LOANS AND ALLOWANCE FOR CREDIT LOSSES (Tables)

3 Months Ended

Mar. 31, 2020

Summary of Loan Portfolio by Type of Loan

The following table summarizes the Company’s loan portfolio by type of loan as of:

	March 31, 2020			December 31, 2019
Commercial and industrial	$	297,163		$	279,583
Real estate:
Construction and development		263,973			280,498
Commercial real estate		584,883			567,360
Farmland		78,635			57,476
1-4 family residential		400,605			412,166
Multi-family residential		20,430			37,379
Consumer		52,996			53,245
Agricultural		19,314			18,359
Overdrafts		354			329
Total loans⁽¹⁾		1,718,353			1,706,395
Net of:
Deferred loan costs, net		456			601
Allowance for credit losses		(21,948	)		(16,202	)
Total net loans⁽¹⁾	$	1,696,861		$	1,690,794

(1) Excludes accrued interest receivable on loans of $6.8 million as of March 31, 2020 and December 31, 2019, which is presented on the consolidated balance sheets.

Schedule of Allowance for Loan Losses Activity

The Company’s estimate of the allowance for credit losses (“ACL”) reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring. The following tables present the activity in the ACL by class of loans for the three months ended March 31, 2020, and the activity in the allowance for loan loss by portfolio segment for the year ended December 31, 2019 and for the three months ended March 31, 2019:

For the Three Months Ended March 31, 2020	Commercial and industrial			Construction and development			Commercial real estate		Farmland		1-4 family residential			Multi-family residential			Consumer			Agricultural		Overdrafts			Unallocated COVID-19 reserve		Total
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	2,056		$	2,378		$	6,853	$	570	$	3,125		$	409		$	602		$	197	$	12		$	—	$	16,202
Impact of adopting ASC 326		546			323			2,228		26		1,339			(50	)		72			73		(9	)		—		4,548
Provision for credit losses		365			(229	)		447		193		(250	)		(170	)		85			11		35			—		487
Provision for credit losses - COVID-19		—			106			233		3		—			—			—			—		—			571		913
Loans charged-off		(43	)		—			—		—		(59	)		—			(73	)		—		(49	)		—		(224	)
Recoveries		—			—			—		—		1			—			7			—		14			—		22
Ending balance	$	2,924		$	2,578		$	9,761	$	792	$	4,156		$	189		$	693		$	281	$	3		$	571	$	21,948

For the Year Ended December 31, 2019	Commercial and industrial			Construction and development		Commercial real estate		Farmland			1-4 family residential			Multi-family residential			Consumer			Agricultural			Overdrafts			Total
Allowance for loan losses:
Beginning balance	$	1,751		$	1,920	$	6,025	$	643		$	2,868		$	631		$	565		$	238		$	10		$	14,651
Provision for loan losses		(117	)		458		827		(73	)		268			(222	)		(2	)		(41	)		152			1,250
Loans charged-off		(86	)		—		—		—			(14	)		—			(72	)		(89	)		(192	)		(453	)
Recoveries		508			—		1		—			3			—			111			89			42			754
Ending balance	$	2,056		$	2,378	$	6,853	$	570		$	3,125		$	409		$	602		$	197		$	12		$	16,202

For the Three Months Ended March 31, 2019	Commercial and industrial			Construction and development		Commercial real estate		Farmland		1-4 family residential			Multi-family residential			Consumer			Agricultural			Overdrafts			Total
Allowance for loan losses:
Beginning balance	$	1,751		$	1,920	$	6,025	$	643	$	2,868		$	631		$	565		$	238		$	10		$	14,651
Provision for loan losses		213			81		269		16		7			(56	)		46			(35	)		34			575
Loans charged-off		(6	)		—		—		—		(6	)		—			(17	)		—			(49	)		(78	)
Recoveries		5			—		—		—		1			—			23			—			13			42
Ending balance	$	1,963		$	2,001	$	6,294	$	659	$	2,870		$	575		$	617		$	203		$	8		$	15,190

