| LOANS | LOANS The following table presents total loans outstanding by portfolio class, as of March 31, 2024 and December 31, 2023: (dollars in thousands) March 31, December 31, Commercial: Commercial $ 813,963 $ 825,938 Commercial other 601,704 656,592 Commercial real estate: Commercial real estate non-owner occupied 1,591,455 1,622,668 Commercial real estate owner occupied 450,149 436,857 Multi-family 287,586 279,904 Farmland 67,923 67,416 Construction and land development 474,128 452,593 Total commercial loans 4,286,908 4,341,968 Residential real estate: Residential first lien 316,310 317,388 Other residential 62,273 63,195 Consumer: Consumer 99,157 107,743 Consumer other 737,935 827,435 Lease financing 455,879 473,350 Total loans $ 5,958,462 $ 6,131,079 Total loans include net deferred loan costs of $3.5 million and $3.8 million at March 31, 2024 and December 31, 2023, respectively, and unearned discounts of $64.4 million and $66.4 million within the lease financing portfolio at March 31, 2024 and December 31, 2023, respectively. At March 31, 2024, the Company had residential real estate loans held for sale totaling $5.0 million, compared to $3.8 million at December 31, 2023. The Company sold loans and leases with proceeds totaling $17.6 million and $6.3 million during the three months ended March 31, 2024 and 2023, 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 $8.0 million as of March 31, 2024 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 new loans, other additions, repayments and other reductions for the three months ended March 31, 2024 and 2023, are summarized as follows: Three Months Ended March 31, (dollars in thousands) 2024 2023 Beginning balance $ 20,990 $ 19,776 Repayments and other reductions (264) (257) Ending balance $ 20,726 $ 19,519 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, 2024 and 2023: 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, 2024: Balance, beginning of period $ 21,847 $ 20,229 $ 4,163 $ 5,553 $ 3,770 $ 12,940 $ 68,502 Provision for credit losses on loans 1,776 1,677 8,466 82 (11) 2,010 14,000 Charge-offs (2,410) (691) — (35) (235) (1,665) (5,036) Recoveries 116 152 — 55 87 181 591 Balance, end of period $ 21,329 $ 21,367 $ 12,629 $ 5,655 $ 3,611 $ 13,466 $ 78,057 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 The Company utilizes a combination of models which measure probability of default and loss given default 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. 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 the amortized cost basis of individually evaluated loans on nonaccrual status as of March 31, 2024 and December 31, 2023: March 31, 2024 December 31, 2023 (dollars in thousands) Nonaccrual with allowance Nonaccrual with no allowance Total nonaccrual Nonaccrual with allowance Nonaccrual with no allowance Total nonaccrual Commercial: Commercial $ 3,572 $ — $ 3,572 $ 3,560 $ — $ 3,560 Commercial other 6,251 — 6,251 4,941 — 4,941 Commercial real estate: Commercial real estate non-owner occupied 6,544 14,902 21,446 1,614 14,098 15,712 Commercial real estate owner occupied 4,198 6,500 10,698 4,276 6,500 10,776 Multi-family 3,413 2,652 6,065 240 6,015 6,255 Farmland 1,265 — 1,265 1,148 — 1,148 Construction and land development 15,724 10,594 26,318 39 — 39 Total commercial loans 40,967 34,648 75,615 15,818 26,613 42,431 Residential real estate: Residential first lien 2,658 590 3,248 2,583 490 3,073 Other residential 670 — 670 635 — 635 Consumer: Consumer 91 — 91 134 — 134 Lease financing 10,185 15 10,200 9,097 36 9,133 Total loans $ 54,571 $ 35,253 $ 89,824 $ 28,267 $ 27,139 $ 55,406 There was no interest income recognized on nonaccrual loans during the three months ended March 31, 2024 and 2023 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 $1.3 million and $0.8 million for the three months ended March 31, 2024 and 2023, respectively. 