ALLOWANCE FOR CREDIT LOSSES (Tables)

9 Months Ended

Sep. 30, 2022

ALLOWANCE FOR CREDIT LOSSES

Loans by risk grades, loan class and vintage

Loans by risk grades, loan class and vintage, at September 30, 2022 were as follows:

(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans		Converted Revolving Loans		Total
Commercial and industrial:
Pass	$	97,529	$	131,496	$	29,688	$	41,184	$	15,542	$	5,762	$	210,724	$	23,616	$	555,541
Substandard		—		—		—		2,745		3,585		300		1,540		4,360		12,530
Total commercial and industrial		97,529		131,496		29,688		43,929		19,127		6,062		212,264		27,976		568,071
Commercial real estate:
Pass		409,433		226,016		196,281		159,697		80,581		77,497		42,858		17,631		1,209,994
Special mention		—		—		—		—		2,161		—		—		—		2,161
Substandard		—		47		1,083		8,132		6,746		3,470		—		10,485		29,963
Total commercial real estate		409,433		226,063		197,364		167,829		89,488		80,967		42,858		28,116		1,242,118
Construction and development:
Pass		169,575		183,167		27,542		24,518		5,889		11,691		74,221		82		496,685
Special mention		421		—		—		—		—		—		—		—		421
Substandard		—		—		291		—		2,700		7,473		—		—		10,464
Total construction and development		169,996		183,167		27,833		24,518		8,589		19,164		74,221		82		507,570
1-4 family residential:
Pass		64,430		107,974		19,278		11,647		22,871		48,751		7,289		246		282,486
Substandard		—		1,310		1,548		494		891		226		—		1,501		5,970
Total 1-4 family residential		64,430		109,284		20,826		12,141		23,762		48,977		7,289		1,747		288,456
Multi-family residential:
Pass		50,748		35,442		59,609		17,732		35,974		170,319		567		—		370,391
Total multi-family residential		50,748		35,442		59,609		17,732		35,974		170,319		567		—		370,391
Consumer:
Pass		5,356		3,290		2,485		558		446		48		12,095		—		24,278
Substandard		—		—		34		—		—		—		197		—		231
Total consumer		5,356		3,290		2,519		558		446		48		12,292		—		24,509
Agriculture:
Pass		4,680		722		362		24		26		28		5,284		—		11,126
Substandard		—		—		—		—		—		15		44		—		59
Total agriculture		4,680		722		362		24		26		43		5,328		—		11,185
Other:
Pass		22,473		34,745		1,198		—		1,255		1,149		62,770		—		123,590
Substandard		—		—		—		1		—		—		—		—		1
Total other		22,473		34,745		1,198		1		1,255		1,149		62,770		—		123,591
Total
Pass		824,224		722,852		336,443		255,360		162,584		315,245		415,808		41,575		3,074,091
Special mention		421		—		—		—		2,161		—		—		—		2,582
Substandard		—		1,357		2,956		11,372		13,922		11,484		1,781		16,346		59,218
Total gross loans	$	824,645	$	724,209	$	339,399	$	266,732	$	178,667	$	326,729	$	417,589	$	57,921	$	3,135,891

Loans by risk grades, loan class and vintage, at December 31, 2021 were as follows:

(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans		Converted Revolving Loans		Total
Commercial and industrial:
Pass	$	230,432	$	53,744	$	60,514	$	21,059	$	8,117	$	5,533	$	228,247	$	5,773	$	613,419
Special mention		—		—		290		15		—		—		3,177		—		3,482
Substandard		—		1,014		1,852		7,075		4		391		1,647		5,500		17,483
Total commercial and industrial		230,432		54,758		62,656		28,149		8,121		5,924		233,071		11,273		634,384
Commercial real estate:
Pass		243,666		197,625		232,074		141,591		69,995		84,398		55,253		13,799		1,038,401
Special mention		—		—		859		7,934		—		62		—		—		8,855
Substandard		—		2,953		12,967		14,556		334		3,046		—		10,857		44,713
Total commercial real estate		243,666		200,578		245,900		164,081		70,329		87,506		55,253		24,656		1,091,969
Construction and development:
Pass		197,900		99,420		54,017		7,127		16,133		142		72,698		96		447,533
Special mention		—		470		—		—		—		—		—		—		470
Substandard		—		292		—		1,500		10,207		717		—		—		12,716
Total construction and development		197,900		100,182		54,017		8,627		26,340		859		72,698		96		460,719
1-4 family residential:
Pass		115,451		23,298		20,210		31,416		21,607		53,253		6,516		466		272,217
Substandard		—		1,548		514		902		126		464		1,502		—		5,056
Total 1-4 family residential		115,451		24,846		20,724		32,318		21,733		53,717		8,018		466		277,273
Multi-family residential:
Pass		16,744		18,236		6,473		58,750		9,784		167,033		9,376		—		286,396
Total multi-family residential		16,744		18,236		6,473		58,750		9,784		167,033		9,376		—		286,396
Consumer:
Pass		6,427		3,637		1,199		714		277		11		14,921		679		27,865
Substandard		—		40		—		—		—		—		85		100		225
Total consumer		6,427		3,677		1,199		714		277		11		15,006		779		28,090
Agriculture:
Pass		2,954		423		42		57		35		—		4,198		190		7,899
Substandard		—		—		—		—		—		18		24		—		42
Total agriculture		2,954		423		42		57		35		18		4,222		190		7,941
Other:
Pass		27,656		3,744		630		1,509		10		2,157		53,906		43		89,655
Total other		27,656		3,744		630		1,509		10		2,157		53,906		43		89,655
Total
Pass		841,230		400,127		375,159		262,223		125,958		312,527		445,115		21,046		2,783,385
Special mention		—		470		1,149		7,949		—		62		3,177		—		12,807
Substandard		—		5,847		15,333		24,033		10,671		4,636		3,258		16,457		80,235
Total gross loans	$	841,230	$	406,444	$	391,641	$	294,205	$	136,629	$	317,225	$	451,550	$	37,503	$	2,876,427

