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Loans
 9 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
Loans LoansLoans held for investment are categorized into the following segments:
•Construction and land development: Loans are extended to both commercial and consumer customers which are collateralized by and for the purpose of funding land development and construction projects, including 1-4 family residential construction, multi-family property and non-farm residential property where the primary source of repayment is from proceeds of the sale, refinancing or permanent financing of the property.
•Commercial real estate - owner-occupied: Loans are extended to commercial customers for the purpose of acquiring real estate to be occupied by the borrower's business. These loans are collateralized by the subject property and the repayment of these loans is largely dependent on the performance of the company occupying the property.
•Commercial real estate - non owner-occupied: Loans are extended to commercial customers for the purpose of acquiring commercial property where occupancy by the borrower is not their primary intent. These loans are viewed primarily as cash flow loans, collateralized by the subject property, and the repayment of these loans is largely dependent on rental income from the successful operation of the property.
•Residential real estate: Loans are extended to consumer customers and collateralized primarily by 1-4 family residential properties and include fixed and variable rate mortgages, home equity mortgages, and home equity lines of credit. Loans are primarily written based on conventional loan agency guidelines, including loans that exceed agency value limitations. Sources of repayment are largely dependent on the occupant of the residential property.
•Commercial and financial: Loans are extended to commercial customers. The purpose of the loans can be working capital, physical asset expansion, asset acquisition or other business purposes. Loans may be collateralized by assets owned by the borrower or the borrower's business. Commercial loans are based primarily on the historical and projected cash flow of the borrower's business and secondarily on the capacity of credit enhancements, guarantees and underlying collateral provided by the borrower.
•Consumer: Loans are extended to consumer customers. The segment includes both installment loans and lines of credit which may be collateralized or non-collateralized.
•Paycheck Protection Program (“PPP”): Loans originated under a temporary program established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and extended by the Economic Aid Act. Under the terms of the program, balances may be forgiven if the borrower uses the funds in a manner consistent with the program guidelines, and repayment is guaranteed by the U.S. government.
In the third quarter of 2022, to align with the Company’s transition of the calculation of expected credit losses to a new modeling tool, $100 million in loans to commercial borrowers collateralized by residential properties were reclassified from “Residential real estate” to “Commercial real estate - non owner-occupied.”
The following tables present net loan balances by segment as of:
 September 30, 2022
(In thousands)Portfolio LoansAcquired Non-PCD LoansPCD LoansTotal
Construction and land development$338,070 $23,808 $35 $361,913 
Commercial real estate - owner-occupied988,614 245,943 18,902 1,253,459 
Commercial real estate - non owner-occupied1,568,138 469,363 70,113 2,107,614 
Residential real estate1,488,359 106,597 4,809 1,599,765 
Commercial and financial1,091,665 78,406 12,313 1,182,384 
Consumer176,895 3,521 — 180,416 
Paycheck Protection Program1,616 3,678 — 5,294 
Totals$5,653,357 $931,316 $106,172 $6,690,845 
 December 31, 2021
(In thousands)Portfolio LoansAcquired Non-PCD LoansPCD LoansTotal
Construction and land development$199,341 $31,438 $45 $230,824 
Commercial real estate - owner occupied983,517 186,812 27,445 1,197,774 
Commercial real estate - non-owner occupied1,278,180 382,554 75,705 1,736,439 
Residential real estate1,261,306 156,957 7,091 1,425,354 
Commercial and financial968,318 84,395 16,643 1,069,356 
Consumer169,507 4,658 10 174,175 
Paycheck Protection Program69,503 21,604 — 91,107 
Totals$4,929,672 $868,418 $126,939 $5,925,029 
The amortized cost basis of loans at September 30, 2022 included net deferred costs of $30.1 million. At December 31, 2021, the amortized cost basis included net deferred costs of $31.0 million on non-PPP portfolio loans and net deferred fees of $2.4 million on PPP loans. At September 30, 2022, the remaining fair value adjustments on acquired loans were $19.1 million, or 1.8% of the outstanding acquired loan balances, compared to $23.1 million, or 2.3% of the acquired loan balances at December 31, 2021. The discount is accreted into interest income over the remaining lives of the related loans on a level yield basis.
Accrued interest receivable is included within Other Assets and was $17.6 million and $14.7 million at September 30, 2022 and December 31, 2021, respectively.
