Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Loans

v3.22.2
Note 5 - Loans
6 Months Ended
Jun. 30, 2022
Notes to Financial Statements  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 5 LOANS

 

The loan portfolio is classified based on the underlying collateral utilized to secure each loan for financial reporting purposes. This classification is consistent with the Quarterly Report of Condition and Income filed by the Bank with the Federal Deposit Insurance Corporation (FDIC).

 

Commercial, financial and agricultural - Includes loans to business enterprises issued for commercial, industrial, agricultural production and/or other professional purposes. These loans are generally secured by equipment, inventory, and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.

 

Real estate construction – Includes loans secured by real estate to finance land development or the construction of industrial, commercial or residential buildings. Repayment is dependent upon the completion and eventual sale, refinance or operation of the related real estate project.

 

Owner-occupied commercial real estate mortgage – Includes loans secured by nonfarm nonresidential properties for which the primary source of repayment is the cash flow from the ongoing operations conducted by the party that owns the property.

 

1-4 family real estate mortgage – Includes loans secured by residential properties, including home equity lines of credit. Repayment is primarily dependent on the personal cash flow of the borrower.

 

Other real estate mortgage – Includes loans secured by nonowner-occupied properties, including office buildings, industrial buildings, warehouses, retail buildings, multifamily residential properties and farmland. Repayment is primarily dependent on income generated from the underlying collateral.

 

Consumer – Includes loans to individuals not secured by real estate. Repayment is dependent upon the personal cash flow of the borrower.

 

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provided for Paycheck Protection Program (“PPP”) loans made by banks to employers with less than 500 employees if they continued to employ their existing workers. The American Rescue Plan Act of 2021, which was signed into law on March 21, 2021, provides additional relief for businesses, states, municipalities and individuals by, among other things, allocating additional funds for the PPP. Effective May 28, 2021, the PPP was closed to new applications. The Company funded approximately 7,400 loans for a total amount of $1.5 billion for clients under the PPP since April 2020. At June 30, 2022 and December 31, 2021, unaccreted deferred loan origination fees, net of costs, related to PPP loans were $513,000 and $7.2 million, respectively. PPP loan origination fees recorded to interest income totaled $2.8 million and $8.0 million for the three months ended  June 30, 2022 and 2021, respectively, and totaled $7.2 million and $17.1 million for the six months ended June 30, 2022 and 2021, respectively. PPP loans outstanding totaled $23.0 million and $595.0 million at June 30, 2022 and December 31, 2021, respectively. PPP loans are included within the commercial, financial and agricultural loan category in the table below.

 

The following table details the Company’s loans at June 30, 2022 and December 31, 2021:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 
   

(Dollars In Thousands)

 

Commercial, financial and agricultural

  $ 2,966,040     $ 2,984,053  

Real estate - construction

    1,383,155       1,103,076  

Real estate - mortgage:

               

Owner-occupied commercial

    2,026,807       1,874,103  

1-4 family mortgage

    1,015,698       826,765  

Other mortgage

    3,160,510       2,678,084  

Subtotal: Real estate - mortgage

    6,203,015       5,378,952  

Consumer

    65,110       66,853  

Total Loans

    10,617,320       9,532,934  

Less: Allowance for credit losses

    (128,387 )     (116,660 )

Net Loans

  $ 10,488,933     $ 9,416,274  
                 
                 

Commercial, financial and agricultural

    27.94

%

    31.30

%

Real estate - construction

    13.03

%

    11.57

%

Real estate - mortgage:

               

Owner-occupied commercial

    19.09

%

    19.66

%

1-4 family mortgage

    9.57

%

    8.67

%

Other mortgage

    29.77

%

    28.10

%

Subtotal: Real estate - mortgage

    58.42

%

    56.42

%

Consumer

    0.61

%

    0.70

%

Total Loans

    100.00

%

    100.00

%

 

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan credit portfolio segments and classes. These categories are utilized to develop the associated allowance for credit losses using historical losses adjusted for current economic conditions defined as follows:

 

 

Pass – loans which are well protected by the current net worth and paying capacity of the borrower (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

 

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

 

Substandard – loans that exhibit well-defined weakness or weaknesses that currently jeopardize debt repayment. These loans are characterized by the distinct possibility that the company will sustain some loss if the weaknesses are not corrected.

