Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2022

A summary of loans at June 30, 2022 and December 31, 2021 follows (in thousands):

	June 30, 2022		December 31, 2021
Construction and land development	$	141,218	$	145,156
Agricultural real estate		350,485		279,001
1-4 family residential properties		424,217		399,932
Multifamily residential properties		331,386		298,974
Commercial real estate		1,983,017		1,666,764
Loans secured by real estate		3,230,323		2,789,827
Agricultural loans		142,237		151,344
Commercial and industrial loans		1,039,363		834,061
Consumer loans		94,780		78,538
All other loans		151,715		143,738
Total gross loans		4,658,418		3,997,508
Less: loans held for sale		1,286		2,748
		4,657,132		3,994,760
Less:
Net deferred loan fees, premiums and discounts		9,755		1,985
Allowance for credit losses		59,075		54,655
Net loans	$	4,588,302	$	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 and six months ended June 30, 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 June 30, 2022
Beginning balance	$	1,988	$	1,971	$	3,728		$	30,345		$	1,051		$	17,348	$	2,043		$	58,474
Provision for credit loss expense		54		141		(178	)		(1,433	)		(72	)		2,117		278			907
Loans charged off		—		—		69			68			93			32		309			571
Recoveries collected		—		—		42			12			—			63		148			265
Ending balance	$	2,042	$	2,112	$	3,523		$	28,856		$	886		$	19,496	$	2,160		$	59,075

Six months ended June 30, 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		29		855		1,086			2,180			(4	)		72		(359	)		3,859
Loans charged off		2		—		141			407			93			35		667			1,345
Recoveries collected		—		—		245			359			—			124		315			1,043
Ending balance	$	2,042	$	2,112	$	3,523		$	28,856		$	886		$	19,496	$	2,160		$	59,075

The following tables present the activity in the allowance for credit losses based on portfolio segment for the three and six months ended June 30, 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 June 30, 2021
Beginning balance (prior to adoption of ASC 326)	$	2,286		$	1,628	$	3,093		$	25,737		$	881		$	18,954	$	2,839		$	55,418
Provision for credit loss expense		(468	)		37		(527	)		(86	)		24			934		(474	)		(560	)
Loans charged off		23			—		14			—			—			68		344			449
Recoveries collected		—			—		18			13			1			22		134			188
Ending balance	$	1,795		$	1,665	$	2,570		$	25,664		$	906		$	19,842	$	2,155		$	54,597

Six months ended June 30, 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		(109	)		535		90			5,816			(621	)		5,608		257			11,576
Loans charged off		23			—		196			480			—			86		632			1,417
Recoveries collected		—			2		26			22			1			40		363			454
Ending balance	$	1,795		$	1,665	$	2,570		$	25,664		$	906		$	19,842	$	2,155		$	54,597

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 June 30, 2022 (in thousands):

	Collateral								Allowance
	Real Estate		Business Assets		Other		Total		for Credit Losses
Construction and land development	$	466	$	—	$	—	$	466	$	205
Agricultural real estate		—		—		74		74		—
1-4 family residential properties		1,040		148		—		1,188		90
Multifamily residential properties		1,287		—		—		1,287		—
Commercial real estate		8,811		663		—		9,474		503
Loans secured by real estate		11,604		811		74		12,489		798
Commercial and industrial loans		220		626		—		846		300
Consumer loans		—		—		3	3			—
Total loans	$	11,824	$	1,437	$	77	$	13,338	$	1,098

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 June 30, 2022 (in thousands):

