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Note 4 - Allowance for Loan Losses

6 Months Ended

Jun. 30, 2021

Allowance for Credit Losses [Text Block]

Note 4. Allowance for Loan Losses

The following tables present, as of June 30, 2021, December 31, 2020 and June 30, 2020, the total allowance for loan losses, the allowance by impairment methodology, and loans by impairment methodology (in thousands):

	June 30, 2021
	Construction and Land Development			Secured by 1-4 Family Residential			Other Real Estate			Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2020	$	306		$	1,022		$	4,956		$	784		$	417		$	7,485
Charge-offs		—			—			(992	)		—			(159	)		(1,151	)
Recoveries		—			4			1			4			122			131
(Recovery of) provision for loan losses		(32	)		(11	)		(893	)		(30	)		(34	)		(1,000	)
Ending Balance, June 30, 2021	$	274		$	1,015		$	3,072		$	758		$	346		$	5,465
Ending Balance:
Individually evaluated for impairment		—			—			—			78			—			78
Collectively evaluated for impairment		273			1,015			3,072			680			347			5,387
Loans:
Ending Balance	$	25,035		$	235,158		$	245,455		$	102,966		$	8,734		$	617,348
Individually evaluated for impairment		—			410			158			1,534			—			2,102
Collectively evaluated for impairment		25,035			234,748			245,297			101,432			8,734			615,246

	December 31, 2020
	Construction and Land Development			Secured by 1-4 Family Residential		Other Real Estate		Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2019	$	464		$	776	$	2,296	$	562		$	836		$	4,934
Charge-offs		—			—		—		(69	)		(715	)		(784	)
Recoveries		2			8		2		18			305			335
Provision for (recovery of) loan losses		(160	)		238		2,658		273			(9	)		3,000
Ending Balance, December 31, 2020	$	306		$	1,022	$	4,956	$	784		$	417		$	7,485
Ending Balance:
Individually evaluated for impairment		—			—		2,065		158			—			2,223
Collectively evaluated for impairment		306			1,022		2,891		626			417			5,262
Loans:
Ending Balance	$	27,328		$	235,814	$	246,883	$	109,838		$	10,051		$	629,914
Individually evaluated for impairment		276			449		4,441		1,548			—			6,714
Collectively evaluated for impairment		27,052			235,365		242,442		108,290			10,051			623,200

June 30, 2020

Construction and Land Development Secured by 1-4 Family Residential Other Real Estate Commercial and Industrial Consumer and Other Loans
Total

Allowance for loan losses:

Beginning Balance, December 31, 2019
$ 464 $ 776 $ 2,296 $ 562 $ 836 $ 4,934

Charge-offs
— — — (69 ) (435 ) (504 )

Recoveries
— 4 1 7 154 166

Provision for (recovery of) loan losses
(68 ) 543 936 283 6 1,700

Ending Balance, June 30, 2020
$ 396 $ 1,323 $ 3,233 $ 783 $ 561 $ 6,296

Ending Balance:

Individually evaluated for impairment
— 5 23 — — 28

Collectively evaluated for impairment
396 1,318 3,210 783 561 6,268

Loans:

Ending Balance
$ 31,981 $ 234,188 $ 248,495 $ 124,706 $ 12,146 $ 651,516

Individually evaluated for impairment
400 497 4,896 — — 5,793

Collectively evaluated for impairment
31,581 233,691 243,599 124,706 12,146 645,723

Impaired loans and the related allowance at June 30, 2021, December 31, 2020 and June 30, 2020, were as follows (in thousands):

	June 30, 2021
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	-	$	—	$	—	$	-	$	—	$	273	$	—
Secured by 1-4 family		544		410		—		410		—		429		—
Other real estate loans		169		158		—		158		—		4,447		1
Commercial and industrial		1,653		—		1,534		1,534		78		1,548		—
Total	$	2,366	$	568	$	1,534	$	2,102	$	78	$	6,697	$	1

	December 31, 2020
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	325	$	276	$	—	$	276	$	—	$	344	$	—
Secured by 1-4 family		568		449		—		449		—		517		1
Other real estate loans		4,492		171		4,270		4,441		2,065		2,623		109
Commercial and industrial		1,582		—		1,548		1,548		158		393		77
Total	$	6,967	$	896	$	5,818	$	6,714	$	2,223	$	3,877	$	187

	June 30, 2020
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	439	$	400	$	—	$	400	$	—	$	383	$	—
Secured by 1-4 family		595		280		217		497		5		563		1
Other real estate loans		4,948		583		4,313		4,896		23		574		127
Total	$	5,982	$	1,263	$	4,530	$	5,793	$	28	$	1,520	$	128

The “Recorded Investment” amounts in the table above represent the outstanding principal balance on each loan represented in the table. The “Unpaid Principal Balance” represents the outstanding principal balance on each loan represented in the table plus any amounts that have been charged off on each loan and/or payments that have been applied towards principal on non-accrual loans. Only loan classes with balances are included in the tables above.

As of June 30, 2021, loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $1.7 million. At June 30, 2021, none of the loans classified as TDRs were performing under the restructured terms and all were considered non-performing assets. There were $6.0 million in TDRs at December 31, 2020, none of which were performing under the restructured terms. Modified terms under TDRs may include rate reductions, extension of terms that are considered to be below market, conversion to interest only, and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. There were no loans modified under TDRs during the three months ended June 30, 2021 and 2020.

In response to the COVID-19 pandemic, the Company created and implemented a loan payment deferral program for individual and business customers beginning in the first quarter of 2020, which provided them the opportunity to defer monthly payments for 90 days. As of June 30, 2021, there were no loans remaining in the program. These loans were not considered TDRs because they were modified in accordance with relief provisions of the CARES Act and recent interagency regulatory guidance.

During the fourth quarter of 2020, the Company modified terms of certain loans for customers that continued to be negatively impacted by the COVID-19 pandemic. The loan modifications lowered borrower loan payments by allowing interest only payments for periods ranging between 6 and 24 months. As of June 30, 2021, loans that were modified totaled $14.6 million. These loans were not considered TDRs because they were modified in accordance with relief provisions of the CARES Act.

For the six months ended June 30, 2021 and 2020, there were no TDRs that subsequently defaulted within twelve months of the loan modification. Management defines default as over ninety days past due or the foreclosure and repossession of the collateral or charge-off of the loan during the twelve month period subsequent to the modification.