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LOANS (Tables)
 6 Months Ended
Jun. 30, 2023
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Schedule of Composition of Loans
The composition of loans, excluding loans held for sale, is summarized as follows:
June 30, 2023December 31, 2022
Amount% of
Total		Amount% of
Total
Real estate mortgages:
Construction and development$228,23613.3%$255,73616.1%
Residential214,89712.5%167,89110.5%
Commercial1,011,81558.7%904,87256.8%
Commercial and industrial259,19515.0%256,55316.1%
Consumer and other8,1350.5%7,6550.5%
Gross Loans1,722,278100.0%1,592,707100.0%
Deferred loan fees(5,766)(5,543)
Allowance for credit losses(21,385)(20,156)
Loans, net$1,695,127$1,567,008
Schedule of Financing Receivable Credit Quality Indicators
The following tables summarize the risk category of the Company’s loan portfolio based upon the most recent analysis performed as of June 30, 2023 and December 31, 2022:
PassSpecial
Mention		SubstandardDoubtfulTotal
(dollars in thousands)
As of June 30, 2023
Real estate mortgages:
Construction and development$223,741 $4,462 $33 $— $228,236 
Residential213,170 912 815 — 214,897 
Commercial994,874 10,647 6,294 — 1,011,815 
Commercial and industrial237,665 8,442 13,088 — 259,195 
Consumer and other8,109 26 — — 8,135 
Total$1,677,559 $24,489 $20,230 $— $1,722,278 
As of December 31, 2022
Real estate mortgages:
Construction and development$251,130 $4,539 $67 $— $255,736 
Residential165,388 1,787 716 — 167,891 
Commercial883,082 18,532 3,258 — 904,872 
Commercial and industrial247,948 8,322 283 — 256,553 
Consumer and other7,604 28 23 — 7,655 
Total$1,555,152 $33,208 $4,347 $— $1,592,707 
Credit Risk Management (Continued)

Collateral Dependent Loans
The Company classifies a loan as collateral dependent when the borrower is experiencing financial difficulty, and expected repayment is to be provided substantially through the operation or sale of collateral. The following table summarizes collateral dependent loans, which are individually evaluated to determine expected credit losses.

As of June 30, 2023
Real EstateOtherTotalACL
Real estate mortgages:
Construction and development$254$—$254$35
Residential1,170—1,17077
Commercial7,109—7,109148
Commercial and industrial—2727—
Consumer and other—33—
Total$8,533$30$8,563$260 
Schedule of Aging Analysis The following tables present the aging of the recorded investment in loans and leases as of June 30, 2023 and December 31, 2022:
Past Due Status (Accruing Loans)
Current
30-59
Days
60-89
Days
90+
Days
Total Past DueNonaccrual with ACLNonaccrual without ACLTotal
As of June 30, 2023
Real estate mortgages:
Construction and development
$227,719 $484 $— $— $484 $— $33 $228,236 
Residential
214,158 442 — — 442 24 273 214,897 
Commercial
1,009,806 1,077 261 — 1,338 336 335 1,011,815 
Commercial and industrial259,026 160 — — 160 — 9 259,195 
Consumer and other8,135 — — — — — — 8,135 
Total$1,718,844 $2,163 $261 $— $2,424 $360 $650 $1,722,278 
As of December 31, 2022
Real estate mortgages:
Construction and development
$255,575 $— $94 $— $94 $— $67 $255,736 
Residential
167,10814772—21930534 167,891 
Commercial
900,8952,63465—2,699351927 904,872 
Commercial and industrial254,8241,37938—1,41727735 256,553 
Consumer and other7,57062——62167 7,655 
Total$1,585,972 $4,222 $269 $— $4,491 $674 $1,570 $1,592,707 
Schedule of Allowance for Credit Loss
The following tables detail activity in the allowance for credit losses by portfolio segment as of June 30, 2023 and June 30, 2022. As described in Note 1, the Company adopted ASU 2016-13 on January 1, 2023, which replaced the existing incurred loss methodology with an expected credit loss methodology (referred to as CECL). Under the incurred loss methodology, reserves for credit losses were recognized only when the losses were probable or had been incurred; under CECL, the Company is required to recognize the full amount of expected credit losses for the lifetime of the loan, based on historical experience, current conditions and reasonable and supportable forecasts. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
Real EstateCommercialConsumerTotal
Allowance for credit losses:
Balance at December 31, 2022
$14,443 $5,642 $71 $20,156 
Impact of adoption of ASC 326(1,164)(120)(1)(1,285)
Provision (credit) for credit losses
4,080 (1,403)61 2,738 
Loans charged off— (262)(6)(268)
Recoveries of loans previously charged off28 14 2 44 
Ending balance at June 30, 2023
$17,387 $3,871 $127 $21,385 
Allowance for Loans Losses - Incurred Loss Methodology

