Loans and Asset Quality | Loans and Asset Quality Loans Total loans HFI by category and loans HFS are summarized below: December 31, (in thousands) 2019 2018 Real estate: Commercial real estate $ 531,990 $ 454,689 One-to-four family residential 420,020 406,963 Construction and development 132,461 102,868 Commercial and industrial 267,940 275,881 Tax-exempt 56,494 60,104 Consumer 30,019 27,933 Total loans HFI $ 1,438,924 $ 1,328,438 Total loans HFS $ 5,089 $ 2,904 Related Party Transactions In the ordinary course of business, certain officers, directors, and principal shareholders, as well as their immediate family members and affiliates in which they have 10% or more beneficial ownership (“related parties”), maintain a variety of banking relationships with the Company. An analysis of loan activity to these related parties is as follows: Years ended December 31, (in thousands) 2019 2018 Balance - beginning of period $ 40,311 $ 41,463 New loans/changes in relationships 33,354 31,688 Repayments/changes in relationships (43,056 ) (32,840 ) Balance - end of period $ 30,609 $ 40,311 Concentrations of Credit Risk The majority of the Bank’s lending activity occurs within Louisiana, primarily in the Central, Southeast, and Northwest market areas. The Bank maintains a diversified loan portfolio with a focus on commercial real estate, one-to-four family residential real estate, and commercial and industrial loans. Substantially all of the Bank’s real estate loans are secured by properties located within Louisiana. Allowance for Loan Losses The following table summarizes the activity in the allowance for loan losses by category for the year ended December 31, 2019 : (in thousands) Beginning Balance Provision for Loan Losses Loans Charged-off Recoveries Ending Balance Real estate: Commercial real estate $ 3,081 $ 373 $ — $ — $ 3,454 One-to-four family residential 3,146 216 (44 ) 5 3,323 Construction and development 951 172 — 88 1,211 Commercial and industrial 4,604 850 (864 ) 585 5,175 Tax-exempt 372 (38 ) — — 334 Consumer 370 237 (311 ) 144 440 Total allowance for loan losses $ 12,524 $ 1,810 $ (1,219 ) $ 822 $ 13,937 The following table summarizes the activity in the allowance for loan losses by category for the year ended December 31, 2018 : (in thousands) Beginning Balance Provision for Loan Losses Loans Charged-off Recoveries Ending Balance Real estate: Commercial real estate $ 3,270 $ (189 ) $ (27 ) $ 27 $ 3,081 One-to-four family residential 3,099 (136 ) (4 ) 187 3,146 Construction and development 852 99 — — 951 Commercial and industrial 2,836 2,112 (353 ) 9 4,604 Tax-exempt 432 (60 ) — — 372 Consumer 406 164 (353 ) 153 370 Total allowance for loan losses $ 10,895 $ 1,990 $ (737 ) $ 376 $ 12,524 The balance in the allowance for loan losses and the related recorded investment in loans by category as of December 31, 2019 , are as follows: (in thousands) Individually Evaluated for Impairment Collectively Acquired with Deteriorated Credit Quality Total Allowance for loan losses: Real estate: Commercial real estate $ 260 $ 3,194 $ — $ 3,454 One-to-four family residential 31 3,292 — 3,323 Construction and development 10 1,201 — 1,211 Commercial and industrial 2,916 2,259 — 5,175 Tax-exempt — 334 — 334 Consumer 71 369 — 440 Total allowance for loan losses $ 3,288 $ 10,649 $ — $ 13,937 Loans: Real estate: Commercial real estate $ 2,639 $ 529,351 $ — $ 531,990 One-to-four family residential 1,193 418,827 — 420,020 Construction and development 38 132,423 — 132,461 Commercial and industrial 8,797 259,143 — 267,940 Tax-exempt — 56,494 — 56,494 Consumer 75 29,944 — 30,019 Total loans HFI $ 12,742 $ 1,426,182 $ — $ 1,438,924 The balance in the allowance for loan losses and the related recorded investment in loans by category as of December 31, 2018 , are as follows: (in thousands) Individually Evaluated for Impairment Collectively Acquired with Deteriorated Credit Quality Total Allowance for loan losses: Real estate: Commercial real estate $ 206 $ 2,875 $ — $ 3,081 One-to-four family residential 20 3,126 — 3,146 Construction and development 12 939 — 951 Commercial and industrial 2,304 2,300 — 4,604 Tax-exempt — 372 — 372 Consumer 75 295 — 370 Total allowance for loan losses $ 2,617 $ 9,907 $ — $ 12,524 Loans: Real estate: Commercial real estate $ 3,829 $ 450,860 $ — $ 454,689 One-to-four family residential 2,348 404,615 — 406,963 Construction and development 55 102,813 — 102,868 Commercial and industrial 15,516 260,365 — 275,881 Tax-exempt — 60,104 — 60,104 Consumer 104 27,829 — 27,933 Total loans HFI $ 21,852 $ 1,306,586 $ — $ 1,328,438 Past Due and Nonaccrual Loans A summary of current, past due, and nonaccrual loans as of December 31, 2019 , is as follows: Accruing (in thousands) Current 30-89 Days 90 Days or More Past Due Nonaccrual Total Loans Real estate: Commercial real estate $ 530,712 $ — $ — $ 1,278 $ 531,990 One-to-four family residential 419,229 184 — 607 420,020 Construction and development 132,423 — — 38 132,461 Commercial and industrial 264,427 143 — 3,370 267,940 Tax-exempt 56,494 — — — 56,494 Consumer 29,973 20 — 26 30,019 Total loans HFI $ 1,433,258 $ 347 $ — $ 5,319 $ 1,438,924 A summary of current, past due, and nonaccrual loans as of December 31, 2018 , is as follows: Accruing (in thousands) Current 30-89 Days 90 Days or More Past Due Nonaccrual Total Loans Real estate: Commercial real estate $ 452,477 $ — $ 850 $ 1,362 $ 454,689 One-to-four family residential 405,961 512 66 424 406,963 Construction and development 102,776 36 1 55 102,868 Commercial and industrial 272,174 32 — 3,675 275,881 Tax-exempt 60,104 — — — 60,104 Consumer 27,851 16 22 44 27,933 Total loans HFI $ 1,321,343 $ 596 $ 939 $ 5,560 $ 1,328,438 Impaired Loans Impaired loans include TDRs and performing and nonperforming loans. Information pertaining to impaired loans as of December 31, 2019 , is as follows: (in thousands) Unpaid Principal Balance Recorded Investment Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance recorded: Real estate: Commercial real estate $ 1,560 $ 1,537 $ — $ 2,647 $ 74 One-to-four family residential 1,040 984 — 1,194 44 Construction and development — — — 76 — Commercial and industrial 1,805 1,474 — 3,685 3 Tax-exempt — — — — — Consumer 2 2 — 9 — Total with no related allowance 4,407 3,997 — 7,611 121 With allowance recorded: Real estate: Commercial real estate 1,263 1,102 260 1,076 — One-to-four family residential 216 209 31 339 — Construction and development 51 38 10 89 — Commercial and industrial 8,544 7,323 2,916 7,746 299 Tax-exempt — — — — — Consumer 76 73 71 76 4 Total with related allowance 10,150 8,745 3,288 9,326 303 Total impaired loans $ 14,557 $ 12,742 $ 3,288 $ 16,937 $ 424 Information pertaining to impaired loans as of December 31, 2018 , is as follows: (in thousands) Unpaid Principal Balance Recorded Investment Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance recorded: Real estate: Commercial real estate $ 2,376 $ 2,255 $ — $ 2,470 $ 72 One-to-four family residential 1,912 1,855 — 2,026 149 Construction and development 18 16 — 738 — Commercial and industrial 11,003 9,707 — 8,909 345 Tax-exempt — — — — — Consumer 12 12 — 10 — Total with no related allowance 15,321 13,845 — 14,153 566 With allowance recorded: Real estate: Commercial real estate 1,584 1,574 206 1,715 132 One-to-four family residential 507 493 20 497 23 Construction and development 52 39 12 41 — Commercial and industrial 5,809 5,809 2,304 5,813 210 Tax-exempt — — — — — Consumer 95 92 75 35 1 Total with related allowance 8,047 8,007 2,617 8,101 366 Total impaired loans $ 23,368 $ 21,852 $ 2,617 $ 22,254 $ 932 Troubled Debt Restructurings The restructuring of a loan is considered a TDR if the borrower is experiencing financial difficulties and the bank has granted a concession. Concessions grant terms to the borrower that would not be offered for new debt with similar risk characteristics. Concessions typically include interest rate reductions or below market interest rates, revising amortization schedules to defer principal and interest payments, and other changes necessary to provide payment relief to the borrower and minimize the risk of loss. As of December 31, 2019 and 2018 , the recorded investments in TDRs were $4.9 million and $5.1 million , respectively. There were no unfunded commitments to extend credit related to these loans. A summary of current, past due, and nonaccrual TDR loans as of December 31, 2019 , is as follows: (dollars in thousands) Current 30-89 Days 90 Days or More Past Due Nonaccrual Total TDRs Real estate: Commercial real estate $ 1,361 $ — $ — $ 1,278 $ 2,639 One-to-four