| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 4 LOANS The Company’s customers are primarily located in Stanislaus, San Joaquin, Tuolumne, Inyo, and Mono Counties. As of June 30, 2022, (in thousands) June 30, 2022 December 31, 2021 Commercial real estate: Commercial real estate- construction $ 22,967 $ 25,737 Commercial real estate- mortgages 635,297 583,620 Land 8,741 3,101 Farmland 91,243 76,670 Commercial and industrial 91,717 109,554 Consumer 410 416 Consumer residential 30,043 28,439 Agriculture 27,209 32,500 Total loans 907,627 860,037 Less: Deferred loan fees and costs, net (1,201 ) (1,452 ) Allowance for loan losses (10,785 ) (10,738 ) Net loans $ 895,641 $ 847,847 Paycheck Protection Program. two June 5, 2020, five 1%. 2020, 2021 first six 2022. December 31, 2020, December 31, 2020. 2021, December 31, 2021. no COVID- 19 19 second 2020 six December 31, 2021 June 30, 2022, one $8,092,745 19 2021 2022. no 19 not Loan Origination/Risk Management. Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, the Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily made based on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not may may may may Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may third June 30, 2022, December 31, 2021. With respect to loans to developers and builders that are secured by non-owner occupied properties that the Company may may may Agricultural production, real estate and development lending is susceptible to credit risks including adverse weather conditions, pest and disease, as well as market price fluctuations and foreign competition. Agricultural loan underwriting standards are maintained by following Company policies and procedures in place to minimize risk in this lending segment. These standards consist of limiting credit to experienced farmers who have demonstrated farm management capabilities, requiring cash flow projections displaying margins sufficient for repayment from normal farm operations along with equity injected as required by policy, as well as providing adequate secondary repayment and sponsorship including satisfactory collateral support. Credit enhancement obtained through government guarantee programs may The Company originates consumer loans utilizing common underwriting criteria specified in policy. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by line and staff personnel. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis. Underwriting standards for 1 4 not The Company maintains an independent loan review program that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Bank’s policies and procedures. Non-Accrual and Past Due Loans. not may may not No loans were on non-accrual status as of June 30, 2022 December 31, 2021, June 30, 2021. three six June 30, 2021, The following table analyzes past due loans including the past due non-accrual loans in the above table, segregated by class of loans, as of June 30, 2022 ( June 30, 2022 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total 90 Days or More Past Due and Still Accruing Commercial real estate: Commercial R.E. - construction $ 0 $ 0 $ 0 $ 0 $ 22,967 $ 22,967 $ 0 Commercial R.E. - mortgages 0 0 0 0 635,297 635,297 0 Land 0 0 0 0 8,741 8,741 0 Farmland 0 0 0 0 91,243 91,243 0 Commercial and industrial 0 0 0 0 91,717 91,717 0 Consumer 0 0 0 0 410 410 0 Consumer residential 0 0 0 0 30,043 30,043 0 Agriculture 0 0 0 0 27,209 27,209 0 Total $ 0 $ 0 $ 0 $ 0 $ 907,627 $ 907,627 $ 0 The following table analyzes past due loans including the past due non-accrual loans in the above table, segregated by class of loans, as of December 31, 2021 December 31, 2021 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total 90 Days or More Past Due and Still Accruing Commercial real estate: Commercial R.E. - construction $ 0 $ 0 $ 0 $ 0 $ 25,737 $ 25,737 $ 0 Commercial R.E. - mortgages 0 0 0 0 583,620 583,620 0 Land 0 0 0 0 3,101 3,101 0 Farmland 0 0 0 0 76,670 76,670 0 Commercial and industrial 0 0 0 0 109,554 109,554 0 Consumer 0 0 0 0 416 416 0 Consumer residential 0 0 0 0 28,439 28,439 0 Agriculture 0 0 0 0 32,500 32,500 0 Total $ 0 $ 0 $ 0 $ 0 $ 860,037 $ 860,037 $ 0 Impaired Loans. June 30, 2022. three six June 30, 2022 2021. Average recorded investment in impaired loans outstanding as of June 30, 2022 2021 (in thousands) Average Recorded Investment for the Average Recorded Investment for the 2022 2021 2022 2021 Commercial real estate: Commercial R.E. - construction $ 0 $ 0 $ 0 $ 0 Commercial R.E. - mortgages 0 362 0 248 Land 0 0 0 0 Farmland 0 0 0 0 Commercial and Industrial 0 0 0 Consumer 0 0 0 0 Consumer residential 0 0 0 0 Agriculture 0 0 0 0 Total $ 0 $ 362 $ 0 $ 248 Impaired loans as of December 31, 2021 (in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance Average Recorded Investment December 31, 2021 Commercial real estate: Commercial R.E. - construction $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Commercial R.E. - mortgages 0 0 0 0 0 0 Land 0 0 0 0 0 166 Farmland 0 0 0 0 0 0 Commercial and Industrial 0 0 0 0 0 0 Consumer 0 0 0 0 0 0 Consumer residential 0 0 0 0 0 0 Agriculture 0 0 0 0 0 0 Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 166 Troubled Debt Restructurings one As of June 30, 2022, no December 31, 2021. three June 30, 2022 2021, no six June 30, 2022, 2021. twelve six June 30, 2022 2021. ninety Loan Risk Grades The Company grades loans using the following letter system: 1 2 3A 3B 3C 4 5 6 7 8 1. 