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, 2024 and December 31, 2023: Type of Collateral (dollars in thousands) Real Estate Equipment Total March 31, 2024 Commercial: Commercial $ — $ 1,972 $ 1,972 Commercial other — 1,399 1,399 Commercial real estate: Non-owner occupied 20,293 — 20,293 Owner occupied 9,275 — 9,275 Multi-family 20,461 — 20,461 Construction and land development 26,204 — 26,204 Total collateral dependent loans $ 76,233 $ 3,371 $ 79,604 December 31, 2023 Commercial: Commercial $ — $ 1,972 $ 1,972 Commercial other — 1,232 1,232 Commercial real estate: Non-owner occupied 14,147 — 14,147 Owner occupied 9,275 — 9,275 Multi-family 5,143 — 5,143 Total collateral dependent loans $ 28,565 $ 3,204 $ 31,769 The aging status of the recorded investment in loans by portfolio as of March 31, 2024 was as follows: Accruing loans (dollars in thousands) 30-59 60-89 days past due Past due Total Nonaccrual Current Total Commercial: Commercial $ 4,164 $ 640 $ 450 $ 5,254 $ 3,572 $ 805,137 $ 813,963 Commercial other 12,247 4,474 3 16,724 6,251 578,729 601,704 Commercial real estate: Commercial real estate non-owner occupied 7,072 4,339 — 11,411 21,446 1,558,598 1,591,455 Commercial real estate owner occupied 284 265 — 549 10,698 438,902 450,149 Multi-family — — 14,483 14,483 6,065 267,038 287,586 Farmland 3 — — 3 1,265 66,655 67,923 Construction and land development — — — — 26,318 447,810 474,128 Total commercial loans 23,770 9,718 14,936 48,424 75,615 4,162,869 4,286,908 Residential real estate: Residential first lien 429 — 212 641 3,248 312,421 316,310 Other residential 142 52 — 194 670 61,409 62,273 Consumer: Consumer 39 22 — 61 91 99,005 99,157 Consumer other 6,735 4,126 2 10,863 — 727,072 737,935 Lease financing 8,646 5,174 5 13,825 10,200 431,854 455,879 Total loans $ 39,761 $ 19,092 $ 15,155 $ 74,008 $ 89,824 $ 5,794,630 $ 5,958,462 The aging status of the recorded investment in loans by portfolio as of December 31, 2023 was as follows: Accruing loans (dollars in thousands) 30-59 60-89 Past due Total Nonaccrual Current Total Commercial: Commercial $ 9,340 $ 504 $ — $ 9,844 $ 3,560 $ 812,534 $ 825,938 Commercial other 11,156 5,990 781 17,927 4,941 633,724 656,592 Commercial real estate: Commercial real estate non-owner occupied 384 — — 384 15,712 1,606,572 1,622,668 Commercial real estate owner occupied — — — — 10,776 426,081 436,857 Multi-family 14,506 8,140 — 22,646 6,255 251,003 279,904 Farmland — 120 — 120 1,148 66,148 67,416 Construction and land development 211 10,593 — 10,804 39 441,750 452,593 Total commercial loans 35,597 25,347 781 61,725 42,431 4,237,812 4,341,968 Residential real estate: Residential first lien 69 299 161 529 3,073 313,786 317,388 Other residential 100 50 — 150 635 62,410 63,195 Consumer: Consumer 62 20 — 82 134 107,527 107,743 Consumer other 7,225 4,561 3 11,789 — 815,646 827,435 Lease financing 7,622 1,826 — 9,448 9,133 454,769 473,350 Total loans $ 50,675 $ 32,103 $ 945 $ 83,723 $ 55,406 $ 5,991,950 $ 6,131,079 Loan Restructurings The Company adopted the accounting guidance in ASU No. 2022-02, effective as of January 1, 2023, which eliminated the recognition and measurement of a 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, 2024 the Company restructured four loans and three leases for borrowers experiencing financial difficulties with principal balances totaling $1.5 million. Each of the restructured loans and leases were provided a term extension. The Company has not committed to lend any additional amounts to the borrowers that have been granted a loan modification. 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 geographic regions. 