Note 7 - Loans and Allowance for Credit Losses on Loans

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 7.  LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans are generally stated at the amount of unpaid principal, reduced by unearned discount and the ACLL. Interest on loans is accrued daily on the outstanding balances.  Loan origination fees and certain direct loan origination costs are deferred and amortized as adjustments of the related loan yield over its contractual life.

Loans

The following table presents the amortized cost of loans held for investment:

Dollars in thousands	2022		2021
Commercial	$	501,844	$	365,301
Commercial real estate - owner occupied
Professional & medical		120,872		150,759
Retail		188,196		190,304
Other		157,982		143,645
Commercial real estate - non-owner occupied
Hotels & motels		141,042		128,450
Mini-storage		51,109		59,045
Multifamily		272,705		233,157
Retail		192,270		162,758
Other		347,242		282,621
Construction and development
Land & land development		106,362		100,805
Construction		282,935		146,038
Residential 1-4 family real estate
Personal residence		265,326		262,805
Rental - small loan		121,548		121,989
Rental - large loan		92,103		79,108
Home equity		71,986		72,112
Mortgage warehouse lines		130,390		227,869
Consumer		35,372		31,923
Other
Credit cards		2,182		1,891
Overdrafts		1,352		811
Total loans, net of unearned fees		3,082,818		2,761,391
Less allowance for credit losses - loans		38,899		32,298
Loans, net	$	3,043,919	$	2,729,093

Accrued interest and fees receivable on loans totaled $10.4 million and $7.2 million at December 31, 2022 and 2021, respectively and is included in accrued interest and fees receivable in the consolidated balance sheets. Included in the totals above are net unamortized loan fees of $4.6 million and $4.0 million at December 31, 2022 and 2021, respectively.

Past Due Loans and Non-Accrual Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our collateral position. Regulatory provisions would typically require the placement of a loan on non-accrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on non-accrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

The following tables present the contractual aging of the amortized cost basis of past due loans by class.

	At December 31, 2022
	Past Due
Dollars in thousands	30-59 days		60-89 days		90 days or more		Total		Current		90 days or more and Accruing
Commercial	$	2,982	$	201	$	34	$	3,217	$	498,627	$	—
Commercial real estate - owner occupied
Professional & medical		100		—		—		100		120,772		—
Retail		—		—		221		221		187,975		—
Other		376		135		37		548		157,434		—
Commercial real estate - non-owner occupied
Hotels & motels		—		—		—		—		141,042		—
Mini-storage		—		—		—		—		51,109		—
Multifamily		—		—		58		58		272,647		—
Retail		165		—		438		603		191,667		—
Other		—		—		—		—		347,242		—
Construction and development
Land & land development		317		852		—		1,169		105,193		—
Construction		—		—		—		—		282,935		—
Residential 1-4 family real estate
Personal residence		3,768		741		1,969		6,478		258,848		—
Rental - small loan		1,093		582		816		2,491		119,057		—
Rental - large loan		—		—		—		—		92,103		—
Home equity		1,401		105		52		1,558		70,428		—
Mortgage warehouse lines		—		—		—		—		130,390		—
Consumer		182		71		—		253		35,119		—
Other
Credit cards		9		13		12		34		2,148		12
Overdrafts		—		—		—		—		1,352		—
Total	$	10,393	$	2,700	$	3,637	$	16,730	$	3,066,088	$	12

	At December 31, 2021
	Past Due
Dollars in thousands	30-59 days		60-89 days		90 days or more		Total		Current		90 days or more and Accruing
Commercial	$	736	$	15	$	613	$	1,364	$	363,937	$	—
Commercial real estate - owner occupied
Professional & medical		409		—		—		409		150,350		—
Retail		—		405		144		549		189,755		—
Other		208		—		150		358		143,287		—
Commercial real estate - non-owner occupied
Hotels & motels		—		—		—		—		128,450		—
Mini-storage		2		—		—		2		59,043		—
Multifamily		—		—		55		55		233,102		—
Retail		66		—		338		404		162,354		—
Other		—		—		—		—		282,621		—
Construction and development
Land & land development		38		7		962		1,007		99,798		—
Construction		—		—		—		—		146,038		—
Residential 1-4 family real estate
Personal residence		2,283		1,211		1,384		4,878		257,927		—
Rental - small loan		429		247		1,093		1,769		120,220		—
Rental - large loan		—		—		—		—		79,108		—
Home equity		236		80		175		491		71,621		—
Mortgage warehouse lines		—		—		—		—		227,869		—
Consumer		98		101		7		206		31,717		—
Other
Credit cards		12		10		4		26		1,865		4
Overdrafts		—		—		—		—		811		—
Total	$	4,517	$	2,076	$	4,925	$	11,518	$	2,749,873	$	4

The amount of interest recognized on nonaccrual loans during the periods presented is immaterial.

