Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2021

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


	September 30, 2021		December 31, 2020
Real estate loans:
Construction	$	422,095	$	581,941
1-4 family residential	660,689		719,952
Commercial	1,605,132		1,295,746
Commercial loans	443,708		557,122
Municipal loans	427,259		409,028
Loans to individuals	88,702		93,990
Total loans	3,647,585		3,657,779
Less: Allowance for loan losses	38,022		49,006
Net loans	$	3,609,563	$	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):


September 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	$	117,946	$	107,623	$	56,826	$	6,343	$	2,209	$	6,755	$	124,101	$	421,803
Pass watch	—		—		—		—		—		21		—		21
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		217		—		217
Doubtful	—		—		—		54		—		—		—		54
Total construction real estate	$	117,946	$	107,623	$	56,826	$	6,397	$	2,209	$	6,993	$	124,101	$	422,095

1-4 family residential real estate:
Pass	$	111,806	$	134,208	$	89,450	$	52,699	$	38,027	$	226,835	$	2,239	$	655,264
Pass watch	—		—		—		—		—		803		—		803
Special mention	—		—		—		—		—		62		—		62
Substandard	9		483		54		—		430		3,227		89		4,292
Doubtful	—		9		—		—		—		259		—		268
Total 1-4 family residential real estate	$	111,815	$	134,700	$	89,504	$	52,699	$	38,457	$	231,186	$	2,328	$	660,689

Commercial real estate:
Pass	$	448,184	$	237,377	$	317,768	$	127,342	$	154,680	$	230,388	$	6,281	$	1,522,020
Pass watch	—		—		4,163		23,242		22,159		1,645		—		51,209
Special mention	—		197		—		—		168		1,919		—		2,284
Substandard	3,449		609		8,882		8,563		—		7,991		—		29,494
Doubtful	—		—		—		—		—		125		—		125
Total commercial real estate	$	451,633	$	238,183	$	330,813	$	159,147	$	177,007	$	242,068	$	6,281	$	1,605,132

Commercial loans:
Pass	$	131,981	$	78,247	$	28,930	$	15,234	$	4,147	$	6,166	$	174,372	$	439,077
Pass watch	39		55		504		25		—		—		—		623
Special mention	—		—		124		381		—		183		373		1,061
Substandard	91		194		379		165		20		1		1,457		2,307
Doubtful	8		25		141		386		—		80		—		640
Total commercial loans	$	132,119	$	78,521	$	30,078	$	16,191	$	4,167	$	6,430	$	176,202	$	443,708

Municipal loans:
Pass	$	56,206	$	65,884	$	63,328	$	30,504	$	57,665	$	153,672	$	—	$	427,259
Pass watch	—		—		—		—		—		—		—		—
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total municipal loans	$	56,206	$	65,884	$	63,328	$	30,504	$	57,665	$	153,672	$	—	$	427,259

Loans to individuals:
Pass	$	34,329	$	28,335	$	14,196	$	5,195	$	2,188	$	1,068	$	3,236	$	88,547
Pass watch	—		—		—		—		—		—		—		—
Special mention	—		—		—		40		—		—		—		40
Substandard	—		1		27		14		22		10		1		75
Doubtful	—		—		1		11		10		18		—		40
Total loans to individuals	$	34,329	$	28,336	$	14,224	$	5,260	$	2,220	$	1,096	$	3,237	$	88,702
Total loans	$	904,048	$	653,247	$	584,773	$	270,198	$	281,725	$	641,445	$	312,149	$	3,647,585


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):


	September 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	$	72	$	41	$	—	$	113	$	421,982	$	422,095
1-4 family residential	652		691		580		1,923		658,766		660,689
Commercial	885		—		—		885		1,604,247		1,605,132
Commercial loans	1,402		233		31		1,666		442,042		443,708
Municipal loans	96		—		—		96		427,163		427,259
Loans to individuals	265		14		12		291		88,411		88,702
Total	$	3,372	$	979	$	623	$	4,974	$	3,642,611	$	3,647,585


