Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2022

The composition of loans at June 30, 2022 and December 31, 2021 was as follows:

	June 30,			December 31,
	2022			2021
	(in thousands)
Mortgage loans on real estate:
Construction and land development	$	63,083		$	71,191
Secured by farmland		15,101			13,710
Secured by 1-4 family residential properties		266,822			263,723
Multifamily		39,249			29,093
Commercial		470,166			377,051
Commercial and industrial loans		159,279			143,378
Consumer installment loans		97,361			67,281
All other loans		5,147			16,798
Total loans	$	1,116,208		$	982,225
Net deferred loan costs and premiums		4,632			3,495
Allowance for loan losses		(9,847	)		(8,787	)
	$	1,110,993		$	976,933

Changes In Allowance For Loan Losses

Changes in the allowance for loan losses for the six months ended June 30, 2022 and 2021 and the year ended December 31, 2021 were as follows:

	Six Months Ended			Year Ended			Six Months Ended
	June 30,			December 31,			June 30,
	2022			2021			2021
				(in thousands)
Balance, beginning	$	8,787		$	7,096		$	7,096
Provision for loan losses		900			1,483			883
Recoveries added to the allowance		248			318			143
Loan losses charged to the allowance		(88	)		(110	)		(24	)
Balance, ending	$	9,847		$	8,787		$	8,098

Nonaccrual And Past Due Loans By Class

Nonaccrual and past due loans by class at June 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Days Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	155	$	—	$	—	$	155	$	159,124	$	159,279	$	—	$	73
Commercial Real Estate:
Owner Occupied		—		—		—		—		217,672		217,672		—		23
Non-owner occupied		—		—		—		—		252,494		252,494		—		1,361
Construction and Farmland:
Residential		—		—		—		—		11,030		11,030		—		—
Commercial		—		—		104		104		67,050		67,154		—		224
Consumer:
Installment		—		—		—		—		97,361		97,361		—		2
Residential:
Equity Lines		26		—		—		26		37,436		37,462		—		20
Single family		298		81		226		605		228,755		229,360		69		311
Multifamily		—		—		—		—		39,249		39,249		—		—
All Other Loans		—		—		—		—		5,147		5,147		—		—
Total	$	479	$	81	$	330	$	890	$	1,115,318	$	1,116,208	$	69	$	2,014

	December 31, 2021
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	8	$	7	$	—	$	15	$	143,363	$	143,378	$	—	$	—
Commercial Real Estate:
Owner Occupied		—		—		—		—		188,839		188,839		—		124
Non-owner occupied		146		—		130		276		187,936		188,212		—		1,547
Construction and Farmland:
Residential		—		—		—		—		10,077		10,077		—		—
Commercial		—		126		108		234		74,590		74,824		—		234
Consumer:
Installment		6		—		—		6		67,275		67,281		—		3
Residential:
Equity Lines		13		—		—		13		35,849		35,862		—		29
Single family		409		238		434		1,081		226,780		227,861		43		786
Multifamily		—		—		—		—		29,093		29,093		—		—
All Other Loans		—		—		—		—		16,798		16,798		—		—
Total	$	582	$	371	$	672	$	1,625	$	980,600	$	982,225	$	43	$	2,723

Allowance For Loan Losses By Segment

Allowance for loan losses by segment at June 30, 2022 and December 31, 2021 were as follows:

	As of and For the Six Months Ended
	June 30, 2022
	(in thousands)
	Construction and Farmland			Residential Real Estate			Commercial Real Estate		Commercial		Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	2,794		$	1,750		$	1,650	$	1,656	$	646		$	291		$	—	$	8,787
Charge-Offs		—			—			—		—		(29	)		(59	)		—		(88	)
Recoveries		4			127			—		103		7			7			—		248
Provision		(336	)		(167	)		459		500		97			(91	)		438		900
Ending balance	$	2,462		$	1,710		$	2,109	$	2,259	$	721		$	148		$	438	$	9,847
Ending balance: Individually evaluated for impairment	$	—		$	36		$	—	$	73	$	—		$	—		$	—	$	109
Ending balance: collectively evaluated for impairment	$	2,462		$	1,674		$	2,109	$	2,186	$	721		$	148		$	438	$	9,738
Loans:
Ending balance	$	78,184		$	306,071		$	470,166	$	159,279	$	97,361		$	5,147		$	—	$	1,116,208
Ending balance individually evaluated for impairment	$	882		$	2,814		$	1,568	$	162	$	13		$	—		$	—	$	5,439
Ending balance collectively evaluated for impairment	$	77,302		$	303,257		$	468,598	$	159,117	$	97,348		$	5,147		$	—	$	1,110,769

	December 31, 2021
	(in thousands)
	Construction and Farmland		Residential Real Estate			Commercial Real Estate			Commercial			Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	1,604	$	1,929		$	1,645		$	1,374		$	198		$	346		$	—	$	7,096
Charge-Offs		—		(13	)		—			(10	)		(19	)		(68	)		—		(110	)
Recoveries		12		240			7			18			29			12			—		318
Provision		1,178		(406	)		(2	)		274			438			1			—		1,483
Ending balance	$	2,794	$	1,750		$	1,650		$	1,656		$	646		$	291		$	—	$	8,787
Ending balance: Individually evaluated for impairment	$	—	$	39		$	—		$	—		$	—		$	—		$	—	$	39
Ending balance: collectively evaluated for impairment	$	2,794	$	1,711		$	1,650		$	1,656		$	646		$	291		$	—	$	8,748
Loans:
Ending balance	$	84,901	$	292,816		$	377,051		$	143,378		$	67,281		$	16,798		$	—	$	982,225
Ending balance individually evaluated for impairment	$	257	$	2,778		$	2,295		$	108		$	16		$	—		$	—	$	5,454
Ending balance collectively evaluated for impairment	$	84,644	$	290,038		$	374,756		$	143,270		$	67,265		$	16,798		$	—	$	976,771

