
(in thousands)	March 31, 2022		December 31, 2021
Commercial, financial, and agricultural(a)	$	221,015	$	217,214
Real estate construction − residential	21,515		27,920
Real estate construction − commercial	103,478		91,369
Real estate mortgage − residential	287,879		279,346
Real estate mortgage − commercial	677,539		663,256
Installment and other consumer	22,497		23,028
Total loans held for investment	$	1,333,923	$	1,302,133

The Bank grants real estate, commercial, installment, and other consumer loans to customers located within the Missouri communities surrounding Jefferson City, Columbia, Clinton, Warsaw, Springfield, St. Louis, and the greater Kansas City metropolitan area. As such, the Bank is susceptible to changes in the economic environment in these communities. The

Bank does not have a concentration of credit in any one economic sector. Installment and other consumer loans consist primarily of the financing of automotive vehicles. At March 31, 2022, loans of $567.4 million were pledged to the Federal Home Loan Bank (FHLB) as collateral for borrowings and letters of credit.


	Three Months Ended March 31, 2022
(in thousands)	Commercial, Financial, & Agricultural		Real Estate Construction - Residential		Real Estate Construction - Commercial		Real Estate Mortgage - Residential		Real Estate Mortgage - Commercial		Installment and Other Consumer		Un- allocated		Total
Balance at beginning of period	$	2,717	$	137	$	588	$	2,482	$	10,662	$	256	$	61	$	16,903
Additions:
(Release of ) provision for loan losses	128		(77)		76		93		(2,897)		56		121		(2,500)
Deductions:
Loans charged off	35		—		—		—		75		56		—		166
Less recoveries on loans	(20)		—		—		(3)		(2)		(17)		—		(42)
Net loan charge-offs (recoveries)	15		—		—		(3)		73		39		—		124
Balance at end of period	$	2,830	$	60	$	664	$	2,578	$	7,692	$	273	$	182	$	14,279


	Three Months Ended March 31, 2021
(in thousands)	Commercial, Financial, & Agricultural		Real Estate Construction - Residential		Real Estate Construction - Commercial		Real Estate Mortgage - Residential		Real Estate Mortgage - Commercial		Installment and Other Consumer		Un- allocated		Total
Balance at beginning of period	$	5,121	$	213	$	475	$	2,679	$	9,354	$	264	$	7	$	18,113
Additions:
Provision for loan losses	(567)		83		57		(253)		573		13		94		—
Deductions:
Loans charged off	27		—		—		—		23		57		—		107
Less recoveries on loans	(149)		(13)		—		(168)		—		(25)		—		(355)
Net loan charge-offs (recoveries)	(122)		(13)		—		(168)		23		32		—		(248)
Balance at end of period	$	4,676	$	309	$	532	$	2,594	$	9,904	$	245	$	101	$	18,361

Loans, or portions of loans, are charged off to the extent deemed uncollectible or a loss is confirmed. Loan charge-offs reduce the allowance for loan losses, and recoveries of loans previously charged off are added back to the allowance. If management determines that it is probable that all amounts due on a loan will not be collected under the original terms of the loan agreement, the loan is considered to be impaired. These loans are evaluated individually for impairment, and in conjunction with current economic conditions and loss experience, specific reserves are estimated as further discussed below. Loans not individually evaluated are aggregated by risk characteristics and reserves are recorded using a consistent methodology that considers historical loan loss experience by loan type, delinquencies, current economic conditions, loan risk ratings and industry concentration.

These historical loss rates for each risk group are used as the starting point to determine loss rates for measurement purposes. The historical loan loss rates are multiplied by loss emergence periods (LEP) which represent the estimated time period between a borrower first experiencing financial difficulty and the recognition of a loss. Management's look-back period began with loss history in the first quarter 2012 as the starting point through the current quarter and it will continue to include this starting point going forward. The look-back period will continue to be evaluated and will be adjusted once a sustained loss producing downturn is recognized and found to be representative of historical losses expected for the current portfolio.

