Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments

12 Months Ended

Dec. 31, 2021

Receivables [Abstract]

Allowance for Loan and Leases and Reserve for Unfunded Commitments

Note 6—Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments

Loans and leases considered for inclusion in the allowance for loan and lease losses include acquired non-impaired loans and leases, those acquired impaired loans with credit deterioration after acquisition, and originated loans and leases. Although all acquired loans and leases are included in the following table, only those with credit deterioration subsequent to acquisition date are actually included in the allowance for loan and lease losses.

The following tables summarize the balance and activity within the allowance for loan and lease losses, the components of the allowance for loan and lease losses in terms of loans and leases individually and collectively evaluated for impairment, and corresponding loan and lease balances by type for the years ended December 31, 2021, 2020 and 2019 are as follows:

2021	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Paycheck Protection Program		Installment and Other			Lease Financing Receivables			Total
Allowance for loan and lease losses
Beginning balance	$	19,584		$	2,400		$	1,352		$	41,183		$	—	$	15		$	1,813		$	66,347
Provision/(recapture)		1,263			(663	)		(504	)		(219	)		—		(6	)		1,586			1,457
Charge-offs		(4,698	)		(124	)		(326	)		(9,015	)		—		—			(1,501	)		(15,664	)
Recoveries		769			15			—			1,180			—		—			908			2,872
Ending balance	$	16,918		$	1,628		$	522		$	33,129		$	—	$	9		$	2,806		$	55,012
Ending balance:
Individually evaluated for impairment	$	6,538		$	—		$	—		$	14,500		$	—	$	—		$	—		$	21,038
Collectively evaluated for impairment		8,570			622			519			18,265			—		7			2,806			30,789
Loans acquired with    deteriorated credit quality		1,810			1,006			3			364			—		2			—			3,185
Total allowance for loan and lease losses	$	16,918		$	1,628		$	522		$	33,129		$	—	$	9		$	2,806		$	55,012

2021	Commercial Real Estate		Residential Real Estate		Construction, Land Development, and Other Land		Commercial and Industrial		Paycheck Protection Program		Installment and Other		Lease Financing Receivables		Total
Loans and leases ending balance:
Individually evaluated for    impairment	$	35,051	$	1,802	$	—	$	36,070	$	—	$	—	$	—	$	72,923
Collectively evaluated for    impairment		1,558,537		429,311		324,087		1,541,877		123,712		1,204		358,426		4,337,154
Loans acquired with deteriorated    credit quality		72,160		49,401		1,312		4,014		—		164		—		127,051
Total loans and leases	$	1,665,748	$	480,514	$	325,399	$	1,581,961	$	123,712	$	1,368	$	358,426	$	4,537,128

Note 6—Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments (continued)

2020	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land			Commercial and Industrial			Paycheck Protection Program		Installment and Other			Lease Financing Receivables			Total
Allowance for loan and lease losses
Beginning balance	$	7,965		$	1,990		$	610		$	19,377		$	—	$	50		$	1,944		$	31,936
Provision/(recapture)		17,759			548			1,390			35,498			—		(35	)		789			55,949
Charge-offs		(6,407	)		(274	)		(701	)		(14,182	)		—		—			(1,783	)		(23,347	)
Recoveries		267			136			53			490			—		—			863			1,809
Ending balance	$	19,584		$	2,400		$	1,352		$	41,183		$	—	$	15		$	1,813		$	66,347
Ending balance:
Individually evaluated for impairment	$	5,034		$	78		$	—		$	18,848		$	—	$	—		$	—		$	23,960
Collectively evaluated for impairment		10,676			1,836			987			20,598			—		15			1,813			35,925
Loans acquired with deteriorated credit quality		3,874			486			365			1,737			—		—			—			6,462
Total allowance for loan and lease losses	$	19,584		$	2,400		$	1,352		$	41,183		$	—	$	15		$	1,813		$	66,347

2020	Commercial Real Estate		Residential Real Estate		Construction, Land Development, and Other Land		Commercial and Industrial		Paycheck Protection Program		Installment and Other		Lease Financing Receivables		Total
Loans and leases ending balance:
Individually evaluated for    impairment	$	46,169	$	1,830	$	—	$	47,356	$	—	$	—	$	—	$	95,355
Collectively evaluated for    impairment		1,267,017		491,601		226,620		1,311,366		517,815		1,803		227,141		4,043,363
Loans acquired with deteriorated    credit quality		108,484		78,840		4,113		10,178		-		202		—		201,817
Total loans and leases	$	1,421,670	$	572,271	$	230,733	$	1,368,900	$	517,815	$	2,005	$	227,141	$	4,340,535