Summary of Credit Exposure by Internally Assigned Grade

The following table summarizes the credit exposure in the Company’s loan portfolio, by year of origination, as of March 31, 2020:

March 31, 2020	2020		2019		2018			2017		2016		Prior		Revolving Loans Amortized Cost		Total
Commercial and industrial:
Risk rating
Pass	$	89,353	$	44,914	$	22,360		$	9,359	$	9,586	$	19,274	$	101,608	$	296,454
Special mention		—		—		—			—		—		—		—		—
Substandard		—		—		218			21		58		—		—		297
Nonaccrual		—		—		28			—		43		191		150		412
Total commercial and industrial loans	$	89,353	$	44,914	$	22,606		$	9,380	$	9,687	$	19,465	$	101,758	$	297,163

Charge-offs	$	—	$	—	$	(43	)	$	—	$	—	$	—	$	—	$	(43	)
Recoveries		—		—		—			—		—		—		—		—
Current period net	$	—	$	—	$	(43	)	$	—	$	—	$	—	$	—	$	(43	)

Construction and development:
Risk rating
Pass	$	29,946	$	119,807	$	55,942		$	28,704	$	10,867	$	11,023	$	5,886	$	262,175
Special mention		—		—		—			—		—		—		—		—
Substandard		—		600		6			—		—		—		—		606
Nonaccrual		—		1,192		—			—		—		—		—		1,192
Total construction and development loans	$	29,946	$	121,599	$	55,948		$	28,704	$	10,867	$	11,023	$	5,886	$	263,973

Charge-offs	$	—	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Recoveries		—		—		—			—		—		—		—		—
Current period net	$	—	$	—	$	—		$	—	$	—	$	—	$	—	$	—

Commercial real estate:
Risk rating
Pass	$	17,610	$	106,440	$	101,206		$	86,620	$	101,885	$	137,737	$	11,921	$	563,419
Special mention		—		—		—			—		—		70		—		70
Substandard		—		—		1,183			617		—		9,358		—		11,158
Nonaccrual		—		—		158			3,947		5,087		1,044		—		10,236
Total commercial real estate loans	$	17,610	$	106,440	$	102,547		$	91,184	$	106,972	$	148,209	$	11,921	$	584,883

Charge-offs	$	—	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Recoveries		—		—		—			—		—		—		—		—
Current period net	$	—	$	—	$	—		$	—	$	—	$	—	$	—	$	—

Farmland:
Risk rating
Pass	$	5,423	$	14,614	$	14,202		$	8,507	$	11,353	$	18,649	$	5,573	$	78,321
Special mention		—		—		—			—		—		41		—		41
Substandard		—		—		—			—		—		97		—		97
Nonaccrual		—		—		—			—		—		176		—		176
Total farmland loans	$	5,423	$	14,614	$	14,202		$	8,507	$	11,353	$	18,963	$	5,573	$	78,635

Charge-offs	$	—	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Recoveries		—		—		—			—		—		—		—		—
Current period net	$	—	$	—	$	—		$	—	$	—	$	—	$	—	$	—

March 31, 2020	2020			2019			2018			2017			2016		Prior			Revolving Loans Amortized Cost		Total
1-4 family residential:
Risk rating
Pass	$	12,890		$	81,727		$	65,493		$	46,797		$	53,530	$	125,807		$	10,237	$	396,481
Special mention		—			—			55			113			—		70			—		238
Substandard		—			—			—			—			—		—			—		—
Nonaccrual		—			—			383			446			1,031		2,026			—		3,886
Total 1-4 family residential loans	$	12,890		$	81,727		$	65,931		$	47,356		$	54,561	$	127,903		$	10,237	$	400,605

Charge-offs	$	—		$	—		$	—		$	—		$	—	$	(59	)	$	—	$	(59	)
Recoveries		—			—			—			—			—		1			—		1
Current period net	$	—		$	—		$	—		$	—		$	—	$	(58	)	$	—	$	(58	)

