LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables)

12 Months Ended

Dec. 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):

	December 31,		December 31,
	2021		2020
Cash, Securities and Other(1)	$	295,948	$	357,020
Construction and Development		178,716		131,111
1-4 Family Residential		580,872		455,038
Non-Owner Occupied CRE		482,622		281,943
Owner Occupied CRE		212,426		163,042
Commercial and Industrial(2)		203,584		146,031
Total loans held for investment		1,954,168		1,534,185
Deferred fees and unamortized premiums/(unaccreted discounts), net		(5,031)		(1,352)
Allowance for loan losses		(13,732)		(12,539)
Loans, net	$	1,935,405	$	1,520,294

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⁽¹⁾ Includes PPP loans of $46.8 million and $142.9 million as of December 31, 2021 and 2020, respectively.

⁽²⁾ Includes MSLP loans of $6.8 million and $6.6 million as of December 31, 2021 and 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 costs (fees), and unamortized premiums/(unaccreted discounts) which are not material) in loans past due as of December 31, 2021 and December 31, 2020 (in thousands):

	30-59		60-89		90 or		Total				Total
	Days		Days		More Days		Loans				Recorded
December 31, 2021	Past Due		Past Due		Past Due		Past Due		Current		Investment
Cash, Securities and Other	$	1,199	$	—	$	8	$	1,207	$	294,741	$	295,948
Construction and Development		2,758		—		—		2,758		175,958		178,716
1-4 Family Residential		1,449		—		—		1,449		579,423		580,872
Non-Owner Occupied CRE		—		2,548		—		2,548		480,074		482,622
Owner Occupied CRE		1,419		—		—		1,419		211,007		212,426
Commercial and Industrial		748		—		2,200		2,948		200,636		203,584
Total	$	7,573	$	2,548	$	2,208	$	12,329	$	1,941,839	$	1,954,168

	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):

	December 31,		December 31,
	2021		2020
Cash, Securities and Other	$	8	$	50
1-4 Family Residential		75		—
Owner Occupied CRE		1,241		479
Commercial and Industrial		2,938		3,529
Total	$	4,262	$	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):

	December 31,		December 31,
	2021		2020
Accruing
Non-Owner Occupied CRE	$	55	$	—
Non-accrual
Cash, Securities, and Other		6		48
1-4 Family Residential		75		—
Owner Occupied CRE		1,241		—
Commercial and Industrial		2,938		3,529
Total		4,315		3,577
Allowance for loan losses associated with TDR		(1,751)		(1,619)
Net recorded investment	$	2,564	$	1,958

Summary of impaired loans by portfolio and related valuation allowance

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

	December 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	$	2	$	2	$	2	$	2	$	2	$	2
Commercial and Industrial		2,190		2,190		1,751		3,419		3,419		1,619
Total	$	2,192	$	2,192	$	1,753	$	3,421	$	3,421	$	1,621
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	6	$	6	$	—	$	48	$	48	$	—
1-4 Family Residential		75		75		—		—		—		—
Owner Occupied CRE		1,241		1,241		—		479		479		—
Commercial and Industrial		748		748		—		110		110		—
Total	$	2,070	$	2,070	$	—	$	637	$	637	$	—
Total impaired loans:
Cash, Securities, and Other	$	8	$	8	$	2	$	50	$	50	$	2
1-4 Family Residential		75		75		—		—		—		—
Owner Occupied CRE		1,241		1,241		—		479		479		—
Commercial and Industrial		2,938		2,938		1,751		3,529		3,529		1,619
Total	$	4,262	$	4,262	$	1,753	$	4,058	$	4,058	$	1,621

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

	December 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	$	2	$	—	$	1	$	—
Commercial and Industrial		2,413		21		3,453		—
Total	$	2,415	$	21	$	3,454	$	—
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	17	$	—	$	1,180	$	—
Owner Occupied CRE		248		51		96		—
Commercial and Industrial		205		262		4,893		336
1-4 Family Residential		15		—		—		—
Total	$	485	$	313	$	6,169	$	336
Total impaired loans:
Cash, Securities, and Other	$	19	$	—	$	1,181	$	—
Owner Occupied CRE		248		51		96		—
Commercial and Industrial		2,618		283		8,346		336
1-4 Family Residential		15		—		—		—
Total	$	2,900	$	334	$	9,623	$	336

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, 2021
Beginning balance	$	2,579	$	932	$	3,233	$	2,004	$	1,159	$	2,632	$	12,539
(Recovery of)/provision for loan losses		(678)		160		320		948		133		347		1,230
Charge-offs		(44)		—		—		—		—		—		(44)
Recoveries		7		—		—		—		—		—		7
Ending balance	$	1,864	$	1,092	$	3,553	$	2,952	$	1,292	$	2,979	$	13,732
Allowance for loan losses as of December 31, 2021 allocated to loans evaluated for impairment:
Individually	$	2	$	—	$	—	$	—	$	—	$	1,751	$	1,753
Collectively		1,862		1,092		3,553		2,952		1,292		1,228		11,979
Ending balance	$	1,864	$	1,092	$	3,553	$	2,952	$	1,292	$	2,979	$	13,732
Loans as of December 31, 2021, evaluated for impairment:
Individually	$	8	$	—	$	75	$	—	$	1,241	$	2,938	$	4,262
Collectively		295,940		178,716		580,797		482,622		211,185		200,646		1,949,906
Ending balance	$	295,948	$	178,716	$	580,872	$	482,622	$	212,426	$	203,584	$	1,954,168

	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/(recovery of) 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

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, 2021 and December 31, 2020 (in thousands):

			Special
December 31, 2021	Pass		Mention		Substandard			Total
Cash, Securities and Other	$	295,940	$	—	$	8	$	295,948
Construction and Development		176,194		2,522		—		178,716
1-4 Family Residential		580,797		—		75		580,872
Non-Owner Occupied CRE		476,670		5,952		—		482,622
Owner Occupied CRE		210,493		—		1,933		212,426
Commercial and Industrial		198,368		401		4,815		203,584
Total	$	1,938,462	$	8,875	$	6,831	$	1,954,168

			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