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Loans and Leases and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2022

Credit Quality and Nonperforming Assets [Abstract]


Loan And Lease Distribution
(dollars in thousands, unaudited)
	June 30, 2022		December 31, 2021
Real estate:
1-4 family residential construction	$	5,542	$	21,369
Other construction/land		20,816		25,299
1-4 family - closed-end		429,109		289,457
Equity lines		25,260		26,588
Multi-family residential		66,367		53,458
Commercial real estate - owner occupied		312,060		334,446
Commercial real estate - non-owner occupied		898,158		882,888
Farmland		101,675		106,706
Total real estate		1,858,987		1,740,211
Agricultural		28,660		33,990
Commercial and industrial		72,617		109,791
Mortgage warehouse lines		58,134		101,184
Consumer loans		4,264		4,550
Subtotal		2,022,662		1,989,726
Less net deferred loan fees and costs		(1,081)		(1,865)
Loans and leases, amortized cost basis		2,021,581		1,987,861
Allowance for credit losses		(22,802)		(14,256)
Net loans and leases	$	1,998,779	$	1,973,605

Schedule of Nonaccrual Loans and Leases


Nonaccrual Loans and Leases
(dollars in thousands, unaudited)
	June 30, 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	$	—	$	—	$	—	$	632
Other construction/land		—		—		—		—
1-4 family - closed-end		745		—		745		—
Equity lines		62		—		62		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		379		—		379		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		19,301		—		19,301		—
Total real estate		20,487		—		20,487		632
Agricultural		8,414		30		8,444		—
Commercial and industrial		584		230		814		7
Mortgage warehouse lines		—		—		—		—
Consumer loans		—		—		—		—
Total	$	29,485	$	260	$	29,745	$	639

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)
	June 30, 2022
	Amortized Cost		Individual Reserves
Real estate:
1-4 family residential construction	$	—	$	—
Other construction/land		—		—
1-4 family - closed-end		41		—
Equity lines		—		—
Multi-family residential		—		—
Commercial real estate - owner occupied		204		—
Commercial real estate - non-owner occupied		—		—
Farmland		19,300		—
Total real estate		19,545		—
Agricultural		8,414		—
Commercial and industrial		478		—
Mortgage warehouse lines		—		—
Consumer loans		—		—
Total loans and leases	$	28,437	$	—

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 June 30, 2022:


Past Due Loans and Leases
(dollars in thousands, unaudited)
	June 30, 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	$	—	$	—	$	632	$	632	$	4,910	$	5,542
Other construction/land		—		—		—		—		20,757		20,757
1-4 family - closed-end		32		—		8		40		430,095		430,135
Equity lines		—		—		—		—		25,575		25,575
Multi-family residential		—		—		—		—		66,291		66,291
Commercial real estate - owner occupied		—		124		—		124		311,965		312,089
Commercial real estate - non-owner occupied		—		—		—		—		895,352		895,352
Farmland		5,129		13,932		342		19,403		82,358		101,761
Total real estate		5,161		14,056		982		20,199		1,837,303		1,857,502
Agricultural		—		7,760		597		8,357		20,400		28,757
Commercial and industrial		174		—		263		437		72,389		72,826
Mortgage warehouse lines		—		—		—		—		58,134		58,134
Consumer loans		7		2		—		9		4,353		4,362
Total loans and leases	$	5,342	$	21,818	$	1,842	$	29,002	$	1,992,579	$	2,021,581

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 June 30, 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		—		—		—		—		—		—
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		136		—		—		—		136
Farmland		—		—		—		—		—		—
Total real estate loans		—		136		—		—		—		136
Agricultural		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Total	$	—	$	136	$	—	$	—	$	—	$	136


		Six months ended June 30, 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		—		136		—		—		—		136
Farmland		—		—		—		—		—		—
Total real estate loans		—		136		—		83		—		219
Agricultural		—		118		—		—				118
Commercial and industrial		—		185		—		—		—		185
Consumer loans		—		41		—		—		—		41
Total	$	—	$	480	$	—	$	83	$	—	$	563

Troubled Debt Restructurings

(dollars in thousands, unaudited)


	Three months ended June 30, 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	0		—		—		—		—
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	1		137		136		(1)		—
Farmland	0		—		—		—		—
Total real estate loans			137		136		(1)		—

Agricultural	0		—		—		—		—
Commercial and industrial	0		—		—		—		—
Consumer loans	0		—		—		—		—
Total		$	137	$	136	$	($1)	$	—

(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.


	Six months ended June 30, 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	1		137		136		(1)		—
Farmland	0		—		—		—		—
Total real estate loans			220		219		(1)		1

Agricultural	1		118		118		116		—
Commercial and industrial	1		185		185		(1)		48
Consumer loans	1		41		41		—		—
Total		$	564	$	563	$	114	$	49

