LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables)

3 Months Ended

Mar. 31, 2021

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):

	March 31,		December 31,
	2021		2020
Cash, Securities, and Other(1)	$	363,155	$	357,020
Construction and Development		110,024		131,111
1-4 Family Residential		452,591		455,038
Non-Owner Occupied CRE		317,457		281,943
Owner Occupied CRE		161,787		163,042
Commercial and Industrial(2)		141,770		146,031
Total loans held for investment		1,546,784		1,534,185
Deferred fees and unamortized premiums/(unaccreted discounts), net		(2,858)		(1,352)
Allowance for loan losses		(12,539)		(12,539)
Loans, net	$	1,531,387	$	1,520,294

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⁽¹⁾ Includes PPP loans of $190.5 million and $142.9 million as of March 31, 2021 and December 31, 2020, respectively.

⁽²⁾ Includes MSLP loans of $6.7 million and $6.6 million as of March 31, 2021 and December 31, 2020, respectively.

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 (fees) costs, and unamortized premiums/ (unaccreted discounts) which are not material) in loans past due as of March 31, 2021 and December 31, 2020 (in thousands):

	30-59		60-89		90 or		Total				Total
	Days		Days		More Days		Loans				Recorded
March 31, 2021	Past Due		Past Due		Past Due		Past Due		Current		Investment
Cash, Securities and Other	$	—	$	—	$	21	$	21	$	363,134	$	363,155
Construction and Development		—		—		—		—		110,024		110,024
1-4 Family Residential		—		—		—		—		452,591		452,591
Non-Owner Occupied CRE		—		—		—		—		317,457		317,457
Owner Occupied CRE		—		—		479		479		161,308		161,787
Commercial and Industrial		200		47		3,519		3,766		138,004		141,770
Total	$	200	$	47	$	4,019	$	4,266	$	1,542,518	$	1,546,784

	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

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):

	March 31,		December 31,
	2021		2020
Cash, Securities and Other	$	23	$	50
Owner Occupied CRE		479		479
Commercial and Industrial		3,519		3,529
Total	$	4,021	$	4,058

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):

	March 31,		December 31,
	2021		2020
Non-accrual
Cash, Securities, and Other	$	19	$	48
Commercial and Industrial		3,519		3,529
Total		3,538		3,577
Allowance for loan losses associated with TDR		(1,751)		(1,619)
Net recorded investment	$	1,787	$	1,958

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):

	March 31, 2021						December 31, 2020
			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	$	4	$	4	$	4	$	2	$	2	$	2
Commercial and Industrial		3,419		3,419		1,751		3,419		3,419		1,619
Total	$	3,423	$	3,423	$	1,755	$	3,421	$	3,421	$	1,621
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	19	$	19	$	—	$	48	$	48	$	—
Owner Occupied CRE		479		479		—		479		479		—
Commercial and Industrial		100		100		—		110		110		—
Total	$	598	$	598	$	—	$	637	$	637	$	—
Total impaired loans:
Cash, Securities, and Other	$	23	$	23	$	4	$	50	$	50	$	2
Owner Occupied CRE		479		479		—		479		479		—
Commercial and Industrial		3,519		3,519		1,751		3,529		3,529		1,619
Total	$	4,021	$	4,021	$	1,755	$	4,058	$	4,058	$	1,621

The recorded investment in loans in the previous tables excludes accrued interest, deferred (fees) costs and unamortized premiums/ (unaccreted discounts) which are not material. Interest income, if any, was recognized on the cash basis on non-accrual loans.

The average balance of impaired loans and interest income recognized on impaired loans during the three months ended March 31, 2021 and 2020 are included in the table below (in thousands):

	Three Months Ended March 31,
	2021				2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans with a valuation allowance:
Cash, Securities, and Other	$	3	$	—	$	—	$	—
Commercial and Industrial		3,419		—		4,275		—
Total	$	3,422	$	—	$	4,275	$	—
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	34	$	—	$	2,148	$	—
Owner Occupied CRE		479		—		—		—
Commercial and Industrial		105		—		4,937		81
Total	$	618	$	—	$	7,085	$	81
Total impaired loans:
Cash, Securities, and Other	$	37	$	—	$	2,148	$	—
Owner Occupied CRE		479		—		—		—
Commercial and Industrial		3,524		—		9,212		81
Total	$	4,040	$	—	$	11,360	$	81

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

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 three months ended March 31, 2021
Beginning balance	$	2,579	$	932	$	3,233	$	2,004	$	1,159	$	2,632	$	12,539
(Recovery of) provision for loan losses		(6)		(166)		(81)		207		(36)		82		—
Charge-offs		—		—		—		—		—		—		—
Recoveries		—		—		—		—		—		—		—
Ending balance	$	2,573	$	766	$	3,152	$	2,211	$	1,123	$	2,714	$	12,539
Allowance for loan losses as of March 31, 2021 allocated to loans evaluated for impairment:
Individually	$	4	$	—	$	—	$	—	$	—	$	1,751	$	1,755
Collectively		2,569		766		3,152		2,211		1,123		963		10,784
Ending balance	$	2,573	$	766	$	3,152	$	2,211	$	1,123	$	2,714	$	12,539
Loans as of March 31, 2021, evaluated for impairment:
Individually	$	23	$	—	$	—	$	—	$	479	$	3,519	$	4,021
Collectively		363,132		110,024		452,591		317,457		161,308		138,251		1,542,763
Ending balance	$	363,155	$	110,024	$	452,591	$	317,457	$	161,787	$	141,770	$	1,546,784

	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 three months ended March 31, 2020
Beginning balance	$	1,058	$	200	$	2,850	$	1,176	$	911	$	1,680	$	7,875
Provision for (recovery of) loan losses		34		(14)		158		227		(27)		(11)		367
Charge-offs		—		—		—		—		—		—		—
Recoveries		—		—		—		—		—		—		—
Ending balance	$	1,092	$	186	$	3,008	$	1,403	$	884	$	1,669	$	8,242
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		281,943		162,563		142,502		1,530,127
Ending balance	$	357,020	$	131,111	$	455,038	$	281,943	$	163,042	$	146,031	$	1,534,185

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

The following presents, by class and by credit quality indicator, the recorded investment in the Company’s loans as of March 31, 2021 and December 31, 2020 (in thousands):

			Special
March 31, 2021	Pass		Mention		Substandard			Total
Cash, Securities and Other	$	363,132	$	—	$	23	$	363,155
Construction and Development		110,024		—		—		110,024
1-4 Family Residential		449,483		—		3,108		452,591
Non-Owner Occupied CRE		312,098		5,359		—		317,457
Owner Occupied CRE		160,600		—		1,187		161,787
Commercial and Industrial		136,181		—		5,589		141,770
Total	$	1,531,518	$	5,359	$	9,907	$	1,546,784

			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