 

Doubtful – loans that have all the weaknesses inherent in loans classified substandard, plus 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.

 

The table below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of June 30, 2022 :

 

                                                   

Revolving

         

June 30, 2022

 

2022

   

2021

   

2020

   

2019

   

2018

   

Prior

   

Loans

   

Total

 
   

(In thousands)

 

Commercial, financial and agricultural

                                                               

Pass

  $ 295,183     $ 671,693     $ 257,345     $ 227,787     $ 164,947     $ 514,106     $ 748,747     $ 2,880,087  

Special Mention

    100       6,717       1,276       2,277       3,444       4,950       21,344       40,108  

Substandard

    1       -       408       11,071       343       3,610       30,691       45,845  

Doubtful

    -       -       -       -       -       -       -       -  

Total Commercial, financial and agricultural

  $ 295,284     $ 678,410     $ 259,029     $ 241,135     $ 168,734     $ 522,666     $ 800,782     $ 2,966,040  

Real estate - construction

                                                               

Pass

  $ 237,946     $ 600,567     $ 226,083     $ 17,895     $ 8,644     $ 29,479     $ 257,920     $ 1,378,534  

Special Mention

    2,500       -       -       -       -       894       -       3,394  

Substandard

    -       -       -       -       1,227       -       -       1,227  

Doubtful

    -       -       -       -       -       -       -       -  

Total Real estate - construction

  $ 240,446     $ 600,567     $ 226,083     $ 17,895     $ 9,871     $ 30,373     $ 257,920     $ 1,383,155  

Owner-occupied commercial

                                                               

Pass

  $ 174,174     $ 426,742     $ 257,264     $ 159,595     $ 148,669     $ 386,045     $ 455,962     $ 2,010,500  

Special Mention

    291       1,625       -       2,382       633       5,500       1,777       12,208  

Substandard

    -       -       -       -       -       1,866       4,283       4,099  

Doubtful

    -       -       -       -       -       -       -       -  

Total Owner-occupied commercial

  $ 174,465     $ 428,367     $ 257,264     $ 161,977     $ 149,302     $ 393,411     $ 462,022     $ 2,026,807  

1-4 family mortgage

                                                               

Pass

  $ 210,144     $ 246,092     $ 76,469     $ 40,022     $ 24,584     $ 76,334     $ 333,600     $ 1,007,245  

Special Mention

    101       1,503       839       161       -       585       2,695       5,884  

Substandard

    -       -       -       233       -       342       1,994       2,569  

Doubtful

    -       -       -       -       -       -       -       -  

Total 1-4 family mortgage

  $ 210,245     $ 247,595     $ 77,308     $ 40,416     $ 24,584     $ 77,261     $ 338,289     $ 1,015,698  

Other mortgage

                                                               

Pass

  $ 423,306     $ 798,502     $ 449,472     $ 370,182     $ 123,724     $ 398,486     $ 573,799     $ 3,137,471  

Special Mention

    -       -       -       130       376       2,681       7,151       10,338  

Substandard

    -       -       -       -       4,449       928       7,324       12,701  

Doubtful

    -       -       -       -       -       -       -       -  

Total Other mortgage

  $ 423,306     $ 798,502     $ 449,472     $ 370,312     $ 128,549     $ 402,095     $ 588,274     $ 3,160,510  

Consumer

                                                               

Pass

  $ 5,857     $ 7,083     $ 2,982     $ 1,862     $ 402     $ 22,535     $ 24,370     $ 65,091  

Special Mention

    -       -       -       -       -       19       -       19  

Substandard

    -       -       -       -       -       -       -       -  

Doubtful

    -       -       -       -       -       -       -       -  

Total Consumer

  $ 5,857     $ 7,083     $ 2,982     $ 1,862     $ 402     $ 22,554     $ 24,370     $ 65,110  

