| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Days Past Days Past Days Past Total Past 90 Days and (Amounts in thousands) Due Due Due Due Current Total Accruing Past Due Loans at March 31, 2021 Commercial $ 101 $ — $ 1,413 $ 1,514 $ 116,083 $ 117,597 $ — PPP — — — — 117,991 117,991 — Commercial real estate: Construction and land development — — — — 32,145 32,145 — Non-owner occupied 1,693 — — 1,693 590,464 592,157 — Owner occupied — — — — 165,367 165,367 — Residential real estate: ITIN 274 50 123 447 27,392 27,839 — 1-4 family mortgage — — — — 54,562 54,562 — Equity lines 19 — — 19 18,581 18,600 — Consumer and other 80 10 — 90 19,595 19,685 — Total $ 2,167 $ 60 $ 1,536 $ 3,763 $ 1,142,180 $ 1,145,943 $ — Recorded 30 59 60 89 90 or Greater Investment > Days Past Days Past Days Past Total Past 90 Days and (Amounts in thousands) Due Due Due Due Current Total Accruing Past Due Loans at December 31, 2020 Commercial $ — $ — $ 1,413 $ 1,413 $ 114,146 $ 115,559 $ — PPP — — — — 130,814 130,814 Commercial real estate: Construction and land development — — — — 44,549 44,549 — Non-owner occupied 640 — — 640 549,380 550,020 — Owner occupied — — 2,993 2,993 169,974 172,967 — Residential real estate: ITIN 40 — 169 209 28,826 29,035 — 1-4 family mortgage — — — — 55,925 55,925 — Equity lines 60 — — 60 18,834 18,894 — Consumer and other 82 17 — 99 21,870 21,969 — Total $ 822 $ 17 $ 4,575 $ 5,414 $ 1,134,318 $ 1,139,732 $ — Nonaccrual Loans Nonaccrual loans, segregated by loan portfolio, were as follows as of March 31, 2021 December 31, 2020. March 31, December 31, (Amounts in thousands) 2021 2020 Nonaccrual Loans: Commercial $ 1,520 $ 1,535 Commercial real estate: Non-owner occupied 626 640 Owner occupied 95 3,094 Residential real estate: ITIN 1,529 1,585 1-4 family mortgage 137 141 Consumer and other 17 18 Total $ 3,924 $ 7,013 Had nonaccrual loans performed in accordance with their contractual terms, we would have recognized additional interest income, net of tax, of approximately $44 thousand and $58 thousand for the three March 31, 2021 2020, Impaired Loans A loan is considered impaired when, based on current information and events, we determine it is probable that we will not March 31, 2021 December 31, 2020. As of March 31, 2021 Unpaid Recorded Principal Related (Amounts in thousands) Investment Balance Allowance Impaired Loans: With no related allowance recorded: Commercial $ 1,558 $ 1,915 $ — Commercial real estate: Non-owner occupied 626 654 — Owner occupied 95 98 — Residential real estate: ITIN 4,775 6,309 — 1-4 family mortgage 137 200 — Total with no related allowance recorded $ 7,191 $ 9,176 $ — With an allowance recorded: Commercial $ 456 $ 456 $ 114 Residential real estate: ITIN 174 174 9 Equity lines 121 121 61 Consumer and other 17 17 4 Total with an allowance recorded $ 768 $ 768 $ 188 By loan portfolio: Commercial $ 2,014 $ 2,371 $ 114 Commercial real estate 721 752 — Residential real estate 5,207 6,804 70 Consumer and other 17 17 4 Total impaired loans $ 7,959 $ 9,944 $ 188 As of December 31, 2020 Unpaid Recorded Principal Related (Amounts in thousands) Investment Balance Allowance Impaired Loans: With no related allowance recorded: Commercial $ 1,577 $ 1,932 $ — Commercial real estate: Non-owner occupied 640 654 — Owner occupied 3,094 3,206 — Residential real estate: ITIN 4,876 6,500 — 1-4 family mortgage 141 202 — Total with no related allowance recorded $ 10,328 $ 12,494 $ — With an allowance recorded: Commercial $ 456 $ 456 $ 114 Residential real estate: ITIN 175 175 11 Equity lines 126 126 63 Consumer and other 18 18 4 Total with an allowance recorded $ 775 $ 775 $ 192 By loan portfolio: Commercial $ 2,033 $ 2,388 $ 114 Commercial real estate 3,734 3,860 — Residential real estate 5,318 7,003 74 Consumer and other 18 18 4 Total impaired loans $ 11,103 $ 13,269 $ 192 The following table summarizes average recorded investment and interest income recognized on impaired loans by loan portfolio for the three March 31, 2021 2020. Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 Average Interest Average Interest Recorded Income Recorded Income (Amounts in thousands) Investment Recognized Investment Recognized Average Recorded Investment and Interest Income: Commercial $ 2,020 $ 7 $ 640 $ 9 Commercial real estate: Non-owner occupied 632 — — — Owner occupied 2,092 — 3,103 — Residential real estate: ITIN 4,983 32 5,957 37 1-4 family mortgage 139 — 186 — Equity lines 123 2 228 4 Consumer and other 17 — 39 — Total $ 10,006 $ 41 $ 10,153 $ 50 The impaired loans on which these interest income amounts were recognized are primarily accruing troubled debt restructured loans. Loans are reported as troubled debt restructurings when we grant a concession(s) to a borrower experiencing financial difficulties that we would not not The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $109 thousand and $80 thousand at March 31, 2021 December 31, 2020, Troubled Debt Restructurings As of March 31, 2021, December 31, 2020. March 31, 2021, third March 31, 2021, December 31, 2020. At March 31, 2021 December 31, 2020, For a troubled debt restructured loan to be on accrual status, the loan’s collateral coverage must generally be greater than or equal to 100% of the loan balance, the loan payments must be current, and the borrower must demonstrate the ability to make payments from a verified source of cash flow. As of March 31, 2021 December 31, 2020, no not three March 31, 2021 2020. one twelve three March 31, 2021. Performing and Nonperforming Loans We define a performing loan as a loan where any installment of principal or interest is not 90 may 90 not Performing and nonperforming loans, segregated by loan portfolio, were as follows at March 31, 2021 December 31, 2020. March 31, 2021 (Amounts in thousands) Performing Nonperforming Total Performing and Nonperforming Loans: Commercial $ 116,077 $ 1,520 $ 117,597 PPP 117,991 — 117,991 Commercial real estate: Construction and land development 32,145 — 32,145 Non-owner occupied 591,531 626 592,157 Owner occupied 165,272 95 165,367 Residential real estate: ITIN 26,310 1,529 27,839 1-4 family mortgage 54,425 137 54,562 Equity lines 18,600 — 18,600 Consumer and other 19,668 17 19,685 Total $ 1,142,019 $ 3,924 $ 1,145,943 December 31, 2020 (Amounts in thousands) Performing Nonperforming Total Performing and Nonperforming Loans: Commercial $ 114,024 $ 1,535 $ 115,559 PPP 130,814 — 130,814 Commercial real estate: Construction and land development 44,549 — 44,549 Non-owner occupied 549,380 640 550,020 Owner occupied 169,873 3,094 172,967 Residential real estate: ITIN 27,450 1,585 29,035 1-4 family mortgage 55,784 141 55,925 Equity lines 18,894 — 18,894 Consumer and other 21,951 18 21,969 Total $ 1,132,719 $ 7,013 $ 1,139,732 Credit Quality Ratings Management assigns a credit quality rating (risk grade) to each loan. The foundation or primary factor in determining the appropriate credit quality rating is the degree of a debtor’s willingness and ability to perform as agreed. In conjunction with evaluating the performing versus nonperforming nature of our loan portfolio, management evaluates the following credit risk and other relevant factors in determining the appropriate credit quality indicator (rating) for each loan portfolio: Pass Grade: no may ● Strong Cash Flows – borrower’s cash flows must meet or exceed our minimum debt service coverage ratio. ● Collateral Margin – generally, the borrower must have pledged an acceptable collateral class with an adequate collateral margin. ● Qualitative Factors – in addition to meeting our minimum cash flow and collateral requirements, a number of other qualitative factors are also factored into assigning a Pass Grade including the borrower’s level of leverage (debt to equity), prospects, history and experience in their industry, credit history, and any other relevant factors including a borrower’s character. Those borrowers who qualify for unsecured loans must fully demonstrate above average cash flows and strong secondary sources of repayment to mitigate the lack of unpledged collateral. Watch Grade: may one not ● The primary source of repayment may ● The primary source of repayment is adequate, but the secondary source of repayment is insufficient ● In-depth financial analysis would compare to the lower quartile in two ● Volatile or deteriorating collateral ● Management decisions may ● Delinquencies in bank credits or other financial/trade creditors ● Frequent overdrafts ● Significant change in management/ownership Special Mention Grade: may not not not ● Inadequate or incomplete loan documentation or perfection of collateral, or any other deviation from prudent lending practices ● Credit is structured in a manner in which the timing of the repayment source does not ● Current economic or market conditions exist which may ● Adverse trends in the borrower's operations or continued deterioration in the borrower’s financial condition that has not ● The borrower is less than cooperative or unable to produce current and adequate financial information Substandard Grade: not not may may not The following represents, but is not not ● Sustained or substantial deteriorating financial trends, ● Unresolved management problems, ● Collateral is insufficient to repay debt; collateral is not ● Improper perfection of lien position, which is not ● Unanticipated and severe decline in market values, ● High reliance on secondary source of repayment, ● Legal proceedings, such as bankruptcy or a divorce, which has substantially decreased the borrower’s capacity to repay the debt, ● Fraud committed by the borrower, ● IRS liens that take precedence, ● Forfeiture statutes for assets involved in criminal activities, ● Protracted repayment terms outside of policy that are for longer than the same type of credit in our portfolio, ● Any other relevant quantitative or qualitative factor that negatively affects the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Doubtful Grade: one may may may not ● Proposed merger(s), ● Acquisition or liquidation procedures, ● Capital injection, ● Perfecting liens on additional collateral, ● Refinancing plans. Generally, a Doubtful Grade does not six six The following tables summarize loans by internal risk grades and by loan class as of March 31, 2021 December 31, 2020. As of March 31, 2021 Special (Amounts in thousands) Pass Watch Mention Substandard Doubtful Total Loan Portfolio: Commercial $ 103,683 $ 8,555 $ 381 $ 4,978 $ — $ 117,597 PPP 117,991 — — — — 117,991 Commercial real estate: Construction and land development 31,831 117 — 197 — 32,145 Non-owner occupied 490,585 62,451 33,455 5,666 — 592,157 Owner occupied 145,573 12,366 — 7,428 — 165,367 Residential real estate: ITIN 24,441 — — 3,398 — 27,839 1-4 family mortgage 52,655 — — 1,907 — 54,562 Equity lines 18,600 — — — — 18,600 Consumer and other 19,666 2 — 17 — 19,685 Total $ 1,005,025 $ 83,491 $ 33,836 $ 23,591 $ — $ 1,145,943 As of December 31, 2020 Special (Amounts in thousands) Pass Watch Mention Substandard Doubtful Total Loan Portfolio: Commercial $ 102,067 $ 8,549 $ 540 $ 4,403 $ — $ 115,559 PPP 130,814 — — — — 130,814 Commercial real estate: Construction and land development 41,767 2,782 — — — 44,549 Non-owner occupied 456,725 79,845 12,810 640 — 550,020 Owner occupied 152,623 13,945 414 5,985 — 172,967 Residential real estate: ITIN 25,558 — — 3,477 — 29,035 1-4 family mortgage 54,288 195 — 1,442 — 55,925 Equity lines 18,894 — — — — 18,894 Consumer and other 21,952 — — 17 — 21,969 Total $ 1,004,688 $ 105,316 $ 13,764 $ 15,964 $ — $ 1,139,732 Allowance for Loan and Lease Losses The following tables summarize the ALLL by portfolio for the three March 31, 2021 2020. For the Three Months Ended March 31, 2021 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program (1) Real Estate Real Estate Consumer Unallocated Total ALLL by Loan Portfolio: Beginning balance $ 2,402 $ — $ 11,895 $ 1,324 $ 683 $ 606 $ 16,910 Charge-offs — — — (22 ) (68 ) — (90 ) Recoveries 10 — 110 25 62 — 207 Provision (46 ) — 248 (106 ) (120 ) 24 — Ending balance $ 2,366 $ — $ 12,253 $ 1,221 $ 557 $ 630 $ 17,027 ( 1 no For the Three Months Ended