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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Accounts, Notes, Loans and Financing Receivable

Major categories of loans are summarized as follows (in thousands):


	June 30, 2020						December 31, 2019
	PCI		All Other				PCI		All Other
	Loans¹		Loans		Total		Loans¹		Loans		Total
Commercial real estate	$	16,517	$	1,000,516	$	1,017,033	$	15,255	$	890,051	$	905,306
Consumer real estate		11,568		448,292		459,860		6,541		410,941		417,482
Construction and land development		6,427		272,789		279,216		4,458		223,168		227,626
Commercial and industrial		341		637,109		637,450		407		336,668		337,075
Consumer and other		106		14,619		14,725		326		9,577		9,903
Total loans		34,959		2,373,325		2,408,284		26,987		1,870,405		1,897,392
Less: Allowance for loan losses		—		(16,254)		(16,254)		(156)		(10,087)		(10,243)

Loans, net	$	34,959	$	2,357,071	$	2,392,030	$	26,831	$	1,860,318	$	1,887,149

¹Purchased Credit Impaired loans (“PCI loans”) are loans with evidence of credit deterioration at purchase.

Schedule of Impaired and Performing Loans Receivable

The composition of loans by loan classification for impaired and performing loan status is summarized in the tables below (in thousands):


					Construction		Commercial
	Commercial		Consumer		and Land		and		Consumer
	Real Estate		Real Estate		Development		Industrial		and Other		Total
June 30, 2020:
Performing loans	$	999,567	$	446,892	$	272,789	$	636,952	$	14,619	$	2,370,819
Impaired loans		949		1,400		—		157		—		2,506
		1,000,516		448,292		272,789		637,109		14,619		2,373,325
PCI loans		16,517		11,568		6,427		341		106		34,959
Total loans	$	1,017,033	$	459,860	$	279,216	$	637,450	$	14,725	$	2,408,284

December 31, 2019:
Performing loans	$	889,795	$	409,394	$	222,621	$	336,508	$	9,577	$	1,867,895
Impaired loans		256		1,547		547		160		—		2,510
		890,051		410,941		223,168		336,668		9,577		1,870,405
PCI loans		15,255		6,541		4,458		407		326		26,987
Total loans	$	905,306	$	417,482	$	227,626	$	337,075	$	9,903	$	1,897,392

Schedule of Allowance for Loan Losses for Impaired and Performing Loans Receivable

The following tables show the allowance for loan losses allocation by loan classification for impaired, PCI, and performing loans (in thousands):


					Construction		Commercial		Consumer
	Commercial		Consumer		and Land		and		and
	Real Estate		Real Estate		Development		Industrial		Other		Total
June 30, 2020:
Performing loans	$	6,551	$	3,021	$	1,795	$	4,314	$	108	$	15,789
Impaired loans		44		292		—		129		—		465
		6,595		3,313		1,795		4,443		108		16,254
PCI loans		—		—		—		—		—		—
Total loans	$	6,595	$	3,313	$	1,795	$	4,443	$	108	$	16,254

December 31, 2019:
Performing loans	$	4,491	$	2,159	$	1,127	$	1,766	$	69	$	9,612
Impaired loans		—		343		—		132		—		475
		4,491		2,502		1,127		1,898		69		10,087
PCI loans		17		74		—		59		6		156
Total loans	$	4,508	$	2,576	$	1,127	$	1,957	$	75	$	10,243

Schedule of Allowance for Loan Losses

The following tables detail the changes in the allowance for loan losses by loan classification (in thousands):


	Three Months Ended June 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
Beginning balance	$	5,963	$	3,301	$	1,484	$	2,557	$	126	$	13,431
Charged off loans		—		—		—		(9)		(66)		(75)
Recoveries of charge-offs		3		11		—		6		28		48
Provision (reallocation) charged to expense		629		1		311		1,889		20		2,850
Ending balance	$	6,595	$	3,313	$	1,795	$	4,443	$	108	$	16,254


	Three Months Ended June 30, 2019
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
Beginning balance	$	4,074	$	1,949	$	854	$	1,709	$	118	$	8,704
Charged off loans		—		—		—		(14)		(80)		(94)
Recoveries of charge-offs		22		16		2		41		13		94
Provision (reallocation) charged to expense		6		224		90		10		63		393
Ending balance	$	4,102	$	2,189	$	946	$	1,746	$	114	$	9,097


