Loans and Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2022

A summary of loans at March 31, 2022 and December 31, 2021 follows (in thousands):

	March 31, 2022		December 31, 2021
Construction and land development	$	131,784	$	145,156
Agricultural real estate		280,946		279,001
1-4 family residential properties		417,231		399,932
Multifamily residential properties		370,654		298,974
Commercial real estate		1,971,833		1,666,764
Loans secured by real estate		3,172,448		2,789,827
Agricultural loans		121,532		151,344
Commercial and industrial loans		938,041		834,061
Consumer loans		89,651		78,538
All other loans		142,720		143,738
Total gross loans		4,464,392		3,997,508
Less: loans held for sale		2,037		2,748
		4,462,355		3,994,760
Less:
Net deferred loan fees, premiums and discounts		9,831		1,985
Allowance for credit losses		58,474		54,655
Net loans	$	4,394,050	$	3,938,120

Allowance for Credit Losses Based on Portfolio Segment

The following table presents the activity in the allowance for credit losses based on portfolio segment for the three months ended March 31, 2022 (in thousands):

	Construction and Land Development			Agricultural Real Estate		1-4 Family Residential Properties		Commercial Real Estate		Agricultural Loans		Commercial and Industrial			Consumer Loans			Total
Three months ended March 31, 2022
Beginning balance	$	1,743		$	1,257	$	2,330	$	26,246	$	983	$	19,241		$	2,855		$	54,655
Initial allowance on loans purchased with credit deterioration		272			—		3		478		—		94			16			863
Provision for credit loss expense		(25	)		714		1,264		3,613		68		(2,045	)		(637	)		2,952
Loans charged off		2			—		72		339		—		3			358			774
Recoveries collected		—			—		203		347		—		61			167			778
Ending balance	$	1,988		$	1,971	$	3,728	$	30,345	$	1,051	$	17,348		$	2,043		$	58,474

The following tables present the activity in the allowance for credit losses based on portfolio segment for the three months ended March 31, 2021 and for the year ended December 31, 2021 (in thousands):

	Construction and Land Development		Agricultural Real Estate		1-4 Family Residential Properties			Commercial Real Estate		Agricultural Loans			Commercial and Industrial		Consumer Loans		Total
Three months ended March 31, 2021
Beginning balance (prior to adoption of ASC 326)	$	1,666	$	1,084	$	2,322		$	19,660	$	1,526		$	13,485	$	2,167	$	41,910
Initial allowance on loans purchased with credit deterioration		261		44		328			646		—			795		—		2,074
Provision for credit loss expense		359		500		617			5,902		(645	)		4,674		729		12,136
Loans charged off		—		—		182			480		—			18		288		968
Recoveries collected		—		—		8			9		—			18		231		266
Ending balance	$	2,286	$	1,628	$	3,093		$	25,737	$	881		$	18,954	$	2,839	$	55,418

Twelve months ended December 31, 2021
Beginning balance (prior to adoption of ASC 326)	$	1,666	$	1,084	$	2,322		$	19,660	$	1,526		$	13,485	$	2,167	$	41,910
Impact of adopting ASC 326		261		44		328			646		—			795		—		2,074
Provision for credit loss expense		21		129		(160	)		6,415		(544	)		7,940		1,350		15,151
Loans charged off		205		—		371			535		—			3,118		1,405		5,634
Recoveries collected		—		—		211			60		1			139		743		1,154
Ending balance	$	1,743	$	1,257	$	2,330		$	26,246	$	983		$	19,241	$	2,855	$	54,655

Amortized Cost Basis of Collateral-Dependent Loans by Class of Loans Individually Evaluated

The following table presents the amortized cost basis of collateral-dependent loans by class of loans that were individually evaluated to determine expected credit losses, and the related allowance for credit losses, as of March 31, 2022 (in thousands):

	Collateral								Allowance
	Real Estate		Business Assets		Other		Total		for Credit Losses
Construction and land development	$	475	$	—	$	—	$	475	$	215
1-4 family residential properties		1,375		—		—		1,375		133
Multifamily residential properties		1,658		—		—		1,658		—
Commercial real estate		9,657		—		—		9,657		605
Loans secured by real estate		13,165		—		—		13,165		953
Commercial and industrial loans		—		1,132		—		1,132		192
Consumer loans		—		—		4	4			—
Total loans	$	13,165	$	1,132	$	4	$	14,301	$	1,145

