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LOANS HELD FOR INVESTMENT (Tables)
 3 Months Ended
Mar. 31, 2023
LOANS HELD FOR INVESTMENT [Abstract]  
Summary of Loans Held for Investment by Category
Loans held for investment are summarized by category as of the periods presented below (dollars in thousands):

 
March 31,
2023
    
December 31,
2022
  
Commercial real estate
  
$
926,018
    
$
919,358
  
Commercial - specialized
    
315,473
      
327,513
  
Commercial - general
    
510,917
      
484,783
  
Consumer:
                
1-4 family residential
    
485,396
      
460,124
  
Auto loans
    
321,309
      
321,476
  
Other consumer
    
81,413
      
81,308
  
Construction
    
148,114
      
153,519
  
     
2,788,640
      
2,748,081
  
Allowance for credit losses on loans
    
(39,560
)
    
(39,288
)
Loans, net
  
$
2,749,080
    
$
2,708,793
  
Activity in Allowance for Credit Losses and Investment in Loans Disaggregated Based on Method of Evaluating Impairment
The following table details the activity in the ACL for loans for the periods indicated (dollars in thousands). Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

 
Beginning
Balance
    
Impact of
CECL
Adoption
    
Provision for
Credit
Losses(1)
    
Charge-offs
     Recoveries    
Ending
Balance
  
For the three months ended March 31, 2023
                                    
Commercial real estate
   $ 13,029     $ 827     $ (475 )   $ —     $ —     $
13,381  
Commercial - specialized
     3,425       33       (11 )     —       63       3,510  
Commercial - general
     9,215       (2,574 )     (237 )     (199 )     62       6,267  
Consumer:
                                                
1-4 family residential
     6,194       1,700       635       —       2       8,531  
Auto loans
     3,926       (332 )     298       (254 )     76       3,714  
Other consumer
     1,376       (235 )     68       (214 )     106       1,101  
Construction
     2,123       683       522       (272 )     —       3,056  

  $ 39,288     $ 102     $ 800     $ (939 )   $ 309     $
39,560  

(1) The $1.0 million provision for credit loss on the consolidated statement of comprehensive income (loss) includes a $800 thousand provision for credit losses on loans and a $210 thousand provision for off-balance sheet credit exposures for the three months ended March 31, 2023.


  
Beginning
Balance
    
Provision for
Credit Losses
    
Charge-offs
    
Recoveries
    
Ending
Balance
  
For the three months ended March 31, 2022
                              
Commercial real estate
   $ 17,245     $ (2,649 )   $ —     $ 25     $ 14,621  
Commercial - specialized
     4,363       (1,083 )     (39 )     34       3,275  
Commercial - general
     8,466       1,659
    (307 )     122       9,940  
Consumer:
                                        
1-4 family residential
     5,268       (298 )     (40 )     1       4,931  
Auto loans
     3,653       68       (86 )     46       3,681  
Other consumer
     1,357       147       (185 )     65       1,384  
Construction
     1,746       71       —       —       1,817  

  $ 42,098     $ (2,085 )   $ (657 )   $ 293     $ 39,649  

During the three months ended March 31, 2023, the provision for credit losses on loans of $800 thousand reflected a build in the allowance driven primarily by organic loan growth experienced over the first three months of 2023. The changes in the ACL for this period were also impacted by net charge-offs of $630 thousand.

All of the individually analyzed loans are predominantly secured by real estate. The following table shows the Company’s amortized cost in loans and related ACL for loans recorded disaggregated based on using the fair value of collateral loss estimation methodology of evaluating expected credit losses at the date indicated (dollars in thousands).