Total Loans

                                                               

Pass

  $ 1,346,610     $ 2,750,679     $ 1,269,615     $ 817,343     $ 470,970     $ 1,426,985     $ 2,393,868     $ 10,478,928  

Special Mention

    2,992       9,845       2,115       4,950       4,453       14,629       32,967       71,951  

Substandard

    1       -       408       11,303       6,019       6,746       44,940       66,441  

Doubtful

    -       -       -       -       -       -       -       -  

Total Loans

  $ 1,349,603     $ 2,760,524     $ 1,272,138     $ 833,596     $ 481,442     $ 1,448,360     $ 2,471,657     $ 10,617,320  

 

 

The table below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of December 31, 2021:

 

                                                   

Revolving

         

December 31, 2021

 

2021

   

2020

   

2019

   

2018

   

2017

   

Prior

   

Loans

   

Total

 
   

(In thousands)

 

Commercial, financial and agricultural

                                                               

Pass

  $ 800,822     $ 294,841     $ 209,086     $ 130,579     $ 114,870     $ 127,572     $ 1,216,153     $ 2,893,923  

Special Mention

    1,245       1,323       942       846       915       784       19,801       25,856  

Substandard

    -       387       10,039       1,741       1,501       7,966       42,640       64,274  

Doubtful

    -       -       -       -       -       -       -       -  

Total Commercial, financial and agricultural

  $ 802,067     $ 296,551     $ 220,067     $ 133,166     $ 117,286     $ 136,322     $ 1,278,594     $ 2,984,053  

Real estate - construction

                                                               

Pass

  $ 597,497     $ 260,723     $ 110,671     $ 16,452     $ 13,704     $ 17,356     $ 76,662     $ 1,093,065  

Special Mention

    -       -       6,594       2,500       -       917       -       10,011  

Substandard

    -       -       -       -       -       -       -       -  

Doubtful

    -       -       -       -       -       -       -       -  

Total Real estate - construction

  $ 597,497     $ 260,723     $ 117,265     $ 18,952     $ 13,704     $ 18,273     $ 76,662     $ 1,103,076  

Owner-occupied commercial

                                                               

Pass

  $ 406,473     $ 352,642     $ 231,197     $ 182,812     $ 162,648     $ 430,638     $ 96,860     $ 1,863,270  

Special Mention

    101       -       2,417       779       476       2,688       -       6,461  

Substandard

    -       -       -       -       -       4,372       -       4,372  

Doubtful

    -       -       -       -       -       -       -       -  

Total Owner-occupied commercial

  $ 406,574     $ 352,642     $ 233,614     $ 183,591     $ 163,124     $ 437,698     $ 96,860     $ 1,874,103  

1-4 family mortgage

                                                               

Pass

  $ 299,686     $ 117,579     $ 68,044     $ 46,954     $ 37,374     $ 37,970     $ 210,338     $ 817,945  

Special Mention

    -       1,000       517       116       260       912       3,033       5,838  

Substandard

    -       150       593       241       231       611       1,156       2,982  

Doubtful

    -       -       -       -       -       -       -       -  

Total 1-4 family mortgage

  $ 299,686     $ 118,729     $ 69,154     $ 47,311     $ 37,865     $ 39,493     $ 214,527     $ 826,765  

Other mortgage

                                                               

Pass

  $ 882,849     $ 481,012     $ 411,426     $ 174,700     $ 272,555     $ 353,621     $ 81,202     $ 2,657,365  

Special Mention

    -       -       130       376       2,720       4,656       -       7,882  

Substandard

    -       -       -       4,497       8,340       -       -       12,837  

Doubtful

    -       -       -       -       -       -       -       -  

Total Other mortgage

  $ 882,849     $ 481,012     $ 411,556     $ 179,573     $ 283,615     $ 358,277     $ 81,202     $ 2,678,084  

Consumer

                                                               

