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Note 5 - Allowance for Loan Losses, Nonperforming Assets and Impaired Loans | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Allowance for Credit Losses [Text Block] | Note 5: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans The allowance for loan losses methodology incorporates individual evaluation of impaired loans and collective evaluation of groups of non-impaired loans. The Company performs ongoing analysis of the loan portfolio to determine credit quality and to identify impaired loans. Credit quality is rated based on the loan’s payment history, the borrower’s current financial situation and value of the underlying collateral. Impaired Loans Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts will not be collected when due according to the contractual terms of the loan agreement. Impaired loans are those loans that have been modified in a TDR and larger, usually non-homogeneous loans that are in nonaccrual or exhibit payment history or financial status that indicate that collection probably will not occur when due according to the loan’s terms. Generally, impaired loans are given risk ratings that indicate higher risk, such as “classified” or “special mention.” Impaired loans are individually evaluated to determine appropriate reserves and are measured at the lower of the invested amount or the fair value. Impaired loans that are not TDRs and for which fair value measurement indicates an impairment loss are designated nonaccrual. A restructured loan that maintains current status for at least six months may be in accrual status. Please refer to Note 1: Summary of Significant Accounting Policies for additional information on evaluation of impaired loans and associated specific reserves, and policies regarding nonaccruals, past due status and charge-offs. TDRs impact the estimation of the appropriate level of the allowance for loan losses. If the restructuring included forgiveness of a portion of principal or accrued interest, the charge-off is included in the historical charge-off rates applied to the collective evaluation methodology. Restructured loans are individually evaluated for impairment, and the amount of a restructured loan’s book value in excess of its fair value is accrued as a specific allocation in the allowance for loan losses. If a TDR loan payment exceeds 90 days past due, it is examined to determine whether the late payment indicates collateral dependency or cash flows below those that were used in the fair value measurement. TDRs, as well as all impaired loans, that are determined to be collateral dependent are charged down to fair value. Deficiencies indicated by impairment measurements for TDRs that are not collateral dependent may be accrued in the allowance for loan losses or charged off if deemed uncollectible. Collectively Evaluated Loans The Company evaluated characteristics in the loan portfolio and determined major segments and smaller classes within each segment. These characteristics include collateral type, repayment sources, and (if applicable) the borrower’s business model. The methodology for calculating reserves for collectively evaluated loans is applied at the class level. Portfolio Segments and Classes The segments and classes used in determining the allowance for loan losses are as follows.
| Real Estate Construction | Commercial Non-Real Estate
| Construction, residential | Commercial and Industrial
| Construction, other |
|  | Public Sector and IDA
| Consumer Real Estate | State and political subdivisions
| Equity lines |
| Residential closed-end first liens | Consumer Non-Real Estate
| Residential closed-end junior liens | Credit cards
| Investor-owned residential real estate | Automobile
|  | Other consumer loans
| Commercial Real Estate |
| Multifamily real estate |
| Commercial real estate, owner-occupied |
| Commercial real estate, other |
Historical Loss Rates The Company’s allowance methodology for collectively evaluated loans applies historical loss rates by class to current class balances as part of the process of determining required reserves. Class loss rates are calculated as the net charge-offs for the class as a percentage of average class balance. The Company averages loss rates for the most recent eight quarters to determine the historical loss rate for each class. Two loss rates for each class are calculated: total net charge-offs for the class as a percentage of average class loan balance (“class loss rate”), and total net charge-offs for the class as a percentage of average classified loans in the class (“classified loss rate”). Classified loans are those with