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Loans and Allowance for Loan Losses (Tables)
 6 Months Ended
Jun. 30, 2019
Loans and Allowance for Loan Losses [Abstract]  
Summary of Loans
A summary of loans at June 30, 2019 and December 31, 2018, are as follows (dollars in thousands):
 
 
 
June 30,
2019
  
December 31,
2018
 
 
      
Construction & development
 
$
83,291
  
$
87,267
 
1-4 family commercial
  
36,165
   
33,278
 
Commercial real estate - other
  
188,142
   
156,396
 
Total commercial real estate
  
307,598
   
276,941
 
 
        
Commercial & industrial
  
256,100
   
248,394
 
Agricultural
  
56,167
   
62,844
 
Consumer
  
13,093
   
13,723
 
 
        
Gross loans
  
632,958
   
601,902
 
 
        
Less allowance for loan losses
  
(7,836
)
  
(7,832
)
Less deferred loan fees
  
(1,508
)
  
(1,992
)
 
        
Net loans
 
$
623,614
  
$
592,078
 
Activity in Allowance for Loan Losses by Portfolio Segment
The following table presents, by portfolio segment, the activity in the allowance for loan losses for the three months ended June 30, 2019 and 2018 (dollars in thousands):
 
  
Construction &
Development
  
1 - 4 Family
Commercial
  
Commercial
Real Estate -
Other
  

Commercial
& Industrial
  
Agricultural
  
Consumer
  
Total
 
                      
June 30, 2019
                     
Balance, beginning of period
 
$
1,290
  
$
452
  
$
2,087
  
$
3,068
  
$
760
  
$
178
  
$
7,835
 
                             
Charge-offs
  
-
   
-
   
-
   
-
   
(10
)
  
-
   
(10
)
Recoveries
  
-
   
1
   
-
   
7
   
3
   
-
   
11
 
                             
Net recoveries
  
-
   
1
       
7
   
(7
)
  
-
   
1
 
                             
Provision (credit) for loan losses
  
(259
)
  
(5
)
  
242
   
96
   
(58
)
  
(16
)
  
-
 
                             
Balance, end of period
 
$
1,031
  
$
448
  
$
2,329
  
$
3,171
  
$
695
  
$
162
  
$
7,836
 

  
Construction &
Development
  
1 - 4 Family
Commercial
  
Commercial
Real Estate -
Other
  
Commercial
& Industrial
  
Agricultural
  
Consumer
  
Total
 
                      
June 30, 2018
                     
Balance, beginning of period
 
$
1,465
  
$
497
  
$
1,556
  
$
3,108
  
$
872
  
$
201
  
$
7,699
 
                             
Charge-offs
  
-
   
(25
)
  
-
   
(6
)
  
-
   
-
   
(31
)
Recoveries
  
-
   
2
   
2
   
29
   
-
   
1
   
34
 
                             
Net recoveries
  
-
   
(23
)
  
2
   
23
   
-
   
1
   
3
 
                             
Provision (credit) for loan losses
  
(182
)
  
(39
)
  
414
   
(118
)
  
(64
)
  
(11
)
  
-
 
                             
Balance, end of period
 
$
1,283
  
$
435
  
$
1,972
  
$
3,013
  
$
808
  
$
191
  
$
7,702
 

The following table presents, by portfolio segment, the activity in the allowance for loan losses for the six months ended June 30, 2019 and 2018 (dollars in thousands):
 
  
Construction &
Development
  
1 - 4 Family
Commercial
  
Commercial
Real Estate -
Other
  
Commercial
& Industrial
  
Agricultural
  
Consumer
  
Total
 
                      
June 30, 2019
                     
Balance, beginning of period
 
$
1,136
  
$
433
  
$
2,035
  
$
3,231
  
$
818
  
$
179
  
$
7,832
 
                             
Charge-offs
  
-
   
-
   
-
   
(4
)
  
(10
)
  
-
   
(14
)
Recoveries
  
-
   
2
   
-
   
13
   
3
   
-
   
18
 
                             
Net charge-offs
  
-
   
2
   
-
   
9
   
(7
)
  
-
   
4
 
                             
Provision (credit) for loan losses
  
(105
)
  
13
   
294
   
(69
)
  
(116
)
  
(17
)
  
-
 
                             
Balance, end of period
 
$
1,031
  
$
448
  
$
2,329
  
$
3,171
  
$
695
  
$
162
  
$
7,836
 

  
Construction &
Development
  
1 - 4 Family
Commercial
  
Commercial
Real Estate -
Other
  
Commercial
& Industrial
  
Agricultural
  
Consumer
  
Total
 
                      
June 30, 2018
                     
Balance, beginning of period
 
$
1,407
  
$
431
  
$
1,865
  
$
2,779
  
$
1,015
  
$
157
  
$
7,654
 
                             
Charge-offs
  
-
   
(25
)
  
-
   
(61
)
  
-
   
-
   
(86
)
Recoveries
  
-
   
2
   
2
   
29
   
-
   
1
   
34
 
                             
Net charge-offs
  
-
   
(23
)
  