2019	Commercial Real Estate			Residential Real Estate			Construction, Land Development, and Other Land		Commercial and Industrial			Installment and Other			Lease Financing Receivables			Total
Allowance for loan and lease losses
Beginning balance	$	7,540		$	1,751		$	466	$	12,932		$	49		$	2,463		$	25,201
Provision/(recapture)		4,805			67			144		14,460			15			1,217			20,708
Charge-offs		(4,950	)		(113	)		—		(8,171	)		(16	)		(2,609	)		(15,859	)
Recoveries		570			285			—		156			2			873			1,886
Ending balance	$	7,965		$	1,990		$	610	$	19,377		$	50		$	1,944		$	31,936
Ending balance:
Individually evaluated for impairment	$	2,614		$	124		$	—	$	7,952		$	—		$	—		$	10,690
Collectively evaluated for impairment		4,414			1,191			584		10,287			50			1,944			18,470
Loans acquired with deteriorated credit    quality		937			675			26		1,138			—			—			2,776
Total allowance for loan and lease losses	$	7,965		$	1,990		$	610	$	19,377		$	50		$	1,944		$	31,936

2019	Commercial Real Estate		Residential Real Estate		Construction, Land Development, and Other Land		Commercial and Industrial		Installment and Other		Lease Financing Receivables		Total
Loans and leases ending balance:
Individually evaluated for    impairment	$	26,396	$	2,398	$	2,644	$	37,303	$	—	$	—	$	68,741
Collectively evaluated for    impairment		1,114,232		609,201		270,640		1,277,353		6,316		180,510		3,458,252
Loans acquired with deteriorated    credit quality		135,914		100,223		5,373		16,909		249		—		258,668
Total loans and leases	$	1,276,542	$	711,822	$	278,657	$	1,331,565	$	6,565	$	180,510	$	3,785,661

Note 6—Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments (continued)

The Company decreased the allowance for loan and lease losses by $11.3 million for the year ended December 31, 2021. The Company increased the allowance for loan and lease losses by $34.4 million, and $6.7 million for the years ended December 31, 2020 and 2019, respectively. For acquired impaired loans, the Company decreased the allowance for loan and lease losses by $3.3 million for the year ended December 31, 2021, and increased the allowance for loan and lease losses by $3.7 million, $41,000 for the year ended December 31, 2020, and 2019, respectively.

For loans individually evaluated for impairment, the Company decreased the allowance for loan and lease losses by $2.9 million year ended December 31, 2021, and increased the allowance for loan and lease losses by $13.3 million, and $4.0 million for the years ended December 31, 2020, and 2019, respectively. For loans collectively evaluated for impairment, the Company decreased the allowance for loan and lease losses by $5.1 million year ended December 31, 2021, and increased the allowance for loan and lease losses by $17.5 million, and $2.7 million for the years ended December 31, 2020 and 2019, respectively.

The following tables summarize the recorded investment, unpaid principal balance, related allowance, average recorded investment, and interest income recognized for loans and leases considered impaired as of December 31, 2021, 2020, and 2019, which excludes acquired impaired loans:

2021	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate	$	17,233	$	19,252	$	—	$	26,041	$	1,262
Residential real estate		1,802		1,919		—		2,647		123
Commercial and industrial		16,624		19,148		—		16,808		923
With an allowance recorded
Commercial real estate		17,818		20,117		6,538		26,575		1,563
Residential real estate		—		—		—		164		2
Commercial and industrial		19,446		21,198		14,500		27,251		2,114
Total impaired loans	$	72,923	$	81,634	$	21,038	$	99,486	$	5,987

Note 6—Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments (continued)

2020	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate	$	32,473	$	34,792	$	—	$	23,938	$	1,835
Residential real estate		1,558		1,644		—		1,627		59
Construction, land development, and other land		—		—		—		2,238		220
Commercial and industrial		17,944		19,917		—		16,359		989
With an allowance recorded
Commercial real estate		13,696		14,919		5,034		13,022		1,023
Residential real estate		272		274		78		413		21
Commercial and industrial		29,412		32,018		18,848		21,354		2,217
Total impaired loans	$	95,355	$	103,564	$	23,960	$	78,951	$	6,364

2019	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate	$	16,556	$	19,808	$	—	$	11,218	$	1,257
Residential real estate		2,165		2,253		—		2,285		192
Construction, land development, and other land		2,644		3,000		—		220		191
Commercial and industrial		19,211		20,398		—		14,137		1,487
With an allowance recorded
Commercial real estate		9,840		10,691		2,614		8,863		711
Residential real estate		233		233		124		195		7
Commercial and industrial		18,092		19,285		7,952		14,989		1,010
Total impaired loans	$	68,741	$	75,668	$	10,690	$	51,907	$	4,855

For purposes of these tables, the unpaid principal balance represents the outstanding contractual balance. Impaired loans include loans that are individually evaluated for impairment as well as troubled debt restructurings for all loan categories. The sum of non‑accrual loans and loans past due 90 days still on accrual will differ from the total impaired loan amount.

