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Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2021

The following table presents loans held for investment as of the dates stated.

(Dollars in thousands)	March 31, 2021			December 31, 2020
Commercial and industrial	$	286,835		$	123,675
Paycheck Protection Program		608,692			292,068
Real estate – construction, commercial		155,631			54,702
Real estate – construction, residential		49,338			18,040
Real estate – mortgage, commercial		649,474			273,499
Real estate – mortgage, residential		496,301			213,404
Real estate – mortgage, farmland		5,245			3,615
Consumer		65,210			46,684
Gross loans		2,316,726			1,025,687
Less: Deferred loan fees, net of costs		(12,184	)		(4,271	)
Total	$	2,304,542		$	1,021,416

Summary of Acquired Loans Included in Consolidated Statement of Condition

The following table presents the outstanding principal balance and related recorded investment of these acquired loans included in the Company’s consolidated balance sheets as of the dates stated.

(Dollars in thousands)	March 31, 2021		December 31, 2020
PCI loans
Outstanding principal balance	$	112,964	$	1,278
Recorded investment		97,892		1,085
Purchased performing loans
Outstanding principal balance		967,580		97,301
Recorded investment		964,056		96,317
Total acquired loans
Outstanding principal balance		1,080,544		98,579
Recorded investment		1,061,948		97,402

Summary of Changes in Accretable Yield on Purchased Credit Impaired Loans

The following table presents the changes in the accretable yield for PCI loans for the periods stated.

	For the three months ended
(Dollars in thousands)	March 31, 2021			March 31, 2020
Balance, beginning of period	$	123		$	188
Additions		10,030			—
Accretion		(840	)		(16	)
Reclassification of nonaccretable difference due to improvement in expected cash flows		104			—
Other changes, net		22			(1	)
Balance, end of period	$	9,439		$	171

Summary of Financing Receivable, Past Due

The following tables present the aging of the recorded investment of loans held for investment as of the dates stated.

	March 31, 2021
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total Past Due & Nonaccrual		PCI Loans		Current Loans			Total Loans
Commercial and industrial	$	1,166	$	128	$	—	$	1,432	$	2,726	$	10,213	$	273,896		$	286,835
Paycheck Protection Program		—		—		—		—		—		—		608,692			608,692
Real estate – construction, commercial		310		—		—		—		310		31,049		124,272			155,631
Real estate – construction, residential		1,185		—		—		262		1,447		—		47,891			49,338
Real estate – mortgage, commercial		3,287		685		—		2,032		6,004		47,520		595,950			649,474
Real estate – mortgage, residential		6,027		800		7		965		7,799		7,379		481,123			496,301
Real estate – mortgage, farmland		—		—		—		—		—		—		5,245			5,245
Consumer		752		145		—		655		1,552		1,731		61,927			65,210
Less: Deferred loan fees, net of costs		—		—		—		—		—		—		(12,184	)		(12,184	)
Total Loans	$	12,727	$	1,758	$	7	$	5,346	$	19,838	$	97,892	$	2,186,812		$	2,304,542

	December 31, 2020
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total Past Due & Nonaccrual		PCI Loans		Current Loans			Total Loans
Commercial and industrial	$	1,117	$	—	$	—	$	1,310	$	2,427	$	—	$	121,248		$	123,675
Paycheck Protection Program		—		—		—		—		—		—		292,068			292,068
Real estate – construction, commercial		—		—		—		—		—		35		54,667			54,702
Real estate – construction, residential		262		—		—		—		262		—		17,778			18,040
Real estate – mortgage, commercial		771		211		—		3,643		4,625		808		268,066			273,499
Real estate – mortgage, residential		1,062		—		46		881		1,989		242		211,173			213,404
Real estate – mortgage, farmland		—		—		—		—		—		—		3,615			3,615
Consumer		935		334		—		714		1,983		—		44,701			46,684
Less: Deferred loan fees, net of costs		—		—		—				—				(4,271	)		(4,271	)
Total Loans	$	4,147	$	545	$	46	$	6,548	$	11,286	$	1,085	$	1,009,045		$	1,021,416

Summary of Recorded Investment of PCI Loans, Past Due

The following tables present the aging of the recorded investment of PCI loans as of the dates stated.

