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Note 4 - Loans | 9 Months Ended
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Sep. 30, 2020
Notes to Financial Statements |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4. Loans The Company groups loans held for investment into three segments (commercial loans, consumer real estate loans, and consumer and other loans) with each segment divided into various classes. Covered loans are those loans acquired in Federal Deposit Insurance Corporation (“FDIC”) assisted transactions that are covered by loss share agreements. Customer overdrafts reclassified as loans totaled $1.67 million as of September 30, 2020, and $2.20 million as of December 31, 2019. Deferred loan fees, net of loan costs, totaled $7.47 million as of September 30, 2020, and $4.60 million as of December 31, 2019. For information about off-balance sheet financing, see Note 15, “Litigation, Commitments, and Contingencies,” to the Condensed Consolidated Financial Statements of this report. The following table presents loans, net of unearned income, within the non-covered portfolio by loan class, as of the dates indicated:
|  | September 30, 2020 |  |  | December 31, 2019 |
(Amounts in thousands) |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Non-covered loans held for investment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 46,785 |  |  |  | 2.13 | % |  | $ | 48,659 |  |  |  | 2.30 | %
Commercial and industrial |  |  | 179,714 |  |  |  | 8.19 | % |  |  | 142,962 |  |  |  | 6.76 | %
Multi-family residential |  |  | 105,647 |  |  |  | 4.81 | % |  |  | 121,840 |  |  |  | 5.76 | %
Single family non-owner occupied |  |  | 189,265 |  |  |  | 8.62 | % |  |  | 163,181 |  |  |  | 7.72 | %
Non-farm, non-residential |  |  | 748,815 |  |  |  | 34.11 | % |  |  | 727,261 |  |  |  | 34.39 | %
Agricultural |  |  | 10,362 |  |  |  | 0.47 | % |  |  | 11,756 |  |  |  | 0.56 | %
Farmland |  |  | 22,973 |  |  |  | 1.05 | % |  |  | 23,155 |  |  |  | 1.10 | %
Total commercial loans |  |  | 1,303,561 |  |  |  | 59.38 | % |  |  | 1,238,814 |  |  |  | 58.59 | %
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 94,056 |  |  |  | 4.29 | % |  |  | 110,078 |  |  |  | 5.21 | %
Single family owner occupied |  |  | 644,598 |  |  |  | 29.37 | % |  |  | 620,697 |  |  |  | 29.35 | %
Owner occupied construction |  |  | 17,460 |  |  |  | 0.79 | % |  |  | 17,241 |  |  |  | 0.82 | %
Total consumer real estate loans |  |  | 756,114 |  |  |  | 34.45 | % |  |  | 748,016 |  |  |  | 35.38 | %
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 118,738 |  |  |  | 5.41 | % |  |  | 110,027 |  |  |  | 5.20 | %
Other |  |  | 5,838 |  |  |  | 0.27 | % |  |  | 4,742 |  |  |  | 0.22 | %
Total consumer and other loans |  |  | 124,576 |  |  |  | 5.68 | % |  |  | 114,769 |  |  |  | 5.42 | %
Total non-covered loans |  |  | 2,184,251 |  |  |  | 99.51 | % |  |  | 2,101,599 |  |  |  | 99.39 | %
Total covered loans |  |  | 10,744 |  |  |  | 0.49 | % |  |  | 12,861 |  |  |  | 0.61 | %
Total loans held for investment, net of unearned income |  | $ | 2,194,995 |  |  |  | 100.00 | % |  | $ | 2,114,460 |  |  |  | 100.00 | %
Loans held for sale |  | $ | - |  |  |  |  |  |  | $ | 263 |  |  |  |  |
Commercial and industrial loan balances grew significantly compared to December 31, 2019. The Company began participating as a Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) lender during the second quarter of 2020. At September 30, 2020, the PPP loans had a current balance of $61.00 million, and were included in commercial and industrial loan balances. Deferred loan origination fees related to the PPP loans, net of deferred loan origination costs, which totaled $2.30 million at September 30, 2020, were also recorded. During the third quarter of 2020, the Company recorded amortization of net deferred loan origination fees of $287 thousand on PPP loans and $479 thousand in amortization for the nine month period. The remaining net deferred loan origination fees will be amortized over the expected life of the respective loans, or until forgiven by the SBA, and will be recognized in net interest income. The following table presents the covered loan portfolio, by loan class, as of the dates indicated:
|  | September 30, 2020 |  |  | December 31, 2019 |
(Amounts in thousands) |  |  |  |  |  |  |  |
Covered loans |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 27 |  |  | $ | 28 |
Single family non-owner occupied |  |  | 188 |  |  |  | 199 |
Non-farm, non-residential |  |  | - |  |  |  | 3 |
Total commercial loans |  |  | 215 |  |  |  | 230 |
Consumer real estate loans |  |  |  |  |  |  |  |
Home equity lines |  |  | 8,079 |  |  |  | 9,853 |
Single family owner occupied |  |  | 2,450 |  |  |  | 2,778 |
Total consumer real estate loans |  |  | 10,529 |  |  |  | 12,631 |
Total covered loans |  | $ | 10,744 |  |  | $ | 12,861 |
The Company identifies certain purchased loans as impaired when fair values are established at acquisition and groups those purchased credit impaired (“PCI”) loans into loan pools with common risk characteristics. The Company estimates cash flows to be collected on PCI loans and discounts those cash flows at a market rate of interest. Effective January 1, 2020, the Company consolidated the insignificant PCI loans and discounts for Peoples, Waccamaw, and other acquired loans into the core loan portfolio. The only remaining PCI pools are those loans acquired in the Highlands acquisition on December 31, 2019. The following table presents the recorded investment and contractual unpaid principal balance of PCI loans, by acquisition, as of the dates indicated:
|  | September 30, 2020 |  |  | December 31, 2019 |
|  |  |  |  |  | Unpaid Principal |  |  |  |  |  |  | Unpaid Principal |
(Amounts in thousands) |  | Recorded Investment |  |  | Balance |  |  | Recorded Investment |  |  | Balance |
PCI Loans, by acquisition |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Peoples |  | $ | - |  |  | $ | - |  |  | $ | 5,071 |  |  | $ | 6,431 |
Waccamaw |  |  | - |  |  |  | - |  |  |  | 2,708 |  |  |  | 14,277 |
Highlands |  |  | 43,527 |  |  |  | 53,295 |  |  |  | 53,116 |  |  |  | 64,096 |
Other acquired |  |  | - |  |  |  | - |  |  |  | 352 |  |  |  | 378 |
Total PCI Loans |  | $ | 43,527 |  |  | $ | 53,295 |  |  | $ | 61,247 |  |  | $ | 85,182 |
The following table presents the changes in the accretable yield on PCI loans, by acquisition, during the periods indicated:
|  | Peoples |  |  | Waccamaw |  |  | Highlands |  |  | Total |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance January 1, 2019 |  | $ | 2,590 |  |  | $ | 14,639 |  |  | $ | - |  |  | $ | 17,229 |
Accretion |  |  | (734 | ) |  |  | (2,761 | ) |  |  | - |  |  |  | (3,495 | )
Reclassifications (to) from nonaccretable difference(1) |  |  | 14 |  |  |  | 1,200 |  |  |  | - |  |  |  | 1,214 |
Other changes, net |  |  | 167 |  |  |  | 141 |  |  |  | - |  |  |  | 308 |
Balance September 30, 2019 |  | $ | 2,037 |  |  | $ | 13,219 |  |  | $ | - |  |  | $ | 15,256 |
Balance January 1, 2020 |  | $ | 1,890 |  |  | $ | 12,574 |  |  | $ | 8,152 |  |  | $ | 22,616 |
Accretion |  |  | - |  |  |  | - |  |  |  | (1,952 | ) |  |  | (1,952 | )
Reclassifications from nonaccretable difference(1) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other changes, net |  |  | (1,890 | ) |  |  | (12,574 | ) |  |  | - |  |  |  | (14,464 | )
Balance September 30, 2020 |  | $ | - |  |  | $ | - |  |  | $ | 6,200 |  |  | $ | 6,200 |
(1) Represents changes attributable to expected loss assumptions

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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