Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2021

Loans in the accompanying consolidated balance sheets are classified as follows (in thousands):


	June 30, 2021		December 31, 2020
Real estate loans:
Construction	$	528,157	$	581,941
1-4 family residential	678,402		719,952
Commercial	1,430,900		1,295,746
Commercial loans	497,513		557,122
Municipal loans	417,398		409,028
Loans to individuals	89,976		93,990
Total loans	3,642,346		3,657,779
Less: Allowance for loan losses	42,913		49,006
Net loans	$	3,599,433	$	3,608,773

Summary of loans by credit quality indicators and origination year

The following tables set forth the amortized cost basis by class of financing receivable and credit quality indicator for the periods presented (in thousands):


June 30, 2021	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Total
	2021		2020		2019		2018		2017		Prior
Construction real estate:
Pass	$	71,711	$	121,423	$	144,531	$	62,296	$	2,301	$	7,587	$	118,005	$	527,854
Pass watch	—		—		—		—		—		22		—		22
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		224		—		224
Doubtful	—		—		—		57		—		—		—		57
Total construction real estate	$	71,711	$	121,423	$	144,531	$	62,353	$	2,301	$	7,833	$	118,005	$	528,157

1-4 family residential real estate:
Pass	$	79,835	$	141,033	$	94,589	$	56,732	$	41,836	$	253,907	$	2,284	$	670,216
Pass watch	—		—		—		—		—		813		—		813
Special mention	—		—		—		—		—		63		—		63
Substandard	10		1,035		55		—		926		4,261		92		6,379
Doubtful	—		12		—		—		33		886		—		931
Total 1-4 family residential real estate	$	79,845	$	142,080	$	94,644	$	56,732	$	42,795	$	259,930	$	2,376	$	678,402

Commercial real estate:
Pass	$	272,014	$	251,630	$	269,339	$	102,178	$	151,519	$	233,346	$	6,849	$	1,286,875
Pass watch	—		—		4,214		23,257		36,867		5,414		—		69,752
Special mention	24,142		199		8,883		6,963		307		12,826		—		53,320
Substandard	4,526		1,869		—		1,800		40		12,587		—		20,822
Doubtful	—		—		—		—		—		131		—		131
Total commercial real estate	$	300,682	$	253,698	$	282,436	$	134,198	$	188,733	$	264,304	$	6,849	$	1,430,900

Commercial loans:
Pass	$	159,561	$	102,900	$	33,923	$	17,163	$	5,633	$	7,371	$	164,496	$	491,047
Pass watch	42		133		563		102		—		—		244		1,084
Special mention	—		—		418		398		—		211		281		1,308
Substandard	175		208		492		317		3		1		1,483		2,679
Doubtful	121		453		276		440		18		87		—		1,395
Total commercial loans	$	159,899	$	103,694	$	35,672	$	18,420	$	5,654	$	7,670	$	166,504	$	497,513

Municipal loans:
Pass	$	36,575	$	68,625	$	64,734	$	31,373	$	58,798	$	157,293	$	—	$	417,398
Pass watch	—		—		—		—		—		—		—		—
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total municipal loans	$	36,575	$	68,625	$	64,734	$	31,373	$	58,798	$	157,293	$	—	$	417,398

Loans to individuals:
Pass	$	24,593	$	34,063	$	16,940	$	6,403	$	2,872	$	1,454	$	3,458	$	89,783
Pass watch	—		—		—		—		—		—		—		—
Special mention	—		—		—		44		—		—		4		48
Substandard	—		3		32		17		24		4		2		82
Doubtful	—		—		—		3		33		27		—		63
Total loans to individuals	$	24,593	$	34,066	$	16,972	$	6,467	$	2,929	$	1,485	$	3,464	$	89,976
Total loans	$	673,305	$	723,586	$	638,989	$	309,543	$	301,210	$	698,515	$	297,198	$	3,642,346


December 31, 2020	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Total
	2020		2019		2018		2017		2016		Prior
Construction real estate:
Pass	$	155,693	$	180,536	$	76,090	$	55,636	$	3,191	$	8,297	$	101,793	$	581,236
Pass watch	—		—		—		—		23		—		—		23
Special mention	—		—		—		—		—		—		—		—
Substandard	—		382		62		—		—		58		—		502
Doubtful	—		—		—		—		—		180		—		180
Total construction real estate	$	155,693	$	180,918	$	76,152	$	55,636	$	3,214	$	8,535	$	101,793	$	581,941

