Loan Quality And Allowance For Loan Losses

9 Months Ended

Sep. 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 July 1, 2020	$	580	$	197	$	242	$	8,837	$	5,845	$	105	$	749	$	16,555
Charge-offs		—		—		—		—		—		(28)		—		(28)
Recoveries		—		—		—		—		243		6		—		249
Provision		(2)		14		17		372		(52)		11		15		375
ALL at September 30, 2020	$	578	$	211	$	259	$	9,209	$	6,036	$	94	$	764	$	17,151

ALL at December 31, 2019	$	416	$	119	$	187	$	6,607	$	4,021	$	84	$	532	$	11,966
Charge-offs		—		—		—		—		(365)		(87)		—		(452)
Recoveries		4		—		—		—		267		16		—		287
Provision		158		92		72		2,602		2,113		81		232		5,350
ALL at September 30, 2020	$	578	$	211	$	259	$	9,209	$	6,036	$	94	$	764	$	17,151

ALL at July 1, 2019	$	437	$	113	$	164	$	6,452	$	4,733	$	95	$	559	$	12,553
Charge-offs		-		—		(120)		(169)		(17)		(27)		—		(333)
Recoveries		1		—		—		1		111		11		—		124
Provision		2		1		139		266		(545)		2		(27)		(162)
ALL at September 30, 2019	$	440	$	114	$	183	$	6,550	$	4,282	$	81	$	532	$	12,182

ALL at December 31, 2018	$	491	$	133	$	110	$	6,278	$	4,783	$	70	$	550	$	12,415
Charge-offs		(34)		(1)		(123)		(355)		(92)		(78)		—		(683)
Recoveries		4		1		—		22		162		24		—		213
Provision		(21)		(19)		196		605		(571)		65		(18)		237
ALL at September 30, 2019	$	440	$	114	$	183	$	6,550	$	4,282	$	81	$	532	$	12,182

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 September 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
September 30, 2020
Loans evaluated for ALL:
Individually	$	643	$	—	$	515	$	16,361	$	—	$	—	$	—	$	17,519
Collectively		140,953		58,776		13,699		489,137		296,331		6,543		—		1,005,439
Total	$	141,596	$	58,776	$	14,214	$	505,498	$	296,331	$	6,543	$	—	$	1,022,958

ALL established for ‎ loans evaluated:
Individually	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively		578		211		259		9,209		6,036		94		764		17,151
ALL at September 30, 2020	$	578	$	211	$	259	$	9,209	$	6,036	$	94	$	764	$	17,151

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 September 30, 2020 and December 31, 2019:


	Impaired Loans
	With No Allowance				With Allowance
(Dollars in thousands)			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal		Related
September 30, 2020	Investment		Balance		Investment		Balance		Allowance
Residential Real Estate 1-4 Family
First liens	$	643	$	643	$	—	$	—	$	—
Junior liens and lines of credit		—		—		—		—		—
Total		643		643		—		—		—
Residential real estate - construction		515		729		—		—		—
Commercial real estate		16,361		17,511		—		—		—
Commercial		—		—		—		—		—
Total	$	17,519	$	18,883	$	—	$	—	$	—


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 nine months ended September 30, 2020 and 2019:


	Three Months Ended				Nine Months Ended
	September 30, 2020				September 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	$	645	$	12	$	651	$	30
Junior liens and lines of credit		—		—		—		—
Total		645		12		651		30
Residential real estate - construction		517		—		519		—
Commercial real estate		16,580		93		13,041		280
Commercial		—		—		—		—
Total	$	17,742	$	105	$	14,211	$	310

	Three Months Ended				Nine Months Ended
	September 30, 2019				September 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	$	396	$	6	$	399	$	18
Junior liens and lines of credit		—		—		—		—
Total		396		6		399		18
Residential real estate - construction		646		—		650		—
Commercial real estate		12,461		98		12,933		302
Commercial		—		—		—		—
Total	$	13,503	$	104	$	13,982	$	320

‎

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
September 30, 2020
Residential Real Estate 1-4 Family
First liens	$	141,383	$	42	$	130	$	—	$	172	$	41	$	141,596
Junior liens and lines of credit		58,626		99		37		—		136		14		58,776
Total		200,009		141		167		—		308		55		200,372
Residential real estate - construction		13,699		—		—		—		—		515		14,214
Commercial real estate		496,472		296		—		443		739		8,287		505,498
Commercial		295,968		158		—		—		158		205		296,331
Consumer		6,493		31		12		7		50		—		6,543
Total	$	1,012,641	$	626	$	179	$	450	$	1,255	$	9,062	$	1,022,958



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.



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

September 30, 2020
Residential Real Estate 1-4 Family
First liens	$	141,555	$	—	$	41	$	—	$	141,596
Junior liens and lines of credit		58,762		—		14		—		58,776
Total		200,317		—		55		—		200,372
Residential real estate - construction		13,699		—		515		—		14,214
Commercial real estate		469,953		25,639		9,906		—		505,498
Commercial		284,339		11,618		374		—		296,331
Consumer		6,537		—		6		—		6,543
Total	$	974,845	$	37,257	$	10,856	$	—	$	1,022,958



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
September 30, 2020
Residential real estate - construction	1	$	437	$	437	$	—	—	$	—
Residential real estate	4		643		643		—	—		—
Commercial real estate - owner occupied	4		1,238		795		443	—		—
Commercial real estate - farm land	6		2,235		2,235		—	—		—
Commercial real estate - construction and land development	2		6,221		6,221		—	—		—
Commercial real estate	2		339		339		—	—		—
Total	19	$	11,113	$	10,670	$	443	—	$	—


December 31, 2019
Residential real estate - construction	1	$	444	$	444	$	—	—	$	—
Residential real estate	4		659		659		—	—		—
Commercial real estate - owner occupied	2		846		846		—	—		—
Commercial real estate - farm land	5		1,646		1,646		—	—		—
Commercial real estate - construction and land development	2		6,487		6,487		—	—		—
Commercial real estate	2		364		364		—	—		—
Total	16	$	10,446	$	10,446	$	—	—	$	—

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

‎

The following table reports new TDR loans during 2020, concession granted and the recorded investment as of September 30, 2020:


	New During Period
Nine Months Ended	Number of		Pre-TDR		After-TDR		Recorded
September 30, 2020	Contracts		Modification		Modification		Investment	Concession
Commercial real estate - farm land	1	$	650	$	650	$	650	multiple
Commercial real estate - owner occupied	2		426		426		426	maturity
	3	$	1,076	$	1,076	$	1,076

There were no new TDR loans during 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 or Section 4013 of the CARES Act. 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 September 30, 2020, the Bank has granted approximately $83 million loan deferrals or modifications (approximately 8% of gross loans).