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Loans and Allowance for Loan Losses (Tables)
 3 Months Ended
Mar. 31, 2020
Receivables [Abstract]  
Summary of Loans
A summary of loans at March 31, 2020 and December 31, 2019 follows (in thousands):
 
March 31,
2020
 
December 31,
2019
Construction and land development
$
123,346

 
$
94,462

Agricultural real estate
242,541

 
240,481

1-4 Family residential properties
325,146

 
336,553

Multifamily residential properties
140,536

 
155,132

Commercial real estate
1,003,021

 
997,175

Loans secured by real estate
1,834,590

 
1,823,803

Agricultural loans
139,014

 
136,023

Commercial and industrial loans
565,714

 
528,987

Consumer loans
82,330

 
83,544

All other loans
123,482

 
126,807

Total Gross loans
2,745,130

 
2,699,164

Less: Loans held for sale
1,251

 
1,820

 
2,743,879

 
2,697,344

Less:
 

 
 

Net deferred loan fees, premiums and discounts
832

 
3,817

Allowance for credit losses
32,876

 
26,911

Net loans
$
2,710,171

 
$
2,666,616
Allowance for Loan Losses and Recorded Investment in Loans
The following tables present the activity in the allowance for credit losses based on portfolio segment for the three-months ended March 31, 2020 (in thousands):

 
 
Construction & Land Development
 
Agricultural Real Estate
 
1-4 Family Residential Properties
 
Commercial Real Estate
 
Agricultural Loans
 
Commercial & Industrial
 
Consumer Loans
 
Total
Three months ended March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance (prior to adoption of ASU 2016-13)
 
$
1,146

 
$
1,093

 
$
1,386

 
$
11,198

 
$
1,386

 
$
9,273

 
$
1,429

 
$
26,911

Impact of adopting ASU 2016-13
 
(113
)
 
230

 
756

 
541

 
(363
)
 
155

 
466

 
1,672

Provision for credit loss expense
 
587

 
12

 
(77
)
 
1,961

 
41

 
2,815

 
142

 
5,481

Loans charged off
 
—

 
—

 
196

 
84

 
—

 
972

 
171

 
1,423

Recoveries collected
 
—

 
—

 
62

 
5

 
—

 
23

 
145

 
235

Ending balance
 
$
1,620

 
$
1,335

 
$
1,931

 
$
13,621

 
$
1,064

 
$
11,294

 
$
2,011

 
$
32,876



Prior to the adoption of ASU 2016-13, the appropriate level of the allowance for loan losses for all non-impaired loans was based on a migration analysis of net losses over a rolling twelve quarter period by loan segment. A weighted average of the net losses was determined by assigning more weight to the most recent quarters in order to recognize current risk factors influencing the various segments of the loan portfolio more prominently than past periods. Due to weakened economic conditions during historical years, the Company established qualitative factor adjustments for each of the loan segments at levels above the historical net loss averages. Some of the economic factors included the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, the uncertainty regarding grain prices and increased operating costs for farmers, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the allowance for loan losses. The following tables present the activity in the allowance for credit losses based on portfolio segment for the three-months ended March 31, 2019 and for the year ended December 31, 2019 (in thousands):

 
 
Construction & Land Development
 
Agricultural Real Estate
 
1-4 Family Residential Properties
 
Commercial Real Estate
 
Agricultural Loans
 
Commercial & Industrial
 
Consumer Loans
 
Total
Three months ended March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance (prior to adoption of ASU 2016-13)
 
$
561

 
$
1,246

 
$
1,504

 
$
11,102

 
$
951

 
$
9,893

 
$
932

 
$
26,189

Provision for credit loss expense
 
(9
)
 
36

 
(41
)
 
(481
)
 
188

 
1,013

 
241

 
947

Loans charged off
 
—

 
—

 
130

 
56

 
9

 
104

 
269

 
568

Recoveries collected
 
—

 
—

 
8

 
—

 
—

 
28

 
100

 
136

Ending balance
 
$
552

 
$
1,282

 
$
1,341

 
$
10,565

 
$
1,130

 
$
10,830

 
$
1,004

 
$
26,704

 
 
Construction & Land Development
 
Agricultural Real Estate
 
1-4 Family Residential Properties
 
Commercial Real Estate
 
Agricultural Loans
 
Commercial & Industrial
 
Consumer Loans
 
Total
Twelve months ended December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance (prior to adoption of ASU 2016-13)
 
$
561

 
$
1,246

 
$
1,504

 
$
11,102

 
$
951

 
$
9,893

 
$
932

 
$
26,189

Provision for credit loss expense
 
585

 
(153
)
 