The following tables present the nonaccrual loans included in the net balance of loans.

	December 31, 2022				December 31, 2021
Dollars in thousands	Nonaccrual		Nonaccrual with No Allowance for Credit Losses - Loans		Nonaccrual		Nonaccrual with No Allowance for Credit Losses - Loans
Commercial	$	93	$	48	$	740	$	96
Commercial real estate - owner occupied
Professional & medical		—		—		—		—
Retail		350		—		775		—
Other		423		—		341		—
Commercial real estate - non-owner occupied
Hotels & motels		—		—		3,085		—
Mini-storage		—		—		—		—
Multifamily		538		—		55		—
Retail		439		—		338		—
Other		—		—		9		—
Construction and development
Land & land development		852		—		1,560		—
Construction		—		—		—		—
Residential 1-4 family real estate
Personal residence		2,892		—		2,504		—
Rental - small loan		2,066		—		3,094		—
Rental - large loan		—		—		—		—
Home equity		158		—		174		—
Mortgage warehouse lines		—		—		—		—
Consumer		—		—		17		—
Other
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Total	$	7,811	$	48	$	12,692	$	96

Troubled Debt Restructurings. The restructuring of a loan is considered a troubled debt restructuring (“TDR”) if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules, payment deferrals, reductions in collateral and other actions intended to minimize potential losses.

At December 31, 2022, we had TDRs of $20.6 million, of which $18.6 million were current with respect to restructured contractual payments. At December 31, 2021, our TDRs totaled $20.9 million, of which $18.7 million were current with respect to restructured contractual payments.  There were no commitments to lend additional funds under these restructurings at either balance sheet date.

The following table presents by class the TDRs that were restructured during the years ended December 31, 2022 and 2021. Generally, the modifications were extensions of term, modifying the payment terms from principal and interest to interest only for an extended period, or reduction in interest rate.  TDRs are evaluated individually for allowance for credit loss purposes if the loan balance exceeds $500,000, otherwise, smaller balance TDR loans are included in the pools to determine ACLL.

	2022						2021						2020
Dollars in thousands	Number of Modifications		Pre-modification Recorded Investment		Post- modification Recorded Investment		Number of Modifications		Pre- modification Recorded Investment		Post- modification Recorded Investment		Number of Modifications		Pre- modification Recorded Investment		Post- modification Recorded Investment
Commercial real estate - owner occupied
Other		—	$	—	$	—		—	$	—	$	—		1	$	361	$	361
Residential 1-4 family real estate
Personal residence		9		692		692		4		294		294		1		48		48
Rental - small loan		—		—		—		—		—		—		1		399		399
Rental - large loan		1		671		671		—		—		—		—		—		—
Home equity		2		158		158		—		—		—		—		—		—
Total		12	$	1,521	$	1,521		4	$	294	$	294		3	$	808	$	808

The following tables present defaults during the stated period of TDRs that were restructured during the prior 12 months. For purposes of these tables, a default is considered as either the loan was past due 30 days or more at any time during the period, or the loan was fully or partially charged off during the period.

	2022				2021				2020
Dollars in thousands	Number of Defaults		Recorded Investment at Default Date		Number of Defaults		Recorded Investment at Default Date		Number of Defaults		Recorded Investment at Default Date
Commercial real estate - owner occupied
Other		—	$	—		—	$	—		1	$	361
Residential 1-4 family real estate
Personal residence		1		22		1		44		1		48
Rental - small loan		—		—		—		—		1		399
Home equity		1		107		—		—		—		—
Total		2	$	129		1	$	44		3	$	808

Credit Quality Indicators: We analyze loans individually by classifying the loans as to credit risk.  The appropriate risk grades are determined based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. We use the following definitions for our risk grades:

Pass: Loans graded as Pass are loans to borrowers of acceptable credit quality and risk. They are higher quality loans that do not fit any of the other categories described below.

Special Mention:  Loans categorized as Special Mention are potentially weak. The credit risk may be relatively minor yet represent a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the asset may weaken or inadequately protect our position in the future.

Substandard:   Loans categorized as Substandard are inadequately protected by the borrower’s ability to repay and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. These loans are characterized by the distinct possibility that we will sustain some loss if the identified weaknesses are not mitigated.

Doubtful:  Loans categorized as Doubtful have all the weaknesses inherent in those loans classified as Substandard, with the added elements that the full collection of the loan is improbable and the possibility of loss is high.

Loss:  Loans classified as loss are considered to be non-collectible and of such little value that their continuance as a bankable asset is not warranted. This does not mean that the loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future.

