Loans | Loans The following table summarizes the components of First Guaranty's loan portfolio as of September 30, 2022 and December 31, 2021: September 30, 2022 December 31, 2021 (in thousands except for %) Balance As % of Category Balance As % of Category Real Estate: Construction & land development $ 204,640 8.4 % $ 174,334 8.1 % Farmland 24,556 1.0 % 31,810 1.5 % 1- 4 Family 352,501 14.5 % 288,347 13.3 % Multifamily 118,273 4.9 % 65,848 3.0 % Non-farm non-residential 981,954 40.5 % 886,407 40.9 % Total Real Estate 1,681,924 69.3 % 1,446,746 66.8 % Non-Real Estate: Agricultural 47,642 2.0 % 26,747 1.2 % Commercial and industrial (1) 365,549 15.1 % 398,391 18.4 % Commercial leases 281,010 11.6 % 246,022 11.4 % Consumer and other 48,188 2.0 % 48,142 2.2 % Total Non-Real Estate 742,389 30.7 % 719,302 33.2 % Total Loans Before Unearned Income 2,424,313 100.0 % 2,166,048 100.0 % Unearned income (6,986) (6,689) Total Loans Net of Unearned Income $ 2,417,327 $ 2,159,359 (1) Includes PPP loans fully guaranteed by the SBA of $6.1 million and $35.4 million at September 30, 2022 and December 31, 2021, respectively. The following table summarizes fixed and floating rate loans by contractual maturity, excluding nonaccrual loans, as of September 30, 2022 and December 31, 2021 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, 2022 December 31, 2021 (in thousands) Fixed Floating Total Fixed Floating Total One year or less $ 222,294 $ 123,864 $ 346,158 $ 239,423 $ 117,697 $ 357,120 More than one to five years 900,499 340,962 1,241,461 926,640 385,509 1,312,149 More than five to 15 years 117,972 209,048 327,020 114,976 106,579 221,555 Over 15 years 222,710 276,606 499,316 179,522 78,987 258,509 Subtotal $ 1,463,475 $ 950,480 2,413,955 $ 1,460,561 $ 688,772 2,149,333 Nonaccrual loans 10,358 16,715 Total Loans Before Unearned Income 2,424,313 2,166,048 Unearned income (6,986) (6,689) Total Loans Net of Unearned Income $ 2,417,327 $ 2,159,359 As of September 30, 2022, $177.3 million of floating rate loans were at their interest rate floor. At December 31, 2021, $349.1 million of floating rate loans were at their 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, 2022 and December 31, 2021: As of September 30, 2022 (in thousands) 30-89 Days Past Due 90 Days or Greater Total Past Due Current Total Loans Recorded Investment Real Estate: Construction & land development $ 852 $ 430 $ 1,282 $ 203,358 $ 204,640 $ 326 Farmland — 290 290 24,266 24,556 — 1- 4 family 2,363 4,005 6,368 346,133 352,501 359 Multifamily 184 13 197 118,076 118,273 13 Non-farm non-residential 4,321 2,947 7,268 974,686 981,954 318 Total Real Estate 7,720 7,685 15,405 1,666,519 1,681,924 1,016 Non-Real Estate: Agricultural 221 1,645 1,866 45,776 47,642 — Commercial and industrial 939 1,320 2,259 363,290 365,549 444 Commercial leases 1,930 — 1,930 279,080 281,010 — Consumer and other 1,492 1,168 2,660 45,528 48,188 — Total Non-Real Estate 4,582 4,133 8,715 733,674 742,389 444 Total Loans Before Unearned Income $ 12,302 $ 11,818 $ 24,120 $ 2,400,193 $ 2,424,313 $ 1,460 Unearned income (6,986) Total Loans Net of Unearned Income $ 2,417,327 As of December 31, 2021 (in thousands) 30-89 Days Past Due 90 Days or Greater Total Past Due Current Total Loans Recorded Investment Real Estate: Construction & land development $ 956 $ 776 $ 1,732 $ 172,602 $ 174,334 $ 246 Farmland 17 787 804 31,006 31,810 — 1- 4 family 3,932 3,375 7,307 281,040 288,347 514 Multifamily 1,669 162 1,831 64,017 65,848 162 Non-farm