Loans | Note 5. Loans The following table summarizes the components of First Guaranty's loan portfolio as of September 30, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 (in thousands except for %) Balance As % of Category Balance As % of Category Real Estate: Construction & land development $ 107,578 9.0 % $ 112,603 9.8 % Farmland 19,422 1.6 % 25,691 2.2 % 1- 4 Family 166,399 14.0 % 158,733 13.8 % Multifamily 43,015 3.6 % 16,840 1.4 % Non-farm non-residential 566,625 47.6 % 530,293 46.1 % Total Real Estate 903,039 75.8 % 844,160 73.3 % Non-Real Estate: Agricultural 29,118 2.4 % 21,514 1.9 % Commercial and industrial 194,136 16.3 % 230,638 20.0 % Consumer and other 65,763 5.5 % 55,185 4.8 % Total Non-Real Estate 289,017 24.2 % 307,337 26.7 % Total loans before unearned income 1,192,056 100.0 % 1,151,497 100.0 % Unearned income (2,670 ) (2,483 ) Total loans net of unearned income $ 1,189,386 $ 1,149,014 The following table summarizes fixed and floating rate loans by contractual maturity, excluding nonaccrual loans, as of September 30, 2018 and December 31, 2017 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, 2018 December 31, 2017 (in thousands) Fixed Floating Total Fixed Floating Total One year or less $ 133,863 $ 86,293 $ 220,156 $ 89,383 $ 75,361 $ 164,744 More than one to five years 387,534 230,627 618,161 390,333 251,135 641,468 More than five to 15 years 130,055 72,303 202,358 124,215 70,273 194,488 Over 15 years 80,912 64,648 145,560 70,366 67,881 138,247 Subtotal $ 732,364 $ 453,871 1,186,235 $ 674,297 $ 464,650 1,138,947 Nonaccrual loans 5,821 12,550 Total loans before unearned income 1,192,056 1,151,497 Unearned income (2,670 ) (2,483 ) Total loans net of unearned income $ 1,189,386 $ 1,149,014 As of September 30, 2018, $34.9 million of floating rate loans were at their interest rate floor. At December 31, 2017, $95.4 million of floating rate loans were at the interest rate floor. Nonaccrual loans have been excluded from these totals. The following tables present the age analysis of past due loans at September 30, 2018 and December 31, 2017: As of September 30, 2018 (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 $ 24 $ 795 $ 819 $ 106,759 $ 107,578 $ 479 Farmland 552 492 1,044 18,378 19,422 - 1 - 4 family 1,675 2,094 3,769 162,630 166,399 - Multifamily - - - 43,015 43,015 - Non-farm non-residential 887 609 1,496 565,129 566,625 - Total Real Estate 3,138 3,990 7,128 895,911 903,039 479 Non-Real Estate: Agricultural 1,961 1,898 3,859 25,259 29,118 - Commercial and industrial 390 320 710 193,426 194,136 - Consumer and other 513 121 634 65,129 65,763 29 Total Non-Real Estate 2,864 2,339 5,203 283,814 289,017 29 Total loans before unearned income $ 6,002 $ 6,329 $ 12,331 $ 1,179,725 $ 1,192,056 $ 508 Unearned income (2,670 ) Total loans net of unearned income $ 1,189,386 As of December 31, 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 $ 95 $ 371 $ 466 $ 112,137 $ 112,603 $ - Farmland 175 65 240 25,451 25,691 - 1 - 4 family 1,481 1,953 3,434 155,299 158,733 - Multifamily - - - 16,840 16,840 - Non-farm non-residential 1,006 3,758 4,764 525,529 530,293 - Total Real Estate 2,757 6,147 8,904 835,256 844,160 - Non-Real Estate: Agricultural 239 1,537 1,776 19,738 21,514 41 Commercial and industrial 630 5,624 6,254 224,384 230,638 798 Consumer and other 463 81 544 54,641 55,185 - Total Non-Real Estate 1,332 7,242 8,574 298,763 307,337 839 Total loans before unearned income $ 4,089 $ 13,389 $ 17,478 $ 1,134,019 $ 1,151,497 $ 839 Unearned income (2,483 ) Total loans net of unearned income $ 1,149,014 The tables above include $5.8 million and $12.6 million of nonaccrual loans at September 30, 2018 and December 31, 2017, 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, 2018 As of December 31, 2017 Real Estate: Construction & land development $ 316 $ 371 Farmland 492 65 1 - 4 family 2,094 1,953 Multifamily - - Non-farm non-residential 609 3,758 Total Real Estate 3,511 6,147 Non-Real Estate: Agricultural 1,898 1,496 Commercial and industrial 320 4,826 Consumer and other 92 81 Total Non-Real Estate 2,310 6,403 Total Nonaccrual Loans $ 5,821 $ 12,550 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, 2018 As of December 31, 2017 (in thousands) Pass Special Mention Substandard Doubtful Total Pass Special Mention Substandard Doubtful Total Real Estate: Construction & land development $ 102,252 $ 2,399 $ 2,927 $ - $ 107,578 $ 108,200 $ 125 $ 4,278 $ - $ 112,603 Farmland 13,441 5,451 530 - 19,422 25,030 569 92 - 25,691 1 - 4 family 155,528 2,835 8,036 - 166,399 149,426 1,856 7,451 - 158,733 Multifamily 36,282 - 6,733 - 43,015 9,366 639 6,835 - 16,840 Non-farm non-residential 544,261 6,249 15,583 532 566,625 510,494 2,490 17,309 - 530,293 Total Real Estate 851,764 16,934 33,809 532 903,039 802,516 5,679 35,965 - 844,160 Non-Real Estate: Agricultural 24,661 1,668 2,789 - 29,118 19,050 995 1,469 - 21,514 Commercial and industrial 188,289 1,778 4,069 - 194,136 201,722 19,187 5,169 4,560 230,638 Consumer and other 65,353 190 220 - 65,763 48,225 68 6,892 - 55,185 Total Non-Real Estate 278,303 3,636 7,078 - 289,017 268,997 20,250 13,530 4,560 307,337 Total loans before unearned income $ 1,130,067 $ 20,570 $ 40,887 $ 532 $ 1,192,056 $ 1,071,513 $ 25,929 $ 49,495 $ 4,560 $ 1,151,497 Unearned income (2,670 ) (2,483 ) Total loans net of unearned income $ 1,189,386 $ 1,149,014 Purchased Impaired Loans As part of the acquisition of Premier 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, 2018 and December 31, 2017. (in thousands) As of September 30, 2018 As of December 31, 2017 Real Estate: Construction & land development $ - $ 1,135 Farmland 3 8 1 - 4 family 52 50 Multifamily - - Non-farm non-residential 2,330 2,148 Total Real Estate 2,385 3,341 Non-Real Estate: Agricultural - - Commercial and industrial 917 1,017 Consumer and other - - Total Non-Real Estate 917 1,017 Total $ 3,302 $ 4,358 For those purchased loans disclosed above, there was no allowance for loan losses at September 30, 2018 or December 31, 2017. 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. The accretable yield, or income expected to be collected, on the purchased loans above is as follows for the nine months ended September 30, 2018 and 2017. (in thousands) Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Balance, beginning of period $ 1,031 $ - Acquisition accretable yield - 1,330 Accretion (368 ) (109 ) Net transfers from nonaccretable difference to accretable yield - - Balance, end of period $ 663 $ 1,221 |