Loans | Note 5. Loans The following table summarizes the components of First Guaranty's loan portfolio as of September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 (in thousands except for %) Balance As % of Category Balance As % of Category Real Estate: Construction & land development $ 108,610 9.8 % $ 84,239 8.9 % Farmland 29,345 2.6 % 21,138 2.2 % 1- 4 Family 158,564 14.3 % 135,211 14.2 % Multifamily 17,089 1.5 % 12,450 1.3 % Non-farm non-residential 508,210 45.6 % 417,014 43.9 % Total Real Estate 821,818 73.8 % 670,052 70.5 % Non-Real Estate: Agricultural 29,109 2.6 % 23,783 2.5 % Commercial and industrial 209,386 18.8 % 193,969 20.4 % Consumer and other 53,606 4.8 % 63,011 6.6 % Total Non-Real Estate 292,101 26.2 % 280,763 29.5 % Total loans before unearned income 1,113,919 100.0 % 950,815 100.0 % Unearned income (2,128 ) (1,894 ) Total loans net of unearned income $ 1,111,791 $ 948,921 The following table summarizes fixed and floating rate loans by contractual maturity, excluding nonaccrual loans, as of September 30, 2017 and December 31, 2016 unadjusted for scheduled principal payments, prepayments, or repricing opportunities. The average life of the loan portfolio may be substantially less than the contractual terms when these adjustments are considered. September 30, 2017 December 31, 2016 (in thousands) Fixed Floating Total Fixed Floating Total One year or less $ 102,315 $ 64,857 $ 167,172 $ 97,713 $ 51,965 $ 149,678 More Than One to five years 398,112 224,644 622,756 352,000 206,676 558,676 More Than Five to 15 years 131,206 43,175 174,381 115,691 46,116 161,807 Over 15 years 83,606 55,704 139,310 53,150 5,830 58,980 Subtotal $ 715,239 $ 388,380 1,103,619 $ 618,554 $ 310,587 929,141 Nonaccrual loans 10,300 21,674 Total loans before unearned income 1,113,919 950,815 Unearned income (2,128 ) (1,894 ) Total loans net of unearned income $ 1,111,791 $ 948,921 As of September 30, 2017, $121.8 million of floating rate loans were at their interest rate floor. At December 31, 2016, $127.7 million of floating rate loans were at the floor rate. Nonaccrual loans have been excluded from these totals. The following tables present the age analysis of past due loans, including loans acquired with deteriorated credit quality, at September 30, 2017 and December 31, 2016: As of September 30, 2017 (in thousands) 30-89 Days Past Due 90 Days or Greater Total Past Due Current Total Loans Recorded Investment 90 Days Accruing Real Estate: Construction & land development $ 160 $ 376 $ 536 $ 108,074 $ 108,610 $ - Farmland 178 107 285 29,060 29,345 - 1 - 4 family 1,779 2,343 4,122 154,442 158,564 47 Multifamily - - - 17,089 17,089 - Non-farm non-residential 5,940 773 6,713 501,497 508,210 - Total Real Estate 8,057 3,599 11,656 810,162 821,818 47 Non-Real Estate: Agricultural 46 979 1,025 28,084 29,109 362 Commercial and industrial 1,289 6,081 7,370 202,016 209,386 - Consumer and other 240 50 290 53,316 53,606 - Total Non-Real Estate 1,575 7,110 8,685 283,416 292,101 362 Total loans before unearned income $ 9,632 $ 10,709 $ 20,341 $ 1,093,578 $ 1,113,919 $ 409 Unearned income (2,128 ) Total loans net of unearned income $ 1,111,791 As of December 31, 2016 (in thousands) 30-89 Days Past Due 90 Days or Greater Total Past Due Current Total Loans Recorded Investment 90 Days Accruing Real Estate: Construction & land development $ 173 $ 585 $ 758 $ 83,481 $ 84,239 $ 34 Farmland 234 105 339 20,799 21,138 - 1 - 4 family 1,108 2,387 3,495 131,716 135,211 145 Multifamily - 5,014 5,014 7,436 12,450 - Non-farm non-residential 1,618 2,753 4,371 412,643 417,014 - Total Real Estate 3,133 10,844 13,977 656,075 670,052 179 Non-Real Estate: Agricultural 64 1,958 2,022 21,761 23,783 - Commercial and industrial 552 8,070 8,622 185,347 193,969 - Consumer and other 182 981 1,163 61,848 63,011 - Total Non-Real Estate 798 11,009 11,807 268,956 280,763 - Total loans before unearned income $ 3,931 $ 21,853 $ 25,784 $ 925,031 $ 950,815 $ 179 Unearned income (1,894 ) Total loans net of unearned income $ 948,921 The tables above include $10.3 million and $21.7 million of nonaccrual loans at September 30, 2017 and December 31, 2016, respectively. See the tables below for more detail on nonaccrual loans. The following is a summary of nonaccrual loans by class at the dates indicated: (in thousands) As of September 30, 2017 As of December 31, 2016 Real Estate: Construction & land development $ 376 $ 551 Farmland 107 105 