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Loans and Allowance for Credit Losses (Tables)

12 Months Ended

Dec. 31, 2021

Amortized Cost and Unpaid Principal Balance of Loans by Loan Segment

The following table presents the Company's loan segments as of December 31, 2020 under the legacy segmentation and the new segmentation under ASU 2016-13:


(In Thousands)			Pre-ASU 2016-13
Commercial loans			$780,058
Real estate construction one-to-four family			38,467
Real estate construction other			80,315
Real estate term owner occupied			163,597
Real estate term non-owner occupied			309,074
Real estate term other			46,620
Consumer secured by 1st deeds of trust			15,585
Consumer other			22,069
Subtotal			1,455,785
Unearned loan fees, net			(11,735)
Total portfolio loans			$1,444,050

			Post-ASU 2016-13
Commercial & industrial loans			$619,304
Commercial real estate:
Owner occupied properties			234,364
Non-owner occupied and multifamily properties			394,860
Residential real estate:
1-4 family residential properties secured by first liens			33,463
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens			18,114
1-4 family residential construction loans			32,760
Other construction, land development and raw land loans			84,352
Obligations of states and political subdivisions in the US			15,274
Agricultural production, including commercial fishing			13,093
Consumer loans			5,794
Other loans			4,407
Subtotal			$1,455,785
Unearned loan fees, net			($11,735)
Total portfolio loans			$1,444,050

The following table presents amortized cost and unpaid principal balance of loans for the periods indicated:


	December 31, 2021			December 31, 2020
(In Thousands)	Amortized Cost	Unpaid Principal	Difference	Amortized Cost	Unpaid Principal	Difference
Commercial & industrial loans	$448,338	$454,106	($5,768)	$612,254	$619,304	($7,050)
Commercial real estate:
Owner occupied properties	300,200	301,623	(1,423)	233,320	234,363	(1,043)
Non-owner occupied and multifamily properties	435,311	438,631	(3,320)	392,452	394,860	(2,408)
Residential real estate:
1-4 family residential properties secured by first liens	32,542	32,602	(60)	33,415	33,510	(95)
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	19,610	19,489	121	18,236	18,114	122
1-4 family residential construction loans	36,222	36,542	(320)	32,500	32,760	(260)
Other construction, land development and raw land loans	88,094	88,604	(510)	83,463	84,351	(888)
Obligations of states and political subdivisions in the US	16,403	16,565	(162)	15,318	15,274	44
Agricultural production, including commercial fishing	27,959	28,082	(123)	12,968	13,093	(125)
Consumer loans	4,801	4,763	38	5,734	5,794	(60)
Other loans	4,406	4,422	(16)	4,390	4,407	(17)
Total	1,413,886	1,425,429	(11,543)	1,444,050	1,455,830	(11,780)
Allowance for credit losses	(11,739)			(21,136)
	$1,402,147	$1,425,429	($11,543)	$1,422,914	$1,455,830	($11,780)

Allowance For Credit Losses

The activity in the ACL related to loans held for investment is as follows:


	Beginning Balance	Impact of adopting ASC 326	Credit Loss Expense (Benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2021
Commercial	$7,973	($7,973)	$—	$—	$—	—
Real estate construction 1-4 family	679	(679)	—	—	—	—
Real estate construction other	1,179	(1,179)	—	—	—	—
Real estate term owner occupied	2,625	(2,625)	—	—	—	—
Real estate term non-owner occupied	5,133	(5,133)	—	—	—	—
Real estate term other	779	(779)	—	—	—	—
Consumer secured by 1st deed of trust	261	(261)	—	—	—	—
Consumer other	400	(400)	—	—	—	—
Unallocated	2,107	(2,107)	—	—	—	—
Commercial & industrial loans	—	4,348	(122)	(1,452)	253	3,027
Commercial real estate:
Owner occupied properties	—	3,579	(412)	—	9	3,176
Non-owner occupied and multifamily properties	—	4,944	(2,014)	—	—	2,930
Residential real estate:
1-4 family residential properties secured by first liens	—	673	(234)	—	—	439
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	—	419	(242)	—	38	215
1-4 family residential construction loans	—	454	(334)	—	—	120
Other construction, land development and raw land loans	—	1,994	(359)	—	—	1,635
Obligations of states and political subdivisions in the US	—	44	(12)	—	—	32
Agricultural production, including commercial fishing	—	49	11	—	31	91
Consumer loans	—	118	(65)	—	14	67
Other loans	—	3	4	—	—	7
Total	$21,136	($4,511)	($3,779)	($1,452)	$345	$11,739


