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Loans and Allowance for Credit Losses (Tables)
 12 Months Ended
Dec. 31, 2019
Receivables [Abstract]  
Outstanding loans
Outstanding loans are summarized as follows (in thousands):
Loan Type 
 
December 31,
2019
 
% of Total 
loans
 
December 31,
2018
 
% of Total 
loans
Commercial:
 
 

 
 

 
 

 
 

Commercial and industrial
 
$
102,541

 
10.9
%
 
$
101,533

 
11.1
%
Agricultural production
 
23,159

 
2.6
%
 
7,998

 
0.9
%
Total commercial
 
125,700

 
13.5
%
 
109,531

 
12.0
%
Real estate:
 
 
 
 
 
 
 
 
Owner occupied
 
197,946

 
21.0
%
 
183,169

 
19.9
%
Real estate construction and other land loans
 
73,718

 
7.8
%
 
101,606

 
11.1
%
Commercial real estate
 
329,333

 
34.9
%
 
305,118

 
33.2
%
Agricultural real estate
 
76,304

 
8.1
%
 
76,884

 
8.4
%
Other real estate
 
31,241

 
3.3
%
 
32,799

 
3.6
%
 
 
708,542

 
75.1
%
 
699,576

 
76.2
%
Consumer:
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
64,841

 
6.9
%
 
69,958

 
7.6
%
Consumer and installment
 
42,782

 
4.5
%
 
38,038

 
4.2
%
Total consumer
 
107,623

 
11.4
%
 
107,996

 
11.8
%
Net deferred origination costs
 
1,515

 
 
 
1,592

 
 
Total gross loans
 
943,380

 
100.0
%
 
918,695

 
100.0
%
Allowance for credit losses
 
(9,130
)
 
 

 
(9,104
)
 
 

Total loans
 
$
934,250

 
 

 
$
909,591

 
 
Allowance for credit losses
Changes in the allowance for credit losses were as follows (in thousands):
 
 
Years Ended December 31,
 
 
2019
 
2018
 
2017
Balance, beginning of year
 
$
9,104

 
$
8,778

 
$
9,326

Provision (reversal) charged to operations
 
1,025

 
50

 
(1,150
)
Losses charged to allowance
 
(1,196
)
 
(210
)
 
(464
)
Recoveries
 
197

 
486

 
1,066

Balance, end of year
 
$
9,130

 
$
9,104

 
$
8,778


The following table shows the summary of activities for the allowance for credit losses as of and for the years ended December 31, 2019, 2018, and 2017 by portfolio segment (in thousands):
 
 
Commercial
 
Real Estate
 
Consumer
 
Unallocated
 
Total
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2019
 
$
1,671

 
$
6,539

 
$
826

 
$
68

 
$
9,104

(Reversal) provision charged to operations
 
655

 
230

 
172

 
(32
)
 
1,025

Losses charged to allowance
 
(1,032
)
 
—

 
(164
)
 
—

 
(1,196
)
Recoveries
 
134

 
—

 
63

 
—

 
197

Ending balance, December 31, 2019
 
$
1,428

 
$
6,769

 
$
897

 
$
36

 
$
9,130

 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2018
 
$
2,071

 
$
5,795

 
$
825

 
$
87

 
$
8,778

(Reversal) provision charged to operations
 
(513
)
 
642

 
(60
)
 
(19
)
 
50

Losses charged to allowance
 
(94
)
 
—

 
(116
)
 
—

 
(210
)
Recoveries
 
207

 
102

 
177

 
—

 
486

Ending balance, December 31, 2018
 
$
1,671

 
$
6,539

 
$
826

 
$
68

 
$
9,104

 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2017
 
$
2,180

 
$
6,200

 
$
852

 
$
94

 
$
9,326

(Reversal) provision charged to operations
 
(762
)
 
(449
)
 
68

 
(7
)
 
(1,150
)
Losses charged to allowance
 
(207
)
 
(22
)
 
(235
)
 
—

 
(464
)
Recoveries
 
860

 
66

 
140

 
—

 
1,066

Ending balance, December 31, 2017
 
$
2,071

 
$
5,795

 
$
825

 
$
87

 
$
8,778


The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of December 31, 2019 and December 31, 2018 (in thousands):
 