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, 2024 and December 31, 2023: March 31, 2024 Term Loans (dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving loans Total Commercial Commercial Acceptable credit quality $ 34,179 $ 161,363 $ 94,071 $ 63,411 $ 32,308 $ 51,224 $ 343,792 $ 780,348 Special mention — — 450 — — 169 1,103 1,722 Substandard 970 3,321 13,192 420 322 5,229 4,867 28,321 Substandard – nonaccrual — 1,308 — 1,321 — 273 670 3,572 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 35,149 165,992 107,713 65,152 32,630 56,895 350,432 813,963 Commercial other Acceptable credit quality 31,164 117,553 177,957 89,308 49,811 49,197 77,454 592,444 Special mention 2 — 400 368 109 94 1,071 2,044 Substandard — 36 220 — — — 709 965 Substandard – nonaccrual — 2,301 2,437 654 148 595 116 6,251 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 31,166 119,890 181,014 90,330 50,068 49,886 79,350 601,704 Commercial real estate Non-owner occupied Acceptable credit quality 183,143 181,438 540,756 294,180 102,842 185,288 6,923 1,494,570 Special mention — 4,423 — 181 452 277 — 5,333 Substandard 17,978 19,027 11,474 — — 21,627 — 70,106 Substandard – nonaccrual — 5,256 — 96 860 15,234 — 21,446 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 201,121 210,144 552,230 294,457 104,154 222,426 6,923 1,591,455 Owner occupied Acceptable credit quality 11,641 37,180 108,068 111,372 47,480 95,805 793 412,339 Special mention — 5,750 — 127 — 546 5 6,428 Substandard — — 7,644 265 — 12,775 — 20,684 Substandard – nonaccrual — 109 9,419 5 159 702 304 10,698 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 11,641 43,039 125,131 111,769 47,639 109,828 1,102 450,149 Multi-family Acceptable credit quality 59,782 12,834 111,585 25,660 27,987 20,888 112 258,848 Special mention — — — — — — — — Substandard 8,140 — — — — 14,533 — 22,673 Substandard – nonaccrual — 1,658 — 899 — 3,508 — 6,065 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 67,922 14,492 111,585 26,559 27,987 38,929 112 287,586 Farmland Acceptable credit quality 1,017 9,720 4,654 15,117 12,037 21,322 1,040 64,907 Special mention — — — 1,451 — — — 1,451 Substandard — — — 14 — 286 — 300 Substandard – nonaccrual — — — 117 — 1,100 48 1,265 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 1,017 9,720 4,654 16,699 12,037 22,708 1,088 67,923 Construction and land development Acceptable credit quality 9,176 69,390 229,815 88,372 — 1,566 27,125 425,444 Special mention — — 9,851 3,810 — 40 — 13,701 Substandard — — — 6,000 — — — 6,000 Substandard – nonaccrual — — — 26,278 — 40 — 26,318 Doubtful — — — — — — — — Not graded 264 1,601 421 355 — 24 — 2,665 Subtotal 9,440 70,991 240,087 124,815 — 1,670 27,125 474,128 Total Acceptable credit quality 330,102 589,478 1,266,906 687,420 272,465 425,290 457,239 4,028,900 Special mention 2 10,173 10,701 5,937 561 1,126 2,179 30,679 Substandard 27,088 22,384 32,530 6,699 322 54,450 5,576 149,049 Substandard – nonaccrual — 10,632 11,856 29,370 1,167 21,452 1,138 75,615 Doubtful — — — — — — — — Not graded 264 1,601 421 355 — 24 — 2,665 Total commercial loans $ 357,456 $ 634,268 $ 1,322,414 $ 729,781 $ 274,515 $ 502,342 $ 466,132 $ 4,286,908 December 31, 2023 Term Loans (dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving loans Total Commercial Commercial Acceptable credit quality $ 157,498 $ 96,295 $ 71,366 $ 36,680 $ 14,688 $ 42,827 $ 369,297 $ 788,651 Special mention 3,015 450 4 — 181 43 983 4,676 Substandard 4,485 13,651 420 342 253 4,961 4,940 29,052 Substandard – nonaccrual 1,238 — 1,321 25 79 360 536 3,559 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 166,236 110,396 73,111 37,047 15,201 48,191 375,756 825,938 Commercial other Acceptable credit quality 139,057 195,726 100,946 59,392 32,848 28,946 90,928 647,843 Special mention — 532 399 114 107 4 1,682 2,838 Substandard 37 220 — — — — 639 896 Substandard – nonaccrual 1,819 1,918 449 184 361 94 116 4,941 Doubtful — — — — — — — — Not graded 74 — — — — — — 74 Subtotal 140,987 198,396 101,794 59,690 33,316 29,044 93,365 656,592 Commercial real estate Non-owner occupied Acceptable credit quality 237,215 653,057 309,013 110,743 82,563 124,430 6,328 1,523,349 Special mention 4,480 — 181 457 — 274 — 5,392 Substandard 35,811 1,658 — — 17,835 22,911 — 78,215 Substandard – nonaccrual 5,573 — 154 999 7,597 1,389 — 15,712 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 283,079 654,715 