1,268

 
1,827

 
459

 
1,053

 
1,394

 
6,433

Loans charged off
 
—

 
—

 
1,477

 
1,743

 
24

 
1,828

 
1,254

 
6,326

Recoveries collected
 
—

 
—

 
91

 
12

 
—

 
155

 
357

 
615

Ending balance
 
$
1,146

 
$
1,093

 
$
1,386

 
$
11,198

 
$
1,386

 
$
9,273

 
$
1,429

 
$
26,911
Financing Receivable, Individually Evaluated, Collateral Dependent [Table Text Block]
The following table presents the amortized cost basis of collateral-dependent loans by class of loans that were individually evaluated to determine expected credit losses, and the related allowance for credit losses, as of March 31, 2020 (in thousands):
 
 
Collateral
 
Allowance for Credit Losses
 
 
Real Estate
 
Business Assets
 
Other
 
Total
 
Construction and land development
 
$
540

 
$
—

 
$
—

 
$
540

 
$
269

Agricultural real estate
 
150

 
—

 
—

 
150

 
—

1-4 Family residential properties
 
3,875

 
—

 
—

 
3,875

 
203

Multifamily residential properties
 
3,060

 
—

 
—

 
3,060

 
17

Commercial real estate
 
6,494

 
—

 
—

 
6,494

 
1,029

Loans secured by real estate
 
14,119

 
—

 
—

 
14,119

 
1,518

Agricultural loans
 
239

 
40

 
—

 
279

 
—

Commercial and industrial loans
 
327

 
3,788

 
19

 
4,134

 
312

Consumer loans
 
—

 
—

 
11

 
11

 
1

Total loans
 
$
14,685

 
$
3,828

 
$
30

 
$
18,543

 
$
1,831
Credit Risk Profile of the Company's Loan Portfolio
The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category and year of origination as of March 31, 2020 (in thousands):

Risk Rating
 
2020
 
2019
 
2018
 
2017
 
2016
 
Prior
 
Revolving Loans
 
Total
March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction & Land Development Loans
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
47,279

 
$
57,767

 
$
4,912

 
$
2,931

 
$
604

 
$
6,722

 
$
—

 
$
120,215

     Special Mention
 
—

 
309

 
1,796

 
—

 
393

 
15

 
—

 
2,513

     Substandard
 
—

 
—

 
—

 
540

 
—

 
58

 
—

 
598

          Total
 
$
47,279

 
$
58,076

 
$
6,708

 
$
3,471

 
$
997

 
$
6,795

 
$
—

 
$
123,326

Agricultural Real Estate Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
12,868

 
$
44,321

 
$
48,157

 
$
20,904

 
$
16,689

 
$
87,879

 
$
—

 
$
230,818

     Special Mention
 
275

 
3,008

 
2,512

 
—

 
1,088

 
3,444

 
—

 
10,327

     Substandard
 
—

 
150

 
859

 
197

 
31

 
509

 
—

 
1,746

          Total
 
$
13,143

 
$
47,479

 
$
51,528

 
$
21,101

 
$
17,808

 
$
91,832

 
$
—

 
$
242,891

1-4 Family Residential Property Loans
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
9,125

 
$
32,088

 
$
33,208

 
$
28,598

 
$
29,270

 
$
128,255

 
$
44,251

 
$
304,795

     Watch
 
154

 
335

 
325

 
1,055

 
254

 
1,929

 
256

 
4,308

     Substandard
 
56

 
374

 
2,075

 
2,091

 
2,053

 
8,138

 
1,238

 
16,025

          Total
 
$
9,335

 
$
32,797

 
$
35,608

 
$
31,744

 
$
31,577

 
$
138,322

 
$
45,745

 
$
325,128

Commercial Real Estate Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
49,604

 
$
208,865

 
$
178,757

 
$
208,454

 
$
179,026

 
$
271,285

 
$
—

 
$
1,095,991

     Special Mention
 
61

 
24

 
2,857

 
1,795

 
4,912

 
4,109

 
—

 
13,758

     Substandard
 
1,257

 
127

 
1,406

 
4,287

 
4,573

 
21,203

 
—

 
32,853

          Total
 
$
50,922

 
$
209,016

 
$
183,020

 
$
214,536

 
$
188,511

 
$
296,597

 
$
—

 
$
1,142,602

Agricultural Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
32,007

 
$
79,071

 
$
11,469

 
$
3,914

 
$
1,732

 
$
4,780

 
$
—

 
$
132,973

     Special Mention
 
838

 
3,320

 
364

 
—

 
81

 
274

 
—

 
4,877

     Substandard
 
232

 
205

 
213

 
513

 
—

 
123

 
—

 
1,286

          Total
 
$
33,077

 
$
82,596

 
$
12,046

 
$
4,427

 
$
1,813

 
$
5,177

 
$
—

 
$
139,136

Commercial & Industrial Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
83,001

