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Loans and Leases and Allowance for Loan and Lease Losses (Tables)

9 Months Ended

Sep. 30, 2021

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


	September 30, 2021						December 31, 2020
	PCI		All Other				PCI		All Other
	Loans and Leases¹		Loans and Leases		Total		Loans and Leases¹		Loans and Leases		Total
Commercial real estate	$	23,156	$	1,290,091	$	1,313,247	$	16,123	$	996,853	$	1,012,976
Consumer real estate		10,863		467,298		478,161		10,258		433,672		443,930
Construction and land development		2,904		323,470		326,374		5,348		272,727		278,075
Commercial and industrial		2,871		466,868		469,739		308		634,138		634,446
Leases		3,748		49,648		53,396		—		—		—
Consumer and other		87		11,659		11,746		27		12,789		12,816
Total loans and leases		43,629		2,609,034		2,652,663		32,064		2,350,179		2,382,243
Less: Allowance for loan and lease losses		(427)		(18,868)		(19,295)		(309)		(18,037)		(18,346)
Loans and leases, net	$	43,202	$	2,590,166	$	2,633,368	$	31,755	$	2,332,142	$	2,363,897

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

Schedule of Impaired and Performing Loans Receivable

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


					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
September 30, 2021:
Performing loans and leases	$	1,289,233	$	464,881	$	323,470	$	466,769	$	49,648	$	11,659	$	2,605,660
Impaired loans and leases		858		2,417		—		99		—		—		3,374
		1,290,091		467,298		323,470		466,868		49,648		11,659		2,609,034
PCI loans and leases		23,156		10,863		2,904		2,871		3,748		87		43,629
Total loans and leases	$	1,313,247	$	478,161	$	326,374	$	469,739	$	53,396	$	11,746	$	2,652,663

December 31, 2020:
Performing loans and leases	$	992,982	$	432,356	$	272,727	$	633,992	$	—	$	12,789	$	2,344,846
Impaired loans and leases		3,871		1,316		—		146		—		—		5,333
		996,853		433,672		272,727		634,138		—		12,789		2,350,179
PCI loans and leases		16,123		10,258		5,348		308		—		27		32,064
Total loans and leases	$	1,012,976	$	443,930	$	278,075	$	634,446	$	—	$	12,816	$	2,382,243

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

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


					Construction		Commercial				Consumer
	Commercial		Consumer		and Land		and				and
	Real Estate		Real Estate		Development		Industrial		Leases		Other		Total
September 30, 2021:
Performing loans and leases	$	8,927	$	3,316	$	2,218	$	3,493	$	225	$	103	$	18,282
Impaired loans and leases		417		70		—		99		—		—		586
		9,344		3,386		2,218		3,592		225		103		18,868
PCI loans and leases		61		155		—		209		—		2		427
Total loans and leases	$	9,405	$	3,541	$	2,218	$	3,801	$	225	$	105	$	19,295

December 31, 2020:
Performing loans and leases	$	7,579	$	3,267	$	2,076	$	4,768	$	—	$	110	$	17,800
Impaired loans and leases		—		116		—		121		—		—		237
		7,579		3,383		2,076		4,889		—		110		18,037
PCI loans and leases		—		88		—		218		—		3		309
Total loans and leases	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346

Schedule of Allowance for Loan Losses

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


	Three Months Ended September 30, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	8,382	$	3,323	$	2,061	$	4,442	$	—	$	102	$	18,310
Charged-off loans and leases		—		—		—		(41)		(68)		(132)		(241)
Recoveries of charge-offs		23		13		—		3		5		33		77
Provision charged to expense		1,000		205		157		(603)		288		102		1,149
Ending balance	$	9,405	$	3,541	$	2,218	$	3,801	$	225	$	105	$	19,295


	Three Months Ended September 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	6,595	$	3,313	$	1,795	$	4,443	$	—	$	108	$	16,254
Charged-off loans and leases		—		(21)		—		(60)		—		(89)		(170)
Recoveries of charge-offs		11		17		—		55		—		16		99
Provision charged to expense		1,123		135		265		1,025		—		86		2,634
Ending balance	$	7,729	$	3,444	$	2,060	$	5,463	$	—	$	121	$	18,817