Multi-family residential:
Risk rating
Pass	$	1,304		$	4,837		$	3,746		$	1,515		$	1,801	$	6,665		$	562	$	20,430
Special mention		—			—			—			—			—		—			—		—
Substandard		—			—			—			—			—		—			—		—
Nonaccrual		—			—			—			—			—		—			—		—
Total multi-family residential loans	$	1,304		$	4,837		$	3,746		$	1,515		$	1,801	$	6,665		$	562	$	20,430

Charge-offs	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—
Recoveries		—			—			—			—			—		—			—		—
Current period net	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—

Consumer and overdrafts:
Risk rating
Pass	$	8,344		$	20,857		$	14,693		$	3,694		$	1,442	$	843		$	3,171	$	53,044
Special mention		—			39			35			3			—		—			—		77
Substandard		—			—			—			—			—		—			—		—
Nonaccrual		—			50			150			23			3		3			—		229
Total consumer loans and overdrafts	$	8,344		$	20,946		$	14,878		$	3,720		$	1,445	$	846		$	3,171	$	53,350

Charge-offs	$	(49	)	$	(17	)	$	(18	)	$	(38	)	$	—	$	—		$	—	$	(122	)
Recoveries		14			—			—			4			1		2			—		21
Current period net	$	(35	)	$	(17	)	$	(18	)	$	(34	)	$	1	$	2		$	—	$	(101	)

Agricultural:
Risk rating
Pass	$	1,532		$	2,919		$	3,357		$	1,146		$	432	$	391		$	9,276	$	19,053
Special mention		—			—			—			70			—		—			—		70
Substandard		—			—			—			—			85		5			—		90
Nonaccrual		—			—			69			—			32		—			—		101
Total agricultural loans	$	1,532		$	2,919		$	3,426		$	1,216		$	549	$	396		$	9,276	$	19,314

Charge-offs	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—
Recoveries		—			—			—			—			—		—			—		—
Current period net	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—

Total loans	$	166,402		$	397,996		$	283,284		$	191,582		$	197,235	$	333,470		$	148,384	$	1,718,353

Charge-offs	$	(49	)	$	(17	)	$	(61	)	$	(38	)	$	—	$	(59	)	$	—	$	(224	)
Recoveries		14			—			—			4			1		3			—		22
Total current period net charge-offs	$	(35	)	$	(17	)	$	(61	)	$	(34	)	$	1	$	(56	)	$	—	$	(202	)

The following table summarizes the credit exposure in the Company’s loan portfolio by class as of December 31, 2019:

December 31, 2019	Commercial and industrial		Construction and development		Commercial real estate		Farmland		1-4 family residential		Multi-family residential		Consumer and Overdrafts		Agricultural		Total
Grade:
Pass	$	279,217	$	278,679	$	548,662	$	57,152	$	409,896	$	37,379	$	53,327	$	18,101	$	1,682,413
Special mention		153		600		1,071		91		1,425		—		192		126		3,658
Substandard		213		1,219		17,627		233		845		—		55		132		20,324
Total	$	279,583	$	280,498	$	567,360	$	57,476	$	412,166	$	37,379	$	53,574	$	18,359	$	1,706,395

Schedule of Amortized Cost Basis of Collateral Dependent Loans

The following table presents the amortized cost basis of individually evaluated collateral-dependent loans by class of loans, and their impact on ACL, as of March 31, 2020:

	Real Estate		Non-RE		Total		Allowance for Credit Losses Allocation
Commercial and industrial	$	134	$	—	$	134	$	16
Real estate:
Construction and development		600		—		600		69
Commercial real estate		9,692		—		9,692		1,415
Farmland		—		—		—		—
1-4 family residential		—		—		—		—
Multi-family residential		—		—		—		—
Consumer		—		174		174		—
Agricultural		—		191		191		—
Overdrafts		—		—		—		—
Total	$	10,426	$	365	$	10,791	$	1,500