 
$
165,672

 
$
113,733

 
$
92,434

 
$
52,819

 
$
131,520

 
$
—

 
$
639,179

     Special Mention
 
10

 
33,495

 
257

 
241

 
2,054

 
4,984

 
—

 
41,041

     Substandard
 
329

 
2,339

 
463

 
1,475

 
430

 
3,855

 
—

 
8,891

          Total
 
$
83,340

 
$
201,506

 
$
114,453

 
$
94,150

 
$
55,303

 
$
140,359

 
$
—

 
$
689,111

Consumer Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
8,211

 
$
31,924

 
$
20,386

 
$
12,441

 
$
5,878

 
$
2,236

 
$
—

 
$
81,076

     Special Mention
 
27

 
68

 
50

 
10

 
57

 
22

 
—

 
234

     Substandard
 
—

 
47

 
184

 
185

 
179

 
199

 
—

 
794

          Total
 
$
8,238

 
$
32,039

 
$
20,620

 
$
12,636

 
$
6,114

 
$
2,457

 
$
—

 
$
82,104

Total Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Pass
 
$
242,095

 
$
619,708

 
$
410,622

 
$
369,676

$
—

$
286,018

 
$
632,677

 
$
44,251

 
$
2,605,047

     Special Mention
 
1,365

 
40,559

 
8,161

 
3,101

 
8,839

 
14,777

 
256

 
77,058

     Substandard
 
1,874

 
3,242

 
5,200

 
9,288

 
7,266

 
34,085

 
1,238

 
62,193

          Total
 
$
245,334

 
$
663,509

 
$
423,983

 
$
382,065

 
$
302,123

 
$
681,539

 
$
45,745

 
$
2,744,298


The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category and year of origination as of December 31, 2019 (in thousands):

December 31, 2019
Pass
 
Special Mention
 
Substandard
 
Total
Construction & land development
$
93,413

 
$
413

 
$
316

 
$
94,142

Agricultural real estate
231,227

 
6,902

 
2,112

 
240,241

1-4 Family residential property loans
314,999

 
5,743

 
15,685

 
336,427

Commercial real estate
1,103,543

 
14,156

 
31,951

 
1,149,650

Loans secured by real estate
1,743,182

 
27,214

 
50,064

 
1,820,460

Agricultural loans
129,811

 
3,862

 
2,451

 
136,124

Commercial & industrial loans
603,047

 
40,395

 
12,138

 
655,580

Consumer loans
82,117

 
140

 
926

 
83,183

Total loans
$
2,558,157

 
$
71,611

 
$
65,579

 
$
2,695,347
Loan Portfolio Aging Analysis
The following table presents the Company’s loan portfolio aging analysis at March 31, 2020 and December 31, 2019 (in thousands):
 
30-59 Days Past Due
 
60-89 Days Past Due
 
90 Days
or More Past Due
 
Total
Past Due
 
Current
 
Total Loans Receivable
 
Total Loans > 90 Days & Accruing
March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
$
—

