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Loans and Leases and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2022

Credit Quality and Nonperforming Assets [Abstract]


Loan And Lease Distribution
(dollars in thousands, unaudited)
	September 30, 2022		December 31, 2021
Real estate:
1-4 family residential construction	$	—	$	21,369
Other construction/land		18,315		25,299
1-4 family - closed-end		420,136		289,457
Equity lines		21,126		26,588
Multi-family residential		69,665		53,458
Commercial real estate - owner occupied		324,696		334,446
Commercial real estate - non-owner occupied		896,954		882,888
Farmland		117,385		106,706
Total real estate		1,868,277		1,740,211
Agricultural		31,290		33,990
Commercial and industrial		70,147		109,791
Mortgage warehouse lines		46,553		101,184
Consumer loans		4,097		4,550
Subtotal		2,020,364		1,989,726
Net deferred loan fees and costs		(348)		(1,865)
Loans and leases, amortized cost basis		2,020,016		1,987,861
Allowance for credit losses		(23,790)		(14,256)
Net loans and leases	$	1,996,226	$	1,973,605

Schedule of Nonaccrual Loans and Leases


Nonaccrual Loans and Leases
(dollars in thousands, unaudited)
	September 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	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		485		—		485		—
Equity lines		61		—		61		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		9,677		8,593		18,270		—
Total real estate		10,223		8,593		18,816		—
Agricultural		82		7,649		7,731		—
Commercial and industrial		87		138		225		7
Mortgage warehouse lines		—		—		—		—
Consumer loans		—		—		—		—
Total	$	10,392	$	16,380	$	26,772	$	7

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)
	September 30, 2022
	Amortized Cost		Individual Reserves
Real estate:
1-4 family residential construction	$	—	$	—
Other construction/land		—		—
1-4 family - closed-end		40		—
Equity lines		506		—
Multi-family residential		—		—
Commercial real estate - owner occupied		—		—
Commercial real estate - non-owner occupied		—		—
Farmland		18,271		195
Total real estate		18,817		195
Agricultural		7,702		967
Commercial and industrial		224		40
Mortgage warehouse lines		—		—
Consumer loans		—		—
Total loans and leases	$	26,743	$	1,202

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 September 30, 2022:


Past Due Loans and Leases
(dollars in thousands, unaudited)
	September 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	$	—	$	—	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—		18,255		18,255
1-4 family - closed-end		—		32		8		40		421,096		421,136
Equity lines		—		—		—		—		21,441		21,441
Multi-family residential		—		—		—		—		69,569		69,569
Commercial real estate - owner occupied		351		—		—		351		324,364		324,715
Commercial real estate - non-owner occupied		—		—		—		—		894,213		894,213
Farmland		99		—		18,271		18,370		99,189		117,559
Total real estate		450		32		18,279		18,761		1,848,127		1,866,888
Agricultural		—		—		7,649		7,649		23,879		31,528
Commercial and industrial		775		—		—		775		70,069		70,844
Mortgage warehouse lines		—		—		—		—		46,554		46,554
Consumer loans		—		—		—		—		4,202		4,202
Total loans and leases	$	1,225	$	32	$	25,928	$	27,185	$	1,992,831	$	2,020,016

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 September 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		—		1,000		—		—		—		1,000
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—		—		—
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,000		—		—		—		1,000
Agricultural		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Total	$	—	$	1,000	$	—	$	—	$	—	$	1,000


		Nine months ended September 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		—		1,000		—		83		—		1,083
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		136		—		—		—		136
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,136		—		83		—		1,219
Agricultural		—		118		—		—				118
Commercial and industrial		—		185		—		—		—		185
Consumer loans		—		41		—		—		—		41
Total	$	—	$	1,480	$	—	$	83	$	—	$	1,563

Troubled Debt Restructurings

(dollars in thousands, unaudited)


	Three months ended September 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		1,000		1,000		—		—
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	0		—		—		—		—
Farmland	0		—		—		—		—
Total real estate loans			1,000		1,000		—		—

Agricultural	0		—		—		—		—
Commercial and industrial	0		—		—		—		—
Consumer loans	0		—		—		—		—
Total		$	1,000	$	1,000	$	—	$	—

(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.


