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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2023

Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]

Schedule of Loan Portfolio

As of June 30, 2023 and December 31, 2022, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:


		June 30, 2023
		Bank				ALC				Total
		(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans		$	91,231			$	—			$	91,231
Secured by 1-4 family residential properties			84,052				1,049				85,101
Secured by multi-family residential properties			54,719				—				54,719
Secured by non-farm, non-residential properties			204,270				—				204,270
Commercial and industrial loans and leases (1)			60,568				—				60,568
Consumer loans:
Direct			5,250				2,343				7,593
Branch retail			—				10,830				10,830
Indirect			300,182				—				300,182
Total loans			800,272				14,222				814,494
Allowance for credit losses			9,897				1,639				11,536
Net loans		$	790,375			$	12,583			$	802,958


		December 31, 2022
		Bank				ALC				Total
		(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans		$	53,914			$	—			$	53,914
Secured by 1-4 family residential properties			86,518				1,477				87,995
Secured by multi-family residential properties			67,852				—				67,852
Secured by non-farm, non-residential properties			200,156				—				200,156
Commercial and industrial loans and leases (1)			73,546				—				73,546
Consumer loans:
Direct			5,145				4,706				9,851
Branch retail			—				13,992				13,992
Indirect			266,567				—				266,567
Total loans			753,698				20,175				773,873
Allowance for loan and lease losses			8,057				1,365				9,422
Net loans		$	745,641			$	18,810			$	764,451

(1)

Includes equipment financing leases, which totaled $10.7 million and $10.3 million as of June 30, 2023 and December 31, 2022, respectively.

Allowance for Credit Losses on Loans and Leases

The following tables present changes in the allowance for credit losses on loans and leases during the six months ended June 30, 2023 and 2022:


		As of and for the Six Months Ended June 30, 2023
		Construction, Land Development, and Other				Real Estate 1-4 Family				Real Estate Multi- Family				Non- Farm Non- Residential				Commercial and Industrial				Direct Consumer				Branch Retail				Indirect Consumer				Total
		(Dollars in Thousands)
Allowance for credit losses:
Beginning balance		$	517			$	832			$	646			$	1,970			$	919			$	866			$	518			$	3,154			$	9,422
Impact of adopting CECL accounting guidance			(94	)			(39	)			(85	)			(147	)			(20	)			47				628				1,833				2,123
Charge-offs			—				(55	)			—				—				—				(415	)			(266	)			(301	)			(1,037	)
Recoveries			—				23				—				—				—				347				146				33				549
Provision for (recovery of) credit losses			204				11				(145	)			(76	)			(327	)			(215	)			(90	)			1,117				479
Ending balance		$	627			$	772			$	416			$	1,747			$	572			$	630			$	936			$	5,836			$	11,536


		As of and for the Six Months Ended June 30, 2022
		Construction, Land Development, and Other				Real Estate 1-4 Family				Real Estate Multi- Family				Non- Farm Non- Residential				Commercial and Industrial				Direct Consumer				Branch Retail				Indirect Consumer				Total
		(Dollars in Thousands)
Allowance for loan and lease losses:
Beginning balance		$	628			$	690			$	437			$	1,958			$	860			$	1,004			$	304			$	2,439			$	8,320
Charge-offs			—				(7	)			—				—				—				(1,171	)			(240	)			(102	)			(1,520	)
Recoveries			2				14				—				2				—				247				57				13				335
Provision for (recovery of) loan and lease losses			(257	)			(24	)			199				(93	)			(50	)			812				437				592				1,616
Ending balance		$	373			$	673			$	636			$	1,867			$	810			$	892			$	558			$	2,942			$	8,751

Schedule of Loan and Lease Losses and Recorded Investment in Loans by Loan Classification and by Impairment Evaluation

The following table details the allowance for loan and lease losses and recorded investment in loans by loan classification and by impairment evaluation as of December 31, 2022, as determined in accordance with ASC 310, Receivables, prior to the adoption of ASC 326:


		As of the Year Ended December 31, 2022
		Construction, Land Development, and Other				Real Estate 1-4 Family				Real Estate Multi- Family				Non- Farm Non- Residential				Commercial and Industrial				Direct Consumer				Branch Retail				Indirect Consumer				Total
		(Dollars in Thousands)
Ending balance of allowance attributable to loans:
Individually evaluated for impairment		$	—			$	7			$	—			$	—			$	252			$	—			$	—			$	—			$	259
Collectively evaluated for impairment			517				825				646				1,970				667				886				518				3,154				9,163
Total allowance for loan and lease losses		$	517			$	832			$	646			$	1,970			$	919			$	886			$	518			$	3,154			$	9,422
Ending balance of loans receivable:
Individually evaluated for impairment		$	—			$	582			$	—			$	2,492			$	2,429			$	18			$	—			$	—			$	5,521
Collectively evaluated for impairment			53,914				87,413				67,852				197,664				71,117				9,833				13,992				266,567				768,352
Total loans receivable		$	53,914			$	87,995			$	67,852			$	200,156			$	73,546			$	9,851			$	13,992			$	266,567			$	773,873

Loans By Credit Quality Indicators

The tables below illustrate the carrying amount of loans by credit quality indicator and year of origination as of June 30, 2023:


				June 30, 2023
				Loans at Amortized Cost Basis by Origination Year
				2023				2022				2021				2020				2019				Prior				Total
				(Dollars in Thousands)
Commercial:

Construction, land development and other land loans		Pass		$	2,971			$	44,221			$	37,342			$	6,054			$	—			$	643			$	91,231
		Special Mention			—				—				—				—				—				—				—
		Substandard			—				—				—				—				—				—				—
		Doubtful			—				—				—				—				—				—				—
		Loss			—				—				—				—				—				—				—
		Subtotal		$	2,971			$	44,221			$	37,342			$	6,054			$	—			$	643			$	91,231

		Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—

Secured by multi-family residential properties		Pass		$	367			$	16,532			$	6,031			$	694			$	7,238			$	23,857			$	54,719
		Special Mention			—				—				—				—				—				—				—
		Substandard			—				—				—				—				—				—				—
		Doubtful			—				—				—				—				—				—				—
		Loss			—				—				—				—				—				—				—
		Subtotal		$	367			$	16,532			$	6,031			$	694			$	7,238			$	23,857			$	54,719

		Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—

Secured by non-farm, non-residential properties		Pass		$	8,601			$	37,416			$	24,169			$	58,963			$	18,879			$	51,056			$	199,084
		Special Mention			—				540				1,307				—				—				641				2,488
		Substandard			—				—				—				154				—				2,544				2,698
		Doubtful			—				—				—				—				—				—				—
		Loss			—				—				—				—				—				—				—
		Subtotal		$	8,601			$	37,956			$	25,476			$	59,117			$	18,879			$	54,241			$	204,270

		Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—

Commercial and industrial loans and leases		Pass		$	6,575			$	7,455			$	16,596			$	3,175			$	3,779			$	20,550			$	58,130
		Special Mention			—				180				997				224				75				—				1,476
		Substandard			—				46				231				34				372				279				962
		Doubtful			—				—				—				—				—				—				—
		Loss			—				—				—				—				—				—				—
		Subtotal		$	6,575			$	7,681			$	17,824			$	3,433			$	4,226			$	20,829			$	60,568

		Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—

Total commercial		Pass		$	18,514			$	105,624			$	84,138			$	68,886			$	29,896			$	96,106			$	403,164
		Special Mention			—				720				2,304				224				75				641				3,964
		Substandard			—				46				231				188				372				2,823				3,660
		Doubtful			—				—				—				—				—				—				—
		Loss			—				—				—				—				—				—				—
				$	18,514			$	106,390			$	86,673			$	69,298			$	30,343			$	99,570			$	410,788

		Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—


				June 30, 2023
				Loans at Amortized Cost Basis by Origination Year
				2023				2022				2021				2020				2019				Prior				Total
				(Dollars in Thousands)
Consumer:

Secured by 1-4 family residential properties		Performing		$	2,677			$	22,000			$	15,616			$	12,273			$	9,613			$	22,040			$	84,219
		Non-performing			—				—				—				—				—				882				882
		Subtotal		$	2,677			$	22,000			$	15,616			$	12,273			$	9,613			$	22,922			$	85,101

		Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	55			$	55

Direct		Performing		$	1,780			$	1,632			$	2,593			$	990			$	401			$	197			$	7,593
		Non-performing			—				—				—				—				—				—				—
		Subtotal		$	1,780			$	1,632			$	2,593			$	990			$	401			$	197			$	7,593