risk ratings of “substandard” or lower. Net charge-offs in both calculations include charge-offs and recoveries of classified and non-classified loans as well as those associated with impaired loans. Class historical loss rates are applied to non-classified loan balances at the reporting date, and classified historical loss rates are applied to classified balances at the reporting date. Risk Factors In addition to historical loss rates, risk factors pertinent to credit risk for each class are analyzed to estimate reserves for collectively evaluated loans. Factors include changes in national and local economic and business conditions, the nature and volume of classes within the portfolio, loan quality, loan officers’ experience, lending policies and the Company’s loan review system. The analysis of certain factors results in standard allocations to all segments and classes. These factors include the risk from changes in lending policies, loan officers’ average years of experience, and economic factors including unemployment levels, bankruptcy rates, interest rate environment, and competition/legal/regulatory environments. Also applied to all segments and classes is an economic factor implemented to address COVID-19 uncertainty: national unemployment filings. Typically the Company applies to the allowance calculation economic data specific to its market area. However, historical analysis determined that local unemployment filings were closely correlated to national unemployment filings. Since local data is not available timely, the Company elected to use national unemployment filings. Factors analyzed for each class, with resultant allocations based upon the level of risk assessed for each class, include the risk from changes in loan review, levels of past due loans, levels of nonaccrual loans, current class balance as a percentage of total loans, and the percentage of high risk loans within the class. The Company analyzes housing data for its impact to affected classes. During the fourth quarter of 2020, the Company added a factor to analyze commercial loans modified under the CARES Act that received subsequent modifications that also qualified under the CARES act. Please refer to Note 1: Summary of Significant Accounting Policies for a discussion of risk factors pertinent to each class. Real estate construction loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. These risks are measured by market-area unemployment rates, bankruptcy rates, building market trends, and interest rates. The credit quality of consumer real estate is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, local housing market trends, and interest rates. The commercial real estate segment includes loans secured by multifamily residential real estate, commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for multi-family housing and commercial buildings, business bankruptcy rates, local unemployment and interest rate trends that would impact the businesses housed by the commercial real estate. Commercial non-real estate loans are secured by collateral other than real estate, or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, and interest rates. Included in this segment are the SBA-guaranteed PPP loans, which are assumed to not be subject to credit risk. Public sector and IDA loans are extended to municipalities and related entities. Credit risk is based upon the entity’s ability to repay and interest rate trends. Consumer non-real estate includes credit cards, automobile and other consumer loans. Credit cards and certain other consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay, measured by average unemployment, average personal bankruptcy rates and interest rates. Factor allocations applied to each class are increased for loans rated special mention and increased to a greater extent for loans rated classified. The Company allocates additional reserves for “high risk” loans. High risk loans include junior liens, interest only and high loan to value loans. A detailed analysis showing the allowance roll-forward by portfolio segment and related loan balance by segment follows:
|  | Activity in the Allowance for Loan Losses by Segment for the year ended December 31, 2020 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non-Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non-Real Estate |  |  | Unallocated |  |  | Total |
Balance, December 31, 2019 |  | $ | 400 |  |  | $ | 1,895 |  |  | $ | 2,559 |  |  | $ | 555 |  |  | $ | 478 |  |  | $ | 650 |  |  | $ | 326 |  |  | $ | 6,863 |
Charge-offs |  |  | - |  |  |  | (85 | ) |  |  | (15 | ) |  |  | (372 | ) |  |  | - |  |  |  | (248 | ) |  |  | - |  |  |  | (720 | )
