XML 21 R12.htm IDEA: XBRL DOCUMENT v3.22.1
Loans
 3 Months Ended
Mar. 31, 2022
Receivables [Abstract]  
Loans

Note 4—Loans

 

The following table summarizes the composition of our loan portfolio. Total loans are recorded net of deferred loan fees and costs, which totaled $1.4 million and $1.4 million as of March 31, 2022 and December 31, 2021, respectively.

 

   March 31,   December 31, 
(Dollars in thousands)  2022   2021 
Commercial, financial and agricultural   $70,565   $69,952 
Real estate:          
Construction    96,419    94,969 
Mortgage-residential   42,675    45,498 
Mortgage-commercial   627,621    617,464 
Consumer:          
Home equity    27,712    27,116 
Other    10,805    8,703 
Total loans, net of deferred loan fees and costs  $875,797   $863,702 

 

Commercial, financial, and agricultural category includes $0.3 million and $1.5 million in PPP loans, net of deferred fees and costs, as of March 31, 2022 and December 31, 2021, respectively.

 

The detailed activity in the allowance for loan losses and the recorded investment in loans receivable as of and for the three months ended March 31, 2022 and March 31, 2021 and for the year ended December 31, 2021 is as follows:

 

           Real estate   Real estate   Consumer             
       Real estate   Mortgage   Mortgage   Home   Consumer         
(Dollars in thousands)  Commercial   Construction   Residential   Commercial   equity   Other   Unallocated   Total 
March 31, 2022                                        
Allowance for loan losses:                                        
Beginning balance December 31, 2021  $853   $113   $560   $8,570   $333   $126   $624   $11,179 
Charge-offs   —    —    —    —    —    (14)   —    (14)
Recoveries   11    —    —    6    3    3    —    23 
Provisions   (15)   (22)   (47)   (68)   (5)   35    (3)   (125)
Ending balance March 31, 2022  $849   $91   $513   $8,508   $331   $150   $621   $11,063 
                                         
Ending balances:                                        
Individually evaluated for impairment  $—   $—   $—   $—   $—   $—   $—   $— 
                                         
Collectively evaluated for impairment   849   $91   $513   $8,508   $331   $150   $621   $11,063 
                                         
March 31, 2022 Loans receivable:                                        
Ending balance-total  $70,565   $96,419   $42,675   $627,621   $27,712   $10,805   $—   $875,797 
                                         
Ending balances:                                        
Individually evaluated for impairment   —    —    42    1,499    —    —    —    1,541 
                                         
Collectively evaluated for impairment  $70,565   $96,419   $42,633   $626,122   $27,712   $10,805   $—   $874,256 
           Real estate   Real estate   Consumer             
       Real estate   Mortgage   Mortgage   Home   Consumer         
(Dollars in thousands)  Commercial   Construction   Residential   Commercial   equity   Other   Unallocated   Total 
March 31, 2021                                        
Allowance for loan losses:                                        
Beginning balance December 31, 2020  $778   $145   $541   $7,855   $324   $125   $621   $10,389 
Charge-offs   —    —    —    —    —    (25)   —    (25)
Recoveries   1    —    —    4    1    16    —    22 
Provisions   (21)   (11)   (61)   278    (16)   8    —    177 
Ending balance March 31, 2021  $758   $134   $480   $8,137   $309   $124   $621   $10,563 
                                         
Ending balances:                                        
Individually evaluated for impairment  $—   $—   $—   $2   $—   $—   $—   $2 
                                         
Collectively evaluated for impairment   758    134    480    8,135    309    124    621    10,561 
                                         
March 31, 2021 Loans receivable:                                        
Ending balance-total  $110,776   $104,065   $38,947   $582,083   $25,068   $8,127   $—   $869,066 
                                         
Ending balances:                                        
Individually evaluated for impairment   —    —    436    5,578    21    —    —    6,035 
                                         
Collectively evaluated for impairment  $110,776   $104,065   $38,511   $576,505   $25,047   $8,127   $—   $863,031 
                                 