March 31, 2020 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program Real Estate Real Estate Consumer Unallocated Total ALLL by Loan Portfolio: Beginning balance $ 1,822 $ — $ 8,096 $ 1,032 $ 933 $ 348 $ 12,231 Charge-offs — — — (6 ) (163 ) — (169 ) Recoveries 7 — — 44 104 — 155 Provision 654 — 1,803 211 98 84 2,850 Ending balance $ 2,483 $ — $ 9,899 $ 1,281 $ 972 $ 432 $ 15,067 While the ALLL composition is an indication of specific amounts or loan categories in which future charge-offs may may not March 31, 2021 December 31, 2020, 4% March 31, 2021 December 31, 2020. As of March 31, 2021 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program (1) Real Estate Real Estate Consumer Unallocated Total ALLL: Individually evaluated for impairment $ 114 $ — $ — $ 70 $ 4 $ — $ 188 Collectively evaluated for impairment 2,252 — 12,253 1,151 553 630 16,839 Total $ 2,366 $ — $ 12,253 $ 1,221 $ 557 $ 630 $ 17,027 Gross loans: Individually evaluated for impairment $ 2,014 $ — $ 721 $ 5,207 $ 17 $ — $ 7,959 Collectively evaluated for impairment 115,583 117,991 788,948 95,794 19,668 — 1,137,984 Total gross loans $ 117,597 $ 117,991 $ 789,669 $ 101,001 $ 19,685 $ — $ 1,145,943 ( 1 no As of December 31, 2020 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program (1) Real Estate Real Estate Consumer Unallocated Total ALLL: Individually evaluated for impairment $ 114 $ — $ — $ 74 $ 4 $ — $ 192 Collectively evaluated for impairment 2,288 — 11,895 1,250 679 606 16,718 Total $ 2,402 $ — $ 11,895 $ 1,324 $ 683 $ 606 $ 16,910 Gross loans: Individually evaluated for impairment $ 2,033 $ — $ 3,734 $ 5,318 $ 18 $ — $ 11,103 Collectively evaluated for impairment 113,526 130,814 763,802 98,536 21,951 — 1,128,629 Total gross loans $ 115,559 $ 130,814 $ 767,536 $ 103,854 $ 21,969 $ — $ 1,139,732 ( 1 no The ALLL totaled $17.0 million or 1.49% of total gross loans at March 31, 2021 December 31, 2020. March 31, 2021 December 31, 2020, Other Liabilities Consolidated Balance Sheets March 31, 2021 December 31, 2020 We believe that the ALLL was adequate as of March 31, 2021. no not may COVID- 19 During 2020 COVID‐19 During the current quarter, we decreased our qualitative credit risk factor for “changes in international, national, regional and local conditions” to reflect our more positive outlook on the economy. ALLL Methodology We have lending policies and procedures in place with the objective of optimizing loan income within an accepted risk tolerance level. We review and approve these policies and procedures annually. Monitoring and reporting systems supplement the review process with regular frequency as related to loan production, loan quality, concentrations of credit, potential problem loans, loan delinquencies, and nonperforming loans. We formally assess the adequacy of the ALLL on a quarterly basis. The ALLL is based upon estimates of future loan and lease losses and is maintained at a level considered adequate to provide for probable losses inherent in the outstanding loan and lease portfolio. Our ALLL methodology incorporates management’s current judgments, and reflects management’s estimate of future loan and lease losses and risks inherent in the loan portfolio in accordance with ASC Topic 450 Contingencies 450” 310 Receivables 310” . Management’s assessment of the ALLL is based on our continuing evaluation of all known relevant quantitative and qualitative internal and external risk factors provides the foundation for the four ( 1 Historical valuation allowances established in accordance with ASC 450, ( 2 General valuation allowances established in accordance with ASC 450, ( 3 Specific valuation allowances established in accordance with ASC 310, ( 4 Unallocated valuation allowances established in accordance with ASC 310 450, not All four may not not no not may The allowance is increased by provisions charged to expense and reduced by net charge-offs. In periodic evaluations of the adequacy of the allowance balance, management considers past loan and lease loss experience by type of credit, known