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Note 4 - Allowance for Loan Losses

9 Months Ended

Sep. 30, 2021

Allowance for Credit Losses [Text Block]

Note 4. Allowance for Loan Losses

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

	September 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		—			(15	)		(992	)		—			(255	)		(1,262	)
Recoveries		—			46			2			6			157			211
(Recovery of) provision for loan losses		(25	)		(97	)		(813	)		(81	)		16			(1,000	)
Ending Balance, September 30, 2021	$	281		$	956		$	3,153		$	709		$	335		$	5,434
Ending Balance:
Individually evaluated for impairment		—			—			—			84			—			84
Collectively evaluated for impairment		281			956			3,153			625			335			5,350
Loans:
Ending Balance	$	45,120		$	294,216		$	362,643		$	105,664		$	14,768		$	822,411
Individually evaluated for impairment		—			470			153			1,535			—			2,158
Collectively evaluated for impairment		45,120			293,746			362,490			104,129			14,768			820,253

	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

September 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 ) (550 ) (619 )

Recoveries
2 6 2 17 235 262

Provision for (recovery of) loan losses
(164 ) 305 2,691 398 (30 ) 3,200

Ending Balance, September 30, 2020
$ 302 $ 1,087 $ 4,989 $ 908 $ 491 $ 7,777

Ending Balance:

Individually evaluated for impairment
— — 2,108 181 — 2,289

Collectively evaluated for impairment
302 1,087 2,881 727 491 5,488

Loans:

Ending Balance
$ 27,472 $ 234,198 $ 250,319 $ 125,277 $ 11,102 $ 648,368

Individually evaluated for impairment
283 469 4,674 1,548 — 6,974

Collectively evaluated for impairment
27,189 233,729 245,645 123,729 11,102 641,394

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

	September 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		611		470		—		470		—		420		3
Other real estate loans		167		153		—		153		—		3,159		1
Commercial and industrial		1,655		—		1,535		1,535		84		1,548		—
Total	$	2,433	$	623	$	1,535	$	2,158	$	84	$	5,400	$	4

	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

	September 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	$	325	$	283	$	—	$	283	$	—	$	366	$	—
Secured by 1-4 family		578		469		—		469		—		536		1
Other real estate loans		4,698		361		4,313		4,674		2,108		1,974		109
Commercial and industrial		1,548		—		1,548		1,548		181		6		77
Total	$	7,149	$	1,113	$	5,861	$	6,974	$	2,289	$	2,882	$	187

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 September 30, 2021, loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $1.7 million. At September 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 September 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 September 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 September 30, 2021, loans that were modified totaled $13.3 million. These loans were not considered TDRs because they were modified in accordance with relief provisions of the CARES Act.

For the nine months ended September 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.