non-residential 1,352 9,014 10,366 876,041 886,407 281 Total Real Estate 7,926 14,114 22,040 1,424,706 1,446,746 1,203 Non-Real Estate: Agricultural 97 2,302 2,399 24,348 26,747 — Commercial and industrial 1,233 722 1,955 396,436 398,391 23 Commercial leases — — — 246,022 246,022 — Consumer and other 920 822 1,742 46,400 48,142 19 Total Non-Real Estate 2,250 3,846 6,096 713,206 719,302 42 Total Loans Before Unearned Income $ 10,176 $ 17,960 $ 28,136 $ 2,137,912 $ 2,166,048 $ 1,245 Unearned income (6,689) Total Loans Net of Unearned Income $ 2,159,359 The tables above include $10.4 million and $16.7 million of nonaccrual loans at September 30, 2022 and December 31, 2021, 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, 2022 As of December 31, 2021 Real Estate: Construction & land development $ 104 $ 530 Farmland 290 787 1- 4 family 3,646 2,861 Multifamily — — Non-farm non-residential 2,629 8,733 Total Real Estate 6,669 12,911 Non-Real Estate: Agricultural 1,645 2,302 Commercial and industrial 876 699 Commercial leases — — Consumer and other 1,168 803 Total Non-Real Estate 3,689 3,804 Total Nonaccrual Loans $ 10,358 $ 16,715 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, 2022 As of December 31, 2021 (in thousands) Pass Special Mention Substandard Doubtful Total Pass Special Mention Substandard Doubtful Total Real Estate: Construction & land development $ 200,959 $ 2,984 $ 697 $ — $ 204,640 $ 151,220 $ 21,997 $ 1,117 $ — $ 174,334 Farmland 23,738 35 783 — 24,556 27,678 40 4,092 — 31,810 1- 4 family 334,064 8,946 9,491 — 352,501 270,866 7,644 9,837 — 288,347 Multifamily 112,702 449 5,122 — 118,273 56,686 2,212 6,950 — 65,848 Non-farm 957,272 15,348 9,334 — 981,954 795,495 72,103 18,809 — 886,407 Total Real Estate 1,628,735 27,762 25,427 — 1,681,924 1,301,945 103,996 40,805 — 1,446,746 Non-Real Estate: Agricultural 44,822 163 2,657 — 47,642 23,952 128 2,667 — 26,747 Commercial 355,436 1,893 8,220 — 365,549 355,407 34,220 8,764 — 398,391 Commercial leases 279,175 — 1835 — 281,010 245,869 — 153 — 246,022 Consumer and other 45,911 886 1,391 — 48,188 46,804 374 964 — 48,142 Total Non-Real Estate 725,344 2,942 14,103 — 742,389 672,032 34,722 12,548 — 719,302 Total Loans Before Unearned Income $ 2,354,079 $ 30,704 $ 39,530 $ — 2,424,313 $ 1,973,977 $ 138,718 $ 53,353 $ — 2,166,048 Unearned income (6,986) (6,689) Total Loans Net of Unearned Income $ 2,417,327 $ 2,159,359 Purchased Impaired Loans As part of the acquisition of Union Bancshares, Incorporated on November 7, 2019 and 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, 2022 and December 31, 2021. (in thousands) As of September 30, 2022 As of December 31, 2021 Real Estate: Construction & land development $ 315 $ 146 Farmland — — 1- 4 family 1,318 1,848 Multifamily — — Non-farm non-residential 1,908 2,192 Total Real Estate 3,541 4,186 Non-Real Estate: Agricultural — 159 Commercial and industrial 742 798 Commercial leases — — Consumer and other — — Total Non-Real Estate 742 957 Total $ 4,283 $ 5,143 For those purchased loans disclosed above, there was an allowance for loan and lease losses of $0.7 million at September 30, 2022 and December 31, 2021. 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, 2022 and 2021. (in thousands) Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 Balance, beginning of period $ 2,378 $ 2,892 Acquisition accretable yield — — Accretion (208) (370) Net transfers from nonaccretable difference to accretable yield — — Balance, end of period $ 2,170 $ 2,522 |