charge-offs, non-performing loans, and general economic conditions. The Company utilizes a risk grading matrix to assign a rating to each of its commercial, commercial real estate, and construction real estate loans. Changes in credit risk are monitored on a continuous basis and changes in risk ratings are made when identified. The loan ratings are summarized into the following categories: Pass, Special Mention, Substandard, and Doubtful. Any loan not classified in one of the categories described below is considered to be a Pass loan. A description of the general characteristics of the loan rating categories is as follows: • Special Mention – This rating reflects a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the borrower’s credit position at some future date. The rating is not adversely classified and does not expose an institution to sufficient risk to warrant adverse classification. • Substandard – This rating represents an asset inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans in this category are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard. • Doubtful – This rating represents an asset that has all the weaknesses inherent in an asset classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage of strengthening the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, or perfecting liens. Commercial and industrial A discussion of the credit quality indicators that impact each type of collateral securing Commercial and industrial loans is included below: Equipment, accounts receivable, and inventory General commercial and industrial loans are secured by working capital assets and non-real estate assets. The general purpose of these loans is for financing capital expenditures and current operations for commercial and industrial entities. These assets are short-term in nature. In the case of accounts receivable and inventories, the repayment of debt is reliant upon converting assets into cash or through goods and services being sold and collected. Collateral-based risk is due to aged short-term assets, which can be indicative of underlying issues with the borrower and lead to the value of the collateral being overstated. Agriculture Agricultural loans are secured by non-real estate agricultural assets. These include shorter-term assets such as equipment, crops, and livestock. The risks associated with loans to finance crops or livestock include the borrower’s ability to successfully raise and market the commodity. Adverse weather conditions and other natural perils can dramatically affect farmers’ or ranchers’ production and ability to service debt. Volatile commodity prices present another significant risk for agriculture borrowers. Market price volatility and production cost volatility can affect both revenues and expenses. Overdrafts Commercial overdrafts are typically short-term and unsecured. Some commercial borrowers tie their overdraft obligation to their line of credit, so any draw on the line of credit will satisfy the overdraft. Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position. The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Amortized Cost Basis by Origination Year - Term Loans
Risk by Collateral 2024 2023 2022 2021 2020 Prior Amortized Cost - Revolving Loans Amortized Cost - Revolving Loans Converted to Term Loans Total
Equipment/Accounts Receivable/Inventory
Pass $ 1,611,855 $ 1,395,688 $ 995,069 $ 820,239 $ 316,176 $ 198,413 $ 4,781,179 $ 875 $ 10,119,494
Special Mention 2,453 22,583 10,773 9,845 62 — 88,962 — 134,678
Substandard 46,628 2,848 56,034 12,098 976 4,936 119,717 210 243,447
Doubtful 1,142 — — — — — — 1,286 2,428
Total Equipment/Accounts Receivable/Inventory $ 1,662,078 $ 1,421,119 $ 1,061,876 $ 842,182 $ 317,214 $ 203,349 $ 4,989,858 $ 2,371 $ 10,500,047
Agriculture
Pass $ 4,575 $ 5,889 $ 3,605 $ 2,697 $ 462 $ 246 $ 132,801 $ 400 $ 150,675
Special Mention — — — — — — — — —
