Allowance for Credit Losses [Text Block] | Note 4 . 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. As noted in Note 1, zero June 30, 2020 December 31, 2019: 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, 20 20 Allowance for loan losses: Balance, March 31, 2019 $ 341 $ 465 $ 1,998 $ 1,054 $ 246 $ 148 $ 4,252 Charge-offs - - - - - (25 ) (25 ) Recoveries - - 3 - - 10 13 Provision 74 7 125 (3 ) 204 7 414 Balance, March 31, 2020 $ 415 $ 472 $ 2,126 $ 1,051 $ 450 $ 140 $ 4,654 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 Six Months Ended June 30 , 20 20 Allowance for loan losses: Balance, December 31, 2019 $ 305 $ 487 $ 1,822 $ 924 $ 211 $ 144 $ 3,893 Charge-offs - - - - - (78 ) (78 ) Recoveries 4 - 11 65 2 21 103 Provision 106 (15 ) 293 62 237 53 736 Balance, June 30, 2019 $ 415 $ 472 $ 2,126 $ 1,051 $ 450 $ 140 $ 4,654 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 June 3 0 , 20 20 Allowance for loan losses: Ending Balance $ 415 $ 472 $ 2,126 $ 1,051 $ 450 $ 140 $ 4,654 Ending balance: individually evaluated for impairment $ - $ - $ - $ - $ - $ - $ - Ending balance: collectively evaluated for impairment $ 415 $ 472 $ 2,126 $ 1,051 $ 450 $ 140 $ 4,654 Ending balance: purchased credit impaired loans $ - $ - $ - $ - $ - $ - $ - Loans outstanding: Ending Balance $ 44,192 $ 34,629 $ 260,565 $ 181,866 $ 31,456 $ 20,786 $ 573,494 Ending balance: individually evaluated for impairment $ - $ 2,836 $ - $ - $ - $ - $ 2,836 Ending balance: collectively evaluated for impairment $ 44,192 $ 31,793 $ 260,422 $ 181,554 $ 31,310 $ 20,786 $ 570,057 Ending balance: purchased credit impaired loans $ - $ - $ 143 $ 312 $ 146 $ - $ 601 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, 2019 Allowance for loan losses: Ending Balance $ 305 $ 487 $ 1,822 $ 924 $ 211 $ 144 $ 3,893 Ending balance: individually evaluated for impairment $ - $ - $ - $ - $ - $ - $ - Ending balance: collectively evaluated for impairment $ 305 $ 487 $ 1,822 $ 924 $ 211 $ 144 $ 3,893 Ending balance: purchased credit impaired loans $ - $ - $ - $ - $ - $ - $ - Loans outstanding: Ending Balance $ 39,649 $ 34,166 $ 253,674 $ 190,817 $ 32,426 $ 19,621 $ 570,353 Ending balance: individually evaluated for impairment $ - $ 3,240 $ 909 $ - $ - $ - $ 4,149 Ending balance: collectively evaluated for impairment $ 39,649 $ 30,926 $ 252,615 $ 190,496 $ 32,280 $ 19,621 $ 565,587 Ending balance: purchased credit impaired loans $ - $ - $ 150 $ 321 $ 146 $ - $ 617 As of June 30, 2020 December 31, 2019, 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, 2020 December 31, 2019, no During the first 2020, December 31, 2019 Loan Grades (dollars in thousands) Watch As Reported Reclass Watch Adjusted December 31, 2019 Real Estate Secured: Construction & development $ 4,801 $ (4,244 ) $ 557 Farmland 4,059 (2,565 ) 1,494 Residential 19,887 (19,349 ) 538 Commercial mortgage 21,960 (19,557 ) 2,403 Non-Real Estate Secured: Commercial & agricultural 4,346 (3,805 ) 541 Consumer & other 300 (300 ) - Total $ 55,353 $ (49,820 ) $ 5,533 Loan Grades (dollars in thousands) Pass As Reported Reclass Pass Adjusted December 31, 2019 Real Estate Secured: Construction & development $ 34,701 $ 4,244 $ 38,945 Farmland 22,969 2,565 25,534 Residential 231,629 19,349 250,978 Commercial mortgage 163,584 19,557 