Credit Risk Profile of Loan Portfolio on Amortized Cost Basis Based on Risk Rating Category

The following tables present the credit risk profile of the Company’s loan portfolio on amortized cost basis based on risk rating category and year of origination as of March 31, 2022 (in thousands):

	Term Loans by Origination Year												Revolving
Risk rating	2022		2021		2020		2019		2018		Prior		Loans		Total
March 31, 2022
Construction and land development loans
Pass	$	7,333	$	47,220	$	33,352	$	26,873	$	2,599	$	13,533	$	—	$	130,910
Special mention		—		107		—		—		—		—		—		107
Substandard		—		—		—		—		—		487		—		487
Total	$	7,333	$	47,327	$	33,352	$	26,873	$	2,599	$	14,020	$	—	$	131,504
Agricultural real estate loans
Pass	$	27,996	$	91,907	$	64,989	$	26,672	$	39,318	$	18,288	$	427	$	269,597
Special mention		825		46		259		3,499		390		5,504		—		10,523
Substandard		—		—		—		—		244		629		—		873
Total	$	28,821	$	91,953	$	65,248	$	30,171	$	39,952	$	24,421	$	427	$	280,993
1-4 family residential property loans
Pass	$	17,076	$	95,294	$	101,585	$	38,664	$	49,229	$	92,832	$	2,898	$	397,578
Special mention		—		158		—		1,915		1,796		3,098		40		7,007
Substandard		46		367		499		492		1,366		9,245		632		12,647
Total	$	17,122	$	95,819	$	102,084	$	41,071	$	52,391	$	105,175	$	3,570	$	417,232
Commercial real estate loans
Pass	$	157,560	$	563,350	$	409,771	$	317,733	$	224,746	$	614,381	$	218	$	2,287,759
Special mention		1,733		1,431		1,101		1,887		1,268		17,831		—		25,251
Substandard		3,889		499		851		704		5,824		10,470		—		22,237
Total	$	163,182	$	565,280	$	411,723	$	320,324	$	231,838	$	642,682	$	218	$	2,335,247
Agricultural loans
Pass	$	35,055	$	48,882	$	11,860	$	4,502	$	2,330	$	2,067	$	—	$	104,696
Special mention		3,859		9,913		346		2,648		129		64		—		16,959
Substandard		30		6		—		17		—		—		—		53
Total	$	38,944	$	58,801	$	12,206	$	7,167	$	2,459	$	2,131	$	—	$	121,708
Commercial and industrial loans
Pass	$	116,681	$	326,191	$	149,215	$	88,980	$	58,513	$	292,322	$	39,894	$	1,071,796
Special mention		370		694		274		1,639		174		1,023		—		4,174
Substandard		—		587		360		32		128		1,115		—		2,222
Total	$	117,051	$	327,472	$	149,849	$	90,651	$	58,815	$	294,460	$	39,894	$	1,078,192
Consumer loans
Pass	$	11,315	$	29,356	$	19,264	$	16,484	$	5,049	$	5,321	$	2,475	$	89,264
Special mention		—		64		32		35		8		—		—		139
Substandard		12		96		23		22		59		70		—		282
Total	$	11,327	$	29,516	$	19,319	$	16,541	$	5,116	$	5,391	$	2,475	$	89,685
Total loans
Pass	$	373,016	$	1,202,200	$	790,036	$	519,908	$	381,784	$	1,038,744	$	45,912	$	4,351,600
Special mention		6,787		12,413		2,012		11,623		3,765		27,520		40		64,160
Substandard		3,977		1,555		1,733		1,267		7,621		22,016		632		38,801
Total	$	383,780	$	1,216,168	$	793,781	$	532,798	$	393,170	$	1,088,280	$	46,584	$	4,454,561

The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category as of December 31, 2021 (in thousands):

