Loan Quality And Allowance For Loan Losses

6 Months Ended

Jun. 30, 2020

Loan Quality And Allowance For Loan Losses [Abstract]

Loan Quality And Allowance For Loan Losses

Note 6. Loan Quality and Allowance for Loan Losses

The following table presents, by class, the activity in the Allowance for Loan Losses (ALL) for the periods shown:


	Residential Real Estate 1-4 Family
	First		Junior Liens &				Commercial
(Dollars in thousands)	Liens		Lines of Credit		Construction		Real Estate		Commercial		Consumer		Unallocated		Total


ALL at March 31, 2020	$	563	$	178	$	269	$	8,249	$	4,713	$	98	$	660	$	14,730
Charge-offs		—		—		—		—		(145)		(29)		—		(174)
Recoveries		1		—		—		—		19		4		—		24
Provision		16		19		(27)		588		1,258		32		89		1,975
ALL at June 30, 2020	$	580	$	197	$	242	$	8,837	$	5,845	$	105	$	749	$	16,555

ALL at December 31, 2019	$	416	$	119	$	187	$	6,607	$	4,021	$	84	$	532	$	11,966
Charge-offs		—		—		—		—		(365)		(59)		—		(424)
Recoveries		4		—		—		—		24		10		—		38
Provision		160		78		55		2,230		2,165		70		217		4,975
ALL at June 30, 2020	$	580	$	197	$	242	$	8,837	$	5,845	$	105	$	749	$	16,555

ALL at March 31, 2019	$	487	$	132	$	154	$	6,470	$	4,801	$	72	$	565	$	12,681
Charge-offs		(1)		—		—		(123)		(14)		(25)		—		(163)
Recoveries		2		1		—		20		9		3		—		35
Provision		(51)		(20)		10		85		(63)		45		(6)		-
ALL at June 30, 2019	$	437	$	113	$	164	$	6,452	$	4,733	$	95	$	559	$	12,553

ALL at December 31, 2018	$	491	$	133	$	110	$	6,278	$	4,783	$	70	$	550	$	12,415
Charge-offs		(34)		(1)		(3)		(186)		(75)		(51)		—		(350)
Recoveries		3		1		—		21		51		13		—		89
Provision		(23)		(20)		57		339		(26)		63		9		399
ALL at June 30, 2019	$	437	$	113	$	164	$	6,452	$	4,733	$	95	$	559	$	12,553

The following table presents, by class, loans that were evaluated for the ALL under the specific reserve (individually) and those that were evaluated under the general reserve (collectively) and the amount of the ALL established in each class as of June 30, 2020 and December 31, 2019:



	Residential Real Estate 1-4 Family
	First		Junior Liens &				Commercial
(Dollars in thousands)	Liens		Lines of Credit		Construction		Real Estate		Commercial		Consumer		Unallocated		Total

June 30, 2020
Loans evaluated for ALL:
Individually	$	648	$	—	$	518	$	11,127	$	—	$	—	$	—	$	12,293
Collectively		142,284		54,833		13,059		486,555		296,432		6,682		—		999,845
Total	$	142,932	$	54,833	$	13,577	$	497,682	$	296,432	$	6,682	$	—	$	1,012,138

ALL established for ‎ loans evaluated:
Individually	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively		580		197		242		8,837		5,845		105		749		16,555
ALL at June 30, 2020	$	580	$	197	$	242	$	8,837	$	5,845	$	105	$	749	$	16,555

December 31, 2019
Loans evaluated for ALL:
Individually	$	659	$	—	$	523	$	10,994	$	—	$	—	$	—	$	12,176
Collectively		142,287		47,597		12,800		483,268		230,007		6,440		—		922,399
Total	$	142,946	$	47,597	$	13,323	$	494,262	$	230,007	$	6,440	$	—	$	934,575

ALL established for ‎ loans evaluated:
Individually	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively		416		119		187		6,607		4,021		84		532		11,966
ALL at December 31, 2019	$	416	$	119	$	187	$	6,607	$	4,021	$	84	$	532	$	11,966

‎

The following table shows additional information about those loans considered to be impaired at June 30, 2020 and December 31, 2019:


	Impaired Loans
	With No Allowance				With Allowance
(Dollars in thousands)			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal		Related
June 30, 2020	Investment		Balance		Investment		Balance		Allowance
Residential Real Estate 1-4 Family
First liens	$	648	$	648	$	—	$	—	$	—
Junior liens and lines of credit		—		—		—		—		—
Total		648		648		—		—		—
Residential real estate - construction		518		729		—		—		—
Commercial real estate		11,127		12,259		—		—		—
Commercial		—		—		—		—		—
Total	$	12,293	$	13,636	$	—	$	—	$	—


December 31, 2019
Residential Real Estate 1-4 Family
First liens	$	659	$	659	$	—	$	—	$	—
Junior liens and lines of credit		—		—		—		—		—
Total		659		659		—		—		—
Residential real estate - construction		523		729		—		—		—
Commercial real estate		10,994		12,096		—		—		—
Commercial		—		—		—		—		—
Total	$	12,176	$	13,484	$	—	$	—	$	—

The following table shows the average of impaired loans and related interest income for the three and six months ended June 30, 2020 and 2019:


	Three Months Ended				Six Months Ended
	June 30, 2020				June 30, 2020
	Average		Interest		Average		Interest
(Dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Residential Real Estate 1-4 Family
First liens	$	651	$	8	$	653	$	19
Junior liens and lines of credit		—		—		—		—
Total		651		8		653		19
Residential real estate - construction		520		—		521		—
Commercial real estate		11,179		93		11,039		187
Commercial		—		—		—		—
Total	$	12,350	$	101	$	12,213	$	206