We internally grade all loans at the time of loan origination. We perform an annual loan review on all non-homogenous commercial loan relationships with an aggregate exposure of $5.0 million, at which time these loans are re-graded.  In addition, during the renewal process of any loan, as well as if a loan becomes past due or if other relevant information becomes available, we will re-evaluate the loan risk grade.

Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for purposes of the table below. As of   December 31, 2022 and 2021, based on the most recent analysis performed, the risk category of loans based on year of origination is as follows:

	December 31, 2022
Dollars in thousands	Risk Rating	2022		2021		2020		2019		2018		Prior		Revolving		Revolving - Term		Total
Commercial	Pass	$	145,996	$	73,702	$	27,247	$	20,300	$	3,056	$	10,429	$	194,641	$	—	$	475,371
	Special Mention		689		23,055		267		51		17		149		2,010		—		26,238
	Substandard		52		56		—		48		24		—		55		—		235
Total Commercial			146,737		96,813		27,514		20,399		3,097		10,578		196,706		—		501,844
Commercial Real Estate - Owner Occupied
Professional & medical	Pass		13,750		47,010		10,312		6,621		3,981		35,476		2,090		—		119,240
	Special Mention		—		—		1,119		—		—		233		—		—		1,352
	Substandard		—		—		72		—		—		208		—		—		280
Total Professional & Medical			13,750		47,010		11,503		6,621		3,981		35,917		2,090		—		120,872
Retail	Pass		23,604		70,257		28,128		28,327		8,163		26,538		2,226		—		187,243
	Special Mention		—		—		—		—		—		603		—		—		603
	Substandard		—		—		—		—		—		350		—		—		350
Total Retail			23,604		70,257		28,128		28,327		8,163		27,491		2,226		—		188,196
Other	Pass		43,811		27,174		24,870		7,778		15,346		34,720		3,412		—		157,111
	Special Mention		—		56		—		—		—		392		—		—		448
	Substandard		—		—		—		—		107		316		—		—		423
Total Other			43,811		27,230		24,870		7,778		15,453		35,428		3,412		—		157,982
Total Commercial Real Estate - Owner Occupied			81,165		144,497		64,501		42,726		27,597		98,836		7,728		—		467,050
Commercial Real Estate - Non-Owner Occupied
Hotels & motels	Pass		32,059		1,695		3,192		32,688		15,358		12,899		4,081		—		101,972
	Special Mention		—		—		—		36,131		—		—		—		—		36,131
	Substandard		—		—		2,716		—		—		223		—		—		2,939
Total Hotels & Motels			32,059		1,695		5,908		68,819		15,358		13,122		4,081		—		141,042
Mini-storage	Pass		2,868		13,191		7,679		3,776		13,017		10,419		115		—		51,065
	Special Mention		—		—		—		—		—		44		—		—		44
Total Mini-storage			2,868		13,191		7,679		3,776		13,017		10,463		115		—		51,109
Multifamily	Pass		57,727		56,073		53,558		29,479		21,359		53,244		646		—		272,086
	Special Mention		—		—		81		—		—		—		—		—		81
	Substandard		—		—		480		—		—		58		—		—		538
Total Multifamily			57,727		56,073		54,119		29,479		21,359		53,302		646		—		272,705

 