	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):


	September 30, 2021		December 31, 2020
Nonaccrual loans:
Real estate loans:
Construction	$	63	$	640
1-4 family residential	1,432		3,922
Commercial	796		1,269
Commercial loans	674		1,592

Loans to individuals	48		291
Total nonaccrual loans (1)	3,013		7,714

Accruing loans past due more than 90 days	—		—
TDR loans	9,371		9,646
OREO	25		106
Repossessed assets	15		14
Total nonperforming assets	$	12,424	$	17,480

(1) Includes $1.1 million and $976,000 of restructured loans as of September 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 September 30, 2021
	Extend Amortization Period		Interest Rate Reductions		Combination		Total Modifications		Number of Loans
Real estate loans:

1-4 family residential	$	—	$	—	$	219	$	219	3
Commercial	—		—		453		453		1



Total	$	—	$	—	$	672	$	672	4



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

1-4 family residential	$	—	$	—	$	344	$	344	5
Commercial	—		—		453		453		1
Commercial loans	—		16		94		110		3


Total	$	—	$	16	$	891	$	907	9


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


Commercial	$	—	$	—	$	58	$	58	1
Commercial loans	—		—		117		117		3


Total	$	—	$	—	$	175	$	175	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 September 30, 2021
	Real Estate
	Construction		1-4 Family Residential		Commercial		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Balance at beginning of period	$	8,018	$	2,520	$	28,930	$	3,097	$	47	$	301	$	42,913
Loans charged-off	—		(35)		—		(508)		—		(397)		(940)
Recoveries of loans charged-off	1		4		12		74		—		346		437
Net loans (charged-off) recovered	1		(31)		12		(434)		—		(51)		(503)
Provision for (reversal of) loan losses	(3,036)		(543)		(684)		(103)		(1)		(21)		(4,388)
Balance at end of period	$	4,983	$	1,946	$	28,258	$	2,560	$	46	$	229	$	38,022



	Nine Months Ended September 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	—		(136)		—		(943)		—		(1,183)		(2,262)
Recoveries of loans charged-off	2		71		13		535		—		904		1,525
Net loans (charged-off) recovered	2		(65)		13		(408)		—		(279)		(737)
Provision for (reversal of) loan losses	(1,509)		(259)		(7,464)		(1,139)		—		124		(10,247)
Balance at end of period	$	4,983	$	1,946	$	28,258	$	2,560	$	46	$	229	$	38,022



	Three Months Ended September 30, 2020
	Real Estate
	Construction		1-4 Family Residential		Commercial		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Balance at beginning of period	$	8,500	$	2,702	$	43,785	$	4,221	$	47	$	613	$	59,868


Loans charged-off	(6)		(18)		(12)		(279)		—		(403)		(718)
Recoveries of loans charged-off	—		9		13		61		—		278		361
Net loans (charged-off) recovered	(6)		(9)		1		(218)		—		(125)		(357)
Provision for (reversal of) loan losses	(2,868)		(58)		(2,001)		489		(1)		38		(4,401)
Balance at end of period	$	5,626	$	2,635	$	41,785	$	4,492	$	46	$	526	$	55,110



	Nine Months Ended September 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	(39)		(74)		(33)		(800)		—		(1,313)		(2,259)
Recoveries of loans charged-off	11		29		94		191		—		923		1,248
Net loans (charged-off) recovered	(28)		(45)		61		(609)		—		(390)		(1,011)
Provision for (reversal of) loan losses(1)	(838)		300		24,089		2,304		(2)		168		26,021
Balance at end of period	$	5,626	$	2,635	$	41,785	$	4,492	$	46	$	526	$	55,110

(1) The increase in the provision for credit losses during the nine months ended September 30, 2020 was primarily due to the economic impact of COVID-19 on macroeconomic factors used in the CECL model.