Pass

  $ 16,303     $ 4,845     $ 2,896     $ 983     $ 903     $ 3,649     $ 37,250     $ 66,829  

Special Mention

    -       -       -       -       -       24       -       24  

Substandard

    -       -       -       -       -       -       -       -  

Doubtful

    -       -       -       -       -       -       -       -  

Total Consumer

  $ 16,303     $ 4,845     $ 2,896     $ 983     $ 903     $ 3,673     $ 37,250     $ 66,853  

Total Loans

                                                               

Pass

  $ 3,003,630     $ 1,511,642     $ 1,033,320     $ 552,480     $ 602,054     $ 970,806     $ 1,718,465     $ 9,392,397  

Special Mention

    1,346       2,323       10,600       4,617       4,371       9,981       22,834       56,072  

Substandard

    -       537       10,632       6,479       10,072       12,949       43,796       84,465  

Doubtful

    -       -       -       -       -       -       -       -  

Total Loans

  $ 3,004,976     $ 1,514,502     $ 1,054,552     $ 563,576     $ 616,497     $ 993,736     $ 1,785,095     $ 9,532,934  

 

Loans by performance status as of June 30, 2022 and December 31, 2021 were as follows:

 

June 30, 2022

 

Performing

   

Nonperforming

   

Total

 
                         
   

(In Thousands)

 

Commercial, financial and agricultural

  $ 2,960,589     $ 5,451     $ 2,966,040  

Real estate - construction

    1,383,155       -       1,383,155  

Real estate - mortgage:

                       

Owner-occupied commercial

    2,023,628       3,179       2,026,807  

1-4 family mortgage

    1,014,336       1,362       1,015,698  

Other mortgage

    3,154,993       5,517       3,160,510  

Total real estate mortgage

    6,192,957       10,058       6,203,015  

Consumer

    65,088       22       65,110  

Total

  $ 10,601,789     $ 15,531     $ 10,617,320  

 

December 31, 2021

 

Performing

   

Nonperforming

   

Total

 
                         
   

(In Thousands)

 

Commercial, financial and agricultural

  $ 2,979,671     $ 4,382     $ 2,984,053  

Real estate - construction

    1,103,076       -       1,103,076  

Real estate - mortgage:

                       

Owner-occupied commercial

    1,873,082       1,021       1,874,103  

1-4 family mortgage

    824,756       2,009       826,765  

Other mortgage

    2,673,428       4,656       2,678,084  

Total real estate mortgage

    5,371,266       7,686       5,378,952  

Consumer

    66,824       29       66,853  

Total

  $ 9,520,837     $ 12,097     $ 9,532,934  

 

Loans by past due status as of June 30, 2022 and December 31, 2021 were as follows:

 

June 30, 2022

 

Past Due Status (Accruing Loans)

                                 
                           

Total Past

   

Total

                   

Nonaccrual

 
   

30-59 Days

   

60-89 Days

   

90+ Days

   

Due

   

Nonaccrual

   

Current

   

Total Loans

   

With no ACL

 
                                                                 
   

(In Thousands)

 

Commercial, financial and agricultural

  $ 2,810     $ 885     $ 249     $ 3,944     $ 5,202     $ 2,956,894     $ 2,966,040     $ 2,595  

Real estate - construction

    -       -       -       -       -       1,383,155       1,383,155       -  

Real estate - mortgage:

                                                               

Owner-occupied commercial

    -       -       -       -       3,179       2,023,628       2,026,807       5,515  

1-4 family mortgage

    402       1,332       134       1,868       1,228       1,012,602       1,015,698       102  

Other mortgage

    376       -       4,586       4,962       931       3,154,617       3,160,510       -  

Total real estate - mortgage

    778       1,332       4,720       6,830       5,338       6,190,847       6,203,015       5,617  

Consumer

    53       27       22       102       -       65,008       65,110       -  

Total

  $ 3,641     $ 2,244     $ 4,991     $ 10,876     $ 10,540     $ 10,595,904     $ 10,617,320     $ 8,212  

 

December 31, 2021

 