The Bank’s credit risk rating methodology assigns risk ratings from 1 to 10, where a higher rating represents higher risk. The risk rating categories are described by the following groupings:

Pass—Ratings 1‑4 define the risk levels of borrowers and guarantors that offer a minimal to an acceptable level of risk.

Watch—A watch asset (rating of 5) has credit exposure that presents higher than average risk and warrants greater than routine attention by Bank personnel due to conditions affecting the borrower, the borrower’s industry or the economic environment.

Special Mention—A special mention asset (rating of 6) has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Substandard Accrual—A substandard accrual asset (rating of 7) has well‑defined weakness or weaknesses in cash flow and collateral coverage resulting in a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. This classification may be used in limited cases, where despite credit severity, the borrower is current on payments and there is an agreed plan for credit remediation.

Substandard Non‑Accrual—A substandard asset (rating of 8) has well‑defined weakness or weaknesses in cash flow and collateral coverage resulting in the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Note 6—Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments (continued)

Doubtful—A doubtful asset (rating of 9) has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loss—A loss asset (rating of 10) is considered uncollectible and of such little value that its continuance as a realizable asset is not warranted.

The following tables summarize the risk rating categories of the loans and leases considered for inclusion in the allowance for loan and lease losses calculation, excluding acquired impaired loans, as of December 31, 2021 and 2020:

2021	Commercial Real Estate		Residential Real Estate		Construction, Land Development, and Other Land		Commercial and Industrial		Paycheck Protection Program		Installment and Other		Lease Financing Receivables		Total
Pass	$	1,397,228	$	406,948	$	286,434	$	1,341,826	$	123,712	$	1,123	$	354,380	$	3,911,651
Watch		123,248		19,062		31,768		177,638		—		81		1,992		353,789
Special Mention		37,340		3,118		5,885		21,586		—		—		1,609		69,538
Substandard		35,772		1,985		—		36,897		—		—		348		75,002
Doubtful		—		—		—		—		—		—		97		97
Loss		—		—		—		—		—		—		—		—
Total	$	1,593,588	$	431,113	$	324,087	$	1,577,947	$	123,712	$	1,204	$	358,426	$	4,410,077

2020	Commercial Real Estate		Residential Real Estate		Construction, Land Development, and Other Land		Commercial and Industrial		Paycheck Protection Program		Installment and Other		Lease Financing Receivables		Total
Pass	$	1,064,623	$	463,103	$	180,458	$	1,027,399	$	517,815	$	1,706	$	222,818	$	3,477,922
Watch		134,381		22,086		46,162		225,930		—		96		47		428,702
Special Mention		60,022		3,795		—		56,784		—		—		2,721		123,322
Substandard		54,160		4,447		—		48,609		—		1		955		108,172
Doubtful		—		—		—		—		—		—		600		600
Loss		—		—		—		—		—		—		—		—
Total	$	1,313,186	$	493,431	$	226,620	$	1,358,722	$	517,815	$	1,803	$	227,141	$	4,138,718

The following tables summarize contractual delinquency information for acquired non-impaired and originated loans and leases by category as of December 31, 2021 and 2020:

2021	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Non- accrual		Total Past Due		Current		Total
Commercial real estate	$	5,185	$	2,361	$	—	$	12,751	$	20,297	$	1,573,291	$	1,593,588
Residential real estate		14,282		852		—		1,450		16,584		414,529		431,113
Construction, land development, and    other land		5,885		—		—		—		5,885		318,202		324,087
Commercial and industrial		2,479		1,097		—		8,600		12,176		1,565,771		1,577,947
Paycheck Protection Program		—		—		—		—		—		123,712		123,712
Installment and other		3		35		—		—		38		1,166		1,204
Lease financing receivables		1,661		251		—		329		2,241		356,185		358,426
Total	$	29,495	$	4,596	$	—	$	23,130	$	57,221	$	4,352,856	$	4,410,077

Note 6—Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments (continued)