The following tables present the status of net loan balances as of September 30, 2022 and December 31, 2021.
 September 30, 2022
(In thousands)CurrentAccruing
30-59 Days
Past Due		Accruing
60-89 Days
Past Due		Accruing
Greater
Than
90 Days		NonaccrualTotal
Portfolio Loans      
Construction and land development$338,063 $— $— $— $7 $338,070 
Commercial real estate - owner-occupied987,534 — — — 1,080 988,614 
Commercial real estate - non owner-occupied1,568,107 — — — 31 1,568,138 
Residential real estate1,476,907 4,458 291 — 6,703 1,488,359 
Commercial and financial1,087,617 1,197 119 — 2,732 1,091,665 
Consumer176,351 387 47 — 110 176,895 
Paycheck Protection Program1
1,315 29 272 — — 1,616 
Total Portfolio Loans$5,635,894 $6,071 $729 $— $10,663 $5,653,357 
Acquired Non-PCD Loans
Construction and land development$23,808 $— $— $— $— $23,808 
Commercial real estate - owner-occupied245,943 — — — — 245,943 
Commercial real estate - non owner-occupied467,459 122 — 738 1,044 469,363 
Residential real estate105,653 426 — — 518 106,597 
Commercial and financial77,935 89 — — 382 78,406 
Consumer3,263 26 6 — 226 3,521 
Paycheck Protection Program1
3,671 — 7 — — 3,678 
 Total Acquired Non-PCD Loans$927,732 $663 $13 $738 $2,170 $931,316 
PCD Loans
Construction and land development$33 $— $— $— $2 $35 
Commercial real estate - owner-occupied18,343 — — — 559 18,902 
Commercial real estate - non owner-occupied66,965 — — — 3,148 70,113 
Residential real estate3,852 260 — — 697 4,809 
Commercial and financial8,088 — — — 4,225 12,313 
Consumer— — — — — — 
Total PCD Loans$97,281 $260 $— $— $8,631 $106,172 
Total Loans$6,660,907 $6,994 $742 $738 $21,464 $6,690,845 
1Paycheck Protection Program loans are not reflected as past due when forgiveness applications are being processed by the SBA. Repayment of principal and interest is fully guaranteed by the U.S. government.
 
 December 31, 2021
(In thousands)CurrentAccruing
30-59 Days
Past Due		Accruing
60-89 Days
Past Due		Accruing
Greater
Than
90 Days		NonaccrualTotal
Portfolio Loans      
Construction and land development$199,087 $— $— $— $254 $199,341 
Commercial real estate - owner occupied982,804 — — — 713 983,517 
Commercial real estate - non-owner occupied1,276,582 — — — 1,598 1,278,180 
Residential real estate1,248,160 3,457 143 — 9,546 1,261,306 
Commercial and financial963,828 851 41 — 3,598 968,318 
Consumer168,791 565 23 15 113 169,507 
Paycheck Protection Program1
69,434 — — 69 — 69,503 
 Total Portfolio Loans$4,908,686 $4,873 $207 $84 $15,822 $4,929,672 
Acquired Non-PCD Loans
Construction and land development$31,438 $— $— $— $— $31,438 
Commercial real estate - owner occupied186,652 — 160 — — 186,812 
Commercial real estate - non-owner occupied381,510 — — — 1,044 382,554 
Residential real estate154,981 182 — — 1,794 156,957 
Commercial and financial84,180 — 40 — 175 84,395 
Consumer4,082 135 — — 441 4,658 
Paycheck Protection Program1
21,567 — — 37 — 21,604 
 Total Acquired Non-PCD Loans$864,410 $317 $200 $37 $3,454 $868,418 
PCD Loans
Construction and land development$40 $— $— $— $5 $45 
Commercial real estate - owner occupied24,192 — — — 3,253 27,445 
Commercial real estate - non-owner occupied72,442 — — — 3,263 75,705 
Residential real estate5,386 — — — 1,705 7,091 
Commercial and financial13,547 — — — 3,096 16,643 
Consumer10 — — — — 10 
 Total PCD Loans$115,617 $— $— $— $11,322 $126,939 
Total Loans$5,888,713 $5,190 $407 $121 $30,598 $5,925,029 
1Paycheck Protection Program loans are not reflected as past due when forgiveness applications are being processed by the SBA. Repayment of principal and interest is fully guaranteed by the U.S. government.