1 ● A high level of liquidity and whose debt-servicing capacity exceeds expected obligations by a substantial margin. ● Where leverage is below average for the industry and earnings are consistent or growing without severe vulnerability to economic cycles. ● Also included in this rating (but not one 2. No 2 ● Unquestionable debt-servicing capacity to cover all obligations in the ordinary course of business from well-defined primary and secondary sources. ● Consistent strong earnings. ● A solid equity base. 3A. 3 three three 3 3A ● Strong earnings with no three ● Long term experienced management with depth and defined management succession. ● The loan has no ● Loan-to-value on real estate secured transactions is 10% 20% ● Very liquid balance sheet that may ● Little to no 3B. 3B 3A 3C not ● Are those where the borrower has average financial strengths, a history of profitable operations and experienced management. ● Are those where the borrower can be expected to handle normal credit needs in a satisfactory manner. 3C. 3C 3Bs ● Requires collateral. ● A credit facility where the borrower has average financial strengths, but usually lacks reliable secondary sources of repayment other than the subject collateral. ● Other common characteristics can include some or all of the following: minimal background experience of management, lacking continuity of management, a start-up operation, erratic historical profitability (acceptable reasons-well identified), lack of or marginal sponsorship of guarantor, and government guaranteed loans. 4 may ● Any unexpected short-term adverse financial performance from budgeted projections or a prior period’s results (i.e., declining profits, sales, margins, cash flow, or increased reliance on leverage, including adverse balance sheet ratios, trade debt issues, etc.). ● Any managerial or personal problems with company management, decline in the entire industry or local economic conditions, or failure to provide financial information or other documentation as requested. ● Issues regarding delinquency, overdrafts, or renewals. ● Any other issues that cause concern for the company. ● Loans to individuals or loans supported by guarantors with marginal net worth and/or marginal collateral. ● Weaknesses that are identified are short-term in nature. ● Loans in this category are usually accounts the Bank would want to retain providing a positive turnaround can be expected within a reasonable time frame. Grade 4 5. may, ● The lending officer may ● Questions exist regarding the condition of and/or control over collateral. ● Economic or market conditions may ● A declining trend in the obligor’s operations or an imbalanced position in the balance sheet exists, but not 6. not not 7. one may may may not 25 40 65 A proper classification of such a credit would show 40 percent substandard, 25 percent doubtful, and 35 percent loss. A credit classified as doubtful should be resolved within a ‘reasonable’ period of time. Reasonable is generally defined as the period between examinations. In other words, a credit classified as doubtful at an examination should be cleared up before the next exam. However, there may 8. not not no not may not As of June 30, 2022 December 31, 2021, 8 The following table presents weighted average risk grades of the Company’s loan portfolio: June 30, 2022 December 31, 2021 Weighted Average Risk Grade Weighted Average Risk Grade Commercial real estate: Commercial real estate - construction 3.00 3.00 Commercial real estate - mortgages 3.05 3.08 Land 3.00 3.00 Farmland 3.03 3.09 Commercial and industrial 2.96 3.01 Consumer 1.80 1.81 Consumer residential 3.00 3.00 Agriculture 3.00 3.23 Total gross loans 3.03 3.07 The following table presents risk grade totals by class of loans as of June 30, 2022 December 31, 2021. 1 4 (in thousands) Commercial R.E. Commercial R.E. Land Farmland Commercial and Industrial Consumer Consumer Residential Agriculture Total June 30, 2022 Pass $ 22,967 $ 626,456 $ 8,741 $ 90,472 $ 90,607 $ 390 $ 30,009 $ 27,209 $ 896,851 Special mention - 8,841 - - 1,110 - - - 9,951 Substandard - - - 771 - 20 34 - 825 Total loans $ 22,967 $ 635,297 $ 8,741 $ 91,243 $ 91,717 $ 410 $ 30,043 $ 27,209 $ 907,627 December 31, 2021 Pass $ 25,737 $ 574,774 $ 3,101 $ 75,889 $ 107,154 $ 395 $ 28,404 $ 32,500 $ 847,954 Special mention - 8,846 - - 1,647 - - - 10,493 Substandard - - - 781 753 21 35 - 1,590 Total loans $ 25,737 $ 583,620 $ 3,101 $ 76,670 $ 109,554 $ 416 $ 28,439 $ 32,500 $ 860,037 Allowance for Loan Losses. 