2020	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Non- accrual		Total Past Due		Current		Total
Commercial real estate	$	1,544	$	4,194	$	—	$	15,969	$	21,707	$	1,291,479	$	1,313,186
Residential real estate		1,686		—		—		1,929		3,615		489,816		493,431
Construction, land development, and    other land		—		—		—		—		—		226,620		226,620
Commercial and industrial		4,521		1,290		—		21,936		27,747		1,330,975		1,358,722
Paycheck Protection Program		—		—		—		—		—		517,815		517,815
Installment and other		6		—		—		1		7		1,796		1,803
Lease financing receivables		996		376		—		1,268		2,640		224,501		227,141
Total	$	8,753	$	5,860	$	-	$	41,103	$	55,716	$	4,083,002	$	4,138,718

Trouble debt restructurings are granted due to borrower financial difficulty and provide for a modification of loan repayment terms. TDRs are treated in the same manner as impaired loans for purposes of calculating the allowance for loan and lease losses. The tables below present TDRs by loan category as of December 31, 2021, 2020, and 2019. Refer to Note 1—Summary of Significant Accounting Policies for the accounting policy for TDRs.

2021	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Charge-offs		Specific Reserves
Accruing:
Commercial real estate		5	$	1,703	$	1,703	$	—	$	215
Commercial and industrial		1		56		56		—		131
Residential real estate		2		168		168		—		—
Total accruing		8		1,927		1,927		—		346
Non-accruing:
Commercial real estate		4		1,034		918		116		111
Commercial and industrial		3		1,745		588		1,157		—
Total non-accruing		7		2,779		1,506		1,273		111
Total troubled debt restructurings		15	$	4,706	$	3,433	$	1,273	$	457

2020	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Charge-offs		Specific Reserves
Accruing:
Commercial real estate		8	$	2,187	$	2,187	$	—	$	104
Commercial and industrial		1		78		78		—		78
Residential real estate		3		230		230		—		—
Total accruing		12		2,495		2,495		—		182
Non-accruing:
Commercial real estate		4		1,609		1,362		247		102
Commercial and industrial		14		4,420		4,288		132		3,157
Total non-accruing		18		6,029		5,650		379		3,259
Total troubled debt restructurings		30	$	8,524	$	8,145	$	379	$	3,441

Note 6—Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments (continued)

2019	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Charge-offs		Specific Reserves
Accruing:
Commercial real estate		5	$	1,451	$	1,451	$	—	$	223
Commercial and industrial		2		129		129		—		118
Residential real estate		2		191		191		—		—
Total accruing		9		1,771		1,771		—		341
Non-accruing:
Commercial real estate		6		2,777		2,600		177		513
Commercial and industrial		11		8,048		6,096		1,952		1,312
Residential real estate		1		104		104		—		—
Total non-accruing		18		10,929		8,800		2,129		1,825
Total troubled debt restructurings		27	$	12,700	$	10,571	$	2,129	$	2,166

There was no commitment outstanding on troubled debt restructurings at December 31, 2021 and 2020, and a $500,000 commitment outstanding on troubled debt restructurings at December 31, 2019.

Loans modified as troubled debt restructurings that occurred during the years ended December 31, 2021, 2020, and 2019:

	For the Year Ended
	December 31,
	2021			2020			2019
Accruing:
Beginning balance	$	2,495		$	1,771		$	1,813
Additions		281			818			113
Net payments		(636	)		(1,598	)		(940	)
Net transfers (to) from non-accrual		(213	)		1,504			785
Ending balance		1,927			2,495			1,771
Non-accruing:
Beginning balance		5,650			8,800			7,314
Additions		673			5,771			5,254
Net payments		(3,671	)		(2,087	)		(2,310	)
Charge-offs		(1,359	)		(5,330	)		(673	)
Net transfers (to) from accrual		213			(1,504	)		(785	)
Ending balance		1,506			5,650			8,800
Total troubled debt restructurings	$	3,433		$	8,145		$	10,571

There were no troubled debt restructurings that subsequently defaulted within twelve months of the restructure date during the year ended December 31, 2021. Troubled debt restructurings that subsequently defaulted within twelve months of the restructure date during the years ended December 31, 2020, and 2019 had a recorded investment of $36,000, and $348,000, respectively.

The following table presents the change in balance for reserve for unfunded commitments as of December 31, 2021, 2020 and 2019:

	For the Year Ended
	December 31,
	2021			2020		2019
Beginning balance	$	1,887		$	1,159	$	1,239
Provision/(recapture) for/of unfunded commitments		(484	)		728		(80	)
Ending balance	$	1,403		$	1,887	$	1,159