| LOANS | LOANS The following table presents total loans outstanding by portfolio class, as of March 31, 2023 and December 31, 2022: (dollars in thousands) March 31, December 31, Commercial: Commercial $ 823,847 $ 786,877 Commercial other 756,553 727,697 Commercial real estate: Commercial real estate non-owner occupied 1,636,316 1,591,399 Commercial real estate owner occupied 460,133 496,786 Multi-family 281,559 277,889 Farmland 70,150 67,085 Construction and land development 326,836 320,882 Total commercial loans 4,355,394 4,268,615 Residential real estate: Residential first lien 309,637 304,243 Other residential 60,273 61,851 Consumer: Consumer 112,882 105,880 Consumer other 1,006,056 1,074,134 Lease financing 510,029 491,744 Total loans $ 6,354,271 $ 6,306,467 Total loans include net deferred loan costs of $5.7 million and $4.4 million at March 31, 2023 and December 31, 2022, respectively, and unearned discounts of $67.2 million and $62.6 million within the lease financing portfolio at March 31, 2023 and December 31, 2022, respectively. At March 31, 2023, the Company had residential real estate loans held for sale totaling $2.7 million, compared to $1.3 million at December 31, 2022. The Company sold commercial real estate, residential real estate and consumer loans with proceeds totaling $6.3 million and $103.1 million during the three months ended March 31, 2023 and 2022, respectively. Classifications of Loan Portfolio The Company monitors and assesses the credit risk of its loan portfolio using the classes set forth below. These classes also represent the segments by which the Company monitors the performance of its loan portfolio and estimates its allowance for credit losses on loans. Commercial —Loans to varying types of businesses, including municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital, operational needs and term financing of equipment. Repayment of such loans is generally provided through operating cash flows of the business. Commercial loans are predominately secured by equipment, inventory, accounts receivable, and other sources of repayment. Commercial FHA warehouse lines of $10.3 million and $25.0 million as of March 31, 2023 and December 31, 2022, respectively, were included in this classification. Commercial real estate —Loans secured by real estate occupied by the borrower for ongoing operations, including loans to borrowers engaged in agricultural production, and non-owner occupied real estate leased to one or more tenants, including commercial office, industrial, special purpose, retail and multi-family residential real estate loans. Construction and land development —Secured loans for the construction of business and residential properties. Real estate construction loans often convert to a real estate commercial loan at the completion of the construction period. Secured development loans are made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Interest reserves may be established on real estate construction loans. Residential real estate —Loans secured by residential properties that generally do not qualify for secondary market sale; however, the risk to return and/or overall relationship are considered acceptable to the Company. This category also includes loans whereby consumers utilize equity in their personal residence, generally through a second mortgage, as collateral to secure the loan. Consumer —Loans to consumers primarily for the purpose of home improvements or acquiring automobiles, recreational vehicles and boats. Consumer loans consist of relatively small amounts that are spread across many individual borrowers. Lease financing —Our equipment leasing business provides financing leases to varying types of businesses, nationwide, for purchases of business equipment and software. The financing is secured by a first priority interest in the financed assets and generally requires monthly payments. Commercial, commercial real estate, and construction and land development loans are collectively referred to as the Company’s commercial loan portfolio, while residential real estate, consumer loans and lease financing receivables are collectively referred to as the Company’s other loan portfolio. We have extended loans to certain of our directors, executive officers, principal shareholders and their affiliates. These loans were made in the ordinary course of business upon substantially the same terms, including collateralization and interest rates prevailing at the time. The aggregate loans outstanding to the Company's directors, executive officers, principal shareholders and their affiliates totaled $19.5 million and $19.8 million at March 31, 2023 and December 31, 2022, respectively. The new loans, other