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LOANS AND ALLOWANCE (Tables)

3 Months Ended

Mar. 31, 2022

Schedule of loans, net of unearned income

The following table summarizes the composition of our loan portfolio as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022		December 31, 2021
Loans secured by real estate:
Commercial real estate - owner occupied	$	404,957	$	387,703
Commercial real estate - non-owner occupied		613,282		588,000
Secured by farmland		7,527		8,612
Construction and land development		116,288		121,444
Residential 1-4 family		574,688		547,560
Multi-family residential		152,266		164,071
Home equity lines of credit		72,410		73,846
Total real estate loans		1,941,418		1,891,236

Commercial loans		335,537		301,980
Paycheck Protection Program loans		31,404		77,319
Consumer loans		77,383		60,996
Total Non-PCD loans		2,385,742		2,331,531
PCD loans		7,927		8,455
Total loans	$	2,393,669	$	2,339,986

Schedule of details of aging of the recorded investment in past due loans by class of loans

The following tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2022 and December 31, 2021 (in thousands):


	30 - 59		60 - 89		90
	Days		Days		Days		Total		Loans Not		Total
March 31, 2022	Past Due		Past Due		or More		Past Due		Past Due		Loans
Commercial real estate - owner occupied	$	304	$	—	$	—	$	304	$	404,653	$	404,957
Commercial real estate - non-owner occupied		—		—		—		—		613,282		613,282
Secured by farmland		790		—		—		790		6,737		7,527
Construction and land development		19		—		4,575		4,594		111,694		116,288
Residential 1-4 family		9,515		503		154		10,172		564,516		574,688
Multi- family residential		—		—		—		—		152,266		152,266
Home equity lines of credit		375		—		329		704		71,706		72,410
Commercial loans		1,386		—		1,243		2,629		332,908		335,537
Paycheck Protection Program loans		98		553		1,837		2,488		28,916		31,404
Consumer loans		66		11		—		77		77,306		77,383
Total Non-PCD loans		12,553		1,067		8,138		21,758		2,363,984		2,385,742
PCD loans		1,424		12		—		1,436		6,491		7,927
Total	$	13,977	$	1,079	$	8,138	$	23,194	$	2,370,475	$	2,393,669


	30 - 59		60 - 89		90
	Days		Days		Days		Total		Loans Not		Total
December 31, 2021	Past Due		Past Due		or More		Past Due		Past Due		Loans
Commercial real estate - owner occupied	$	194	$	346	$	—	$	540	$	387,163	$	387,703
Commercial real estate - non-owner occupied		—		—		—		—		588,000		588,000
Secured by farmland		791		—		—		791		7,821		8,612
Construction and land development		204		131		4,575		4,910		116,534		121,444
Residential 1-4 family		9,384		254		137		9,775		537,785		547,560
Multi- family residential		—		—		—		—		164,071		164,071
Home equity lines of credit		331		—		171		502		73,344		73,846
Commercial loans		387		—		1,246		1,633		300,347		301,980
Paycheck Protection Program loans		4,954		8,559		283		13,796		63,523		77,319
Consumer loans		193		130		2		325		60,671		60,996
Total Non-PCD loans		16,438		9,420		6,414		32,272		2,299,259		2,331,531
PCD loans		1,717		—		—		1,717		6,738		8,455
Total	$	18,155	$	9,420	$	6,414	$	33,989	$	2,305,997	$	2,339,986

The amortized cost, by class, of loans and leases on nonaccrual status at March 31, 2022 and December 31, 2021, were as follows (in thousands):


	90			Less Than	Total		Nonaccrual With
	Days			90 Days	Nonaccrual		No Credit
March 31, 2022	or More			Past Due	Loans ⁽¹⁾		Loss Allowance ⁽²⁾
Commercial real estate - owner occupied	$	—	$	830	$	830	$	830
Secured by farmland		—		811		811		811
Construction and land development		4,575		32		4,607		4,607
Residential 1-4 family		154		572		726		726
Multi- family residential		—		4,226		4,226		4,226
Home equity lines of credit		329		247		576		576
Commercial loans		1,243		454		1,697		724
Paycheck Protection Program loans		20		—		20		20
Consumer loans		—		12		12		7
Total Non-PCD loans		6,321		7,184		13,505		12,527
PCD loans		—		1,436		1,436		—
Total	$	6,321	$	8,620	$	14,941	$	12,527