Recoveries |  |  | - |  |  |  | 18 |  |  |  | 145 |  |  |  | 9 |  |  |  | - |  |  |  | 175 |  |  |  | - |  |  |  | 347 |
Provision for (recovery of) loan losses |  |  | 103 |  |  |  | 337 |  |  |  | 1,164 |  |  |  | 478 |  |  |  | (139 | ) |  |  | (22 | ) |  |  | 70 |  |  |  | 1,991 |
Balance, December 31, 2020 |  | $ | 503 |  |  | $ | 2,165 |  |  | $ | 3,853 |  |  | $ | 670 |  |  | $ | 339 |  |  | $ | 555 |  |  | $ | 396 |  |  | $ | 8,481 |
|  | Activity in the Allowance for Loan Losses by Segment for the year ended December 31, 201 9 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non-Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non-Real Estate |  |  | Unallocated |  |  | Total |
Balance, December 31, 2018 |  | $ | 398 |  |  | $ | 2,049 |  |  | $ | 2,798 |  |  | $ | 602 |  |  | $ | 583 |  |  | $ | 750 |  |  | $ | 210 |  |  | $ | 7,390 |
Charge-offs |  |  | - |  |  |  | (192 | ) |  |  | (150 | ) |  |  | (47 | ) |  |  | - |  |  |  | (531 | ) |  |  | - |  |  |  | (920 | )
Recoveries |  |  | - |  |  |  | - |  |  |  | 49 |  |  |  | 1 |  |  |  | - |  |  |  | 217 |  |  |  | - |  |  |  | 267 |
Provision for (recovery of) loan losses |  |  | 2 |  |  |  | 38 |  |  |  | (138 | ) |  |  | (1 | ) |  |  | (105 | ) |  |  | 214 |  |  |  | 116 |  |  |  | 126 |
Balance, December 31, 2019 |  | $ | 400 |  |  | $ | 1,895 |  |  | $ | 2,559 |  |  | $ | 555 |  |  | $ | 478 |  |  | $ | 650 |  |  | $ | 326 |  |  | $ | 6,863 |
|  | Activity in the Allowance for Loan Losses by Segment for the year ended December 31, 2018 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non-Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non-Real Estate |  |  | Unallocated |  |  | Total |
Balance, December 31, 2017 |  | $ | 337 |  |  | $ | 2,027 |  |  | $ | 3,044 |  |  | $ | 1,072 |  |  | $ | 419 |  |  | $ | 707 |  |  | $ | 319 |  |  | $ | 7,925 |
Charge-offs |  |  | - |  |  |  | (38 | ) |  |  | - |  |  |  | (107 | ) |  |  | - |  |  |  | (544 | ) |  |  | - |  |  |  | (689 | )
Recoveries |  |  | - |  |  |  | 3 |  |  |  | 49 |  |  |  | 22 |  |  |  | - |  |  |  | 161 |  |  |  | - |  |  |  | 235 |
Provision for (recovery of) loan losses |  |  | 61 |  |  |  | 57 |  |  |  | (295 | ) |  |  | (385 | ) |  |  | 164 |  |  |  | 426 |  |  |  | (109 | ) |  |  | (81 | )
Balance, December 31, 2018 |  | $ | 398 |  |  | $ | 2,049 |  |  | $ | 2,798 |  |  | $ | 602 |  |  | $ | 583 |  |  | $ | 750 |  |  | $ | 210 |  |  | $ | 7,390 |
|  | Allowance for Loan Losses by Segment and Evaluation Method as of |
|  | December 31, 2020 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non-Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non-Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | - |  |  | $ | 2 |  |  | $ | - |  |  | $ | 73 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 75 |
Collectively evaluated loans |  |  | 503 |  |  |  | 2,163 |  |  |  | 3,853 |  |  |  | 597 |  |  |  | 339 |  |  |  | 555 |  |  |  | 396 |  |  |  | 8,406 |
Total |  | $ | 503 |  |  | $ | 2,165 |  |  | $ | 3,853 |  |  | $ | 670 |  |  | $ | 339 |  |  | $ | 555 |  |  | $ | 396 |  |  | $ | 8,481 |
|  | Loans by Segment and Evaluation Method as of |
|  | December 31, 2020 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non-Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non-Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | - |  |  | $ | 194 |  |  | $ | 3,856 |  |  | $ | 851 |  |  | $ | - |  |  | $ | 2 |  |  | $ | - |  |  | $ | 4,903 |
Collectively evaluated loans |  |  | 42,266 |  |  |  | 181,588 |  |  |  | 389,259 |  |  |  | 77,920 |  |  |  | 40,983 |  |  |  | 33,108 |  |  |  | - |  |  |  | 765,124 |
Total |  | $ | 42,266 |  |  | $ | 181,782 |  |  | $ | 393,115 |  |  | $ | 78,771 |  |  | $ | 40,983 |  |  | $ | 33,110 |  |  | $ | - |  |  | $ | 770,027 |
|  | Allowance for Loan Losses by Segment and Evaluation Method as of |
|  | December 31, 201 9 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non-Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non-Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | - |  |  | $ | 2 |  |  | $ | - |  |  | $ | 108 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 110 |
Collectively evaluated loans |  |  | 400 |  |  |  | 1,893 |  |  |  | 2,559 |  |  |  | 447 |  |  |  | 478 |  |  |  | 650 |  |  |  | 326 |  |  |  | 6,753 |
Total |  | $ | 400 |  |  | $ | 1,895 |  |  | $ | 2,559 |  |  | $ | 555 |  |  | $ | 478 |  |  | $ | 650 |  |  | $ | 326 |  |  | $ | 6,863 |
|  | Loans by Segment and Evaluation Method as of |
|  | December 31, 201 9 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non-Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non-Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | - |  |  | $ | 759 |  |  | $ | 3,608 |  |  | $ | 918 |  |  | $ | - |  |  | $ | 4 |  |  | $ | - |  |  | $ | 5,289 |