 
  
Individually
Evaluated –
Amortized Cost
    
Individually
Evaluated – ACL
  
March 31, 2023
            
Commercial real estate
  
$
79
    
$
—
  
Commercial - specialized
    
—
      
—
  
Commercial - general
    
3,742
      
63
  
Consumer:
                
1-4 family residential
    
486
      
83
  
Auto loans
    
—
      
—
  
Other consumer
    
—
      
—
  
Construction
    
—
      
—
  
 
  
$
4,307
    
$
146
  

The following table shows the Company’s investment in loans disaggregated based on the method of evaluating impairment at the date indicated (dollars in thousands):

 
Recorded Investment
    
ACL for Loans
  
   
Individually
Evaluated
    
Collectively
Evaluated
    
Individually
Evaluated
    
Collectively
Evaluated
  
December 31, 2022
                        
Commercial real estate
  
$
—
    
$
919,358
    
$
—
    
$
13,029
  
Commercial - specialized
    
—
      
327,513
      
—
      
3,425
  
Commercial - general
    
3,350
      
481,433
      
22
      
9,193
  
Consumer:
                                
1-4 family residential
    
742
      
459,382
      
18
      
6,176
  
Auto loans
    
—
      
321,476
      
—
      
3,926
  
Other consumer
    
—
      
81,308
      
—
      
1,376
  
Construction
    
1,014
      
152,505
      
245
      
1,878
  

 
$
5,106
    
$
2,742,975
    
$
285
    
$
39,003
  
Impaired Loan Information
Impaired loan information at the date indicated follows (dollars in thousands):

 
Unpaid
Contractual
Principal
Balance
    
Recorded
Investment
With No
Allowance
    
Recorded
Investment
With
Allowance
    
Total
Recorded
Investment
    
Related
Allowance
    
Average
Recorded
Investment
  
                                     
December 31, 2022
                                    
Commercial real estate
  
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
551
  
Commercial - specialized
    
—
      
—
      
—
      
—
      
—
      
—
  
Commercial - general
    
3,350
      
799
      
2,551
      
3,350
      
22
      
4,214
  
Consumer:
                                                
1-4 family
    
742
      
486
      
256
      
742
      
18
      
1,167
  
Auto loans
    
—
      
—
      
—
      
—
      
—
      
—
  
Other consumer
    
—
      
—
      
—
      
—
      
—
      
—
  
Construction
    
1,014
      
686
      
328
      
1,014
      
245
      
507
  

 
$
5,106
    
$
1,971
    
$
3,135
    
$
5,106
    
$
285
    
$
6,439
  
Age Analysis on Accruing Past-due Loans and Nonaccrual Loans
The table below provides an age analysis on accruing past-due loans and nonaccrual loans at the dates indicated (dollars in thousands):

 
  
30-89 Days
Past Due
    
90 Days or
More Past
Due
    
Nonaccrual
    
Nonaccrual
with no
ACL
  
March 31, 2023
                        
Commercial real estate
  
$
2,236
    
$
19
    
$
79
    
$
79
  
Commercial - specialized
    
1,042
      
13
      
36
      
—
  
Commercial - general
    
753
      
74
      
3,671
      
3,141
  
Consumer:
                                
1-4 Family residential
    
1,285
      
2,011
      
1,326
      
—
  
Auto loans
    
335
      
94
      
—
      
—
  
Other consumer
    
251
      
221
      
36
      
—
  
Construction
    
1,146
      
—
      
—
      
—
  
 
  
$
7,048
    
$
2,432
    
$
5,148
    
$
3,220
  

 
30-89 Days
Past Due
    
90 Days or
More Past Due
    
Nonaccrual
  
December 31, 2022
                  
Commercial real estate
  
$
342
    
$
27
    
$
—
  
Commercial - specialized
    
25
      
13
      
38
  
Commercial - general
    
1,451
      
60
      
3,357
  
Consumer:
                        
1-4 Family residential
    
1,389
      
1,653
      
1,356
  
Auto loans
    
707
      
85
      
—
  
Other consumer
    
1,487
      
149
      
37
  
Construction
    
550
      
—
      
1,014
  

 
$
5,951
    
$
1,987
    
$
5,802
  
Amortized Cost Basis in Loans by Credit Quality Indicator and Origination Year
The following table reflects the amortized cost basis in loans by credit quality indicator and origination year at March 31, 2023, excluding loans held for sale. Loans acquired are shown in the table by origination year, not merger date. The Company had an immaterial amount of revolving loans converted to term loans at March 31, 2023.