	Beginning Balance	Provision (benefit)	Charge-offs	Recoveries	Ending Balance
	(In Thousands)
2020
Commercial	$6,604	$1,680	($1,021)	$710	$7,973
Real estate construction 1-4 family	643	36	—	—	679
Real estate construction other	1,017	162	—	—	1,179
Real estate term owner occupied	2,188	522	(85)	—	2,625
Real estate term non-owner occupied	5,180	(47)	—	—	5,133
Real estate term other	671	106	—	2	779
Consumer secured by 1st deed of trust	270	(9)	—	—	261
Consumer other	436	(46)	(15)	25	400
Unallocated	2,079	28	—	—	2,107
Total	$19,088	$2,432	($1,121)	$737	$21,136

The following table presents loans individually and collectively evaluated for impairment and their respective allowance for credit loss allocations as of December 31, 2020, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:


(In Thousands)	Loan Evaluation			ALLL Allocations
	Individually	Collectively	Total	Individually	Collectively	Total

Commercial	$7,786	$764,682	$772,468	$13	$7,960	$7,973
Real estate construction 1-4 family	702	$37,478	38,180	—	679	679
Real estate construction other	—	$79,403	79,403	—	1,179	1,179
Real estate term owner occupied	6,962	$155,762	162,724	—	2,625	2,625
Real estate term non-owner occupied	770	$306,477	307,247	—	5,133	5,133
Real estate term other	1,467	$44,763	46,230	—	779	779
Consumer secured by 1st deed of trust	259	$15,289	15,548	—	261	261
Consumer other	82	$22,168	22,250	—	400	400
Unallocated	—	—	—	—	2,107	2,107
Total	$18,028	$1,426,022	$1,444,050	$13	$21,123	$21,136

Information Pertaining to Impaired Loans Prior to the Adoption of ASU 2016-13

The following table presents information pertaining to impaired loans as of December 31, 2020, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:


	Impaired Loans With a Valuation Allowance			Impaired Loans Without a Valuation Allowance
(In Thousands)	Recorded Investment	Unpaid Principal	Related Allowance	Recorded Investment	Unpaid Principal

Commercial	$308	$308	$13	$7,478	$8,287
Real estate construction 1-4 family	—	—	—	702	702
Real estate construction other	—	—	—	—	—
Real estate term owner occupied	—	—	—	6,962	7,047
Real estate term non-owner occupied	—	—	—	771	771
Real estate term other	—	—	—	1,467	1,467
Consumer secured by 1st deed of trust	—	—	—	258	258
Consumer other	—	—	—	82	87
Total	$308	$308	$13	$17,720	$18,619

The following table presents average impaired loans information, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the year ended December 31, 2020:


(In Thousands)	Average Impaired Loans	Interest Recognized
Commercial	$10,964	$147
Real estate construction 1-4 family	781	—
Real estate construction other	—	—
Real estate term owner occupied	6,739	125
Real estate term non-owner occupied	562	29
Real estate term other	1,551	20
Consumer secured by 1st deed of trust	299	12
Consumer other	86	—
Total	$20,982	$333

Portfolio of Risk-rated Loans by Grade and by Year of Origination

The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below.


December 31, 2021	2021	2020	2019	2018	2017	Prior	Total
	(In Thousands)
Commercial & industrial loans
Pass	$227,376	$54,478	$29,846	$37,339	$23,205	$44,554	$416,798
Classified	18,853	714	3,564	3,118	517	4,774	31,540
Total commercial & industrial loans	$246,229	$55,192	$33,410	$40,457	$23,722	$49,328	$448,338

Commercial real estate:
Owner occupied properties
Pass	$81,533	$83,975	$39,254	$14,841	$14,452	$57,717	$291,772
Classified	—	1,399	—	522	—	6,507	8,428
Total commercial real estate owner occupied properties	$81,533	$85,374	$39,254	$15,363	$14,452	$64,224	$300,200

Non-owner occupied and multifamily properties
Pass	$77,205	$77,961	$61,147	$34,307	$19,833	$154,561	$425,014
Classified	—	—	—	10	10,286	1	10,297
Total commercial real estate non-owner occupied and multifamily properties	$77,205	$77,961	$61,147	$34,317	$30,119	$154,562	$435,311

Residential real estate:
1-4 family residential properties secured by first liens
Pass	$7,756	$8,023	$3,689	$531	$1,466	$8,812	$30,277
Classified	417	1,077	472	90	—	209	2,265
Total residential real estate 1-4 family residential properties secured by first liens	$8,173	$9,100	$4,161	$621	$1,466	$9,021	$32,542

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens
Pass	$5,806	$2,535	$3,229	$3,464	$259	$4,046	$19,339
Classified	—	—	—	259	—	12	271
Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	$5,806	$2,535	$3,229	$3,723	$259	$4,058	$19,610

1-4 family residential construction loans
Pass	$21,409	$1,056	$1,707	$62	$—	$11,879	$36,113
Classified	—	—	—	—	109	—	109
Total residential real estate 1-4 family residential construction loans	$21,409	$1,056	$1,707	$62	$109	$11,879	$36,222