Collectively evaluated loans |  |  | 42,303 |  |  |  | 180,713 |  |  |  | 361,765 |  |  |  | 45,658 |  |  |  | 63,764 |  |  |  | 34,535 |  |  |  | - |  |  |  | 728,738 |
Total |  | $ | 42,303 |  |  | $ | 181,472 |  |  | $ | 365,373 |  |  | $ | 46,576 |  |  | $ | 63,764 |  |  | $ | 34,539 |  |  | $ | - |  |  | $ | 734,027 |
A summary of ratios for the allowance for loan losses follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees and costs(1) |  |  | 1.10 | % |  |  | 0.94 | %
Ratio of net charge-offs to average loans, net of unearned income and deferred fees and costs |  |  | 0.05 | % |  |  | 0.09 | %
(1) The ratio of the allowance for loan losses to the end of period loans, net of unearned income and deferred fees and costs at December 31, 2020 includes government-guaranteed SBA PPP loans, which do not require an allowance for loan losses. Excluding the PPP loans, the ratio would be 1.16%. The Company currently has $110 in residential real estate OREO. As of December 31, 2020, $261 in loans secured by residential real estate are in process of foreclosure. A summary of nonperforming assets, as of the dates indicated, follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Nonperforming assets: |  |  |  |  |  |  |  |
Nonaccrual loans |  | $ | 846 |  |  | $ | 164 |
Restructured loans in nonaccrual |  |  | 2,839 |  |  |  | 3,211 |
Total nonperforming loans |  |  | 3,685 |  |  |  | 3,375 |
Other real estate owned, net |  |  | 1,553 |  |  |  | 1,612 |
Total nonperforming assets |  | $ | 5,238 |  |  | $ | 4,987 |
Ratio of nonperforming assets to loans, net of unearned income and deferred fees and costs, plus other real estate owned |  |  | 0.68 | % |  |  | 0.68 | %
Ratio of allowance for loan losses to nonperforming loans(1) |  |  | 230.15 | % |  |  | 203.35 | %
| (1) | The Company defines nonperforming loans as total nonaccrual and restructured loans that are nonaccrual. Loans 90 days past due and still accruing and accruing restructured loans are excluded.
A summary of loans past due 90 days or more and impaired loans, as of the dates indicated, follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Loans past due 90 days or more and still accruing |  | $ | 17 |  |  | $ | 231 |
Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees and costs |  |  | 0.00 | % |  |  | 0.03 | %
Accruing restructured loans |  | $ | 1,410 |  |  | $ | 1,729 |
Impaired loans: |  |  |  |  |  |  |  |
Impaired loans with no valuation allowance |  | $ | 3,858 |  |  | $ | 4,174 |
Impaired loans with a valuation allowance |  |  | 1,045 |  |  |  | 1,115 |
Total impaired loans |  | $ | 4,903 |  |  | $ | 5,289 |
Valuation allowance |  | $ | (75 | ) |  | $ | (110 | )
Impaired loans, net of allowance |  | $ | 4,828 |  |  | $ | 5,179 |
Average recorded investment in impaired loans(1) |  | $ | 5,093 |  |  | $ | 5,359 |
Income recognized on impaired loans, after designation as impaired |  | $ | 54 |  |  | $ | 171 |
Amount of income recognized on a cash basis |  | $ | - |  |  | $ | - |
| (1) | Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.
No interest income was recognized on nonaccrual loans for the years ended December 31, 2020, 2019 or 2018. Nonaccrual loans that meet the Company’s balance thresholds are designated as impaired. A detailed analysis of investment in impaired loans, associated reserves and interest income recognized, by loan class follows:
|  | Impaired Loans as of December 31, 2020 |
|  | Principal Balance |  |  | (A) Total Recorded Investment(1) |  |  | Recorded Investment(1) in (A) for Which There is No Related Allowance |  |  | Recorded Investment(1) in (A) for Which There is a Related Allowance |  |  | Related Allowance |
Consumer Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor-owned residential real estate |  | $ | 194 |  |  | $ | 194 |  |  | $ | - |  |  | $ | 194 |  |  | $ | 2 |
Commercial Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate, owner occupied |  |  | 3,752 |  |  |  | 3,202 |  |  |  | 3,202 |  |  |  | - |  |  |  | - |
Commercial real estate, other |  |  | 654 |  |  |  | 654 |  |  |  | 654 |  |  |  | - |  |  |  | - |
Commercial Non-Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 851 |  |  |  | 851 |  |  |  | - |  |  |  | 851 |  |  |  | 73 |
Consumer Non-Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Automobile |  |  | 2 |  |  |  | 2 |  |  |  | 2 |  |  |  | - |  |  |  | - |
Total |  | $ | 5,453 |  |  | $ | 4,903 |  |  | $ | 3,858 |  |  | $ | 1,045 |  |  | $ | 75 |
| (1) | Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.