 
                    
Term Loans
                    
 
              
Amortized Cost Basis by Origination Year
              
 
                                                
(Dollars in thousands)
  
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving Loans
    
Total
  

                                               
Commercial real estate:
                                               
Pass
  
$
62,228
    
$
291,185
    
$
230,596
    
$
65,575
    
$
69,961
    
$
179,093
    
$
3,511
    
$
902,149
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Classified
    
—
      
19
      
117
      
1,841
      
870
      
21,022
      
—
      
23,869
  
Total commercial real estate loans
  
$
62,228
    
$
291,204
    
$
230,713
    
$
67,416
    
$
70,831
    
$
200,115
    
$
3,511
    
$
926,018
  
Current period gross charge-offs
  
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
  
 
                                                                
Commercial - specialized:
                                                                
Pass
  
$
26,236
    
$
70,603
    
$
65,620
    
$
22,967
    
$
17,446
    
$
29,568
    
$
82,523
    
$
314,963
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Classified
    
—
      
—
      
183
      
245
      
19
      
63
      
—
      
510
  
Total commercial - specialized loans
  
$
26,236
    
$
70,603
    
$
65,803
    
$
23,212
    
$
17,465
    
$
29,631
    
$
82,523
    
$
315,473
  
Current period gross charge-offs
  
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
  
 
                                                                
Commercial - general:
                                                                
Pass
  
$
28,675
    
$
150,325
    
$
102,064
    
$
41,549
    
$
19,139
    
$
79,283
    
$
54,664
    
$
475,699
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Classified
    
—
      
13,019
      
4,724
      
540
      
6,433
      
6,079
      
4,423
      
35,218
  
Total commercial - general loans
  
$
28,675
    
$
163,344
    
$
106,788
    
$
42,089
    
$
25,572
    
$
85,362
    
$
59,087
    
$
510,917
  
Current period gross charge-offs
  
$
—
    
$
—
    
$
25
    
$
10
    
$
18
    
$
146
    
$
—
    
$
199
  
Consumer: 1-4 family residential:
                                                                
 
                                                                
Pass
  
$
24,089
    
$
166,053
    
$
116,762
    
$
58,256
    
$
34,702
    
$
70,999
    
$
3,749
    
$
474,610
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Classified
    
—
      
154
      
919
      
1,831
      
4,356
      
3,526
      
—
      
10,786
  
Total consumer: 1-4 family residential loans
  
$
24,089
    
$
166,207
    
$
117,681
    
$
60,087
    
$
39,058
    
$
74,525
    
$
3,749
    
$
485,396
  
Current period gross charge-offs
  
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
  
 
                                                                
Consumer: auto loans:
                                                                
Pass
  
$
32,574
      
170,405
      
71,132
      
26,400
      
13,730
      
6,741
      
—
      
320,982
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Classified
    
—
      
—
      
133
      
50
      
79
      
65
      
—
      
327
  
Total consumer: auto loans
  
$
32,574
    
$
170,405
    
$
71,265
    
$
26,450
    
$
13,809
    
$
6,806
    
$
—
    
$
321,309
  
Current period gross charge-offs
  
$
—
    
$
106
    
$
102
    
$
—
    
$
16
    
$
30
    
$
—
    
$
254
  
 
                                                                
Consumer: other consumer:
                                                                
Pass
  
$
7,117
    
$
38,896
    
$
16,431
    
$
5,320
    
$
4,009
    
$
7,866
    
$
1,574
    
$
81,213
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Classified
    
—
      
12
      
50
      
36
      
3
      
99
      
—
      
200
  
Total consumer: other consumer loans
  
$
7,117
    
$
38,908
    
$
16,481
    
$
5,356
    
$
4,012
    
$
7,965
    
$
1,574
    
$
81,413
  
Current period gross charge-offs
  
$
53
    
$
91
    
$
19
    
$
6
    
$
34
    
$
11
    
$
—
    
$
214
  

Construction:
                                                