additions, repayments and other reductions for the three months ended March 31, 2023 and 2022, are summarized as follows: Three Months Ended March 31, (dollars in thousands) 2023 2022 Beginning balance $ 19,776 $ 13,869 New loans and other additions — 9,805 Repayments and other reductions (257) (300) Ending balance $ 19,519 $ 23,374 The following table represents, by loan portfolio segment, a summary of changes in the allowance for credit losses on loans for the three months ended March 31, 2023 and 2022: Commercial Loan Portfolio Other Loan Portfolio (dollars in thousands) Commercial Commercial Construction Residential Consumer Lease Total Changes in allowance for credit losses on loans for the three months ended March 31, 2023: Balance, beginning of period $ 14,639 $ 29,290 $ 2,435 $ 4,301 $ 3,599 $ 6,787 $ 61,051 Provision for credit losses on loans 1,998 (330) 7 63 700 697 3,135 Charge-offs (969) (746) — (31) (263) (390) (2,399) Recoveries 94 2 — 17 93 74 280 Balance, end of period $ 15,762 $ 28,216 $ 2,442 $ 4,350 $ 4,129 $ 7,168 $ 62,067 Changes in allowance for credit losses on loans for the three months ended March 31, 2022: Balance, beginning of period $ 14,375 $ 22,993 $ 972 $ 2,695 $ 2,558 $ 7,469 $ 51,062 Provision for credit losses on loans 389 3,444 (156) 584 257 (386) 4,132 Charge-offs (2,154) (227) (6) (104) (305) (206) (3,002) Recoveries 11 67 6 113 162 387 746 Balance, end of period $ 12,621 $ 26,277 $ 816 $ 3,288 $ 2,672 $ 7,264 $ 52,938 The Company utilizes a combination of models which measure probability of default and loss given default methodology in determining expected future credit losses. The probability of default is the risk that the borrower will be unable or unwilling to repay its debt in full or on time. The risk of default is derived by analyzing the obligor’s capacity to repay the debt in accordance with contractual terms. Probability of default is generally associated with financial characteristics such as inadequate cash flow to service debt, declining revenues or operating margins, high leverage, declining or marginal liquidity, and the inability to successfully implement a business plan. In addition to these quantifiable factors, the borrower’s willingness to repay also must be evaluated. The probability of default is forecasted, for most commercial and retail loans, using a regression model that determines the likelihood of default within the twelve month time horizon. The regression model uses forward-looking economic forecasts including variables such as gross domestic product, housing price index, and real disposable income to predict default rates. The forecasting method for the equipment financing portfolio assumes a rolling twelve-month average of the through-the-cycle default rate, to predict default rates for the twelve month time horizon. The loss given default component is the percentage of defaulted loan balance that is ultimately charged off. As a method for estimating the allowance, a form of migration analysis is used that combines the estimated probability of loans experiencing default events and the losses ultimately associated with the loans experiencing those defaults. Multiplying one by the other gives the Company its loss rate, which is then applied to the loan portfolio balance to determine expected future losses. Within the model, the loss given default approach produces segmented loss given default estimates using a loss curve methodology, which is based on historical net losses from charge-off and recovery information. The main principle of a loss curve model is that the loss follows a steady timing schedule based on how long the defaulted loan has been on the books. The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company’s historical look-back period includes January 2012 through the current period on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data. Historical data is evaluated in multiple components of the expected credit loss, including the reasonable and supportable forecast and the post-reversion period of each loan segment. The historical experience is used to infer probability of default and loss given default in the reasonable and supportable forecast period. In the post-reversion period, long-term average loss rates are segmented by loan pool. Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit-related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible. The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of borrower and concentrations, historical or expected credit loss patterns, and reasonable and supportable forecast periods. Within the probability of default segmentation, credit metrics are identified to further segment the financial assets. The Company utilizes risk ratings for the commercial portfolios and days past due for the consumer and the lease financing portfolios. The Company has defined five transitioning risk states for each asset pool within the expected credit loss model. The below table illustrates the transition matrix: Risk state Commercial loans Consumer loans and 1 0-5 0-14 2 6 15-29 3 7 30-59 4 8 60-89 Default 9+ and nonaccrual 90+ and nonaccrual Expected Credit Losses In calculating expected credit losses, the Company individually evaluates loans on nonaccrual status with a balance greater than $500,000, loans past due 90 days or more and still accruing interest, and loans that do not share risk characteristics with other loans in the pool. The following table presents amortized cost basis of individually evaluated loans on nonaccrual status as of March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 (dollars in thousands) Nonaccrual with allowance Nonaccrual with no allowance Total nonaccrual Nonaccrual with allowance Nonaccrual with no allowance Total nonaccrual Commercial: Commercial $ 1,838 $ 969 $ 2,807 $ 1,910 $ 1,111 $ 3,021 Commercial other 2,820 — 2,820 3,169 — 3,169 Commercial real estate: Commercial real estate non-owner occupied 11,780 9,968 21,748 1,345 11,899 13,244 Commercial real estate owner occupied 6,410 — 6,410 7,118 — 7,118 Multi-family 141 8,148 8,289 154 8,949 9,103 Farmland 25 — 25 25 — 25 Construction and land development 200 — 200 202 — 202 Total commercial loans 23,214 19,085 42,299 13,923 21,959 35,882 Residential real estate: Residential first lien 3,140 570 3,710 2,925 572 3,497 Other residential 786 — 786 871 — 871 Consumer: Consumer 119 — 119 120 — 120 Lease financing 2,155 — 2,155 1,606 — 1,606 Total loans $ 29,414 $ 19,655 $ 49,069 $ 19,445 $ 22,531 $ 41,976 There was no interest income recognized on nonaccrual loans during the three months ended March 31, 2023 and 2022 while the loans were in nonaccrual status. Additional interest income that would have been recorded on nonaccrual loans had they been current in accordance with their original terms was $0.8 million for both the three months ended March 31, 2023 and 2022. Collateral Dependent Financial Assets A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with a loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral’s value increases and the loan may become collateral dependent. The table below presents the value of individually evaluated, collateral dependent loans by loan class, for borrowers experiencing financial difficulty, as of March 31, 2023 and December 31, 2022: Type of Collateral (dollars in thousands) Real Estate Blanket Lien Equipment Total March 31, 2023 Commercial: Commercial $ — $ 969 $ — $ 969 Commercial real estate: Non-owner occupied 21,577 — — 21,577 Owner occupied 3,752 — — 3,752 Multi-family 8,150 — — 8,150 Lease financing — — 101 101 Total collateral dependent loans $ 33,479 $ 969 $ 101 $ 34,549 December 31, 2022 Commercial: Commercial $ — $ 1,604 $ — $ 1,604 Commercial real estate: Non-owner occupied 13,033 — — 13,033 Owner occupied 3,874 — — 3,874 Multi-family 8,950 — — 8,950 Residential real estate Residential first lien 220 — — 220 Total collateral dependent loans $ 26,077 $ 1,604 $ — $ 27,681 The aging status of the recorded investment in loans by portfolio as of March 31, 2023 was as follows: Accruing loans (dollars in thousands) 30-59 60-89 days past due Past due Total Nonaccrual Current Total Commercial: Commercial $ 360 $ 89 $ 44 $ 493 $ 2,807 $ 820,547 $ 823,847 Commercial other 8,214 3,102 732 12,048 2,820 741,685 756,553 Commercial real estate: Commercial real estate non-owner occupied 4,105 113 — 4,218 21,748 1,610,350 1,636,316 Commercial real estate owner occupied 121 — — 121 6,410 453,602 460,133 Multi-family 141 — — 141 8,289 273,129 281,559 Farmland 104 — — 104 25 70,021 70,150 Construction and land development 199 — — 199 200 326,437 326,836 Total commercial loans 13,244 3,304 776 17,324 42,299 4,295,771 4,355,394 Residential real estate: Residential first lien 35 123 — 158 3,710 305,769 309,637 Other residential 78 — — 78 786 59,409 60,273 Consumer: Consumer 224 32 — 256 119 112,507 112,882 Consumer other 4,823 3,187 766 8,776 — 997,280 1,006,056 Lease financing 4,552 1,293 102 5,947 2,155 501,927 510,029 Total loans $ 22,956 $ 7,939 $ 1,644 $ 32,539 $ 49,069 $ 6,272,663 $ 6,354,271 The aging status of the recorded investment in loans by portfolio as of December 31, 2022 was as follows: Accruing loans (dollars in thousands) 30-59 60-89 Past due Total Nonaccrual Current Total Commercial: Commercial $ 7 $ 112 $ — $ 119 $ 3,021 $ 783,737 $ 786,877 Commercial other 6,035 2,365 — 8,400 3,169 716,128 727,697 Commercial