	December 31, 2022
Dollars in thousands	Risk Rating	2022		2021		2020		2019		2018		Prior		Revolving		Revolving - Term		Total
Retail	Pass		46,278		52,387		39,609		5,449		6,999		25,315		7,053		—		183,090
	Special Mention		—		—		—		—		—		964		—		—		964
	Substandard		—		—		—		7,778		—		438		—		—		8,216
Total Retail			46,278		52,387		39,609		13,227		6,999		26,717		7,053		—		192,270
Other	Pass		94,765		123,551		52,592		12,281		5,444		47,752		1,953		—		338,338
	Special Mention		5,465		—		—		—		538		—		—		—		6,003
	Substandard		—		—		—		—		—		2,901		—		—		2,901
Total Other			100,230		123,551		52,592		12,281		5,982		50,653		1,953		—		347,242
Total Commercial Real Estate - Non-Owner Occupied			239,162		246,897		159,907		127,582		62,715		154,257		13,848		—		1,004,368
Construction and Development
Land & land development	Pass		27,857		23,490		10,670		13,395		5,142		15,859		7,484		—		103,897
	Special Mention		—		—		149		109		—		473		—		—		731
	Substandard		—		—		—		—		—		1,734		—		—		1,734
Total Land & land development			27,857		23,490		10,819		13,504		5,142		18,066		7,484		—		106,362
Construction	Pass		82,650		140,764		54,584		317		1,355		—		2,940		—		282,610
	Substandard		—		—		—		—		325		—		—		—		325
Total Construction			82,650		140,764		54,584		317		1,680		—		2,940		—		282,935
Total Construction and Development			110,507		164,254		65,403		13,821		6,822		18,066		10,424		—		389,297
Residential 1-4 Family Real Estate
Personal residence	Pass		38,783		39,416		30,297		16,003		16,581		105,822		—		—		246,902
	Special Mention		—		53		—		180		74		9,074		—		—		9,381
	Substandard		—		68		—		620		901		7,454		—		—		9,043
Total Personal Residence			38,783		39,537		30,297		16,803		17,556		122,350		—		—		265,326
Rental - small loan	Pass		22,692		26,654		11,609		10,995		8,103		30,508		5,784		—		116,345
	Special Mention		—		224		103		—		—		1,100		—		—		1,427
	Substandard		—		—		—		156		239		3,269		112		—		3,776
Total Rental - Small Loan			22,692		26,878		11,712		11,151		8,342		34,877		5,896		—		121,548
Rental - large loan	Pass		28,090		31,401		11,033		3,631		3,932		9,045		894		—		88,026
	Special Mention		—		—		—		—		—		26		—		—		26
	Substandard		670		—		—		—		—		3,381		—		—		4,051
Total Rental - Large Loan			28,760		31,401		11,033		3,631		3,932		12,452		894		—		92,103
Home equity	Pass		65		219		55		50		192		2,118		67,155		—		69,854
	Special Mention		—		—		—		—		125		626		757		—		1,508
	Substandard		51		—		—		—		58		461		54		—		624
Total Home Equity			116		219		55		50		375		3,205		67,966		—		71,986
Total Residential 1-4 Family Real Estate			90,351		98,035		53,097		31,635		30,205		172,884		74,756		—		550,963
Mortgage warehouse lines	Pass		—		—		—		—		—		—		130,390		—		130,390
Total Mortgage Warehouse Lines			—		—		—		—		—		—		130,390		—		130,390
Consumer	Pass		17,594		7,620		3,066		1,806		749		1,221		889		—		32,945
	Special Mention		1,332		362		179		83		18		102		6		—		2,082
	Substandard		207		75		31		—		3		1		28		—		345
Total Consumer			19,133		8,057		3,276		1,889		770		1,324		923		—		35,372

	December 31, 2022
Dollars in thousands	Risk Rating	2022		2021		2020		2019		2018		Prior		Revolving		Revolving - Term		Total
Other
Credit cards	Pass		2,182		—		—		—		—		—		—		—		2,182
Total Credit Cards			2,182		—		—		—		—		—		—		—		2,182
Overdrafts	Pass		1,352		—		—		—		—		—		—		—		1,352
Total Overdrafts			1,352		—		—		—		—		—		—		—		1,352
Total Other			3,534		—		—		—		—		—		—		—		3,534
Total		$	690,589	$	758,553	$	373,698	$	238,052	$	131,206	$	455,945	$	434,775	$	—	$	3,082,818

	December 31, 2021
Dollars in thousands	Risk Rating	2021		2020		2019		2018		2017		Prior		Revolving		Revolving - Term		Total
Commercial	Pass	$	123,890	$	36,339	$	31,116	$	5,549	$	8,831	$	14,061	$	141,003	$	—	$	360,789
	Special Mention		693		279		69		41		60		539		1,984		—		3,665
	Substandard		135		45		110		48		18		7		484		—		847
Total Commercial			124,718		36,663		31,295		5,638		8,909		14,607		143,471		—		365,301
Commercial Real Estate - Owner Occupied
Professional & medical	Pass		72,417		11,869		7,046		4,595		22,939		27,905		2,366		—		149,137
	Special Mention		—		1,146		—		—		—		187		—		—		1,333
	Substandard		—		72		—		—		217		—		—		—		289
Total Professional & Medical			72,417		13,087		7,046		4,595		23,156		28,092		2,366		—		150,759
Retail	Pass		78,780		29,749		33,114		8,813		9,318		25,296		2,464		—		187,534
	Special Mention		—		—		—		—		—		671		—		—		671
	Substandard		—		—		1,324		—		549		226		—		—		2,099
Total Retail			78,780		29,749		34,438		8,813		9,867		26,193		2,464		—		190,304
Other	Pass		32,805		30,897		13,216		16,716		7,501		38,796		2,782		—		142,713
	Special Mention		59		—		—		—		—		532		—		—		591
	Substandard		—		—		—		—		—		303		38		—		341
Total Other			32,864		30,897		13,216		16,716		7,501		39,631		2,820		—		143,645
Total Commercial Real Estate - Owner Occupied			184,061		73,733		54,700		30,124		40,524		93,916		7,650		—		484,708
Commercial Real Estate - Non-Owner Occupied
Hotels & motels	Pass		1,736		3,313		32,634		15,949		6,953		20,308		7,531		—		88,424
	Special Mention		—		—		36,941		—		—		—		—		—		36,941
	Substandard		—		2,830		—		—		—		255		—		—		3,085
Total Hotels & Motels			1,736		6,143		69,575		15,949		6,953		20,563		7,531		—		128,450
Mini-storage	Pass		13,294		7,641		9,218		14,209		4,506		10,109		21		—		58,998
	Special Mention		—		—		—		—		—		47		—		—		47
Total Mini-storage			13,294		7,641		9,218		14,209		4,506		10,156		21		—		59,045
Multifamily	Pass		55,367		39,105		45,016		23,665		14,629		51,155		3,372		—		232,309
	Special Mention		—		582		—		—		—		43		169		—		794
	Substandard		—		—		—		—		—		54		—		—		54
Total Multifamily			55,367		39,687		45,016		23,665		14,629		51,252		3,541		—		233,157
Retail	Pass		52,533		42,177		20,763		7,653		6,778		24,958		6,586		—		161,448
	Special Mention		—		—		—		—		—		972		—		—		972
	Substandard		—		—		—		—		—		338		—		—		338
Total Retail			52,533		42,177		20,763		7,653		6,778		26,268		6,586		—		162,758