 
Commercial
 
Real Estate
 
Consumer
 
Unallocated
 
Total
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Ending balance, December 31, 2019
 
$
1,428

 
$
6,769

 
$
897

 
$
36

 
$
9,130

Ending balance: individually evaluated for impairment
 
$
2

 
$
3

 
$
35

 
$
—

 
$
40

Ending balance: collectively evaluated for impairment
 
$
1,426

 
$
6,766

 
$
862

 
$
36

 
$
9,090

 
 
 
 
 
 
 
 
 
 
 
Ending balance, December 31, 2018
 
$
1,671

 
$
6,539

 
$
826

 
$
68

 
$
9,104

Ending balance: individually evaluated for impairment
 
$
9

 
$
27

 
$
54

 
$
—

 
$
90

Ending balance: collectively evaluated for impairment
 
$
1,662

 
$
6,512

 
$
772

 
$
68

 
$
9,014
Loans by impairment methdology
The following table shows the ending balances of loans as of December 31, 2019 and December 31, 2018 by portfolio segment and by impairment methodology (in thousands):
 
 
Commercial
 
Real Estate
 
Consumer
 
Total
Loans:
 
 

 
 

 
 

 
 

Ending balance, December 31, 2019
 
$
125,700

 
$
708,542

 
$
107,623

 
$
941,865

Ending balance: individually evaluated for impairment
 
$
187

 
$
2,036

 
$
1,511

 
$
3,734

Ending balance: collectively evaluated for impairment
 
$
125,513

 
$
706,506

 
$
106,112

 
$
938,131

 
 
 
 
 
 
 
 
 
Loans:
 
 

 
 

 
 

 
 

Ending balance, December 31, 2018
 
$
109,531

 
$
699,576

 
$
107,996

 
$
917,103

Ending balance: individually evaluated for impairment
 
$
348

 
$
4,215

 
$
1,346

 
$
5,909

Ending balance: collectively evaluated for impairment
 
$
109,183

 
$
695,361

 
$
106,650

 
$
911,194
Loan portfolio by internal risk rating
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at December 31, 2019 (in thousands):
 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
86,705

 
$
2,635

 
$
13,201

 
$
—

 
$
102,541

Agricultural production
 
18,814

 
—

 
4,345

 
—

 
23,159

Real Estate:
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
186,370

 
6,881

 
4,695

 
—

 
197,946

Real estate construction and other land loans
 
72,142

 
—

 
1,576

 
—

 
73,718

Commercial real estate
 
310,982

 
17,202

 
1,149

 
—

 
329,333

Agricultural real estate
 
68,032

 
946

 
7,326

 
—

 
76,304

Other real estate
 
31,241

 
—

 
—

 
—

 
31,241

Consumer:
 
 
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
62,776

 
519

 
1,546

 
—

 
64,841

Consumer and installment
 
42,782

 
—

 
—

 
—

 
42,782

Total
 
$
879,844

 
$
28,183

 
$
33,838

 
$
—

 
$
941,865


The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2018 (in thousands):
 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
86,876

 
$
12,072

 
$
2,585

 
$
—

 
$
101,533

Agricultural production
 
5,955

 
2,043

 
—

 
—

 
7,998

Real Estate:
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
179,214

 
3,056

 
899

 
—

 
183,169

Real estate construction and other land loans
 
95,301

 
3,270

 
3,035

 
—

 
101,606

Commercial real estate
 
298,714

 
5,268

 
1,136

 
—

 
305,118

Agricultural real estate
 
57,544

 
165

 
19,175

 
—

 
76,884

Other real estate
 
32,799

 
—

 
—

 
—

 
32,799

Consumer:
 
 
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
68,016

 
380

 
1,562

 
—

 
69,958

Consumer and installment
 
38,036

 
—

 
2

 
—

 
38,038

Total
 
$
862,455

 
$
26,254

 
$
28,394

 
$
—

 
$
917,103
Loan portfolio by time past due
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2019 (in thousands):
 
 
30-59 Days
Past Due
 
60-89
Days Past
Due
 
Greater
Than
 90 Days
Past Due
 
Total Past
Due
 
Current
 
Total
Loans
 
Recorded
Investment
> 90 Days
Accruing
 
Non-accrual
Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
17

 
$
—

 
$
—

 
$
17

 
$
102,524

 
$
102,541

 
$
—

 
$
187

Agricultural production
 
—

 
—

 
—

 
—

 
23,159

 
23,159

 
—

 
—

Real estate:
 