(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	$	—	$	—	$	—	$	—	$	—	$	—	$	4,910	$	4,910
Special Mention		—		—		—		—		—		—		632		632
Substandard		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		—		—		5,542		5,542
Other construction/land
Pass		—	$	3,591	$	4,343	$	777	$	1,054	$	1,116	$	9,802		20,683
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		74		—		—		—		—		74
Subtotal		—		3,591		4,417		777		1,054		1,116		9,802		20,757
1-4 family - closed-end
Pass		110,397	$	243,625	$	8,058	$	2,094	$	11,042	$	50,354	$	—		425,570
Special Mention		264		—		—		—		1,022		2,095		—		3,381
Substandard		—		—		—		—		32		1,152		—		1,184
Subtotal		110,661		243,625		8,058		2,094		12,096		53,601		—		430,135
Equity lines
Pass		2,355	$	171	$	551	$	361	$	79	$	—	$	20,691		24,208
Special Mention		—		—		20		—		—		—		790		810
Substandard		—		118		—		—		—		—		439		557
Subtotal		2,355		289		571		361		79		—		21,920		25,575
Multi-family residential
Pass		19,320	$	522	$	9,504	$	668	$	13,159	$	12,757	$	4,720		60,650
Special Mention		—		—		2,240		—		—		3,401		—		5,641
Substandard		—		—		—		—		—		—		—		—
Subtotal		19,320		522		11,744		668		13,159		16,158		4,720		66,291
Commercial real estate - OO
Pass		9,855	$	26,311	$	63,756	$	38,080	$	39,071	$	118,601	$	7,346		303,020
Special Mention		—		—		—		2,403		—		2,107		—		4,510
Substandard		326		—		—		—		80		3,393		760		4,559
Subtotal		10,181		26,311		63,756		40,483		39,151		124,101		8,106		312,089
Commercial real estate - NOO
Pass		51,922	$	19,710	$	451,234	$	26,810	$	56,883	$	165,217	$	62,955		834,731
Special Mention		—		—	$	33,613		—		7,266		3,121		12,671		56,671
Substandard		—		—	$	—		—		852		3,098		—		3,950
Subtotal		51,922		19,710		484,847		26,810		65,001		171,436		75,626		895,352
Farmland
Pass		—	$	1,377	$	5,008	$	1,978	$	8,202	$	25,700	$	27,588		69,853
Special Mention		—		—		—		—		7,116		4,385		1,004		12,505
Substandard		—		—		—		—		4,722		14,133		548		19,403
Subtotal		—		1,377		5,008		1,978		20,040		44,218		29,140		101,761
Agricultural
Pass		549	$	1,684	$	475	$	30	$	1,092	$	6,882	$	9,329		20,041
Special Mention		—		—		—		—		—		—		272		272
Substandard		—		7,847		—		—		—		—		597		8,444
Subtotal		549		9,531		475		30		1,092		6,882		10,198		28,757
Commercial and industrial
Pass		1,272	$	11,449	$	8,021	$	6,977	$	5,682	$	10,004	$	19,576		62,981
Special Mention		—		312		3,186		50		—		1,553		3,772		8,873
Substandard		—		—		44		143		93		643		49		972
Subtotal		1,272		11,761		11,251		7,170		5,775		12,200		23,397		72,826
Mortgage warehouse lines
Pass		—	$	—	$	—	$	—	$	—	$	—	$	58,134		58,134
Subtotal		—		—		—		—		—		—		58,134		58,134
Consumer loans
Pass		953	$	275	$	173	$	299	$	19	$	429	$	2,163		4,311
Special Mention		—		—		40	$	—		—		—		7		47
Substandard		2		—		—	$	—		—		2		—		4
Subtotal		955		275		213		299		19		431		2,170		4,362
Total	$	197,215	$	316,992	$	590,340	$	80,670	$	157,466	$	430,143	$	248,755	$	2,021,581

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, March 31, 2022	$	3,329	$	17,043	$	606	$	1,231	$	51	$	270	$	22,530
Charge-offs		—		(1,911)		(213)		(86)		—		(313)		(2,523)
Recoveries		12		—		—		62		—		173		247
Provision for credit losses		252		2,187		(17)		(74)		(10)		210		2,548
Ending allowance balance:	$	3,593	$	17,319	$	376	$	1,133	$	41	$	340	$	22,802


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		—		(1,911)		(2,171)		(160)		—		(612)		(4,854)
Recoveries		99		260		—		82		—		357		798
Provision for credit losses		974		290		1,825		(207)		(50)		316		3,148
Ending allowance balance:	$	3,593	$	17,319	$	376	$	1,133	$	41	$	340	$	22,802

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2021:


		Three months ended June 30, 2021
		Real Estate		Agricultural Products		Commercial and Industrial ⁽¹⁾		Consumer		Unallocated		Total

Allowance for credit losses:
Beginning balance	$	12,806	$	672	$	4,205	$	593	$	43	$	18,319
Charge-offs		(11)		(50)		(25)		(169)		—		(255)
Recoveries		195		—		82		180		—		457
(Benefit) provision		(915)		(98)		(1,190)		86		17		(2,100)
Ending balance	$	12,075	$	524	$	3,072	$	690	$	60	$	16,421

	Six months ended June 30, 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		(245)		(50)		(77)		(331)		—		(703)
Recoveries		648		—		192		396		—		1,236
(Benefit) provision		(94)		92		(1,764)		(95)		11		(1,850)
Ending balance	$	12,075	$	524	$	3,072	$	690	$	60	$	16,421
Reserves:
Specific	$	641	$	246	$	381	$	16	$	—	$	1,284
General		11,434		278		2,691		674		60		15,137
Ending balance	$	12,075	$	524	$	3,072	$	690	$	60	$	16,421
Loans evaluated for impairment:
Individually	$	15,677	$	517	$	1,649	$	207	$	—	$	18,050
Collectively		1,780,290		42,435		299,334		4,687		—		2,126,746
Ending balance	$	1,795,967	$	42,952	$	300,983	$	4,894	$	—	$	2,144,796