	Term Loans by Origination Year												Revolving
Risk rating	2021		2020		2019		2018		2017		Prior		Loans		Total
December 31, 2021
Construction and land development loans
Pass	$	38,656	$	34,774	$	23,505	$	34,358	$	3,760	$	9,433	$	—	$	144,486
Special mention		110		—		—		—		—		—		—		110
Substandard		—		—		—		483		—		39		—		522
Total	$	38,766	$	34,774	$	23,505	$	34,841	$	3,760	$	9,472	$	—	$	145,118
Agricultural real estate loans
Pass	$	78,793	$	64,159	$	25,713	$	30,203	$	12,142	$	54,808	$	—	$	265,818
Special mention		872		259		4,028		384		69		6,087		—		11,699
Substandard		—		—		392		187		57		1,119		—		1,755
Total	$	79,665	$	64,418	$	30,133	$	30,774	$	12,268	$	62,014	$	—	$	279,272
1-4 family residential property loans
Pass	$	78,889	$	94,404	$	35,554	$	44,248	$	30,735	$	52,131	$	42,800	$	378,761
Special mention		234		—		1,934		499		2,601		1,196		41		6,505
Substandard		355		496		1,534		1,302		3,458		7,250		652		15,047
Total	$	79,478	$	94,900	$	39,022	$	46,049	$	36,794	$	60,577	$	43,493	$	400,313
Commercial real estate loans
Pass	$	568,200	$	417,334	$	299,973	$	174,448	$	150,811	$	304,585	$	—	$	1,915,351
Special mention		3,185		1,206		1,836		1,295		10,609		8,632		—		26,763
Substandard		2,007		714		6,242		1,179		4,646		8,238		—		23,026
Total	$	573,392	$	419,254	$	308,051	$	176,922	$	166,066	$	321,455	$	—	$	1,965,140
Agricultural loans
Pass	$	105,378	$	17,903	$	5,612	$	2,822	$	924	$	1,316	$	—	$	133,955
Special mention		13,725		436		2,648		150		13		64		—		17,036
Substandard		350		18		—		—		—		125		—		493
Total	$	119,453	$	18,357	$	8,260	$	2,972	$	937	$	1,505	$	—	$	151,484
Commercial and industrial loans
Pass	$	279,814	$	167,662	$	119,702	$	76,022	$	22,888	$	302,962	$	—	$	969,050
Special mention		613		399		1,463		182		477		819		—		3,953
Substandard		506		34		133		621		24		1,433		—		2,751
Total	$	280,933	$	168,095	$	121,298	$	76,825	$	23,389	$	305,214	$	—	$	975,754
Consumer loans
Pass	$	27,948	$	19,033	$	16,978	$	5,505	$	4,297	$	1,244	$	—	$	75,005
Special mention		68		54		38		9		—		—		—		169
Substandard		585		58		308		678		43		1,596		—		3,268
Total	$	28,601	$	19,145	$	17,324	$	6,192	$	4,340	$	2,840	$	—	$	78,442
Total loans
Pass	$	1,177,678	$	815,269	$	527,037	$	367,606	$	225,557	$	726,479	$	42,800	$	3,882,426
Special mention		18,807		2,354		11,947		2,519		13,769		16,798		41		66,235
Substandard		3,803		1,320		8,609		4,450		8,228		19,800		652		46,862
Total	$	1,200,288	$	818,943	$	547,593	$	374,575	$	247,554	$	763,077	$	43,493	$	3,995,523

Loan Portfolio Aging Analysis

The following table presents the Company’s loan portfolio aging analysis at March 31, 2022 and December 31, 2021 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
March 31, 2022
Construction and land development	$	93	$	12	$	203	$	308	$	131,196	$	131,504	$	—
Agricultural real estate		243		139		1,813		2,195		278,798		280,993		—
1-4 family residential properties		2,080		253		1,644		3,977		413,255		417,232		—
Multifamily residential properties		—		—		580		580		369,346		369,926		—
Commercial real estate		2,317		—		11,305		13,622		1,951,699		1,965,321		—
Loans secured by real estate		4,733		404		15,545		20,682		3,144,294		3,164,976		—
Agricultural loans		—		—		321		321		121,387		121,708		—
Commercial and industrial loans		572		54		1,486		2,112		933,342		935,454		—
Consumer loans		271		213		119		603		89,082		89,685		—
All other loans		—		—		—		—		142,738		142,738		—
Total loans	$	5,576	$	671	$	17,471	$	23,718	$	4,430,843	$	4,454,561	$	—
December 31, 2021
Construction and land development	$	159	$	199	$	203	$	561	$	144,557	$	145,118	$	—
Agricultural real estate		—		222		1		223		279,049		279,272		—
1-4 family residential properties		2,532		914		2,012		5,458		394,855		400,313		—
Multifamily residential properties		—		—		1,676		1,676		297,266		298,942		—
Commercial real estate		8,930		640		2,484		12,054		1,654,144		1,666,198		—
Loans secured by real estate		11,621		1,975		6,376		19,972		2,769,871		2,789,843		—
Agricultural loans		—		10		588		598		150,886		151,484		—
Commercial and industrial loans		381		302		1,156		1,839		830,169		832,008		—
Consumer loans		388		47		118		553		77,889		78,442		—
All other loans		1,854		—		—		1,854		141,892		143,746		—
Total loans	$	14,244	$	2,334	$	8,238	$	24,816	$	3,970,707	$	3,995,523	$	—