Loans by risk grades and loan class

(Dollars in thousands)	Pass		Special Mention		Substandard		Total Loans
September 30, 2022
Commercial and industrial	$	555,541	$	—	$	12,530	$	568,071
Real estate:
Commercial real estate		1,209,994		2,161		29,963		1,242,118
Construction and development		496,685		421		10,464		507,570
1-4 family residential		282,486		—		5,970		288,456
Multi-family residential		370,391		—		—		370,391
Consumer		24,278		—		231		24,509
Agriculture		11,126		—		59		11,185
Other		123,590		—		1		123,591
Total gross loans	$	3,074,091	$	2,582	$	59,218	$	3,135,891
December 31, 2021
Commercial and industrial	$	613,419	$	3,482	$	17,483	$	634,384
Real estate:
Commercial real estate		1,038,401		8,855		44,713		1,091,969
Construction and development		447,533		470		12,716		460,719
1-4 family residential		272,217		—		5,056		277,273
Multi-family residential		286,396		—		—		286,396
Consumer		27,865		—		225		28,090
Agriculture		7,899		—		42		7,941
Other		89,655		—		—		89,655
Total gross loans	$	2,783,385	$	12,807	$	80,235	$	2,876,427

Loans individually evaluated and collectively evaluated

	September 30, 2022						December 31, 2021
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Total		Evaluated		Evaluated		Total
(Dollars in thousands)	Loans		Loans		Loans		Loans		Loans		Loans
Commercial and industrial	$	10,932	$	557,139	$	568,071	$	16,579	$	617,805	$	634,384
Real estate:
Commercial real estate		18,705		1,223,413		1,242,118		21,057		1,070,912		1,091,969
Construction and development		10,464		497,106		507,570		12,716		448,003		460,719
1-4 family residential		3,202		285,254		288,456		3,355		273,918		277,273
Multi-family residential		—		370,391		370,391		—		286,396		286,396
Consumer		116		24,393		24,509		125		27,965		28,090
Agriculture		—		11,185		11,185		—		7,941		7,941
Other		8,523		115,068		123,591		5,440		84,215		89,655
Total gross loans	$	51,942	$	3,083,949	$	3,135,891	$	59,272	$	2,817,155	$	2,876,427

Activity in the total ACL for loans

			Real Estate
	Commercial				Construction
	and		Commercial		and		1-4 Family		Multi-family
(Dollars in thousands)	Industrial		Real Estate		Development		Residential		Residential		Consumer		Agriculture		Other		Total
September 30, 2022
Beginning balance	$	11,214	$	11,015	$	3,310	$	2,105	$	1,781	$	406	$	88	$	1,426	$	31,345
Provision (recapture)		(2,101)		1,195		654		152		723		22		24		353		1,022
Charge-offs		(44)		(25)		—		(8)		—		(63)		—		—		(140)
Recoveries		328		—		—		6		—		6		10		—		350
Net recoveries		284		(25)		—		(2)		—		(57)		10		—		210
Ending balance	$	9,397	$	12,185	$	3,964	$	2,255	$	2,504	$	371	$	122	$	1,779	$	32,577
Period-end amount allocated to:
Specific reserve	$	2,517	$	28	$	—	$	—	$	—	$	116	$	—	$	—	$	2,661
General reserve		6,880		12,157		3,964		2,255		2,504		255		122		1,779		29,916
Total	$	9,397	$	12,185	$	3,964	$	2,255	$	2,504	$	371	$	122	$	1,779	$	32,577
September 30, 2021
Beginning balance	$	13,035	$	13,798	$	6,089	$	2,578	$	2,513	$	440	$	137	$	2,047	$	40,637
Provision (recapture)		(2,028)		(2,054)		(2,755)		(875)		(357)		(85)		(75)		(732)		(8,961)
Charge-offs		(495)		—		—		(3)		—		(13)		—		—		(511)
Recoveries		889		—		—		—		—		107		47		—		1,043
Net (charge-offs) recoveries		394		—		—		(3)		—		94		47		—		532
Ending balance	$	11,401	$	11,744	$	3,334	$	1,700	$	2,156	$	449	$	109	$	1,315	$	32,208
Period-end amount allocated to:
Specific reserve	$	4,343	$	670	$	—	$	—	$	—	$	131	$	—	$	—	$	5,144
General reserve		7,058		11,074		3,334		1,700		2,156		318		109		1,315		27,064
Total	$	11,401	$	11,744	$	3,334	$	1,700	$	2,156	$	449	$	109	$	1,315	$	32,208

