Loans Receivable and the Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Loans by Lending Classification

The composition of loans by class of receivable was as follows:


	As of
(in thousands)	June 30, 2020		December 31, 2019
Agricultural	$	140,837	$	140,446
Commercial and industrial	1,084,527		835,236
Commercial real estate:
Construction & development	199,950		298,077
Farmland	161,897		181,885
Multifamily	247,403		227,407
Commercial real estate-other	1,155,489		1,107,490
Total commercial real estate	1,764,739		1,814,859
Residential real estate:
One- to four- family first liens	377,100		407,418
One- to four- family junior liens	155,814		170,381
Total residential real estate	532,914		577,799
Consumer	74,022		82,926
Loans held for investment, net of unearned income	3,597,039		3,451,266
Allowance for credit losses	(55,644)		(29,079)
Total loans held for investment, net	$	3,541,395	$	3,422,187

Schedule of Loans Based on Delinquency Status

The following table presents the amortized cost basis of loans based on delinquency status:


			Age Analysis of Past-Due Financial Assets										90 Days or More Past Due And Accruing
(in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total
June 30, 2020
Agricultural	$	138,409	$	522	$	351	$	1,555	$	140,837	$	—
Commercial and industrial	1,078,603		245		1,134		4,545		1,084,527		35
Commercial real estate:
Construction and development	194,965		3,663		707		615		199,950		—
Farmland	151,530		388		1,221		8,758		161,897		—
Multifamily	247,403		—		—		—		247,403		—
Commercial real estate-other	1,147,912		1,432		—		6,145		1,155,489		—
Total commercial real estate	1,741,810		5,483		1,928		15,518		1,764,739		—
Residential real estate:
One- to four- family first liens	368,201		2,142		1,740		5,017		377,100		3,197
One- to four- family junior liens	154,769		552		259		234		155,814		—
Total residential real estate	522,970		2,694		1,999		5,251		532,914		3,197
Consumer	73,768		136		13		105		74,022		6
Total	$	3,555,560	$	9,080	$	5,425	$	26,974	$	3,597,039	$	3,238

December 31, 2019
Agricultural	$	137,715	$	975	$	—	$	1,756	$	140,446	$	—
Commercial and industrial	828,842		846		270		5,278		835,236		—
Commercial real estate:
Construction and development	294,995		2,256		621		205		298,077		—
Farmland	175,281		362		—		6,242		181,885		—
Multifamily	227,013		394		—		—		227,407		—
Commercial real estate-other	1,102,504		1,965		347		2,674		1,107,490		—
Total commercial real estate	1,799,793		4,977		968		9,121		1,814,859		—
Residential real estate:
One- to four- family first liens	402,471		2,579		857		1,511		407,418		99
One- to four- family junior liens	169,592		518		108		163		170,381		25
Total residential real estate	572,063		3,097		965		1,674		577,799		124
Consumer	82,558		150		80		138		82,926		12
Total	$	3,420,971	$	10,045	$	2,283	$	17,967	$	3,451,266	$	136

Schedule of Amortized Cost Basis on Nonaccrual Status

The following table presents the amortized cost basis of loans on non-accrual status, loans past due 90 days or more and still accruing by class of loan and related interest income recognized:


									Three Months Ended June 30,		Six Months Ended June 30,
(in thousands)	Beginning of Period Nonaccrual		End of Period Nonaccrual		Nonaccrual with no Allowance for Credit Losses		90 Days or More Past Due And Accruing		Interest Income Recognized on Nonaccrual		Interest Income Recognized on Nonaccrual
As of and for the Three and Six Months Ended June 30, 2020
Agricultural	$	2,894	$	3,187	$	1,611	$	—	$	16	$	80
Commercial and industrial	13,276		10,041		5,104		35		45		101
Commercial real estate:
Construction and development	1,494		879		701		—		6		41
Farmland	10,402		14,178		12,593		—		9		93
Multifamily	—		—		—		—		—		1
Commercial real estate-other	10,141		9,980		3,099		—		3		24
Total commercial real estate	22,037		25,037		16,393		—		18		159
Residential real estate:
One- to four- family first liens	2,557		2,293		207		3,197		33		41
One- to four- family junior liens	513		583		1		—		6		7
Total residential real estate	3,070		2,876		208		3,197		39		48
Consumer	206		162		13		6		6		8
Total	$	41,483	$	41,303	$	23,329	$	3,238	$	124	$	396

Schedule of Credit Quality Indicator

The following table sets forth the amortized cost basis of loans by class of receivable by credit quality indicator and vintage based on the most recent analysis performed, as of June 30, 2020. As of June 30, 2020, there were no 'loss' rated credits.


