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Loans and Leases and Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2022

Loans and Leases and Allowance for Credit Losses.


Loan And Lease Distribution
(dollars in thousands, unaudited)
	March 31, 2022		December 31, 2021
Real estate:
1-4 family residential construction	$	8,800	$	21,369
Other construction/land		24,633		25,299
1-4 family - closed-end		398,871		289,457
Equity lines		23,389		26,588
Multi-family residential		59,711		53,458
Commercial real estate - owner occupied		331,764		334,446
Commercial real estate - non-owner occupied		857,051		882,888
Farmland		98,865		106,706
Total real estate		1,803,084		1,740,211
Agricultural		31,663		33,990
Commercial and industrial		87,173		109,791
Mortgage warehouse lines		57,178		101,184
Consumer loans		4,233		4,550
Subtotal		1,983,331		1,989,726
Less net deferred loan fees and costs		(1,200)		(1,865)
Loans and leases, amortized cost basis		1,982,131		1,987,861
Allowance for credit losses		(22,530)		(14,256)
Net loans and leases	$	1,959,601	$	1,973,605

Schedule of Nonaccrual Loans and Leases


Nonaccrual Loans and Leases
(dollars in thousands, unaudited)
	March 31, 2022
	Nonaccrual Loans
	With no allowance for credit loss		With an allowance for credit loss		Total		Loans Past Due 90+ Accruing
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		1,713		—		1,713		—
Equity lines		845		—		845		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		399		—		399		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		18,449		—		18,449		—
Total real estate		21,406		—		21,406		—
Agricultural		7,868		242		8,110		—
Commercial and industrial		627		285		912		19
Mortgage warehouse lines		—		—		—		—
Consumer loans		18		—		18		—
Total	$	29,919	$	527	$	30,446	$	19

Impaired Financing Receivables


	December 31, 2021
	Unpaid Principal		Recorded				Average Recorded		Interest Income
	Balance⁽¹⁾		Investment⁽²⁾		Related Allowance		Investment		Recognized⁽³⁾
With an Allowance Recorded
Real estate:
Other construction/land	$	341	$	341	$	64	$	352	$	55
1-4 family - closed-end		1,048		1,048		37		1,096		104
Equity lines		2,005		1,993		182		2,056		138
Commercial real estate - owner occupied		1,249		1,248		19		1,278		144
Commercial real estate - non-owner occupied		367		367		126		393		32
Total real estate		5,010		4,997		428		5,175		473
Agricultural		244		244		244		246		—
Commercial and industrial		757		757		127		873		41
Consumer loans		164		164		19		180		28
		6,175		6,162		818		6,474		542
With no Related Allowance Recorded
Real estate:
1-4 family - closed-end		788		788		—		869		—
Equity lines		648		648		—		690		6
Commercial real estate - owner occupied		1,353		1,234		—		1,282		—
Total real estate		2,789		2,670		—		2,841		6
Agricultural		134		134		—		186		—
Commercial and industrial		466		466		—		550		—
		3,389		3,270		—		3,577		6
Total	$	9,564	$	9,432	$	818	$	10,051	$	548

(1)	Contractual principal balance due from customer.

(2)	Principal balance on Company’s books, less any direct charge offs.

(3)	Interest income is recognized on performing balances on a regular accrual basis.

Schedule of collateral dependent loans


Collateral Dependent Loans
(dollars in thousands, unaudited)
	March 31, 2022
	Amortized Cost		Individual Reserves
Real estate:
1-4 family residential construction	$	—	$	—
Other construction/land		—		—
1-4 family - closed-end		1,487		—
Equity lines		712		—
Multi-family residential		—		—
Commercial real estate - owner occupied		562		—
Commercial real estate - non-owner occupied		—		—
Farmland		18,449		—
Total real estate		21,210		—
Agricultural		7,868		—
Commercial and industrial		613		—
Mortgage warehouse lines		—		—
Consumer loans		—		—
Total loans and leases	$	29,691	$	—