	Three Months Ended				Six Months Ended
	June 30, 2019				June 30, 2019
	Average		Interest		Average		Interest
(Dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Residential Real Estate 1-4 Family
First liens	$	779	$	11	$	813	$	21
Junior liens and lines of credit		26		1		35		1
Total		805		12		848		22
Residential real estate - construction		651		—		652		—
Commercial real estate		13,242		102		13,368		204
Commercial		147		—		138		—
Total	$	14,845	$	114	$	15,006	$	226

‎

The following table presents the aging of payments of the loan portfolio:



(Dollars in thousands)			Loans Past Due and Still Accruing										Total
	Current		30-59 Days		60-89 Days		90 Days+		Total		Non-Accrual		Loans
June 30, 2020
Residential Real Estate 1-4 Family
First liens	$	142,822	$	42	$	27	$	—	$	69	$	41	$	142,932
Junior liens and lines of credit		54,660		119		28		12		159		14		54,833
Total		197,482		161		55		12		228		55		197,765
Residential real estate - construction		13,059		—		—		—		—		518		13,577
Commercial real estate		493,923		392		—		—		392		3,367		497,682
Commercial		296,208		17		—		—		17		207		296,432
Consumer		6,661		15		4		2		21		—		6,682
Total	$	1,007,333	$	585	$	59	$	14	$	658	$	4,147	$	1,012,138



December 31, 2019
Residential Real Estate 1-4 Family
First liens	$	141,843	$	646	$	358	$	31	$	1,035	$	68	$	142,946
Junior liens and lines of credit		47,420		70		30		46		146		31		47,597
Total		189,263		716		388		77		1,181		99		190,543
Residential real estate - construction		12,800		—		—		—		—		523		13,323
Commercial real estate		490,114		813		326		—		1,139		3,009		494,262
Commercial		229,659		31		120		—		151		197		230,007
Consumer		6,397		25		18		—		43		—		6,440
Total	$	928,233	$	1,585	$	852	$	77	$	2,514	$	3,828	$	934,575

‎

The following table reports the risk rating for those loans in the portfolio that are assigned an individual risk rating. Consumer purpose loans are assigned a rating of either pass or substandard based on the performance status of the loans. Substandard consumer loans are comprised of loans 90 days or more past due and still accruing, and nonaccrual loans. Commercial purpose loans may be assigned any rating in accordance with the Bank’s internal risk rating system. Approximately $57 million of hotel portfolio loans were moved to Pass-watch (5) rating at June 30, 2020. The entire hotel portfolio of approximately $70 million at June 30, 2020 is now rated no better than Pass-watch (5).



	Pass		OAEM		Substandard		Doubtful
(Dollars in thousands)	(1-5)		(6)		(7)		(8)		Total

June 30, 2020
Residential Real Estate 1-4 Family
First liens	$	142,891	$	—	$	41	$	—	$	142,932
Junior liens and lines of credit		54,807		—		26		—		54,833
Total		197,698		—		67		—		197,765
Residential real estate - construction		13,059		—		518		—		13,577
Commercial real estate		487,112		5,983		4,587		—		497,682
Commercial		296,055		—		377		—		296,432
Consumer		6,679		—		3		—		6,682
Total	$	1,000,603	$	5,983	$	5,552	$	—	$	1,012,138



December 31, 2019
Residential Real Estate 1-4 Family
First liens	$	142,847	$	—	$	99	$	—	$	142,946
Junior liens and lines of credit		47,520		—		77		—		47,597
Total		190,367		—		176		—		190,543
Residential real estate - construction		12,800		—		523		—		13,323
Commercial real estate		483,878		5,875		4,509		—		494,262
Commercial		229,465		4		538		—		230,007
Consumer		6,440		—		—		—		6,440
Total	$	922,950	$	5,879	$	5,746	$	—	$	934,575

The following table presents information on the Bank’s Troubled Debt Restructuring (TDR) loans as of:


								Troubled Debt Restructurings
								Within the Last 12 Months
								That Have Defaulted
(Dollars in thousands)	Troubled Debt Restructurings							On Modified Terms
	Number of	Recorded						Number of	Recorded
	Contracts	Investment		Performing*		Nonperforming*		Contracts	Investment
June 30, 2020
Residential real estate - construction	1	$	440	$	440	$	—	—	$	—
Residential real estate	4		648		648		—	—		—
Commercial real estate	11		9,089		8,771		318	—		—
Total	16	$	10,177	$	9,859	$	318	—	$	—


December 31, 2019
Residential real estate - construction	1	$	444	$	444	$	—	—	$	—
Residential real estate	4		659		659		—	—		—
Commercial real estate	11		9,343		9,343		—	—		—
Total	16	$	10,446	$	10,446	$	—	—	$	—

*The performing status is determined by the loan’s compliance with the modified terms.

There were no new TDR loans during 2020 or 2019. Loans that have been modified on a good-faith basis in response to COVID-19 to borrowers who were classified as current prior to any relief are not TDRs as outlined in the March 22, 2020 Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. Such short-term modifications (e.g., six months) may include payment deferrals, fee

waivers, extension of payment terms or other delays in payment that are insignificant. As of June 30, 2020, the Bank has granted approximately $196 million loan deferrals or modifications (approximately 19% of gross loans).