Substandard 8,164 — — — — — 2,246 — 10,410
Doubtful — — — — — — — — —
Total Agriculture $ 12,739 $ 5,889 $ 3,605 $ 2,697 $ 462 $ 246 $ 135,047 $ 400 $ 161,085
December 31, 2023
Amortized Cost Basis by Origination Year - Term Loans
Risk by Collateral 2023 2022 2021 2020 2019 Prior Amortized Cost - Revolving Loans Amortized Cost - Revolving Loans Converted to Term Loans Total
Equipment/Accounts Receivable/Inventory
Pass $ 1,767,383 $ 1,462,714 $ 1,115,205 $ 411,441 $ 194,181 $ 94,606 $ 4,473,085 $ 6,243 $ 9,524,858
Special Mention 3,000 17,857 5,186 214 — — 39,059 — 65,316
Substandard 15,708 6,038 3,341 621 8,646 2,524 103,728 93 140,699
Doubtful 1,210 — — — — — — — 1,210
Total Equipment/Accounts Receivable/Inventory $ 1,787,301 $ 1,486,609 $ 1,123,732 $ 412,276 $ 202,827 $ 97,130 $ 4,615,872 $ 6,336 $ 9,732,083
Agriculture
Pass $ 13,934 $ 5,122 $ 3,785 $ 839 $ 477 $ 239 $ 159,565 $ — $ 183,961
Special Mention — 66 — — — — 1,236 — 1,302
Substandard — 652 — 81 — — 8,372 — 9,105
Doubtful — — — — — — — — —
Total Agriculture $ 13,934 $ 5,840 $ 3,785 $ 920 $ 477 $ 239 $ 169,173 $ — $ 194,368 Specialty lending A discussion of the credit quality indicators that impact each type of collateral securing Specialty loans is included below: Asset-based lending General asset-based loans are secured by accounts receivable, inventory, equipment, and real estate. The purpose of these loans is for financing current operations for commercial customers. The repayment of debt is reliant upon collection of the accounts receivable within 30 to 90 days or converting assets into cash or through goods and services being sold and collected. The Company tracks each individual borrower credit risk based on their loan to collateral position. Any borrower position where the underlying value of collateral is below the fair value of the loan is considered out-of-margin and inherently higher risk. The following table provides a summary of the amortized cost balance by risk rating for asset-based loans as of September 30, 2024 and December 31, 2023 (in thousands):
Asset-based lending
Risk September 30, 2024 December 31, 2023
In-margin $ 473,267 $ 498,786
Out-of-margin — —
Total $ 473,267 $ 498,786 Commercial real estate A discussion of the credit quality indicators that impact each type of collateral securing Commercial real estate loans is included below: Owner-occupied Owner-occupied loans are secured by commercial real estate. These loans are often longer tenured and susceptible to multiple economic cycles. The loans rely on the owner-occupied operations to service debt which cover a broad spectrum of industries. Real estate debt can carry a significant amount of leverage for a borrower to maintain. Non-owner-occupied Non-owner-occupied loans are secured by commercial real estate. These loans are often longer tenured and susceptible to multiple economic cycles. The key element of risk in this type of lending is the cyclical nature of real estate markets. Although national conditions affect the overall real estate industry, the effect of national conditions on local markets is equally important. Factors such as unemployment rates, consumer demand, household formation, and the level of economic activity can vary widely from state to state and among metropolitan areas. In addition to geographic considerations, markets can be defined by property type. While all sectors are influenced by economic conditions, some sectors are more sensitive to certain economic factors than others. Farmland Farmland loans are secured by real estate used for agricultural purposes such as crop and livestock production. Assets used as collateral are long-term assets that carry the ability to have longer amortizations and maturities. Longer terms carry the risk of added susceptibility to market conditions. The limited purpose of some Agriculture-related collateral affects credit risk because such collateral may have limited or no other uses to support values when loan repayment problems emerge. 