Aging of Loan Balances by Number of Days Past Due

The following table presents the aging of the amortized cost basis in past-due loans, according to class, as of March 31, 2022:


Past Due Loans and Leases
(dollars in thousands, unaudited)
	March 31, 2022
	30-59 Days Past Due		60-89 Days Past Due		Loans Past Due 90+ Days		Total Past Due		Loans not Past Due		Total Loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	8,800	$	8,800
Other construction/land		—		—		—		—		24,532		24,532
1-4 family - closed-end		179		—		—		179		399,673		399,852
Equity lines		—		—		—		—		23,690		23,690
Multi-family residential		—		—		—		—		59,632		59,632
Commercial real estate - owner occupied		2,543		—		—		2,543		329,257		331,800
Commercial real estate - non-owner occupied		189		—		—		189		854,315		854,504
Farmland		44		—		—		44		98,881		98,925
Total real estate		2,955		—		—		2,955		1,798,780		1,801,735
Agricultural		—		—		259		259		31,502		31,761
Commercial and industrial		10		14		320		344		86,788		87,132
Mortgage warehouse lines		—		—		—		—		57,178		57,178
Consumer loans		12		5		—		17		4,308		4,325
Total loans and leases	$	2,977	$	19	$	579	$	3,575	$	1,978,556	$	1,982,131

The following table presents the aging of the recorded investment in past-due and nonaccrual loans, according to class, as of December 31, 2021:


December 31, 2021	30-59 Days		60-89 Days		90 Days Or More Past						Total Financing		Non-Accrual
	Past Due		Past Due		Due⁽²⁾		Total Past Due		Current		Receivables		Loans⁽¹⁾
Real Estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	21,369	$	21,369	$	—
Other construction/land		—		—		—		—		25,299		25,299		—
1-4 family - closed-end		1,532		132		—		1,664		287,793		289,457		1,023
Equity lines		30		—		—		30		26,558		26,588		892
Multi-family residential		—		—		—		—		53,458		53,458		—
Commercial real estate owner occupied		124		—		698		822		333,624		334,446		1,234
Commercial real estate non-owner occupied		—		—		—		—		882,888		882,888		—
Farmland		—		—		—		—		106,706		106,706		—
Total real estate loans		1,686		132		698		2,516		1,737,695		1,740,211		3,149

Agricultural		—		—		284		284		33,706		33,990		378
Commercial and industrial		473		—		283		756		109,035		109,791		973
Mortgage warehouse lines		—		—		—		—		101,184		101,184		—
Consumer loans		6		3		—		9		4,541		4,550		22
Total gross loans and leases	$	2,165	$	135	$	1,265	$	3,565	$	1,986,161	$	1,989,726	$	4,522

(1)	Included in Total Financing Receivables

(2)	As of December 31, 2021 there were no loans over 90 days past due and still accruing.

Troubled Debt Restructurings, by Type of Loan Modification

Troubled Debt Restructurings, by Type of Loan Modification

(dollars in thousands, unaudited)

Three months ended March 31, 2022

Rate Modification

Term
Modification

Interest Only Modification

Rate & Term Modification

Term & Interest Modification

Total

Real estate:

Other construction/land

—

1-4 family - closed-end

—

Equity lines

—

Multi-family residential

—

Commercial real estate - owner occupied

—

Farmland

—

Total real estate loans

—

Agricultural

—

Commercial and industrial

—

Consumer loans

—

Total

—


	Three months ended March 31, 2021
	Rate Modification		Term Modification		Interest Only Modification		Rate & Term Modification		Term & Interest Modification		Total
Real estate:
Other construction/land	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family - closed-end		—		—		—		—		—		—
Equity lines		—		—		—		83		—		83
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—		—		—
Farmland		—		—		—		—		—		—
Total real estate loans		—		—		—		83		—		83
Agricultural		—		118		—		—		—		118
Commercial and industrial		—		185		—		—		—		185
Consumer loans		—		41		—		—		—		41
Total	$	—	$	344	$	—	$	83	$	—	$	427

