Loan and Allowance for Credit Losses	3 Months Ended
Loan and Allowance for Credit Losses	Mar. 31, 2023
Loans And Leases Receivable Disclosure [Abstract]
Loans and leases receivable disclosure [Text Block]	NOTE 5: LOANS AND ALLOWANCE FOR CREDIT LOSSES March 31, December 31, (Dollars in thousands) 2023 2022 Commercial and industrial $ 59,602 $ 66,212 Construction and land development 66,500 66,479 Commercial real estate: Owner occupied 67,280 61,125 Hotel/motel 32,959 33,378 Multi-family 40,974 41,084 Other 126,749 128,986 Total commercial real estate 267,962 264,573 Residential real estate: Consumer mortgage 48,513 45,370 Investment property 53,462 52,278 Total residential real estate 101,975 97,648 Consumer installment 9,002 9,546 Total Loans $ 505,041 $ 504,458 Loans secured by real estate were approximately 86.4% of the Company’s total loan portfolio at March 31, 2023. At March 31, 2023, the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama, and surrounding areas. The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. As part of the Company’s quarterly assessment of the allowance, the loan portfolio included the following portfolio segments: commercial and industrial, construction and land development, commercial real estate, residential real estate, and consumer installment. Where appropriate, the Company’s loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute, risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk. The following describes the risk characteristics relevant to each of the portfolio segments and classes. Commercial and industrial (“C&I”) — includes loans to finance business operations, equipment purchases, or other needs for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural production. Generally, the primary source of repayment is the cash flow from business operations and activities of the borrower. Construction and land development (“C&D”) — includes both loans and credit lines for the purpose of purchasing, carrying, and developing land into commercial developments or residential subdivisions. Also included are loans and credit lines for construction of residential, multi-family, and commercial buildings. Generally, the primary source of repayment is dependent upon the sale or refinance of the real estate collateral. Commercial real estate (“CRE”) — includes loans in these classes: ● Owner occupied – includes loans secured by business facilities to finance business operations, equipment and owner-occupied facilities primarily for small and medium-sized commercial customers. Generally, the primary source of repayment is the cash flow from business operations and activities of the borrower, who owns the property. ● Hotel/motel – includes loans for hotels and motels. Generally, the primary source of repayment is dependent upon income generated from the hotel/motel securing the loan. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower. ● Multi-family – primarily includes loans to finance income-producing multi-family properties . These include loans for 5 or more unit residential properties and apartments leased to residents. Generally , the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the respective borrowers. ● Other – primarily includes loans to finance income-producing commercial properties other than hotels/motels and multi-family properties, and which are not owner occupied. Loans in this class include loans for neighborhood retail centers, medical and professional offices, single retail stores, industrial buildings, and warehouses leased to local and other businesses. Generally, the primary source of repayment is dependent upon income generated from the real estate collateral. The underwriting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower. Residential real estate (“RRE”) — includes loans in these two classes: ● Consumer mortgage – primarily includes first or second lien mortgages and home equity lines of credit to consumers that are secured by a primary residence or second home. These loans are underwritten in accordance with the Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history , and property value. ● Investment property – primarily includes loans to finance income-producing 1-4 family residential properties. Generally, the