Allowance for Credit Losses [Text Block] | Note 5 . Allowance for Loan Losses and Impaired Loans Allowance for Loan Losses The allowance for loan losses is maintained at a level believed to be sufficient to provide for estimated loan losses based on evaluating known and inherent risks in the loan portfolio. The allowance is provided based upon management’s comprehensive analysis of the pertinent factors underlying the quality of the loan portfolio. These factors include changes in the amount and composition of the loan portfolio, delinquency levels, actual loss experience, current economic conditions, and detailed analysis of individual loans for which the full collectability may not A provision for loan losses is charged against operations and is added to the allowance for loan losses based on quarterly comprehensive analyses of the loan portfolio. The allowance for loan losses is allocated to certain loan categories based on the relative risk characteristics, asset classifications and actual loss experience of the loan portfolio. While management has allocated the allowance for loan losses to various loan portfolio segments, the allowance is general in nature and is available for the loan portfolio in its entirety. The following table presents activity in the allowance by loan category and information on the loans evaluated individually for impairment and collectively evaluated for impairment as of June 30, 2019 December 31, 2018: Allowance for Loan Losses and Recorded Investment in Loans (dollars in thousands) Construction & Development Farmland Residential Commercial Mortgage Commercial & Agricultural Consumer & Other Total For the Three Months Ended June 30, 2019 Allowance for loan losses: Balance, March 31, 2019 $ 268 $ 407 $ 1,733 $ 697 $ 385 $ 128 $ 3,618 Charge-offs - - (20 ) - (19 ) (43 ) (82 ) Recoveries - - 1 - 2 3 6 Provision 17 133 16 155 (76 ) 31 276 Balance, June 30, 2019 $ 285 $ 540 $ 1,730 $ 852 $ 292 $ 119 $ 3,818 For the Three Months Ended June 30, 2018 Allowance for loan losses: Balance, March 31, 2018 $ 247 $ 322 $ 1,896 $ 609 $ 267 $ 74 $ 3,415 Charge-offs (8 ) - - (142 ) - (90 ) (240 ) Recoveries - - 9 - 2 4 15 Provision 17 17 (210 ) 152 14 101 91 Balance, June 30, 2018 $ 256 $ 339 $ 1,695 $ 619 $ 283 $ 89 $ 3,281 For the Six Months Ended June 30, 2019 Allowance for loan losses: Balance, December 31, 2018 $ 246 $ 385 $ 1,807 $ 682 $ 281 $ 94 $ 3,495 Charge-offs - (14 ) (32 ) (41 ) (63 ) (95 ) (245 ) Recoveries - - 8 28 4 14 54 Provision 39 169 (53 ) 183 70 106 514 Balance, June 30, 2019 $ 285 $ 540 $ 1,730 $ 852 $ 292 $ 119 $ 3,818 For the Six Months Ended June 30, 2018 Allowance for loan losses: Balance, December 31, 2017 $ 239 $ 358 $ 1,875 $ 619 $ 282 $ 80 $ 3,453 Charge-offs (20 ) - (117 ) (142 ) - (109 ) (388 ) Recoveries - 34 19 - 4 14 71 Provision 37 (53 ) (82 ) 142 (3 ) 104 145 Balance, June 30, 2018 $ 256 $ 339 $ 1,695 $ 619 $ 283 $ 89 $ 3,281 June 30, 2019 Allowance for loan losses: Ending Balance $ 285 $ 540 $ 1,730 $ 852 $ 292 $ 119 $ 3,818 Ending balance: individually evaluated for impairment $ - $ 41 $ 6 $ - $ - $ - $ 47 Ending balance: collectively evaluated for impairment $ 285 $ 499 $ 1,724 $ 852 $ 292 $ 119 $ 3,771 Ending balance: purchased credit impaired loans $ - $ - $ - $ - $ - $ - $ - Loans outstanding: Ending Balance $ 34,623 $ 35,558 $ 243,482 $ 177,846 $ 39,132 $ 19,179 $ 549,820 Ending balance: individually evaluated for impairment $ - $ 