| (2) | Only classes with impaired loans are shown.
|  | Impaired Loans as of December 31, 2019 |
|  | Principal Balance |  |  | (A) Total Recorded Investment(1) |  |  | Recorded Investment(1) in (A) for Which There is No Related Allowance |  |  | Recorded Investment(1) in (A) for Which There is a Related Allowance |  |  | Related Allowance |
Consumer Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential equity lines |  | $ | 100 |  |  | $ | 100 |  |  | $ | 100 |  |  | $ | - |  |  | $ | - |
Residential closed-end first liens |  |  | 221 |  |  |  | 221 |  |  |  | 221 |  |  |  | - |  |  |  | - |
Investor-owned residential real estate |  |  | 441 |  |  |  | 438 |  |  |  | 241 |  |  |  | 197 |  |  |  | 2 |
Commercial Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 278 |  |  |  | 278 |  |  |  | 278 |  |  |  | - |  |  |  | - |
Commercial real estate, owner occupied |  |  | 929 |  |  |  | 895 |  |  |  | 895 |  |  |  | - |  |  |  | - |
Commercial real estate, other |  |  | 2,867 |  |  |  | 2,435 |  |  |  | 2,435 |  |  |  | - |  |  |  | - |
Commercial Non-Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 917 |  |  |  | 918 |  |  |  | - |  |  |  | 918 |  |  |  | 108 |
Consumer Non-Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Automobile |  |  | 4 |  |  |  | 4 |  |  |  | 4 |  |  |  | - |  |  |  | - |
Total |  | $ | 5,757 |  |  | $ | 5,289 |  |  | $ | 4,174 |  |  | $ | 1,115 |  |  | $ | 110 |
| (1) | Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.
| (2) | Only classes with impaired loans are shown.
|  | Average Investment and Interest Income for Impaired Loans For the Year Ended December 31, 2020 |
|  | Average Recorded Investment(1) |  |  | Interest Income Recognized |
Consumer Real Estate(2) |  |  |  |  |  |  |  |
Investor-owned residential real estate |  | $ | 196 |  |  | $ | 13 |
Commercial Real Estate(2) |  |  |  |  |  |  |  |
Commercial real estate, owner occupied |  |  | 3,217 |  |  |  | 19 |
Commercial real estate, other |  |  | 790 |  |  |  | - |
Commercial Non-Real Estate(2) |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 887 |  |  |  | 22 |
Consumer Non-Real Estate(2) |  |  |  |  |  |  |  |
Automobile |  |  | 3 |  |  |  | - |
Total |  | $ | 5,093 |  |  | $ | 54 |
| (1) | Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.
| (2) | Only classes with impaired loans are shown.
|  | Average Investment and Interest Income for Impaired Loans For the Year Ended December 31, 2019 |
|  | Average Recorded Investment(1) |  |  | Interest Income Recognized |
Consumer Real Estate(2) |  |  |  |  |  |  |  |
Residential equity lines |  | $ | 98 |  |  | $ | 6 |
Residential closed-end first liens |  |  | 225 |  |  |  | 11 |
Investor-owned residential real estate |  |  | 439 |  |  |  | 17 |
Commercial Real Estate(2) |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 284 |  |  |  | 12 |
Commercial real estate, owner occupied |  |  | 913 |  |  |  | 41 |
Commercial real estate, other |  |  | 2,435 |  |  |  | 59 |
Commercial Non-Real Estate(2) |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 962 |  |  |  | 25 |
Consumer Non-Real Estate(2) |  |  |  |  |  |  |  |
Automobile |  |  | 3 |  |  |  | - |
Total |  | $ | 5,359 |  |  | $ | 171 |
| (1) | Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.
| (2) | Only classes with impaired loans are shown.
|  | Average Investment and Interest Income for Impaired Loans For the Year Ended December 31, 2018 |
|  | Average Recorded Investment(1) |  |  | Interest Income Recognized |
Consumer Real Estate(2) |  |  |  |  |  |  |  |
Residential closed-end first liens |  | $ | 1,202 |  |  | $ | 41 |
Residential closed-end junior liens |  |  | 159 |  |  |  | 9 |
Investor-owned residential real estate |  |  | 808 |  |  |  | 23 |
Commercial Real Estate(2) |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 491 |  |  |  | 20 |
Commercial real estate, owner occupied |  |  | 3,038 |  |  |  | 75 |
Commercial real estate, other |  |  | 2,744 |  |  |  | 54 |
Commercial Non-Real Estate(2) |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 1,326 |  |  |  | 27 |
Consumer Non-Real Estate(2) |  |  |  |  |  |  |  |
Automobile |  |  | 20 |  |  |  | 1 |
Total |  | $ | 9,788 |  |  | $ | 250 |
| (1) | Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.
| (2) | Only classes with impaired loans are shown.
