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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2021

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

(Dollars in thousands)	June 30, 2021			December 31, 2020
Commercial and industrial	$	304,178		$	123,675
Paycheck Protection Program		130,489			292,068
Real estate – construction, commercial		143,215			54,702
Real estate – construction, residential		47,894			18,040
Real estate – mortgage, commercial		672,592			273,499
Real estate – mortgage, residential		490,753			213,404
Real estate – mortgage, farmland		6,537			3,615
Consumer		65,220			46,684
Gross loans		1,860,878			1,025,687
Less: Deferred loan fees, net of costs		(1,008	)		(4,271	)
Total	$	1,859,870		$	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 consolidated balance sheets as of the dates stated.

(Dollars in thousands)	June 30, 2021		December 31, 2020
PCI loans
Outstanding principal balance	$	108,220	$	1,278
Recorded investment		94,163		1,085
Purchased performing loans
Outstanding principal balance		877,755		97,301
Recorded investment		874,825		96,317
Total acquired loans
Outstanding principal balance		985,975		98,579
Recorded investment		968,988		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						For the six months ended
(Dollars in thousands)	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Balance, beginning of period	$	9,439		$	169		$	123		$	185
Additions		—			—			10,030			—
Accretion		(1,625	)		(16	)		(2,465	)		(32	)
Reclassification of nonaccretable difference due to improvement in expected cash flows		2			—			106			—
Other changes, net		14			—			36			—
Balance, end of period	$	7,830		$	153		$	7,830		$	153

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.

	June 30, 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	$	338	$	332	$	—	$	6,180	$	6,850	$	9,235	$	288,093		$	304,178
Paycheck Protection Program		—		—		—		—		—		—		130,489			130,489
Real estate – construction, commercial		16,593		7		9		89		16,698		22,722		103,795			143,215
Real estate – construction, residential		—		—		451		255		706		—		47,188			47,894
Real estate – mortgage, commercial		2,007		—		28		3,220		5,255		52,945		614,392			672,592
Real estate – mortgage, residential		924		2,182		1,308		1,588		6,002		7,905		476,846			490,753
Real estate – mortgage, farmland		—		—		—		—		—		—		6,537			6,537
Consumer		668		226		97		594		1,585		1,356		62,279			65,220
Less: Deferred loan fees, net of costs		—		—		—		—		—		—		(1,008	)		(1,008	)
Total Loans	$	20,530	$	2,747	$	1,893	$	11,926	$	37,096	$	94,163	$	1,728,611		$	1,859,870

	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.

	June 30, 2021
(Dollars in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Current Loans		Total Loans
Commercial and industrial	$	—	$	—	$	9,235	$	9,235
Real estate – construction, commercial		13,904		9		8,809		22,722
Real estate – mortgage, commercial		133		28		52,784		52,945
Real estate – mortgage, residential		1,068		1,308		5,529		7,905
Consumer		20		—		1,336		1,356
Total PCI Loans	$	15,125	$	1,345	$	77,693	$	94,163

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

	June 30, 2021
(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment			Total
Originated and purchased performing loans:
Commercial and industrial	$	4,810	$	290,133		$	294,943
Real estate – construction, commercial		536		119,958			120,494
Real estate – construction, residential		—		47,894			47,894
Real estate – mortgage, commercial		1,378		618,269			619,647
Real estate – mortgage, residential		976		481,871			482,847
Real estate – mortgage, farmland		—		6,537			6,537
Consumer		—		63,864			63,864
Total originated and purchased performing loans		7,700		1,628,526			1,636,226
PCI loans:
Commercial and industrial		—		9,235			9,235
Real estate – construction, commercial		—		22,721			22,721
Real estate – mortgage, commercial		—		52,945			52,945
Real estate – mortgage, residential		—		7,906			7,906
Consumer		—		1,356			1,356
Total PCI loans		—		94,163			94,163
Gross loans		7,700		1,722,689			1,730,389
Less: Deferred loan fees, net of costs		—		(722	)		(722	)
Total	$	7,700	$	1,721,967		$	1,729,667

	December 31, 2020
(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment			Total
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.