 
$
—

 
$
—

 
$
—

 
$
123,326

 
$
123,326

 
$
—

Agricultural real estate
841

 
476

 
213

 
1,530

 
241,361

 
242,891

 
—

1-4 Family residential properties
5,617

 
1,526

 
2,148

 
9,291

 
315,837

 
325,128

 
—

Multifamily residential properties
—

 
875

 
—

 
875

 
138,859

 
139,734

 
—

Commercial real estate
15,443

 
129

 
3,163

 
18,735

 
984,133

 
1,002,868

 
—

Loans secured by real estate
21,901

 
3,006

 
5,524

 
30,431

 
1,803,516

 
1,833,947

 
—

Agricultural loans
407

 
100

 
11

 
518

 
138,618

 
139,136

 
—

Commercial and industrial loans
1,631

 
562

 
5,358

 
7,551

 
558,238

 
565,789

 
—

Consumer loans
472

 
99

 
126

 
697

 
81,407

 
82,104

 
—

All other loans
—

 
—

 
—

 
—

 
123,322

 
123,322

 
—

Total loans
$
24,411

 
$
3,767

 
$
11,019

 
$
39,197

 
$
2,705,101

 
$
2,744,298

 
$
—

December 31, 2019
 

 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
$
235

 
$
—

 
$
—

 
$
235

 
$
93,907

 
$
94,142

 
$
—

Agricultural real estate
1,595

 
—

 
47

 
1,642

 
238,599

 
240,241

 
—

1-4 Family residential properties
3,834

 
2,288

 
4,713

 
10,835

 
325,592

 
336,427

 
—

Multifamily residential properties
1,348

 
46

 
1,131

 
2,525

 
151,423

 
153,948

 
—

Commercial real estate
602

 
495

 
2,241

 
3,338

 
992,364

 
995,702

 
—

Loans secured by real estate
7,614

 
2,829

 
8,132

 
18,575

 
1,801,885

 
1,820,460

 
—

Agricultural loans
300

 
—

 
307

 
607

 
135,517

 
136,124

 
—

Commercial and industrial loans
767

 
855

 
5,989

 
7,611

 
521,362

 
528,973

 
—

Consumer loans
454

 
196

 
150

 
800

 
82,383

 
83,183

 
—

All other loans
—

 
—

 
—

 
—

 
126,607

 
126,607

 
—

Total loans
$
9,135

 
$
3,880

 
$
14,578

 
$
27,593

 
$
2,667,754

 
$
2,695,347

 
$
—
Impaired Loans
The following tables present impaired loans as of March 31, 2020 and December 31, 2019 (in thousands):
 
March 31, 2020
 
December 31, 2019
 
Recorded
Balance
 
Unpaid Principal Balance
 
Specific Allowance
 
Recorded
Balance
 
Unpaid Principal Balance
 
Specific Allowance
Loans with a specific allowance:
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
$
540

 
$
540

 
$
269

 
$
256

 
$
256

 
$
—

Agricultural real estate
150

 
150

 
—

 
—

 
—

 
—

1-4 Family residential properties
5,449

 
5,668

 
203

 
5,154

 
5,351

 
182

Multifamily residential properties
3,133

 
3,133

 
17

 
4,254

 
4,254

 
19

Commercial real estate
6,494

 
6,998

 
1,029

 
5,904

 
6,408

 
587

Loans secured by real estate
15,766

 
16,489

 
1,518

 
15,568

 
16,269

 
788

Agricultural loans
279

 
852

 
—

 
85

 
669

 
8

Commercial and industrial loans
4,205

 
6,182

 
312

 
7,653

 
8,789

 
301

Consumer loans
139

 
139

 
1

 
134

 
134

 
1

Total loans
$
20,389

 
$
23,662

 
$
1,831

 
$
23,440

 
$
25,861

 
$
1,098

Loans without a specific allowance:
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
$
39

 
$
39

 
$
—

 
$
41

 
$
41

 
$
—

Agricultural real estate
419

 
419

 
—

 
479

 
479

 
—

1-4 Family residential properties
3,333

 
4,001

 
—

 
3,719

 
4,263

 
—

Multifamily residential properties
44

 
44

 
—

 
—

 
—

 
—

Commercial real estate
1,463

 
1,540

 
—

 
1,721

 
1,724

 
—

Loans secured by real estate
5,298

 
6,043

 
—

 
5,960

 
6,507

 
—

Agricultural loans
583

 
10

 
—

 
724

 
140

 
—

Commercial and industrial loans
914

 
3,076

 
—

 
916

 
3,065

 
—

Consumer loans
357

 
784

 
—

 
391

 
713

 
—

Total loans
$
7,152

 
$
9,913

 
$
—

 
$
7,991

 
$
10,425

 
$
—

Total loans:
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
$
579

 
$
579

 
$
269

 
$
297

 
$
297

 
$
—

Agricultural real estate
569

 
569

 
—

 
479

 
479

 
—

1-4 Family residential properties
8,782

 
9,669

 
203

 
8,873

 
9,614

 
182

Multifamily residential properties
3,177

 
3,177

 
17

 
4,254

 
4,254

 
19

Commercial real estate
7,957

 
8,538

 
1,029

 
7,625

 
8,132

 
587

Loans secured by real estate
21,064

 
22,532

 
1,518

 
21,528

 
22,776

 
788

Agricultural loans
862

 
862

 
—

 
809

 
809

 
8

Commercial and industrial loans
5,119

 
9,258

 
312

 
8,569

 
11,854

 
301

Consumer loans
496

 
923

 
1

 
525

 
847

 
1

Total loans
$
27,541

 
$
33,575

 
$
1,831

 
$
31,431

 
$
36,286

 
$
1,098
Impaired loans by portfolio class
The following tables present average recorded investment and interest income recognized on impaired loans for the three-month periods ended March 31, 2020 and 2019 (in thousands):
 