5+ Multi-family 5+ multi-family loans are secured by a multi-family residential property. The primary risks associated with this type of collateral are largely driven by economic conditions. The national and local market conditions can change with unemployment rates or competing supply of multi-family housing. Tenants may not be able to afford their housing or have better options and this can result in increased vacancy. Rents may need to be lowered to fill apartment units. Increased vacancy and lower rental rates not only drive the borrower’s ability to repay debt but also contribute to how the collateral is valued. 1-4 Family construction 1-4 family construction loans are secured by 1-4 family residential real estate and are in the process of construction or improvements being made. The predominant risk inherent to this portfolio is the risk associated with a borrower’s ability to successfully complete a project on time and within budget. Market conditions also play an important role in understanding the risk profile. Risk from adverse changes in market conditions from the start of development to completion can result in deflated collateral values. General construction General construction loans are secured by commercial real estate in process of construction or improvements being made and their repayment is dependent on the collateral’s completion. Construction lending presents unique risks not encountered in term financing of existing real estate. The predominant risk inherent to this portfolio is the risk associated with a borrower’s ability to successfully complete a project on time and within budget. Commercial properties under construction are susceptible to market and economic conditions. Demand from prospective customers may erode after construction begins because of a general economic slowdown or an increase in the supply of competing properties. Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position. The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Amortized Cost Basis by Origination Year - Term Loans
Risk by Collateral 2024 2023 2022 2021 2020 Prior Amortized Cost - Revolving Loans Amortized Cost - Revolving Loans Converted to Term Loans Total
Owner-occupied
Pass $ 212,334 $ 283,561 $ 606,230 $ 451,594 $ 298,553 $ 293,345 $ 50,839 $ 540 $ 2,196,996
Special Mention 30,803 — 1,046 1,993 4,787 — — — 38,629
Substandard 4,592 69 1,667 43 6 6,479 — — 12,856
Doubtful — — — — — — — — —
Total Owner-occupied $ 247,729 $ 283,630 $ 608,943 $ 453,630 $ 303,346 $ 299,824 $ 50,839 $ 540 $ 2,248,481
Non-owner-occupied
Pass $ 520,732 $ 550,501 $ 864,388 $ 783,800 $ 408,997 $ 329,944 $ 33,080 $ — $ 3,491,442
Special Mention 487 13,027 25,000 — — — — — 38,514
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Total Non-owner-occupied $ 521,219 $ 563,528 $ 889,388 $ 783,800 $ 408,997 $ 329,944 $ 33,080 $ — $ 3,529,956
Farmland
Pass $ 25,330 $ 45,345 $ 46,487 $ 36,959 $ 186,094 $ 19,999 $ 101,243 $ — $ 461,457
Special Mention 999 — 12,403 — — — 1,000 — 14,402
Substandard 17,815 2,333 — — 994 6,482 — 324 27,948
Doubtful — — — — — — — — —
Total Farmland $ 44,144 $ 47,678 $ 58,890 $ 36,959 $ 187,088 $ 26,481 $ 102,243 $ 324 $ 503,807
5+ Multi-family
Pass $ 73,224 $ 34,690 $ 184,269 $ 228,306 $ 29,018 $ 20,091 $ 8,751 $ — $ 578,349
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Total 5+ Multi-family $ 73,224 $ 34,690 $ 184,269 $ 228,306 $ 29,018 $ 20,091 $ 8,751 $ — $ 578,349
1-4 Family construction
Pass $ 28,607 $ 12,076 $ 55,920 $ — $ — $ — $ 3,113 $ — $ 99,716
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Total 1-4 Family construction $ 28,607 $ 12,076 $ 55,920 $ — $ — $ — $ 3,113 $ — $ 99,716
General construction
Pass $ 286,036 $ 679,619 $ 1,429,098 $ 349,096 $ 4,093 $ 553 $ 70,972 $ 1,104 $ 2,820,571
