XML 23 R12.htm IDEA: XBRL DOCUMENT v3.22.2.2
Loans
 9 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
Loans Loans
The following table presents the composition of loans segregated by legacy and purchased loans and by class of loans, as of September 30, 2022 and December 31, 2021. Purchased loans are defined as loans that were acquired in bank acquisitions.
September 30, 2022
(dollars in thousands)Legacy LoansPurchased LoansTotal
Construction, land and land development$215,731 $19,923 $235,654 
Other commercial real estate750,531 135,276 885,807 
Total commercial real estate966,262 155,199 1,121,461 
Residential real estate198,377 42,874 241,251 
Commercial, financial, & agricultural (*)191,362 15,223 206,585 
Consumer and other16,256 1,060 17,316 
Total Loans$1,372,257 $214,356 $1,586,613 
December 31, 2021
(dollars in thousands)Legacy LoansPurchased LoansTotal
Construction, land and land development$119,953 $45,493 $165,446 
Other commercial real estate595,739 191,653 787,392 
Total commercial real estate715,692 237,146 952,838 
Residential real estate159,469 53,058 212,527 
Commercial, financial, & agricultural (*)113,040 41,008 154,048 
Consumer and other16,003 2,561 18,564 
Total Loans$1,004,204 $333,773 $1,337,977 
(*) Includes $98,000 and $9.0 million in PPP loans at September 30, 2022 and December 31, 2021, respectively.
Commercial and industrial loans are extended to a diverse group of businesses within the Company’s market area. These loans are often underwritten based on the borrower’s ability to service the debt from income from the business. Real estate construction loans often require loan funds to be advanced prior to completion of the project. Due to uncertainties inherent in estimating construction costs, changes in interest rates and other economic conditions, these loans often pose a higher risk than other types of loans. Consumer loans are originated at the Bank level.
Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (1) the risk grade assigned to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4) nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets.
The Company uses a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. A description of the general characteristics of the grades is as follows:
•Grades 1, 2 and 3 - Borrowers with these assigned risk grades range from virtual absence of risk to minimal risk. Such loans may be secured by Company-issued and controlled certificates of deposit or properly margined equity securities or bonds. Other loans comprising these grades are made to companies that have been in existence for a long period of time with many years of consecutive profits and strong equity, good liquidity, excellent debt service ability and unblemished past performance, or to exceptionally strong individuals with collateral of unquestioned value that fully secures the loans. Loans in this category fall into the “pass” classification.
•Grades 4 and 5 - Loans assigned these “pass” risk grades are made to borrowers with acceptable credit quality and risk. The risk ranges from loans with no significant weaknesses in repayment capacity and collateral protection to acceptable loans with one or more risk factors considered to be more than average. These loans are also included in into the “pass” classification.
•Grade 6 - This grade includes “special mention” loans on management’s watch list and is intended to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the short-term.
•Grades 7 and 8 - These grades includes “substandard” loans in accordance with regulatory guidelines. This category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt in accordance with the agreed terms. Loans considered to be impaired are assigned grade 8, and these loans often have assigned loss allocations as part of the allowance for loan and lease losses. Generally, loans on which interest accrual has been stopped would be included in this grade.
•Grades 9 and 10 - These grades correspond to regulatory classification definitions of “doubtful” and “loss,” respectively. In practice, any loan with these grades would be for a very short period of time, and generally the Company has no loans with these assigned grades. Management manages the Company’s problem loans in such a way that uncollectible loans or uncollectible portions of loans are charged off immediately with any residual, collectible amounts assigned a risk grade of 7 or 8. 
The following table presents the loan portfolio, excluding purchased loans, by credit quality indicator (risk grade) as of September 30, 2022 and December 31, 2021. Those loans with a risk grade of 1, 2, 3, 4 and 5 have been combined in the pass column for presentation purposes.