	Nine Months Ended September 30, 2021
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	7,579	$	3,471	$	2,076	$	5,107	$	—	$	113	$	18,346
Charged-off loans and leases		—		(60)		—		(45)		(68)		(341)		(514)
Recoveries of charge-offs		29		34		—		13		5		171		252
Provision charged to expense		1,797		96		142		(1,274)		288		162		1,211
Ending balance	$	9,405	$	3,541	$	2,218	$	3,801	$	225	$	105	$	19,295


	Nine Months Ended September 30, 2020
			Consumer		Construction		Commercial
	Commercial		Real		and Land		and				Consumer
	Real Estate		Estate		Development		Industrial		Leases		and Other		Total
Beginning balance	$	4,508	$	2,576	$	1,127	$	1,957	$	—	$	75	$	10,243
Charged-off loans and leases		—		(23)		—		(77)		—		(231)		(331)
Recoveries of charge-offs		16		34		2		103		—		67		222
Provision charged to expense		3,205		857		931		3,480		—		210		8,683
Ending balance	$	7,729	$	3,444	$	2,060	$	5,463	$	—	$	121	$	18,817

Loan Credit Quality Indicators

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


	September 30, 2021
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	1,245,064	$	461,422	$	323,156	$	460,588	$	49,648	$	11,591	$	2,551,469
Watch		40,106		1,490		240		5,767		—		45		47,648
Special mention		3,841		1,527		—		244		—		—		5,612
Substandard		1,080		2,859		74		224		—		23		4,260
Doubtful		—		—		—		45		—		—		45
Total		1,290,091		467,298		323,470		466,868		49,648		11,659		2,609,034

PCI Loans and Leases:
Pass		11,769		8,473		2,344		2,824		3,748		69		29,227
Watch		7,719		754		91		1		—		18		8,583
Special mention		579		70		—		—		—		—		649
Substandard		3,089		1,566		469		46		—		—		5,170
Doubtful		—		—		—		—		—		—		—
Total		23,156		10,863		2,904		2,871		3,748		87		43,629
Total loans and leases	$	1,313,247	$	478,161	$	326,374	$	469,739	$	53,396	$	11,746	$	2,652,663


	December 31, 2020
					Construction		Commercial
	Commercial		Consumer		and Land		and				Consumer
Non PCI Loans and Leases:	Real Estate		Real Estate		Development		Industrial		Leases		and Other		Total
Pass	$	922,153	$	417,302	$	269,350	$	625,836	$	—	$	12,622	$	2,247,263
Watch		66,287		14,218		3,296		7,673		—		137		91,611
Special mention		4,446		46		—		320		—		—		4,812
Substandard		3,967		2,020		81		261		—		30		6,359
Doubtful		—		86		—		48		—		—		134
Total		996,853		433,672		272,727		634,138		—		12,789		2,350,179

PCI Loans and Leases:
Pass		11,072		8,382		1,008		262		—		25		20,749
Watch		3,381		224		3,820		—		—		2		7,427
Special mention		19		57		—		—		—		—		76
Substandard		1,651		1,595		520		46		—		—		3,812
Doubtful		—		—		—		—		—		—		—
Total		16,123		10,258		5,348		308		—		27		32,064
Total loans and leases	$	1,012,976	$	443,930	$	278,075	$	634,446	$	—	$	12,816	$	2,382,243

Past Due Loans and Leases

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


	September 30, 2021
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	1,599	$	—	$	—	$	858	$	2,457	$	23,156	$	1,287,634	$	1,313,247
Consumer real estate		170		—		—		2,564		2,734		10,863		464,564		478,161
Construction and land development		45		—		—		—		45		2,904		323,425		326,374
Commercial and industrial		342		214		—		125		681		2,871		466,187		469,739
Leases		377		42		—		—		419		3,748		49,229		53,396
Consumer and other		193		—		—		20		213		87		11,446		11,746
Total	$	2,726	$	256	$	—	$	3,567	$	6,549	$	43,629	$	2,602,485	$	2,652,663


	December 31, 2020
	30-60 Days		61-89 Days		Past Due 90				Total
	Past Due and		Past Due and		Days or More				Past Due and
	Accruing		Accruing		and Accruing		Nonaccrual		Nonaccrual		PCI		Current		Total
Commercial real estate	$	134	$	—	$	67	$	3,740	$	3,941	$	16,123	$	992,912	$	1,012,976
Consumer real estate		1,916		51		82		1,823		3,872		10,258		429,800		443,930
Construction and land development		245		—		—		12		257		5,348		272,470		278,075
Commercial and industrial		12		76		—		36		124		308		634,014		634,446
Leases		—		—		—		—		—		—		—		—
Consumer and other		14		5		—		22		41		27		12,748		12,816
Total	$	2,321	$	132	$	149	$	5,633	$	8,235	$	32,064	$	2,341,944	$	2,382,243