The Company’s methodology includes qualitative risk factors that allow management to adjust its estimates of losses based on the most recent information available and to address other limitations in the quantitative component that is based on historical loss rates. Such risk factors are generally reviewed and updated quarterly, as appropriate, and are adjusted to reflect changes in national and local economic conditions and developments, the nature, volume and terms of loans in the portfolio, including changes in volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans, loan concentrations, assessment of trends in collateral values, assessment

The funding of $88.4 million and $47.5 million in SBA PPP loans during 2020 and 2021, respectively, required management to assess the methodology that would be adopted in regard to the allowance for loan losses applicable to these loans. As the SBA PPP loans are expected to be mostly paid off within a year and carry a 100% credit guarantee from the SBA, management determined that no allowance for loan losses was deemed necessary for these loans. At March 31, 2022, the net balance of the PPP loans totaled $2.3 million.

All SBA PPP loans have a 1% interest rate and the Company earns a fee that is based upon a tiered schedule corresponding with the amount of the loan to the borrower, which is deferred and recognized over the life of the loan. The PPP loan may be forgiven by the SBA if the borrower meets certain criteria as defined by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Company reports these loans at their principal amount outstanding, net of unearned income, unamortized deferred loan fee income and loan origination costs. Interest is accrued as earned and loan origination fees and direct costs are deferred and accreted or amortized into interest income, as an adjustment to the yield, over the life of the loan using the level yield method. When a PPP loan is paid off or forgiven by the SBA, the remaining unaccreted or unamortized net origination fees or costs are immediately recognized into income.


(in thousands)	Commercial, Financial, and Agricultural		Real Estate Construction - Residential		Real Estate Construction - Commercial		Real Estate Mortgage - Residential		Real Estate Mortgage - Commercial		Installment and Other Consumer		Un- allocated		Total
March 31, 2022
Allowance for loan losses:
Individually evaluated for impairment	$	39	$	—	$	13	$	206	$	41	$	18	$	—	$	317
Collectively evaluated for impairment	2,791		60		651		2,372		7,651		255		182		13,962
Total	$	2,830	$	60	$	664	$	2,578	$	7,692	$	273	$	182	$	14,279
Loans outstanding:
Individually evaluated for impairment	$	319	$	—	$	100	$	2,428	$	15,800	$	140	$	—	$	18,787
Collectively evaluated for impairment	220,696		21,515		103,378		285,451		661,739		22,357		—		1,315,136
Total	$	221,015	$	21,515	$	103,478	$	287,879	$	677,539	$	22,497	$	—	$	1,333,923

December 31, 2021
Allowance for loan losses:
Individually evaluated for impairment	$	42	$	—	$	13	$	166	$	2,815	$	8	$	—	$	3,044
Collectively evaluated for impairment	2,675		137		575		2,316		7,847		248		61		13,859
Total	$	2,717	$	137	$	588	$	2,482	$	10,662	$	256	$	61	$	16,903
Loans outstanding:
Individually evaluated for impairment	$	341	$	—	$	105	$	2,391	$	24,357	$	60	$	—	$	27,254
Collectively evaluated for impairment	216,873		27,920		91,264		276,955		638,899		22,968		—		1,274,879
Total	$	217,214	$	27,920	$	91,369	$	279,346	$	663,256	$	23,028	$	—	$	1,302,133

Loans evaluated under Accounting Standards Codification (ASC) 310-10-35 include loans which are individually evaluated for impairment. All other loans are collectively evaluated for impairment under ASC 450-20. Impaired loans individually evaluated for impairment totaled $18.8 million and $27.3 million at March 31, 2022 and December 31, 2021, respectively, and are comprised of loans on non-accrual status and loans which have been classified as troubled debt restructurings (TDRs).

The net carrying value of impaired loans is based on the fair values of collateral obtained through independent appraisals or internal evaluations, or by discounting the total expected future cash flows. At March 31, 2022, $15.4 million of impaired loans were evaluated based on the fair value less estimated selling costs of the loans' collateral compared to $24.2 million at December 31, 2021. Once the impairment amount is calculated, a specific reserve allocation is recorded. At March 31, 2022, $0.3 million of the Company’s allowance for loan losses was allocated to impaired loans totaling $18.8 million compared to $3.0 million of the Company’s allowance for loan losses allocated to impaired loans totaling $27.3 million at December 31, 2021. Management determined that $16.1, or 86%, of total impaired loans required no reserve allocation at March 31, 2022 compared to $16.6 million, or 61%, at December 31, 2021, primarily due to adequate collateral values, acceptable payment history and adequate cash flow ability.