	December 31, 2021
Dollars in thousands	Risk Rating	2021		2020		2019		2018		2017		Prior		Revolving		Revolving - Term		Total
Other	Pass		107,962		82,846		14,211		8,443		11,421		51,587		2,620		—		279,090
	Special Mention		—		—		—		572		—		—		—		—		572
	Doubtful		—		—		—		—		—		2,959		—		—		2,959
Total Other			107,962		82,846		14,211		9,015		11,421		54,546		2,620		—		282,621
Total Commercial Real Estate - Non-Owner Occupied			230,892		178,494		158,783		70,491		44,287		162,785		20,299		—		866,031
Construction and Development
Land & land development	Pass		26,671		14,050		20,275		5,627		2,927		21,875		6,721		—		98,146
	Special Mention		—		155		117		—		—		591		—		—		863
	Substandard		—		—		—		—		—		1,796		—		—		1,796
Total Land & land development			26,671		14,205		20,392		5,627		2,927		24,262		6,721		—		100,805
Construction	Pass		64,352		64,022		7,438		1,407		—		—		8,320		—		145,539
	Substandard		—		—		—		329		—		170		—		—		499
Total Construction			64,352		64,022		7,438		1,736		—		170		8,320		—		146,038
Total Construction and Development			91,023		78,227		27,830		7,363		2,927		24,432		15,041		—		246,843
Residential 1-4 Family Real Estate
Personal residence	Pass		39,637		34,962		18,974		18,784		14,597		115,384		—		—		242,338
	Special Mention		—		—		184		62		534		10,377		—		—		11,157
	Substandard		—		—		475		847		456		7,532		—		—		9,310
Total Personal Residence			39,637		34,962		19,633		19,693		15,587		133,293		—		—		262,805
Rental - small loan	Pass		30,342		13,990		14,093		11,524		6,567		33,936		4,630		—		115,082
	Special Mention		229		107		57		250		1		1,579		9		—		2,232
	Substandard		—		132		133		374		513		3,388		135		—		4,675
Total Rental - Small Loan			30,571		14,229		14,283		12,148		7,081		38,903		4,774		—		121,989
Rental - large loan	Pass		34,558		14,069		5,971		5,283		2,790		11,776		1,078		—		75,525
	Special Mention		—		—		—		—		—		29		—		—		29
	Substandard		—		—		—		—		—		3,554		—		—		3,554
Total Rental - Large Loan			34,558		14,069		5,971		5,283		2,790		15,359		1,078		—		79,108
Home equity	Pass		27		115		11		50		78		1,380		68,293		—		69,954
	Special Mention		—		—		—		—		—		94		1,399		—		1,493
	Substandard		—		—		—		—		—		407		258		—		665
Total Home Equity			27		115		11		50		78		1,881		69,950		—		72,112
Total Residential 1-4 Family Real Estate			104,793		63,375		39,898		37,174		25,536		189,436		75,802		—		536,014
Mortgage warehouse lines	Pass		—		—		—		—		—		—		227,869		—		227,869
Total Mortgage Warehouse Lines			—		—		—		—		—		—		227,869		—		227,869
Consumer	Pass		14,134		6,333		4,444		1,767		540		1,691		902		—		29,811
	Special Mention		904		381		210		66		87		53		11		—		1,712
	Substandard		199		96		40		11		3		22		29		—		400
Total Consumer			15,237		6,810		4,694		1,844		630		1,766		942		—		31,923
Other
Credit cards	Pass		1,891		—		—		—		—		—		—		—		1,891
Total Credit Cards			1,891		—		—		—		—		—		—		—		1,891

	December 31, 2021
Dollars in thousands	Risk Rating	2021		2020		2019		2018		2017		Prior		Revolving		Revolving - Term		Total
Overdrafts	Pass		811		—		—		—		—		—		—		—		811
Total Overdrafts			811		—		—		—		—		—		—		—		811
Total Other			2,702		—		—		—		—		—		—		—		2,702
Total		$	753,426	$	437,302	$	317,200	$	152,634	$	122,813	$	486,942	$	491,074	$	—	$	2,761,391

Industry concentrations: At December 31, 2022 and 2021, we had no concentrations of loans to any single industry in excess of 10% of total loans.