Summary of Payment Status of Loans

The following tables summarize the payment status of loans in the Company’s total loan portfolio, including an aging of delinquent loans and loans 90 days or more past due continuing to accrue interest as of:

March 31, 2020	30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days and Greater Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial and industrial	$	73	$	49	$	356	$	478	$	296,685	$	297,163	$	—
Real estate:
Construction and development		1,369		—		—		1,369		262,604		263,973		—
Commercial real estate		8,285		340		9,139		17,764		567,119		584,883		150
Farmland		263		238		49		550		78,085		78,635		—
1-4 family residential		2,823		712		471		4,006		396,599		400,605		—
Multi-family residential		—		—		—		—		20,430		20,430		—
Consumer		566		103		72		741		52,255		52,996		—
Agricultural		10		7		29		46		19,268		19,314		—
Overdrafts		—		—		—		—		354		354		—
Total	$	13,389	$	1,449	$	10,116	$	24,954	$	1,693,399	$	1,718,353	$	150

December 31, 2019	30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days and Greater Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial and industrial	$	321	$	53	$	15	$	389	$	279,194	$	279,583	$	—
Real estate:
Construction and development		161		—		—		161		280,337		280,498		—
Commercial real estate		1,181		49		882		2,112		565,248		567,360		—
Farmland		103		—		—		103		57,373		57,476		—
1-4 family residential		2,514		1,433		845		4,792		407,374		412,166		—
Multi-family residential		—		—		—		—		37,379		37,379		—
Consumer		373		152		96		621		52,624		53,245		—
Agricultural		51		67		—		118		18,241		18,359		—
Overdrafts		—		—		—		—		329		329		—
Total	$	4,704	$	1,754	$	1,838	$	8,296	$	1,698,099	$	1,706,395	$	—

Summary of Troubled Debt Restructuring

The outstanding balances of TDRs are shown below:

	March 31, 2020		December 31, 2019
Nonaccrual TDRs	$	97	$	101
Performing TDRs		7,220		7,240
Total	$	7,317	$	7,341
Specific reserves on TDRs	$	—	$	164

There were no loans modified as TDRs that occurred during the three months ended March 31, 2020 and 2019.

The following table presents loans by class, modified as TDRs that occurred during the year ended December 31, 2019:

Year Ended December 31, 2019	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Commercial real estate		4	$	1,680	$	1,515
Total		4	$	1,680	$	1,515

Summary of Loans Individually and Collectively Evaluated for Impairment and Respective Allowance for Loan Losses

The following table presents loans individually and collectively evaluated for impairment, and the respective allowance for loan losses as of December 31, 2019, as determined in accordance with ASC 310 prior to the adoption of ASC 326. A loan was considered impaired when, based on current information and events, it was probable that the Company would be unable to collect all amounts due from the borrower in accordance with original contractual terms of the loan. Loans with insignificant delays or insignificant short falls in the amount payments expected to be collected were not considered to be impaired. Loans defined as individually impaired included larger balance non-performing loans and TDRs.

December 31, 2019	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment
With no related allowance recorded:
Commercial and industrial	$	289	$	289	$	—	$	312
Real estate:
Construction and development		1,212		1,212		—		1,259
Commercial real estate		4,612		4,612		—		4,244
Farmland		—		—		—		—
1-4 family residential		2,498		2,498		—		1,798
Multi-family residential		—		—		—		—
Consumer		—		—		—		—
Agricultural		62		62		—		190
Subtotal		8,673		8,673		—		7,803
With allowance recorded:
Commercial and industrial		—		—		—		61
Real estate:
Construction and development		—		—		—		-
Commercial real estate		12,871		12,871		1,587		9,111
Farmland		133		133		62		135
1-4 family residential		—		—		—		78
Multi-family residential		—		—		—		—
Consumer		—		—		—		—
Agricultural		—		—		—		—
Subtotal		13,004		13,004		1,649		9,385
Total	$	21,677	$	21,677	$	1,649	$	17,188