	Term Loans by Origination Year																Revolving Loans
June 30, 2020 (in thousands)	2020		2019		2018		2017		2016		Prior				Total
Agricultural
Pass	$	21,013	$	11,300	$	4,898	$	2,906	$	2,753	$	3,067	$	71,689	$	117,626
Special mention / watch	5,905		1,422		125		113		600		1,253		6,206		15,624
Substandard	1,093		1,282		2		191		131		227		4,661		7,587
Doubtful	—		—		—		—		—		—		—		—
Total	$	28,011	$	14,004	$	5,025	$	3,210	$	3,484	$	4,547	$	82,556	$	140,837
Commercial and industrial
Pass	$	486,629	$	114,316	$	70,083	$	77,159	$	44,088	$	114,435	$	125,003	$	1,031,713
Special mention / watch	5,018		1,309		1,953		4,243		906		3,356		18,615		35,400
Substandard	3,036		2,569		752		974		624		4,416		5,043		17,414
Doubtful	—		—		—		—		—		—		—		—
Total	$	494,683	$	118,194	$	72,788	$	82,376	$	45,618	$	122,207	$	148,661	$	1,084,527
CRE - Construction and development
Pass	$	50,048	$	76,696	$	25,444	$	8,655	$	1,932	$	1,308	$	26,494	$	190,577
Special mention / watch	4,159		1,688		775		—		14		34		—		6,670
Substandard	735		1,919		—		—		—		49		—		2,703
Doubtful	—		—		—		—		—		—		—		—
Total	$	54,942	$	80,303	$	26,219	$	8,655	$	1,946	$	1,391	$	26,494	$	199,950
CRE - Farmland
Pass	$	37,140	$	32,227	$	14,315	$	15,023	$	10,590	$	18,171	$	2,257	$	129,723
Special mention / watch	2,244		4,584		1,290		1,953		1,237		587		353		12,248
Substandard	2,732		3,632		4,339		1,729		449		6,051		994		19,926
Doubtful	—		—		—		—		—		—		—		—
Total	$	42,116	$	40,443	$	19,944	$	18,705	$	12,276	$	24,809	$	3,604	$	161,897
CRE - Multifamily
Pass	$	109,637	$	17,948	$	18,346	$	37,740	$	16,722	$	32,726	$	12,788	$	245,907
Special mention / watch	348		—		—		—		78		—		—		426
Substandard	716		354		—		—		—		—		—		1,070
Doubtful	—		—		—		—		—		—		—		—
Total	$	110,701	$	18,302	$	18,346	$	37,740	$	16,800	$	32,726	$	12,788	$	247,403
CRE - other
Pass	$	385,335	$	129,669	$	84,625	$	106,504	$	81,037	$	147,048	$	50,888	$	985,106
Special mention / watch	85,815		24,505		6,821		6,526		4,537		5,671		199		134,074
Substandard	24,446		1,480		6,296		1,246		604		2,101		136		36,309
Doubtful	—		—		—		—		—		—		—		—
Total	$	495,596	$	155,654	$	97,742	$	114,276	$	86,178	$	154,820	$	51,223	$	1,155,489
RRE - One- to four- family first liens
Performing	$	71,419	$	61,180	$	52,230	$	47,208	$	43,567	$	85,959	$	10,046	$	371,609
Nonperforming	17		67		588		1,092		930		2,797		—		5,491
Total	$	71,436	$	61,247	$	52,818	$	48,300	$	44,497	$	88,756	$	10,046	$	377,100
RRE - One- to four- family junior liens
Performing	$	3,687	$	12,453	$	16,629	$	8,207	$	4,343	$	7,568	$	102,345	$	155,232
Nonperforming	—		—		—		32		250		229		71		582
Total	$	3,687	$	12,453	$	16,629	$	8,239	$	4,593	$	7,797	$	102,416	$	155,814
Consumer
Performing	$	12,933	$	19,438	$	14,079	$	6,857	$	3,607	$	6,203	$	10,743	$	73,860
Nonperforming	—		38		49		24		14		37		—		162
Total	$	12,933	$	19,476	$	14,128	$	6,881	$	3,621	$	6,240	$	10,743	$	74,022