	Six Months Ended June 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
Beginning balance	$	4,508	$	2,576	$	1,127	$	1,957	$	75	$	10,243
Loans charged off		—		(2)		—		(17)		(142)		(161)
Recoveries of loans charged off		5		17		2		49		50		123
Provision (reallocation) charged to expense		2,082		722		666		2,454		125		6,049
Ending balance	$	6,595	$	3,313	$	1,795	$	4,443	$	108	$	16,254


	Six Months Ended June 30, 2019
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and		Consumer
	Real Estate		Estate		Development		Industrial		and Other		Total
Beginning balance	$	3,639	$	1,789	$	795	$	1,746	$	306	$	8,275
Loans charged off		—		(2)		—		(333)		(210)		(545)
Recoveries of loans charged off		24		20		4		53		76		177
Provision (reallocation) charged to expense		439		382		147		280		(58)		1,190
Ending balance	$	4,102	$	2,189	$	946	$	1,746	$	114	$	9,097

Financing Receivable Credit Quality Indicators

The following tables outline the amount of each loan classification and the amount categorized into each risk rating (in thousands):


	June 30, 2020
					Construction		Commercial
	Commercial		Consumer		and Land		and		Consumer
Non PCI Loans:	Real Estate		Real Estate		Development		Industrial		and Other		Total
Pass	$	526,141	$	390,787	$	227,302	$	573,989	$	14,259	$	1,732,478
Watch		462,734		55,210		45,416		61,888		288		625,536
Special mention		10,586		599		—		892		—		12,077
Substandard		1,055		1,534		71		207		48		2,915
Doubtful		—		162		—		133		24		319
Total		1,000,516		448,292		272,789		637,109		14,619		2,373,325

PCI Loans:
Pass		8,082		9,028		1,353		249		83		18,795
Watch		7,314		922		4,520		—		16		12,772
Special mention		20		57		—		—		—		77
Substandard		1,101		1,561		554		92		7		3,315
Doubtful		—		—		—		—		—		—
Total		16,517		11,568		6,427		341		106		34,959
Total loans	$	1,017,033	$	459,860	$	279,216	$	637,450	$	14,725	$	2,408,284


	December 31, 2019
					Construction		Commercial
	Commercial		Consumer		and Land		and		Consumer
Non PCI Loans:	Real Estate		Real Estate		Development		Industrial		and Other		Total
Pass	$	860,447	$	407,336	$	216,459	$	328,564	$	9,462	$	1,822,268
Watch		25,180		989		6,089		6,786		40		39,084
Special mention		4,057		738		—		1,033		—		5,828
Substandard		367		1,713		620		228		51		2,979
Doubtful		—		165		—		57		24		246
Total		890,051		410,941		223,168		336,668		9,577		1,870,405

PCI Loans:
Pass		12,473		5,258		902		41		300		18,974
Watch		2,234		38		3,556		—		13		5,841
Special mention		139		60		—		—		—		199
Substandard		409		1,185		—		366		13		1,973
Doubtful		—		—		—		—		—		—
Total		15,255		6,541		4,458		407		326		26,987
Total loans	$	905,306	$	417,482	$	227,626	$	337,075	$	9,903	$	1,897,392

Past Due Financing Receivables

The following tables present an aging analysis of our loan portfolio (in thousands):


	June 30, 2020
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and		PCI		Current		Total
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		Loans		Loans		Loans
Commercial real estate	$	1,019	$	188	$	1	$	815	$	2,023	$	16,517	$	998,493	$	1,017,033
Consumer real estate		1,726		457		138		1,891		4,212		11,568		444,080		459,860
Construction and land development		602		—		265		—		867		6,427		271,922		279,216
Commercial and industrial		84		93		465		121		763		341		636,346		637,450
Consumer and other		134		2		8		72		216		106		14,403		14,725
Total	$	3,565	$	740	$	877	$	2,899	$	8,081	$	34,959	$	2,365,244	$	2,408,284


	December 31, 2019
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and		PCI		Current		Total
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		Loans		Loans		Loans
Commercial real estate	$	466	$	22	$	—	$	124	$	612	$	15,255	$	889,439	$	905,306
Consumer real estate		1,564		30		—		1,872		3,466		6,541		407,475		417,482
Construction and land development		507		—		607		620		1,734		4,458		221,434		227,626
Commercial and industrial		559		53		—		57		669		407		335,999		337,075
Consumer and other		86		14		—		70		170		326		9,407		9,903
Total	$	3,182	$	119	$	607	$	2,743	$	6,651	$	26,987	$	1,863,754	$	1,897,392