Troubled Debt Restructurings

(dollars in thousands, unaudited)


	Three months ended March 31, 2022
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	0		—		—		—		—
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	0		—		—		—		—
Farmland	0		—		—		—		—
Total real estate loans			—		—		—		—

Agricultural	0		—		—		—		—
Commercial and industrial	0		—		—		—		—
Consumer loans	0		—		—		—		—
Total		$	—	$	—	$	—	$	—

(1)	This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.


	Three months ended March 31, 2021
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	1		83		83		—		1
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	0		—		—		—		—
Farmland	0		—		—		—		—
Total real estate loans			83		83		—		1

Agricultural	1		118		118		116		111
Commercial and industrial	1		185		185		(1)		48
Consumer loans	1		41		41		—		—
Total		$	427	$	427	$	115	$	160

(1)	This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.

Credit Quality Classifications for Loan Balances


Loan and Lease Credit Quality by Vintage
(dollars in thousands, unaudited)
	Term Loans and Loans Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Total Loans
1-4 family construction
Pass	$		$	—	$	—	$	—	$	—	$	—	$	8,800	$	8,800
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		—		—		8,800		8,800
Other construction/land
Pass		—		3,617		4,395		798		1,087		1,306		13,253		24,456
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		76		—		—		—		—		76
Subtotal		—		3,617		4,471		798		1,087		1,306		13,253		24,532
1-4 family - closed-end
Pass		66,654		253,394		8,104		2,112		12,057		52,248		—		394,569
Special Mention		—		—		—		—		1,022		2,116		—		3,138
Substandard		—		869		—		—		33		1,243		—		2,145
Subtotal		66,654		254,263		8,104		2,112		13,112		55,607		—		399,852
Equity lines
Pass		—		91		587		376		81		—		20,990		22,125
Special Mention		—		—		—		—		—		—		468		468
Substandard		—		122		—		—		—		—		975		1,097
Subtotal		—		213		587		376		81		—		22,433		23,690
Multi-family residential
Pass		6,589		525		12,099		5,014		13,297		12,919		5,754		56,197
Special Mention		—		—		—		—		—		3,435		—		3,435
Substandard		—		—		—		—		—		—		—		—
Subtotal		6,589		525		12,099		5,014		13,297		16,354		5,754		59,632
Commercial real estate - OO
Pass		5,305		26,484		75,109		38,895		39,813		128,482		8,230		322,318
Special Mention		—		—		—		2,057		—		2,790		—		4,847
Substandard		343		—		—		—		80		3,450		762		4,635
Subtotal		5,648		26,484		75,109		40,952		39,893		134,722		8,992		331,800
Commercial real estate - NOO
Pass		9,456		19,831		488,558		27,003		58,415		173,452		33,369		810,084
Special Mention		—		—		16,432		—		7,277		3,652		2,710		30,071
Substandard		—		—		—		—		852		13,175		322		14,349
Subtotal		9,456		19,831		504,990		27,003		66,544		190,279		36,401		854,504
Farmland
Pass		—		1,386		5,042		2,060		8,318		31,618		17,364		65,788
Special Mention		—		—		—		—		7,150		3,857		548		11,555
Substandard		—		—		—		—		4,722		16,860		—		21,582
Subtotal		—		1,386		5,042		2,060		20,190		52,335		17,912		98,925
Agricultural
Pass		273		3,180		481		34		1,092		6,990		9,585		21,635
Special Mention		—		—		—		—		—		—		939		939
Substandard		—		8,607		—		—		—		16		564		9,187
Subtotal		273		11,787		481		34		1,092		7,006		11,088		31,761
Commercial and industrial
Pass		1,414		18,261		8,686		7,372		6,129		11,558		23,261		76,681
Special Mention		—		242		3,245		142		—		1,760		3,952		9,341
Substandard		—		—		48		161		102		721		78		1,110
Subtotal		1,414		18,503		11,979		7,675		6,231		14,039		27,291		87,132
Mortgage warehouse lines
Pass		—		—		—		—		—		—		57,178		57,178
Subtotal		—		—		—		—		—		—		57,178		57,178
Consumer loans
Pass		604		340		212		337		26		491		2,250		4,260
Special Mention		—		9		26		—		2		2		8		47
Substandard		—		—		17		—		—		1		—		18
Subtotal		604		349		255		337		28		494		2,258		4,325
Total	$	90,638	$	336,958	$	623,117	$	86,361	$	161,555	$	472,142	$	211,360	$	1,982,131