Other construction, land development and raw land loans
Pass	$39,624	$26,458	$11,044	$3,315	$139	$5,544	$86,124
Classified	—	—	—	460	—	1,510	1,970
Total other construction, land development and raw land loans	$39,624	$26,458	$11,044	$3,775	$139	$7,054	$88,094

Obligations of states and political subdivisions in the US
Pass	$4,120	$812	$1,875	$343	$2,733	$6,520	$16,403
Classified	—	—	—	—	—	—	—


Total obligations of states and political subdivisions in the US	$4,120	$812	$1,875	$343	$2,733	$6,520	$16,403

Agricultural production, including commercial fishing
Pass	$19,970	$3,929	$810	$1,118	$741	$1,391	$27,959
Classified	—	—	—	—	—	—	—
Total agricultural production, including commercial fishing	$19,970	$3,929	$810	$1,118	$741	$1,391	$27,959

Consumer loans
Pass	$873	$815	$653	$403	$291	$1,766	$4,801
Classified	—	—	—	—	—	—	—
Total consumer loans	$873	$815	$653	$403	$291	$1,766	$4,801

Other loans
Pass	$2,028	$1,645	$430	$95	$—	$208	$4,406
Classified	—	—	—	—	—	—	—
Total other loans	$2,028	$1,645	$430	$95	$—	$208	$4,406

Total loans
Pass	$487,700	$261,687	$153,684	$95,818	$63,119	$296,998	$1,359,006
Classified	19,270	3,190	4,036	4,459	10,912	13,013	54,880
Total loans	$506,970	$264,877	$157,720	$100,277	$74,031	$310,011	$1,413,886

Total pass loans	$487,700	$261,687	$153,684	$95,818	$63,119	$296,998	$1,359,006
Government guarantees	(145,713)	(12,725)	(14,429)	(3,299)	(306)	(6,562)	(183,034)
Total pass loans, net of government guarantees	$341,987	$248,962	$139,255	$92,519	$62,813	$290,436	$1,175,972

Total classified loans	$19,270	$3,190	$4,036	$4,459	$10,912	$13,013	$54,880
Government guarantees	(7,201)	(1,259)	—	—	—	(10,571)	(19,031)
Total classified loans, net government guarantees	$12,069	$1,931	$4,036	$4,459	$10,912	$2,442	$35,849

The following table presents the Company's portfolio of risk-rated loans by grade as of December 31, 2020:


	Pass	Classified	Total
	(In Thousands)
December 31, 2020
Commercial	$758,362	$14,106	$772,468
Real estate construction 1-4 family	37,093	1,087	38,180
Real estate construction other	79,403	—	79,403
Real estate term owner occupied	152,734	9,990	162,724
Real estate term non-owner occupied	289,555	17,692	307,247
Real estate term other	42,900	3,330	46,230
Consumer secured by 1st deed of trust	15,404	144	15,548
Consumer other	22,144	106	22,250
Portfolio loans	1,397,595	46,455	1,444,050
Government guarantees	(334,639)	(14,587)	(349,226)
Portfolio loans, net of government guarantees	$1,062,956	$31,868	$1,094,824

Aging of Contractually Past Due Loans

The following tables present an aging of contractually past due loans as of the periods indicated:


(In Thousands)	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days Past Due	Total Past Due	Current	Total	Greater Than 90 Days Past Due Still Accruing
December 31, 2021
Commercial & industrial loans	$206	$51	$469	$726	$447,612	$448,338	$—
Commercial real estate:
Owner occupied properties	12	—	1,176	1,188	299,012	300,200	—
Non-owner occupied and multifamily properties	—	—	—	—	435,311	435,311	—
Residential real estate:
1-4 family residential properties secured by first liens	—	—	90	90	32,452	32,542	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	—	—	139	139	19,471	19,610	—
1-4 family residential construction loans	—	—	109	109	36,113	36,222	—
Other construction, land development and raw land loans	—	—	1,636	1,636	86,458	88,094	—
Obligations of states and political subdivisions in the US	—	—	—	—	16,403	16,403	—
Agricultural production, including commercial fishing	—	—	—	—	27,959	27,959	—
Consumer loans	—	—	—	—	4,801	4,801	—
Other loans	—	—	—	—	4,406	4,406	—
Total	$218	$51	$3,619	$3,888	$1,409,998	$1,413,886	$—
December 31, 2020
Commercial & industrial loans	$242	$229	$2,675	$3,146	$609,108	$612,254	$—
Commercial real estate:
Owner occupied properties	2,203	—	2,459	4,662	228,658	233,320	449
Non-owner occupied and multifamily properties	—	—	—	—	392,452	392,452	—
Residential real estate:
1-4 family residential properties secured by first liens	446	—	—	446	32,969	33,415	—
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	38	—	139	177	18,059	18,236	—
1-4 family residential construction loans	—	—	702	702	31,798	32,500	—
Other construction, land development and raw land loans	—	—	1,545	1,545	81,918	83,463	—
Obligations of states and political subdivisions in the US	—	—	—	—	15,318	15,318	—
Agricultural production, including commercial fishing	—	—	—	—	12,968	12,968	—
Consumer loans	—	—	272	272	5,462	5,734	—
Other loans	—	—	—	—	4,390	4,390	—
Total	$2,929	$229	$7,792	$10,950	$1,433,100	$1,444,050	$449

