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Loans and Allowance for Loan Losses | 12 Months Ended
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Dec. 31, 2021
Receivables [Abstract] |
Loans and Allowance for Loan Losses | (4) Loans and Allowance for Loan Losses Major classifications of loans, by collateral code, at December 31, 2021 and 2020 are summarized as follows: (in thousands)
|  | December 31, 2021 |  |  | December 31, 2020 |
Commercial (secured by real estate) |  | $ | 262,704 |  |  |  | 178,571 |
Commercial and industrial |  |  | 152,835 |  |  |  | 155,554 |
Paycheck Protection Program loans |  |  | 17,883 |  |  |  | 101,749 |
Construction, land and acquisition & development |  |  | 16,317 |  |  |  | 23,571 |
Residential mortgage 1-4 family |  |  | 63,065 |  |  |  | 91,777 |
Consumer installment |  |  | 71,580 |  |  |  | 47,393 |
|  |  | 584,384 |  |  |  | 598,615 |
Less allowance for loan losses |  |  | (8,559 | ) |  |  | (6,361 | )
|  | $ | 575,825 |  |  | $ | 592,254 |
The Bank grants loans and extensions of credit to individuals and a variety of firms and corporations located primarily in the Atlanta, Georgia MSA. A substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market. The Bank has a specialized expertise in lending to dentists and dental practices, with dental practice loans totaling $179.8 million, or 30.6%, and $170.8 million, or 29.2% of our loan portfolio, as of December 31, 2021 and 2020, respectively. With the acquisition of Affinity Bank, the Bank is a premier lender within professional markets, with a primary focus on the dental industry in Georgia and adjoining states. The majority of these loans are commercial and industrial credits for practice acquisitions and equipment financing with the remainder being owner-occupied real estate. The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is an economic stimulus bill signed into law on March 27, 2020, in response to the economic fallout of the COVID-19 pandemic in the United States. The creation of the Paycheck Protection Program (PPP) enacted under the CARES Act provides forgivable loans to small businesses for payroll obligations, emergency grants to cover immediate operating costs, and a mechanism for loan forgiveness by the Small Business Administration should all criteria be met. The Bank received SBA authorization for 1,901 PPP loans totaling $196.4 million during 2021 and 2020. These loans are fully guaranteed by the Small Business Administration. Qualifying loans in the amount of approximately $343.6 million and $309.9 million were pledged to secure the line of credit from the FHLB at December 31, 2021 and 2020, respectively. The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2021 and 2020: (in thousands)
December 31, 2021 |  | Commercial (Secured by Real Estate) |  |  | Commercial and Industrial |  |  | Paycheck Protection Program (1) |  |  | Construction, Land and Acquisition & Development |  |  | Residential Mortgage |  |  | Consumer Installment |  |  | Unallocated |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 3,084 |  |  |  | 1,320 |  |  |  | — |  |  |  | 224 |  |  |  | 970 |  |  |  | 719 |  |  |  | 44 |  |  |  | 6,361 |
Provision |  |  | 290 |  |  |  | 1,119 |  |  |  | — |  |  |  | (62 | ) |  |  | (541 | ) |  |  | 310 |  |  |  | (41 | ) |  |  | 1,075 |
Charge-offs |  |  | — |  |  |  | (234 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (76 | ) |  |  | — |  |  |  | (310 | )
Recoveries |  |  | 1,307 |  |  |  | 37 |  |  |  | — |  |  |  | — |  |  |  | 73 |  |  |  | 16 |  |  |  | — |  |  |  | 1,433 |
Ending balance |  | $ | 4,681 |  |  |  | 2,242 |  |  |  | — |  |  |  | 162 |  |  |  | 502 |  |  |  | 969 |  |  |  | 3 |  |  |  | 8,559 |
Ending allowance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | 7 |
Collectively evaluated for impairment |  |  | 4,680 |  |  |  | 2,241 |  |  |  | — |  |  |  | 162 |  |  |  | 497 |  |  |  | 969 |  |  |  | 3 |  |  |  | 8,552 |
Total ending allowance |  | $ | 4,681 |  |  | $ | 2,242 |  |  | $ | — |  |  | $ | 162 |  |  | $ | 502 |  |  | $ | 969 |  |  | $ | 3 |  |  | $ | 8,559 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3,482 |  |  |  | 753 |  |  |  | — |  |  |  | — |  |  |  | 2,992 |  |  |  | 1 |  |  |  | — |  |  |  | 7,228 |