	Term Loans by Origination Year																Revolving Loans
	2020		2019		2018		2017		2016		Prior				Total
Total by Credit Quality Indicator Category
Pass	$	1,089,802	$	382,156	$	217,711	$	247,987	$	157,122	$	316,755	$	289,119	$	2,700,652
Special mention / watch	103,489		33,508		10,964		12,835		7,372		10,901		25,373		204,442
Substandard	32,758		11,236		11,389		4,140		1,808		12,844		10,834		85,009
Doubtful	—		—		—		—		—		—		—		—
Performing	88,039		93,071		82,938		62,272		51,517		99,730		123,134		600,701
Nonperforming	17		105		637		1,148		1,194		3,063		71		6,235
Total	$	1,314,105	$	520,076	$	323,639	$	328,382	$	219,013	$	443,293	$	448,531	$	3,597,039

The following table sets forth the risk category of loans by class of loans and credit quality indicator used on the most recent analysis performed as of December 31, 2019:


2019 (in thousands)	Pass		Special Mention / Watch		Substandard		Doubtful		Loss		Total
Agricultural	$	117,374	$	13,292	$	9,780	$	—	$	—	$	140,446
Commercial and industrial	794,526		19,038		21,635		1		36		835,236
Commercial real estate:
Construction and development	283,921		11,423		2,733		—		—		298,077
Farmland	141,107		21,307		19,471		—		—		181,885
Multifamily	226,124		90		1,193		—		—		227,407
Commercial real estate-other	1,036,418		50,691		20,381		—		—		1,107,490
Total commercial real estate	1,687,570		83,511		43,778		—		—		1,814,859
Residential real estate:
One- to four- family first liens	396,175		4,547		6,532		164		—		407,418
One- to four- family junior liens	168,229		1,282		870		—		—		170,381
Total residential real estate	564,404		5,829		7,402		164		—		577,799
Consumer	82,650		39		218		19		—		82,926
Total	$	3,246,524	$	121,709	$	82,813	$	184	$	36	$	3,451,266

Schedule of Changes in Allowance for Credit Losses

The changes in the allowance for credit losses by portfolio segment were as follows:



	For the Three Months Ended June 30, 2020 and 2019
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
For the Three Months June 30, 2020
Beginning balance	$	1,146	$	19,309	$	23,138	$	6,425	$	1,169	$	51,187
Charge-offs	(109)		(902)		(792)		(103)		(197)		(2,103)
Recoveries	1		166		11		8		50		236
Credit loss expense⁽¹⁾	370		136		5,864		(256)		210		6,324
Ending balance	$	1,408	$	18,709	$	28,221	$	6,074	$	1,232	$	55,644

For the Three Months Ended June 30, 2019
Beginning balance	$	3,691	$	7,594	$	14,798	$	3,272	$	297	$	29,652
Charge-offs	(16)		(1,759)		(310)		(1)		(101)		(2,187)
Recoveries	2		100		257		8		163		530
Credit loss expense	43		1,698		(1,090)		98		(53)		696
Ending balance	$	3,720	$	7,633	$	13,655	$	3,377	$	306	$	28,691

	For the Six Months Ended June 30, 2020 and 2019
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
For the Six Months Ended June 30, 2020
Beginning balance, prior to adoption of ASC 326	$	3,748	$	8,394	$	13,804	$	2,685	$	448	$	29,079
Day 1 transition adjustment from adoption of ASC 326	(2,557)		2,728		1,300		2,050		463		3,984
Charge-offs	(193)		(1,373)		(1,512)		(103)		(419)		(3,600)
Recoveries	26		379		19		15		96		535
Credit loss expense⁽¹⁾	384		8,581		14,610		1,427		644		25,646
Ending balance	$	1,408	$	18,709	$	28,221	$	6,074	$	1,232	$	55,644

For the Six Months Ended June 30, 2019
Beginning balance	$	3,637	$	7,478	$	15,635	$	2,349	$	208	$	29,307
Charge-offs	(150)		(2,113)		(960)		(50)		(269)		(3,542)
Recoveries	9		148		265		17		197		636
Credit loss expense	224		2,120		(1,285)		1,061		170		2,290
Ending balance	$	3,720	$	7,633	$	13,655	$	3,377	$	306	$	28,691
(1) The difference in the credit loss expense reported herein as compared to the Consolidated Statements of Income is associated with the credit loss expense of $(1.6) million and $772 thousand related to off-balance sheet credit exposures for the three months and six months ended June 30, 2020, respectively.