	March 31, 2021
(Dollars in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Current Loans		Total Loans
Commercial and industrial	$	—	$	187	$	10,026	$	10,213
Real estate – construction, commercial		8		10		31,032		31,050
Real estate – mortgage, commercial		722		29		46,768		47,519
Real estate – mortgage, residential		739		978		5,662		7,379
Consumer		—		4		1,727		1,731
Total PCI Loans	$	1,469	$	1,208	$	95,215	$	97,892

	December 31, 2020
(Dollars in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Current Loans		Total Loans
Real estate – construction, commercial		—		—		35		35
Real estate – mortgage, commercial		224		—		584		808
Real estate – mortgage, residential		35		—		207		242
Total PCI Loans	$	259	$	—	$	826	$	1,085

Summary of Loan Portfolio Individually and Collectively Evaluated for Impairment

The Company prepares a quarterly analysis of the ALL, with the objective of quantifying portfolio risk into a dollar amount of inherent losses. The ALL is established as losses are estimated to have occurred through a provision for loan losses charged against income and decreased by loans charged-off (net of recoveries, if any). Management’s periodic evaluation of the adequacy of the ALL is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions. While management uses the best information available to make evaluations, future adjustments may be necessary, if economic or other conditions differ substantially from the assumptions used. The allowance consists of specific and general components. The specific component relates to loans that are identified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows or the net realizable value, which is equal to the estimated fair value less estimated costs to sell, of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and those loans classified that are not impaired and is based on historical loss experience adjusted for other internal or external influences on credit quality that are not fully reflected in the historical data.

The Company follows applicable guidance issued by the Financial Accounting Standards Board. This guidance requires that losses be accrued when they are probable of occurring and can be estimated. It also requires that impaired loans, within its scope, be measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, a creditor may measure impairment based on a loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.

PPP loans are fully guaranteed by the U.S. government; therefore, the Company recorded no ALL for these loans as of March 31, 2021 and December 31, 2020. In future periods, the Company may be required to establish an ALL for these loans, which would result in a provision for loan losses charged to earnings.

The following tables present a summary of the loan portfolio individually and collectively evaluated for impairment as of the dates stated.

(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment			Total
March 31, 2021
Originated and purchased performing loans:
Commercial and industrial	$	3,169	$	273,453		$	276,622
Real estate – construction, commercial		540		124,041			124,581
Real estate – construction, residential		—		49,338			49,338
Real estate – mortgage, commercial		1,391		600,564			601,955
Real estate – mortgage, residential		592		488,330			488,922
Real estate – mortgage, farmland		—		5,245			5,245
Consumer		—		63,479			63,479
Total originated and purchased performing loans		5,692		1,604,450			1,610,142
PCI loans:
Commercial and industrial		—		10,213			10,213
Real estate – construction, commercial		—		31,050			31,050
Real estate – mortgage, commercial		—		47,519			47,519
Real estate – mortgage, residential		—		7,379			7,379
Consumer		—		1,731			1,731
Total PCI loans		—		97,892			97,892
Gross loans		5,692		1,702,342			1,708,034
Less: Deferred loan fees, net of costs		—		(1,118	)		(1,118	)
Total	$	5,692	$	1,701,224		$	1,706,916

(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment			Total
December 31, 2020
Originated and purchased performing loans:
Commercial and industrial	$	234	$	123,441		$	123,675
Real estate – construction, commercial		—		54,667			54,667
Real estate – construction, residential		—		18,040			18,040
Real estate – mortgage, commercial		1,645		271,046			272,691
Real estate – mortgage, residential		452		212,710			213,162
Real estate – mortgage, farmland		—		3,615			3,615
Consumer		—		46,684			46,684
Total originated and purchased performing loans		2,331		730,203			732,534
PCI loans:
Real estate – construction, commercial		—		35			35
Real estate – mortgage, commercial		—		808			808
Real estate – mortgage, residential		—		242			242
Total PCI loans		—		1,085			1,085
Gross loans		2,331		731,288			733,619
Less: Deferred loan fees, net of costs		—		(736	)		(736	)
Total	$	2,331	$	730,552		$	732,883

Summary of Impaired Financing Receivables

The following tables present information related to impaired loans by loan type as of the dates presented.

	March 31, 2021
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Real estate – construction, commercial	$	540	$	539	$	—	$	542	$	8
Real estate – mortgage, commercial		1,391		1,460		—		1,384		14
Real estate – mortgage, residential		592		591		—		583		6
Commercial and industrial		3,169		3,162		—		3,250		35
	$	5,692	$	5,752	$	—	$	5,217	$	63

	December 31, 2020
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Real estate – mortgage, commercial	$	1,645	$	2,030	$	—	$	2,091	$	4
Real estate – mortgage, residential		452		571		—		538		2
With an allowance recorded:
Commercial and industrial		234		234		144		362		—
	$	2,331	$	2,835	$	144	$	2,991	$	6

Summary of Allowance for Loans Losses

The following table presents an analysis of the change in the ALL by loan type as of and for the periods stated.

	For the three months ended
(Dollars in thousands)	March 31, 2021			March 31, 2020
ALL, beginning of period	$	13,827		$	4,572
Charge-offs
Commercial and industrial	$	(359	)	$	—
Real estate – mortgage		(12	)		—
Consumer		(263	)		(319	)
Total charge-offs		(634	)		(319	)
Recoveries
Commercial and industrial		56			1
Real estate – mortgage		16			—
Consumer		137			68
Total recoveries		209			69
Net charge-offs		(425	)		(250	)
Provision for loan losses		—			575
ALL, end of period	$	13,402		$	4,897

Summary of Primary Segments of ALLL, Loans Individually and Collectively Evaluated for Impairment

The following tables summarize the primary segments of the ALL, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment for the periods stated.