2
   
(32
)
  
-
   
1
   
(52
)
                             
Provision (credit) for loan losses
  
(124
)
  
27
   
105
   
266
   
(207
)
  
33
   
100
 
                             
Balance, end of period
 
$
1,283
  
$
435
  
$
1,972
  
$
3,013
  
$
808
  
$
191
  
$
7,702
 

The following table presents, by portfolio segment, the balance in allowance for loan losses and the gross loans based upon portfolio segment and impairment method as of June 30, 2019 and December 31, 2018 (dollars in thousands):
 
  
Construction &
Development
  
1 - 4 Family
Commercial
  
Commercial
Real Estate -
Other
  
Commercial
& Industrial
  
Agricultural
  
Consumer
  
Total
 
                      
June 30, 2019
Allowance Balance
                     

                     
Ending balance Individually evaluated for impairment
 
$
-
  
$
3
  
$
32
  
$
-
  
$
-
  
$
-
  
$
35
 
Collectively evaluated for impairment
  
1,031
   
445
   
2,297
   
3,171
   
695
   
162
   
7,801
 
                             
Total
 
$
1,031
  
$
448
  
$
2,329
  
$
3,171
  
$
695
  
$
162
  
$
7,836
 
                             
Gross Loans
                            
Ending balance Individually evaluated for impairment
 
$
-
  
$
8
  
$
1,911
  
$
5,309
  
$
2,641
  
$
-
  
$
9,869
 
Collectively evaluated for impairment
  
83,291
   
36,157
   
186,231
   
250,791
   
53,526
   
13,093
   
623,089
 
                             
Total
 
$
83,291
  
$
36,165
  
$
188,142
  
$
256,100
  
$
56,167
  
$
13,093
  
$
632,958
 

                            
December 31, 2018
Allowance Balance
                            
Ending balance Individually evaluated for impairment
 
$
-
  
$
-
  
$
32
  
$
14
  
$
-
  
$
-
  
$
46
 
Collectively evaluated for impairment
  
1,136
   
433
   
2,003
   
3,217
   
818
   
179
   
7,786
 
                             
Total
 
$
1,136
  
$
433
  
$
2,035
  
$
3,231
  
$
818
  
$
179
  
$
7,832
 
                             
Gross Loans
                            
Ending balance Individually evaluated for impairment
 
$
-
  
$
115
  
$
484
  
$
7,381
  
$
1,097
  
$
-
  
$
9,077
 
Collectively evaluated for impairment
  
87,267
   
33,163
   
155,912
   
241,013
   
61,747
   
13,723
   
592,825
 
                             
Total
 
$
87,267
  
$
33,278
  
$
156,396
  
$
248,394
  
$
62,844
  
$
13,723
  
$
601,902
 
Loan Portfolio Based on Internal Rating Category
The following table presents the credit risk profile of the Company’s loan portfolio based on internal rating category as of June 30, 2019 and December 31, 2018 (dollars in thousands):
 
  
Construction &
Development
  
1 - 4 Family
Commercial
  
Commercial
Real Estate -
Other
  
Commercial
& Industrial
  
Agricultural
  
Consumer
  
Total
 
                      
June 30, 2019
                     
Grade
                     
1 (Pass)
 
$
81,053
  
$
35,463
  
$
182,645
  
$
216,425
  
$
51,287
  
$
13,093
  
$
579,966
 
2 (Watch)
  
2,238
   
694
   
1,510
   
33,489
   
110
   
-
   
38,041
 
3 (Special Mention)
  
-
   
-
   
2,076
   
877
   
2,129
   
-
   
5,082
 
4 (Substandard)
  
-
   
8
   
1,911
   
5,309
   
2,641
   
-
   
9,869
 
                             
Total
 
$
83,291
  
$
36,165
  
$
188,142
  
$
256,100
  
$
56,167
  
$
13,093
  
$
632,958
 

  
Construction &
Development
  
1 - 4 Family
Commercial
  
Commercial
Real Estate -
Other
  
Commercial
& Industrial
  
Agricultural
  
Consumer
  
Total
 
                      
December 31, 2018
                     
Grade
                     
1 (Pass)
 
$
84,485
  
$
29,942
  
$
154,353
  
$
204,671
  
$
57,782
  
$
13,723
  
$
544,956
 
2 (Watch)
  
2,782
   
3,221
   
1,559
   
36,342
   
758
   
-
   
44,662
 
3 (Special Mention)
  
-
   
-
   
-
   
-
   
3,207
   
-
   
3,207
 
4 (Substandard)
  
-
   
115
   
484
   
7,381
   
1,097
   
-
   
9,077
 
                             
Total
 
$
87,267
  
$
33,278
  
$
156,396
  
$
248,394
  
$
62,844
  
$
13,723
  
$
601,902
 
Loan Portfolio Aging Analysis of Recorded Investment in Loans
The following table presents the Company’s loan portfolio aging analysis of the recorded investment in loans as of  June 30, 2019 and December 31, 2018 (dollars in thousands):
 