Loans to related parties:  We have had, and may be expected to have in the future, banking transactions in the ordinary course of business with our directors, principal officers, their immediate families and affiliated companies in which they are principal shareholders (commonly referred to as related parties).  These transactions have been, in our opinion, on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others.

The following presents the activity with respect to related party loans aggregating $60,000 or more to any one related party (other changes represent additions to and changes in director and executive officer status):

Dollars in thousands	2022			2021
Balance, beginning	$	53,212		$	55,092
Additions		516			2,677
Amounts collected		(4,419	)		(4,557	)
Balance, ending	$	49,309		$	53,212

Allowance for Credit Losses - Loans

The ACLL is a valuation allowance, estimated at each balance sheet date in accordance with ASC 326, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the ACLL represents our best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans’ contractual terms, adjusted for expected prepayments when appropriate (the “life-of-loan” concept). The contractual term excludes expected extensions, renewals and modifications unless (i) management has a reasonable expectation that a troubled debt restructuring will be executed with an individual borrower or (ii) such extension or renewal options are not unconditionally cancellable by us and, in such cases, the borrower is likely to meet applicable conditions and likely to request extension or renewal. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors. The ACLL losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Expected credit losses for collateral dependent loans, including loans where the borrower is experiencing financial difficulty, but foreclosure is not probable, are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Expected credit losses are reflected in the ACLL through a charge to provision for credit losses. When we deem all or a portion of a financial asset to be uncollectible the appropriate amount is written off and the ACLL is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible; however, generally speaking, an asset will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the ACLL when received.

Loan Pools. In calculating the ACLL, most loans are segmented into pools based upon similar characteristics and risk profiles. Common characteristics and risk profiles include the type/purpose of loan, underlying collateral, geographical similarity and historical/expected credit loss patterns. In developing these loan pools for the purposes of modeling expected credit losses, we also analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors. We have identified the pools of financial assets with similar risk characteristics for measuring expected credit losses as presented in the table of amortized cost of loans held for investment above.

We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary.

Residential 1-4 family rentals are classified as small loan if the original loan amount is less than $600,000 and classified as large loan if the original loan amount equals or exceeds $600,000.

The Company’s methodology for estimating the ACLL considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodology applies historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed. Our methodology reverts to historical loss information immediately when it can no longer develop reasonable and supportable forecasts.

Loss-Rate Method. We use a loss-rate (“cohort”) method to estimate expected credit losses for all loan pools. The cohort method identifies and captures the balances of pooled loans with similar risk characteristics, as of a point in time to form a cohort, then tracks the respective losses generated by that cohort of loans over their remaining lives, or until the loans are “exhausted” (reached an acceptable stage at which a significant majority of all losses are expected to have been recognized). This method encompasses loan balances for as long as the loans are outstanding, so while significant history is required to represent the life-of-loan concept, this method does not require as much history due to its inclusion of loan balances in multiple cohort periods.

Qualitative Factors. We qualitatively adjust our loan loss rates for risk factors that are not otherwise considered within our model but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factor (“Q-Factor”) adjustments may increase or decrease our estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk.

One Q-Factor adjustment to our loss rates is consideration of reasonable and supportable forecasts of economic conditions. In arriving at a reasonable and supportable economic forecast, we primarily consider the forecasted unemployment rates for the U.S., West Virginia and Virginia as loss drivers for each segmented loan pool. Secondarily, we consider the following forecasted economic data for one or more of our segmented loan pools depending on the nature of the underlying loan pool: housing price indices (U.S., West Virginia & Virginia), single-family housing starts (West Virginia & Virginia), multi-family housing starts (West Virginia & Virginia), personal income growth (U.S., West Virginia & Virginia), U.S. consumer confidence, rental vacancy rates (U.S.), and U.S. percentage change in gross domestic product.

Other risks that we may consider in making Q-Factor adjustments include, among other things, the impact of (i) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (ii) changes in the nature and volume of the loan pools and in the terms of the underlying loans, (iii) changes in the experience, ability, and depth of our lending management and staff, (iv) changes in volume and severity of past due financial assets, the volume of non-accrual assets, and the volume and severity of adversely classified or graded assets, (v) changes in the quality of our credit review function, (vi) changes in the value of the underlying collateral for loans that are non-collateral dependent, (vii) the existence, growth, and effect of any concentrations of credit and (viii) other external factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters or health pandemics.