	For the three months ended March 31, 2021
(Dollars in thousands)	Commercial and Industrial			Real Estate – Construction Commercial		Real Estate – Construction Residential		Real Estate – Mortgage, Commercial		Real Estate – Mortgage, Residential			Real Estate – Mortgage, Farmland		Consumer			Total
ALL, beginning of period	$	3,762		$	960	$	150		4,215	$	1,481		$	18	$	3,241		$	13,827
Charge-offs		(359	)		—		—		—		(12	)		—		(263	)		(634	)
Recoveries		56			—		—		—		16			—		137			209
Provision for loan losses		—			—		—		—		—			—		—			—
ALL, end of period	$	3,459		$	960	$	150	$	4,215	$	1,485		$	18	$	3,115		$	13,402
Individually evaluated for impairment	$	—		$	—	$	—	$	—	$	—		$	—	$	—		$	—
Collectively evaluated for impairment	$	3,459		$	960	$	150	$	4,215	$	1,485		$	18	$	3,115		$	13,402

	For the three months ended March 31, 2020
(Dollars in thousands)	Commercial and Industrial		Real Estate – Construction Commercial		Real Estate – Construction Residential		Real Estate – Mortgage Commercial		Real Estate – Mortgage Residential		Real Estate – Mortgage, Farmland		Consumer			Total
ALL, beginning of period	$	841	$	220	$	60		1,604	$	510	$	9	$	1,328		$	4,572
Charge-offs		—		—		—		—		—		—		(319	)		(319	)
Recoveries		1		—		—		—		—		—		68			69
Provision for loan losses		86		27		11		62		16		—		373			575
ALL, end of period	$	928	$	247	$	71	$	1,666	$	526	$	9	$	1,450		$	4,897
Individually evaluated for impairment	$	144	$	—	$	—	$	—	$	—	$	—	$	—		$	144
Collectively evaluated for impairment	$	784	$	247	$	71	$	1,666	$	526	$	9	$	1,450		$	4,753

Summary of Accounts Notes Loans and Financing Receivable

The following tables present the Company’s loan portfolio by internal loan grade as of the dates stated.

	March 31, 2021
(Dollars in thousands)	Grade 1 Prime		Grade 2 Desirable		Grade 3 Good		Grade 4 Acceptable		Grade 5 Pass/Watch		Grade 6 Special Mention		Grade 7 Substandard		Total
Commercial and industrial	$	1,218	$	552	$	125,985	$	128,054	$	13,434	$	7,300	$	10,292	$	286,835
Paycheck Protection Program		608,692		—		—		—		—		—		—		608,692
Real estate – construction, commercial		—		650		36,028		78,234		9,045		29,605		2,069		155,631
Real estate – construction, residential		147		74		21,005		20,622		7,228		—		262		49,338
Real estate – mortgage, commercial		—		2,645		316,340		228,523		47,630		45,092		9,244		649,474
Real estate – mortgage residential		536		9,561		329,777		131,986		15,773		2,870		5,798		496,301
Real estate – mortgage, farmland		410		—		1,220		3,615		—		—		—		5,245
Consumer		398		23		18,806		42,638		2,191		497		657		65,210
Gross loans	$	611,401	$	13,505	$	849,161	$	633,672	$	95,301	$	85,364	$	28,322	$	2,316,726
Less: Deferred loan fees, net of costs																(12,184	)
Total															$	2,304,542

	December 31, 2020
(Dollars in thousands)	Grade 1 Prime		Grade 2 Desirable		Grade 3 Good		Grade 4 Acceptable		Grade 5 Pass/Watch		Grade 6 Special Mention		Grade 7 Substandard		Total
Commercial and industrial	$	844	$	484	$	23,828	$	85,928	$	7,251	$	4	$	5,336	$	123,675
Paycheck Protection Program		292,068		—		—		—		—		—		—		292,068
Real estate – construction, commercial		—		2,143		19,524		26,324		5,916		218		577		54,702
Real estate – construction, residential		—		—		3,073		8,247		6,458		—		262		18,040
Real estate – mortgage, commercial		—		3,994		128,163		114,977		15,799		2,968		7,598		273,499
Real estate – mortgage residential		—		3,583		101,078		100,601		5,750		158		2,234		213,404
Real estate – mortgage, farmland		444		—		1,175		1,996		—		—		—		3,615
Consumer		324		36		17,062		28,033		521		1		707		46,684
Gross loans	$	293,680	$	10,240	$	293,903	$	366,106	$	41,695	$	3,349	$	16,714	$	1,025,687
Less: Deferred loan fees, net of costs																(4,271	)
Total															$	1,021,416