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LOANS (Tables)
 3 Months Ended
Mar. 31, 2023
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Schedule of Composition of Loans
The composition of loans, excluding loans held for sale, is summarized as follows:
March 31, 2023December 31, 2022
Amount% of
Total		Amount% of
Total
(in thousands, except percentages)
Real estate mortgages:
Construction and development$227,56013.8%$255,73616.1%
Residential196,92311.9%167,89110.5%
Commercial948,25157.5%904,87256.8%
Commercial and industrial270,82516.4%256,55316.1%
Consumer and other7,3700.4%7,6550.5%
Gross Loans1,650,929100.0%1,592,707100.0%
Deferred loan fees(5,614)(5,543)
Allowance for credit losses(19,855)(20,156)
Loans, net$1,625,460$1,567,008
Schedule of Financing Receivable Credit Quality Indicators
The following tables summarize the risk category of the Company’s loan portfolio based upon the most recent analysis performed as of March 31, 2023 and December 31, 2022:
PassSpecial
Mention		SubstandardDoubtfulTotal
(dollars in thousands)
As of March 31, 2023
Real estate mortgages:
Construction and development$222,962 $4,533 $65 $— $227,560 
Residential194,766 1,282 875 — 196,923 
Commercial930,583 10,757 6,911 — 948,251 
Commercial and industrial255,861 9,005 5,959 — 270,825 
Consumer and other7,339 30 1 — 7,370 
Total$1,611,511 $25,607 $13,811 $— $1,650,929 
As of December 31, 2022
Real estate mortgages:
Construction and development$251,130 $4,539 $67 $— $255,736 
Residential165,388 1,787 716 — 167,891 
Commercial883,082 18,532 3,258 — 904,872 
Commercial and industrial247,948 8,322 283 — 256,553 
Consumer and other7,604 28 23 — 7,655 
Total$1,555,152 $33,208 $4,347 $— $1,592,707 


Collateral Dependent Loans
The Company classifies a loan as collateral dependent when the borrower is experiencing financial difficulty, and expected repayment is to be provided substantially through the operation or sale of collateral. There were no significant loans classified as collateral dependent as of March 31, 2023.
Schedule of Aging Analysis The following tables present the aging of the recorded investment in loans and leases as of March 31, 2023 and December 31, 2022:
Past Due Status (Accruing Loans)
Current
30-59
Days
60-89
Days
90+
Days
Total Past DueNonaccrual with ALLNonaccrual without ALLTotal
As of March 31, 2023
Real estate mortgages:
Construction and development
$226,636 $860 $— $— $860 $— $64 $227,560 
Residential
196,378 278 — — 278 27 240 196,923 
Commercial
945,628 241 1,119 — 1,360 346 917 948,251 
Commercial and industrial270,603 171 — — 171 21 30 270,825 
Consumer and other7,369 — — — — — 1 7,370 
Total$1,646,614 $1,550 $1,119 $— $2,669 $394 $1,252 $1,650,929 
As of December 31, 2022
Real estate mortgages:
Construction and development
$255,575 $— $94 $— $94 $— $67 $255,736 
Residential
167,10814772—21930534167,891 
Commercial
900,8952,63465—2,699351927904,872 
Commercial and industrial254,8241,37938—1,41727735256,553 
Consumer and other7,57062——621677,655 
Total$1,585,972 $4,222 $269 $— $4,491 $674 $1,570 $1,592,707 
Schedule of Allowance for Credit Loss
The following tables detail activity in the allowance for credit losses by portfolio segment as of March 31, 2023 and March 31, 2022. As described in Note 1, the Company adopted ASU 2016-13 on January 1, 2023, which replaced the existing incurred loss methodology with an expected credit loss methodology (referred to as CECL). Under the incurred loss methodology, reserves for credit losses were recognized only when the losses were probable or had been incurred; under CECL, the Company is required to recognize the full amount of expected credit losses for the lifetime of the loan, based on historical experience, current conditions and reasonable and supportable forecasts. The Company did not have an aggregate effect of modification resulting from adoption of ASU 2016-13. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Real EstateCommercialConsumerTotal
Allowance for credit losses:
Balance at December 31, 2022
$14,443 $5,642 $71 $20,156 
Impact of adoption of ASC 326(1,164)(120)(1)(1,285)
Provision (credit) for credit losses2,348 (1,208)41 1,181 
Loans charged off— (218)(6)(224)
Recoveries of loans previously charged off11 14 2 27 
Ending balance at March 31, 2023
$15,638 $4,110 $107 $19,855 
Allowance for Loan Losses - Incurred Loss Methodology

Real EstateCommercialConsumerTotal
Allowance for loan losses:
Balance at December 31, 2021
$11,554 $3,166 $124 $14,844 
Provision (credit) for loan losses(1,299)2,009 (10)700 
Loans charged off(66)— (6)(72)
Recoveries of loans previously charged off17 — 3 20 
Ending balance at March 31, 2022
$10,206 $5,175 $111 $15,492 
Ending balance - individually evaluated for impairment$400 $269 $— $669 
Ending balance - collectively evaluated for impairment9,743 4,906 111 14,760 
Ending balance - loans acquired with deteriorated credit quality63 — — 63 
Total ending balance at March 31, 2022
$10,206 $5,175 $111 $15,492 
Loans:
Ending balance - individually evaluated for impairment$15,943 $283 $22 $16,248 
Ending balance - collectively evaluated for impairment1,068,050 219,478 9,055 1,296,583 
Ending balance - loans acquired with deteriorated credit quality1,235 — — 1,235 
Total ending balance at March 31, 2022
$1,085,228 $219,761 $9,077 $1,314,066 

We maintain an allowance for credit losses on unfunded loan commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance for credit losses is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the consolidated balance sheet within other liabilities, while corresponding provision for these credit losses is recorded as a component of other operating expense. The allowance for credit losses on unfunded commitments as the result of the adoption of ASC 326 was $1.3 million at March 31, 2023.
Schedule of Impaired Loans - Incurred Loss Methodology
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance		Average
Recorded
Investment
December 31, 2022
With no related allowance recorded:
Real estate mortgages:
Construction and development
$372$372$—$397
Residential
1,1291,129—1,169
Commercial
7,3237,323—7,282
Commercial and industrial
3636—42
Consumer and other
1818—24
Total with no related allowance recorded
8,8788,878—8,914
With an allowance recorded:
Real estate mortgages:
Construction and development
92923995
Residential
25532690265
Commercial
623623166630
Commercial and industrial
277277248298
Consumer and other
1616816
Total with an allowance recorded
1,2631,3345511,304
Total impaired loans$10,141$10,212$551$10,218
Impaired Loans - Incurred Loss Methodology
A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. The following tables detail our interest income recognized on impaired loans, by portfolio class as of the three months ended March 31, 2022.
Recorded
Investment		Average
Recorded
Investment		Interest
Income
Recognized
Three Months Ended March 31, 2022
With no related allowance recorded:
Real estate mortgages:
Construction and development$4,810$4,813$55
Residential1,4771,48521
Commercial7,8917,922115
Commercial and industrial1417—
Consumer and other2223—
Total with no related allowance recorded14,21414,260191
With an allowance recorded:
Real estate mortgages:
Construction and development2342363
Residential3623644
Commercial2,4042,4069
Commercial and industrial2692766
Consumer and other———
Total with an allowance recorded3,2693,28222
Total impaired loans$17,483$17,542$213