An analysis of past due and nonaccrual loans, as of the dates indicated, follows:
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 30 – 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | 90 or More Days Past Due and Still Accruing |  |  | Nonaccruals (Including Impaired Nonaccruals) |
Consumer Real Estate(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential closed-end first liens |  | $ | 365 |  |  | $ | 62 |  |  | $ | - |  |  | $ | 62 |
Investor-owned residential real estate |  |  | 106 |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial Real Estate(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate, owner occupied |  |  | 15 |  |  |  | 571 |  |  |  | - |  |  |  | 2,941 |
Commercial real estate, other |  |  | - |  |  |  | 654 |  |  |  | - |  |  |  | 654 |
Commercial Non-Real Estate(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 730 |  |  |  | 27 |  |  |  | - |  |  |  | 28 |
Consumer Non-Real Estate (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 7 |  |  |  | 3 |  |  |  | 3 |  |  |  | - |
Automobile |  |  | 144 |  |  |  | 1 |  |  |  | 1 |  |  |  | - |
Other consumer loans |  |  | 130 |  |  |  | 13 |  |  |  | 13 |  |  |  | - |
Total |  | $ | 1,497 |  |  | $ | 1,331 |  |  | $ | 17 |  |  | $ | 3,685 |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 30 – 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | 90 or More Days Past Due and Still Accruing |  |  | Nonaccruals (Including Impaired Nonaccruals) |
Real Estate Construction(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, other |  | $ | 19 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Consumer Real Estate(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential closed-end first liens |  |  | 499 |  |  |  | 210 |  |  |  | 188 |  |  |  | 22 |
Residential closed-end junior liens |  |  | 83 |  |  |  | - |  |  |  | - |  |  |  | - |
Investor-owned residential real estate |  |  | - |  |  |  | 264 |  |  |  | - |  |  |  | 264 |
Commercial Real Estate(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 94 |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate, owner occupied |  |  | - |  |  |  | 287 |  |  |  | - |  |  |  | 514 |
Commercial real estate, other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,435 |
Commercial Non-Real Estate(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 45 |  |  |  | 153 |  |  |  | 17 |  |  |  | 136 |
Consumer Non-Real Estate (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 4 |  |  |  | - |  |  |  | - |  |  |  | - |
Automobile |  |  | 256 |  |  |  | 14 |  |  |  | 14 |  |  |  | 4 |
Other consumer loans |  |  | 70 |  |  |  | 12 |  |  |  | 12 |  |  |  | - |
Total |  | $ | 1,070 |  |  | $ | 940 |  |  | $ | 231 |  |  | $ | 3,375 |
| (1) | Only classes with past due or nonaccrual loans are presented
The estimate of credit risk for non-impaired loans is obtained by applying allocations for internal and external factors. The allocations are increased for loans that exhibit greater credit quality risk. Credit quality indicators, which the Company terms risk grades, are assigned through the Company’s credit review function for larger loans and selective review of loans that fall below credit review thresholds. Loans that do not indicate heightened risk are graded as “pass.” Loans that appear to have elevated credit risk because of frequent or persistent past due status, which is less than 75 days, or that show weakness in the borrower’s financial condition are risk graded “special mention.” During the third quarter of 2019, the Bank slightly revised the loan risk rating system to align with regulatory guidance. After the revision, the “special mention” rating is no longer applied to consumer loans. Loans with frequent or persistent delinquency exceeding 75 days or that have a higher level of weakness in the borrower’s financial condition are graded “classified.” Classified loans have regulatory risk ratings of “substandard” and “doubtful.” Allocations are increased by 50% and by 100% for loans with grades of “special mention” and “classified,” respectively. Determination of risk grades was completed for the portfolio as of December 31, 2020 and 2019. The following displays non-impaired gross loans by credit quality indicator as of the dates indicated:
December 31, 2020 |  |  |  |  |  |  |  |  |
|  | Pass |  |  | Special Mention (Excluding Impaired) |  |  | Classified (Excluding Impaired) |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |
Construction, 1-4 family residential |  | $ | 8,195 |  |  | $ | - |  |  | $ | - |
Construction, other |  |  | 34,071 |  |  |  | - |  |  |  | - |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 13,903 |  |  |  | - |  |  |  | - |
Closed-end first liens |  |  | 92,241 |  |  |  | 66 |  |  |  | 284 |
Closed-end junior liens |  |  | 3,003 |  |  |  | - |  |  |  | - |
Investor-owned residential real estate |  |  | 71,450 |  |  |  | 641 |  |  |  | - |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Multifamily residential real estate |  |  | 87,455 |  |  |  | 265 |  |  |  | - |
Commercial real estate owner-occupied |  |  | 146,900 |  |  |  | 543 |  |  |  | 140 |
Commercial real estate, other |  |  | 147,436 |  |  |  | 6,520 |  |  |  | - |
Commercial Non-Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 77,892 |  |  |  | - |  |  |  | 28 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  |  | 40,983 |  |  |  | - |  |  |  | - |
Consumer Non-Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 4,665 |  |  |  | - |  |  |  | - |
Automobile |  |  | 12,024 |  |  |  | - |  |  |  | 6 |
Other consumer |  |  | 16,398 |  |  |  | - |  |  |  | 15 |
Total |  | $ | 756,616 |  |  | $ | 8,035 |  |  | $ | 473 |
December 31, 201 9 |  |  |  |  |  |  |  |  |  |  |  |
|  | Pass |  |  | Special Mention (Excluding Impaired) |  |  | Classified (Excluding Impaired) |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |
Construction, 1-4 family residential |  | $ | 7,590 |  |  | $ | - |  |  | $ | - |
Construction, other |  |  | 34,713 |  |  |  | - |  |  |  | - |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 16,435 |  |  |  | - |  |  |  | - |
Closed-end first liens |  |  | 94,814 |  |  |  | - |  |  |  | 517 |
Closed-end junior liens |  |  | 3,861 |  |  |  | - |  |  |  | - |
Investor-owned residential real estate |  |  | 65,063 |  |  |  | - |  |  |  | 23 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Multifamily residential real estate |  |  | 87,934 |  |  |  | - |  |  |  | 94 |
Commercial real estate owner-occupied |  |  | 127,937 |  |  |  | - |  |  |  | 164 |
Commercial real estate, other |  |  | 145,636 |  |  |  | - |  |  |  | - |
Commercial Non-Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 45,387 |  |  |  | 135 |  |  |  | 136 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  |  | 63,764 |  |  |  | - |  |  |  | - |
Consumer Non-Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 5,703 |  |  |  | - |  |  |  | - |
Automobile |  |  | 14,810 |  |  |  | - |  |  |  | 19 |
Other consumer |  |  | 13,995 |  |  |  | - |  |  |  | 8 |
Total |  | $ | 727,642 |  |  | $ | 135 |  |  | $ | 961 |
Sales, Purchases and Reclassification of Loans The Company finances mortgages under “best efforts” contracts with mortgage purchasers. The mortgages are designated as held for sale upon initiation. There have been no major reclassifications from portfolio loans to held for sale. Occasionally, the Company purchases or sells participations in loans. All participation loans purchased met the Company’s normal underwriting standards at the time the participation was entered. Participation loans are included in the appropriate portfolio balances to which the allowance methodology is applied. Troubled Debt Restructurings From time to time the Company modifies loans in TDRs. There were no new restructurings designated in 2020. The following tables present restructurings by class that occurred during the years ended December 31, 2019 and 2018. Note: Only classes with restructured loans are presented.
|  | Restructurings that occurred during the year ended December 31, 201 9 |
|  | Number of Contracts |  |  | Pre- Modification Outstanding Recorded Investment |  |  | Post- Modification Outstanding Recorded Investment(1) |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 1 |  |  | $ | 100 |  |  | $ | 100 |
Total |  |  | 1 |  |  | $ | 100 |  |  | $ | 100 |
| (1) | Post-modification outstanding recorded investment considers amounts immediately following the modification. Amounts do not reflect balances at the end of the period.