Collectively evaluated for impairment |  |  | 259,222 |  |  |  | 152,082 |  |  |  | 17,883 |  |  |  | 16,317 |  |  |  | 60,073 |  |  |  | 71,579 |  |  |  | — |  |  |  | 577,156 |
Total loans |  | $ | 262,704 |  |  |  | 152,835 |  |  |  | 17,883 |  |  |  | 16,317 |  |  |  | 63,065 |  |  |  | 71,580 |  |  |  | — |  |  |  | 584,384 |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 1,661 |  |  |  | 1,478 |  |  |  | — |  |  |  | 153 |  |  |  | 369 |  |  |  | 466 |  |  |  | 7 |  |  |  | 4,134 |
Provision |  |  | 1,207 |  |  |  | (194 | ) |  |  | — |  |  |  | 71 |  |  |  | 627 |  |  |  | 252 |  |  |  | 37 |  |  |  | 2,000 |
Charge-offs |  |  | (30 | ) |  |  | - |  |  |  | — |  |  |  | — |  |  |  | (126 | ) |  |  | (29 | ) |  |  | — |  |  |  | (185 | )
Recoveries |  |  | 246 |  |  |  | 36 |  |  |  | — |  |  |  | — |  |  |  | 100 |  |  |  | 30 |  |  |  | — |  |  |  | 412 |
Ending balance |  | $ | 3,084 |  |  |  | 1,320 |  |  |  | — |  |  |  | 224 |  |  |  | 970 |  |  |  | 719 |  |  |  | 44 |  |  |  | 6,361 |
Ending allowance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 2 |  |  |  | 35 |  |  |  | — |  |  |  | — |  |  |  | 14 |  |  |  | — |  |  |  | — |  |  |  | 51 |
Collectively evaluated for impairment |  |  | 3,082 |  |  |  | 1,285 |  |  |  | — |  |  |  | 224 |  |  |  | 956 |  |  |  | 719 |  |  |  | 44 |  |  |  | 6,310 |
Total ending allowance |  | $ | 3,084 |  |  | $ | 1,320 |  |  | $ | — |  |  | $ | 224 |  |  | $ | 970 |  |  | $ | 719 |  |  | $ | 44 |  |  | $ | 6,361 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 2,584 |  |  |  | 1,085 |  |  |  | — |  |  |  | — |  |  |  | 3,597 |  |  |  | 8 |  |  |  | — |  |  |  | 7,274 |
Collectively evaluated for impairment |  |  | 175,987 |  |  |  | 154,469 |  |  |  | 101,749 |  |  |  | 23,571 |  |  |  | 88,180 |  |  |  | 47,385 |  |  |  | — |  |  |  | 591,341 |
Total loans |  | $ | 178,571 |  |  |  | 155,554 |  |  |  | 101,749 |  |  |  | 23,571 |  |  |  | 91,777 |  |  |  | 47,393 |  |  |  | — |  |  |  | 598,615 |
(1) Consists of loans that are fully guaranteed by the SBA; thus, no allowance for loan losses has been allocated to these loans. The Bank individually evaluates all loans for impairment that are on nonaccrual status or are rated substandard (as described below). Additionally, all troubled debt restructurings are evaluated for impairment. A loan is considered impaired when, based on current events and circumstances, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Interest payments received on impaired loans are applied as a reduction of the outstanding principal balance. Impaired loans At December 31, 2021 and 2020 were as follows: (in thousands)
December 31, 2021 |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Allocated Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial (secured by real estate) |  | $ | 3,294 |  |  |  | 3,294 |  |  |  | — |  |  |  | 3,277 |  |  |  | 51 |
Commercial and industrial |  |  | 388 |  |  |  | 421 |  |  |  | — |  |  |  | 458 |  |  |  | — |
Construction, land and acquisition & development |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential mortgage |  |  | 2,052 |  |  |  | 2,052 |  |  |  | — |  |  |  | 2,110 |  |  |  | 31 |
Consumer installment |  |  | 1 |  |  |  | 1 |  |  |  | — |  |  |  | 3 |  |  |  | — |
|  |  | 5,735 |  |  |  | 5,768 |  |  |  | — |  |  |  | 5,848 |  |  |  | 82 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial (secured by real estate) |  |  | 188 |  |  |  | 189 |  |  |  | 1 |  |  |  | 192 |  |  |  | 12 |
Commercial and industrial |  |  | 365 |  |  |  | 365 |  |  |  | 1 |  |  |  | 379 |  |  |  | — |
Construction, land and acquisition & development |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential mortgage |  |  | 940 |  |  |  | 941 |  |  |  | 5 |  |  |  | 960 |  |  |  | 60 |
Consumer installment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 1,493 |  |  |  | 1,495 |  |  |  | 7 |  |  |  | 1,531 |  |  |  | 72 |
Total impaired loans |  | $ | 7,228 |  |  |  | 7,263 |  |  |  | 7 |  |  |  | 7,379 |  |  |  | 154 |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial (secured by real estate) |  | $ | 1,136 |  |  |  | 2,232 |  |  |  | — |  |  |  | 1,138 |  |  |  | 42 |