Past Due Status (Accruing Loans)

                                 
                           

Total Past

   

Total

                   

Nonaccrual

 
   

30-59 Days

   

60-89 Days

   

90+ Days

   

Due

   

Nonaccrual

   

Current

   

Total Loans

   

With no ACL

 
                                                                 
   

(In Thousands)

 

Commercial, financial and agricultural

  $ 516     $ 77     $ 39     $ 632     $ 4,343     $ 2,979,078     $ 2,984,053     $ 2,059  

Real estate - construction

    -       -       -       -       -       1,103,076       1,103,076       -  

Real estate - mortgage:

                                                               

Owner-occupied commercial

    143       -       -       143       1,021       1,872,939       1,874,103       1,021  

1-4 family mortgage

    -       703       611       1,314       1,398       824,053       826,765       483  

Other mortgage

    -       -       4,656       4,656       -       2,673,428       2,678,084       -  

Total real estate - mortgage

    143       703       5,267       6,113       2,419       5,370,420       5,378,952       1,504  

Consumer

    93       23       29       145       -       66,708       66,853       -  

Total

  $ 752     $ 803     $ 5,335     $ 6,890     $ 6,762     $ 9,519,282     $ 9,532,934     $ 3,563  

 

Under the current expected credit losses (“CECL”) methodology, the allowance for credit losses ("ACL") is measured on a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses.         

 

The Company uses the discounted cash flow (“DCF”) method to estimate ACL for all loan pools except for commercial and industrial ("C&I") revolving lines of credit and credit cards.  For all loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment rate as a loss driver. The Company also utilizes and forecasts GDP growth as a second loss driver for its agricultural and consumer loan pools.  Consistent forecasts of the loss drivers are used across the loan segments.  At June 30, 2022 and December 31, 2021, the Company utilized a reasonable and supportable forecast period of twelve months followed by a six-month straight-line reversion to long term averages.  The Company leveraged economic projections from reputable and independent sources to inform its loss driver forecasts.  The Company expects the national unemployment to rise during the forecast period with a declining national GDP growth rate compared to December 31, 2021.

 

The Company uses a loss-rate method to estimate expected credit losses for its C&I revolving lines of credit and credit card pools.  The C&I revolving lines of credit pool incorporates a probability of default (“PD”) and loss given default (“LGD”) modeling approach.  This approach involves estimating the pool average life and then using historical correlations of default and loss experience over time to calculate the lifetime PD and LGD.  These two inputs are then applied to the outstanding pool balance.  The credit card pool incorporates a remaining life modeling approach, which utilizes an attrition-based method to estimate the remaining life of the pool.  A quarterly average loss rate is then calculated using the Company’s historical loss data. The model reduces the pool balance quarterly on a straight-line basis over the estimated life of the pool. The quarterly loss rate is multiplied by the outstanding balance at each period-end resulting in an estimated loss for each quarter. The sum of estimated loss for all quarters is the total calculated reserve for the pool.  Management has applied the loss-rate method to C&I lines of credit and to credit cards due to their generally short-term nature.  An expected loss ratio is applied based on internal and peer historical losses.

 

Each loan pool is adjusted for qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation.  The Company considers factors that are relevant within the qualitative framework which include the following:  lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.

 

Inherent risks in the loan portfolio will differ based on type of loan. Specific risk characteristics by loan portfolio segment are listed below:

 

Commercial, financial and agricultural loans include risks associated with the  borrower’s cash flow, debt service coverage, and management’s expertise.  These loans are subject to the risk that the Company may have difficulty converting collateral to a liquid asset if necessary, as well as risks associated with the  degree of specialization, mobility, and general collectability in a default situation. These commercial loans may be subject to many different types of risks, including fraud, bankruptcy, economic downturn, deteriorated or non-existent collateral, and changes in interest rates.

 

Real estate construction loans include risks associated with the borrower’s credit-worthiness, contractor’s qualifications, borrower and contractor performance, and the overall risk and complexity of the proposed project.  Construction lending is also subject to risks associated with sub-market dynamics, including population, employment trends and household income.  During times of economic stress, this type of loan has typically had a greater degree of risk than other loan types.  