Impaired Loans By Class

Impaired loans by class as of and for the periods ended June 30, 2022 and December 31, 2021 were as follows:

	As of
	June 30, 2022
	(in thousands)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	101	$	89	$	—	$	99	$	3
Commercial Real Estate:
Owner Occupied		211		207		—		211		6
Non-owner occupied		1,596		1,361		—		1,361		—
Construction and Farmland:
Residential		639		639		—		617		12
Commercial		265		243		—		246		1
Consumer:
Installment		14		13		—		14		1
Residential
Equity lines		24		20		—		21		—
Single family		2,106		2,034		—		2,052		37
Multifamily		—		—		—		—		—
Other Loans		—		—		—		—		—
	$	4,956	$	4,606	$	—	$	4,621	$	60
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	77	$	73	$	73	$	73	$	1
Commercial Real Estate:
Owner Occupied		—		—		—		—		—
Non-owner occupied		—		—		—		—		—
Construction and Farmland:
Residential		—		—		—		—		—
Commercial		—		—		—		—		—
Consumer:
Installment		—		—		—		—		—
Residential
Equity lines		—		—		—		—		—
Single family		798		774		36		781		13
Multifamily		—		—		—		—		—
Other Loans		—		—		—		—		—
	$	875	$	847	$	109	$	854	$	14
Total:
Commercial	$	178	$	162	$	73	$	172	$	4
Commercial Real Estate		1,807		1,568		—		1,572		6
Construction and Farmland		904		882		—		863		13
Consumer		14		13		—		14		1
Residential		2,928		2,828		36		2,854		50
Other		—		—		—		—		—
Total	$	5,831	$	5,453	$	109	$	5,475	$	74

(1)	Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs. Accrued interest and net deferred loan fees or costs totaled $14 thousand at June 30, 2022.

	As of
	December 31, 2021
	(in thousands)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	143	$	109	$	—	$	166	$	11
Commercial Real Estate:
Owner Occupied		148		124		—		142		—
Non-owner occupied		2,539		2,177		—		2,186		—
Construction and Farmland:
Residential		—		—		—		—		—
Commercial		271		257		—		267		9
Consumer:
Installment		17		16		—		19		1
Residential:
Equity lines		35		29		—		32		—
Single family		2,088		1,974		—		2,012		62
Multifamily		—		—		—		—		—
Other Loans		—		—		—		—		—
	$	5,241	$	4,686	$	—	$	4,824	$	83
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate:
Owner Occupied		—		—		—		—		—
Non-owner occupied		—		—		—		—		—
Construction and Farmland:
Residential		—		—		—		—		—
Commercial		—		—		—		—		—
Consumer:
Installment		—		—		—		—		—
Residential:
Equity lines		—		—		—		—		—
Single family		811		787		39		802		30
Multifamily		—		—		—		—		—
Other Loans		—		—		—		—		—
	$	811	$	787	$	39	$	802	$	30
Total:
Commercial	$	143	$	109	$	—	$	166	$	11
Commercial Real Estate		2,687		2,301		—		2,328		—
Construction and Farmland		271		257		—		267		9
Consumer		17		16		—		19		1
Residential		2,934		2,790		39		2,846		92
Other		—		—		—		—		—
Total	$	6,052	$	5,473	$	39	$	5,626	$	113

(1)	Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs. Accrued interest and net deferred loan fees or costs totaled $19 thousand at December 31, 2021.

Credit Quality Information By Class

Credit quality information by class at June 30, 2022 and December 31, 2021 was as follows:

	As of
	June 30, 2022
	(in thousands)
INTERNAL RISK RATING GRADES	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial - Non Real Estate:
Commercial & Industrial	$	158,816	$	390	$	73	$	—	$	—	$	159,279
Commercial Real Estate:
Owner Occupied		204,876		12,773		23		—		—		217,672
Non-owner occupied		234,250		16,501		1,743		—		—		252,494
Construction and Farmland:
Residential		11,030		—		—		—		—		11,030
Commercial		56,088		2,692		8,374		—		—		67,154
Residential:
Equity Lines		37,442		—		20		—		—		37,462
Single family		225,314		2,208		1,722		116		—		229,360
Multifamily		38,629		620		—		—		—		39,249
All other loans		5,147		—		—		—		—		5,147
Total	$	971,592	$	35,184	$	11,955	$	116	$	—	$	1,018,847

		Performing				Nonperforming
Consumer Credit Exposure by Payment Activity		$	97,359			$	2

	As of
	December 31, 2021
	(in thousands)
INTERNAL RISK RATING GRADES	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial - Non Real Estate:
Commercial & Industrial	$	143,197	$	176	$	5	$	—	$	—	$	143,378
Commercial Real Estate:
Owner Occupied		185,978		2,703		158		—		—		188,839
Non-owner occupied		180,830		4,819		2,563		—		—		188,212
Construction and Farm land:
Residential		10,077		—		—		—		—		10,077
Commercial		59,318		15,198		308		—		—		74,824
Residential:
Equity Lines		35,832		—		30		—		—		35,862
Single family		224,510		1,601		1,633		117		—		227,861
Multifamily		26,952		2,141		—		—		—		29,093
All other loans		16,798		—		—		—		—		16,798
Total	$	883,492	$	26,638	$	4,697	$	117	$	—	$	914,944

		Performing				Nonperforming
Consumer Credit Exposure by Payment Activity		$	67,275			$	6