(Dollars in thousands)  Commercial   Real estate
Construction		   Real estate
Mortgage
Residential		   Real estate
Mortgage
Commercial		   Consumer
Home
equity		   Consumer
Other		   Unallocated   Total 
December 31, 2021                                        
Allowance for loan losses:                                        
Beginning balance December 31, 2020  $778   $145   $541   $7,855   $324   $125   $621   $10,389 
Charge-offs   —    —    —    (110)   —    (72)   —    (182)
Recoveries   39    —    10    473    69    46    —    637 
Provisions   36    (32)   9    352    (60)   27    3    335 
Ending balance December 31, 2021  $853   $113   $560   $8,570   $333   $126   $624   $11,179 
                                         
Ending balances:                                        
Individually evaluated for impairment  $—   $—   $—   $1   $—   $—   $—   $— 
                                         
Collectively evaluated for impairment   853    113    560    8,569    333    126    624    11,179 
                                         
December 31, 2021 Loans receivable:                                        
Ending balance-total  $69,952   $94,969   $45,498   $617,464   $27,116   $8,703   $—   $863,702 
                                         
Ending balances:                                        
Individually evaluated for impairment   —    —    133    1,561    —    —    —    1,694 
                                         
Collectively evaluated for impairment   69,952    94,969    45,365    615,903    27,116    8,703    —    862,008 

The following tables are by loan category and present March 31, 2022, March 31, 2021, and December 31, 2021 loans individually evaluated and considered impaired under FASB ASC 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing TDRs.

 

                   Three months ended 
       Unpaid       Average   Interest 
(Dollars in thousands)  Recorded   Principal   Related   Recorded   Income 
March 31, 2022  Investment   Balance   Allowance   Investment   Recognized 
With no allowance recorded:                         
Commercial  $—   $—   $—   $—   $— 
Real estate:                         
Construction   —    —    —    —    — 
Mortgage-residential   42    57    —    42    1 
Mortgage-commercial   1,499    3,492    —    1,737    46 
Consumer:                         
Home Equity   —    —    —    —    — 
Other   —    —    —    —    — 
                          
With an allowance recorded:                         
Commercial   —    —    —    —    — 
Real estate:                         
Construction   —    —    —    —    — 
Mortgage-residential   —    —    —    —    — 
Mortgage-commercial   —    —    —    —    — 
Consumer:                         
Home Equity   —    —    —    —    — 
Other   —    —    —    —    — 
                          
Total:                         
Commercial   —    —    —    —    — 
Real estate:                         
Construction   —    —    —    —    — 
Mortgage-residential   42    57    —    42    1 
Mortgage-commercial   1,499    3,492    —    1,737    46 
Consumer:                         
Home Equity   —    —    —    —    — 
Other   —    —    —    —    — 
Total  $1,541   $3,549   $—   $1,779   $47 
               Three months ended 
       Unpaid       Average   Interest 
(Dollars in thousands)  Recorded   Principal   Related   Recorded   Income 
March 31, 2021  Investment   Balance   Allowance   Investment   Recognized 
With no allowance recorded:                         
Commercial   $ —     $ —     $ —     $ —     $ —  
Real estate:                         
Construction   —    —    —    —    — 
Mortgage-residential   436    496    —    434    5 
Mortgage-commercial   5,474    8,129    —    5,728    99 
Consumer:                         
Home Equity   21    26    —    21    1 
Other   —    —    —    —    — 
                          
With an allowance recorded:                         
Commercial     —       —       —       —       —  
Real estate:                         
Construction   —    —    —    —    — 
Mortgage-residential   —    —    —    —    — 
Mortgage-commercial   104    104    2    103    2 
Consumer:                         
Home Equity   —    —    —    —    — 
Other   —    —    —    —    — 
                          
Total:                         
Commercial     —       —       —       —       —
Real estate:                         
Construction   —    —    —    —    — 
Mortgage-residential   436    496    —    434    5 
Mortgage-commercial   5,578    8,233    2    5,831    101 
Consumer:                         
Home Equity   21    26    —    21    1 
Other   —    —    —    —    — 
   $6,035   $8,755   $2   $6,286   $107 
       Unpaid       Average   Interest 
(Dollars in thousands)  Recorded   Principal   Related   Recorded   Income 
December 31, 2021  Investment   Balance   Allowance   Investment   Recognized 
With no allowance recorded:                         
Commercial   $—   $—   $—   $—   $— 
Real estate:                         
Construction   —    —    —    —    — 
Mortgage-residential    133    151    —    131    6 
Mortgage-commercial    1,521    3,514    —    1,748    223 
Consumer:                         
Home Equity    —    —    —    —    — 
Other    —    —    —    —    — 
                          