	June 30, 2021						December 31, 2020
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and industrial	$	4,735	$	4,735	$	—	$	234	$	234	$	144
Real estate – construction, commercial		535		535		—		—		—		—
Real estate – mortgage, commercial		182		182		—		1,645		2,030		—
Real estate – mortgage, residential		919		919		—		452		571		—
With an allowance recorded:
Real estate – mortgage, commercial		1,188		1,188		387		—		—		—
Real estate – mortgage, residential		57		57		57		—		—		—
	$	7,616	$	7,616	$	444	$	2,331	$	2,835	$	144

	For the three months ended
	June 30, 2021				June 30, 2020
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial and industrial	$	4,324	$	49	$	—	$	—
Real estate – construction, commercial		537		8		—		—
Real estate – mortgage, commercial		185		3		—		—
Real estate – mortgage, residential		920		7		581		—
With an allowance recorded:
Commercial and industrial		—		—		265		—
Real estate – mortgage, commercial		1,207		17		—		—
Real estate – mortgage, residential		57		—		376		—
	$	7,230	$	84	$	1,222	$	—

	For the six months ended
	June 30, 2021				June 30, 2020
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial and industrial	$	4,409	$	99	$	—	$	—
Real estate – construction, commercial		539		16		—		—
Real estate – mortgage, commercial		210		7		—		—
Real estate – mortgage, residential		890		13		581		—
With an allowance recorded:
Commercial and industrial		—		—		265		1
Real estate – mortgage, commercial		1,211		34		—		—
Real estate – mortgage, residential		116		—		376		2
	$	7,375	$	169	$	1,222	$	3

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						For the six months ended
(Dollars in thousands)	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
ALL, beginning of period	$	13,402		$	4,897		$	13,827		$	4,572
Charge-offs
Commercial and industrial	$	(857	)	$	—		$	(1,216	)	$	—
Real estate – mortgage		(1	)		—			(13	)		—
Consumer		(133	)		(255	)		(396	)		(574	)
Total charge-offs		(991	)		(255	)		(1,625	)		(574	)
Recoveries
Commercial and industrial		394			—			450			1
Real estate – mortgage		87			—			103			—
Consumer		115			64			252			132
Total recoveries		596			64			805			133
Net charge-offs		(395	)		(191	)		(820	)		(441	)
Provision for loan losses		—			3,500			—			4,075
ALL, end of period	$	13,007		$	8,206		$	13,007		$	8,206

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 June 30, 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	$	3,459		$	960		$	150			4,215	$	1,485		$	18	$	3,115		$	13,402
Charge-offs		(857	)		—			—			—		(1	)		—		(133	)		(991	)
Recoveries		394			—			—			79		8			—		115			596
Provision for loan losses		502			(208	)		(72	)		1,953		(734	)		5		(1,446	)		—
ALL, end of period	$	3,498		$	752		$	78		$	6,247	$	758		$	23	$	1,651		$	13,007
Individually evaluated for impairment	$	—		$	—		$	—		$	387	$	57		$	—	$	—		$	444
Collectively evaluated for impairment	$	3,498		$	752		$	78		$	5,860	$	701		$	23	$	1,651		$	12,563

	For the six months ended June 30, 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		(1,216	)		—			—			—		(13	)		—		(396	)		(1,625	)
Recoveries		450			—			—			79		24			—		252			805
Provision for loan losses		502			(208	)		(72	)		1,953		(734	)		5		(1,446	)		—
ALL, end of period	$	3,498		$	752		$	78		$	6,247	$	758		$	23	$	1,651		$	13,007
Individually evaluated for impairment	$	—		$	—		$	—		$	387	$	57		$	—	$	—		$	444
Collectively evaluated for impairment	$	3,498		$	752		$	78		$	5,860	$	701		$	23	$	1,651		$	12,563

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.

	June 30, 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	$	5,324	$	3,578	$	133,649	$	131,944	$	13,441	$	5,787	$	10,455	$	304,178
Paycheck Protection Program		130,489		—		—		—		—		—		—		130,489
Real estate – construction, commercial		—		538		36,043		76,956		8,625		18,988		2,065		143,215
Real estate – construction, residential		108		33		19,401		21,681		6,416		—		255		47,894
Real estate – mortgage, commercial		—		3,766		325,958		235,860		41,193		56,990		8,825		672,592
Real estate – mortgage residential		1,663		9,393		313,336		142,353		14,530		4,158		5,320		490,753
Real estate – mortgage, farmland		384		—		1,172		4,981		—		—		—		6,537
Consumer		354		44		18,655		43,373		1,685		496		613		65,220
Gross loans	$	138,322	$	17,352	$	848,214	$	657,148	$	85,890	$	86,419	$	27,533	$	1,860,878
Less: Deferred loan fees, net of costs																(1,008	)
Total															$	1,859,870

	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