The composition of allowance for credit losses by portfolio segment based on evaluation method were as follows:


	As of June 30, 2020
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
Loans held for investment, net of unearned income
Individually evaluated for impairment	$	2,747	$	8,593	$	23,714	$	204	$	8	$	35,266
Collectively evaluated for impairment	138,090		1,075,934		1,741,025		532,710		74,014		3,561,773
Total	$	140,837	$	1,084,527	$	1,764,739	$	532,914	$	74,022	$	3,597,039
Allowance for credit losses:
Individually evaluated for impairment	$	490	$	1,774	$	915	$	—	$	—	$	3,179
Collectively evaluated for impairment	918		16,935		27,306		6,074		1,232		52,465
Total	$	1,408	$	18,709	$	28,221	$	6,074	$	1,232	$	55,644


	As of December 31, 2019
(in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate		Residential Real Estate		Consumer		Total
Loans held for investment, net of unearned income
Individually evaluated for impairment	$	4,312	$	12,242	$	16,082	$	838	$	21	$	33,495
Collectively evaluated for impairment	135,246		822,939		1,781,306		572,865		82,864		3,395,220
Purchased credit impaired loans	888		55		17,471		4,096		41		22,551
Total	$	140,446	$	835,236	$	1,814,859	$	577,799	$	82,926	$	3,451,266
Allowance for loan losses:
Individually evaluated for impairment	$	212	$	2,198	$	1,180	$	73	$	—	$	3,663
Collectively evaluated for impairment	3,536		6,194		11,836		2,152		448		24,166
Purchased credit impaired loans	—		2		788		460		—		1,250
Total	$	3,748	$	8,394	$	13,804	$	2,685	$	448	$	29,079

Financing Receivable, Collateral Depend Loans

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:


	As of June 30, 2020
(in thousands)	Primary Type of Collateral
	Real Estate		Equipment		Other		Total		ACL Allocation
Agricultural	$	124	$	2,011	$	612	$	2,747	$	490
Commercial and industrial	1,230		4,066		3,297		8,593		1,774
Commercial real estate:
Construction and development	700		—		—		700		—
Farmland	13,646		—		—		13,646		283
Multifamily	—		—		—		—		—
Commercial real estate-other	9,368		—		—		9,368		632
Residential real estate:
One- to four- family first liens	204		—		—		204		—
One- to four- family junior liens	—		—		—		—		—
Consumer	—		8		—		8		—
Total	$	25,272	$	6,085	$	3,909	$	35,266	$	3,179

Schedule of TDRs by Class of Financing Receivable

The following table sets forth information on the Company's TDRs by class of financing receivable occurring during the stated periods. TDRs may

include multiple concessions, and the disclosure classifications in the table are based on the primary concession provided to the borrower.


	Three Months Ended June 30,
	2020								2019
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(dollars in thousands)











CONCESSION - Extended maturity date






One- to four- family first liens	2	$	145	$	145	3	$	240	$	239
One- to four- family junior liens	—	—		—		1	25		25


CONCESSION - Other
Agricultural	1	208		208		—	—		—


Farmland	2	354		354		—	—		—





Total	5	$	707	$	707	4	$	265	$	264


	Six Months Ended June 30,
	2020								2019
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(dollars in thousands)











CONCESSION - Extended maturity date





Commercial real estate-other	3	$	759	$	808	—	$	—	$	—
One- to four- family first liens	2	145		145		3	240		239
One- to four- family junior liens	—	—		—		2	76		76


CONCESSION - Other
Agricultural	1	208		208		—	—		—


Farmland	2	354		354		—	—		—





Total	8	$	1,466	$	1,515	5	$	316	$	315

Schedule of Impaired Receivables

The following table presents loans individually evaluated for impairment by class of receivable, as of December 31, 2019:


	December 31, 2019
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Agricultural	$	2,383	$	2,913	$	—
Commercial and industrial	7,391		10,875		—
Commercial real estate:
Construction and development	1,181		1,218		—
Farmland	4,306		4,331		—
Multifamily	—		—		—
Commercial real estate-other	5,709		5,854		—
Total commercial real estate	11,196		11,403		—
Residential real estate:
One- to four- family first liens	577		578		—
One- to four- family junior liens	—		—		—
Total residential real estate	577		578		—
Consumer	21		21		—
Total	$	21,568	$	25,790	$	—
With an allowance recorded:
Agricultural	$	1,929	$	1,930	$	212
Commercial and industrial	4,851		5,417		2,198
Commercial real estate:
Construction and development	135		135		135
Farmland	1,109		1,148		347
Multifamily	—		—		—
Commercial real estate-other	3,642		4,229		698
Total commercial real estate	4,886		5,512		1,180
Residential real estate:
One- to four- family first liens	261		262		73
One- to four- family junior liens	—		—		—
Total residential real estate	261		262		73
Consumer	—		—		—
Total	$	11,927	$	13,121	$	3,663
Total:
Agricultural	$	4,312	$	4,843	$	212
Commercial and industrial	12,242		16,292		2,198
Commercial real estate:
Construction and development	1,316		1,353		135
Farmland	5,415		5,479		347
Multifamily	—		—		—
Commercial real estate-other	9,351		10,083		698
Total commercial real estate	16,082		16,915		1,180
Residential real estate:
One- to four- family first liens	838		840		73
One- to four- family junior liens	—		—		—
Total residential real estate	838		840		73
Consumer	21		21		—
Total	$	33,495	$	38,911	$	3,663

The following table presents the average recorded investment and interest income recognized for loans individually evaluated for impairment by class of receivable, during the stated period:


	Three Months Ended June 30,						Six Months Ended June 30,
	2019						2019
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Agricultural	$	2,632	$	47	$	2,227	$	12
Commercial and industrial	4,347		—		4,610		—
Commercial real estate:
Construction and development	—		—		—		—
Farmland	3,001		32		2,011		—
Multifamily	—		—		—		—
Commercial real estate-other	920		10		857		20
Total commercial real estate	3,921		42		2,868		20
Residential real estate:
One- to four- family first liens	497		—		332		—
One- to four- family junior liens	75		—		50		—
Total residential real estate	572		—		382		—
Consumer	21		—		14		—
Total	$	11,493	$	89	$	10,101	$	32
With an allowance recorded:
Agricultural	$	2,363	$	53	$	2,279	$	60
Commercial and industrial	4,271		—		4,042		—
Commercial real estate:
Construction and development	—		—		—		—
Farmland	86		5		57		5
Multifamily	—		—		—		—
Commercial real estate-other	2,044		10		1,931		12
Total commercial real estate	2,130		15		1,988		17
Residential real estate:
One- to four- family first liens	526		6		440		8
One- to four- family junior liens	—		—		—		—
Total residential real estate	526		6		440		8
Consumer	—		—		—		—
Total	$	9,290	$	74	$	8,749	$	85
Total:
Agricultural	$	4,995	$	100	$	4,506	$	72
Commercial and industrial	8,618		—		8,652		—
Commercial real estate:
Construction and development	—		—		—		—
Farmland	3,087		37		2,068		5
Multifamily	—		—		—		—
Commercial real estate-other	2,964		20		2,788		32
Total commercial real estate	6,051		57		4,856		37
Residential real estate:
One- to four- family first liens	1,023		6		772		8
One- to four- family junior liens	75		—		50		—
Total residential real estate	1,098		6		822		8
Consumer	21		—		14		—
Total	$	20,783	$	163	$	18,850	$	117

Schedule of PCD Loans

The following table summarizes the outstanding balance and carrying amount of our PCI loans that were identified prior to the adoption of ASC 326:


	December 31, 2019
(in thousands)
Agricultural	$	904
Commercial and industrial	147
Commercial real estate	17,803
Residential real estate	4,136
Consumer	57
Outstanding balance	23,047
Carrying amount	22,551
Allowance for credit losses	1,250
Carrying amount, net of allowance for credit losses	$	21,301