With an allowance recorded:                         
Commercial    —    —    —    —    — 
Real estate:                         
Construction    —    —    —    —    — 
Mortgage-residential    —    —    —    —    — 
Mortgage-commercial    40    40    1    39    5 
Consumer:                         
Home Equity    —    —    —    —    — 
Other    —    —    —    —    — 
                          
Total:                         
Commercial    —    —    —    —    — 
Real estate:                         
Construction    —    —    —    —    — 
Mortgage-residential    133    151    —    131    6 
Mortgage-commercial    1,561    3,554    1    1,787    228 
Consumer:                         
Home Equity    —    —    —    —    — 
Other    —    —    —    —    — 
   $1,694   $3,705   $1   $1,918   $234 

 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a monthly basis. The Company uses the following definitions for risk ratings:

 

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

 

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with 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.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered as pass rated loans. Based on the most recent analysis performed, the risk category of loans by class of loans is shown in the table below as of March 31, 2022 and December 31, 2021. As of March 31, 2022 and December 31, 2021, no loans were classified as doubtful.

 

(Dollars in thousands)                    
March 31, 2022  Pass   Special
Mention		   Substandard   Doubtful   Total 
Commercial, financial & agricultural  $70,473   $92   $—   $—   $70,565 
Real estate:   —    —    —           
Construction   96,418    —    1    —    96,419 
Mortgage – residential   42,246    377    52    —    42,675 
Mortgage – commercial   620,089    1,002    6,530    —    627,621 
Consumer:   —    —    —           
Home Equity   26,347    175    1,190    —    27,712 
Other   10,708    22    75    —    10,805 
Total  $866,281   $1,668   $7,848   $—   $875,797 
                     
(Dollars in thousands)                    
December 31, 2021  Pass   Special
Mention		   Substandard   Doubtful   Total 
Commercial, financial & agricultural  $69,833   $119   $—   $—   $69,952 
Real estate:   —    —    —           
Construction   94,966    —    3    —    94,969 
Mortgage – residential   45,049    305    144    —    45,498 
Mortgage – commercial   610,001    1,009    6,454    —    617,464 
Consumer:   —    —    —           
Home Equity   25,751    171    1,194    —    27,116 
Other   8,604    22    77    —    8,703 
Total  $854,204   $1,626   $7,872   $—   $863,702 

 

At March 31, 2022 and December 31, 2021, non-accrual loans totaled $148 thousand and $250 thousand, respectively.

 

TDRs that are still accruing and included in impaired loans at March 31, 2022 and at December 31, 2021 amounted to $1.4 million and $1.4 million, respectively.

 

Loans greater than 90 days delinquent and still accruing interest were $173.9 thousand and $0 at March 31, 2022 and December 31, 2021, respectively. The following tables are by loan category and present loans past due and on non-accrual status as of March 31, 2022 and December 31, 2021:  

 

           Greater than                 
(Dollars in thousands)  30-59 Days   60-89 Days   90 Days and       Total         
March 31, 2022  Past Due   Past Due   Accruing   Nonaccrual   Past Due   Current   Total Loans 
                                    
Commercial   $238   $3   $—   $106   $347   $70,218   $70,565 
Real estate:                                   
Construction    —    —    —    —    —    96,419    96,419 
Mortgage-residential    71    —    4    42    117    42,558    42,675 
Mortgage-commercial    —    —    —    0    —    627,621    627,621 
Consumer:                                   
Home equity    —    165    169    0    334    27,378    27,712 
Other    2    —    1    —    3    10,802    10,805 
Total  $311   $168   $174   $148   $801   $874,996   $875,797 
           Greater than                 
(Dollars in thousands)  30-59 Days   60-89 Days   90 Days and       Total         
December 31, 2021  Past Due   Past Due   Accruing   Nonaccrual   Past Due   Current   Total Loans 
                                    
Commercial   $125   $35   $—   $118   $278   $69,674   $69,952 
Real estate:                                   
Construction    —    —    —    —    —    94,969    94,969 
Mortgage-residential    8    4    —    132    144    45,354    45,498 
Mortgage-commercial    —    —    —    —    —    617,464    617,464 
Consumer:                                   
Home equity    —    62    —    —    62    27,054    27,116 
Other    —    1    —    —    1    8,702    8,703 
Total  $133   $102   $—   $250   $485   $863,217   $863,702 