(in thousands)	Recorded Investment		Unpaid Principal Balance		Specific Reserves
March 31, 2022
With no related allowance recorded:

Real estate mortgage − residential	$	754	$	754	$	—
Real estate mortgage − commercial	15,364		16,045		—
Installment and other consumer	—		4		—
Total	$	16,118	$	16,803	$	—
With an allowance recorded:
Commercial, financial and agricultural	$	319	$	357	$	39

Real estate construction − commercial	100		135		13
Real estate mortgage − residential	1,674		2,152		206
Real estate mortgage − commercial	436		516		41
Installment and other consumer	140		140		18
Total	$	2,669	$	3,300	$	317
Total impaired loans	$	18,787	$	20,103	$	317


(in thousands)	Recorded Investment		Unpaid Principal Balance		Specific Reserves
December 31, 2021
With no related allowance recorded:

Real estate mortgage − residential	$	1,034	$	1,152	$	—
Real estate mortgage − commercial	15,593		16,057		—
Total	$	16,627	$	17,209	$	—
With an allowance recorded:
Commercial, financial and agricultural	$	341	$	374	$	42

Real estate construction − commercial	105		138		13
Real estate mortgage − residential	1,357		1,730		166
Real estate mortgage − commercial	8,764		9,142		2,815
Installment and other consumer	60		61		8
Total	$	10,627	$	11,445	$	3,044
Total impaired loans	$	27,254	$	28,654	$	3,044


	Three Months Ended March 31,
		2022	2021
(in thousands)			Average Recorded Investment		Interest Recognized For the Period Ended		Average Recorded Investment		Interest Recognized For the Period Ended
With no related allowance recorded:
Commercial, financial and agricultural			$	—	$	—	$	1,742	$	8

Real estate mortgage − residential			759		9		1,424		9
Real estate mortgage − commercial			21,256		—		9,457		—
Installment and other consumer			2		—		—		—
Total			$	22,017	$	9	$	12,623	$	17
With an allowance recorded:
Commercial, financial and agricultural			$	323	$	3	$	5,696	$	7
Real estate construction − residential			—		—		190		—
Real estate construction − commercial			101		—		199		—
Real estate mortgage − residential			1,659		7		1,958		6
Real estate mortgage − commercial			440		7		16,195		7
Installment and other consumer			96		—		85		3
Total			$	2,619	$	17	$	24,323	$	23
Total impaired loans			$	24,636	$	26	$	36,946	$	40

The recorded investment varies from the unpaid principal balance primarily due to partial charge-offs taken resulting from current appraisals received. The amount recognized as interest income on impaired loans continuing to accrue interest, primarily related to TDRs, was $26,000 for the three months ended March 31, 2022 compared to $40,000 for the three months ended March 31, 2021. The average recorded investment in impaired loans is calculated on a monthly basis during the periods reported.

The delinquency status of loans is determined based on the contractual terms of the notes. Loans are generally classified as delinquent once payments become 30 days or more past due. The Company’s policy is to discontinue the accrual of interest income on any loan when, in the opinion of management, the ultimate collectability of interest or principal is no longer probable. In general, loans are placed on non-accrual when they become 90 days or more past due. However, management considers many factors before placing a loan on non-accrual, including the delinquency status of the loan, the overall financial condition of the borrower, the progress of management’s collection efforts and the value of the underlying collateral. Subsequent interest payments received on non-accrual loans are applied to principal if any doubt exists as to the collectability of such principal; otherwise, such receipts are recorded as interest income on a cash basis. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial condition of the borrower indicates that the timely collectability of interest and principal is probable and the borrower demonstrates the ability to pay under the terms of the note through a sustained period of repayment performance, which is generally six months.