primary source of repayment is dependent upon income generated from leasing the property securing the loan. The underwriting of these loans takes into consideration the rental rates and property values, as well as the financial health of the borrowers. Consumer installment — includes loans to individuals, which may be secured by personal property or are unsecured. Loans include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history, and, if applicable, property values. The following is a summary of current, accruing past due, and nonaccrual loans by portfolio segment and class as of March 31, 2023 and December 31, 2022. Accruing Accruing Total 30-89 Days Greater than Accruing Non- Total (Dollars in thousands) Current Past Due 90 days Loans Accrual Loans March 31, 2023: Commercial and industrial $ 59,141 29 — 59,170 432 $ 59,602 Construction and land development 66,500 — — 66,500 — 66,500 Commercial real estate: Owner occupied 65,177 — — 65,177 2,103 67,280 Hotel/motel 32,959 — — 32,959 — 32,959 Multi-family 40,974 — — 40,974 — 40,974 Other 126,749 — — 126,749 — 126,749 Total commercial real estate 265,859 — — 265,859 2,103 267,962 Residential real estate: Consumer mortgage 48,162 216 — 48,378 135 48,513 Investment property 53,184 278 — 53,462 — 53,462 Total residential real estate 101,346 494 — 101,840 135 101,975 Consumer installment 8,922 70 — 8,992 10 9,002 Total $ 501,768 593 — 502,361 2,680 $ 505,041 December 31, 2022: Commercial and industrial $ 65,764 5 — 65,769 443 $ 66,212 Construction and land development 66,479 — — 66,479 — 66,479 Commercial real estate: Owner occupied 61,125 — — 61,125 — 61,125 Hotel/motel 33,378 — — 33,378 — 33,378 Multi-family 41,084 — — 41,084 — 41,084 Other 126,870 — — 126,870 2,116 128,986 Total commercial real estate 262,457 — — 262,457 2,116 264,573 Residential real estate: Consumer mortgage 45,160 38 — 45,198 172 45,370 Investment property 52,278 — — 52,278 — 52,278 Total residential real estate 97,438 38 — 97,476 172 97,648 Consumer installment 9,506 40 — 9,546 — 9,546 Total $ 501,644 83 — 501,727 2,731 $ 504,458 Credit Quality Indicators The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan portfolio segments and classes by year of origination as of March 31, 2023. These categories are utilized to develop the associated allowance for credit losses using historical losses adjusted for qualitative and environmental factors and are defined as follows: ● Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral. ● Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification. ● Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment, even though they are currently performing. These loans are characterized by the distinct possibility that the Company may incur a loss in the future if these weaknesses are not corrected . ● Nonaccrual – includes loans where management has determined that full payment of principal and interest is not expected. (Dollars in thousands) 2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Total loans March 31, 2023: Commercial and industrial Pass $ 4,106 10,873 14,985 6,152 7,787 8,630 6,536 $ 59,069 Special mention — — — — — — — — Substandard 59 — 28 3 11 — — 101 Nonaccrual — — — — 432 — — 432 Total commercial and industrial 4,165 10,873 15,013 6,155 8,230 8,630 6,536 59,602 Current period gross charge-offs — — — — — — — — Construction and land development Pass 9,319 51,422 3,226 1,670 151 234 478 66,500 Special mention — — — — — — — — Substandard — — — — — — — — Nonaccrual — — — — — — — — Total construction and land development 9,319 51,422 3,226 1,670 151 234 478 66,500 Current period gross charge-offs — — — — — — — — Commercial real estate: Owner occupied Pass 4,294 10,250 19,309 11,652 5,194 11,372 2,711 64,782 Special mention — — 235 — — — — 235 Substandard — 105 — — 55 — — 160 Nonaccrual — — — — 2,103 — — 2,103 Total owner occupied 4,294 10,355 19,544 11,652 7,352 11,372 2,711 67,280 Current period gross charge-offs — — — — — — — — Hotel/motel Pass — 10,191 3,294 1,633 4,090 13,751 — 32,959 Special mention — — — — — — — — Substandard — — — — — — — — Nonaccrual — — — — — — — — Total hotel/motel — 10,191 3,294 1,633 4,090 13,751 — 32,959 Current period gross charge-offs — — — — — — — — (Dollars in thousands) 