 
For the three months ended
 
March 31, 2020
 
March 31, 2019
 
Average Investment
in Impaired Loans
 
Interest Income Recognized
 
Average Investment
in Impaired Loans
 
Interest Income Recognized
Construction and land development
$
600

 
$
8

 
$
813

 
$
—

Agricultural real estate
1,202

 
—

 
1,239

 
—

1-4 Family residential properties
8,997

 
18

 
8,690

 
23

Multifamily residential properties
3,323

 
1

 
1,718

 
—

Commercial real estate
8,266

 
42

 
10,359

 
6

Loans secured by real estate
22,388

 
69

 
22,819

 
29

Agricultural loans
960

 
—

 
664

 
—

Commercial and industrial loans
7,402

 
2

 
6,698

 
1

Consumer loans
544

 
—

 
744

 
—

All other loans
—

 
—

 
—

 
—

Total loans
$
31,294

 
$
71

 
$
30,925

 
$
30
Nonaccrual Loans
The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated for which no allowance was recorded as of March 31, 2020 and December 31, 2019 (in thousands). There were no loans past due over eighty-nine days that were still accruing.
 
March 31,
2020
 
December 31,
2019
 
Nonaccrual with no Allowance for Credit Loss
 
Nonaccrual
 
Nonaccrual
Construction and land development
$
—

 
$
39

 
$
41

Agricultural real estate
150

 
569

 
479

1-4 Family residential properties
3,478

 
7,416

 
7,379

Multifamily residential properties
2,260

 
3,104

 
3,137

Commercial real estate
1,273

 
4,351

 
4,351

Loans secured by real estate
7,161

 
15,479

 
15,387

Agricultural loans
812

 
822

 
769

Commercial and industrial loans
3,824

 
4,994

 
8,441

Consumer loans
125

 
492

 
521

Total loans
$
11,922

 
$
21,787

 
$
25,118
Schedule of Acquired Receivables With Credit Deterioration [Table Text Block]
The amount of these loans at December 31, 2019 was as follows (in thousands):
 
December 31,
2019
Construction and land development
$
256

Agricultural real estate
—

1-4 Family residential properties
371

Multifamily residential properties
2,077

Commercial real estate
2,247

Loans secured by real estate
4,951

Agricultural loans
—

Commercial and industrial loans
—

Consumer loans
—

 Carrying amount
4,951

Allowance for loan losses
(365
)
Carrying amount, net of allowance
$
4,586
Recorded Balance of Troubled Debt Restructurings
The following table presents the Company’s recorded balance of troubled debt restructurings at March 31, 2020 and December 31, 2019 (in thousands).
Troubled debt restructurings:
March 31, 2020
 
December 31, 2019
1-4 Family residential properties
$
1,882

 
$
1,905

Commercial real estate
2,008

 
1,746

Loans secured by real estate
3,890

 
3,651

Agricultural loans
553

 
669

Commercial and industrial loans
1,017

 
1,349

Consumer loans
139

 
134

Total
$
5,599

 
$
5,803

Performing troubled debt restructurings:
 

 
 

1-4 Family residential properties
$
1,366

 
$
1,382

Commercial real estate
1,140

 
1,146

Loans secured by real estate
2,506

 
2,528

Agricultural Loans
41

 
40

Commercial and industrial loans
125

 
128

Consumer loans
4

 
5

Total
$
2,676

 
$
2,701
Financing Receivables,Troubled Debt Restructurings during period [Table Text Block]
following table presents loans modified as TDRs during the three months ended March 31, 2020 and 2019, as a result of various modified loan factors (in thousands). The change in the recorded investment from pre-modification to post-modification was not material.
 
March 31, 2020
 
March 31, 2019
 
Number of Modifications
 
Recorded Investment
 
Type of Modifications
 
Number of Modifications
 
Recorded Investment
 
Type of Modifications
1-4 Family residential properties
—

 
$
—

 

 
1

 
$
46

 
(b)(c)
Commercial real estate
1

 
305

 
(b)
 
1

 
483

 
(b)(c)
Loans secured by real estate
1

 
305

 
 
 
2

 
529

 
 
Commercial and industrial loans
1

 
7

 
(b)
 
2

 
72

 
(b)(c)
Consumer Loans
1

 
11

 
(b)
 
1

 
14

 
(b)(c)
Total
3

 
$
323

 
 
 
5

 
$
615