Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2019

Schedule of Accounts, Notes, Loans and Financing Receivable

Major categories of loans are summarized as follows (in thousands):



	September 30, 2019									December 31, 2018
	PCI Loans¹			All Other Loans²			Total			PCI Loans¹		All Other Loans²			Total
Commercial real estate	$	17,880		$	872,582		$	890,462		$	17,682	$	842,345		$	860,027
Consumer real estate	7,169			398,362			405,531			8,712		398,542			407,254
Construction and land development	4,629			215,122			219,751			4,602		183,293			187,895
Commercial and industrial	434			340,773			341,207			2,557		305,697			308,254
Consumer and other	359			10,437			10,796			605		13,204			13,809
Total loans	30,471			1,837,276			1,867,747			34,158		1,743,081			1,777,239
Less: Allowance for loan losses	(116		)	(9,676		)	(9,792		)	—		(8,275		)	(8,275		)
Loans, net	$	30,355		$	1,827,600		$	1,857,955		$	34,158	$	1,734,806		$	1,768,964

¹ Purchased Credit Impaired loans (“PCI loans”) are loans with evidence of credit deterioration at purchase.

² Includes loans held for sale.

Schedule of Impaired and Performing Loans Receivable

The composition of loans by loan classification for impaired and performing loan status is summarized in the tables below (in thousands):



	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
September 30, 2019:
Performing loans	$	872,325	$	397,217	$	214,422	$	340,322	$	10,437	$	1,834,723
Impaired loans	257		1,145		700		451		—		2,553
	872,582		398,362		215,122		340,773		10,437		1,837,276
PCI loans	17,880		7,169		4,629		434		359		30,471
Total loans	$	890,462	$	405,531	$	219,751	$	341,207	$	10,796	$	1,867,747



December 31, 2018:
Performing loans	$	841,709	$	397,306	$	182,746	$	304,673	$	13,088	$	1,739,522
Impaired loans	636		1,236		547		1,024		116		3,559
	842,345		398,542		183,293		305,697		13,204		1,743,081
PCI loans	17,682		8,712		4,602		2,557		605		34,158
Total loans	$	860,027	$	407,254	$	187,895	$	308,254	$	13,809	$	1,777,239

Schedule of Allowance for Loan Losses for Impaired and Performing Loans Receivable

The following tables show the allowance for loan losses allocation by loan classification for impaired, PCI, and performing loans (in thousands):



	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
September 30, 2019:
Performing loans	$	4,225	$	1,983	$	1,043	$	1,725	$	71	$	9,047
Impaired loans	—		206		—		423		—		629
	4,225		2,189		1,043		2,148		71		9,676
PCI loans	35		81		—		—		—		116
Total loans	$	4,260	$	2,270	$	1,043	$	2,148	$	71	$	9,792



December 31, 2018:
Performing loans	$	3,639	$	1,763	$	795	$	1,304	$	240	$	7,741
Impaired loans	—		26		—		442		66		534
	3,639		1,789		795		1,746		306		8,275
PCI loans	—		—		—		—		—		—
Total loans	$	3,639	$	1,789	$	795	$	1,746	$	306	$	8,275

Schedule of Financing Receivable Allowance for Credit Losses

The following tables detail the changes in the allowance for loan losses by loan classification (in thousands):



	Commercial Real Estate			Consumer Real Estate			Construction and Land Development		Commercial and Industrial			Consumer and Other			Total
Three Months Ended September 30, 2019:
Beginning balance	$	4,102		$	2,189		$	946	$	1,746		$	114		$	9,097
Charged off loans	(36		)	(1		)	—		(20		)	(50		)	(107		)
Recoveries of charge-offs	39			17			3		12			7			78
Provision (reallocation) charged to expense	155			65			94		410			—			724
Ending balance	$	4,260		$	2,270		$	1,043	$	2,148		$	71		$	9,792



Three Months Ended September 30, 2018:
Beginning balance	$	3,135	$	1,528		$	744		$	1,367		$	300		$	7,074
Charged off loans	—		(2		)	—			(100		)	(156		)	(258		)
Recoveries of charge-offs	—		5			2			9			22			38
Provision (reallocation) charged to expense	110		67			(37		)	86			76			302
Ending balance	$	3,245	$	1,598		$	709		$	1,362		$	242		$	7,156