2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Total loans March 31, 2023: Multifamily Pass 3,666 19,375 2,009 7,158 3,889 3,299 1,578 40,974 Special mention — — — — — — — — Substandard — — — — — — — — Nonaccrual — — — — — — — — Total multifamily 3,666 19,375 2,009 7,158 3,889 3,299 1,578 40,974 Current period gross charge-offs — — — — — — — — Other Pass 5,546 38,002 33,006 15,834 11,241 21,706 1,253 126,588 Special mention — — — — — — — — Substandard — — — 161 — — — 161 Nonaccrual — — — — — — — — Total other 5,546 38,002 33,006 15,995 11,241 21,706 1,253 126,749 Current period gross charge-offs — — — — — — — — Residential real estate: Consumer mortgage Pass 4,375 22,234 2,783 2,874 1,531 13,584 94 47,475 Special mention — — — — — 381 — 381 Substandard — — — — — 522 — 522 Nonaccrual — — — — — 135 — 135 Total consumer mortgage 4,375 22,234 2,783 2,874 1,531 14,622 94 48,513 Current period gross charge-offs — — — — — — — — Investment property Pass 2,400 15,316 10,569 14,231 6,221 3,561 877 53,175 Special mention — — — — — 43 — 43 Substandard — — — 244 — — — 244 Nonaccrual — — — — — — — — Total investment property 2,400 15,316 10,569 14,475 6,221 3,604 877 53,462 Current period gross charge-offs — — — — — — — — Consumer installment Pass 1,216 5,565 1,285 440 196 234 — 8,936 Special mention — — — 5 — — — 5 Substandard 15 20 12 — 4 — — 51 Nonaccrual — — 10 — — — — 10 Total consumer installment 1,231 5,585 1,307 445 200 234 — 9,002 Current period gross charge-offs — 6 5 — — — — 11 Total loans Pass 34,922 183,228 90,466 61,644 40,300 76,371 13,527 500,458 Special mention — — 235 5 — 424 — 664 Substandard 74 125 40 408 70 522 — 1,239 Nonaccrual — — 10 — 2,535 135 — 2,680 Total loans $ 34,996 183,353 90,751 62,057 42,905 77,452 13,527 $ 505,041 Total current period gross charge-offs $ — 6 5 — — — — $ 11 (Dollars in thousands) Pass Special Mention Substandard Accruing Nonaccrual Total loans December 31, 2022: Commercial and industrial $ 65,550 7 212 443 $ 66,212 Construction and land development 66,479 — — — 66,479 Commercial real estate: Owner occupied 60,726 238 161 — 61,125 Hotel/motel 33,378 — — — 33,378 Multi-family 41,084 — — — 41,084 Other 126,700 170 — 2,116 128,986 Total commercial real estate 261,888 408 161 2,116 264,573 Residential real estate: Consumer mortgage 44,172 439 587 172 45,370 Investment property 51,987 43 248 — 52,278 Total residential real estate 96,159 482 835 172 97,648 Consumer installment 9,498 1 47 — 9,546 Total $ 499,574 898 1,255 2,731 $ 504,458 The following table is a summary of the Company’s nonaccrual loans by major categories for the periods indicated. CECL Incurred Loss March 31, 2023 December 31, 2022 Nonaccrual Nonaccrual Total Loans with Loans with an Nonaccrual Nonaccrual (Dollars in thousands) No Allowance Allowance Loans Loans Commercial and industrial $ 194 238 432 $ 443 Commercial real estate 837 1,266 2,103 2,116 Residential real estate 135 — 135 172 Consumer 10 — 10 — Total $ 1,176 1,504 2,680 $ 2,731 The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses: (Dollars in thousands) Real Estate Business Assets Total Loans March 31, 2023: Commercial and industrial $ — 432 $ 432 Commercial real estate 2,103 — 2,103 Total $ 2,103 432 $ 2,535 Allowance for Credit Losses The Company adopted ASC 326 on January 1, 2023, which introduced the CECL methodology for estimating all expected losses over the life of a financial asset. Under the CECL methodology, the allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics, and for loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. The following table details the changes in the allowance for credit losses by portfolio segment for the respective periods. March 31, 2023 (Dollars in thousands) Commercial and industrial Construction and land development Commercial real estate Residential real estate Consumer installment Total Quarter ended: Beginning balance, prior to the adoption of ASC 326 $ 747 949 3,109 828 132 $ 5,765 Impact from the adoption of ASC 326 532 (17) 873 (347) (22) 1,019 Charge-offs — — — — (11) (11) Recoveries 2 — — 5 1 8 Net recoveries (charge-offs) 2 — — 5 (10) (3) Provision for credit losses (49) 89 (16) 11 5 40 Ending balance $ 1,232 1,021 3,966 497 105 $ 6,821 March 31, 2022 (Dollars