LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables)

12 Months Ended

Dec. 31, 2020

LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Summary of the Company's loans

The following presents a summary of the Company’s loans as of the dates noted (in thousands):

	December 31,		December 31,
	2020		2019
Cash, Securities and Other(1)	$	357,020	$	146,701
Construction and Development		131,111		28,120
1-4 Family Residential		455,038		400,134
Non-Owner Occupied CRE		281,943		165,179
Owner Occupied CRE		163,042		127,968
Commercial and Industrial(2)		146,031		128,457
Total loans held for investment		1,534,185		996,559
Deferred costs (fees) and unamortized premiums/(unaccreted discounts), net		(1,352)		1,448
Allowance for loan losses		(12,539)		(7,875)
Loans, net	$	1,520,294	$	990,132

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⁽¹⁾ Includes PPP loans of $142.9 million as of December 31, 2020.

⁽²⁾ Includes MSLP loans of $6.6 million as of December 31, 2020.

Schedule of loan modifications

The following presents loans in their deferral period under the Company’s COVID-19 loan modification program as of December 31, 2020 (dollars in thousands):

	Total Loans		# of Loans Modified		Outstanding Balance of Modified Loans		% of Total Loan Balance Modified
Cash, Securities and Other	$	357,020		—	$	—		—	%
Construction and Development		131,111		—		—		—
1-4 Family Residential		455,038		1		346		0.02
Non-Owner Occupied CRE		281,943		—		—		—
Owner Occupied CRE		163,042		1		1,716		0.11
Commercial and Industrial		146,031		—		—		—
Total Loans	$	1,534,185		2	$	2,062		0.13	%

Summary of aging analysis of the recorded investments in loans past due

The following presents, by class, an aging analysis of the recorded investments (excluding accrued interest receivable, deferred costs (fees), and unamortized premiums/ (unaccreted discounts) which are not material) in loans past due as of December 31, 2020 and December 31, 2019 (in thousands):

	30-59		60-89		90 or		Total				Total
	Days		Days		More Days		Loans				Recorded
December 31, 2020	Past Due		Past Due		Past Due		Past Due		Current		Investment
Cash, Securities and Other	$	752	$	—	$	48	$	800	$	356,220	$	357,020
Construction and Development		—		—		—		—		131,111		131,111
1-4 Family Residential		1,283		—		—		1,283		453,755		455,038
Non-Owner Occupied CRE		—		—		—		—		281,943		281,943
Owner Occupied CRE		479		—		—		479		162,563		163,042
Commercial and Industrial		271		—		3,529		3,800		142,231		146,031
Total	$	2,785	$	—	$	3,577	$	6,362	$	1,527,823	$	1,534,185

	30-59		60-89		90 or		Total				Total
	Days		Days		More Days		Loans				Recorded
December 31, 2019	Past Due		Past Due		Past Due		Past Due		Current		Investment
Cash, Securities and Other	$	525	$	—	$	—	$	525	$	146,176	$	146,701
Construction and Development		—		—		—		—		28,120		28,120
1-4 Family Residential		5,688		—		—		5,688		394,446		400,134
Non-Owner Occupied CRE		—		—		—		—		165,179		165,179
Owner Occupied CRE		—		—		—		—		127,968		127,968
Commercial and Industrial		—		3,110		907		4,017		124,440		128,457
Total	$	6,213	$	3,110	$	907	$	10,230	$	986,329	$	996,559

Schedule of recorded investment in non accrual loans by class

The following presents the recorded investment in non-accrual loans by class as of the dates noted (in thousands):

	December 31,		December 31,
	2020		2019
Cash, Securities and Other	$	50	$	2,803
Owner Occupied CRE		479		—
Commercial and Industrial		3,529		4,412
Total	$	4,058	$	7,215

Summary of the unpaid principal balance of loans classified as TDRs

The following presents a summary of the unpaid principal balance of loans classified as TDRs as of the dates noted (in thousands):

	December 31,		December 31,
	2020		2019
Accruing
Commercial and Industrial	$	—	$	5,055
Non-accrual
Cash, Securities, and Other		48		2,803
Commercial and Industrial		3,529		4,412
Total		3,577		12,270
Allowance for loan losses associated with TDR		(1,619)		(833)
Net recorded investment	$	1,958	$	11,437

Summary of impaired loans by portfolio and related valuation allowance

The following table presents impaired loans by portfolio and related valuation allowance as of the periods presented (in thousands):

	December 31, 2020						December 31, 2019
			Unpaid		Allowance				Unpaid		Allowance
	Total		Contractual		for		Total		Contractual		for
	Recorded		Principal		Loan		Recorded		Principal		Loan
	Investment		Balance		Losses		Investment		Balance		Losses
Impaired loans with a valuation allowance:
Cash, Securities, and Other	$	2	$	2	$	2	$	—	$	—	$	—
Commercial and Industrial		3,419		3,419		1,619		4,412		4,412		833
Total	$	3,421	$	3,421	$	1,621	$	4,412	$	4,412	$	833
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	48	$	48	$	—	$	2,803	$	2,803	$	—
Owner Occupied CRE		479		479		—		—		—		—
Commercial and Industrial		110		110		—		5,055		5,055		—
Total	$	637	$	637	$	—	$	7,858	$	7,858	$	—
Total impaired loans:
Cash, Securities, and Other	$	50	$	50	$	2	$	2,803	$	2,803	$	—
Owner Occupied CRE		479		479		—		—		—		—
Commercial and Industrial		3,529		3,529		1,619		9,467		9,467		833
Total	$	4,058	$	4,058	$	1,621	$	12,270	$	12,270	$	833