The Company restructured one loan during the 12 month period ended December 31, 2019 to provide relief to the borrower without forgiving principal or interest. The loan covenants require that the balance be paid in full for a period of 30 days each year. The Company allowed the borrower to maintain full funding for more than a year, and extended the maturity date. The impairment analysis was based upon the fair value of collateral and did not result in a specific allocation.
|  | Restructurings that occurred during the year ended December 31, 2018 |
|  | Number of Contracts |  |  | Pre- Modification Outstanding Recorded Investment |  |  | Post- Modification Outstanding Recorded Investment(1) |
Construction Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Construction, other |  |  | 2 |  |  | $ | 2,882 |  |  | $ | 2,882 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate, owner occupied |  |  | 2 |  |  |  | 715 |  |  |  | 715 |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Closed-end first liens |  |  | 1 |  |  |  | 22 |  |  |  | 22 |
Investor-owned residential real estate |  |  | 8 |  |  |  | 594 |  |  |  | 594 |
Total |  |  | 13 |  |  | $ | 4,213 |  |  | $ | 4,213 |
| (1) | Post-modification outstanding recorded investment considers amounts immediately following the modification. Amounts do not reflect balances at the end of the period.
The Company restructured 13 loans during the year ended December 31, 2018. Each of the construction loans were restructured to extend the maturity and interest only period for each loan. As of December 31, 2018, the loans were converted to permanent financing at market terms and were no longer considered TDR or individually evaluated for impairment. Two commercial real estate loans were restructured to provide a 12 month interest-only period without reducing the interest rate. The impairment measurements were based upon the present value of cash flows and did not result in a specific allocation for either loan. The investor owned residential real estate loans were restructured to provide payment relief. Seven loans were restructured from amortizing to interest-only for a period of 12 months. The impairment measurements were based on the fair value of collateral and did not result in specific allocations. The other investor owned residential real estate restructure consolidated debt at a longer term, provided a rate reduction and capitalized interest. The impairment measurement was based upon the present value of cash flows and did not result in a specific allocation. The loan’s nonaccrual status requires that all payments made during the nonaccrual period are credited fully to principal, reducing the book balance below the present value of cash flows. One residential closed-end first lien loan was restructured to provide payment relief by restructuring from amortizing to interest-only for a period of 12 months. The impairment measurement was based on the fair value of collateral and did not result in a specific allocation. None of the restructures completed during the 12 months ended December 31, 2018 forgave principal or interest. Defaulted TDRs Of the Company’s TDRs at December 31, 2020, none defaulted during 2020 within 12 months of modification. Of the Company's TDRs at December 31, 2019, seven consumer real estate loans totaling $263, all part of one relationship, defaulted during 2019 within 12 months of modification. The impairment measurement was based upon the fair value of collateral, less estimated cost to sell, and resulted in no allocation. All of the defaulted loans were in nonaccrual status at December 31, 2019 while the Company works with the borrowers to recover its investment. Of the Company’s TDR’s that defaulted during 2018, none were modified within 12 months prior to default. The company defines default as one or more payments that occur more than 90 days past the due date, charge-off or foreclosure. COVID-19 Related Modifications In accordance with regulatory guidance and provisions in the CARES Act to provide relief during the COVID-19 pandemic, the Company has provided short-term concessions to borrowers who request assistance. Through December 31, 2020, the Company provided principal and/or interest extensions, interest only periods or rate reductions on 388 loans with balances totaling $182,829 for COVID-19 related hardship. Loans that qualified for COVID-19 related modifications were not more than 30 days past due as of December 31, 2019. As such, they were not considered TDRs based on the relief provisions of the CARES Act and recent interagency regulatory guidance. The Company is monitoring loans with COVID-19 related modifications. As of December 31, 2020, 75 loans totaling $43,576 received a COVID-19 related modification and also received a subsequent COVID-19 related modification. Of these, 17 loans totaling $39,402 were commercial loans and resulted in additional allocation to the allowance for loan loss, with 15 loans totaling $38,935 remaining within their modification period at December 31, 2020. When loans require subsequent modifications, the Company will consider the borrower’s financial status at the time of the request and the effect of all modifications, past and requested. If the borrower is deemed to be in financial difficulty that is not short-term and the impact of all modifications is considered to amount to a concession under GAAP and the modification does not qualify under the CARES Act or meet interagency thresholds to be excluded from TDR designation, the loan will be designated TDR. The Company is also monitoring the population to determine whether other credit-related action should be taken, possibly including downgrading credit risk ratings, designating as nonaccrual or charge-off. Downgraded credit risk ratings, nonaccrual status and charge-offs result in increasing the requirement for the allowance for loan losses.

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