and inherent risks in the portfolio, adverse situations that may Our assessment of the adequacy of the ALLL includes the periodic re-grading of classified loans based on changes in their individual credit characteristics including delinquency, seasoning, recent financial performance of the borrower, economic factors, changes in the interest rate environment and other factors as warranted. Loans are initially rated when originated. They are reviewed as they are renewed, when there is a new loan to the same borrower and/or when identified facts demonstrate heightened risk of default. Our loan portfolio is evaluated by general loan class including commercial, commercial real estate (which includes construction and other real estate), residential real estate (which includes 1 4 450, General valuation allowances, as prescribed by ASC 450, Impaired loans Management monitors delinquent loans continuously and identifies problem loans to be evaluated individually for impairment testing. For loans that are determined impaired, a formal impairment measurement is performed at least quarterly on a loan-by-loan basis. If the measurement of each impaired loans’ value is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value through the ALLL. For collateral dependent loans, this can be accomplished by charging off the impaired portion of the loan based on the underlying value of the collateral. For non-collateral dependent loans, we establish a specific component within the ALLL based on the present value of the future cash flows. If we determine the sources of repayment will not Risk Characteristics and Underwriting The following is a brief summary, by loan type, of management’s evaluation of the general risk characteristics and underwriting standards: Commercial Loans may may Most commercial loans are generally secured by the assets being financed and other business assets such as accounts receivable or inventory. Management may may may PPP Loans April 2020 100% March 31, 2021, may no Commercial Real Estate ( CRE ) Loans The properties securing the CRE portfolio are diverse in terms of type and primary source of repayment. This diversity helps reduce our exposure to adverse economic events that affect any single industry. We monitor and evaluate CRE loans based on occupancy status (investor versus owner occupied), collateral, geography, and risk grade criteria. Generally, CRE loans are made to developers and builders that are secured by non-owner occupied properties require the borrower to have had an existing relationship with the Company and a proven record of success. Construction loans are underwritten utilizing feasibility studies, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of cost and value associated with the complete project (as-is value). These estimates may may Residential Real Estate Loans not We originate some single-family residence construction loans. The loan amounts are no $1 12 may Consumer Loans third not one Concentrations of Credit Risk As of March 31, 2021, may may may Credit review Confirmation of the quality of our loan grading process is obtained by independent reviews conducted by outside consultants specifically hired for this purpose and by periodic examination by various bank regulatory agencies. We maintain an independent loan review program that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to the Board of Directors, Loan Committee and Audit Committee. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as our policies and procedures. Reserve For Unfunded Commitments The reserve for unfunded commitments, which is included in Other Liabilities Consolidated Balance Sheets March 31, 2021 December 31, 2020. Consolidated Statements of Income. " id="sjs-B4" xml:space="preserve">NOTE 4. Outstanding loan balances consisted of the following at March 31, 2021, December 31, 2020. March 31, December 31, (Amounts in thousands) 2021 2020 Loan Portfolio: Commercial $ 117,597 $ 115,559 Paycheck Protection Program ("PPP") 117,991 130,814 Commercial real estate: Construction and land development 32,145 44,549 Non-owner occupied 592,157 550,020 Owner occupied 165,367 172,967 Residential real estate: Individual Tax Identification Number (“ITIN”) 27,839 29,035 1-4 family mortgage 54,562 55,925 Equity lines 18,600 18,894 Consumer and other 19,685 21,969 Gross loans 1,145,943 1,139,732 Deferred fees and costs 143 229 Loans, net of deferred fees and costs 1,146,086 1,139,961 Allowance for loan and lease losses (17,027 ) (16,910 ) Net loans $ 1,129,059 $ 1,123,051 Gross loan balances in the table above include discounts on purchased loans and fair value adjustments made to acquired loans using the acquisition method of accounting. Discounts on purchased loans - March 31, 2021, December 31, 2020, no March 31, 2021, December 31, 2020. Fair value adjustment - March 31, 2021 December 31, 2020, first 2019. three March 31, 2021 2020, Pledged Loans Certain loans are pledged as collateral for lines of credit with the FHLB and the Federal Reserve Bank. Pledged loans totaled $557.3 million and $523.5 million at March 31, 2021 December 31, 2020, Short-Term Loan Modifications At March 31, 2021, 19 December 31, 2020. not not one six 19. six March 31, 2021. Past Due Loans Past due loans (gross), segregated by loan portfolio were as follows, as of March 31, 2021, December 31, 2020. Recorded 30 59 60 89 90 or Greater Investment > Days Past Days Past Days Past Total Past 90 Days and (Amounts in thousands) Due Due Due Due Current Total Accruing Past Due Loans at March 31, 2021 Commercial $ 101 $ — $ 1,413 $ 1,514 $ 116,083 $ 117,597 $ — PPP — — — — 117,991 117,991 — Commercial real estate: Construction and land development — — — — 32,145 32,145 — Non-owner occupied 1,693 — — 1,693 590,464 592,157 — Owner occupied — — — — 165,367 165,367 — Residential real estate: ITIN 274 50 123 447 27,392 27,839 — 1-4 family mortgage — — — — 54,562 54,562 — Equity lines 19 — — 19 18,581 18,600 — Consumer and other 80 10 — 90 19,595 19,685 — Total $ 2,167 $ 60 $ 1,536 $ 3,763 $ 1,142,180 $ 1,145,943 $ — Recorded 30 59 60 89 90 or Greater Investment > Days Past Days Past Days Past Total Past 90 Days and (Amounts in thousands) Due Due Due Due Current Total Accruing Past Due Loans at December 31, 2020 Commercial $ — $ — $ 1,413 $ 1,413 $ 114,146 $ 115,559 $ — PPP — — — — 130,814 130,814 Commercial real estate: Construction and land development — — — — 44,549 44,549 — Non-owner occupied 640 — — 640 549,380 550,020 — Owner occupied — — 2,993 2,993 169,974 172,967 — Residential real estate: ITIN 40 — 169 209 28,826 29,035 — 1-4 family mortgage — — — — 55,925 55,925 — Equity lines 60 — — 60 18,834 18,894 — Consumer and other 82 17 — 99 21,870 21,969 — Total $ 822 $ 17 $ 4,575 $ 5,414 $ 1,134,318 $ 1,139,732 $ — Nonaccrual Loans Nonaccrual loans, segregated by loan portfolio, were as follows as of March 31, 2021 December 31, 2020. March 31, December 31, (Amounts in thousands) 2021 2020 Nonaccrual Loans: Commercial $ 1,520 $ 1,535 Commercial real estate: Non-owner occupied 626 640 Owner occupied 95 3,094 Residential real estate: ITIN 1,529 1,585 1-4 family mortgage 137 141 Consumer and other 17 18 Total $ 3,924 $ 7,013 Had nonaccrual loans performed in accordance with their contractual terms, we would have recognized additional interest income, net of tax, of approximately $44 thousand and $58 thousand for the three March 31, 2021 2020, Impaired Loans A loan is considered impaired when, based on current information and events, we determine it is probable that we will not March 31, 2021 December 31, 2020. As of March 31, 2021 Unpaid Recorded Principal Related (Amounts in thousands) Investment Balance Allowance Impaired Loans: With no related allowance recorded: Commercial $ 1,558 $ 1,915 $ — Commercial real estate: Non-owner occupied 626 654 — Owner occupied 95 98 — Residential real estate: ITIN 4,775 6,309 — 1-4 family mortgage 137 200 — Total with no related allowance recorded $ 7,191 $ 9,176 $ — With an allowance recorded: Commercial $ 456 $ 456 $ 114 Residential real estate: ITIN 174 174 9 Equity