1-4 family residential real estate:
Pass	$	154,003	$	114,063	$	70,621	$	55,557	$	57,680	$	255,003	$	2,833	$	709,760
Pass watch	—		—		—		—		267		564		—		831
Special mention	—		—		—		—		—		10		—		10
Substandard	1,473		—		135		427		1,588		5,134		96		8,853
Doubtful	—		—		—		36		103		359		—		498
Total 1-4 family residential real estate	$	155,476	$	114,063	$	70,756	$	56,020	$	59,638	$	261,070	$	2,929	$	719,952

Commercial real estate:
Pass	$	270,087	$	307,161	$	143,177	$	162,180	$	98,828	$	179,919	$	6,957	$	1,168,309
Pass watch	—		—		3,153		40,125		1,696		2,582		—		47,556
Special mention	4,555		33,020		7,041		140		4,531		7,850		—		57,137
Substandard	7,542		—		2,097		65		704		12,282		—		22,690
Doubtful	—		—		—		—		—		54		—		54
Total commercial real estate	$	282,184	$	340,181	$	155,468	$	202,510	$	105,759	$	202,687	$	6,957	$	1,295,746

Commercial loans:
Pass	$	313,688	$	47,446	$	20,386	$	7,505	$	3,392	$	6,142	$	140,018	$	538,577
Pass watch	2,599		1,318		2,410		1,981		—		—		370		8,678
Special mention	304		809		433		39		286		265		455		2,591
Substandard	405		1,081		473		7		—		—		4,417		6,383
Doubtful	310		53		475		54		1		—		—		893
Total commercial loans	$	317,306	$	50,707	$	24,177	$	9,586	$	3,679	$	6,407	$	145,260	$	557,122

Municipal loans:
Pass	$	72,542	$	68,132	$	33,735	$	61,170	$	25,387	$	148,062	$	—	$	409,028
Pass watch	—		—		—		—		—		—		—		—
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total municipal loans	$	72,542	$	68,132	$	33,735	$	61,170	$	25,387	$	148,062	$	—	$	409,028

Loans to individuals:
Pass	$	46,722	$	25,302	$	10,132	$	4,716	$	1,867	$	917	$	3,900	$	93,556
Pass watch	—		—		—		—		—		—		—		—
Special mention	—		—		51		—		—		—		4		55
Substandard	6		35		28		30		9		11		1		120
Doubtful	73		20		6		55		81		24		—		259
Total loans to individuals	$	46,801	$	25,357	$	10,217	$	4,801	$	1,957	$	952	$	3,905	$	93,990
Total loans	$	1,030,002	$	779,358	$	370,505	$	389,723	$	199,634	$	627,713	$	260,844	$	3,657,779

Aging of past due loans by class of loan

The following tables present the aging of the amortized cost basis in past due loans by class of loans (in thousands):


	June 30, 2021
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total
Real estate loans:
Construction	$	170	$	12	$	—	$	182	$	527,975	$	528,157
1-4 family residential	1,563		522		752		2,837		675,565		678,402
Commercial	687		147		80		914		1,429,986		1,430,900
Commercial loans	1,246		535		454		2,235		495,278		497,513
Municipal loans	—		—		—		—		417,398		417,398
Loans to individuals	197		62		—		259		89,717		89,976
Total	$	3,863	$	1,278	$	1,286	$	6,427	$	3,635,919	$	3,642,346


	December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total
Real estate loans:
Construction	$	95	$	14	$	444	$	553	$	581,388	$	581,941
1-4 family residential	7,872		2,469		2,830		13,171		706,781		719,952
Commercial	467		315		86		868		1,294,878		1,295,746
Commercial loans	1,423		4,516		323		6,262		550,860		557,122
Municipal loans	64		—		—		64		408,964		409,028
Loans to individuals	519		123		27		669		93,321		93,990
Total	$	10,440	$	7,437	$	3,710	$	21,587	$	3,636,192	$	3,657,779

Nonperforming assets by asset class

The following table sets forth the amortized cost basis of nonperforming assets for the periods presented (in thousands):


	June 30, 2021		December 31, 2020
Nonaccrual loans:
Real estate loans:
Construction	$	69	$	640
1-4 family residential	2,397		3,922
Commercial	1,212		1,269
Commercial loans	1,414		1,592

Loans to individuals	62		291
Total nonaccrual loans (1)	5,154		7,714

Accruing loans past due more than 90 days	—		—
TDR loans	9,549		9,646
OREO	566		106
Repossessed assets	—		14
Total nonperforming assets	$	15,269	$	17,480

(1) Includes $810,000 and $976,000 of restructured loans as of June 30, 2021 and December 31, 2020, respectively.

