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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Accounts, Notes, Loans and Financing Receivable

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


	September 30, 2020						December 31, 2019
	PCI		All Other				PCI		All Other
	Loans¹		Loans		Total		Loans¹		Loans		Total
Commercial real estate	$	16,469	$	1,014,182	$	1,030,651	$	15,255	$	890,051	$	905,306
Consumer real estate		10,801		429,509		440,310		6,541		410,941		417,482
Construction and land development		6,409		268,763		275,172		4,458		223,168		227,626
Commercial and industrial		317		644,181		644,498		407		336,668		337,075
Consumer and other		87		13,339		13,426		326		9,577		9,903
Total loans		34,083		2,369,974		2,404,057		26,987		1,870,405		1,897,392
Less: Allowance for loan losses		—		(18,817)		(18,817)		(156)		(10,087)		(10,243)

Loans, net	$	34,083	$	2,351,157	$	2,385,240	$	26,831	$	1,860,318	$	1,887,149

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

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):


					Construction		Commercial
	Commercial		Consumer		and Land		and		Consumer
	Real Estate		Real Estate		Development		Industrial		and Other		Total
September 30, 2020:
Performing loans	$	1,013,631	$	428,514	$	268,763	$	643,581	$	13,339	$	2,367,828
Impaired loans		551		995		—		600		—		2,146
		1,014,182		429,509		268,763		644,181		13,339		2,369,974
PCI loans		16,469		10,801		6,409		317		87		34,083
Total loans	$	1,030,651	$	440,310	$	275,172	$	644,498	$	13,426	$	2,404,057

December 31, 2019:
Performing loans	$	889,795	$	409,394	$	222,621	$	336,508	$	9,577	$	1,867,895
Impaired loans		256		1,547		547		160		—		2,510
		890,051		410,941		223,168		336,668		9,577		1,870,405
PCI loans		15,255		6,541		4,458		407		326		26,987
Total loans	$	905,306	$	417,482	$	227,626	$	337,075	$	9,903	$	1,897,392

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):


					Construction		Commercial		Consumer
	Commercial		Consumer		and Land		and		and
	Real Estate		Real Estate		Development		Industrial		Other		Total
September 30, 2020:
Performing loans	$	7,729	$	3,366	$	2,060	$	5,055	$	121	$	18,331
Impaired loans		—		78		—		408		—		486
		7,729		3,444		2,060		5,463		121		18,817
PCI loans		—		—		—		—		—		—
Total loans	$	7,729	$	3,444	$	2,060	$	5,463	$	121	$	18,817

December 31, 2019:
Performing loans	$	4,491	$	2,159	$	1,127	$	1,766	$	69	$	9,612
Impaired loans		—		343		—		132		—		475
		4,491		2,502		1,127		1,898		69		10,087
PCI loans		17		74		—		59		6		156
Total loans	$	4,508	$	2,576	$	1,127	$	1,957	$	75	$	10,243

Schedule of Allowance for Loan Losses

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


	Three Months Ended September 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
Beginning balance	$	6,595	$	3,313	$	1,795	$	4,443	$	108	$	16,254
Charged-off loans		—		(21)		—		(60)		(89)		(170)
Recoveries of charge-offs		11		17		—		55		16		99
Provision (reallocation) charged to expense		1,123		135		265		1,025		86		2,634
Ending balance	$	7,729	$	3,444	$	2,060	$	5,463	$	121	$	18,817


	Three Months Ended September 30, 2019
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
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


	Nine Months Ended September 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
Beginning balance	$	4,508	$	2,576	$	1,127	$	1,957	$	75	$	10,243
Loans charged-off		—		(23)		—		(77)		(231)		(331)
Recoveries of loans charged-off		16		34		2		103		67		222
Provision (reallocation) charged to expense		3,205		857		931		3,480		210		8,683
Ending balance	$	7,729	$	3,444	$	2,060	$	5,463	$	121	$	18,817


	Nine Months Ended September 30, 2019
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
Beginning balance	$	3,639	$	1,789	$	795	$	1,746	$	306	$	8,275
Loans charged-off		(36)		(3)		—		(353)		(260)		(652)
Recoveries of loans charged-off		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

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, 2020
					Construction		Commercial
	Commercial		Consumer		and Land		and		Consumer
Non PCI Loans:	Real Estate		Real Estate		Development		Industrial		and Other		Total
Pass	$	666,865	$	394,794	$	247,424	$	619,308	$	13,004	$	1,941,395
Watch		336,122		32,578		21,269		23,655		294		413,918
Special mention		10,547		463		—		385		—		11,395
Substandard		648		1,588		70		728		17		3,051
Doubtful		—		86		—		105		24		215
Total		1,014,182		429,509		268,763		644,181		13,339		2,369,974

PCI Loans:
Pass		8,248		8,974		1,383		222		70		18,897
Watch		6,819		255		4,491		—		12		11,577
Special mention		19		56		—		—		—		75
Substandard		1,383		1,516		535		95		5		3,534
Doubtful		—		—		—		—		—		—
Total		16,469		10,801		6,409		317		87		34,083
Total loans	$	1,030,651	$	440,310	$	275,172	$	644,498	$	13,426	$	2,404,057


	December 31, 2019
					Construction		Commercial
	Commercial		Consumer		and Land		and		Consumer
Non PCI Loans:	Real Estate		Real Estate		Development		Industrial		and Other		Total
Pass	$	860,447	$	407,336	$	216,459	$	328,564	$	9,462	$	1,822,268
Watch		25,180		989		6,089		6,786		40		39,084
Special mention		4,057		738		—		1,033		—		5,828
Substandard		367		1,713		620		228		51		2,979
Doubtful		—		165		—		57		24		246
Total		890,051		410,941		223,168		336,668		9,577		1,870,405