Pass
  
$
6,565
    
$
102,556
    
$
26,638
    
$
270
    
$
—
    
$
—
    
$
12,085
    
$
148,114
  
Special mention
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Classified
    
—
      
—
      
—
      
—
      
—
      
—
      
—
      
—
  
Total construction loans
  
$
6,565
    
$
102,556
    
$
26,638
    
$
270
    
$
—
    
$
—
    
$
12,085
    
$
148,114
  
Current period gross charge-offs
   $
—     $
—     $
272     $
—     $
—     $
—     $
—     $
272  

The following table summarizes loans by credit quality indicator at December 31, 2022 (dollars in thousands):

 
Pass
    
Special
Mention
    
Substandard
    
Doubtful
    
Total
  
Commercial real estate
  
$
 893,312    
$
 —    
$
 26,046    
$
 —    
$
 919,358  
Commercial - specialized
     326,987       —       526       —       327,513  
Commercial - general
     451,639       —       33,144       —       484,783  
Consumer:
    
     
     
     
     
 
1-4 family residential
     450,034       —       10,090       —       460,124  
Auto loans
     321,158       —       318       —       321,476  
Other consumer
     81,109       —       199       —       81,308  
Construction
     151,995       —       1,524       —       153,519  

 
$
 2,676,234    
$
 —    
$
 71,847    
$
 —    
$
 2,748,081  
Amortized Cost Basis of Loans Modified to Borrowers Experiencing Financial Difficulty and Financial Effects of Loan Modifications
The following table presents the amortized cost basis of loans at March 31, 2023 that were both experiencing financial difficulty and modified during the three months ended March 31, 2023, by class and by type of modification.  The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost bases of each class of financing receivable is also presented below (dollars in thousands):

 
  
Payment
Delay
    
Term
Extension
    
Interest Rate
Reduction
    
Term
Extension
and Interest
Rate
Reduction
    
Total Class of
Financing
Receivable
  
March 31, 2023
                              
Commercial real estate
  
$
—
    
$
—
    
$
—
    
$
—
      
0.00
%
Commercial - specialized
    
—
      
—
      
—
      
—
      
0.00
%
Commercial - general
    
—
      
2,999
      
—
      
42
      
0.60
%
Consumer:
                                        
1-4 family
    
—
      
199
      
—
      
—
      
0.04
%
Auto loans
    
—
      
40
      
—
      
—
      
0.01
%
Other consumer
    
—
      
—
      
—
      
—
      
0.00
%
Construction
    
—
      
—
      
—
      
—
      
0.00
%
 
  
$
—
    
$
3,238
    
$
—
    
$
42
      
0.12
%

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.  The following presents the performance of such loans that have been modified in the last three months (dollars in thousands):

 
  
30-89 Days
Past Due
    
90 Days or
More Past Due
and Still
Accruing
    
Nonaccrual
  
March 31, 2023
                  
Commercial real estate
  
$
—
    
$
—
    
$
—
  
Commercial - specialized
    
—
      
—
      
—
  
Commercial - general
    
—
      
—
      
—
  
Consumer:
                        
1-4 Family residential
    
—
      
—
      
—
  
Auto loans
    
40
      
—
      
—
  
Other consumer
    
—
      
—
      
—
  
Construction
    
—
      
—
      
—
  
 
  
$
40
    
$
—
    
$
—
  

The following table presents the financial effects of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended March 31, 2023 (dollars in thousands):

 
  
Principal
Forgiveness
    
Weighted-
Average
Interest Rate
Reduction
    
Weighted-
Average
Term
Extension
(Months)
  
March 31, 2023
                  
Commercial real estate
  
$
—
      
0.00
%
    
—
  
Commercial - specialized
    
—
      
0.00
%
    
—
  
Commercial - general
    
—
      
0.25
%
    
43
  
Consumer:
                        
1-4 Family residential
    
—
      
0.00
%
    
10
  
Auto loans
    
—
      
0.00
%
    
15
  
Other consumer
    
—
      
0.00
%
    
—
  
Construction
    
—
      
0.00
%
    
—
  
 
  
$
—
      
0.25
%
    
41