Loans, Allowance for Credit Losses - Loans, and Credit Quality (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of loan composition by portfolio segment

The loan composition is summarized as follows.



	March 31, 2020					December 31, 2019
(in thousands)	Amount			% of Total		Amount			% of Total
Commercial & industrial	$	831,257		32	%	$	806,189		31	%
Owner-occupied CRE	499,705			19		496,372			19
Agricultural	95,991			3		95,450			4
CRE investment	448,758			17		443,218			17
Construction & land development	96,055			4		92,970			4
Residential construction	52,945			2		54,403			2
Residential first mortgage	432,126			17		432,167			17
Residential junior mortgage	121,105			5		122,771			5
Retail & other	29,482			1		30,211			1
Loans	2,607,424			100	%	2,573,751			100	%
Less allowance for credit losses - Loans (“ACL-Loans”)	26,202					13,972
Loans, net	$	2,581,222				$	2,559,779
Allowance for credit losses - Loans to loans	1.00		%			0.54		%

Schedule of changes in allowance for credit losses by portfolio segment

For comparison purposes, the following table presents the balance and activity in the ACL-Loans by portfolio segment for the prior year-end period.



	TOTAL – Year Ended December 31, 2019
(in thousands)	Commercial & industrial			Owner- occupied CRE			Agricultural			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ACL-Loans:
Beginning balance	$	5,271		$	2,847		$	422		$	1,470		$	510		$	211		$	1,646		$	472		$	304		$	13,153
Provision	(61		)	254			157			130			(96		)	383			9			86			338			1,200
Charge-offs	(159		)	(93		)	—			—			—			(226		)	(22		)	(80		)	(347		)	(927		)
Recoveries	420			2			—			—			—			—			36			39			49			546
Net (charge-offs) recoveries	261			(91		)	—			—			—			(226		)	14			(41		)	(298		)	(381		)
Ending balance	$	5,471		$	3,010		$	579		$	1,600		$	414		$	368		$	1,669		$	517		$	344		$	13,972
As % of ACL-Loans	39		%	22		%	4		%	11		%	3		%	3		%	12		%	4		%	2		%	100		%

The following table presents the balance and activity in the ACL-Loans by portfolio segment.



	TOTAL – Three Months Ended March 31, 2020
(in thousands)	Commercial & industrial			Owner- occupied CRE			Agricultural			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ACL-Loans:
Beginning balance	$	5,471		$	3,010		$	579		$	1,600		$	414		$	368		$	1,669		$	517		$	344		$	13,972
Adoption of CECL	2,962			1,249			361			1,970			51			124			1,286			351			134			8,488
Initial PCD ACL	797			—			—			—			—			—			—			—			—			797
Provision	1,253			163			95			795			82			(50		)	533			102			27			3,000
Charge-offs	—			—			—			(20		)	—			—			—			—			(73		)	(93		)
Recoveries	30			—			—			—			—			—			1			3			4			38
Net (charge-offs) recoveries	30			—			—			(20		)	—			—			1			3			(69		)	(55		)
Ending balance	$	10,513		$	4,422		$	1,035		$	4,345		$	547		$	442		$	3,489		$	973		$	436		$	26,202
As % of ACL-Loans	40		%	17		%	4		%	16		%	2		%	2		%	13		%	4		%	2		%	100		%

A roll forward of the allowance for credit losses is summarized as follows.



	Three Months Ended						Year Ended
(in thousands)	March 31, 2020			March 31, 2019			December 31, 2019
Beginning balance	$	13,972		$	13,153		$	13,153
Adoption of CECL	8,488			—			—
Initial PCD ACL	797			—			—
Total impact for adoption of CECL	9,285			—			—
Provision for credit losses	3,000			200			1,200
Charge-offs	(93		)	(10		)	(927		)
Recoveries	38			27			546
Net (charge-offs) recoveries	(55		)	17			(381		)
Ending balance	$	26,202		$	13,370		$	13,972

Schedule of collateral dependent loans by portfolio segment

The following table presents collateral dependent loans by portfolio segment and collateral type, including those loans with and without a related allowance allocation as of March 31, 2020.