Troubled debt restructurings

The following tables set forth the recorded balance of loans considered to be TDRs that were restructured and the type of concession by class of loans during the periods presented (dollars in thousands):



	Three Months Ended June 30, 2021
	Extend Amortization Period		Interest Rate Reductions		Combination		Total Modifications		Number of Loans




Commercial loans	$	—	$	—	$	106	$	106	2


Total	$	—	$	—	$	106	$	106	2



	Six Months Ended June 30, 2021
	Extend Amortization Period		Interest Rate Reductions		Combination		Total Modifications		Number of Loans
Real estate loans:

1-4 family residential	$	—	$	—	$	128	$	128	2

Commercial loans	—		—		122		122		3


Total	$	—	$	—	$	250	$	250	5



	Three Months Ended June 30, 2020
	Extend Amortization Period		Interest Rate Reductions		Combination		Total Modifications		Number of Loans




Commercial loans	$	—	$	—	$	148	$	148	2


Total	$	—	$	—	$	148	$	148	2


	Six Months Ended June 30, 2020
	Extend Amortization Period		Interest Rate Reductions		Combination		Total Modifications		Number of Loans
Real estate loans:


Commercial	$	—	$	—	$	59	$	59	1
Commercial loans	—		—		150		150		3


Total	$	—	$	—	$	209	$	209	4

Allowance for loan losses activity by portfolio segment

The following tables detail activity in the allowance for loan losses by portfolio segment for the periods presented (in thousands):



	Three Months Ended June 30, 2021
	Real Estate
	Construction		1-4 Family Residential		Commercial		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Balance at beginning of period	$	8,201	$	2,508	$	27,236	$	3,108	$	46	$	355	$	41,454
Loans charged-off	—		(28)		—		(116)		—		(383)		(527)
Recoveries of loans charged-off	—		12		1		179		—		274		466
Net loans (charged-off) recovered	—		(16)		1		63		—		(109)		(61)
Provision for (reversal of) loan losses	(183)		28		1,693		(74)		1		55		1,520
Balance at end of period	$	8,018	$	2,520	$	28,930	$	3,097	$	47	$	301	$	42,913



	Six Months Ended June 30, 2021
	Real Estate
	Construction		1-4 Family Residential		Commercial		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Balance at beginning of period	$	6,490	$	2,270	$	35,709	$	4,107	$	46	$	384	$	49,006
Loans charged-off	—		(101)		—		(435)		—		(786)		(1,322)
Recoveries of loans charged-off	1		67		1		461		—		558		1,088
Net loans (charged-off) recovered	1		(34)		1		26		—		(228)		(234)
Provision for (reversal of) loan losses	1,527		284		(6,780)		(1,036)		1		145		(5,859)
Balance at end of period	$	8,018	$	2,520	$	28,930	$	3,097	$	47	$	301	$	42,913



	Three Months Ended June 30, 2020
	Real Estate
	Construction		1-4 Family Residential		Commercial		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Balance at beginning of period	$	9,654	$	2,640	$	36,120	$	4,519	$	47	$	658	$	53,638


Loans charged-off	—		(2)		—		(225)		—		(319)		(546)
Recoveries of loans charged-off	—		16		12		56		—		352		436
Net loans (charged-off) recovered	—		14		12		(169)		—		33		(110)
Provision for (reversal of) loan losses(1)	(1,154)		48		7,653		(129)		—		(78)		6,340
Balance at end of period	$	8,500	$	2,702	$	43,785	$	4,221	$	47	$	613	$	59,868



	Six Months Ended June 30, 2020
	Real Estate
	Construction		1-4 Family Residential		Commercial		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Balance at beginning of period	$	3,539	$	3,833	$	9,572	$	6,351	$	570	$	932	$	24,797
Impact of CECL adoption - cumulative effect adjustment	2,968		(1,447)		7,730		(3,532)		(522)		(125)		5,072
Impact of CECL adoption - purchased loans with credit deterioration	(15)		(6)		333		(22)		—		(59)		231
Loans charged-off	(33)		(56)		(21)		(521)		—		(910)		(1,541)
Recoveries of loans charged-off	11		20		81		130		—		645		887
Net loans (charged-off) recovered	(22)		(36)		60		(391)		—		(265)		(654)
Provision for (reversal of) loan losses(1)	2,030		358		26,090		1,815		(1)		130		30,422
Balance at end of period	$	8,500	$	2,702	$	43,785	$	4,221	$	47	$	613	$	59,868

(1) The increase in the provision for credit losses during 2020 was primarily due to the economic impact of COVID-19 on macroeconomic factors used in the CECL model.