—

 
 

 
 

 


 
—

 
—

 
 

 
 
Owner occupied
 
—

 
218

 
—

 
218

 
197,728

 
197,946

 
—

 
416

Real estate construction and other land loans
 
—

 
—

 
—

 
—

 
73,718

 
73,718

 
—

 
—

Commercial real estate
 
—

 
381

 
—

 
381

 
328,952

 
329,333

 
—

 
381

Agricultural real estate
 
—

 
—

 
—

 
—

 
76,304

 
76,304

 
—

 
321

Other real estate
 
—

 
—

 
—

 
—

 
31,241

 
31,241

 
—

 
—

Consumer:
 
 
 
 

 
 

 


 
—

 
—

 
 

 
 
Equity loans and lines of credit
 
—

 
—

 
—

 
—

 
64,841

 
64,841

 
—

 
388

Consumer and installment
 
168

 
—

 
—

 
168

 
42,614

 
42,782

 
—

 
—

Total
 
$
185

 
$
599

 
$
—

 
$
784

 
$
941,081

 
$
941,865

 
$
—

 
$
1,693

 
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2018 (in thousands):
 
 
30-59 Days
Past Due
 
60-89
Days Past
Due
 
Greater
Than
 90 Days
Past Due
 
Total Past
Due
 
Current
 
Total
Loans
 
Recorded
Investment
> 90 Days
Accruing
 
Non-
accrual
Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
255

 
$
—

 
$
—

 
$
255

 
$
101,278

 
$
101,533

 
$
—

 
$
298

Agricultural production
 
—

 
—

 
—

 
—

 
7,998

 
7,998

 
—

 
—

Real estate:
 
—

 
 

 
 

 
 
 
 

 
—

 
 

 
 
Owner occupied
 
215

 
—

 
—

 
215

 
182,954

 
183,169

 
—

 
215

Real estate construction and other land loans
 
—

 
—

 
1,439

 
1,439

 
100,167

 
101,606

 
—

 
1,439

Commercial real estate
 
—

 
—

 
—

 
—

 
305,118

 
305,118

 
—

 
418

Agricultural real estate
 
—

 
—

 
—

 
—

 
76,884

 
76,884

 
—

 
—

Other real estate
 
—

 
—

 
—

 
—

 
32,799

 
32,799

 
—

 
—

Consumer:
 
 

 
 

 
 

 
 
 
 

 
—

 
 

 
 
Equity loans and lines of credit
 
953

 
—

 
—

 
953

 
69,005

 
69,958

 
—

 
370

Consumer and installment
 
7

 
—

 
—

 
7

 
38,031

 
38,038

 
—

 
—

Total
 
$
1,430

 
$
—

 
$
1,439

 
$
2,869

 
$
914,234

 
$
917,103

 
$
—

 
$
2,740
Impaired loans
The following table shows information related to impaired loans by class at December 31, 2019 (in thousands):
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
$
163

 
$
432

 
$
—

Real estate:
 
 

 
 

 
 

Owner occupied
 
416

 
426

 
—

Real estate construction and other land loans
 
—

 
—

 
—

Commercial real estate
 
1,110

 
1,361

 
—

Agricultural real estate
 
321

 
321

 
—

Total real estate
 
1,847

 
2,108

 
—

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
220

 
256

 
—

Total with no related allowance recorded
 
2,230

 
2,796

 
—

 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
24

 
27

 
2

Real estate:
 
 

 
 

 
 

Commercial real estate
 
152

 
153

 
3

Agricultural real estate
 
37

 
37

 
—

Total real estate
 
189

 
190

 
3

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
1,291

 
1,292

 
35

Total with an allowance recorded
 
1,504

 
1,509

 
40

Total
 
$
3,734

 
$
4,305

 
$
40


The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.
The following table shows information related to impaired loans by class at December 31, 2018 (in thousands):
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
$
259

 
$
493

 
$
—

Real estate:
 
 

 
 

 
 

Owner occupied
 
215

 
215

 
—

Real estate construction and other land loans
 
2,613

 
2,676

 
—

Commercial real estate
 
1,182

 
1,414

 
—

Total real estate
 
4,010

 
4,305

 
—

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
248

 
285

 
—

Total with no related allowance recorded
 
4,517

 
5,083

 
—

 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
89

 
90

 
9

Real estate:
 