ACL for loans by loan class

	September 30, 2022				December 31, 2021
(Dollars in thousands)	Amount		Percent		Amount		Percent
Commercial and industrial	$	9,397	28.9	%	$	11,214	35.7	%
Real estate:
Commercial real estate		12,185	37.4	%		11,015	35.1	%
Construction and development		3,964	12.2	%		3,310	10.6	%
1-4 family residential		2,255	6.9	%		2,105	6.7	%
Multi-family residential		2,504	7.7	%		1,781	5.7	%
Consumer		371	1.1	%		406	1.3	%
Agriculture		122	0.4	%		88	0.3	%
Other		1,779	5.4	%		1,426	4.6	%
Total allowance for credit losses for loans	$	32,577	100.0	%	$	31,345	100.0	%
Loans excluding loans held for sale		3,126,421				2,867,524
ACL for loans to loans excluding loans held for sale		1.04%				1.09%

Charge-offs and recoveries by loan class and vintage

Charge-offs and recoveries by loan class and vintage for the nine months ended September 30, 2022 were as follows:

(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans		Converted Revolving Loans		Total
Commercial and industrial:
Charge-off	$	(43)	$	—	$	—	$	—	$	—	$	(1)	$	—	$	—	$	(44)
Recovery		1		—		—		—		207		55		65		—		328
Total commercial and industrial		(42)		—		—		—		207		54		65		—		284
Commercial real estate:
Charge-off		—		—		—		(25)		—		—		—		—		(25)
Total commercial real estate loans		—		—		—		(25)		—		—		—		—		(25)
1-4 family residential:
Charge-off		—		—		—		—		(2)		(6)		—		—		(8)
Recovery		—		—		—		—		—		6		—		—		6
Total 1-4 family residential		—		—		—		—		(2)		—		—		—		(2)
Consumer:
Charge-off		—		—		(12)		—		—		—		(1)		(50)		(63)
Recovery		—		—		—		1		—		3		—		2		6
Total consumer		—		—		(12)		1		—		3		(1)		(48)		(57)
Agriculture:
Recovery		—		—		—		—		—		10		—		—		10
Total agriculture		—		—		—		—		—		10		—		—		10
Total:
Charge-off		(43)		—		(12)		(25)		(2)		(7)		(1)		(50)		(140)
Recovery		1		—		—		1		207		74		65		2		350
Total	$	(42)	$	—	$	(12)	$	(24)	$	205	$	67	$	64	$	(48)	$	210

Charge-offs and recoveries by loan class and vintage for the nine months ended September 30, 2021 were as follows:

(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans		Converted Revolving Loans		Total
Commercial and industrial:
Charge-off	$	—	$	—	$	(191)	$	(260)	$	—	$	—	$	—	$	(44)	$	(495)
Recovery		—		—		5		39		43		762				40		889
Total commercial and industrial		—		—		(186)		(221)		43		762		—		(4)		394
1-4 family residential:
Charge-off		—		—		—		—		—		(3)		—		—		(3)
Total 1-4 family residential		—		—		—		—		—		(3)		—		—		(3)
Consumer:
Charge-off		(10)		—		(3)		—		—		—		—		—		(13)
Recovery		4		—		4		—		—		99		—		—		107
Total consumer		(6)		—		1		—		—		99		—		—		94
Agriculture:
Recovery		—		—		—		—		—		47		—		—		47
Total agriculture		—		—		—		—		—		47		—		—		47
Total:
Charge-off		(10)		—		(194)		(260)		—		(3)		—		(44)		(511)
Recovery		4		—		9		39		43		908		—		40		1,043
Total	$	(6)	$	—	$	(185)	$	(221)	$	43	$	905	$	—	$	(4)	$	532

Activity in the ACL for unfunded commitments

	Nine Months Ended September 30,
(Dollars in thousands)		2022		2021
Beginning balance	$	3,266	$	4,177
Provision (recapture)		551		(605)
Ending balance	$	3,817	$	3,572