The average balance of impaired loans and interest income recognized on impaired loans during the years ended December 31, 2020 and 2019 are included in the table below (in thousands):

	December 31,
	2020				2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans with a valuation allowance:
Cash, Securities, and Other	$	1	$	—	$	—	$	—
Commercial and Industrial		3,453		—		1,686		—
Total	$	3,454	$	—	$	1,686	$	—
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	1,180	$	—	$	6,217	$	—
Owner Occupied CRE		96		—		—		—
Commercial and Industrial		4,893		336		4,499		427
Total	$	6,169	$	336	$	10,716	$	427
Total impaired loans:
Cash, Securities, and Other	$	1,181	$	—	$	6,217	$	—
Owner Occupied CRE		96		—		—		—
Commercial and Industrial		8,346		336		6,185		427
Total	$	9,623	$	336	$	12,402	$	427

Schedule of activity in the Company's allowance for loan losses by portfolio class

Allocation of a portion of the allowance for loan losses to one category of loans does not preclude its availability to absorb losses in other categories. The following presents the activity in the Company’s allowance for loan losses by portfolio class for the periods presented (in thousands):

	Cash,		Construction		1-4		Non-Owner		Owner		Commercial
	Securities		and		Family		Occupied		Occupied		and
	and Other		Development		Residential		CRE		CRE		Industrial		Total
Changes in allowance for loan losses for the year ended December 31, 2020
Beginning balance	$	1,058	$	200	$	2,850	$	1,176	$	911	$	1,680	$	7,875
Provision for loan losses		1,539		732		383		828		248		952		4,682
Charge-offs		(31)		—		—		—		—		—		(31)
Recoveries		13		—		—		—		—		—		13
Ending balance	$	2,579	$	932	$	3,233	$	2,004	$	1,159	$	2,632	$	12,539
Allowance for loan losses as of December 31, 2020 allocated to loans evaluated for impairment:
Individually	$	2	$	—	$	—	$	—	$	—	$	1,619	$	1,621
Collectively		2,577		932		3,233		2,004		1,159		1,013		10,918
Ending balance	$	2,579	$	932	$	3,233	$	2,004	$	1,159	$	2,632	$	12,539
Loans as of December 31, 2020, evaluated for impairment:
Individually	$	50	$	—	$	—	$	479	$	—	$	3,529	$	4,058
Collectively		356,970		131,111		455,038		281,464		163,042		142,502		1,530,127
Ending balance	$	357,020	$	131,111	$	455,038	$	281,943	$	163,042	$	146,031	$	1,534,185

	Cash,		Construction		1-4		Non-Owner		Owner		Commercial
	Securities		and		Family		Occupied		Occupied		and
	and Other		Development		Residential		CRE		CRE		Industrial		Total
Changes in allowance for loan losses for the year ended December 31, 2019
Beginning balance	$	764	$	232	$	2,552	$	1,264	$	789	$	1,850	$	7,451
Provision for (recovery of) loan losses		532		(32)		298		(88)		122		(170)		662
Charge-offs		(248)		—		—		—		—		—		(248)
Recoveries		10		—		—		—		—		—		10
Ending balance	$	1,058	$	200	$	2,850	$	1,176	$	911	$	1,680	$	7,875
Allowance for loan losses as of December 31, 2019 allocated to loans evaluated for impairment:
Individually	$	—	$	—	$	—	$	—	$	—	$	833	$	833
Collectively		1,058		200		2,850		1,176		911		847		7,042
Ending balance	$	1,058	$	200	$	2,850	$	1,176	$	911	$	1,680	$	7,875
Loans as of December 31, 2019, evaluated for impairment:
Individually	$	2,803	$	—	$	—	$	—	$	—	$	9,467	$	12,270
Collectively		143,898		28,120		400,134		165,179		127,968		118,990		984,289
Ending balance	$	146,701	$	28,120	$	400,134	$	165,179	$	127,968	$	128,457	$	996,559

Summary of recorded investment in the Company's loans by class and by credit quality indicator

Loans not meeting any of the three criteria above are considered to be pass-rated loans. The following presents, by class and by credit quality indicator, the recorded investment in the Company’s loans as of December 31, 2020 and December 31, 2019 (in thousands):

			Special
December 31, 2020	Pass		Mention		Substandard			Total
Cash, Securities and Other	$	356,970	$	—	$	50	$	357,020
Construction and Development		131,111		—		—		131,111
1-4 Family Residential		451,918		—		3,120		455,038
Non-Owner Occupied CRE		275,627		6,316		—		281,943
Owner Occupied CRE		161,850		—		1,192		163,042
Commercial and Industrial		140,432		—		5,599		146,031
Total	$	1,517,908	$	6,316	$	9,961	$	1,534,185

			Special
December 31, 2019	Pass		Mention		Substandard			Total
Cash, Securities and Other	$	143,898	$	—	$	2,803	$	146,701
Construction and Development		28,120		—		—		28,120
1-4 Family Residential		395,224		—		4,910		400,134
Non-Owner Occupied CRE		164,021		1,158		—		165,179
Owner Occupied CRE		127,968		—		—		127,968
Commercial and Industrial		114,241		—		14,216		128,457
Total	$	973,472	$	1,158	$	21,929	$	996,559