	Term Loans by Origination Year												Revolving
Risk rating	2022		2021		2020		2019		2018		Prior		Loans		Total
June 30, 2022
Construction and land development loans
Pass	$	24,090	$	50,335	$	24,406	$	27,088	$	2,276	$	12,294	$	—	$	140,489
Special mention		—		105		—		—		—		—		—		105
Substandard		—		—		—		—		—		478		—		478
Total	$	24,090	$	50,440	$	24,406	$	27,088	$	2,276	$	12,772	$	—	$	141,072
Agricultural real estate loans
Pass	$	96,798	$	73,365	$	59,171	$	23,222	$	28,105	$	58,227	$	—	$	338,888
Special mention		825		—		490		3,499		273		3,248		—		8,335
Substandard		—		—		—		—		1,460		1,476		—		2,936
Total	$	97,623	$	73,365	$	59,661	$	26,721	$	29,838	$	62,951	$	—	$	350,159
1-4 family residential property loans
Pass	$	45,334	$	93,175	$	85,280	$	30,080	$	33,992	$	74,577	$	47,094	$	409,532
Special mention		—		151		139		40		182		1,149		129		1,790
Substandard		255		340		441		366		2,924		8,278		304		12,908
Total	$	45,589	$	93,666	$	85,860	$	30,486	$	37,098	$	84,004	$	47,527	$	424,230
Commercial real estate loans
Pass	$	359,324	$	538,921	$	341,037	$	287,273	$	223,273	$	513,758	$	—	$	2,263,586
Special mention		2,061		1,457		1,153		1,799		993		15,212		—		22,675
Substandard		3,865		490		829		1,003		5,655		9,151		—		20,993
Total	$	365,250	$	540,868	$	343,019	$	290,075	$	229,921	$	538,121	$	—	$	2,307,254
Agricultural loans
Pass	$	83,601	$	37,086	$	10,637	$	4,013	$	1,765	$	1,288	$	—	$	138,390
Special mention		1,201		1,317		—		262		81		—		—		2,861
Substandard		940		—		—		43		4		168		—		1,155
Total	$	85,742	$	38,403	$	10,637	$	4,318	$	1,850	$	1,456	$	—	$	142,406
Commercial and industrial loans
Pass	$	227,589	$	319,582	$	184,910	$	77,852	$	77,171	$	296,278	$	—	$	1,183,382
Special mention		229		478		322		1,353		265		382		—		3,029
Substandard		307		455		367		40		109		725		—		2,003
Doubtful		—		300		—		—		—		—		—		300
Total	$	228,125	$	320,815	$	185,599	$	79,245	$	77,545	$	297,385	$	—	$	1,188,714
Consumer loans
Pass	$	28,818	$	25,791	$	20,595	$	11,516	$	3,428	$	4,328	$	—	$	94,476
Special mention		—		60		30		32		7		—		—		129
Substandard		12		119		2		14		46		30		—		223
Total	$	28,830	$	25,970	$	20,627	$	11,562	$	3,481	$	4,358	$	—	$	94,828
Total loans
Pass	$	865,554	$	1,138,255	$	726,036	$	461,044	$	370,010	$	960,750	$	47,094	$	4,568,743
Special mention		4,316		3,568		2,134		6,985		1,801		19,991		129		38,924
Substandard		5,379		1,404		1,639		1,466		10,198		20,306		304		40,696
Doubtful		—		300		—		—		—		—		—		300
Total	$	875,249	$	1,143,527	$	729,809	$	469,495	$	382,009	$	1,001,047	$	47,527	$	4,648,663

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 June 30, 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
June 30, 2022
Construction and land development	$	—	$	—	$	449	$	449	$	140,623	$	141,072	$	—
Agricultural real estate		—		241		192		433		349,726		350,159		—
1-4 family residential properties		3,294		496		918		4,708		419,522		424,230		—
Multifamily residential properties		4		—		544		548		330,052		330,600		—
Commercial real estate		1,706		160		9,349		11,215		1,965,439		1,976,654		—
Loans secured by real estate		5,004		897		11,452		17,353		3,205,362		3,222,715		—
Agricultural loans		226		940		—		1,166		141,240		142,406		—
Commercial and industrial loans		1,357		65		1,332		2,754		1,034,233		1,036,987		—
Consumer loans		598		69		95		762		94,066		94,828		—
All other loans		—		—		—		—		151,727		151,727		—
Total loans	$	7,185	$	1,971	$	12,879	$	22,035	$	4,626,628	$	4,648,663	$	—
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 June 30, 2022 and December 31, 2021 (in thousands). There were no loans past due over eighty-nine days that were still accruing.

	June 30, 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		1,268		1,268		237		336
1-4 family residential properties		4,045		4,680		5,252		5,252
Multifamily residential properties		1,311		1,311		1,982		1,982
Commercial real estate		7,634		7,975		7,554		7,920
Loans secured by real estate		14,258		15,234		15,050		15,515
Agricultural loans		174		174		560		560
Commercial and industrial loans		1,229		1,529		936		1,851
Consumer loans		98		98		179		179
All other loans		—		—		—		—
Total loans	$	15,759	$	17,035	$	16,725	$	18,105

Recorded Balance of Troubled Debt Restructurings

The following table presents the Company’s recorded balance of troubled debt restructurings at June 30, 2022 and December 31, 2021 (in thousands).

Troubled debt restructurings:	June 30, 2022		December 31, 2021
Agricultural real estate	$	233	$	245
1-4 family residential properties		1,082		1,353
Commercial real estate		3,174		3,355
Loans secured by real estate		4,489		4,953
Agricultural loans		168		228
Commercial and industrial loans		313		479
Consumer loans		42		109
All other loans		—		23
Total	$	5,012	$	5,792
Performing troubled debt restructurings:
Agricultural real estate	$	233	$	245
1-4 family residential properties		659		882
Commercial real estate		1,978		2,552
Loans secured by real estate		2,870		3,679
Commercial and industrial loans		37		179
Consumer loans		39		50
All other loans		—		23
Total	$	2,946	$	3,931

Loans Modified as Troubled Debt Restructurings

The following table presents loans modified as TDRs during the six months ended June 30, 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.

	June 30, 2022					June 30, 2021
	Number of		Recorded		Type of	Number of		Recorded		Type of
	Modifications		Investment		Modifications	Modifications		Investment		Modifications
1-4 family residential properties		2	$	79	(b)(c)		1		395	(c)
Commercial real estate		2		199	(b)		1		679	(b)
Loans secured by real estate		4		278			2		1,074
Consumer loans		—		—			3		24	(b)
Total		4	$	278			5	$	1,098

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):

	2022			2021
	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