Special Mention — — — — — — — — —
Substandard — — — — — 10 — — 10
Doubtful 109 — — — — — — — 109
Total General construction $ 286,145 $ 679,619 $ 1,429,098 $ 349,096 $ 4,093 $ 563 $ 70,972 $ 1,104 $ 2,820,690
December 31, 2023
Amortized Cost Basis by Origination Year - Term Loans
Risk by Collateral 2023 2022 2021 2020 2019 Prior Amortized Cost - Revolving Loans Amortized Cost - Revolving Loans Converted to Term Loans Total
Owner-occupied
Pass $ 271,840 $ 626,119 $ 485,343 $ 328,379 $ 145,975 $ 214,031 $ 30,113 $ — $ 2,101,800
Special Mention — 1,609 12,911 6,741 4,015 — 729 — 26,005
Substandard 4,444 1,786 766 13 2,549 1,342 — — 10,900
Doubtful — — — — — — — — —
Total Owner-occupied $ 276,284 $ 629,514 $ 499,020 $ 335,133 $ 152,539 $ 215,373 $ 30,842 $ — $ 2,138,705
Non-owner-occupied
Pass $ 531,835 $ 901,614 $ 824,434 $ 449,547 $ 293,531 $ 185,679 $ 36,313 $ — $ 3,222,953
Special Mention 24,534 — 24,404 — — — — — 48,938
Substandard — — 658 — — — — — 658
Doubtful — — — — — — — — —
Total Non-owner-occupied $ 556,369 $ 901,614 $ 849,496 $ 449,547 $ 293,531 $ 185,679 $ 36,313 $ — $ 3,272,549
Farmland
Pass $ 48,615 $ 62,594 $ 38,806 $ 195,234 $ 11,735 $ 19,168 $ 89,291 $ — $ 465,443
Special Mention 2,358 428 — 493 3,627 — — — 6,906
Substandard 24,445 8,065 322 23 246 532 — — 33,633
Doubtful — — — — — — — — —
Total Farmland $ 75,418 $ 71,087 $ 39,128 $ 195,750 $ 15,608 $ 19,700 $ 89,291 $ — $ 505,982
5+ Multi-family
Pass $ 34,714 $ 27,668 $ 240,724 $ 29,840 $ 16,861 $ 4,982 $ 9,274 $ — $ 364,063
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Total 5+ Multi-family $ 34,714 $ 27,668 $ 240,724 $ 29,840 $ 16,861 $ 4,982 $ 9,274 $ — $ 364,063
1-4 Family construction
Pass $ 49,327 $ 51,360 $ — $ — $ — $ — $ 3,286 $ 3,394 $ 107,367
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Total 1-4 Family construction $ 49,327 $ 51,360 $ — $ — $ — $ — $ 3,286 $ 3,394 $ 107,367
General construction
Pass $ 574,401 $ 1,340,152 $ 507,276 $ 4,220 $ 636 $ 117 $ 70,172 $ — $ 2,496,974
Special Mention 180 — — — — — — — 180
Substandard — — 8,013 — — 13 — — 8,026
Doubtful 80 — — — — — — — 80
Total General construction $ 574,661 $ 1,340,152 $ 515,289 $ 4,220 $ 636 $ 130 $ 70,172 $ — $ 2,505,260 Consumer real estate A discussion of the credit quality indicators that impact each type of collateral securing Consumer real estate loans is included below: HELOC HELOC loans are revolving lines of credit secured by 1-4 family residential property. The primary risk is the borrower’s inability to repay debt. Revolving notes are often associated with HELOCs that can be secured by real estate without a 1st lien priority. Collateral is susceptible to market volatility impacting home values or economic downturns. First lien: 1-4 family First lien 1-4 family loans are secured by a first lien on 1-4 family residential property. These term loans carry longer maturities and amortizations. The longer tenure exposes the borrower to multiple economic cycles, coupled with longer amortizations that result in smaller principal reduction early in the life of the loan. Collateral is susceptible to market volatility impacting home values. Junior lien: 1-4 family Junior lien 1-4 family loans are secured by a junior lien on 1-4 family residential property. The Company’s primary risk is the borrower’s inability to repay debt and not being in a first lien position. Collateral is susceptible to market volatility impacting home values or economic downturns. A borrower is considered non-performing if the Company has ceased the recognition of interest and the loan is placed on non-accrual. Charge-offs and borrower performance are tracked on a loan origination vintage basis. Certain vintages, based on their maturation cycle, could be at higher risk due to collateral-based risk factors. The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Amortized Cost Basis by Origination Year - Term Loans
Risk by Collat |