	90			Less Than	Total		Nonaccrual With
	Days			90 Days	Nonaccrual		No Credit
December 31, 2021	or More			Past Due	Loans ⁽¹⁾		Loss Allowance ⁽²⁾
Commercial real estate - owner occupied	$	—	$	842	$	842	$	842
Secured by farmland		—		836		836		836
Construction and land development		4,575		34		4,609		4,609
Residential 1-4 family		137		411		548		548
Multi- family residential		—		4,301		4,301		4,301
Home equity lines of credit		171		253		424		424
Commercial loans		1,246		476		1,722		745
Consumer loans		2		16		18		10
Total Non-PCD loans		6,131		7,169		13,300		12,315
PCD loans		—		1,729		1,729		—
Total	$	6,131	$	8,898	$	15,029	$	12,315

(1)	Nonaccrual loans include SBA guaranteed amounts totaling $2.7 million and $1.1 million at March 31, 2022 and December 31, 2021, respectively.

(2)	Nonaccrual loans with no credit loss allowance include SBA guaranteed amounts totaling $0.8 million and $1.1 million at March 31, 2022 and December 31, 2021, respectively.

Schedule of nonaccrual loans

The following table presents nonaccrual loans as of March 31, 2022 by class and year of origination (in thousands):



															Revolving
															Loans
													Revolving		Converted
	2022		2021		2020		2019		2018		Prior		Loans		To Term		Total
Commercial real estate - owner occupied	$	—	$	—	$	—	$	469	$	—	$	361	$	—	$	—	$	830
Secured by farmland		—		—		—		21		—		659		131		—		811
Construction and land development		—		—		—		4,575		—		32		—		—		4,607
Residential 1-4 family		—		—		—		—		—		451		—		274		725
Multi- family residential		—		—		—		—		—		4,226		—		—		4,226
Home equity lines of credit		—		—		—		—		—		—		553		24		577
Commercial loans		—		—		8		—		236		295		1,158		—		1,697
Paycheck Protection Program loans		—		20		—		—		—		—		—		—		20
Consumer loans		—		—		—		—		5		7		—		—		12
Total non-PCD nonaccruals		—		20		8		5,065		241		6,031		1,842		298		13,505
PCD loans		—		—		—		—		—		1,436		—		—		1,436
Total nonaccrual loans	$	—	$	20	$	8	$	5,065	$	241	$	7,467	$	1,842	$	298	$	14,941