The following table presents the Company’s loan portfolio on the recorded investment basis, according to loan class and credit grade as of December 31, 2021:


	Pass		Special Mention		Substandard		Impaired		Total
Real estate:
1-4 family residential construction	$	19,669	$	1,700	$	—	$	—	$	21,369
Other construction/land		24,958		—		—		341		25,299
1-4 family - closed-end		282,717		4,703		201		1,836		289,457
Equity lines		23,277		615		55		2,641		26,588
Multi-family residential		49,986		3,472		—		—		53,458
Commercial real estate owner occupied		321,996		6,108		3,860		2,482		334,446
Commercial real estate non-owner occupied		841,728		26,364		14,429		367		882,888
Farmland		92,479		10,266		3,961		—		106,706
Total real estate		1,656,810		53,228		22,506		7,667		1,740,211
Agricultural		32,513		—		1,099		378		33,990
Commercial and industrial		98,367		9,989		212		1,223		109,791
Mortgage warehouse lines		101,184		—		—		—		101,184
Consumer loans		4,349		31		6		164		4,550
Total gross loans and leases	$	1,893,223	$	63,248	$	23,823	$	9,432	$	1,989,726

Allowance for Credit Losses on Financing Receivables


Allowance for Credit Losses and Recorded Investment in Financing Receivables
(dollars in thousands, unaudited)
	1-4 Family Real Estate		Commercial Real Estate		Farmland & Agricultural Production		Commercial & Industrial		Mortgage Warehouse		Consumer		Total
Allowance for credit losses:
Balance, December 31, 2021	$	1,909	$	9,052	$	1,202	$	1,060	$	512	$	521	$	14,256
Impact of adopting ASC 326		611		9,628		(480)		358		(421)		(242)		9,454
Charge-offs		—		—		(1,958)		(74)		—		(299)		(2,331)
Recoveries		87		260		—		20		—		184		551
Provision for credit losses		722		(1,897)		1,842		(133)		(40)		106		600
Ending allowance balance:	$	3,329	$	17,043	$	606	$	1,231	$	51	$	270	$	22,530


		Three months ended March 31, 2021
	Real Estate		Agricultural Products		Commercial and Industrial ⁽¹⁾		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	11,766	$	482	$	4,721	$	720	$	49	$	17,738
Charge-offs		(233)		—		(52)		(163)		—		(448)
Recoveries		453		—		110		216		—		779
Provision		820		190		(574)		(180)		(6)		250
Ending balance	$	12,806	$	672	$	4,205	$	593	$	43	$	18,319
Reserves:
Specific	$	398	$	361	$	409	$	17	$	—	$	1,185
General		12,408		311		3,796		576		43		17,134
Ending balance	$	12,806	$	672	$	4,205	$	593	$	43	$	18,319
Loans evaluated for impairment:
Individually	$	16,611	$	467	$	1,898	$	219	$	—	$	19,195
Collectively		1,849,655		45,009		369,804		4,805		—		2,269,273
Ending balance	$	1,866,266	$	45,476	$	371,702	$	5,024	$	—	$	2,288,468