(dollars in thousands)PassSpecial MentionSubstandardTotal Loans
September 30, 2022
Construction, land and land development$215,087 $240 $404 $215,731 
Other commercial real estate726,455 14,872 9,204 750,531 
Total commercial real estate941,542 15,112 9,608 966,262 
Residential real estate188,721 5,819 3,837 198,377 
Commercial, financial, & agricultural189,093 802 1,467 191,362 
Consumer and other16,149 58 49 16,256 
Total Loans$1,335,505 $21,791 $14,961 $1,372,257 
(dollars in thousands)
December 31, 2021
Construction, land and land development$117,044 $2,634 $275 $119,953 
Other commercial real estate562,228 25,718 7,793 595,739 
Total commercial real estate679,272 28,352 8,068 715,692 
Residential real estate148,507 5,733 5,229 159,469 
Commercial, financial, & agricultural110,267 1,488 1,285 113,040 
Consumer and other15,787 78 $138 16,003 
Total Loans$953,833 $35,651 $14,720 $1,004,204 
The following table presents the purchased loan portfolio by credit quality indicator (risk grade) as of September 30, 2022 and December 31, 2021. Those loans with a risk grade of 1, 2, 3, 4 or 5 have been combined in the pass column for presentation purposes. For the period ending September 30, 2022, the Company did not have any loans classified as “doubtful” or a “loss”.
(dollars in thousands)PassSpecial MentionSubstandardTotal Loans
September 30, 2022
Construction, land and land development$19,923 $— $— $19,923 
Other commercial real estate131,111 3,117 1,048 135,276 
Total commercial real estate151,034 3,117 1,048 155,199 
Residential real estate40,444 632 1,798 42,874 
Commercial, financial, & agricultural14,638 82 503 15,223 
Consumer and other1,060 — — 1,060 
Total Loans$207,176 $3,831 $3,349 $214,356 
December 31, 2021
Construction, land and land development$45,432 $— $61 $45,493 
Other commercial real estate186,905 3,518 1,230 191,653 
Total commercial real estate232,337 3,518 1,291 237,146 
Residential real estate49,875 563 2,620 53,058 
Commercial, financial, & agricultural40,711 — 297 41,008 
Consumer and other2,558 3 — 2,561 
Total Loans$325,481 $4,084 $4,208 $333,773 
A loan’s risk grade is assigned at loan origination and is based on the financial strength of the borrower and the type of collateral. Loan risk grades are subject to review at various times throughout the year as part of the Company’s ongoing loan review process. Loans with an assigned risk grade of six or below and an outstanding balance of $250,000 or more are reassessed on a quarterly basis. During this reassessment process individual reserves may be identified and placed against certain loans which are not considered impaired.
In assessing the overall economic condition of the markets in which it operates, the Company monitors the unemployment rates for its major service areas. The unemployment rates are reviewed on a quarterly basis as part of the allowance for loan loss determination.
Loans are placed on nonaccrual status if principal or interest payments become 90 days past due or when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory guidelines. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due.
The following table presents the aging of the amortized cost basis in legacy loans by aging category and accrual status as of September 30, 2022 and December 31, 2021:
(dollars in thousands)30-89 Days
Past Due		90 Days
or More
Past Due		Total Accruing
Loans Past Due		Nonaccrual
Loans		Current LoansTotal Loans
September 30, 2022
Construction, land and land development$315 $— $315 $143 $215,273 $215,731 
Other commercial real estate650 — 650 1,283 748,598 750,531 
Total commercial real estate965 — 965 1,426 963,871 966,262 
Residential real estate411 — 411 1,457 196,509 198,377 
Commercial, financial, & agricultural159 — 159 900 190,303 191,362 
Consumer and other29 — 29 26 16,201 16,256 
Total Loans$1,564 $— $1,564 $3,809 $1,366,884 $1,372,257 
December 31, 2021
Construction, land and land development$6 $— $6 $— $119,947 $119,953 
Other commercial real estate349 — 349 577 594,813 595,739 
Total commercial real estate355 — 355 577 714,760 715,692 
Residential real estate421 — 421 2,641 156,407 159,469 
Commercial, financial, & agricultural69 — 69 708 112,263 113,040 
Consumer and other93 — 93 26 15,884 16,003 
Total Loans$938 $— $938 $3,952 $999,314 $1,004,204 
The following table presents the aging of the amortized cost basis in purchased loans by aging category and accrual status as of September 30, 2022 and December 31, 2021:
(dollars in thousands)30-89 Days
Past Due		90 Days
or More
Past Due		Total Accruing
Loans Past Due		Nonaccrual
Loans		Current LoansTotal Loans
September 30, 2022
Construction, land and land development$— $— $— $— $19,923 $19,923 
Other commercial real estate— — — 126 135,150 135,276 
Total commercial real estate— — — 126 155,073 155,199 
Residential real estate125 — 125 864 41,885 42,874 
Commercial, financial, & agricultural— — — 503 14,720 15,223 
Consumer and other— — — — 1,060 1,060 
Total Loans$125 $— $125 $1,493 $212,738 $214,356 
December 31, 2021
Construction, land and land development$2,680 $— $2,680 $31 $42,782 $45,493 
Other commercial real estate— — — 260 191,393 191,653 
Total commercial real estate2,680 — 2,680 291 234,175 237,146 
Residential real estate560 — 560 1,198 51,300 53,058 
Commercial, financial, & agricultural389 — 389 — 40,619 41,008 
Consumer and other— — — 8 2,553 2,561 
Total Loans$3,629 $— $3,629 $1,497 $328,647 $333,773 
The following table details impaired loan data, including purchased credit impaired loans, as of September 30, 2022.