real estate: Commercial real estate non-owner occupied 1,008 999 — 2,007 13,244 1,576,148 1,591,399 Commercial real estate owner occupied 73 — — 73 7,118 489,595 496,786 Multi-family — — — — 9,103 268,786 277,889 Farmland — — — — 25 67,060 67,085 Construction and land development — 6,000 — 6,000 202 314,680 320,882 Total commercial loans 7,123 9,476 — 16,599 35,882 4,216,134 4,268,615 Residential real estate: Residential first lien 82 456 428 966 3,497 299,780 304,243 Other residential 188 13 — 201 871 60,779 61,851 Consumer: Consumer 139 18 12 169 120 105,591 105,880 Consumer other 5,381 3,559 733 9,673 — 1,064,461 1,074,134 Lease financing 4,415 1,522 — 5,937 1,606 484,201 491,744 Total loans $ 17,328 $ 15,044 $ 1,173 $ 33,545 $ 41,976 $ 6,230,946 $ 6,306,467 Loan Restructurings On January 1, 2023, the Company adopted the accounting guidance in ASU No. 2022-02, effective as of January 1, 2023, which eliminates the recognition and measurement of a troubled debt restructuring ("TDR"). Due to the removal of the TDR designation, the Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows. The Company may offer various types of concessions when modifying a loan. Commercial and industrial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested. Loans modified in a loan restructuring for the Company may have the financial effect of increasing the specific allowance associated with the loan. An allowance for loans that have been modified in a loan restructuring is measured based on the probability of default and loss given default model, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a loan restructuring subsequently default, the Company evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan. In some cases, the Company will modify a loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession such as an interest rate reduction or principal forgiveness, may be granted. During the three months ended March 31, 2023 the Company restructured two loans for borrowers experiencing financial difficulties with principal balances totaling $0.1 million. One of the restructured loans was provided a term extension with the other receiving an interest rate reduction and a term extension. Credit Quality Monitoring The Company maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally within the Company’s four main regions, which include eastern, northern and southern Illinois and the St. Louis metropolitan area. In addition, our specialty finance division does nationwide bridge lending for FHA and HUD developments and originates loans for multifamily, assisted and senior living and multi-use properties. Our equipment leasing business provides financing to business customers across the country. The Company has a loan approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Company’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. All loan authority is based on the aggregate credit to a borrower and its related entities. The Company’s consumer loan portfolio is primarily comprised of both secured and unsecured loans that are relatively small and are evaluated at origination on a centralized basis against standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Company’s Consumer Collections Group for resolution. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred. Loans in the commercial loan portfolio tend to be larger and more complex than those in the other loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various individuals within the Company at least quarterly. The Company maintains a centralized independent loan review function that monitors the approval process and ongoing asset quality of the loan portfolio, including the accuracy of loan grades. The Company also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Company. Credit Quality Indicators The Company uses a ten grade risk rating system to monitor the ongoing credit quality of its commercial loan portfolio. These loan grades rank the credit quality of a borrower by measuring liquidity, debt capacity, and coverage and payment behavior as shown in the borrower’s financial statements. The risk grades also measure the quality of the borrower’s management and the repayment support offered by any guarantors. The Company considers all loans with Risk Grades 1 - 6 as acceptable credit risks and structures and manages such relationships accordingly. Periodic financial and operating data combined with regular loan officer interactions are deemed adequate to monitor borrower performance. Loans with Risk Grades of 7 are considered "watch credits" categorized as special mention and the frequency of loan officer contact and receipt of financial data is increased to stay abreast of