4,267 $ 924 $ - $ - $ - $ 5,191 Ending balance: collectively evaluated for impairment $ 34,623 $ 31,291 $ 242,402 $ 177,519 $ 38,932 $ 19,179 $ 543,946 Ending balance: purchased credit impaired loans $ - $ - $ 156 $ 327 $ 200 $ - $ 683 Allowance for Loan Losses and Recorded Investment in Loans (dollars in thousands) Construction & Development Farmland Residential Commercial Mortgage Commercial & Agricultural Consumer & Other Total December 31, 2018 Allowance for loan losses: Ending Balance $ 246 $ 385 $ 1,807 $ 682 $ 281 $ 94 $ 3,495 Ending balance: individually evaluated for impairment $ - $ 29 $ 12 $ - $ - $ - $ 41 Ending balance: collectively evaluated for impairment $ 246 $ 356 $ 1,795 $ 682 $ 281 $ 94 $ 3,454 Ending balance: purchased credit impaired loans $ - $ - $ - $ - $ - $ - $ - Loans outstanding: Ending Balance $ 33,449 $ 33,291 $ 235,689 $ 176,192 $ 37,491 $ 20,353 $ 536,465 Ending balance: individually evaluated for impairment $ - $ 4,552 $ 1,018 $ - $ - $ - $ 5,570 Ending balance: collectively evaluated for impairment $ 33,449 $ 28,739 $ 234,504 $ 175,845 $ 37,291 $ 20,353 $ 530,181 Ending balance: purchased credit impaired loans $ - $ - $ 167 $ 347 $ 200 $ - $ 714 As of June 30, 2019 December 31, 2018, no Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help grade the quality of the Bank’s loan portfolio. The Bank’s loan ratings coincide with the “Substandard,” “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions. Generally, an asset is considered Substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. Substandard assets include those characterized by the distinct possibility that the insured financial institution will sustain some loss if the deficiencies are not not not one June 30, 2019 December 31, 2018, no The following table lists the loan grades utilized by the Bank and the corresponding total of outstanding loans in each category as of June 30, 2019 December 31, 2018: Credit Risk Profile by Internally Assigned Grades Loan Grades (dollars in thousands) Pass Watch Special Mention Substandard Total June 30, 2019 Real Estate Secured: Construction & development $ 31,843 $ 1,988 $ 765 $ 27 $ 34,623 Farmland 23,670 4,756 885 6,247 35,558 Residential 221,695 18,878 1,232 1,677 243,482 Commercial mortgage 148,286 23,219 1,710 4,631 177,846 Non-Real Estate Secured: Commercial & agricultural 33,929 4,192 248 763 39,132 Consumer & other 18,826 349 - 4 19,179 Total $ 478,249 $ 53,382 $ 4,840 $ 13,349 $ 549,820 December 31, 2018 Real Estate Secured: Construction & development $ 31,237 $ 2,044 $ 147 $ 21 $ 33,449 Farmland 23,250 4,933 750 4,358 33,291 Residential 213,670 18,794 299 2,926 235,689 Commercial mortgage 148,179 23,468 1,212 3,333 176,192 Non-Real Estate Secured: Commercial & agricultural 33,537 2,908 70 976 37,491 Consumer & other 18,975 1,364 - 14 20,353 Total $ 468,848 $ 53,511 $ 2,478 $ 11,628 $ 536,465 Loans may may first The following table presents an age analysis of nonaccrual and past due loans by category as of June 30, 2019 December 31, 2018: Analysis of Past Due and Nonaccrual Loans (dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans 90+ Days Past Due and Still Accruing Nonaccrual Loans June 30, 201 9 Real Estate Secured: Construction & development $ 1 $ - $ 10 $ 11 $ 34,612 $ 34,623 $ - $ 10 Farmland 375 - 1,302 1,677 33,881 35,558 - 4,132 Residential 558 85 438 1,081 242,401 243,482 - 567 Commercial mortgage 100 - 442 542 177,304 177,846 - 442 Non-Real Estate Secured: Commercial & agricultural 26 - 245 271 38,861 39,132 - 249 Consumer & other 7 18 4 29 19,150 19,179 - 4 Total $ 1,067 $ 103 $ 2,441 $ 3,611 $ 546,209 $ 549,820 $ - $ 5,404 December 31, 2018 Real Estate Secured: Construction & development $ 29 $ - $ - $ 29 $ 33,420 $ 33,449 $ - $ - Farmland 71 100 989 1,160 32,131 33,291 - 3,914 Residential 762 145 241 1,148 234,541 235,689 - 653 Commercial mortgage - - 604 604 175,588 176,192 - 740 Non-Real Estate Secured: Commercial & agricultural 7 - 264 271 37,220 37,491 - 264 Consumer & other 12 18 8 38 20,315 20,353 - 8 Total $ 881 $ 263 $ 2,106 $ 3,250 $ 533,215 $ 536,465 $ - $ 5,579 Impaired Loans A loan is considered impaired when it is probable that the Bank will be unable to collect all contractual principal and interest payments due in accordance with the original or modified terms of the loan agreement. Smaller balance homogenous loans may not may third third may As of June 30, 2019 December 31, 2018, $9.8 $10.3 June 30, 2019 December 31, 2018, $2.7 $2.8 June 30, 2019 December 31, 2018, $3.0 $3.4 not $7.1 $7.3 June 30, 2019 December 31, 2018, The categories of non-accrual loans and impaired loans overlap, although they are not In 2015, $250,000 June 30, 2019 December 31, 2018, $4.6 $4.7 $238 $259 The following table is a summary of information related to impaired loans as of June 30, 2019 December 31, 2018: Impaired Loans Six months ended Three months ended (dollars in thousands) Recorded Investment 1 Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized June 30, 201 9 With no related allowance recorded: Construction & development $ - $ - $ - $ - $ - $ - $ - Farmland 3,022 3,022 - 3,087 9 3,022 5 Residential - - - - - - - Commercial mortgage - - - - - - - Commercial & agricultural - - - - - - - Consumer & other - - - - - - - Subtotal 3,022 3,022 - 3,087 9 3,022 5 With an allowance recorded: Construction & development 65 65 4 67 3 66 1 Farmland 1,553 1,553 51 1,565 36 1,560 17 Residential 4,892 5,042 219 5,123 135 4,909 63 Commercial mortgage 196 241 10 271 6 197 3 Commercial & agricultural 35 35 2 36 1 36 1 Consumer & other 4 4 - 4 - 4 - Subtotal 6,745 6,940 286 7,066 181 6,772 85 Totals: Construction & development 65 65 4 67 3 66 1 Farmland 4,575 4,575 51 4,652 45 4,582 22 Residential 4,892 5,042 219 5,123 135 4,909 63 Commercial mortgage 196 241 10 271 6 197 3 Commercial & agricultural 35 35 2 36 1 36 1 Consumer & other 4 4 - 4 - 4 - Total $ 9,767 $ 9,962 $ 286 $ 10,153 $ 190 $ 9,794 $ 90 1 Recorded investment is the loan balance, net of any charge-offs (dollars in thousands) Recorded Investment 1 Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized December 31, 201 8 With no related allowance recorded: Construction & development $ - $ - $ - $ - $ - Farmland 3,284 3,284 - 3,523 23 Residential 85 85 - 448 13 Commercial mortgage - - - - - Commercial & agricultural - 24 - - - Consumer & other - - - - - Subtotal 3,369 3,393 - 3,971 36 With an allowance recorded: Construction & development 69 69 4 306 11 Farmland 1,539 1,539 38 1,568 86 Residential 5,005 5,162 241 5,348 266 Commercial mortgage 275 358 15 522 27 Commercial & agricultural 37 37 2 47 3 Consumer & other 4 4 - 4 - Subtotal 6,929 7,169 300 7,795 393 Totals: Construction & development 69 69 4 306 11 Farmland 4,823 4,823 38 5,091 109 Residential 5,090 5,247 241 5,796 279 Commercial mortgage 275 358 15 522 27 Commercial & agricultural 37 61 2 47 3 