LOANS | NOTE 4 - LOANS Loans at December 31, 2019 and 2018 were as follows: December 31, December 31, Loans Construction and land development $ 591,541 $ 584,440 Commercial real estate: Nonfarm, nonresidential 944,021 754,243 Other 49,891 51,017 Residential real estate: Closed-end 1-4 family 455,920 493,065 Other 187,681 189,817 Commercial and industrial 582,641 596,793 Consumer and other 4,769 5,568 Loans before net deferred loan fees 2,816,464 2,674,943 Deferred loan fees, net (4,020) (2,544) Total loans 2,812,444 2,672,399 Allowance for loan losses (45,436) (23,451) Total loans, net of allowance for loan losses $ 2,767,008 $ 2,648,948 The following table presents the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2019, 2018 and 2017: Construction Commercial Residential Commercial Consumer Total December 31, 2019 Allowance for loan losses: Beginning balance $ 4,743 $ 6,725 $ 4,743 $ 7,166 $ 74 $ 23,451 Provision for loan losses 172 1,388 (281) 30,732 36 32,047 Loans charged-off (68) — (15) (10,227) (147) (10,457) Recoveries — — 15 286 94 395 Total ending allowance balance $ 4,847 $ 8,113 $ 4,462 $ 27,957 $ 57 $ 45,436 Construction Commercial Residential Commercial Consumer 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 Commercial Residential Commercial Consumer 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 For the years ended December 31, 2019 and 2018, there was $22 and $0 in allowance for loan losses for PCI loans, respectively. 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, 2019 and 2018. 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 Commercial Residential Commercial Consumer Total December 31, 2019 Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ — $ — $ 17 $ 20,754 $ — $ 20,771 Collectively evaluated for impairment 4,847 8,113 4,445 7,203 57 24,665 Total ending allowance balance $ 4,847 $ 8,113 $ 4,462 $ 27,957 $ 57 $ 45,436 Loans: Individually evaluated for impairment $ 30 $ — $ 2,477 $ 24,528 $ — $ 27,035 Collectively evaluated for impairment 591,511 993,912 641,124 558,113 4,769 2,789,429 Total ending loans balance $ 591,541 $ 993,912 $ 643,601 $ 582,641 $ 4,769 $ 2,816,464 Construction Commercial Residential Commercial Consumer 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 582,142 805,260 679,693 596,626 5,568 2,669,289 Total ending loans balance $ 584,440 $ 805,260 $ 682,882 $ 596,793 $ 5,568 $ 2,674,943 Loans collectively evaluated for impairment reported at December 31, 2019 include certain loans acquired from MidSouth and Civic. The acquired loans were recorded at estimated fair value at date of acquisition, which included estimated credit and interest rate discount components. As of December 31, 2019, these non-PCI loans had a carrying value of $58,745, comprised of contractually unpaid principal totaling $59,471 and discounts totaling $726. Management evaluated these loans for credit deterioration since acquisition and determined that a $77 allowance for loan losses was necessary at December 31, 2019. The following table presents information related to impaired loans by class of loans as of December 31, 2019 and 2018: Unpaid Recorded Allowance for December 31, 2019 With no allowance recorded: Construction and land development $ 30 $ 30 $ — Residential real estate: Closed-end 1-4 family 319 311 — Other 1,523 1,523 — Commercial and industrial 11 11 — Subtotal 1,883 1,875 — With an allowance recorded: Residential real estate: Closed-end 1-4 family 643 643 17 Commercial and industrial 24,517 24,517 20,754 Subtotal 25,160 25,160 20,771 Total $ 27,043 $ 27,035 $ 20,771 December 31, 2018 With no allowance recorded: Construction and land development $ 2,298 $ 2,298 $ — Residential real estate: Closed-end 1-4 family 1,280 1,272 — Other 1,917 1,917 — Subtotal 5,495 5,487 — With an allowance recorded: Commercial and industrial 167 167 17 Subtotal 167 167 17 Total $ 5,662 $ 5,654 $ 17 The following table presents the average recorded investment of impaired loans by class of loans for the years ended December 31, 2019, 2018 