family residential 252 — — — 252 Construction and development — — — 38 38 Commercial and industrial 36 — — 1,869 1,905 Tax-exempt — — — — — Consumer 46 — — — 46 Total $ 1,695 $ — $ — $ 3,185 $ 4,880 Number of TDR loans 12 — — 6 18 A summary of current, past due, and nonaccrual TDR loans as of December 31, 2018 , is as follows: (dollars in thousands) Current 30-89 Days 90 Days or More Past Due Nonaccrual Total TDRs Real estate: Commercial real estate $ 1,267 $ — $ — $ 1,362 $ 2,629 One-to-four family residential 208 — — — 208 Construction and development — — — 39 39 Commercial and industrial 41 — — 2,139 2,180 Tax-exempt — — — — — Consumer 56 — — — 56 Total $ 1,572 $ — $ — $ 3,540 $ 5,112 Number of TDR loans 10 — — 6 16 A summary of loans modified as TDRs that occurred during the years ended December 31, 2019 and 2018 , is as follows: 2019 2018 Recorded Investment Recorded Investment (dollars in thousands) Loan Count Pre Modification Post Modification Loan Count Pre Modification Post Modification Real estate: Commercial real estate 1 $ 166 $ 166 1 $ 435 $ 479 One-to-four family residential 1 60 62 1 40 40 Construction and development — — — — — — Commercial and industrial 1 4 4 — — — Tax-exempt — — — — — — Consumer — — — 1 58 58 Total 3 $ 230 $ 232 3 $ 533 $ 577 The TDRs described above increased the allowance for loan losses by $3,000 and $56,000 during the years ended December 31, 2019 and 2018 , respectively. Additionally, there was a partial charge-off totaling $250,000 for both 2019 and 2018. There were no TDRs that subsequently defaulted in 2019 or 2018 . Credit Quality Indicators Loans are categorized based on the degree of risk inherent in the credit and the ability of the borrower to service the debt. A description of the general characteristics of the Bank’s risk rating grades follows: Pass - These ratings are assigned to loans with a risk level ranging from very low to acceptable based on the borrower’s financial condition, financial trends, management strength, and collateral quality. Special Mention - This category includes loans with potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan. Substandard - Loans in this category have well defined weaknesses which jeopardize normal repayment of principal and interest. Doubtful - Loans in this category have well defined weaknesses that make full collection improbable. Loss - Loans classified in this category are considered uncollectible and charged-off to the allowance for loan losses. The following table summarizes loans by risk rating as of December 31, 2019 : (in thousands) Pass Special Mention Substandard Doubtful Loss Total Real estate: Commercial real estate $ 515,926 $ 14,118 $ 1,946 $ — $ — $ 531,990 One-to-four family residential 416,884 2,021 1,115 — — 420,020 Construction and development 131,185 565 711 — — 132,461 Commercial and industrial 247,382 11,473 9,085 — — 267,940 Tax-exempt 56,494 — — — — 56,494 Consumer 29,876 5 138 — — 30,019 Total loans HFI $ 1,397,747 $ 28,182 $ 12,995 $ — $ — $ 1,438,924 The following table summarizes loans by risk rating as of December 31, 2018 : (in thousands) Pass Special Mention Substandard Doubtful Loss Total Real estate: Commercial real estate $ 439,580 $ 11,883 $ 3,226 $ — $ — $ 454,689 One-to-four family residential 402,864 1,992 2,107 — — 406,963 Construction and development 101,754 375 739 — — 102,868 Commercial and industrial 251,987 8,311 15,583 — — 275,881 Tax-exempt 60,104 — — — — 60,104 Consumer 27,729 44 160 — — 27,933 Total loans HFI $ 1,284,018 $ 22,605 $ 21,815 $ — $ — $ 1,328,438 Commitments to Extend Credit Commitments to extend credit are agreements to lend to a customer if all conditions of the commitment have been met. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s evaluation of the customer’s ability to repay. As of December 31, 2019 , unfunded loan commitments totaled approximately $257.0 million . As of December 31, 2018 , unfunded loan commitments totaled approximately $231.5 million . Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. As of December 31, 2019 , commitments under standby letters of credit totaled approximately $11.1 million . As of December 31, 2018 , commitments under standby letters of credit totaled approximately $11.6 million . The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. |