Collateral Dependent Loans. We may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting collateral dependent loans is evaluated by appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice.

The following table presents the activity in the ACLL by portfolio segment during 2022 and 2021:

	For the Year Ended December 31, 2022
	Allowance for Credit Losses - Loans
Dollars in thousands	Beginning Balance		Provision for Credit Losses - Loans			Charge-offs			Recoveries		Ending Balance
Commercial	$	3,218	$	1,774		$	(237	)	$	186	$	4,941
Commercial real estate - owner occupied
Professional & medical		1,092		(126	)		—			—		966
Retail		1,362		(79	)		(108	)		1		1,176
Other		575		(88	)		(61	)		—		426
Commercial real estate - non-owner occupied
Hotels & motels		2,532		(1,329	)		—			—		1,203
Mini-storage		133		(51	)		—			—		82
Multifamily		1,821		1,080			—			6		2,907
Retail		1,074		228			—			60		1,362
Other		1,820		593			—			39		2,452
Construction and development
Land & land development		3,468		76			(71	)		9		3,482
Construction		6,346		4,792			—			—		11,138
Residential 1-4 family real estate
Personal residence		2,765		230			(112	)		56		2,939
Rental - small loan		2,834		(848	)		(211	)		132		1,907
Rental - large loan		2,374		294			—			—		2,668
Home equity		497		179			(8	)		37		705
Mortgage warehouse lines		—		—			—			—		—
Consumer		163		70			(174	)		115		174
Other
Credit cards		17		7			(24	)		17		17
Overdrafts		207		476			(433	)		104		354
Total	$	32,298	$	7,278		$	(1,439	)	$	762	$	38,899

	For the Year Ended December 31, 2021
	Allowance for Credit Losses - Loans
Dollars in thousands	Beginning Balance		Provision for Credit Losses - Loans			Adjustment for PCD Acquired Loans		Charge-offs			Recoveries		Ending Balance
Commercial	$	2,304	$	1,112		$	—	$	(222	)	$	24	$	3,218
Commercial real estate - owner occupied
Professional & medical		954		71			71		(4	)		—		1,092
Retail		3,173		(1,812	)		—		—			1		1,362
Other		610		(35	)		—		—			—		575
Commercial real estate - non-owner occupied
Hotels & motels		2,135		397			—		—			—		2,532
Mini-storage		337		(204	)		—		—			—		133
Multifamily		1,547		265			—		—			9		1,821
Retail		981		93			—		—			—		1,074
Other		1,104		947			—		(233	)		2		1,820
Construction and development
Land & land development		4,084		(628	)		—		—			12		3,468
Construction		4,648		1,698			—		—			—		6,346
Residential 1-4 family real estate
Personal residence		3,559		(548	)		—		(365	)		119		2,765
Rental - small loan		2,736		177			20		(189	)		90		2,834
Rental - large loan		3,007		(633	)		—		—			—		2,374
Home equity		713		(206	)		—		(26	)		16		497
Mortgage warehouse lines		—		—			—		—			—		—
Consumer		216		(44	)		—		(131	)		122		163
Other
Credit cards		17		10			—		(16	)		6		17
Overdrafts		121		255			—		(321	)		152		207
Total	$	32,246	$	915		$	91	$	(1,507	)	$	553	$	32,298

The following tables presents, as of December 31, 2022 and 2021 segregated by loan portfolio segment, details of the loan portfolio and the ACLL calculated in accordance with our credit loss accounting methodology for loans described above.

	December 31, 2022
	Loan Balances						Allowance for Credit Losses - Loans
Dollars in thousands	Loans Individually Evaluated		Loans Collectively Evaluated (1)		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
Commercial	$	104	$	501,740	$	501,844	$	—	$	4,941	$	4,941
Commercial real estate - owner occupied
Professional & medical		1,969		118,903		120,872		212		754		966
Retail		4,544		183,652		188,196		—		1,176		1,176
Other		—		157,982		157,982		—		426		426
Commercial real estate - non-owner occupied
Hotels & motels		2,939		138,103		141,042		—		1,203		1,203
Mini-storage		—		51,109		51,109		—		82		82
Multifamily		—		272,705		272,705		—		2,907		2,907
Retail		9,906		182,364		192,270		95		1,267		1,362
Other		5,551		341,691		347,242		287		2,165		2,452
Construction and development
Land & land development		1,398		104,964		106,362		502		2,980		3,482
Construction		—		282,935		282,935		—		11,138		11,138
Residential 1-4 family real estate
Personal residence		—		265,326		265,326		—		2,939		2,939
Rental - small loan		1,159		120,389		121,548		282		1,625		1,907
Rental - large loan		3,675		88,428		92,103		—		2,668		2,668
Home equity		—		71,986		71,986		—		705		705
Mortgage warehouse lines		—		130,390		130,390		—		—		—
Consumer		—		35,372		35,372		—		174		174
Other
Credit cards		—		2,182		2,182		—		17		17
Overdrafts		—		1,352		1,352		—		354		354
Total	$	31,245	$	3,051,573	$	3,082,818	$	1,378	$	37,521	$	38,899