310, 450, not The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may The Company’s allowance for loan losses consists of three 310 450 450 The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial loans. When a loan has a calculated grade of 5 Historical valuation allowances are calculated based on the historical loss experience of specific types of loans and the internal risk grade of such loans at the time they were charged-off. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool. The Company’s pools of similar loans include similarly risk-graded groups of commercial and industrial loans, commercial real estate loans, consumer residential, consumer and agriculture. General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Bank and the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank’s lending management and staff; (ii) the effectiveness of the Bank’s loan policies, procedures and internal controls; (iii) changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one Included in the general valuation allowances are allocations for groups of similar loans with risk characteristics that exceed certain concentration limits established by management. Concentration risk limits have been established, among other things, for certain industry concentrations, large balance and highly leveraged credit relationships that exceed specified risk grades, and loans originated with policy exceptions that exceed specified risk grades. Loans identified as losses by management, internal loan review and/or bank examiners are charged-off. Furthermore, consumer loan accounts are charged-off automatically based on regulatory requirements. The following table details activity in the allowance for loan losses by portfolio segment for the three six June 30, 2022 2021. one not Allowance for Loan Losses For the Three and Six Months Ended June 30, 2022 and 2021 (in thousands) Three Months Ended June 30, 2022 Commercial Real Estate Commercial and Industrial Consumer Consumer Residential Agriculture Total Beginning balance $ 9,539 $ 701 $ 6 $ 311 $ 205 $ 10,762 Charge-offs 0 0 (7 ) 0 0 (7 ) Recoveries 30 0 0 0 0 30 Provision for (reversal of) loan losses (25 ) (14 ) 7 6 26 0 Ending balance $ 9,544 $ 687 $ 6 $ 317 $ 231 $ 10,785 Six Months Ended June 30, 2022 Beginning balance $ 9,404 $ 711 $ 6 $ 327 $ 290 $ 10,738 Charge-offs 0 0 (15 ) 0 0 (15 ) Recoveries 61 0 1 0 0 62 Provision for (reversal of) loan losses 79 (24 ) 14 (10 ) (59 ) 0 Ending balance $ 9,544 $ 687 $ 6 $ 317 $ 231 $ 10,785 Three Months Ended June 30, 2021 Beginning balance $ 9,520 $ 1,015 $ 19 $ 336 $ 422 $ 11,312 Charge-offs 0 0 (3 ) 0 0 (3 ) Recoveries 16 0 1 1 0 18 Provision (reversal of) for loan losses (12 ) 14 0 (23 ) 21 0 Ending balance $ 9,524 $ 1,029 $ 17 $ 314 $ 443 11,327 Six Months Ended June 30, 2021 Beginning balance $ 9,310 $ 1,079 $ 22 $ 325 $ 561 $ 11,297 Charge-offs 0 0 (8 ) 0 0 (8 ) Recoveries 32 0 5 1 0 38 Provision (reversal of) for loan losses 182 (50 ) (2 ) (12 ) (118 ) 0 Ending balance $ 9,524 $ 1,029 $ 17 $ 314 $ 443 11,327 The following table details the allowance for loan losses and ending gross loan balances as of June 30, 2022 December 31, 2021, (in thousands) June 30, 2022 Commercial Real Estate Commercial and Industrial Consumer Consumer Residential Agriculture Total Allowance for loan losses for loans: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Collectively evaluated for impairment 9,544 687 6 317 231 10,785 $ 9,544 $ 687 $ 6 $ 317 $ 231 $ 10,785 Ending gross loan balances: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Collectively evaluated for impairment 758,248 91,717 410 30,043 27,209 907,627 $ 758,248 $ 91,717 $ 410 $ 30,043 $ 27,209 $ 907,627 December 31, 2021 Allowance for loan losses for loans: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Collectively evaluated for impairment 9,404 711 6 327 290 10,738 $ 9,404 $ 711 $ 6 $ 327 $ 290 $ 10,738 Ending gross loan balances: Individually evaluated for impairment $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Collectively evaluated for impairment 689,128 109,554 416 28,439 32,500 860,037 $ 689,128 $ 109,554 $ 416 $ 28,439 $ 32,500 $ 860,037 Changes in the reserve for off-balance-sheet commitments were as follows: (in thousands) THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2022 2021 2022 2021 Balance, beginning of period $ 463 $ 428 $ 469 $ 379 Provision to Operations for Off Balance Sheet Commitments 12 7 6 56 Balance, end of period $ 475 $ 435 $ 475 $ 435 The method for calculating the reserve for off-balance-sheet loan commitments is based on a reserve percentage, which is less than other outstanding loan types because they are at a lower risk level. This reserve percentage, based on many factors including historical losses and existing economic conditions, is evaluated by management periodically and is applied to the total undisbursed loan commitment balance to calculate the reserve for off-balance-sheet commitments. Reserves for off-balance-sheet commitments are recorded in interest payable and other liabilities on the condensed consolidated balance sheets. At June 30, 2022 December 31, 2021, |