Commercial and industrial |  |  | 395 |  |  |  | 395 |  |  |  | — |  |  |  | 395 |  |  |  | — |
Construction, land and acquisition & development |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential mortgage |  |  | 1,986 |  |  |  | 1,987 |  |  |  | — |  |  |  | 2,041 |  |  |  | 9 |
Consumer installment |  |  | 8 |  |  |  | 8 |  |  |  | — |  |  |  | 9 |  |  |  | 1 |
|  |  | 3,525 |  |  |  | 4,622 |  |  |  | — |  |  |  | 3,583 |  |  |  | 52 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial (secured by real estate) |  |  | 1,448 |  |  |  | 1,449 |  |  |  | 2 |  |  |  | — |  |  |  | 91 |
Commercial and industrial |  |  | 690 |  |  |  | 690 |  |  |  | 35 |  |  |  | 1,481 |  |  |  | 6 |
Construction, land and acquisition & development |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 727 |  |  |  | — |
Residential mortgage |  |  | 1,611 |  |  |  | 1,613 |  |  |  | 14 |  |  |  | — |  |  |  | 73 |
Consumer installment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,634 |  |  |  | — |
|  |  | 3,749 |  |  |  | 3,752 |  |  |  | 51 |  |  |  | 3,842 |  |  |  | 170 |
Total impaired loans |  | $ | 7,274 |  |  |  | 8,374 |  |  |  | 51 |  |  |  | 7,425 |  |  |  | 222 |
The following table presents the aging of the recorded investment in past due loans, as well as the recorded investment in nonaccrual loans, as of December 31, 2021 and 2020 by class of loans: (in thousands)
December 31, 2021 |  | 30 -59 Days Past Due |  |  | 60- 89 Days Past Due |  |  | 90 Days or Greater Past Due |  |  | Total Past Due |  |  | Current |  |  | Total |  |  | Nonaccrual |
Commercial (secured by real estate) |  | $ | — |  |  |  | — |  |  |  | 3,200 |  |  |  | 3,200 |  |  |  | 259,504 |  |  |  | 262,704 |  |  |  | 3,200 |
Commercial and industrial |  |  | 338 |  |  |  | — |  |  |  | 813 |  |  |  | 1,151 |  |  |  | 151,684 |  |  |  | 152,835 |  |  |  | 813 |
Paycheck Protection Program |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17,883 |  |  |  | 17,883 |  |  |  | — |
Construction, land and acquisition & development |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16,317 |  |  |  | 16,317 |  |  |  | — |
Residential mortgage |  |  | 4,094 |  |  |  | 1,711 |  |  |  | 321 |  |  |  | 6,126 |  |  |  | 56,939 |  |  |  | 63,065 |  |  |  | 2,873 |
Consumer installment |  |  | 289 |  |  |  | 45 |  |  |  | — |  |  |  | 334 |  |  |  | 71,246 |  |  |  | 71,580 |  |  |  | 125 |
Total |  | $ | 4,721 |  |  |  | 1,756 |  |  |  | 4,334 |  |  |  | 10,811 |  |  |  | 573,573 |  |  |  | 584,384 |  |  |  | 7,011 |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial (secured by real estate) |  | $ | 3,386 |  |  |  | — |  |  |  | 1,136 |  |  |  | 4,522 |  |  |  | 174,049 |  |  |  | 178,571 |  |  |  | 1,157 |
Commercial and industrial |  |  | 29 |  |  |  | — |  |  |  | 1,085 |  |  |  | 1,114 |  |  |  | 154,440 |  |  |  | 155,554 |  |  |  | 1,085 |
Paycheck Protection Program |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 101,749 |  |  |  | 101,749 |  |  |  | — |
Construction, land and acquisition & development |  |  | 1,392 |  |  |  | — |  |  |  | — |  |  |  | 1,392 |  |  |  | 22,179 |  |  |  | 23,571 |  |  |  | — |
Residential mortgage |  |  | 4,308 |  |  |  | 1,094 |  |  |  | 1,444 |  |  |  | 6,846 |  |  |  | 84,931 |  |  |  | 91,777 |  |  |  | 2,587 |
Consumer installment |  |  | 78 |  |  |  | — |  |  |  | 73 |  |  |  | 151 |  |  |  | 47,242 |  |  |  | 47,393 |  |  |  | 73 |
Total |  | $ | 9,193 |  |  |  | 1,094 |  |  |  | 3,738 |  |  |  | 14,025 |  |  |  | 584,590 |  |  |  | 598,615 |  |  |  | 4,902 |
There were no loans past due over 90 days and still accruing interest as of December 31, 2021 and 2020. The table below presents information on troubled debt restructurings including the number of loan contracts restructured and the pre- and post-modification recorded investment that have occurred during the years ended December 31, 2021 and 2020. Also included in the table are the number of contracts and the recorded investment for those trouble debt restructurings that have subsequently defaulted during the years ended December 31, 2021 and 2020: (in thousands)
|  |  |  |  | Pre- Modification Outstanding |  |  | Post- Modification Outstanding |  |  | Troubled Debt Restructurings that have Subsequently Defaulted |