and 2017: Average Recorded Investment 2019 2018 2017 With no allowance recorded: Construction and land development $ 301 $ 378 $ 921 Commercial real estate: Nonfarm, nonresidential 13 — 1,796 Residential real estate: Closed-end 1-4 family 587 715 649 Other 1,286 553 331 Commercial and industrial 670 655 899 Consumer and other — — 1 Subtotal 2,857 2,301 4,597 With an allowance recorded: Construction and land development 147 — — Commercial real estate Nonfarm, nonresidential 40 0 0 Residential real estate: Closed-end 1-4 family 56 — 22 Commercial and industrial 4,403 993 2,480 Subtotal 4,646 993 2,502 Total $ 7,503 $ 3,294 $ 7,099 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, 2019, 2018 and 2017. 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, 2019 and 2018: Nonaccrual Loans Past Due December 31, 2019 Construction loans $ 30 $ — Residential real estate: Closed-end 1-4 family 954 — Other 1,523 — Commercial and industrial 24,528 654 Total $ 27,035 $ 654 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 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. Nonaccrual loans and loans past due over 90 days still on accrual increased $21,993 as of December 31, 2019, mainly due to two commercial and industrial lending relationships that were downgraded during the subsequent events period that exists between December 31, 2019 and the filing of this document. The following table presents the aging of the recorded investment in past due loans as of December 31, 2019 and 2018 by class of loans: 30-59 60-89 Greater Total Loans Total December 31, 2019 Construction and land development $ 508 $ — $ 30 $ 538 $ 591,003 $ 591,541 Commercial real estate: Nonfarm, nonresidential 3,981 — — 3,981 940,040 944,021 Other — — — — 49,891 49,891 Residential real estate: Closed-end 1-4 family 2,688 224 8 2,920 453,000 455,920 Other 85 961 555 1,601 186,080 187,681 Commercial and industrial 663 7,156 735 8,554 574,087 582,641 Consumer and other — — — — 4,769 4,769 $ 7,925 $ 8,341 $ 1,328 $ 17,594 $ 2,798,870 $ 2,816,464 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 — — — — 51,017 51,017 Residential real estate: Closed-end 1-4 family 2,390 404 228 3,022 490,043 493,065 Other 142 — 1,810 1,952 187,865 189,817 Commercial and industrial 241 252 208 701 596,092 596,793 Consumer and other — — — — 5,568 5,568 $ 3,582 $ 2,642 $ 2,794 $ 9,018 $ 2,665,925 $ 2,674,943 Credit Quality Indicators: 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 Mention. 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. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. 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 excludes deferred loan fees and 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, 2019 and 2018: Pass Special Substandard Total December 31, 2019 Construction and land development $ 591,293 $ 248 $ — $ 591,541 Commercial real estate: Nonfarm, nonresidential 941,260 997 1,764 944,021 Other 49,891 — — 49,891 Residential real estate: Closed-end 1-4 family 452,363 825 2,732 455,920 Other 185,170 — 2,511 187,681 Commercial and industrial 539,442 943 42,256 582,641 Consumer and other 4,769 — — 4,769 $ 2,764,188 $ 3,013 $ 49,263 $ 2,816,464 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 51,017 — — 51,017 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 557,589 8,313 30,891 596,793 Consumer and other 5,567 1 — 5,568 $ 2,610,376 $ 25,856 $ 38,711 $ 2,674,943 At December 31, 2019, the Bank realized a $12,291 decrease in classified and criticized loans compared to December 31, 2018. Commercial real estate nonfarm, nonresidential loans decreased $12,013, and commercial and industrial loans increased $3,995 from December 31, 2018. Troubled Debt Restructurings As of December 31, 2019, the Company’s loan portfolio contains one loan in the amount of $311 that has been modified in a troubled debt restructuring during the year ended December 31, 2019. There was one loan in the amount of $167 that was modified in troubled debt restructurings during the year ended December 31, 2018. |