1) Included in the loans collectively evaluated are $8.5 million in fully guaranteed or cash secured loans, which are excluded from the pools collectively evaluated and carry no allowance.

	December 31, 2021
	Loan Balances						Allowance for Credit Losses - Loans
Dollars in thousands	Loans Individually Evaluated		Loans Collectively Evaluated (1)		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
Commercial	$	177	$	365,124	$	365,301	$	—	$	3,218	$	3,218
Commercial real estate - owner occupied
Professional & medical		2,073		148,686		150,759		199		893		1,092
Retail		5,559		184,745		190,304		—		1,362		1,362
Other		—		143,645		143,645		—		575		575
Commercial real estate - non-owner occupied
Hotels & motels		3,085		125,365		128,450		669		1,863		2,532
Mini-storage		1,058		57,987		59,045		—		133		133
Multifamily		—		233,157		233,157		—		1,821		1,821
Retail		2,693		160,065		162,758		—		1,074		1,074
Other		5,726		276,895		282,621		69		1,751		1,820
Construction and development
Land & land development		2,004		98,801		100,805		723		2,745		3,468
Construction		—		146,038		146,038		—		6,346		6,346
Residential 1-4 family real estate
Personal residence		—		262,805		262,805		—		2,765		2,765
Rental - small loan		1,463		120,526		121,989		436		2,398		2,834
Rental - large loan		3,162		75,946		79,108		—		2,374		2,374
Home equity		523		71,589		72,112		—		497		497
Mortgage warehouse lines		—		227,869		227,869		—		—		—
Consumer		—		31,923		31,923		—		163		163
Other
Credit cards		—		1,891		1,891		—		17		17
Overdrafts		—		811		811		—		207		207
Total	$	27,523	$	2,733,868	$	2,761,391	$	2,096	$	30,202	$	32,298

1) Included in the loans collectively evaluated are $19.8 million in fully guaranteed or cash secured loans, which are excluded from the pools collectively evaluated and carry no allowance.

The following table presents the amortized cost basis of collateral dependent loans by loan pool, which are individually evaluated to determine expected credit losses, and the related ACLL allocated to those loans:

	December 31, 2022
Dollars in thousands	Real Estate Secured Loans		Non-Real Estate Secured Loans		Total Loans		Allowance for Credit Losses - Loans
Commercial	$	—	$	104	$	104	$	—
Commercial real estate - owner occupied
Professional & medical		1,969		—		1,969		212
Retail		4,544		—		4,544		—
Other		—		—		—		—
Commercial real estate - non-owner occupied
Hotels & motels		2,939		—		2,939		—
Mini-storage		—		—		—		—
Multifamily		—		—		—		—
Retail		9,906		—		9,906		95
Other		5,551		—		5,551		287
Construction and development
Land & land development		1,398		—		1,398		502
Construction		—		—		—		—
Residential 1-4 family real estate
Personal residence		—		—		—		—
Rental - small loan		1,159		—		1,159		282
Rental - large loan		3,675		—		3,675		—
Home equity		—		—		—		—
Consumer		—		—		—		—
Other
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Total	$	31,141	$	104	$	31,245	$	1,378

	December 31, 2021
Dollars in thousands	Real Estate Secured Loans		Non-Real Estate Secured Loans		Total Loans		Allowance for Credit Losses - Loans
Commercial	$	—	$	177	$	177	$	—
Commercial real estate - owner occupied
Professional & medical		2,073		—		2,073		199
Retail		5,559		—		5,559		—
Other		—		—		—		—
Commercial real estate - non-owner occupied
Hotels & motels		3,085		—		3,085		669
Mini-storage		1,058		—		1,058		—
Multifamily		—		—		—		—
Retail		2,693		—		2,693		—
Other		5,726		—		5,726		69
Construction and development
Land & land development		2,004		—		2,004		723
Construction		—		—		—		—
Residential 1-4 family real estate
Personal residence		—		—		—		—
Rental - small loan		1,463		—		1,463		436
Rental - large loan		3,162		—		3,162		—
Home equity		523		—		523		—
Consumer		—		—		—		—
Other
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Total	$	27,346	$	177	$	27,523	$	2,096