borrower performance. Loans with Risk Grades of 8 - 10 are considered problematic and require special care. Risk Grade 8 is categorized as substandard, 9 as substandard - nonaccrual and 10 as doubtful. Further, loans with Risk Grades of 7 - 10 are managed regularly through a number of processes, procedures and committees, including oversight by a loan administration committee comprised of executive and senior management of the Company, which includes highly structured reporting of financial and operating data, intensive loan officer intervention and strategies to exit, as well as potential management by the Company's Special Assets Group. Loans not graded in the commercial loan portfolio are monitored by aging status and payment activity. The following tables present the recorded investment of the commercial loan portfolio by risk category as of March 31, 2023 and December 31, 2022: March 31, 2023 Term Loans (dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving loans Total Commercial Commercial Acceptable credit quality $ 92,019 $ 138,413 $ 101,512 $ 56,991 $ 19,195 $ 50,975 $ 338,272 $ 797,377 Special mention — 3,975 2,024 — 6,956 3,160 124 16,239 Substandard — — — — 203 5,329 1,892 7,424 Substandard – nonaccrual — — 340 43 91 282 2,051 2,807 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 92,019 142,388 103,876 57,034 26,445 59,746 342,339 823,847 Commercial other Acceptable credit quality 120,499 253,610 138,294 93,257 54,541 11,681 76,477 748,359 Special mention — 150 — 716 2,278 410 480 4,034 Substandard 41 250 — — — 77 818 1,186 Substandard – nonaccrual 51 330 1,167 444 520 308 — 2,820 Doubtful — — — — — — — — Not graded — 154 — — — — — 154 Subtotal 120,591 254,494 139,461 94,417 57,339 12,476 77,775 756,553 Commercial real estate Non-owner occupied Acceptable credit quality 31,008 679,676 411,690 160,098 86,550 159,214 6,083 1,534,319 Special mention — — 184 472 165 6,910 — 7,731 Substandard — 1,886 — — 35,495 35,137 — 72,518 Substandard – nonaccrual — — 685 999 7,573 12,491 — 21,748 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 31,008 681,562 412,559 161,569 129,783 213,752 6,083 1,636,316 Owner occupied Acceptable credit quality 15,780 118,881 112,201 63,048 23,955 99,056 1,882 434,803 Special mention — — 1,124 — 86 11,753 19 12,982 Substandard — 34 270 76 1,888 3,670 — 5,938 Substandard – nonaccrual — 210 4,043 210 144 1,499 304 6,410 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 15,780 119,125 117,638 63,334 26,073 115,978 2,205 460,133 Multi-family Acceptable credit quality 487 164,103 26,420 29,279 10,380 23,441 799 254,909 Special mention — — — — — 14,695 14,695 Substandard — — — — — 3,666 — 3,666 Substandard – nonaccrual — — 904 — 109 7,276 — 8,289 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 487 164,103 27,324 29,279 10,489 49,078 799 281,559 Farmland Acceptable credit quality 6,557 7,396 15,614 13,152 3,972 21,271 1,381 69,343 Special mention — — — — — 102 — 102 Substandard — — 14 — 22 445 199 680 Substandard – nonaccrual — — — — — 25 — 25 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 6,557 7,396 15,628 13,152 3,994 21,843 1,580 70,150 Construction and land development Acceptable credit quality 5,904 177,393 91,453 1,430 674 1,256 37,712 315,822 Special mention — — — — — 210 — 210 Substandard — — 6,000 — — 2,407 — 8,407 Substandard – nonaccrual — — — — 200 — — 200 Doubtful — — — — — — — — Not graded — 1,946 216 7 — 28 — 2,197 Subtotal 5,904 179,339 97,669 1,437 874 3,901 37,712 326,836 Total Acceptable credit quality 272,254 1,539,472 897,184 417,255 199,267 366,894 462,606 4,154,932 Special mention — 4,125 3,332 1,188 9,485 37,240 623 55,993 Substandard 41 2,170 6,284 76 37,608 50,731 2,909 99,819 Substandard – nonaccrual 51 540 7,139 1,696 8,637 21,881 2,355 42,299 Doubtful — — — — — — — — Not graded — 2,100 216 7 — 28 — 2,351 Total commercial loans $ 272,346 $ 1,548,407 $ 914,155 $ 420,222 $ 254,997 $ 476,774 $ 468,493 $ 4,355,394 December 31, 2022 Term Loans (dollars in thousands) 2022 2021 2020 2019 2018 Prior Revolving loans Total Commercial Commercial Acceptable credit quality $ 111,087 $ 102,966 $ 61,751 $ 28,063 $ 12,547 $ 45,168 $ 404,100 $ 765,682 Special mention 3,559 2,106 — 227 551 3,154 159 9,756 Substandard — — — 206 1,722 3,915 2,575 8,418 Substandard – nonaccrual — 340 — 132 83 246 2,220 3,021 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 114,646 105,412 61,751 28,628 14,903 52,483 409,054 786,877 Commercial other Acceptable credit quality 283,465 153,788 105,980 64,218 15,459 163 96,509 719,582 Special mention — — 754 2,331 455 — 55 3,595 Substandard 250 — — 12 80 — 848 1,190 Substandard – nonaccrual 524 1,247 444 463 491 — — 3,169 Doubtful — — — — — — — — Not