LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables)

3 Months Ended

Mar. 31, 2022

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 (dollars in thousands):

	March 31,		December 31,
	2022		2021
Cash, Securities, and Other(1)	$	271,811	$	295,948
Construction and Development		151,651		178,716
1-4 Family Residential		602,412		580,872
Non-Owner Occupied CRE		455,715		482,622
Owner Occupied CRE		212,401		212,426
Commercial and Industrial(2)		237,144		203,584
Total loans held for investment		1,931,134		1,954,168
Deferred fees and unamortized premiums/(unaccreted discounts), net		(7,309)		(5,031)
Allowance for loan losses		(13,885)		(13,732)
Loans, net	$	1,909,940	$	1,935,405

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⁽¹⁾ Includes PPP loans of $16.7 million and $46.8 million as of March 31, 2022 and December 31, 2021, respectively. Includes $6.4 million of unsecured consumer loans held for investment measured at fair value as of March 31, 2022.

⁽²⁾ Includes MSLP loans of $6.8 million and $6.8 million as of March 31, 2022 and December 31, 2021, 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, and unamortized premiums/(unaccreted discounts) which are not material) in loans past due as of the dates noted (dollars in thousands):

	30-59		60-89		90 or		Total				Total
	Days		Days		More Days		Loans				Recorded
March 31, 2022	Past Due		Past Due		Past Due		Past Due		Current		Investment
Cash, Securities and Other	$	321	$	351	$	36	$	708	$	271,103	$	271,811
Construction and Development		2,069		—		—		2,069		149,582		151,651
1-4 Family Residential		3,575		—		—		3,575		598,837		602,412
Non-Owner Occupied CRE		—		509		—		509		455,206		455,715
Owner Occupied CRE		—		—		—		—		212,401		212,401
Commercial and Industrial		11,145		—		2,190		13,335		223,809		237,144
Total	$	17,110	$	860	$	2,226	$	20,196	$	1,910,938	$	1,931,134

	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

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 (dollars in thousands):

	March 31,		December 31,
	2022		2021
Cash, Securities and Other	$	6	$	8
1-4 Family Residential		72		75
Owner Occupied CRE		1,222		1,241
Commercial and Industrial		2,926		2,938
Total	$	4,226	$	4,262

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 (dollars in thousands):

	March 31,		December 31,
	2022		2021
Accruing
Non-Owner Occupied CRE	$	51	$	55
Non-accrual
Cash, Securities, and Other		4		6
1-4 Family Residential		72		75
Owner Occupied CRE		1,222		1,241
Commercial and Industrial		2,926		2,938
Total		4,275		4,315
Allowance for loan losses associated with TDR		(1,751)		(1,751)
Net recorded investment	$	2,524	$	2,564

Summary of impaired loans by portfolio and related valuation allowance

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

	March 31, 2022						December 31, 2021
			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		2,190		2,190		1,751
Total	$	2,192	$	2,192	$	1,753	$	2,192	$	2,192	$	1,753
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	4	$	4	$	—	$	6	$	6	$	—
1-4 Family Residential		72		72		—		75		75		—
Owner Occupied CRE		1,222		1,222		—		1,241		1,241		—
Commercial and Industrial		736		736		—		748		748		—
Total	$	2,034	$	2,034	$	—	$	2,070	$	2,070	$	—
Total impaired loans:
Cash, Securities, and Other	$	6	$	6	$	2	$	8	$	8	$	2
1-4 Family Residential		72		72		—		75		75		—
Owner Occupied CRE		1,222		1,222		—		1,241		1,241		—
Commercial and Industrial		2,926		2,926		1,751		2,938		2,938		1,751
Total	$	4,226	$	4,226	$	1,753	$	4,262	$	4,262	$	1,753

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

The following presents the average balance of impaired loans and interest income recognized on impaired loans during the periods presented (dollars in thousands):

	Three Months Ended March 31,
	2022				2021
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans with a valuation allowance:
Cash, Securities, and Other	$	2	$	—	$	3	$	—
Commercial and Industrial		2,190		—		3,419		—
Total	$	2,192	$	—	$	3,422	$	—
Impaired loans with no related valuation allowance:
Cash, Securities, and Other	$	5	$	—	$	34	$	—
Owner Occupied CRE		1,231		—		479		—
Commercial and Industrial		742		—		105		—
1-4 Family Residential		74		—		—		—
Total	$	2,052	$	—	$	618	$	—
Total impaired loans:
Cash, Securities, and Other	$	7	$	—	$	37	$	—
Owner Occupied CRE		1,231		—		479		—
Commercial and Industrial		2,932		—		3,524		—
1-4 Family Residential		74		—		—		—
Total	$	4,244	$	—	$	4,040	$	—

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 during the periods presented (dollars 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, 2022
Beginning balance	$	1,864	$	1,092	$	3,553	$	2,952	$	1,292	$	2,979	$	13,732
(Release)/provision for loan losses		(84)		(138)		236		(85)		36		245		210
Charge-offs		(97)		—		—		—		—		—		(97)
Recoveries		40		—		—		—		—		—		40
Ending balance	$	1,723	$	954	$	3,789	$	2,867	$	1,328	$	3,224	$	13,885
Allowance for loan losses as of March 31, 2022 allocated to loans evaluated for impairment:
Individually	$	2	$	—	$	—	$	—	$	—	$	1,751	$	1,753
Collectively		1,721		954		3,789		2,867		1,328		1,473		12,132
Ending balance	$	1,723	$	954	$	3,789	$	2,867	$	1,328	$	3,224	$	13,885
Loans as of March 31, 2022:
Individually evaluated for impairment	$	6	$	—	$	72	$	—	$	1,222	$	2,926	$	4,226
Collectively evaluated for impairment		265,425		151,651		602,340		455,715		211,179		234,218		1,920,528
Measured at fair value		6,380		—		—		—		—		—		6,380
Ending balance	$	271,811	$	151,651	$	602,412	$	455,715	$	212,401	$	237,144	$	1,931,134

	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
(Release)/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 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:
Individually evaluated for impairment	$	8	$	—	$	75	$	—	$	1,241	$	2,938	$	4,262
Collectively evaluated for impairment		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

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 the dates noted (dollars in thousands):

			Special
March 31, 2022	Pass		Mention		Substandard		Not Rated			Total
Cash, Securities and Other	$	265,425	$	—	$	6	$	6,380	$	271,811
Construction and Development		151,651		—		—		—		151,651
1-4 Family Residential		602,340		—		72		—		602,412
Non-Owner Occupied CRE		449,811		5,904		—		—		455,715
Owner Occupied CRE		210,492		—		1,909		—		212,401
Commercial and Industrial		231,938		393		4,813		—		237,144
Total	$	1,911,657	$	6,297	$	6,800	$	6,380	$	1,931,134

			Special
December 31, 2021	Pass		Mention		Substandard		Not Rated			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