Consumer & other 4 4 - 4 - Total $ 10,298 $ 10,562 $ 300 $ 11,766 $ 429 1 Recorded investment is the loan balance, net of any charge-offs Troubled Debt Restructuring A TDR loan is a loan for which the Bank, for reasons related to the borrower’s financial difficulties, grants a concession to the borrower that the Bank would not The loan terms which have been modified or restructured due to a borrower’s financial difficulty, include but are not The following table sets forth information with respect to the Bank’s TDRs as of June 30, 2019 June 30, 2018: For the Six Months Ended June 30 , 201 9 (dollars in thousands) TDRs identified during the period TDRs identified in the last twelve months that subsequently defaulte d (1) Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Construction & development - $ - $ - - $ - $ - Farmland 1 38 38 - - - Residential 1 117 128 - - - Commercial mortgage - - - - - - Commercial & agricultural - - - - - - Consumer & other - - - - - - Total 2 $ 155 $ 166 - $ - $ - ( 1 30 During the six June 30, 2019, two one No twelve six June 30, 2019. For the Three Months Ended June 30 , 201 9 (dollars in thousands) TDRs identified during the period TDRs identified in the last twelve months that subsequently defaulte d (1) Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Construction & development - $ - $ - - $ - $ - Farmland 1 38 38 - - - Residential - - - - - - Commercial mortgage - - - - - - Commercial & agricultural - - - - - - Consumer & other - - - - - - Total 1 $ 38 $ 38 - $ - $ - ( 1 30 During the three June 30, 2019, one No twelve June 30, 2019. For the Six Months Ended June 30, 2018 (dollars in thousands) TDRs identified during the period TDRs identified in the last twelve months that subsequently defaulte d (1) Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Construction & development - $ - $ - - $ - $ - Farmland - - - - - - Residential 2 80 97 - - - Commercial mortgage - - - - - - Commercial & agricultural - - - - - - Consumer & other - - - - - - Total 2 $ 80 $ 97 - $ - $ - ( 1 30 During the six June 30, 2018, two No twelve six June 30, 2018. For the Three Months Ended June 30, 2018 (dollars in thousands) TDRs identified during the period TDRs identified in the last twelve months that subsequently defaulte d (1) Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Construction & development - $ - $ - - $ - $ - Farmland - - - - - - Residential 2 80 97 - - - Commercial mortgage - - - - - - Commercial & agricultural - - - - - - Consumer & other - - - - - - Total 2 $ 80 $ 97 - $ - $ - ( 1 30 During the three June 30, 2018, two No twelve June 30, 2018. Purchased Credit Impaired Loans During 2018, not June 30, 2019 December 31, 2018 (dollars in thousands) 2019 2018 Residential $ 156 $ 167 Commercial mortgage 327 347 Commercial & agricultural 200 200 Outstanding balance $ 683 $ 714 Carrying amount $ 683 $ 714 There was no There were no six June 30, 2019. December 31, 2018 not (dollars in thousands) 2018 Contractually required payments receivable of loans purchased during the year: Residential $ 233 Commercial mortgage 1,724 Commercial & agricultural 221 $ 2,178 Cash flows expected to be collected at acquisition $ 1,781 Fair value of acquired loans at acquisition $ 1,781 Income is not June 30, 2019 December 31, 2018 (dollars in thousands) 2019 2018 Loans at beginning of year $ 714 $ - Loans purchased during the year $ - $ 1,781 Loans at end of period $ 683 $ 714 |