Impaired Financing Receivables

The following is an analysis of the impaired loan portfolio, including PCI loans, detailing the related allowance recorded (in thousands):


	June 30, 2020						December 31, 2019
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans without a valuation allowance:
Commercial real estate	$	553	$	553	$	—	$	256	$	261	$	—
Consumer real estate		720		721		—		553		553		—
Construction and land development		—		—		—		547		547		—
Commercial and industrial		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		1,273		1,274		—		1,356		1,361		—

Impaired loans with a valuation allowance:
Commercial real estate		396		402		44		—		—		—
Consumer real estate		680		680		292		994		994		343
Construction and land development		—		—		—		—		—		—
Commercial and industrial		157		157		129		160		160		132
Consumer and other		—		—		—		—		—		—
		1,233		1,239		465		1,154		1,154		475
PCI loans:
Commercial real estate		16		99		—		17		99		17
Consumer real estate		1,870		2,138		—		1,205		1,371		74
Construction and land development		—		—		—		—		—		—
Commercial and industrial		303		445		—		396		534		59
Consumer and other		30		35		—		45		51		6
		2,219		2,717		—		1,663		2,055		156

Total impaired loans	$	4,725	$	5,230	$	465	$	4,173	$	4,570	$	631


	Three Months Ended June 30,
	2020				2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	345	$	1	$	424	$	5
Consumer real estate		633		10		624		—
Construction and land development		304		—		650		2
Commercial and industrial		—		—		16		—
Consumer and other		—		—		14		—
		1,282		11		1,728		7
Impaired loans with a valuation allowance:
Commercial real estate		396		—		24		—
Consumer real estate		827		5		217		2
Construction and land development		—		—		28		—
Commercial and industrial		158		3		293		—
Consumer and other		—		—		13		—
		1,381		8		575		2
PCI loans:
Commercial real estate		490		—		2,529		—
Consumer real estate		1,168		38		1,099		—
Construction and land development		116		—		—		—
Commercial and industrial		338		3		—		—
Consumer real estate		22		—		—		—
		2,134		41		3,628		—

Total impaired loans	$	4,797	$	60	$	5,931	$	9


	Six Months Ended June 30,
	2020				2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	315	$	4	$	495	$	25
Consumer real estate		606		14		774		4
Construction and land development		385		—		616		1
Commercial and industrial		—		—		33		1
Consumer and other		—		—		19		—
		1,306		18		1,937		31
Impaired loans with a valuation allowance:
Commercial real estate		264		2		16		—
Consumer real estate		882		14		199		9
Construction and land development		—		—		19		—
Commercial and industrial		158		5		514		9
Consumer and other		—		—		38		—
		1,304		21		786		18
PCI loans:
Commercial real estate		333		1		1,686		(9)
Consumer real estate		1,174		39		732		2
Construction and land development		77		—		—		—
Commercial and industrial		361		3		—		—
Consumer and other		31		—		—		—
		1,976		43		2,418		(7)

Total impaired loans	$	4,586	$	82	$	5,141	$	42

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period, Carrying Amount of Loans

The Company has acquired loans where there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans are as follows (in thousands):


	June 30,		December 31,
	2020		2019
Commercial real estate	$	24,551	$	21,570
Consumer real estate		14,191		8,411
Construction and land development		7,610		5,394
Commercial and industrial		2,212		2,540
Consumer and other		240		504
Total loans		48,804		38,419
Less: Remaining purchase discount		(13,845)		(11,432)
Total loans, net of purchase discount		34,959		26,987
Less: Allowance for loan losses		—		(156)
Carrying amount, net of allowance	$	34,959	$	26,831

Schedule of Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement

Activity related to the accretable yield on loans acquired with deteriorated credit quality is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Accretable yield, beginning of period	$	10,979	$	8,644	$	8,454	$	7,052
Additions		—		—		2,515		—
Accretion income		(1,057)		(1,026)		(3,134)		(2,280)
Reclassification		247		323		2,163		1,358
Other changes, net		1,608		339		1,779		2,150
Accretable yield, end of period	$	11,777	$	8,280	$	11,777	$	8,280