183,141 Non-Real Estate Secured: Commercial & agricultural 27,503 3,805 31,308 Consumer & other 19,314 300 19,614 Total $ 499,700 $ 49,820 $ 549,520 These reclassifications did not 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, 2020 December 31, 2019 ( Credit Risk Profile by Internally Assigned Grades Loan Grades (dollars in thousands) Pass Watch Special Mention Substandard Total June 30, 20 20 Real Estate Secured: Construction & development $ 43,581 $ - $ - $ 611 $ 44,192 Farmland 27,076 813 661 6,079 34,629 Residential 257,636 626 124 2,179 260,565 Commercial mortgage 175,459 2,260 826 3,321 181,866 Non-Real Estate Secured: Commercial & agricultural 30,270 502 125 559 31,456 SBA-PPP 77,105 77,105 Consumer & other 20,786 - - - 20,786 Total $ 631,913 $ 4,201 $ 1,736 $ 12,749 $ 650,599 December 31, 201 9 Real Estate Secured: Construction & development $ 38,945 $ 557 $ - $ 147 $ 39,649 Farmland 25,534 1,494 673 6,465 34,166 Residential 250,978 538 176 1,982 253,674 Commercial mortgage 183,141 2,403 930 4,343 190,817 Non-Real Estate Secured: Commercial & agricultural 31,308 541 103 474 32,426 Consumer & other 19,614 - - 7 19,621 Total $ 549,520 $ 5,533 $ 1,882 $ 13,418 $ 570,353 Loans may may first The following table presents an age analysis of nonaccrual and past due loans by category as of June 30, 2020 December 31, 2019: 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, 20 20 Real Estate Secured: Construction & development $ - $ - $ 9 $ 9 $ 44,183 $ 44,192 $ - $ 9 Farmland - 669 257 926 33,703 34,629 - 3,630 Residential 456 - 357 813 259,752 260,565 - 460 Commercial mortgage - - 292 292 181,574 181,866 - 485 Non-Real Estate Secured: Commercial & agricultural 121 16 146 283 31,173 31,456 - 182 SBA-PPP - - - - 77,105 77,105 - - Consumer & other 1 - - 1 20,785 20,786 - - Total $ 578 $ 685 $ 1,061 $ 2,324 $ 648,275 $ 650,599 $ - $ 4,766 December 31, 201 9 Real Estate Secured: Construction & development $ - $ - $ 10 $ 10 $ 39,639 $ 39,649 $ - $ 10 Farmland 893 - 971 1,864 32,302 34,166 - 4,192 Residential 292 48 365 705 252,969 253,674 - 412 Commercial mortgage 185 - - 185 190,632 190,817 - 198 Non-Real Estate Secured: Commercial & agricultural 135 8 163 306 32,120 32,426 - 165 Consumer & other 2 6 2 10 19,611 19,621 - 2 Total $ 1,507 $ 62 $ 1,511 $ 3,080 $ 567,273 $ 570,353 $ - $ 4,979 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, 2020 December 31, 2019, $7.8 $7.8 June 30, 2020 December 31, 2019, $2.8 $2.9 June 30, 2020 December 31, 2019, $2.8 $4.1 not $5.3 $4.8 June 30, 2020 December 31, 2019, The categories of non-accrual loans and impaired loans overlap, although they are not Management collectively evaluates performing TDRs with a loan balance of $250,000 June 30, 2020 December 31, 2019, $5.0 $3.6 $246 $174 The following table is a summary of information related to impaired loans as of June 30, 2020 December 31, 2019: Impaired Loans Six months ended Three months ended Unpaid Average Interest Average Interest Recorded Principal Related Recorded Income Recorded Income (dollars in thousands) Investment 1 Balance Allowance Investment Recognized Investment Recognized June 30, 2020 With no related allowance recorded: Construction & development $ - $ - $ - $ - $ - $ - $ - Farmland 2,836 3,334 - 3,038 10 2,847 5 Residential - - - - - - - Commercial mortgage - - - - - - - Commercial & agricultural - - - - - - - Consumer & other - - - - - - - Subtotal 2,836 3,334 - 3,038 10 2,847 5 With an allowance recorded: Construction & development 538 538 27 545 16 539 10 Farmland 150 159 2 150 1 150 - Residential 4,263 4,439 214 4,282 113 4,268 57 Commercial mortgage 10 54 1 10 1 10 - Commercial & agricultural 49 49 2 50 2 50 2 Consumer & other 2 2 - 3 - 2 - Subtotal 5,012 5,241 246 5,040 133 5,019 69 Totals: Construction & development 538 538 27 545 16 539 10 Farmland 2,986 3,493 2 3,188 11 2,997 5 Residential 4,263 4,439 214 4,282 113 4,268 57 Commercial mortgage 10 54 1 10 1 10 - Commercial & agricultural 49 49 2 50 2 50 2 Consumer & other 2 2 - 3 - 2 - Total $ 7,848 $ 8,575 $ 246 $ 8,078 $ 143 $ 7,866 $ 74 1 (dollars in thousands) Recorded Investment 1 Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized December 31, 2019 With no related allowance recorded: Construction & development $ - $ - $ - $ - $ - Farmland 3,240 3,240 - 3,505 25 Residential 909 909 - 921 40 Commercial mortgage - - - - - Commercial & agricultural - - - - - Consumer & other - - - - - Subtotal 4,149 4,149 - 4,426 65 With an allowance recorded: Construction & development 72 72 3 76 6 Farmland 150 150 2 1,545 70 Residential 3,345 3,495 166 4,161 225 Commercial mortgage 11 56 1 268 11 Commercial & agricultural 31 31 1 34 2 Consumer & other 3 3 1 4 - Subtotal 3,612 3,807 174 6,088 314 Totals: Construction & development 72 72 3 76 6 Farmland 3,390 3,390 2 5,050 95 Residential 4,254 4,404 166 5,082 265 Commercial mortgage 11 56 1 268 11 Commercial & agricultural 31 31 1 34 2 Consumer & other 3 3 1 4 - Total $ 7,761 $ 7,956 $ 174 $ 10,514 $ 379 1 Troubled Debt Restructuring A troubled debt restructured 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 troubled debt restructurings as of June 30, 2020 June 30, 2019: For the Six Months Ended June 30, 20 20 (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 2 $ 459 $ 459 - $ - $ - Farmland - - - - - - Residential 1 46 50 - - - Commercial mortgage - - - - - - Commercial & agricultural 1 20 20 - - - Consumer & other - - - - - - Total 4 $ 525 $ 529 - $ - $ - ( 1 30 During the six June 30, 2020, four one No twelve six June 30, 2020. For the Three Months Ended June 30, 20 20 (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 1 $ 114 $ 114 - $ - $ - Farmland - - - - - - Residential 1 46 50 - - - Commercial mortgage - - - - - - Commercial & agricultural 1 20 20 - - - Consumer & other - - - - - - Total 3 $ 180 $ 184 - $ - $ - ( 1 30 During the three June 30, 2020, three one No twelve June 30, 2020. For the Six Months Ended June 30, 2019 (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, 2019 (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. Purchased Credit Impaired Loans During 2018, not June 30, 2020 December 31, 2019 (dollars in thousands) 20 20 201 9 Residential $ 143 $ 150 Commercial mortgage 312 321 Commercial & agricultural 146 146 Outstanding balance $ 601 $ 617 Carrying amount $ 601 $ 617 There was no There were no six June 30, 2020 December 31, 2019. Income is not June 30, 2020 December 31, 2019 (dollars in thousands) 20 20 201 9 Loans at beginning of year $ 617 $ 714 Loans purchased during the year - - Loans at end of period $ 601 $ 617 |