March 31, 2020	Collateral Type
(in thousands)	Real Estate		Other Business Assets		Total		Without an Allowance		With an Allowance		Allowance Allocation
Commercial & industrial	$	—	$	5,544	$	5,544	$	978	$	4,566	$	1,683
Owner-occupied CRE	3,168		—		3,168		3,168		—		—
Agricultural	611		921		1,532		663		869		61
CRE investment	1,029		—		1,029		1,029		—		—
Construction & land development	533		—		533		533		—		—
Residential construction	—		—		—		—		—		—
Residential first mortgage	—		—		—		—		—		—
Residential junior mortgage	—		—		—		—		—		—
Retail & other	—		—		—		—		—		—
Total loans	$	5,341	$	6,465	$	11,806	$	6,371	$	5,435	$	1,744

Schedule of impaired loans by portfolio segment

The following table presents impaired loans and their respective allowance for credit loss allocations at December 31, 2019, as determined in accordance with historical accounting guidance.



	Total Impaired Loans – December 31, 2019
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial & industrial	$	5,932	$	7,950	$	625	$	5,405	$	1,170
Owner-occupied CRE	3,430		4,016		—		3,677		256
Agricultural	2,134		2,172		116		2,311		37
CRE investment	2,426		2,790		—		2,497		364
Construction & land development	382		382		—		460		—
Residential construction	—		—		—		—		—
Residential first mortgage	2,357		2,629		—		2,412		178
Residential junior mortgage	218		349		—		224		58
Retail & other	12		12		—		12		—
Total	$	16,891	$	20,300	$	741	$	16,998	$	2,063

Schedule of past due loans by portfolio segment

The following tables present past due loans by portfolio segment.



	March 31, 2020
(in thousands)	30-89 Days Past Due (accruing)			90 Days & Over or nonaccrual			Current			Total
Commercial & industrial	$	1,060		$	6,050		$	824,147		$	831,257
Owner-occupied CRE	1,961			3,837			493,907			499,705
Agricultural	1			1,801			94,189			95,991
CRE investment	484			1,029			447,245			448,758
Construction & land development	210			533			95,312			96,055
Residential construction	100			—			52,845			52,945
Residential first mortgage	1,985			953			429,188			432,126
Residential junior mortgage	249			566			120,290			121,105
Retail & other	80			—			29,402			29,482
Total loans	$	6,130		$	14,769		$	2,586,525		$	2,607,424
Percent of total loans	0.2		%	0.6		%	99.2		%	100.0		%



	December 31, 2019
(in thousands)	30-89 Days Past Due (accruing)			90 Days & Over or nonaccrual			Current			Total
Commercial & industrial	$	1,729		$	6,249		$	798,211		$	806,189
Owner-occupied CRE	112			3,311			492,949			496,372
Agricultural	—			1,898			93,552			95,450
CRE investment	—			1,073			442,145			443,218
Construction & land development	2,063			20			90,887			92,970
Residential construction	302			—			54,101			54,403
Residential first mortgage	2,736			1,090			428,341			432,167
Residential junior mortgage	217			480			122,074			122,771
Retail & other	110			1			30,100			30,211
Total loans	$	7,269		$	14,122		$	2,552,360		$	2,573,751
Percent of total loans	0.3		%	0.5		%	99.2		%	100.0		%

Schedule of nonaccrual loans by portfolio segment

The following table presents nonaccrual loans by portfolio segment. The nonaccrual loans without a related allowance for credit losses have been reflected in the collateral dependent loans table above.