 

Real estate mortgage loans consist of loans secured by commercial and residential real estate.  Commercial real estate lending is dependent upon successful management, marketing and expense supervision necessary to maintain the property.  Repayment of these loans may be adversely affected by conditions in the real estate market or the general economy.  Also, commercial real estate loans typically involve relatively large loan balances to a single borrower.  Residential real estate lending risks are generally less significant than those of other loans.  Real estate lending risks include fluctuations in the value of real estate, bankruptcies, economic downturn and customer financial problems.

 

Consumer loans carry a moderate degree of risk compared to other loans.  They are generally more risky than traditional residential real estate loans but less risky than commercial loans.  Risk of default is usually determined by the well-being of the local economies.  During times of economic stress, there is usually some level of job loss both nationally and locally, which directly affects the ability of the consumer to repay debt.

 

The following table presents changes in the allowance for credit losses, segregated by loan type, for the three and six months ended June 30, 2022 and June 30, 2021.

 

   

Commercial,

                                 
   

financial and

   

Real estate -

   

Real estate -

                 
   

agricultural

   

construction

   

mortgage

   

Consumer

   

Total

 
                                         
   

(In Thousands)

 
   

Three Months Ended June 30, 2022

 

Allowance for credit losses:

                                       

Balance at March 1, 2022

  $ 41,417     $ 27,821     $ 48,548     $ 1,677     $ 119,463  

Charge-offs

    (1,666 )     -       (23 )     (124 )     (1,813 )

Recoveries

    1,217       -       -       13       1,230  

Provision

    642       8,172       268       426       9,507  

Balance at June 30, 2022

  $ 41,610     $ 35,993     $ 48,793     $ 1,992     $ 128,387  

 

   

Three Months Ended March June 30, 2021

 

Allowance for credit losses:

                                       

Balance at March 1, 2021

  $ 38,232     $ 19,391     $ 35,607     $ 1,676     $ 94,906  

Charge-offs

    (150 )     -       (59 )     (54 )     (263 )

Recoveries

    298       2       62       13       375  

Provision

    4,053       3,020       2,920       (341 )     9,652  

Balance at June 30, 2021

  $ 42,433     $ 22,413     $ 38,530     $ 1,294     $ 104,670  

 

   

Six Months Ended June 30, 2022

 

Allowance for credit losses:

                                       

Balance at January 1, 2022

  $ 41,869     $ 26,994     $ 45,829     $ 1,968     $ 116,660  

Charge-offs

    (4,240 )     -       (51 )     (199 )     (4,489 )

Recoveries

    1,322       -       -       25       1,347  

Provision

    2,659       8,999       3,014       198       14,869  

Balance at June 30, 2022

  $ 41,610     $ 35,993     $ 48,793     $ 1,992     $ 128,387  

 

   

Six Months Ended June 30, 2021

 

Allowance for credit losses:

                                       

Balance at January 1, 2021

  $ 36,370     $ 16,057     $ 33,722     $ 1,793     $ 87,942  

Charge-offs

    (627 )     -       (71 )     (141 )     (839 )

Recoveries

    324       52       64       24       464  

Provision

    6,366       6,304       4,815       (382 )     17,103  

Balance at June 30, 2021

  $ 42,433     $ 22,413     $ 38,530     $ 1,294     $ 104,670  

 

We maintain an allowance for credit losses on unfunded lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the Consolidated Balance Sheet within other liabilities, while the corresponding provision for these credit losses is recorded as a component of other expense. The allowance for credit losses on unfunded commitments was $1.6 million at June 30, 2022 and $1.3 million at December 31, 2021. The provision expense for unfunded commitments was $0 and $300,000 for the three and six months ended June 30, 2022, respectively, and was $600,000 and $1.1 million for the three and six months ended June 30, 2021, respectively.

