Troubled Debt Restructurings

9 Months Ended

Sep. 30, 2022

NOTE 6. Troubled Debt Restructurings

All loans deemed a troubled debt restructuring (“TDR"), are considered impaired, and are evaluated for collateral and cash-flow sufficiency. A loan is considered a TDR when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. All of the following factors are indicators that the Company has granted a concession (one or multiple items may be present):

•

The borrower receives a reduction of the stated interest rate to a rate less than the institution is willing to accept at the time of the restructure for a new loan with comparable risk.

•

The borrower receives an extension of the maturity date or dates at a stated interest rate lower than the current market interest rate for new debt with similar risk characteristics.

•

The borrower receives a reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement.

•

The borrower receives a deferral of required payments (principal and/or interest) which causes more than an insignificant change in cash flow.

•

The borrower receives a reduction of the accrued interest.

There were 26 TDR loans totaling $4.4 million at September 30, 2022. At December 31, 2021, there were 17 TDR loans totaling $2.7 million. Two TDR loans, totaling $136 thousand, were in nonaccrual status at September 30, 2022. Two TDR loans, totaling $149 thousand, were in nonaccrual status at December 31, 2021. There were no outstanding commitments to lend additional amounts to troubled debt restructured borrowers at September 30, 2022 or December 31, 2021.

The following tables set forth information on the Company’s troubled debt restructurings by class of loans occurring during the three and nine months ended September 30, 2022 and 2021. During the nine months ended September 30, 2022, nine loans were modified in TDRs, with six loans being newly classified as TDRs during the three months ended September 30, 2022. During the three months ended September 30, 2021, three loans were modified in TDRs.


	Three Months Ended
	September 30, 2022
	(in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer:
Installment		1	$	20	$	21
Residential:
Single family		4		894		894
Total		5	$	914	$	915

	Three Months Ended
	September 30, 2021
	(in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer:
Installment
Total		—	$	—		—

	Nine Months Ended
	September 30, 2022
	(in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial - Non Real Estate:
Commercial & Industrial
Commercial Real Estate:
Owner Occupied		1	$	185	$	185
Non-Owner Occupied		1	$	161	$	161
Construction and Farmland:
Commercial		1		639		639
Consumer:
Installment		1	$	20	$	21
Residential:
Equity
Single family		7		1,433		1,451
Total		11	$	2,438	$	2,457

	Nine Months Ended
	September 30, 2021
	(in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Consumer:
Installment		2	$	15	$	15
Residential:
Single family		1		98		98
Total		3	$	113	$	113

During the three and nine months ended September 30, 2022, the Company restructured eleven loans by granting concessions to the borrowers experiencing financial difficulty. Eight loans were restructured renewing or extending the loan beyond the original maturity date. One loan was restructured by refinancing and providing cash out to the borrower. Two loans were restructured by refinancing the loans to extend the term.

During the nine months ended September 30, 2021, the Company restructured three loans by granting a concession to
borrowers experiencing financial difficulty. These loans were restructured by reducing the loan payments and extending the
term.

There were no payment defaults during the three and nine months ended September 30, 2022 for TDRs that were restructured within the preceding twelve-month period. There were no payment defaults during the three and nine months ended September 30, 2021.

Management defines default as over 30 days contractually past due under the modified terms, the foreclosure and/or repossession of the collateral, or the charge-off of the loan during the twelve-month period subsequent to the modification.