in thousands) Commercial and industrial Construction and land development Commercial real estate Residential real estate Consumer installment Total Quarter ended: Beginning balance $ 857 518 2,739 739 86 $ 4,939 Charge-offs — — — — (48) (48) Recoveries 2 — — 7 8 $ 17 Net (charge-offs) recoveries 2 — — 7 (40) (31) Provision for loan losses (85) (10) (203) (9) 57 (250) Ending balance $ 774 508 2,536 737 103 $ 4,658 The following table presents an analysis of the allowance for loan losses and recorded investment in loans by portfolio segment and impairment methodology as of March 31, 2022 as determined, prior to the adoption of ASC 326. Collectively evaluated (1) Individually evaluated (2) Total Allowance Recorded Allowance Recorded Allowance Recorded for loan investment for loan investment for loan investment (In thousands) losses in loans losses in loans losses in loans March 31, 2022: Commercial and industrial (3) $ 774 73,297 — — 774 73,297 Construction and land development 508 33,058 — — 508 33,058 Commercial real estate 2,536 234,880 — 182 2,536 235,062 Residential real estate 737 79,102 — — 737 79,102 Consumer installment 103 8,412 — — 103 8,412 Total $ 4,658 428,749 — 182 4,658 428,931 (1) Represents loans collectively evaluated for impairment, prior to the adopton of ASC 326, in accordance with ASC 450-20, Loss Contingencies, and pursuant to amendments by ASU 2010-20 regarding allowance for non-impaired loans. (2) Represents loans individually evaluated for impairment, prior to the adoption of ASC 326, in accordance with ASC 310-30, Receivables, and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans. Impaired loans The following tables present impaired loans at December 31, 2022 as determined under ASC 310 prior to the adoption of ASC 326. Loans that have been fully charged-off are not included in the following tables. The related allowance generally represents the following components that correspond to impaired loans: ● Individually evaluated impaired loans equal to or greater than $500 thousand secured by real estate (nonaccrual construction and land development, commercial real estate, and residential real estate loans). ● Individually evaluated impaired loans equal to or greater than $250 thousand not secured by real estate (nonaccrual commercial and industrial and consumer installment loans). The following tables set forth certain information regarding the Company’s impaired loans that were individually evaluated for impairment at December 31, 2022. December 31, 2022 (Dollars in thousands) Unpaid principal balance (1) Charge-offs and payments applied (2) Recorded investment (3) Related allowance With no allowance recorded: Commercial and industrial $ 210 (1) 209 $ — Commercial real estate: Owner occupied 858 (3) 855 Total commercial real estate 858 (3) 855 — Total 1,068 (4) 1,064 — With allowance recorded: Commercial and industrial 234 — 234 $ 59 Owner occupied 1,261 — 1,261 446 Total commercial real estate 1,261 — 1,261 446 Total 1,495 — 1,495 505 Total impaired loans $ 2,563 (4) 2,559 $ 505 (1) Unpaid principal balance represents the contractual obligation due from the customer. (2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status. (3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before any related allowance for loan losses. Pursuant to the adoption of ASU 2022-02, effective January 1, 2023, the Company prospectively discontinued the recognition and measurement guidance previously required for troubled debt restructures. As of March 31, 2023, the Company had no loans that would have previously required disclosure as troubled debt restructures. The following table provides the average recorded investment in impaired loans, if any, by portfolio segment, and the amount of interest income recognized on impaired loans after impairment by portfolio segment and class during the quarter ended March 31, 2022 as determined under ASC 310 prior to the adoption of ASC 326. Quarter ended March 31, 2022 Average Total interest recorded income (Dollars in thousands) investment recognized Impaired loans: Commercial real estate: Other 236 $ — Total commercial real estate 236 — Residential real estate: Investment property 15 — Total residential real estate 15 — Total 251 $ —