(in thousands)	Current or Less Than 30 Days Past Due		30 - 89 Days Past Due		90 Days Past Due And Still Accruing		Non-Accrual		Total
March 31, 2022
Commercial, Financial, and Agricultural	$	220,703	$	176	$	—	$	136	$	221,015
Real estate construction − residential	21,513		2		—		—		21,515
Real estate construction − commercial	103,339		39		—		100		103,478
Real estate mortgage − residential	286,007		614		—		1,258		287,879
Real estate mortgage − commercial	662,062		—		—		15,477		677,539
Installment and Other Consumer	22,273		96		3		125		22,497
Total	$	1,315,897	$	927	$	3	$	17,096	$	1,333,923

December 31, 2021
Commercial, Financial, and Agricultural	$	217,058	$	3	$	—	$	153	$	217,214
Real estate construction − residential	27,920		—		—		—		27,920
Real estate construction − commercial	91,264		—		—		105		91,369
Real estate mortgage − residential	277,532		671		14		1,129		279,346
Real estate mortgage − commercial	638,982		245		—		24,029		663,256
Installment and Other Consumer	22,848		137		—		43		23,028
Total	$	1,275,604	$	1,056	$	14	$	25,459	$	1,302,133

The Company categorizes loans into risk categories based upon an internal rating system reflecting management’s risk assessment. Loans are placed on watch status when one or more weaknesses are identified that may result in the borrower being unable to meet repayment terms or the Company’s credit position could deteriorate at some future date. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified may have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Such loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. A loan is classified as a TDR when a borrower is experiencing financial difficulties that lead to the restructuring of a loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. Loans classified as TDRs that are accruing interest are classified as performing TDRs. Loans classified as TDRs that are not accruing interest are classified as non-performing TDRs and are included with all other non-accrual loans for presentation purposes. It is the Company’s policy to discontinue the accrual of interest income on loans when management believes that the collection of interest or principal is doubtful.


(in thousands)	Commercial, Financial, & Agricultural		Real Estate Construction - Residential		Real Estate Construction - Commercial		Real Estate Mortgage - Residential		Real Estate Mortgage - Commercial		Installment and other Consumer		Total
At March 31, 2022
Watch	$	8,618	$	—	$	2,897	$	12,061	$	41,464	$	—	$	65,040
Substandard	6,143		—		2,673		537		10,893		—		20,246
Performing TDRs	183		—		—		1,170		323		15		1,691
Non-accrual loans	136		—		100		1,258		15,477		125		17,096
Total	$	15,080	$	—	$	5,670	$	15,026	$	68,157	$	140	$	104,073

At December 31, 2021
Watch	$	9,219	$	—	$	4,304	$	12,185	$	43,348	$	—	$	69,056
Substandard	6,284		—		2,673		750		2,305		—		12,012
Performing TDRs	188		—		—		1,262		328		17		1,795
Non-accrual loans	153		—		105		1,129		24,029		43		25,459
Total	$	15,844	$	—	$	7,082	$	15,326	$	70,010	$	60	$	108,322

At March 31, 2022, loans classified as TDRs totaled $2.2 million, of which $0.6 million were classified as non-performing TDRs and $1.7 million were classified as performing TDRs. At December 31, 2021, loans classified as TDRs totaled $2.4 million, of which $0.6 million were classified as non-performing TDRs and $1.8 million were classified as performing TDRs. Both performing and non-performing TDRs are considered impaired loans. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. Accordingly, specific reserves of $179,000 and $159,000 related to TDRs were allocated to the allowance for loan losses at March 31, 2022 and December 31, 2021, respectively.

The Company’s portfolio of loans classified as TDRs include concessions for the borrower given their financial condition such as applying interest rates below the current market rate, deferring principal payments, and extending maturity dates. There were no loans meeting the TDR criteria that were modified during the three months ended March 31, 2022, and 2021, respectively. The Company considers a TDR to be in default when it is 90 days or more past due under the modified terms, a charge-off occurs, or it is in the process of foreclosure. There were no loans modified as a TDR that defaulted during the three months ended March 31, 2022 and 2021, respectively, and within twelve months of their modification date. See Lending and Credit Management section for further information.