Note 4 - Loans

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

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

Note 4. Loans

The Company groups loans held for investment into three segments (commercial loans, consumer real estate loans, and consumer and other loans) with each segment divided into various classes. Covered loans are those loans acquired in FDIC assisted transactions that are covered by loss share agreements. Customer overdrafts reclassified as loans totaled $1.13 million as of December 31, 2020, and $2.20 million as of December 31, 2019. Deferred loan fees were $5.58 million as of December 31, 2020, and $4.60 million as of December 31, 2019. For information about off-balance sheet financing, see Note 20, “Litigation, Commitments, and Contingencies,” to the Consolidated Financial Statements of this report.

The following table presents loans, net of unearned income with non-covered loans and by loan class, as of the dates indicated:

	December 31,
	2020					2019
(Amounts in thousands)	Amount		Percent			Amount		Percent
Non-covered loans held for investment
Commercial loans
Construction, development, and other land	$	44,649		2.04	%	$	48,659		2.30	%
Commercial and industrial		173,024		7.91	%		142,962		6.76	%
Multi-family residential		115,161		5.27	%		121,840		5.76	%
Single family non-owner occupied		187,598		8.58	%		163,181		7.72	%
Non-farm, non-residential		734,793		33.60	%		727,261		34.39	%
Agricultural		9,749		0.45	%		11,756		0.56	%
Farmland		19,761		0.90	%		23,155		1.10	%
Total commercial loans		1,284,735		58.75	%		1,238,814		58.59	%
Consumer real estate loans
Home equity lines		89,432		4.09	%		110,078		5.21	%
Single family owner occupied		658,678		30.12	%		620,697		29.35	%
Owner occupied construction		17,720		0.81	%		17,241		0.82	%
Total consumer real estate loans		765,830		35.02	%		748,016		35.38	%
Consumer and other loans
Consumer loans		120,373		5.50	%		110,027		5.20	%
Other		6,014		0.28	%		4,742		0.22	%
Total consumer and other loans		126,387		5.78	%		114,769		5.42	%
Total non-covered loans		2,176,952		99.56	%		2,101,599		99.39	%
Total covered loans		9,680		0.44	%		12,861		0.61	%
Total loans held for investment, net of unearned income	$	2,186,632		100.00	%	$	2,114,460		100.00	%
Loans held for Sale	$	—	$	—		$	263	$	—

Commercial and industrial loan balances grew significantly compared to December 31, 2019. The Company began participating as a Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) lender during the second quarter of 2020. At December 31, 2020, the PPP loans had a current balance of $57.06 million, and were included in commercial and industrial loan balances. Deferred loan origination fees related to the PPP loans, net of deferred loan origination costs, which totaled $2.30 million at December 31, 2020, were also recorded. During 2020, the Company recorded amortization of net deferred loan origination fees of $868 thousand on PPP loans. The remaining net deferred loan origination fees will be amortized over the expected life of the respective loans, or until forgiven by the SBA, and will be recognized in net interest income. As of December 31, 2020, $3.94 million, or 6.46%, of the Company's Paycheck Protection Program loan balances had been forgiven by the SBA. 

The following table presents the covered loan portfolio, by loan class, as of the dates indicated.

	December 31,
(Amounts in thousands)	2020		2019
Covered loans
Commercial loans
Construction, development, and other land	$	25	$	28
Single family non-owner occupied		185		199
Non-farm, non-residential		—		3
Total commercial loans		210		230
Consumer real estate loans
Home equity lines		7,094		9,853
Single family owner occupied		2,376		2,778
Total consumer real estate loans		9,470		12,631
Total covered loans	$	9,680	$	12,861

The Company identifies certain purchased loans as impaired when fair values are established at acquisition and groups those PCI loans into loan pools with common risk characteristics. The Company estimates cash flows to be collected on PCI loans and discounts those cash flows at a market rate of interest.   Effective January 1, 2020, the Company consolidated the insignificant PCI loans and discounts for Peoples, Waccamaw, and other acquired loans into the core loan portfolio.  The only remaining PCI pools are those loans acquired in the Highlands acquisition on December 31, 2019.  The following table presents the recorded investment and contractual unpaid principal balance of PCI loans, by acquisition, as of the dates indicated:

	December 31,
	2020				2019
(Amounts in thousands)	Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance
PCI Loans, by acquisition
Peoples	$	—	$	—	$	5,071	$	6,431
Waccamaw		—		—		2,708		14,277
Highlands		39,662		47,514		53,116		64,096
Other acquired		—		—		352		378
Total PCI Loans	$	39,662	$	47,514	$	61,247	$	85,182

The Highlands acquisition added $8.15 million in accretable yield. The total fair value of the Highlands PCI loans was $53.12 million at the time of the acquisition. The gross contractual cash flows for the Highlands PCI loans was $76.45 million. The following table presents the changes in the accretable yield on PCI loans, by acquisition, during the periods indicated:

	Peoples			Waccamaw			Highlands			Total
(Amounts in thousands)
Balance January 1, 2018	$	3,388		$	19,465		$	—		$	22,853
Accretion		(1,263	)		(6,269	)		—			(7,532	)
Reclassifications from nonaccretable difference(1)		8			1,770			—			1,778
Other changes, net		457			(327	)		—			130
Balance December 31, 2018	$	2,590		$	14,639		$	—		$	17,229
Balance January 1, 2019	$	2,590		$	14,639		$	—		$	17,229
Accretion		(950	)		(3,317	)		—			(4,267	)
Reclassifications from nonaccretable difference(1)		17			1,440			—			1,457
Other changes, net		233			(188	)		—			45
Balance December 31, 2019	$	1,890		$	12,574		$	—		$	14,464
Balance January 1, 2020	$	1,890		$	12,574		$	—		$	14,464
Additions		—			—			8,152			8,152
Accretion		—			—			(2,497	)		(2,497	)
Other changes, net		(1,890	)		(12,574	)		—			(14,464	)
Balance Balance at December 31, 2020	$	—		$	—		$	5,655		$	5,655

(1) Represents changes attributable to expected loss assumptions