		Current period gross charge-offs		$	—			$	—			$	234			$	109			$	21			$	51			$	415

Branch retail		Performing		$	—			$	—			$	2,803			$	3,321			$	1,966			$	2,740			$	10,830
		Non-performing			—				—				—				—				—				—				—
		Subtotal		$	—			$	—			$	2,803			$	3,321			$	1,966			$	2,740			$	10,830

		Current period gross charge-offs		$	—			$	—			$	63			$	84			$	25			$	94			$	266

Indirect		Performing		$	59,863			$	97,199			$	73,108			$	56,840			$	6,259			$	6,843			$	300,112
		Non-performing			—				—				59				11				—				—				70
		Subtotal		$	59,863			$	97,199			$	73,167			$	56,851			$	6,259			$	6,843			$	300,182

		Current period gross charge-offs		$	—			$	86			$	81			$	92			$	13			$	29			$	301

Total consumer		Performing		$	64,320			$	120,831			$	94,120			$	73,424			$	18,239			$	31,820			$	402,754
		Non-performing			—				—				59				11				—				882				952
				$	64,320			$	120,831			$	94,179			$	73,435			$	18,239			$	32,702			$	403,706

		Current period gross charge-offs		$	—			$	86			$	378			$	285			$	59			$	229			$	1,037

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2022:


		December 31, 2022
		Pass 1-5				Special Mention 6				Substandard 7				Total
		(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		$	53,914			$	—			$	—			$	53,914
Secured by multi-family residential properties			67,852				—				—				67,852
Secured by non-farm, non-residential properties			197,004				651				2,501				200,156
Commercial and industrial loans			70,500				—				3,046				73,546
Total		$	389,270			$	651			$	5,547			$	395,468
As a percentage of total loans			98.43	%			0.17	%			1.40	%			100.00	%


		December 31, 2022
		Performing				Nonperforming				Total
		(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties		$	86,871			$	1,124			$	87,995
Consumer loans:
Direct			9,805				46				9,851
Branch retail			13,960				32				13,992
Indirect			266,496				71				266,567
Total		$	377,132			$	1,273			$	378,405
As a percentage of total loans			99.66	%			0.34	%			100.00	%

Aging Analysis of Past Due Loans

The following table provides an aging analysis of past due loans by class as of June 30, 2023:


		As of June 30, 2023
		30-59 Days Past Due				60-89 Days Past Due				90 Days Or Greater				Total Past Due				Current				Total Loans				Recorded Investment > 90 Days And Accruing
		(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		$	—			$	—			$	—			$	—			$	91,231			$	91,231			$	—
Secured by 1-4 family residential properties			113				38				8				159				84,942				85,101				—
Secured by multi-family residential properties			—				—				—				—				54,719				54,719				—
Secured by non-farm, non-residential properties			14				—				—				14				204,256				204,270				—
Commercial and industrial loans			633				—				95				728				59,840				60,568				—
Consumer loans:
Direct			63				—				—				63				7,530				7,593				—
Branch retail			88				17				—				105				10,725				10,830				—
Indirect			111				89				70				270				299,912				300,182				—
Total		$	1,022			$	144			$	173			$	1,339			$	813,155			$	814,494			$	—
As a percentage of total loans			0.13	%			0.01	%			0.02	%			0.16	%			99.84	%			100.00	%

The following table provides an aging analysis of past due loans by class as of December 31, 2022:


		As of December 31, 2022
		30-59 Days Past Due				60-89 Days Past Due				90 Days Or Greater				Total Past Due				Current				Total Loans				Recorded Investment > 90 Days And Accruing
		(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		$	—			$	—			$	—			$	—			$	53,914			$	53,914			$	—
Secured by 1-4 family residential properties			801				87				78				966				87,029				87,995				—
Secured by multi-family residential properties			—				—				—				—				67,852				67,852				—
Secured by non-farm, non-residential properties			137				—				—				137				200,019				200,156				—
Commercial and industrial loans			61				—				300				361				73,185				73,546				—
Consumer loans:
Direct			251				50				30				330				9,521				9,851				—
Branch retail			258				85				32				375				13,617				13,992				—
Indirect			186				55				71				312				266,255				266,567				—
Total		$	1,694			$	277			$	511			$	2,481			$	771,392			$	773,873			$	—
As a percentage of total loans			0.21	%			0.04	%			0.07	%			0.32	%			99.68	%			100.00	%

Non-accruing Loans

June 30, 2023. Also presented is the balance of loans on nonaccrual status at June 30, 2023 for which there was no related allowance for credit losses recorded.