	Commercial Real Estate			Consumer Real Estate			Construction and Land Development		Commercial and Industrial			Consumer and Other			Total
Nine Months Ended September 30, 2019:
Beginning balance	$	3,639		$	1,789		$	795	$	1,746		$	306		$	8,275
Charged off loans	(36		)	(3		)	—		(353		)	(260		)	(652		)
Recoveries of charge-offs	63			37			7		66			82			255
Provision (reallocation) charged to expense	594			447			241		689			(57		)	1,914
Ending balance	$	4,260		$	2,270		$	1,043	$	2,148		$	71		$	9,792



Nine Months Ended September 30, 2018:
Beginning balance	$	2,465		$	1,596		$	521	$	1,062		$	216		$	5,860
Charged off loans	(38		)	(27		)	—		(178		)	(257		)	(500		)
Recoveries of charge-offs	—			55			7		65			62			189
Provision (reallocation) charged to expense	818			(26		)	181		413			221			1,607
Ending balance	$	3,245		$	1,598		$	709	$	1,362		$	242		$	7,156

Financing Receivable Credit Quality Indicators

The following tables outline the amount of each loan classification and the amount categorized into each risk rating (in thousands):



	September 30, 2019
Non PCI Loans:	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	856,238	$	394,525	$	209,029	$	332,165	$	10,273	$	1,802,230
Watch	15,488		2,503		5,164		7,433		42		30,630
Special mention	489		9		155		612		1		1,266
Substandard	367		1,159		774		556		97		2,953
Doubtful	—		166		—		7		24		197
Total	$	872,582	$	398,362	$	215,122	$	340,773	$	10,437	$	1,837,276



PCI Loans:
Pass	$	13,760	$	4,969	$	516	$	53	$	325	$	19,623
Watch	2,497		383		4,113		1		15		7,009
Special mention	886		435		—		—		5		1,326
Substandard	737		1,382		—		380		14		2,513
Doubtful	—		—		—		—		—		—
Total	$	17,880	$	7,169	$	4,629	$	434	$	359	$	30,471
Total loans	$	890,462	$	405,531	$	219,751	$	341,207	$	10,796	$	1,867,747



	December 31, 2018
Non PCI Loans:	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	834,912	$	394,728	$	182,524	$	303,805	$	12,927	$	1,728,896
Watch	6,791		2,678		64		1,090		135		10,758
Special mention	—		14		158		137		—		309
Substandard	642		1,122		547		462		142		2,915
Doubtful	—		—		—		203		—		203
Total	$	842,345	$	398,542	$	183,293	$	305,697	$	13,204	$	1,743,081



PCI Loans:
Pass	$	14,050	$	5,617	$	4,033	$	2,382	$	541	$	26,623
Watch	1,805		756		569		—		17		3,147
Special mention	1,030		446		—		50		10		1,536
Substandard	797		1,893		—		125		37		2,852
Doubtful	—		—		—		—		—		—
Total	$	17,682	$	8,712	$	4,602	$	2,557	$	605	$	34,158
Total loans	$	860,027	$	407,254	$	187,895	$	308,254	$	13,809	$	1,777,239

Past Due Financing Receivables

The following tables present an aging analysis of our loan portfolio (in thousands):



	September 30, 2019
	30-60 Days Past Due and Accruing		61-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Past Due and Nonaccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	175	$	—	$	—	$	124	$	299	$	17,880	$	872,283	$	890,462
Consumer real estate	321		391		497		1,403		2,612		6,672		396,247		405,531
Construction and land development	271		—		—		621		892		4,629		214,230		219,751
Commercial and industrial	684		166		95		377		1,322		339		339,546		341,207
Consumer and other	184		77		16		39		316		343		10,137		10,796
Total	$	1,635	$	634	$	608	$	2,564	$	5,441	$	29,863	$	1,832,443	$	1,867,747