Amortized Cost Basis of Loans on Nonaccrual Status and Nonaccrual Loans Individually Evaluated

The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated for which no allowance was recorded as of March 31, 2022 and December 31, 2021 (in thousands). There were no loans past due over eighty-nine days that were still accruing.

	March 31, 2022				December 31, 2021
	Nonaccrual with no Allowance for		Total		Nonaccrual with no Allowance for		Total
	Credit Loss		Nonaccrual		Credit Loss		Nonaccrual
Construction and land development	$	—	$	—	$	25	$	25
Agricultural real estate		273		1,296		237		336
1-4 family residential properties		4,344		5,144		5,252		5,252
Multifamily residential properties		1,886		1,886		1,982		1,982
Commercial real estate		7,938		8,341		7,554		7,920
Loans secured by real estate		14,441		16,667		15,050		15,515
Agricultural loans		15		230		560		560
Commercial and industrial loans		1,905		2,293		936		1,851
Consumer loans		140		140		179		179
All other loans		—		—		—		—
Total loans	$	16,501	$	19,330	$	16,725	$	18,105

Recorded Balance of Troubled Debt Restructurings

The following table presents the Company’s recorded balance of troubled debt restructurings at March 31, 2022 and December 31, 2021 (in thousands).

Troubled debt restructurings:	March 31, 2022		December 31, 2021
Agricultural real estate	$	245	$	245
1-4 family residential properties		1,228		1,353
Commercial real estate		3,231		3,355
Loans secured by real estate		4,704		4,953
Agricultural loans		193		228
Commercial and industrial loans		459		479
Consumer loans		94		109
All other loans		—		23
Total	$	5,450	$	5,792
Performing troubled debt restructurings:
Agricultural real estate	$	245	$	245
1-4 family residential properties		668		882
Commercial real estate		2,010		2,552
Loans secured by real estate		2,923		3,679
Agricultural loans		—		—
Commercial and industrial loans		171		179
Consumer loans		41		50
All other loans		—		23
Total	$	3,135	$	3,931

Loans Modified as Troubled Debt Restructurings

The following table presents loans modified as TDRs during the three months ended March 31, 2022, as a result of various modified loan factors (in thousands). The change in the recorded investment from pre-modification to post- modification was not material.

	March 31, 2022					March 31, 2021
	Number of		Recorded		Type of	Number of		Recorded		Type of
	Modifications		Investment		Modifications	Modifications		Investment		Modifications
1-4 family residential properties		4	$	143	(b)(c)		—	$	—
Commercial real estate		2		197	(b)		—		—
Loans secured by real estate		6		340			—		—
Consumer loans		—		—			2		16	(b)
Total		6	$	340			2	$	16

Type of modifications:

(a)

Reduction of stated interest rate of loan

(b)

Change in payment terms

(c)

Extension of maturity date

(d)

Permanent reduction of the recorded investment

Summary of Purchased Credit Deteriorated (PCD) Loans

The Company has acquired loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans at acquisition date is as follows (in thousands):

	Delta Acquisition			LINCO Acquisition
Purchase price of purchase credit deteriorated loans at acquisition	$	18,796		$	64,647
Allowance for credit losses at acquisition		(863	)		(2,074	)
Non-credit discount/(premium) at acquisition		(523	)		(187	)
Fair value of purchased credit deteriorated loans at acquisition	$	17,410		$	62,386