		Loans on Non-Accrual Status
		June 30, 2023
		(Dollars in Thousands)
		Total nonaccrual loans			Nonaccrual loans with no allowance for credit losses			Loans past due 90 days or more and still accruing
Loans secured by real estate:
Construction, land development and other land loans		$	—		$	—		$	—
Secured by 1-4 family residential properties			786			474			—
Secured by multi-family residential properties			—			—			—
Secured by non-farm, non-residential properties			—			—			—
Commercial and industrial loans			123			114			—
Consumer loans:									—
Direct			—			—			—
Branch retail			—			—			—
Indirect			70			—			—
Total loans		$	979		$	588		$	—

The following table provides an analysis of nonaccruing loans by portfolio segment as of December 31, 2022:


	Loans on Non-Accrual Status
	December 31, 2022
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—
Secured by 1-4 family residential properties		914
Secured by multi-family residential properties		—
Secured by non-farm, non-residential properties		—
Commercial and industrial loans		605
Consumer loans:
Direct		29
Branch retail		32
Indirect		71
Total loans	$	1,651

Schedule of Amortized Cost Basis of Collateral Dependent Loans

The following table presents the amortized cost basis of collateral dependent loans as of June 30, 2023, which loans are individually evaluated to determine credit losses:


		June 30, 2023
		Real Estate				Other				Total
		(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans		$	—			$	—			$	—
Secured by 1-4 family residential properties			516				—				516
Secured by multi-family residential properties			—				—				—
Secured by non-farm, non-residential properties			2,553				—				2,553
Commercial and industrial			—				165				165
Direct consumer			—				—				—
Total loans individually evaluated		$	3,069			$	165			$	3,234

Loans Individually Evaluated, as well as any Related Allowance for Loans and Lease Losses

The following table presents impaired loans as of December 31, 2022 as determined under ASC 310 prior to the adoption of ASC 326. Impaired loans generally include nonaccrual loans and other loans deemed to be impaired but that continue to accrue interest. Presented are the carrying amount, unpaid principal balance and related allowance of impaired loans as of December 31, 2022 by portfolio segment:


		December 31, 2022
		Carrying Amount				Unpaid Principal Balance				Related Allowances
		(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans		$	—			$	—			$	—
Secured by 1-4 family residential properties			568				568				—
Secured by multi-family residential properties			—				—				—
Secured by non-farm, non-residential properties			2,492				2,492				—
Commercial and industrial			2,076				2,076				—
Direct consumer			18				18				—
Total impaired loans with no related allowance recorded		$	5,154			$	5,154			$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans		$	—			$	—			$	—
Secured by 1-4 family residential properties			14				14				7
Secured by multi-family residential properties			—				—				—
Secured by non-farm, non-residential properties			—				—				—
Commercial and industrial			353				353				252
Direct consumer			—				—				—
Total impaired loans with an allowance recorded		$	367			$	367			$	259
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans		$	—			$	—			$	—
Secured by 1-4 family residential properties			582				582				7
Secured by multi-family residential properties			—				—				—
Secured by non-farm, non-residential properties			2,492				2,492				—
Commercial and industrial			2,429				2,429				252
Direct consumer			18				18				—
Total impaired loans		$	5,521			$	5,521			$	259

The following table details the average recorded investment and the amount of interest income recognized and received for the six months ended June 30, 2022, respectively, related to impaired loans as determined under ASC 310 prior to the adoption of ASC 326:


		Six Months Ended June 30, 2022
		Average Recorded Investment				Interest Income Recognized				Interest Income Received
		(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans		$	—			$	—			$	—
Secured by 1-4 family residential properties			633				2				3
Secured by multi-family residential properties			—				—				—
Secured by non-farm, non-residential properties			1,038				25				25
Commercial and industrial			683				11				9
Direct consumer			20				1				1
Total		$	2,374			$	39			$	38