 

 
 

 
 

Commercial real estate
 
161

 
162

 
27

Agricultural real estate
 
44

 
44

 
—

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
1,098

 
1,103

 
54

Total with an allowance recorded
 
1,392

 
1,399

 
90

Total
 
$
5,909

 
$
6,482

 
$
90

 
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.
The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2019, 2018, and 2017 (in thousands):
 
 
Year Ended
December 31, 2019
 
Year Ended
December 31, 2018
 
Year Ended
December 31, 2017
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 

 
 

 
 

 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
214

 
$
—

 
$
311

 
$
—

 
$
404

 
$
—

Total commercial
 
214

 
—

 
311

 
—

 
404

 
—

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

Owner occupied
 
223

 
—

 
17

 
—

 
24

 
—

Real estate construction and other land loans
 
1,174

 
45

 
2,857

 
85

 
1,228

 
114

Commercial real estate
 
1,306

 
50

 
1,542

 
51

 
1,370

 
53

Agricultural real estate
 
25

 
—

 
1,173

 
159

 
—

 
—

Other real estate
 
—

 
—

 
702

 
—

 
—

 
—

Total real estate
 
2,728

 
95

 
6,291

 
295

 
2,622

 
167

Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
593

 
13

 
217

 
—

 
132

 
—

Consumer and installment
 
—

 
—

 
—

 
—

 
6

 
—

Total consumer
 
593

 
13

 
217

 
—

 
138

 
—

Total with no related allowance recorded
 
3,535

 
108

 
6,819

 
295

 
3,164

 
167

 
 
—

 
 

 
 

 
 

 
 

 
 

With an allowance recorded:
 
—

 
 

 
 

 
 

 
 

 
 

Commercial:
 
 
 
 
 
 
 
 
 
 
 
—

Commercial and industrial
 
57

 
1

 
55

 
4

 
38

 
1

Total commercial
 
57

 
1

 
55

 
4

 
38

 
1

Real estate:
 
 

 
—

 
 
 
—

 
 
 
—

Real estate construction and other land loans
 
—

 
—

 
—

 
—

 
1,827

 
—

Commercial real estate
 
325

 
12

 
200

 
12

 
470

 
—

Agricultural real estate
 
42

 
2

 
49

 
3

 
43

 
3

Other real estate
 
—

 
—

 
86

 
—

 
—

 
—

Total real estate
 
367

 
14

 
335

 
15

 
2,340

 
3

Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
1,139

 
56

 
1,054

 
57

 
239

 
32

Consumer and installment
 
20

 
—

 
3

 
—

 
1

 
—

Total consumer
 
1,159

 
56

 
1,057

 
57

 
240

 
32

Total with an allowance recorded
 
1,583

 
71

 
1,447

 
76

 
2,618

 
36

Total
 
$
5,118

 
$
179

 
$
8,266

 
$
371

 
$
5,782

 
$
203
Troubled Debt Restructurings
The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2019 (dollars in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification
 
Post Modification Outstanding Recorded Investment (2)
 
Outstanding Recorded Investment
Consumer:
 
 
 
 
 
 
 
 
 
 
Equity loans and line of credit
 
3

 
532

 
—

 
532

 
446

(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.

The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2018 (dollars in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification
 
Post Modification Outstanding Recorded Investment (2)
 
Outstanding Recorded Investment
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and Industrial
 
1

 
$
38

 
$
—

 
$
38

 
$
30

Real Estate:
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
1

 
$
166

 
$
—

 
$
166

 
$
161

Total
 
2

 
$
204

 
$
—

 
$
204

 
$
191

(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.

The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2017 (dollars in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification
 
Post Modification Outstanding Recorded Investment (2)
 
Outstanding Recorded Investment
Real Estate:
 
 
 
 
 
 
 
 
 
 
Agricultural real estate
 
1

 
$
59

 
 
 
$
59

 
$
51

Consumer
 
 
 
 
 
 
 
 
 
 
Equity loans and line of credit
 
2

 
490

 
—

 
1,066

 
1,059

Total
 
3

 
$
549

 
$
—

 
$
1,125

 
$
1,110

(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.