Loans on Nonaccrual Status

The following table presents loans on nonaccrual status and loans on nonaccrual status for which there was no related allowance for credit losses:


	December 31, 2021		December 31, 2020
(In Thousands)	Nonaccrual	Nonaccrual With No ACL	Nonaccrual	Nonaccrual With No ACL

Commercial & industrial loans	$4,350	$4,298	$3,848	$3,513
Commercial real estate:
Owner occupied properties	3,506	3,506	4,620	4,582

Residential real estate:
1-4 family residential properties secured by first liens	1,778	1,778	160	160
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	271	215	242	221
1-4 family residential construction loans	109	109	702	702
Other construction, land development and raw land loans	1,636	1,636	1,545	1,545


Consumer loans	—	—	3	—

Total nonaccrual loans	11,650	11,542	11,120	10,723
Government guarantees on nonaccrual loans	(978)	(978)	(1,483)	(1,483)
Net nonaccrual loans	$10,672	$10,564	$9,637	$9,240

Non Troubled Debt Restructuring

As of December 31, 2021 and 2020, the Company has made the following types of loan modifications related to COVID-19, which are not classified as TDRs with principal balance outstanding of:


Loan Modifications due to COVID-19 as of December 31, 2021
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$49,219	$31	$49,250
Number of modifications	16	1	17


Loan Modifications due to COVID-19 as of December 31, 2020
(Dollars in thousands)	Interest Only	Full Payment Deferral	Total
Portfolio loans	$43,379	$22,165	$65,544
Number of modifications	23	11	34

Troubled Debt Restructured Loans

The following table presents the breakout between newly restructured loans that occurred during 2021 and restructured loans that occurred prior to 2021 that are still included in portfolio loans. As discussed above, the CARES Act provided banks an option to elect to not account for certain loan modifications related to COVID-19 as TDRs as long as the borrowers were not more than 30 days past due as of December 31, 2019. The below disclosed restructurings were not related to COVID-19 modifications:


	Accrual Status	Nonaccrual Status	Total Modifications
(In Thousands)
New Troubled Debt Restructurings
Commercial & industrial loans	$—	$3,118	$3,118
Commercial real estate:
Owner occupied properties	—	350	350

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	—	139	139

Other construction, land development and raw land loans	—	577	577




Subtotal	—	4,184	4,184
Existing Troubled Debt Restructurings	3,291	3,163	6,454
Total	$3,291	$7,347	$10,638

The following tables present newly restructured loans that occurred during 2021 and 2020, by concession (terms modified):


	December 31, 2021
(In Thousands)	Number of Contracts	Rate Modification	Term Modification	Payment Modification	Combination Modification	Total Modifications
Pre-Modification Outstanding Recorded Investment:
Commercial & industrial loans	2	$—	$3,792	$—	$—	$3,792
Commercial real estate:
Owner occupied properties	1	—	360	—	—	360
Residential real estate:
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	1	—	—	139	—	139
Other construction, land development and raw land loans	1	—	577	—	—	577
Total	5	$—	$4,729	$139	$—	$4,868
Post-Modification Outstanding Recorded Investment:
Commercial & industrial loans	1	$—	$3,118	$—	$—	$3,118
Commercial real estate:
Owner occupied properties	1	—	350	—	—	350
Residential real estate:
1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens	1	—	—	139	—	139
Other construction, land development and raw land loans	1	—	577	—	—	577
Total	4	$—	$4,045	$139	$—	$4,184


	December 31, 2020
(In Thousands)	Number of Contracts	Rate Modification	Term Modification	Payment Modification	Combination Modification	Total Modifications
Pre-Modification Outstanding Recorded Investment:
Commercial & industrial loans	2	$—	$3,249	$164	$—	$3,413
Total	2	$—	$3,249	$164	$—	$3,413
Post-Modification Outstanding Recorded Investment:
Commercial & industrial loans	2	$—	$1,590	$161	$—	$1,751
Total	2	$—	$1,590	$161	$—	$1,751

Analysis Of Loan Transactions

An analysis of the loan transactions for the years indicated follows:


(In Thousands)	2021	2020	2019
Balance, beginning of the year	$217	$309	$—
Loans made	—	—	309
Repayments	26	92	—
Balance, end of year	$191	$217	$309