graded 161 — — — — — — 161 Subtotal 284,400 155,035 107,178 67,024 16,485 163 97,412 727,697 Commercial real estate Non-owner occupied Acceptable credit quality 679,040 403,952 145,235 72,504 18,249 160,992 4,833 1,484,805 Special mention 1,407 186 477 10,633 195 8,452 — 21,350 Substandard 569 — 7,458 32,731 1,587 29,655 — 72,000 Substandard – nonaccrual — 701 — 48 10,246 2,249 — 13,244 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 681,016 404,839 153,170 115,916 30,277 201,348 4,833 1,591,399 Owner occupied Acceptable credit quality 120,141 122,321 64,720 31,916 29,454 88,928 4,305 461,785 Special mention — 1,161 — 7,917 — 12,161 22 21,261 Substandard 141 272 79 1,984 — 3,771 375 6,622 Substandard – nonaccrual 155 4,165 225 146 333 1,790 304 7,118 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 120,437 127,919 65,024 41,963 29,787 106,650 5,006 496,786 Multi-family Acceptable credit quality 163,647 31,605 29,458 208 24,490 14,574 1,101 265,083 Special mention — — — — — — — — Substandard — — — — — 3,703 — 3,703 Substandard – nonaccrual — 927 — 113 — 8,063 — 9,103 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 163,647 32,532 29,458 321 24,490 26,340 1,101 277,889 Farmland Acceptable credit quality 8,659 16,138 13,467 4,117 3,129 19,102 1,593 66,205 Special mention — — — — — 159 — 159 Substandard — 14 — 23 113 347 199 696 Substandard – nonaccrual — — — — — 25 — 25 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 8,659 16,152 13,467 4,140 3,242 19,633 1,792 67,085 Construction and land development Acceptable credit quality 171,243 79,747 10,676 8,388 98 1,420 37,997 309,569 Special mention — — — — — 210 — 210 Substandard — 6,000 — — 2,415 — — 8,415 Substandard – nonaccrual — — — 202 — — — 202 Doubtful — — — — — — — — Not graded 2,112 337 8 — — 29 — 2,486 Subtotal 173,355 86,084 10,684 8,590 2,513 1,659 37,997 320,882 Total Acceptable credit quality 1,537,282 910,517 431,287 209,414 103,426 330,347 550,438 4,072,711 Special mention 4,966 3,453 1,231 21,108 1,201 24,136 236 56,331 Substandard 960 6,286 7,537 34,956 5,917 41,391 3,997 101,044 Substandard – nonaccrual 679 7,380 669 1,104 11,153 12,373 2,524 35,882 Doubtful — — — — — — — — Not graded 2,273 337 8 — — 29 — 2,647 Total commercial loans $ 1,546,160 $ 927,973 $ 440,732 $ 266,582 $ 121,697 $ 408,276 $ 557,195 $ 4,268,615 The following table presents the gross charge-offs by class of loan and year of origination on the commercial loan portfolio for the three months ended March 31, 2023: March 31, 2023 Term Loans by Origination Year (dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Total Commercial Commercial $ — $ — $ — $ — $ 9 $ 11 $ — $ 20 Commercial Other — 559 64 — — 326 — 949 Commercial Real Estate Non-owner occupied — — — — — — — — Owner occupied — — — — — — — — Multi-family — — — — — 746 — 746 Farmland — — — — — — — Construction and land development — — — — — — — Total gross commercial charge-offs $ — $ 559 $ 64 $ — $ 9 $ 1,083 $ — $ 1,715 The Company evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and lease financing loans, based primarily on the aging status of the loan and payment activity. Accordingly, loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be nonperforming for purposes of credit quality evaluation. The following tables present the recorded investment of our other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming as of March 31, 2023 and December 31, 2022: March 31, 2023 Term Loans (dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Total Residential real estate Residential first lien Performing $ 10,844 $ 75,904 $ 38,573 $ 31,100 $ 20,688 $ 128,742 $ 76 $ 305,927 Nonperforming — 50 — — 259 3,401 — 3,710 Subtotal 10,844 75,954 38,573 31,100 20,947 132,143 76 309,637 Other residential Performing 817 1,306 480 513 1,008 2,687 52,676 59,487 Nonperforming — — — — — 197 589 786 Subtotal 817 1,306 480 513 1,008 2,884 53,265 60,273 Consumer Consumer Performing 14,924 29,952 38,164 8,240 3,113 15,646 2,724 112,763 Nonperforming — 12 3 7 — 95 2 119 Subtotal 14,924 29,964 38,167 8,247 3,113 15,741 2,726 112,882 Consumer other Performing 153,241 511,526 215,786 79,778 30,437 10,716 3,806 1,005,290 Nonperforming 766 — — — — — — 766 Subtotal 154,007 511,526 215,786 79,778 30,437 10,716 3,806 1,006,056 Leases financing Performing 65,650 198,441 101,715 75,448 48,465 18,053 — 507,772 Nonperforming — 679 224 563 637 154 — 2,257 Subtotal 65,650 199,120 101,939 76,011 49,102 18,207 — 510,029 Total Performing 245,476 817,129 394,718 195,079 103,711 175,844 59,282 1,991,239 Nonperforming 766 741 227 570 896 3,847 591 7,638 Total other loans $ 246,242 $ 817,870 $ 394,945 $ 195,649 $ 104,607 $ 179,691 $ 59,873 $ 1,998,877 December |