	March 31, 2020					December 31, 2019
(in thousands)	Nonaccrual Loans			% of Total		Nonaccrual Loans			% of Total
Commercial & industrial	$	6,050		41	%	$	6,249		44	%
Owner-occupied CRE	3,837			26		3,311			23
Agricultural	1,801			12		1,898			14
CRE investment	1,029			7		1,073			8
Construction & land development	533			4		20			—
Residential construction	—			—		—			—
Residential first mortgage	953			6		1,090			8
Residential junior mortgage	566			4		480			3
Retail & other	—			—		1			—
Nonaccrual loans	$	14,769		100	%	$	14,122		100	%
Percent of total loans	0.6		%			0.5		%

Schedule of loans by loan risk categories by portfolio segment

The following table presents total loans by risk categories and year of origination.



March 31, 2020	Amortized Cost Basis by Origination Year
(in thousands)	2020		2019		2018		2017		2016		Prior		Revolving		Revolving to Term		TOTAL
Commercial & industrial
Grades 1-4	$	45,598	$	151,079	$	118,171	$	77,690	$	31,727	$	64,618	$	291,990	$	—	$	780,873
Grade 5	39		3,470		7,446		576		1,479		2,830		7,845		—		23,685
Grade 6	—		23		823		4		1		37		4,946		—		5,834
Grade 7	113		2,078		1,115		1,404		1,372		7,393		7,390		—		20,865
Total	$	45,750	$	156,650	$	127,555	$	79,674	$	34,579	$	74,878	$	312,171	$	—	$	831,257

Owner-occupied CRE
Grades 1-4	$	21,337	$	68,525	$	84,981	$	64,514	$	50,402	$	175,204	$	2,340	$	—	$	467,303
Grade 5	—		576		1,706		7,882		396		6,676		488		—		17,724
Grade 6	—		—		—		1,749		—		56		—		—		1,805
Grade 7	—		168		285		2,197		1,797		8,426		—		—		12,873
Total	$	21,337	$	69,269	$	86,972	$	76,342	$	52,595	$	190,362	$	2,828	$	—	$	499,705

Agricultural
Grades 1-4	$	4,321	$	7,982	$	7,604	$	10,793	$	3,998	$	26,721	$	20,468	$	—	$	81,887
Grade 5	—		—		38		179		710		4,064		89		—		5,080
Grade 6	—		—		—		329		392		—		49		—		770
Grade 7	—		—		58		117		1,375		5,893		811		—		8,254
Total	$	4,321	$	7,982	$	7,700	$	11,418	$	6,475	$	36,678	$	21,417	$	—	$	95,991

CRE investment
Grades 1-4	$	29,442	$	72,601	$	45,017	$	71,370	$	44,213	$	168,170	$	6,238	$	—	$	437,051
Grade 5	—		—		55		—		394		6,629		—		—		7,078
Grade 6	—		105		—		915		656		—		—		—		1,676
Grade 7	—		—		—		—		146		2,807		—		—		2,953
Total	$	29,442	$	72,706	$	45,072	$	72,285	$	45,409	$	177,606	$	6,238	$	—	$	448,758

Construction & land development
Grades 1-4	$	7,276	$	46,643	$	20,176	$	3,719	$	2,683	$	9,827	$	1,678	$	—	$	92,002
Grade 5	—		219		2,699		45		—		26		—		—		2,989
Grade 6	—		—		—		—		—		—		—		—		—
Grade 7	—		149		—		—		—		915		—		—		1,064
Total	$	7,276	$	47,011	$	22,875	$	3,764	$	2,683	$	10,768	$	1,678	$	—	$	96,055

Residential construction
Grades 1-4	$	3,495	$	44,300	$	3,922	$	466	$	29	$	135	$	—	$	—	$	52,347
Grade 5	—		542		—		56		—		—		—		—		598
Grade 6	—		—		—		—		—		—		—		—		—
Grade 7	—		—		—		—		—		—		—		—		—
Total	$	3,495	$	44,842	$	3,922	$	522	$	29	$	135	$	—	$	—	$	52,945