December 31, 2021 |  | Number of Contracts |  |  | Recorded Investment |  |  | Recorded Investment |  |  | Number of Contracts |  |  | Recorded Investment |
Residential mortgage |  |  | 1 |  |  | $ | 71 |  |  |  | 71 |  |  |  | — |  |  |  | — |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential mortgage |  |  | 1 |  |  | $ | 31 |  |  |  | 31 |  |  |  | — |  |  |  | — |
The Bank has allocated an allowance for loan losses of approximately $6,000 and $17,000 to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2021 and 2020, respectively. The CARES Act provides temporary relief from accounting for certain pandemic-related loan modifications as a troubled debt restructuring. During the years ended December 31, 2020 and 2021 the Bank has granted short-term deferrals on 744 loans totaling $189.6 million that were otherwise performing. All of these loans but one has returned to normal performing status as of December 31, 2021. This loan is in nonaccrual status. There were no outstanding modifications that were excluded from TDR classification based on this law as of December 31, 2021. The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Bank uses the following definitions for its risk ratings: Special Mention. Loans have potential weaknesses that may, if not corrected, weaken or inadequately protect the Bank's credit position at some future date. Weaknesses are generally the result of deviation from prudent lending practices, such as over advances on collateral. Credits in this category should, within a 12 month period, move to Pass if improved or drop to Substandard if poor trends continue. Substandard. Inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans have a well-defined weakness or weaknesses such as primary source of repayment is gone or severely impaired or cash flow is insufficient to reduce debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Doubtful. Loans have weaknesses of those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable. The likelihood of a loss on an asset or portion of an asset classified Doubtful is high. Loss. Loans considered uncollectible and of such little value that the continuance as a Bank asset is not warranted. This does not mean that the loan has no recovery or salvage value, but rather the asset should be charged off even though partial recovery may be possible in the future. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans. As of December 31, 2021 and 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: (in thousands)
December 31, 2021 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful/ Loss |  |  | Total |
Commercial (secured by real estate) |  | $ | 256,541 |  |  |  | 2,742 |  |  |  | 3,421 |  |  |  | — |  |  |  | 262,704 |
Commercial and industrial |  |  | 151,983 |  |  |  | — |  |  |  | 852 |  |  |  | — |  |  |  | 152,835 |
Paycheck Protection Program |  |  | 17,883 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17,883 |
Construction, land and acquisition & development |  |  | 16,005 |  |  |  | 312 |  |  |  | — |  |  |  | — |  |  |  | 16,317 |
Residential mortgage |  |  | 59,080 |  |  |  | — |  |  |  | 3,985 |  |  |  | — |  |  |  | 63,065 |
Consumer installment |  |  | 71,440 |  |  |  | — |  |  |  | 140 |  |  |  | — |  |  |  | 71,580 |
Total |  | $ | 572,932 |  |  |  | 3,054 |  |  |  | 8,398 |  |  |  | — |  |  |  | 584,384 |
December 31, 2020 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful/ Loss |  |  | Total |
Commercial (secured by real estate) |  | $ | 176,629 |  |  |  | 785 |  |  |  | 1,157 |  |  |  | — |  |  |  | 178,571 |
Commercial and industrial |  |  | 154,469 |  |  |  | — |  |  |  | 1,085 |  |  |  | — |  |  |  | 155,554 |
Paycheck Protection Program |  |  | 101,749 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 101,749 |
Construction, land and acquisition & development |  |  | 23,571 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 23,571 |
Residential mortgage |  |  | 87,738 |  |  |  | 62 |  |  |  | 3,977 |  |  |  | — |  |  |  | 91,777 |
Consumer installment |  |  | 47,332 |  |  |  | — |  |  |  | 61 |  |  |  | — |  |  |  | 47,393 |
Total |  | $ | 591,488 |  |  |  | 847 |  |  |  | 6,280 |  |  |  | — |  |  |  | 598,615 |

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