	December 31, 2018
	30-60 Days Past Due and Accruing		61-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Past Due and Nonaccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	377	$	19	$	—	$	272	$	668	$	17,682	$	841,677	$	860,027
Consumer real estate	1,168		462		454		844		2,928		8,712		395,614		407,254
Construction and land development	343		—		—		547		890		4,602		182,403		187,895
Commercial and industrial	155		—		101		909		1,165		2,557		304,532		308,254
Consumer and other	117		—		29		124		270		605		12,934		13,809
Total	$	2,160	$	481	$	584	$	2,696	$	5,921	$	34,158	$	1,737,160	$	1,777,239

Impaired Financing Receivables

The following is an analysis of the impaired loan portfolio, including PCI loans, detailing the related allowance recorded (in thousands):



	September 30, 2019						December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired loans without a valuation allowance:
Commercial real estate	$	257	$	262	$	—	$	636	$	648	$	—
Consumer real estate	751		751		—		1,073		1,089		—
Construction and land development	700		700		—		547		547		—
Commercial and industrial	—		—		—		69		70		—
Consumer and other	—		—		—		29		33		—
	1,708		1,713		—		2,354		2,387		—
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—		—
Consumer real estate	394		394		206		163		205		26
Construction and land development	—		—		—		—		—		—
Commercial and industrial	451		451		423		955		973		442
Consumer and other	—		—		—		87		87		66
	845		845		629		1,205		1,265		534
PCI loans:
Commercial real estate	2,516		2,834		35		—		—		—
Consumer real estate	1,206		1,261		81		—		—		—
	3,722		4,095		116		—		—		—
Total impaired loans	$	6,275	$	6,653	$	745	$	3,559	$	3,652	$	534



	Three Months Ended September 30,
	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	258	$	3	$	1,117	$	12
Consumer real estate	568		4		887		10
Construction and land development	701		3		547		—
Commercial and industrial	—		—		77		2
Consumer and other	—		—		16		1
	1,527		10		2,644		25
Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—
Consumer real estate	396		4		290		2
Construction and land development	—		—		—		—
Commercial and industrial	352		1		393		5
Consumer and other	—		—		73		1
	748		5		756		8
PCI loans:
Commercial real estate	2,520		—		29		—
Consumer real estate	1,151		—		—		—
	3,671		—		29		—
Total impaired loans	$	5,946	$	15	$	3,429	$	33



	Nine Months Ended September 30,
	2019					2018
	Average Recorded Investment		Interest Income Recognized			Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	435	$	28		$	802	$	27
Consumer real estate	768		8			769		22
Construction and land development	637		5			547		—
Commercial and industrial	25		1			62		5
Consumer and other	14		1			8		1
	1,879		43			2,188		55
Impaired loans with a valuation allowance:
Commercial real estate	12		1			6		—
Consumer real estate	248		6			576		13
Construction and land development	14		—			—		—
Commercial and industrial	498		10			280		10
Consumer and other	28		—			68		3
	800		17			930		26
PCI loans:
Commercial real estate	1,894		(10		)	11		3
Consumer real estate	851		3			—		—
	2,745		(7		)	11		3
Total impaired loans	$	5,424	$	53		$	3,129	$	84

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period, Carrying Amount of Loans

The Company has acquired loans where there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans are as follows (in thousands):



	September 30,			December 31,
	2019			2018
Commercial real estate	$	24,651		$	24,849
Consumer real estate	9,127			11,108
Construction and land development	2,697			5,731
Commercial and industrial	5,633			5,824
Consumer and other	556			892
Total loans	42,664			48,404
Less: Remaining purchase discount	(12,193		)	(14,246		)
Total loans, net of purchase discount	30,471			34,158
Less: Allowance for loan losses	(116		)	—
Carrying amount, net of allowance	$	30,355		$	34,158

Schedule of Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement

Activity related to the accretable yield on loans acquired with deteriorated credit quality is as follows (in thousands):



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Accretable yield, beginning of period	$	8,280		$	7,206		$	7,052		$	9,287
Additions	—			—			—			1,292
Accretion income	(1,073		)	(746		)	(3,353		)	(3,776		)
Reclassification	1,033			2,516			2,392			2,898
Other changes, net	390			243			2,539			(482		)
Accretable yield, end of period	$	8,630		$	9,219		$	8,630		$	9,219