  
Past Due
        
Total Loans
 
  
30–59
Days
  
60–89
Days
  
Greater than
90 Days
  
Total
  
Current
  
Total
Loans
  
> 90 Days &
Accruing
 
                        
June 30, 2019
                       
Construction & development
 
$
-
  
$
-
  
$
-
  
$
-
  
$
83,291
  
$
83,291
  
$
-
 
1 - 4 Family Real Estate
  
69
   
-
   
8
   
77
   
36,088
   
36,165
   
-
 
Commercial Real Estate - other
  
-
   
-
   
-
   
-
   
188,142
   
188,142
   
-
 
Commercial & industrial
  
-
   
-
   
-
   
-
   
256,100
   
256,100
   
-
 
Agricultural
  
541
   
-
   
1,097
   
1,638
   
54,529
   
56,167
   
1,097
 
Consumer
  
99
   
-
   
-
   
99
   
12,994
   
13,093
   
-
 
                             
Total
 
$
709
  
$
-
  
$
1,105
  
$
1,814
  
$
631,144
  
$
632,958
  
$
1,097
 
                             
December 31, 2018
                            
Construction & development
 
$
-
  
$
-
  
$
-
  
$
-
  
$
87,267
  
$
87,267
  
$
-
 
1 - 4 Family Real Estate
  
8
   
-
   
-
   
8
   
33,270
   
33,278
   
-
 
Commercial Real Estate - other
  
-
   
-
   
-
   
-
   
156,396
   
156,396
   
-
 
Commercial & industrial
  
-
   
5
   
-
   
5
   
248,389
   
248,394
   
-
 
Agricultural
  
-
   
-
   
-
   
-
   
62,844
   
62,844
   
-
 
Consumer
  
41
   
-
   
-
   
41
   
13,682
   
13,723
   
-
 
                             
Total
 
$
49
  
$
5
  
$
-
  
$
54
  
$
601,848
  
$
601,902
  
$
-
 
Impaired Loans
The following table presents impaired loans as of June 30, 2019 and December 31, 2018 (dollars in thousands):
 
  
Unpaid
Principal
Balance
  
Recorded
Investment
with No
Allowance
  
Recorded
Investment
with an
Allowance
  
Total
Recorded
Investment
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
                 
Three Months Ended
June 30, 2019
  
Six Months Ended
June 30, 2019
 
June 30, 2019
                           
Construction & development
 
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
 
1 - 4 Family Real Estate
  
8
   
-
   
8
   
8
   
3
   
713
   
-
   
414
   
-
 
Commercial Real Estate - other
  
1,911
   
-
   
1,911
   
1,911
   
32
   
1,335
   
33
   
1,147
   
66
 
Commercial & industrial
  
5,309
   
5,309
   
-
   
5,309
   
-
   
5,290
   
55
   
5,940
   
178
 
Agricultural
  
2,641
   
2,641
   
-
   
2,641
   
-
   
2,548
   
48
   
2,190
   
105
 
Consumer
  
-
   
-
   
-
   
-
   
-
   
193
   
-
   
193
   
-
 
                                     
Total
 
$
9,869
  
$
7,950
  
$
1,919
  
$
9,869
  
$
35
  
$
10,079
  
$
136
  
$
9,884
  
$
349
 

                      
Three Months Ended
June 30, 2018
  
Six Months Ended
June 30, 2018
 
December 31, 2018
                                    
Construction & development
 
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
-
 
1 - 4 Family Real Estate
  
115
   
115
   
-
   
115
   
-
   
71
   
8
   
90
   
-
 
Commercial Real Estate - other
  
1,990
   
1,506
   
484
   
1,990
   
32
   
414
   
144
   
500
   
18
 
Commercial & industrial
  
7,614
   
7,359
   
22
   
7,381
   
14
   
8,880
   
7
   
6,207
   
284
 
Agricultural
  
1,097
   
1,097
   
-
   
1,097
   
-
   
1,497
   
-
   
1,529
   
40
 
Consumer
  
5
   
-
   
-
   
-
   
-
   
41
   
-
   
37
   
-
 
                                     
Total
 
$
10,821
  
$
10,077
  
$
506
  
$
10,583
  
$
46
  
$
10,903
  
$
159
  
$
8,363
  
$
342
 
Information Regarding Nonperforming Assets
The following table represents information regarding nonperforming assets at June 30, 2019 and December 31, 2018 (dollars in thousands):
 
  
  As of
 
    
  
June 30,
2019
  
December 31,
2018
 
Nonaccrual loans
 
$
2,240
  
$
2,615
 
Troubled-debt restructurings (1)
  
674
   
-
 
Accruing loans 90 or more days past due
  
1,097
   
-
 
Total nonperforming loans
 
$
4,011
  
$
2,615
 

 
(1)
$2.2 million and $501,000 of TDRs as of June 30, 2019 and December 31, 2018, respectively, are included in the nonaccrual loans balance in the line above