Schedule of the risk category of loans by class of loans


															Revolving
															Loans
														Revolving	Converted
	2022		2021		2020		2019		2018		Prior		Loans		To Term		Total
Commercial real estate - owner occupied
Pass	$	18,786	$	62,589	$	18,223	$	35,051	$	28,082	$	227,050	$	3,758	$	6,887	$	400,426
Special Mention		—		—		—		—		—		1,252		—		—		1,252
Substandard		—		—		—		468		—		2,811		—		—		3,279
Doubtful		—		—		—		—		—		—		—		—		—
	$	18,786	$	62,589	$	18,223	$	35,519	$	28,082	$	231,113	$	3,758	$	6,887	$	404,957
Weighted average risk grade		3.31		3.58		3.42		3.47		3.45		3.53		3.54		3.96		3.52
Commercial real estate - nonowner occupied
Pass	$	17,975	$	120,873	$	55,594	$	31,815	$	74,741	$	277,237	$	3,769	$	—	$	582,004
Special Mention		—		—		—		—		926		29,751		—		601		31,278
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
	$	17,975	$	120,873	$	55,594	$	31,815	$	75,667	$	306,988	$	3,769	$	601	$	613,282
Weighted average risk grade		3.03		3.16		3.47		3.89		3.48		3.75		2.96		5.00		3.56
Secured by farmland
Pass	$	—	$	304	$	60	$	—	$	—	$	3,629	$	1,585	$	95	$	5,673
Special Mention		—		—		—		—		—		1,043		—		—		1,043
Substandard		—		—		—		21		—		659		131		—		811
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	304	$	60	$	21	$	—	$	5,331	$	1,716	$	95	$	7,527
Weighted average risk grade		N/A		3.16		4.00		6.00		N/A		4.40		4.12		2.00		4.26
Construction and land development
Pass	$	5,425	$	61,664	$	13,115	$	1,831	$	7,513	$	21,125	$	980	$	28	$	111,681
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		4,575		—		32		—		—		4,607
Doubtful		—		—		—		—		—		—		—		—		—
	$	5,425	$	61,664	$	13,115	$	6,406	$	7,513	$	21,157	$	980	$	28	$	116,288
Weighted average risk grade		3.05		3.15		3.53		5.35		3.24		3.65		3.31		4.00		3.41
Residential 1-4 family
Pass	$	65,324	$	159,643	$	48,315	$	69,839	$	46,723	$	169,839	$	1,804	$	3,457	$	564,944
Special Mention		—		—		—		8,481		—		—		—		—		8,481
Substandard		—		—		—		—		—		989		—		274		1,263
Doubtful		—		—		—		—		—		—		—		—		—
	$	65,324	$	159,643	$	48,315	$	78,320	$	46,723	$	170,828	$	1,804	$	3,731	$	574,688
Weighted average risk grade		3.02		3.04		3.06		3.28		3.13		3.23		3.98		3.29		3.14
Multi- family residential
Pass	$	3,337	$	23,595	$	18,733	$	7,186	$	5,284	$	78,136	$	5,385	$	—	$	141,656
Special Mention		—		—		—		—		—		5,327		—		—		5,327
Substandard		—		—		—		—		—		4,983		—		300		5,283
Doubtful		—		—		—		—		—		—		—		—		—
	$	3,337	$	23,595	$	18,733	$	7,186	$	5,284	$	88,446	$	5,385	$	300	$	152,266
Weighted average risk grade		3.60		3.00		3.90		3.00		3.70		3.54		4.00		6.00		3.50
Home equity lines of credit
Pass	$	56	$	567	$	57	$	74	$	239	$	4,638	$	65,042	$	884	$	71,557
Special Mention		—		—		—		—		—		—		276		—		276
Substandard		—		—		—		—		—		—		553		24		577
Doubtful		—		—		—		—		—		—		—		—		—
	$	56	$	567	$	57	$	74	$	239	$	4,638	$	65,871	$	908	$	72,410
Weighted average risk grade		3.00		3.00		3.00		3.00		3.00		3.81		3.08		4.05		3.14
Commercial loans
Pass	$	85,663	$	70,858	$	10,283	$	9,287	$	10,188	$	27,638	$	107,456	$	5,242	$	326,615
Special Mention		—		—		—		1,997		—		—		784		—		2,781
Substandard		—		—		8		—		1,502		1,883		2,748		—		6,141
Doubtful		—		—		—		—		—		—		—		—		—
	$	85,663	$	70,858	$	10,291	$	11,284	$	11,690	$	29,521	$	110,988	$	5,242	$	335,537
Weighted average risk grade		3.16		3.70		3.38		3.97		3.77		3.74		3.49		3.95		3.50
Paycheck Protection Program loans
Pass	$	—	$	26,803	$	4,581	$	—	$	—	$	—	$	—	$	—	$	31,384
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		20		—		—		—		—		—		—		20
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	26,823	$	4,581	$	—	$	—	$	—	$	—	$	—	$	31,404
Weighted average risk grade		N/A		4.12		2.73		N/A		N/A		N/A		N/A		N/A		3.92

															Revolving
															Loans
														Revolving	Converted
	2021		2020		2019		2018		2017		Prior		Loans		To Term		Total
Consumer loans
Pass	$	33,232	$	32,034	$	2,122	$	840	$	782	$	5,517	$	2,767	$	—	$	77,294
Special Mention		—		—		—		—		—		77		—		—		77
Substandard		—		—		—		—		5		7		—		—		12
Doubtful		—		—		—		—		—		—		—		—		—
	$	33,232	$	32,034	$	2,122	$	840	$	787	$	5,601	$	2,767	$	—	$	77,383
Weighted average risk grade		3.94		4.00		3.99		3.99		4.01		4.02		4.00		N/A		3.98
PCD
Pass	$	—	$	—	$	—	$	—	$	—	$	4,933	$	30	$	—	$	4,963
Special Mention		—		—		—		—		—		1,369		—		—		1,369
Substandard		—		—		—		—		—		1,595		—		—		1,595
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	7,897	$	30	$	—	$	7,927
Weighted average risk grade		N/A		N/A		N/A		N/A		N/A		4.43		3.00		N/A		4.43
Total	$	229,798	$	558,950	$	171,091	$	171,465	$	175,985	$	871,520	$	197,068	$	17,792	$	2,393,669
Weighted average risk grade		3.24		3.33		3.38		3.55		3.40		3.58		3.37		3.88		3.44

Revolving loans that converted to term during 2022 were as follows (in thousands):


	For the three months ended March 31, 2022
Secured by farmland	$	95
Residential 1-4 family		257
Home equity lines of credit		746
Commercial loans		181
Total loans	$	1,279

Schedule of allowance for loan losses and the recorded investment by portfolio segment

The following tables present details of the allowance for credit losses on loans segregated by loan portfolio segment as of March 31, 2022 and December 31, 2021, calculated in accordance with the current expected credit losses (“CECL”) methodology described above (in thousands).