Impaired Loans

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


	September 30, 2021						December 31, 2020
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	—	$	3,871	$	3,872	$	—
Consumer real estate		2,156		2,157		—		888		888		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		2,156		2,157		—		4,759		4,760		—
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		858		417		—		—		—
Consumer real estate		261		263		70		428		428		116
Construction and land development		—		—		—		—		—		—
Commercial and industrial		99		99		99		146		146		121
Leases		—		—		—		—		—		—
Consumer and other		—		—		—		—		—		—
		1,218		1,220		586		574		574		237
PCI loans and leases:
Commercial real estate		1,206		1,500		61		—		—		—
Consumer real estate		1,196		1,318		155		1,827		2,086		88
Construction and land development		—		—		—		—		—		—
Commercial and industrial		255		228		209		270		234		218
Leases		—		—		—		—		—		—
Consumer and other		6		5		2		21		20		3
		2,663		3,051		427		2,118		2,340		309
Total impaired loans and leases	$	6,037	$	6,428	$	1,013	$	7,451	$	7,674	$	546


	Three Months Ended September 30,
	2021				2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	—	$	—	$	552	$	3
Consumer real estate		2,171		19		758		3
Construction and land development		—		—		—		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		2,171		19		1,310		6
Impaired loans and leases with a valuation allowance:
Commercial real estate		858		—		198		—
Consumer real estate		261		3		440		4
Construction and land development		—		—		—		—
Commercial and industrial		154		2		379		2
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,273		5		1,017		6
PCI loans and leases:
Commercial real estate		1,230		27		8		—
Consumer real estate		1,176		21		1,869		38
Construction and land development		—		—		—		—
Commercial and industrial		258		1		305		2
Leases		—		—		—		—
Consumer and other		10		—		27		—
		2,674		49		2,209		40
Total impaired loans and leases	$	6,118	$	73	$	4,536	$	52



	Nine Months Ended September 30,
	2021				2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans and leases without a valuation allowance:
Commercial real estate	$	1,000	$	1	$	374	$	7
Consumer real estate		1,778		39		653		17
Construction and land development		—		—		289		—
Commercial and industrial		—		—		—		—
Leases		—		—		—		—
Consumer and other		—		—		—		—
		2,778		40		1,316		24
Impaired loans and leases with a valuation allowance:
Commercial real estate		1,218		104		198		2
Consumer real estate		352		11		712		18
Construction and land development		—		—		—		—
Commercial and industrial		141		7		269		7
Leases		—		—		—		—
Consumer and other		—		—		—		—
		1,711		122		1,179		27
PCI loans and leases:
Commercial real estate		410		27		250		1
Consumer real estate		1,169		64		1,344		77
Construction and land development		—		—		58		—
Commercial and industrial		263		3		343		5
Leases		—		—		—		—
Consumer and other		15		—		29		—
		1,857		94		2,024		83
Total impaired loans and leases	$	6,346	$	256	$	4,519	$	134

Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Acquired During Period Carrying Amount Of Loans

The Company has acquired loans and leases 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 and leases are as follows (in thousands):


	September 30,		December 31,
	2021		2020
Commercial real estate	$	31,664	$	23,787
Consumer real estate		13,211		12,692
Construction and land development		3,686		1,812
Commercial and industrial		3,794		6,521
Leases		4,133		—
Consumer and other		154		161
Total loans and leases		56,642		44,973
Less: Remaining purchase discount		(13,013)		(12,909)
Total loans and leases, net of purchase discount		43,629		32,064
Less: Allowance for loan and leases losses		(427)		(309)
Carrying amount, net of allowance	$	43,202	$	31,755

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

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Accretable yield, beginning of period	$	14,522	$	11,777	$	16,889	$	8,454
Additions		4,072		—		4,721		2,515
Accretion income		(2,151)		(1,267)		(5,180)		(4,401)
Reclassification		254		265		1,931		2,428
Other changes, net		(1,034)		7,405		(2,698)		9,184
Accretable yield, end of period	$	15,663	$	18,180	$	15,663	$	18,180