Loans | NOTE 4 - LOANS Loans at December 31, 2018 and 2017 were as follows: December 31, 2018 December 31, 2017 Loans that are not PCI loans Construction and land development $ 584,440 $ 494,818 Commercial real estate: Nonfarm, nonresidential 754,243 628,554 Other 48,017 49,684 Residential real estate: Closed-end 1-4 family 492,989 407,695 Other 189,817 169,640 Commercial and industrial 590,854 502,006 Consumer and other 5,568 3,781 Loans before net deferred loan fees 2,665,928 2,256,178 Deferred loan fees, net (2,544 ) (1,963 ) Total loans that are not PCI loans 2,663,384 2,254,215 Total PCI loans 2,015 2,393 Allowance for loan losses (23,451 ) (21,247 ) Total loans, net of allowance for loan losses $ 2,641,948 $ 2,235,361 The following table presents the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2018, 2017 and 2016: Construction and Land Development Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer and Other Total December 31, 2018 Allowance for loan losses: Beginning balance $ 3,802 $ 5,981 $ 3,834 $ 7,587 $ 43 $ 21,247 Provision for loan losses 978 744 872 (383 ) 43 2,254 Loans charged-off (38 ) — (7 ) (49 ) (27 ) (121 ) Recoveries 1 — 44 11 15 71 Total ending allowance balance $ 4,743 $ 6,725 $ 4,743 $ 7,166 $ 74 $ 23,451 Construction and Land Development Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer and Other Total December 31, 2017 Allowance for loan losses: Beginning balance $ 3,776 $ 4,266 $ 2,398 $ 6,068 $ 45 $ 16,553 Provision for loan losses (642 ) 1,715 1,387 1,823 30 4,313 Loans charged-off — — (1 ) (310 ) (49 ) (360 ) Recoveries 668 — 50 6 17 741 Total ending allowance balance $ 3,802 $ 5,981 $ 3,834 $ 7,587 $ 43 $ 21,247 Construction and Land Development Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer and Other Total December 31, 2016 Allowance for loan losses: Beginning balance $ 3,186 $ 3,146 $ 1,861 $ 3,358 $ 36 $ 11,587 Provision for loan losses 601 1,120 511 2,964 44 5,240 Loans charged-off (11 ) — (40 ) (255 ) (42 ) (348 ) Recoveries — — 66 1 7 74 Total ending allowance balance $ 3,776 $ 4,266 $ 2,398 $ 6,068 $ 45 $ 16,553 For the years ended December 31, 2018 and 2017, there was $0 in allowance for loan losses for PCI loans. The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2018 and 2017. Purchased and PCI loans are also included in the table. For purposes of this disclosure, recorded investment in loans excludes accrued interest receivable and loan fees, net due to immateriality. Construction and Land Development Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer and Other Total December 31, 2018 Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ 17 $ — $ 17 Collectively evaluated for impairment 4,743 6,725 4,743 7,149 74 23,434 Total ending allowance balance $ 4,743 $ 6,725 $ 4,743 $ 7,166 $ 74 $ 23,451 Loans: Individually evaluated for impairment $ 2,298 $ — $ 3,189 $ 167 $ — $ 5,654 Collectively evaluated for impairment 582,142 802,260 679,617 590,687 5,568 2,660,274 Purchased credit-impaired loans — — 76 1,939 — 2,015 Total ending loans balance $ 584,440 $ 802,260 $ 682,882 $ 592,793 $ 5,568 $ 2,667,943 Construction and Land Development Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer and Other Total December 31, 2017 Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ — $ 879 $ — $ 879 Collectively evaluated for impairment 3,802 5,981 3,834 6,708 43 20,368 Total ending allowance balance $ 3,802 $ 5,981 $ 3,834 $ 7,587 $ 43 $ 21,247 Loans: Individually evaluated for impairment $ 217 $ - $ 834 $ 3,090 $ — $ 4,141 Collectively evaluated for impairment 494,601 678,238 576,501 498,916 3,781 2,252,037 Purchased credit-impaired loans — 380 105 1,908 — 2,393 Total ending loans balance $ 494,818 $ 678,618 $ 577,440 $ 503,914 $ 3,781 $ 2,258,571 Loans collectively evaluated for impairment reported at December 31, 2018 include certain loans acquired from MidSouth and Civic. The acquired loans were recorded at estimated fair value at date of acquisition, which included an estimated credit discount. Acquired non-PCI loans were recorded at an estimated fair value of $178,818, comprised of contractually unpaid principal totaling $183,832 net of estimated discounts totaling $5,014 which included both credit and interest rate discount components. As of December 31, 2018, these non-PCI loans had a carrying value of $91,344, comprised of contractually unpaid principal totaling $92,554 and discounts totaling $1,210. Management evaluated these loans for credit deterioration since acquisition and determined that a $185 allowance for loan losses was necessary at December 31, 2018. The following table presents information related to impaired loans by class of loans as of December 31, 2018 and 2017: Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated December 31, 2018 With no allowance recorded: Construction and land development $ 2,298 $ 2,298 $ — Residential real estate: Closed-end 1-4 family 1,272 1,280 — Other 1,917 1,917 — Subtotal 5,487 5,495 — With an allowance recorded: Commercial and industrial 167 167 17 Subtotal 167 167 17 Total $ 5,654 $ 5,662 $ 17 December 31, 2017 With no allowance recorded: Construction and land development $ 217 $ 217 $ — Residential real estate: Closed-end 1-4 family 14 14 — Other 820 820 — Commercial and industrial 108 108 — Subtotal 1,159 1,159 — With an allowance recorded: Commercial and industrial 2,982 2,982 879 Subtotal 2,982 2,982 879 Total $ 4,141 $ 4,141 $ 879 The following table presents the average recorded investment of impaired loans by class of loans for the years ended December 31, 2018, 2017 and 2016: Average Recorded Investment 2018 2017 2016 With no allowance recorded: Construction and land development $ 378 $ 921 $ 474 Commercial real estate: Nonfarm, nonresidential — 1,796 1,892 Residential real estate: Closed-end 1-4 family 715 649 747 Other 553 331 696 Commercial and industrial 655 899 207 Consumer and other — 1 8 Subtotal 2,301 4,597 4,024 With an allowance recorded: Residential real estate: Closed-end 1-4 family — 22 55 Commercial and industrial 993 2,480 490 Subtotal 993 2,502 545 Total $ 3,294 $ 7,099 $ 4,569 The impact on net interest income for these loans was not material to the Company’s results of operations for the years ended December 31, 2018, 2017 and 2016. The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2018 and 2017: Nonaccrual Loans Past Due Over 90 Days December 31, 2018 Construction loans $ 2,298 $ — Residential real estate: Closed-end 1-4 family 1,273 — Other 1,917 — Commercial and industrial — 208 Total $ 5,488 $ 208 December 31, 2017 Residential real estate: Closed-end 1-4 family $ 257 $ 14 Other 114 — Commercial and industrial 2,466 191 Total $ 2,837 $ 205 Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following table presents the aging of the recorded investment in past due loans as of December 31, 2018 and 2017 by class of loans: 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due Total Past Due Loans Not Past Due PCI Loans Total December 31, 2018 Construction and land development $ 294 $ 1,986 $ 548 $ 2,828 $ 581,612 $ — $ 584,440 Commercial real estate: Nonfarm, nonresidential 515 — — 515 753,728 — 754,243 Other — — — — 48,017 — 48,017 Residential real estate: Closed-end 1-4 family 2,390 404 228 3,022 489,967 76 493,065 Other 142 — 1,810 1,952 187,865 — 189,817 Commercial and industrial 241 252 208 701 590,153 1,939 592,793 Consumer and other — — — — 5,568 — 5,568 $ 3,582 $ 2,642 $ 2,794 $ 9,018 $ 2,656,910 $ 2,015 $ 2,667,943 December 31, 2017 Construction and land development $ 1,918 $ 136 $ — $ 2,054 $ 492,764 $ — $ 494,818 Commercial real estate: Nonfarm, nonresidential — — — — 628,554 380 628,934 Other — — — — 49,684 — 49,684 Residential real estate: Closed-end 1-4 family 257 - 14 271 407,424 105 407,800 Other 146 719 114 979 168,661 — 169,640 Commercial and industrial 532 27 2,657 3,216 498,790 1,908 503,914 Consumer and other — — — — 3,781 — 3,781 $ 2,853 $ 882 $ 2,785 $ 6,520 $ 2,249,658 $ 2,393 $ 2,258,571 Credit The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans as well as non-homogeneous residential real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: Special Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. The following table includes PCI loans, which are included in the “Substandard” column. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows as of December 31, 2018 and 2017: Pass Special Mention Substandard Total December 31, 2018 Construction and land development $ 580,468 $ 1,416 $ 2,556 $ 584,440 Commercial real estate: Nonfarm, nonresidential 739,469 14,774 — 754,243 Other 48,017 — — 48,017 Residential real estate: Closed-end 1-4 family 489,781 948 2,336 493,065 Other 186,485 404 2,928 189,817 Commercial and industrial 553,589 8,313 30,891 592,793 Consumer and other 5,567 1 — 5,568 $ 2,603,376 $ 25,856 $ 38,711 $ 2,667,943 December 31, 2017 Construction and land development $ 494,601 $ — $ 217 $ 494,818 Commercial real estate: Nonfarm, nonresidential 609,458 12,602 6,874 628,934 Other 49,303 — 381 49,684 Residential real estate: Closed-end 1-4 family 404,832 615 2,353 407,800 Other 167,886 — 1,754 169,640 Commercial and industrial 485,363 10,350 8,201 503,914 Consumer and other 3,777 4 — 3,781 $ 2,215,220 $ 23,571 $ 19,780 $ 2,258,571 At December 31, 2018, the Bank realized a $21,186 increase in classified and criticized loans compared to December 31, 2017. The increase is specifically related to two Shared National Credit loans that were downgraded to a substandard rating subsequent to year-end 2018, during the review period that exists between December 31, 2018 and the filing of this document. These credits are still performing at this time. Troubled Debt Restructurings As of December 31, 2018, the Company’s loan portfolio contains one loan in the amount of $167 that has been modified in a troubled debt restructuring as of December 31, 2018. There was one loan in the amount of $608 that has been modified in troubled debt restructurings as of December 31, 2017. |