	Commercial		Commercial										Home
	Real Estate		Real Estate				Construction						Equity				Paycheck
	Owner		Non-owner		Secured by		and Land		1-4 Family		Multi-Family		Lines Of		Commercial		Protection		Consumer		PCD
March 31, 2022	Occupied		Occupied		Farmland		Development		Residential		Residential		Credit		Loans		Program		Loans		Loans		Total
Modeled expected credit losses	$	3,875	$	7,845	$	9	$	556	$	3,228	$	1,849	$	275	$	3,083	$	—	$	1,025	$	—	$	21,745
Q-factor and other qualitative adjustments		298		1,068		40		473		660		440		101		776		—		—		—		3,856
Specific allocations		—		—		—		—		—		—		—		1,607		—		—		2,171		3,778
Total	$	4,173	$	8,913	$	49	$	1,029	$	3,888	$	2,289	$	376	$	5,466	$	—	$	1,025	$	2,171	$	29,379

	Commercial		Commercial										Home
	Real Estate		Real Estate				Construction						Equity				Paycheck
	Owner		Non-owner		Secured by		and Land		1-4 Family		Multi-Family		Lines Of		Commercial		Protection		Consumer		PCD
December 31, 2021	Occupied		Occupied		Farmland		Development		Residential		Residential		Credit		Loans		Program		Loans		Loans		Total
Modeled expected credit losses	$	4,281	$	8,020	$	9	$	540	$	3,012	$	1,885	$	273	$	2,154	$	—	$	786	$	—	$	20,960
Q-factor and other qualitative adjustments		281		1,008		47		458		576		1,395		164		1,276		—		—		—		5,205
Specific allocations		—		—		—		—		—		—		—		658		—		1		2,281		2,940
Total	$	4,562	$	9,028	$	56	$	998	$	3,588	$	3,280	$	437	$	4,088	$	—	$	787	$	2,281	$	29,105

Activity in the allowance for credit losses by class of loan for the three months ended March 31, 2022 and 2021 is summarized below (in thousands):


	Commercial		Commercial
	Real Estate		Real Estate				Construction						Home Equity
	Owner		Non-owner		Secured by		and Land		1-4 Family		Multi-Family		Lines Of		Commercial		Consumer		PCD
March 31, 2022	Occupied		Occupied		Farmland		Development		Residential		Residential		Credit		Loans		Loans		Loans		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	4,562	$	9,028	$	56	$	998	$	3,588	$	3,280	$	437	$	4,088	$	787	$	2,281	$	—	$	29,105
Provision (recovery)		(389)		(115)		(7)		31		243		(991)		(47)		1,208		276		(110)		—		99
Charge offs		—		—		—		—		—		—		(14)		—		(47)		—		—		(61)
Recoveries		—		—		—		—		57		—		—		170		9		—		—		236
Ending balance	$	4,173	$	8,913	$	49	$	1,029	$	3,888	$	2,289	$	376	$	5,466	$	1,025	$	2,171	$	—	$	29,379

March 31, 2021
Allowance for credit losses:
Beginning balance	$	6,699	$	11,426	$	104	$	1,815	$	9,579	$	1,412	$	901	$	1,498	$	517	$	2,394	$	—	$	36,345
Provision (recovery)		(2,555)		2,378		7		1,251		(2,810)		(166)		(76)		760		(133)		(28)		—		(1,372)
Charge offs		—		—		—		—		—		—		—		(74)		(36)		—		—		(110)
Recoveries		—		—		—		—		1		—		—		8		21		—		—		30
Ending balance	$	4,144	$	13,804	$	111	$	3,066	$	6,770	$	1,246	$	825	$	2,192	$	369	$	2,366	$	—	$	34,893

The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan portfolio segment as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022				December 31, 2021
	Loan		Specific		Loan		Specific
	Balance ⁽¹⁾		Allocations		Balance ⁽¹⁾		Allocations
Commercial real estate - owner occupied	$	3,279	$	—	$	3,291	$	—
Commercial real estate - non-owner occupied		—		—		18,256		—
Secured by farmland		659		—		681		—
Construction and land development		4,575		—		4,575		—
Residential 1-4 family		536		—		541		—
Multi- family residential		10,610		—		5,378		—
Home equity lines of credit		24		—		—		—
Commercial loans		5,235		1,607		3,688		658
Consumer loans		5		—		7		1
Total non-PCD loans		24,923		1,607		36,417		659
PCD loans		7,927		2,171		8,455		2,281
Total loans	$	32,850	$	3,778	$	44,872	$	2,940

(1)	Includes SBA guarantees of $0.7 million at March 31, 2022 and December 31, 2021.