Residential first mortgage
Grades 1-4	$	24,900	$	79,077	$	59,651	$	56,748	$	60,809	$	142,975	$	1,538	$	1	$	425,699
Grade 5	—		1,215		296		309		697		1,153		—		—		3,670
Grade 6	—		—		—		—		—		2		—		—		2
Grade 7	—		778		198		20		66		1,693		—		—		2,755
Total	$	24,900	$	81,070	$	60,145	$	57,077	$	61,572	$	145,823	$	1,538	$	1	$	432,126

Residential junior mortgage
Grades 1-4	$	927	$	7,017	$	5,941	$	1,856	$	2,021	$	3,844	$	95,033	$	3,861	$	120,500
Grade 5	—		—		—		—		—		34		—		—		34
Grade 6	—		—		—		—		—		—		—		—		—
Grade 7	—		—		—		30		—		355		75		111		571
Total	$	927	$	7,017	$	5,941	$	1,886	$	2,021	$	4,233	$	95,108	$	3,972	$	121,105

Retail & other
Grades 1-4	$	2,438	$	5,605	$	2,658	$	1,161	$	827	$	1,156	$	15,637	$	—	$	29,482
Grade 5	—		—		—		—		—		—		—		—		—
Grade 6	—		—		—		—		—		—		—		—		—
Grade 7	—		—		—		—		—		—		—		—		—
Total	$	2,438	$	5,605	$	2,658	$	1,161	$	827	$	1,156	$	15,637	$	—	$	29,482

Total loans	$	139,886	$	492,152	$	362,840	$	304,129	$	206,190	$	641,639	$	456,615	$	3,973	$	2,607,424

The following tables present total loans by risk categories.



	March 31, 2020
(in thousands)	Grades 1- 4			Grade 5			Grade 6			Grade 7			Total
Commercial & industrial	$	780,873		$	23,685		$	5,834		$	20,865		$	831,257
Owner-occupied CRE	467,303			17,724			1,805			12,873			499,705
Agricultural	81,887			5,080			770			8,254			95,991
CRE investment	437,051			7,078			1,676			2,953			448,758
Construction & land development	92,002			2,989			—			1,064			96,055
Residential construction	52,347			598			—			—			52,945
Residential first mortgage	425,699			3,670			2			2,755			432,126
Residential junior mortgage	120,500			34			—			571			121,105
Retail & other	29,482			—			—			—			29,482
Total loans	$	2,487,144		$	60,858		$	10,087		$	49,335		$	2,607,424
Percent of total	95.4		%	2.3		%	0.4		%	1.9		%	100.0		%



	December 31, 2019
(in thousands)	Grades 1- 4			Grade 5			Grade 6			Grade 7			Total
Commercial & industrial	$	765,073		$	20,199		$	7,663		$	13,254		$	806,189
Owner-occupied CRE	464,661			20,855			953			9,903			496,372
Agricultural	77,082			6,785			3,275			8,308			95,450
CRE investment	430,794			8,085			2,578			1,761			443,218
Construction & land development	90,523			2,213			15			219			92,970
Residential construction	53,286			1,117			—			—			54,403
Residential first mortgage	424,044			4,677			668			2,778			432,167
Residential junior mortgage	122,249			35			—			487			122,771
Retail & other	30,210			—			—			1			30,211
Total loans	$	2,457,922		$	63,966		$	15,152		$	36,711		$	2,573,751
Percent of total	95.5		%	2.5		%	0.6		%	1.4		%	100.0		%

Schedule of non accretable discount

The following table summarizes the nonaccretable discount on purchased credit impaired loans prior to the adoption of ASU 2016-13.



	Three Months Ended			Year Ended
(in thousands)	March 31, 2019			December 31, 2019
Balance at beginning of period	$	6,408		$	6,408
Acquired balance, net	—			911
Accretion to loan interest income	(221		)	(4,713		)
Disposals of loans	—			(679		)
Balance at end of period	$	6,187		$	1,927