September 30, 2022
(dollars in thousands)Unpaid
Contractual
Principal
Balance		Recorded InvestmentRelated
Allowance		Average
Recorded
Investment
With No Related Allowance Recorded
Construction, land and land development$— $— $— $21 
Commercial real estate4,954 4,954 — 5,964 
Residential real estate640 640 — 804 
Commercial, financial & agriculture708 708 — 325 
Consumer & other— — — 1 
6,302 6,302 — 7,115 
With An Allowance Recorded
Construction, land and land development235 235 70 59 
Commercial real estate412 412 126 624 
Residential real estate299 350 57 781 
Commercial, financial & agriculture452 456 251 369 
Consumer & other— — — — 
1,398 1,453 504 1,833 
Purchased Credit Impaired Loans
Construction, land and land development— — — — 
Commercial real estate812 812 17 1,061 
Residential real estate— — — 14 
Commercial, financial & agriculture— — — — 
Consumer & other— — — 113 
812 812 17 1,188 
Total
Construction, land and land development235 235 70 80 
Commercial real estate6,178 6,178 143 7,649 
Residential real estate939 990 57 1,599 
Commercial, financial & agriculture1,160 1,164 251 694 
Consumer & other— — — 114 
$8,512 $8,567 $521 $10,136 
The following table details impaired loan data, including purchased credit impaired loans. as of December 31, 2021.
December 31, 2021
(dollars in thousands)Unpaid
Contractual
Principal
Balance		Recorded InvestmentRelated
Allowance		Average
Recorded
Investment
With No Related Allowance Recorded
Construction, land and land development$62 $62 $— $4,311 
Commercial real estate7,203 6,369 — 8,113 
Residential real estate958 997 — 1,083 
Commercial, financial & agriculture75 75 — 56 
Consumer & other— — — — 
8,298 7,503 — 13,563 
With An Allowance Recorded
Construction, land and land development— — — — 
Commercial real estate430 483 148 4,429 
Residential real estate685 773 108 1,029 
Commercial, financial & agriculture— — — 79 
Consumer & other— — — 1 
1,115 1,256 256 5,538 
Purchased Credit Impaired Loans
Construction, land and land development— — — 51 
Commercial real estate2,003 1,916 18 802 
Residential real estate4 — 6 7 
Commercial, financial & agriculture— — — 35 
Consumer & other192 73 96 72 
2,199 1,989 120 967 
Total
Construction, land and land development62 62 — 4,362 
Commercial real estate9,636 8,768 166 13,344 
Residential real estate1,647 1,770 114 2,119 
Commercial, financial & agriculture75 75 — 170 
Consumer & other192 73 96 73 
$11,612 $10,748 $376 $20,068 
Interest income recorded on impaired loans during the three months ended September 30, 2022 and 2021 was $152,000 and $261,000, respectively. Interest income recorded on impaired loans during the nine months ended September 30, 2022 and 2021 was $532,000 and $825,000, respectively.
Troubled Debt Restructurings
The restructuring of a loan is considered a troubled debt restructuring ("TDR") if both the borrower is experiencing financial difficulties and the Company has granted a concession to the terms of the loan. Concessions may include interest rate reductions to below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.
As discussed in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2021, which are included in the Company’s 2021 Form 10-K, once a loan is identified as a TDR, it is accounted for as an impaired loan. The Company had no unfunded commitments to lend to a customer that has a troubled debt restructured loan as of September 30, 2022. The Company had one commercial real estate loan restructured during the three and nine month period ended September 30, 2022 with outstanding principal balance of $181,000. The loan was restructured related to payment terms. Loans modified in a TDR are considered to be in default once the loan becomes 90 days past due. A TDR may cease being classified as impaired if the loan is subsequently modified at market terms and, has performed according to the modified terms for at least six months, and there has not been any prior principal forgiveness on a cumulative basis.
The Company had no loans that subsequently defaulted during the three and nine months ended September 30, 2022 and 2021.