 

The CARES Act and Initiatives Related to COVID-19. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, was signed into law. The CARES Act provided for approximately $2.2 trillion in direct economic relief in response to the public health and economic impacts of COVID-19. Many of the CARES Act’s programs were dependent upon the direct involvement of financial institutions like the Bank. These programs were implemented through rules and guidance adopted by federal departments and agencies, including the U.S. Department of Treasury, the Federal Reserve and other federal bank regulatory authorities, including those with direct supervisory jurisdiction over the Company and the Bank. The relief period provided in the CARES Act expired on January 1, 2022. 

 

COVID-19 Related Troubled Debt Restructurings and Loan Modifications for Affected Borrowers. The CARES Act, as extended by certain provisions of the Consolidated Appropriations Act, 2021, permitted banks to suspend requirements under generally accepted accounting principles (“GAAP”) for loan modifications to borrowers affected by COVID-19 that may otherwise be characterized as troubled debt restructurings, or TDRs, and suspend any determination related thereto if (i) the borrower was not more than 30 days past due as of December 31, 2019, (ii) the modifications were related to COVID-19, and (iii) the modification occurred between March 1, 2020 and the earlier of 60 days after the date of termination of the national emergency or January 1, 2022. Federal bank regulatory authorities also issued guidance to encourage banks to make loan modifications for borrowers affected by COVID-19.  

 

Beginning in March 2020, the Company proactively offered payment deferrals for up to 90 days to its loan customers regardless of the impact of the pandemic on their business or personal finances.  As a result of payments being resumed at the conclusion of their payment deferral period, loans in which payments were being deferred decreased from the peak of $206.9 million to $175.0 million at June 30, 2020, to $27.3 million at September 30, 2020, to $16.1 million at December 31, 2020, to $8.7 million at March 31, 2021, $4.5 million at June 30, 2021, $4.1 million at September 30, 2021, $0 at December 31, 2021 and March 31, 2022.

 

Troubled Debt Restructurings. The Company identifies TDRs as impaired under the guidance in ASC 310-10-35. There were no loans determined to be TDRs that were restructured during the three-month periods ended March 31, 2022 and March 31, 2021. Additionally, there were no loans determined to be TDRs in the previous twelve months that had payment defaults. Defaulted loans are those loans that are greater than 90 days past due.

In the determination of the allowance for loan losses, all TDRs are reviewed to ensure that one of the three proper valuation methods (fair market value of the collateral, present value of cash flows, or observable market price) is adhered to. All non-accrual loans are written down to its corresponding collateral value. All TDR accruing loans where the loan balance exceeds the present value of cash flow will have a specific allocation. All nonaccrual loans are considered impaired. Under ASC 310-10, a loan is impaired when it is probable that the Bank will be unable to collect all amounts due including both principal and interest according to the contractual terms of the loan agreement.

Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality, found in FASB ASC Topic 310-30, (Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality), and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Loans acquired in business combinations with evidence of credit deterioration are considered impaired. Loans acquired through business combinations that do not meet the specific criteria of FASB ASC Topic 310-30, but for which a discount is attributable, at least in part to credit quality, are also accounted for under this guidance. Certain acquired loans, including performing loans and revolving lines of credit (consumer and commercial), are accounted for in accordance with FASB ASC Topic 310-20, where the discount is accreted through earnings based on estimated cash flows over the estimated life of the loan.

A summary of changes in the accretable yield for purchased credit-impaired loans for the three months ended March 31, 2022 and March 31, 2021 are as follows:

 

 

(Dollars in thousands)  Three Months
Ended
March 31, 2022		   Three Months
Ended
March 31, 2021		 
           
Accretable yield, beginning of period  $64   $93 
Accretion   (8)   (7)
Accretable yield, end of period  $56   $86 

 

At March 31, 2022 and December 31, 2021, the recorded investment in purchased impaired loans was $109 thousand and $109 thousand, respectively. The unpaid principal balance was $147 thousand and $152 thousand at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022 and December 31, 2021, these loans were all secured by commercial real estate.