PCI Loans:
Pass		12,473		5,258		902		41		300		18,974
Watch		2,234		38		3,556		—		13		5,841
Special mention		139		60		—		—		—		199
Substandard		409		1,185		—		366		13		1,973
Doubtful		—		—		—		—		—		—
Total		15,255		6,541		4,458		407		326		26,987
Total loans	$	905,306	$	417,482	$	227,626	$	337,075	$	9,903	$	1,897,392

Past Due Financing Receivables

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


	September 30, 2020
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and		PCI		Current		Total
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		Loans		Loans		Loans
Commercial real estate	$	561	$	616	$	—	$	418	$	1,595	$	16,469	$	1,012,587	$	1,030,651
Consumer real estate		975		124		—		1,586		2,685		10,801		426,824		440,310
Construction and land development		10		—		—		—		10		6,409		268,753		275,172
Commercial and industrial		16		6		—		204		226		317		643,955		644,498
Consumer and other		70		522		—		40		632		87		12,707		13,426
Total	$	1,632	$	1,268	$	—	$	2,248	$	5,148	$	34,083	$	2,364,826	$	2,404,057


	December 31, 2019
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and		PCI		Current		Total
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		Loans		Loans		Loans
Commercial real estate	$	466	$	22	$	—	$	124	$	612	$	15,255	$	889,439	$	905,306
Consumer real estate		1,564		30		—		1,872		3,466		6,541		407,475		417,482
Construction and land development		507		—		607		620		1,734		4,458		221,434		227,626
Commercial and industrial		559		53		—		57		669		407		335,999		337,075
Consumer and other		86		14		—		70		170		326		9,407		9,903
Total	$	3,182	$	119	$	607	$	2,743	$	6,651	$	26,987	$	1,863,754	$	1,897,392

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, 2020						December 31, 2019
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans without a valuation allowance:
Commercial real estate	$	551	$	551	$	—	$	256	$	261	$	—
Consumer real estate		795		795		—		553		553		—
Construction and land development		—		—		—		547		547		—
Commercial and industrial		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		1,346		1,346		—		1,356		1,361		—

Impaired loans with a valuation allowance:
Commercial real estate		—		—		—		—		—		—
Consumer real estate		200		200		78		994		994		343
Construction and land development		—		—		—		—		—		—
Commercial and industrial		600		600		408		160		160		132
Consumer and other		—		—		—		—		—		—
		800		800		486		1,154		1,154		475
PCI loans:
Commercial real estate		—		—		—		17		99		17
Consumer real estate		1,852		2,113		—		1,205		1,371		74
Construction and land development		—		—		—		—		—		—
Commercial and industrial		279		242		—		396		534		59
Consumer and other		26		24		—		45		51		6
		2,157		2,379		—		1,663		2,055		156

Total impaired loans	$	4,303	$	4,525	$	486	$	4,173	$	4,570	$	631


	Three Months Ended September 30,
	2020				2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	552	$	3	$	258	$	3
Consumer real estate		758		3		568		4
Construction and land development		—		—		701		3
Commercial and industrial		—		—		—		—
Consumer and other		—		—		—		—
		1,310		6		1,527		10
Impaired loans with a valuation allowance:
Commercial real estate		198		—		—		—
Consumer real estate		440		4		396		4
Construction and land development		—		—		—		—
Commercial and industrial		379		2		352		1
Consumer and other		—		—		—		—
		1,017		6		748		5
PCI loans:
Commercial real estate		8		—		2,520		—
Consumer real estate		1,869		38		1,151		—
Construction and land development		—		—		—		—
Commercial and industrial		305		2		—		—
Consumer real estate		27		—		—		—
		2,209		40		3,671		—

Total impaired loans	$	4,536	$	52	$	5,946	$	15


	Nine Months Ended September 30,
	2020				2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	374	$	7	$	435	$	28
Consumer real estate		653		17		768		8
Construction and land development		289		—		637		5
Commercial and industrial		—		—		25		1
Consumer and other		—		—		14		1
		1,316		24		1,879		43
Impaired loans with a valuation allowance:
Commercial real estate		198		2		12		1
Consumer real estate		712		18		248		6
Construction and land development		—		—		14		—
Commercial and industrial		269		7		498		10
Consumer and other		—		—		28		—
		1,179		27		800		17
PCI loans:
Commercial real estate		250		1		1,894		(10)
Consumer real estate		1,344		77		851		3
Construction and land development		58		—		—		—
Commercial and industrial		343		5		—		—
Consumer and other		29		—		—		—
		2,024		83		2,745		(7)

Total impaired loans	$	4,519	$	134	$	5,424	$	53

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,
	2020		2019
Commercial real estate	$	24,179	$	21,570
Consumer real estate		13,353		8,411
Construction and land development		1,910		5,394
Commercial and industrial		7,567		2,540
Consumer and other		199		504
Total loans		47,208		38,419
Less: Remaining purchase discount		(13,125)		(11,432)
Total loans, net of purchase discount		34,083		26,987
Less: Allowance for loan losses		—		(156)
Carrying amount, net of allowance	$	34,083	$	26,831

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,
	2020		2019		2020		2019
Accretable yield, beginning of period	$	11,777	$	8,280	$	8,454	$	7,052
Additions		—		—		2,515		—
Accretion income		(1,267)		(1,073)		(4,401)		(3,353)
Reclassification		265		1,033		2,428		2,392
Other changes, net		7,405		390		9,184		2,539
Accretable yield, end of period	$	18,180	$	8,630	$	18,180	$	8,630