 

Loans that no longer share similar risk characteristics with collectively evaluated pools are estimated on an individual basis. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent gross loans held for investment by collateral type as follows:

 

           

Accounts

                           

ACL

 

June 30, 2022

 

Real Estate

   

Receivable

   

Equipment

   

Other

   

Total

   

Allocation

 
   

(In Thousands)

 

Commercial, financial and agricultural

  $ 12,330     $ 5,174     $ 3,246     $ 25,094     $ 45,844     $ 8,264  

Real estate - construction

    -       -       -       1,227       1,227       96  

Real estate - mortgage:

                                               

Owner-occupied commercial

    4,100       -       -       -       4,100       1,837  

1-4 family mortgage

    3,226       -       -       -       3,226       231  

Other mortgage

    12,704       -       -       -       12,704       -  

Total real estate - mortgage

    20,030       -       -       -       20,030       2,068  

Consumer

    -       -       -       -       -       -  

Total

  $ 32,360     $ 5,174     $ 3,246     $ 26,321     $ 67,101     $ 10,428  

 

           

Accounts

                           

ACL

 

December 31, 2021

 

Real Estate

   

Receivable

   

Equipment

   

Other

   

Total

   

Allocation

 
   

(In Thousands)

 

Commercial, financial and agricultural

  $ 13,067     $ 5,075     $ 18,533     $ 27,599     $ 64,274     $ 9,727  

Real estate - construction

    -       -       -       -       -       -  

Real estate - mortgage:

                                               

Owner-occupied commercial

    4,372       -       -       -       4,372       1,371  

1-4 family mortgage

    2,982       -       -       -       2,982       163  

Other mortgage

    12,837       -       -       -       12,837       31  

Total real estate - mortgage

    20,191       -       -       -       20,191       1,565  

Consumer

    -       -       -       -       -       -  

Total

  $ 33,258     $ 5,075     $ 18,533     $ 27,599     $ 84,465     $ 11,292  

 

Troubled Debt Restructuring (“TDR”) at June 30, 2022, December 31, 2021 and June 30, 2021 totaled $‐‐2.4 million, $2.6 million and $2.9 million, respectively. The portion of those TDRs accruing interest at June 30, 2022, December 31, 2021 and June 30, 2021 totaled $421,000, $431,000 and $441,000, respectively. There were no modifications made to new TDRs or renewals of existing TDRs for the three and six months ended June 30, 2022. The following tables present loans modified in a TDR during three and six months ended June 30, 2021 by portfolio segment and the financial impact of those modifications. The tables include modifications made to new TDRs, as well as renewals of existing TDRs.

 

   

Three Months Ended June 30, 2022

   

Six Months Ended June 30, 2022

 
           

Pre-

   

Post-

           

Pre-

   

Post-

 
           

Modification

   

Modification

           

Modification

   

Modification

 
           

Outstanding

   

Outstanding

           

Outstanding

   

Outstanding

 
   

Number of

   

Recorded

   

Recorded

   

Number of

   

Recorded

   

Recorded

 
   

Contracts

   

Investment

   

Investment

   

Contracts

   

Investment

   

Investment

 
   

(In Thousands)

 

Troubled Debt Restructurings

                                               

Commercial, financial and agricultural

    2     $ 1,155     $ 1,155       2     $ 1,155     $ 1,155  

Real estate - construction

    -       -       -       -       -       -  

Real estate - mortgage:

                                               

Owner-occupied commercial

    1       991       991       1       991       991  

1-4 family mortgage

    -       -       -       -       -       -  

Other mortgage

    -       -       -       -       -       -  

Total real estate mortgage

    1       991       991       1       991       991  

Consumer

    -       -       -       -       -       -  
      3     $ 2,146     $ 2,146       3     $ 2,146     $ 2,146  

 

There were no loans which were modified in the previous twelve months (i.e., the twelve months prior to default) that defaulted during the three and six months ended  June 30, 2022 and June 30, 2021, respectively. For purposes of this disclosure, default is defined as 90 days past due and still accruing or placement on nonaccrual status.