	Nine months ended September 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	2		1,083		1,083		—		1
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	1		137		136		(1)		—
Farmland	0		—		—		—		—
Total real estate loans			1,220		1,219		(1)		1

Agricultural	1		118		118		116		—
Commercial and industrial	1		185		185		(1)		47
Consumer loans	1		41		41		—		—
Total		$	1,564	$	1,563	$	114	$	48

(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


	Term Loans and Leases Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Total Loans
Other construction/land
Pass	$	—	$	—	$	4,295	$	756	$	974	$	1,063	$	11,095	$	18,183
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		72		—		—		—		—		72
Subtotal		—		—		4,367		756		974		1,063		11,095		18,255
1-4 family - closed-end
Pass		108,169		240,043		8,011		2,077		11,061		50,121		—		419,482
Special Mention		—		—		—		—		—		744		—		744
Substandard		—		—		—		—		32		878		—		910
Subtotal		108,169		240,043		8,011		2,077		11,093		51,743		—		421,136
Equity lines
Pass		—		158		527		352		78		—		18,982		20,097
Special Mention		—		—		20		—		—		—		777		797
Substandard		—		116		—		—		—		—		431		547
Subtotal		—		274		547		352		78		—		20,190		21,441
Multi-family residential
Pass		23,928		519		9,439		664		13,018		11,778		4,628		63,974
Special Mention		—		—		2,228		—		—		3,367		—		5,595
Substandard		—		—		—		—		—		—		—		—
Subtotal		23,928		519		11,667		664		13,018		15,145		4,628		69,569
Commercial real estate - OO
Pass		32,522		26,144		64,833		36,390		37,353		111,721		7,243		316,206
Special Mention		304		—		—		2,393		—		1,696		—		4,393
Substandard		—		—		—		—		79		3,280		757		4,116
Subtotal		32,826		26,144		64,833		38,783		37,432		116,697		8,000		324,715
Commercial real estate - NOO
Pass		75,716		19,627		401,978		26,624		57,534		161,763		60,457		803,699
Special Mention		—		—		64,607		—		8,965		3,098		9,924		86,594
Substandard		—		—		—		—		852		3,068		—		3,920
Subtotal		75,716		19,627		466,585		26,624		67,351		167,929		70,381		894,213
Farmland
Pass		15,958		1,368		4,971		1,904		8,098		24,658		28,976		85,933
Special Mention		—		—		—		—		7,081		4,671		1,504		13,256
Substandard		—		—		—		—		4,689		13,681		—		18,370
Subtotal		15,958		1,368		4,971		1,904		19,868		43,010		30,480		117,559
Agricultural
Pass		7,253		458		458		26		1,027		1,809		12,045		23,076
Special Mention		—		—		—		—		—		—		721		721
Substandard		—		7,702		—		—		—		—		29		7,731
Subtotal		7,253		8,160		458		26		1,027		1,809		12,795		31,528
Commercial and industrial
Pass		2,448		6,988		7,700		6,519		5,113		8,288		24,569		61,625
Special Mention		245		145		3,127		47		—		1,562		3,772		8,898
Substandard		—		—		—		97		87		137		—		321
Subtotal		2,693		7,133		10,827		6,663		5,200		9,987		28,341		70,844
Mortgage warehouse lines
Pass		—		—		—		—		—		—		46,554		46,554
Subtotal		—		—		—		—		—		—		46,554		46,554
Consumer loans
Pass		945		229		156		243		6		375		2,187		4,141
Special Mention		—		—		37		19		—		—		4		60
Substandard		1		—		—		—		—		—		—		1
Subtotal		946		229		193		262		6		375		2,191		4,202
Total	$	267,489	$	303,497	$	572,459	$	78,111	$	156,047	$	407,758	$	234,655	$	2,020,016

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, June 30, 2022	$	3,593	$	17,319	$	376	$	1,133	$	41	$	340	$	22,802
Charge-offs		—		—		—		(85)		—		(371)		(456)
Recoveries		—		—		—		36		—		196		232
Provision for credit losses		(262)		249		1,034		67		6		118		1,212
Ending allowance balance:	$	3,331	$	17,568	$	1,410	$	1,151	$	47	$	283	$	23,790


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)		(2,170)		(244)		—		(984)		(5,309)
Recoveries		99		259		—		118		—		553		1,029
Provision for credit losses		712		539		2,858		(141)		(44)		436		4,360
Ending allowance balance:	$	3,331	$	17,567	$	1,410	$	1,151	$	47	$	284	$	23,790

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


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

Allowance for credit losses:
Beginning balance	$	12,075	$	524	$	3,072	$	690	$	60	$	16,421
Charge-offs		—		—		(52)		(274)		—		(326)
Recoveries		(59)		—		11		170		—		122
(Benefit) provision		261		1		(930)		(1)		69		(600)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617

	Nine months ended September 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)		(129)		(606)		—		(1,030)
Recoveries		590		—		203		566		—		1,359
(Benefit) provision		166		93		(2,694)		(95)		80		(2,450)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Reserves:
Specific	$	419	$	244	$	382	$	16	$	—	$	1,061
General		11,858		281		1,719		569		129		14,556
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Loans evaluated for impairment:
Individually	$	10,150	$	471	$	1,512	$	163	$	—	$	12,296
Collectively		1,822,774		42,825		257,266		4,665		—		2,127,530
Ending balance	$	1,832,924	$	43,296	$	258,778	$	4,828	$	—	$	2,139,826