1 - 4 family 2,296 2,242 Multifamily - 5,014 Non-farm non-residential 773 2,753 Total Real Estate 3,552 10,665 Non-Real Estate: Agricultural 617 1,958 Commercial and industrial 6,081 8,070 Consumer and other 50 981 Total Non-Real Estate 6,748 11,009 Total Nonaccrual Loans $ 10,300 $ 21,674 The following table identifies the credit exposure of the loan portfolio, including loans acquired with deteriorated credit quality, by specific credit ratings as of the dates indicated: As of September 30, 2017 As of December 31, 2016 (in thousands) Pass Special Mention Substandard Doubtful Total Pass Special Mention Substandard Doubtful Total Real Estate: Construction & land development $ 103,954 $ 114 $ 4,542 $ - $ 108,610 $ 79,069 $ 1,162 $ 4,008 $ - $ 84,239 Farmland 29,228 17 100 - 29,345 20,652 381 105 - 21,138 1 - 4 family 148,981 2,123 7,460 - 158,564 123,191 5,460 6,560 - 135,211 Multifamily 9,680 454 6,955 - 17,089 4,268 1,132 7,050 - 12,450 Non-farm non-residential 487,271 2,535 18,404 - 508,210 392,355 6,406 18,253 - 417,014 Total Real Estate 779,114 5,243 37,461 - 821,818 619,535 14,541 35,976 - 670,052 Non-Real Estate: Agricultural 28,058 419 632 - 29,109 20,890 920 1,973 - 23,783 Commercial and industrial 188,214 9,977 5,627 5,568 209,386 182,381 850 3,008 7,730 193,969 Consumer and other 53,410 21 175 - 53,606 60,582 1,394 1,035 - 63,011 Total Non-Real Estate 269,682 10,417 6,434 5,568 292,101 263,853 3,164 6,016 7,730 280,763 Total loans before unearned income $ 1,048,796 $ 15,660 $ 43,895 $ 5,568 $ 1,113,919 $ 883,388 $ 17,705 $ 41,992 $ 7,730 $ 950,815 Unearned income (2,128 ) (1,894 ) Total loans net of unearned income $ 1,111,791 $ 948,921 Purchased Impaired Loans As part of the acquisition of Premier Bancshares, Inc. on June 16, 2017, First Guaranty purchased credit impaired loans for which there was, at acquisition, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows at September 30, 2017. (in thousands) As of September 30, 2017 Real Estate: Construction & land development $ 1,291 Farmland 10 1 - 4 family 295 Multifamily - Non-farm non-residential 1,689 Total Real Estate 3,285 Non-Real Estate: Agricultural - Commercial and industrial 1,356 Consumer and other - Total Non-Real Estate 1,356 Total Carrying Amount $ 4,641 Contractual principal balance $ 6,153 Carrying amount, net of allowance $ 4,641 For those purchased loans disclosed above, First Guaranty did not increase the allowance for loan losses for the nine months ended September 30, 2017. For those purchased loans disclosed above, where First Guaranty can reasonably estimate the cash flows expected to be collected on the loans, a portion of the purchase discount is allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion is being recognized as interest income over the remaining life of the loan. Where First Guaranty cannot reasonably estimate the cash flows expected to be collected on the loans, it has decided to account for those loans using the cost recovery method of income recognition. As such, no portion of a purchase discount adjustment has been determined to meet the definition of an accretable yield adjustment on those loans accounted for using the cost recovery method. If, in the future, cash flows from the borrower(s) can be reasonably estimated, a portion of the purchase discount would be allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion would be recognized as interest income over the remaining life of the loan. Until such accretable yield can be calculated, under the cost recovery method of income recognition, all payments will be used to reduce the carrying value of the loan and no income will be recognized on the loan until the carrying value is reduced to zero. Any loan accounted for under the cost recovery method is also still included as a non-accrual loan in the amounts presented in the table below. The accretable yield, or income expected to be collected, on the purchased loans above is as follows at September 30, 2017. (in thousands) Nine Months Ended September 30, 2017 Balance, beginning of period $ - Acquisition accretable yield 1,330 Accretion (109 ) Net transfers from nonaccretable difference to accretable yield - Balance, end of period $ 1,221 The contractually required payments of purchased impaired loans totaled $8.3 million, while the cash flow expected to be collected at acquisition totaled $6.0 million, and the fair value of the acquired loans totaled $4.6 million. |