309,348 112,199 107,995 149,004 6,328 1,622,668 Owner occupied Acceptable credit quality 32,972 100,893 113,264 48,415 23,671 77,854 1,803 398,872 Special mention 5,750 — 129 — 149 177 8 6,213 Substandard — 7,716 265 — 705 12,310 — 20,996 Substandard – nonaccrual 126 9,431 28 171 27 689 304 10,776 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 38,848 118,040 113,686 48,586 24,552 91,030 2,115 436,857 Multi-family Acceptable credit quality 4,483 170,519 25,835 28,137 10,185 11,538 254 250,951 Special mention — — — — — — — — Substandard 8,140 — — — — 14,558 — 22,698 Substandard – nonaccrual 1,700 — 899 — 104 3,552 — 6,255 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 14,323 170,519 26,734 28,137 10,289 29,648 254 279,904 Farmland Acceptable credit quality 10,104 4,735 13,405 12,255 3,723 18,636 1,439 64,297 Special mention — — 1,451 — — 96 — 1,547 Substandard — — 133 — 22 269 — 424 Substandard – nonaccrual — — — — — 1,100 48 1,148 Doubtful — — — — — — — — Not graded — — — — — — — — Subtotal 10,104 4,735 14,989 12,255 3,745 20,101 1,487 67,416 Construction and land development Acceptable credit quality 65,538 233,660 88,047 — 677 916 29,385 418,223 Special mention — — — — — 40 — 40 Substandard — — 16,594 — — — 15,349 31,943 Substandard – nonaccrual — — — — — 39 — 39 Doubtful — — — — — — — — Not graded 1,535 432 356 — — 25 — 2,348 Subtotal 67,073 234,092 104,997 — 677 1,020 44,734 452,593 Total Acceptable credit quality 646,867 1,454,885 721,876 295,622 168,355 305,147 499,434 4,092,186 Special mention 13,245 982 2,164 571 437 634 2,673 20,706 Substandard 48,473 23,245 17,412 342 18,815 55,009 20,928 184,224 Substandard – nonaccrual 10,456 11,349 2,851 1,379 8,168 7,223 1,004 42,430 Doubtful — — — — — — — — Not graded 1,609 432 356 — — 25 — 2,422 Total commercial loans $ 720,650 $ 1,490,893 $ 744,659 $ 297,914 $ 195,775 $ 368,038 $ 524,039 $ 4,341,968 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, 2024: Term Loans by Origination Year (dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total For the three months ended March 31, 2024 Commercial Commercial $ — $ — $ — $ — $ 10 $ 1 $ 102 $ 113 Commercial Other — 866 1,074 294 20 43 — 2,297 Commercial Real Estate Non-owner occupied — — — — — — — — Owner occupied — — — — 138 553 — 691 Multi-family — — — — — — — — Construction and land development — — — — — — — — Total gross commercial charge-offs $ — $ 866 $ 1,074 $ 294 $ 168 $ 597 $ 102 $ 3,101 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 and loans past due 90 days or more and still accruing interest 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, 2024 and December 31, 2023: March 31, 2024 Term Loans (dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Residential real estate Residential first lien Performing $ 5,943 $ 43,221 $ 73,140 $ 36,738 $ 28,978 $ 124,818 $ 12 $ 312,850 Nonperforming — 176 — 331 — 2,953 — 3,460 Subtotal 5,943 43,397 73,140 37,069 28,978 127,771 12 316,310 Other residential Performing 542 2,465 1,039 329 375 2,542 54,311 61,603 Nonperforming — — — 24 — 169 477 670 Subtotal 542 2,465 1,039 353 375 2,711 54,788 62,273 Consumer Consumer Performing 2,856 27,585 21,508 29,044 5,203 11,971 900 99,067 Nonperforming — 15 42 9 — 23 1 90 Subtotal 2,856 27,600 21,550 29,053 5,203 11,994 901 99,157 Consumer other Performing 20 183,855 350,647 128,536 50,076 24,798 — 737,932 Nonperforming — — — — — 3 — 3 Subtotal 20 183,855 350,647 128,536 50,076 24,801 — 737,935 Leases financing Performing 30,896 128,315 144,134 65,687 43,798 32,844 — 445,674 Nonperforming — 1,342 5,107 2,720 261 775 — 10,205 Subtotal 30,896 129,657 149,241 68,407 44,059 33,619 — 455,879 Total Performing 40,257 385,441 590,468 260,334 128,430 196,973 55,223 1,657,126 Nonperforming — 1,533 5,149 3,084 261 3,923 478 14,428 Total other loans $ 40,257 $ 386,974 $ 595,617 $ 263,418 $ 128,691 $ 200,896 $ 55,701 $ 1,671,554 December 31, 2023 Term Loans (dollars in thousands) 2023 2022 2021 2020 2019 Prior R |