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest subsequently received on such loans is accounted for under the cost-recovery method, whereby interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, and future payments are reasonably assured. The Company recognized $0.2 million and $0.3 million in interest income on nonaccrual loans during each of the three months ended September 30, 2022 and 2021, respectively. The Company recognized $1.4 million and $0.9 million in interest income on nonaccrual loans during the nine months ended September 30, 2022 and 2021, respectively.
The following tables present net balances of loans on nonaccrual status and the related allowance for credit losses, if any, as of:
September 30, 2022
(In thousands)Nonaccrual Loans With No Related AllowanceNonaccrual Loans With an AllowanceTotal Nonaccrual LoansAllowance for Credit Losses
Construction and land development$9 $— $9 $— 
Commercial real estate - owner-occupied1,080 559 1,639 45 
Commercial real estate - non owner-occupied2,342 1,881 4,223 1,300 
Residential real estate7,684 234 7,918 173 
Commercial and financial4,980 2,359 7,339 1,472 
Consumer46 290 336 290 
Totals $16,141 $5,323 $21,464 $3,280 
December 31, 2021
(In thousands)Nonaccrual Loans With No Related AllowanceNonaccrual Loans With an AllowanceTotal Nonaccrual LoansAllowance for Credit Losses
Construction and land development$37 $222 $259 $92 
Commercial real estate - owner-occupied2,976 990 3,966 419 
Commercial real estate - non owner-occupied4,490 1,415 5,905 27 
Residential real estate12,358 687 13,045 357 
Commercial and financial2,676 4,193 6,869 2,384 
Consumer29 525 554 525 
Totals$22,566 $8,032 $30,598 $3,804 
Collateral-Dependent Loans
Loans are considered collateral-dependent when the repayment, based on the Company's assessment as of the reporting date, is expected to be provided substantially through the operation or sale of the underlying collateral and there are no other available and reliable sources of repayment. The following table presents collateral-dependent loans as of:
(In thousands)September 30, 2022December 31, 2021
Construction and land development$11 $271 
Commercial real estate - owner-occupied2,368 4,706 
Commercial real estate - non owner-occupied3,218 4,923 
Residential real estate 9,779 16,334 
Commercial and financial5,476 8,741 
Consumer481 741 
Totals $21,333 $35,716 
Loans by Risk Rating
The Company utilizes an internal asset classification system as a means of identifying problem and potential problem loans. The following classifications are used to categorize loans under the internal classification system:
•Pass: Loans that are not problem loans or potential problem loans are considered to be pass-rated.
•Special Mention: Loans that do not currently expose the Company to sufficient risk to warrant classification in the Substandard or Doubtful categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention.
•Substandard: Loans with the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
•Substandard Impaired: Loans typically placed on nonaccrual and considered to be collateral-dependent or accruing TDRs.
•Doubtful: Loans that have all the weaknesses inherent in those classified Substandard with the added characteristic that the weakness present makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are likely to be charged off.
The following tables present the risk rating of loans by year of origination as of:
September 30, 2022
(In thousands)20222021202020192018PriorRevolvingTotal
Construction and Land Development
Risk Ratings:
Pass$138,044 $127,715 $12,724 $17,839 $6,943 $12,573 $46,064 $361,902 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Substandard Impaired — — — — — 11 — 11 
Doubtful— — — — — — — — 
Total$138,044 $127,715 $12,724 $17,839 $6,943 $12,584 $46,064 $361,913 
Commercial real estate - owner-occupied
Risk Ratings:
Pass$137,279 $194,852 $153,023 $180,220 $116,511 $445,680 $13,926 $1,241,491 
Special Mention694 — — — 764 2,909 — 4,367 
Substandard— — — 2,646 — 1,956 — 4,602 
Substandard Impaired — — — 314 304 2,381 — 2,999 
Doubtful— — — — — — — — 
Total$137,973 $194,852 $153,023 $183,180 $117,579 $452,926 $13,926 $1,253,459 
Commercial real estate - non owner-occupied
Risk Ratings:
Pass$379,918 $430,128 $213,128 $291,043 $194,840 $548,896 $26,578 $2,084,531 
Special Mention— — 738 — — 1,436 — 2,174 
Substandard— — 4,709 — 5,515 5,724 — 15,948 
Substandard Impaired — — 1,044 1,849 31 2,037 — 4,961 
Doubtful— — — — — — — — 
Total$379,918 $430,128 $219,619 $292,892 $200,386 $558,093 $26,578 $2,107,614 
Residential real estate
Risk Ratings:
Pass$165,480 $496,317 $104,888 $69,576 $89,632 $249,545 $411,635 $1,587,073 
Special Mention24 — 50 — — 343 843 1,260 
Substandard— — — — — — 194 194 
Substandard Impaired — — 136 123 86 8,896 1,997 11,238 
Doubtful— — — — — — — — 
Total$165,504 $496,317 $105,074 $69,699 $89,718 $258,784 $414,669 $1,599,765 
September 30, 2022
(In thousands)20222021202020192018PriorRevolvingTotal
Commercial and financial
Risk Ratings:
Pass$220,218 $292,894 $151,871 $75,083 $51,569 $59,354 $299,146 $1,150,135 
Special Mention1,288 452 121 566 205 333 361 3,326 
Substandard— — 11,098 5,756 1,875 2,304 256 21,289 
Substandard Impaired 6 — 204 270 4,298 2,829 27 7,634 
Doubtful— — — — — — — — 
Total$221,512 $293,346 $163,294 $81,675 $57,947 $64,820 $299,790 $1,182,384 
Consumer
Risk Ratings:
Pass$36,074 $41,798 $25,282 $18,908 $12,322 $18,192 $24,793 $177,369 
Special Mention— 31 136 58 10 160 1,914 2,309 
Substandard— — 12 12 2 8 223 257 
Substandard Impaired — 7 24 57 52 130 211 481 
Doubtful— — — — — — — — 
Total$36,074 $41,836 $25,454 $19,035 $12,386 $18,490 $27,141 $180,416 
Paycheck Protection Program
Risk Ratings:
Pass$— $3,210 $2,084 $— $— $— $— $5,294 
Total$— $3,210 $2,084 $— $— $— $— $5,294 
Consolidated
Risk Ratings:
Pass$1,077,013 $1,586,914 $663,000 $652,669 $471,817 $1,334,240 $822,142 $6,607,795 
Special Mention2,006 483 1,045 624 979 5,181 3,118 13,436 
Substandard— — 15,819 8,414 7,392 9,992 673 42,290 
Substandard Impaired 6 7 1,408 2,613 4,771 16,284 2,235 27,324 
Doubtful— — — — — — — — 
Total$1,079,025 $1,587,404 $681,272 $664,320 $484,959 $1,365,697 $828,168 $6,690,845 
December 31, 2021
(In thousands)20212020201920182017PriorRevolvingTotal
Construction and Land Development
Risk Ratings:
Pass$94,318 $23,860 $38,058 $25,507 $3,995 $15,466 $29,349 $230,553 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Substandard Impaired — — — 222 — 49 — 271 
Doubtful— — — — — — — — 
Total$94,318 $23,860 $38,058 $25,729 $3,995 $15,515 $29,349 $230,824 
Commercial real estate - owner-occupied
Risk Ratings:
Pass$205,404 $154,432 $179,786 $132,353 $125,763 $363,986 $10,005 $1,171,729 
Special Mention— 6,527 5,370 649 218 3,250 — 16,014 
Substandard— — — — 3,290 1,610 — 4,900 
Substandard Impaired — — 2,742 310 596 1,483 — 5,131 
Doubtful— — — — — — — — 
Total$205,404 $160,959 $187,898 $133,312 $129,867 $370,329 $10,005 $1,197,774 
December 31, 2021
(In thousands)20212020201920182017PriorRevolvingTotal
Commercial real estate - non owner-occupied
Risk Ratings:
Pass$395,308 $207,824 $298,021 $186,339 $110,990 $460,435 $6,477 $1,665,394 
Special Mention— — 844 — 289 13,850 — 14,983 
Substandard— 4,776 3,009 23,206 1,900 17,266 — 50,157 
Substandard Impaired — 1,044 1,849 — 326 2,686 — 5,905 
Doubtful— — — — — — — — 
Total$395,308 $213,644 $303,723 $209,545 $113,505 $494,237 $6,477 $1,736,439 
Residential real estate
Risk Ratings:
Pass$394,547 $114,364 $90,566 $119,836 $118,556 $213,950 $354,439 $1,406,258 
Special Mention— — — 70 — 1,243 532 1,845 
Substandard— 340 — — 58 422 86 906 
Substandard Impaired — 149 724 39 4,415 8,507 2,511 16,345 
Doubtful— — — — — — — — 
Total$394,547 $114,853 $91,290 $119,945 $123,029 $224,122 $357,568 $1,425,354 
Commercial and financial
Risk Ratings:
Pass$340,826 $180,677 $97,072 $68,232 $39,331 $56,053 $246,568 $1,028,759 
Special Mention530 15,587 — 237 251 84 876 17,565 
Substandard— 371 2,605 3,594 1,436 3,217 339 11,562 
Substandard Impaired — 196 4,561 3,694 1,371 1,520 128 11,470 
Doubtful— — — — — — — — 
Total$341,356 $196,831 $104,238 $75,757 $42,389 $60,874 $247,911 $1,069,356 
Consumer
Risk Ratings:
Pass$45,063 $31,342 $26,194 $17,300 $9,979 $16,019 $25,418 $171,315 
Special Mention— 24 431 37 167 3 1,199 1,861 
Substandard— — 18 — 17 — 223 258 
Substandard Impaired — — 92 23 74 118 434 741 
Doubtful— — — — — — — — 
Total$45,063 $31,366 $26,735 $17,360 $10,237 $16,140 $27,274 $174,175 
Paycheck Protection Program
Risk Ratings:
Pass$87,036 $4,071 $— $— $— $— $— $91,107 
Total$87,036 $4,071 $— $— $— $— $— $91,107 
Consolidated
Risk Ratings:
Pass$1,562,502 $716,570 $729,697 $549,567 $408,614 $1,125,909 $672,256 $5,765,115 
Special Mention530 22,138 6,645 993 925 18,430 2,607 52,268 
Substandard— 5,487 5,632 26,800 6,701 22,515 648 67,783 
Substandard Impaired — 1,389 9,968 4,288 6,782 14,363 3,073 39,863 
Doubtful— — — — — — — — 
Total$1,563,032 $745,584 $751,942 $581,648 $423,022 $1,181,217 $678,584 $5,925,029 

Troubled Debt Restructured Loans
The Company’s TDR concessions granted to certain borrowers generally do not include forgiveness of principal balances, but may include interest rate reductions, an extension of the amortization period and/or converting the loan to interest only for a limited period of time. Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements.
The following table presents loans that were modified in a troubled debt restructuring during the three and nine months ended September 30, 2022 and September 30, 2021:
Three Months Ended September 30,
20222021
(In thousands)Number of ContractsPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded InvestmentNumber of ContractsPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded Investment
Construction and land development$— $— $— $— $— $— 
Commercial real estate - owner-occupied— — — — — — 
Commercial real estate - non owner-occupied— — — — — — 
Residential real estate— — — 1 152 152 
Commercial and financial— — — — — — 
Consumer— — — — — — 
Totals$— $— $— $1 $152 $152 
Nine Months Ended September 30,
20222021
(In thousands)Number of ContractsPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded InvestmentNumber of ContractsPre-Modification Outstanding Recorded InvestmentPost-Modification Outstanding Recorded Investment
Construction and land development$— $— $— $— $— $— 
Commercial real estate - owner-occupied— — — — — — 
Commercial real estate - non owner-occupied— — — — — — 
Residential real estate 3 785 785 4 231 231 
Commercial and financial2 54 54 1 142 142 
Consumer4 23 23 — — — 
 Totals $9 $862 $862 $5 $373 $373 

The TDRs described above resulted in a specific allowance for credit losses of $0.1 million and $0.2 million as of September 30, 2022 and September 30, 2021, respectively. During the nine months ended September 30, 2022, there was one default totaling $2 thousand on a loan that had been modified to a TDR within the preceding twelve months. During the nine months ended September 30, 2021, there were two defaults on loans totaling $0.1 million that had been modified to a TDR within the preceding twelve months. The Company considers a loan to have defaulted when it becomes 90 days or more delinquent under the modified terms, has been transferred to nonaccrual status, is charged off or has been transferred to other real estate owned. For loans measured based on the present value of expected future cash flows, $13 thousand and $9 thousand for the three months ended September 30, 2022, and 2021, respectively, and $33 thousand and $20 thousand for the nine months ended September 30, 2022, and 2021, respectively, was included in interest income and represents the change in present value attributable to the passage of time.