Real EstateCommercialConsumerTotal
Allowance for loan losses:
Balance at December 31, 2021
$11,554 $3,166 $124 $14,844 
Provision (credit) for loan losses
93 1,954 (43)2,004 
Loans charged off(73)— (7)(80)
Recoveries of loans previously charged off35 — 4 39 
Ending balance at June 30, 2022
$11,609 $5,120 $78 $16,807 
Ending balance - individually evaluated for impairment$146 $612 $— $758 
Ending balance - collectively evaluated for impairment11,423 4,508 78 16,009 
Ending balance - loans acquired with deteriorated credit quality40 — — 40 
Total ending balance at June 30, 2022
$11,609 $5,120 $78 $16,807 
Loans:
Ending balance - individually evaluated for impairment$9,667 $769 $26 $10,462 
Ending balance - collectively evaluated for impairment1,195,387 218,515 9,525 1,423,427 
Ending balance - loans acquired with deteriorated credit quality1,200 — — 1,200 
Total ending balance at June 30, 2022
$1,206,254 $219,284 $9,551 $1,435,089 
Allowance for Loans Losses - Incurred Loss Methodology (Continued)
We maintain an allowance for credit losses on unfunded loan commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance for credit losses is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the consolidated balance sheet within other liabilities, while corresponding provision for these credit losses is recorded as a component of other operating expense. The allowance for credit losses on unfunded commitments as the result of the adoption of ASC 326 was $1.3 million. At June 30, 2023, $1.5 million in allowance for credit losses on unfunded commitments was included in other liabilities on the consolidated balance sheets.
Schedule of Impaired Loans The following tables detail our impaired loans, by portfolio class as of December 31, 2022.
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance		Average
Recorded
Investment
December 31, 2022
With no related allowance recorded:
Real estate mortgages:
Construction and development
$372$372$—$397
Residential
1,1291,129—1,169
Commercial
7,3237,323—7,282
Commercial and industrial
3636—42
Consumer and other
1818—24
Total with no related allowance recorded
8,8788,878—8,914
With an allowance recorded:
Real estate mortgages:
Construction and development
92923995
Residential
25532690265
Commercial
623623166630
Commercial and industrial
277277248298
Consumer and other
1616816
Total with an allowance recorded
1,2631,3345511,304
Total impaired loans$10,141$10,212$551$10,218
Impaired Loans - Incurred Loss Methodology (Continued)
A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. The following tables detail our interest income recognized on impaired loans, by portfolio class in the six months ended June 30, 2022.
Recorded
Investment		Average
Recorded
Investment		Interest
Income
Recognized
Six Months Ended June 30, 2022
With no related allowance recorded:
Real estate mortgages:
Construction and development$397$402$2
Residential1,1721,1803
Commercial8,5328,56529
Commercial and industrial12121
Consumer and other26284
Total with no related allowance recorded10,13910,18739
With an allowance recorded:
Real estate mortgages:
Construction and development95962
Residential239240—
Commercial4324342
Commercial and industrial75776347
Consumer and other———
Total with an allowance recorded1,5231,53351
Total impaired loans$11,662$11,720$90