lines 121 121 61 Consumer and other 17 17 4 Total with an allowance recorded $ 768 $ 768 $ 188 By loan portfolio: Commercial $ 2,014 $ 2,371 $ 114 Commercial real estate 721 752 — Residential real estate 5,207 6,804 70 Consumer and other 17 17 4 Total impaired loans $ 7,959 $ 9,944 $ 188 As of December 31, 2020 Unpaid Recorded Principal Related (Amounts in thousands) Investment Balance Allowance Impaired Loans: With no related allowance recorded: Commercial $ 1,577 $ 1,932 $ — Commercial real estate: Non-owner occupied 640 654 — Owner occupied 3,094 3,206 — Residential real estate: ITIN 4,876 6,500 — 1-4 family mortgage 141 202 — Total with no related allowance recorded $ 10,328 $ 12,494 $ — With an allowance recorded: Commercial $ 456 $ 456 $ 114 Residential real estate: ITIN 175 175 11 Equity lines 126 126 63 Consumer and other 18 18 4 Total with an allowance recorded $ 775 $ 775 $ 192 By loan portfolio: Commercial $ 2,033 $ 2,388 $ 114 Commercial real estate 3,734 3,860 — Residential real estate 5,318 7,003 74 Consumer and other 18 18 4 Total impaired loans $ 11,103 $ 13,269 $ 192 The following table summarizes average recorded investment and interest income recognized on impaired loans by loan portfolio for the three March 31, 2021 2020. Three Months Ended Three Months Ended March 31, 2021 March 31, 2020 Average Interest Average Interest Recorded Income Recorded Income (Amounts in thousands) Investment Recognized Investment Recognized Average Recorded Investment and Interest Income: Commercial $ 2,020 $ 7 $ 640 $ 9 Commercial real estate: Non-owner occupied 632 — — — Owner occupied 2,092 — 3,103 — Residential real estate: ITIN 4,983 32 5,957 37 1-4 family mortgage 139 — 186 — Equity lines 123 2 228 4 Consumer and other 17 — 39 — Total $ 10,006 $ 41 $ 10,153 $ 50 The impaired loans on which these interest income amounts were recognized are primarily accruing troubled debt restructured loans. Loans are reported as troubled debt restructurings when we grant a concession(s) to a borrower experiencing financial difficulties that we would not not The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $109 thousand and $80 thousand at March 31, 2021 December 31, 2020, Troubled Debt Restructurings As of March 31, 2021, December 31, 2020. March 31, 2021, third March 31, 2021, December 31, 2020. At March 31, 2021 December 31, 2020, For a troubled debt restructured loan to be on accrual status, the loan’s collateral coverage must generally be greater than or equal to 100% of the loan balance, the loan payments must be current, and the borrower must demonstrate the ability to make payments from a verified source of cash flow. As of March 31, 2021 December 31, 2020, no not three March 31, 2021 2020. one twelve three March 31, 2021. Performing and Nonperforming Loans We define a performing loan as a loan where any installment of principal or interest is not 90 may 90 not Performing and nonperforming loans, segregated by loan portfolio, were as follows at March 31, 2021 December 31, 2020. March 31, 2021 (Amounts in thousands) Performing Nonperforming Total Performing and Nonperforming Loans: Commercial $ 116,077 $ 1,520 $ 117,597 PPP 117,991 — 117,991 Commercial real estate: Construction and land development 32,145 — 32,145 Non-owner occupied 591,531 626 592,157 Owner occupied 165,272 95 165,367 Residential real estate: ITIN 26,310 1,529 27,839 1-4 family mortgage 54,425 137 54,562 Equity lines 18,600 — 18,600 Consumer and other 19,668 17 19,685 Total $ 1,142,019 $ 3,924 $ 1,145,943 December 31, 2020 (Amounts in thousands) Performing Nonperforming Total Performing and Nonperforming Loans: Commercial $ 114,024 $ 1,535 $ 115,559 PPP 130,814 — 130,814 Commercial real estate: Construction and land development 44,549 — 44,549 Non-owner occupied 549,380 640 550,020 Owner occupied 169,873 3,094 172,967 Residential real estate: ITIN 27,450 1,585 29,035 1-4 family mortgage 55,784 141 55,925 Equity lines 18,894 — 18,894 Consumer and other 21,951 18 21,969 Total $ 1,132,719 $ 7,013 $ 1,139,732 Credit Quality Ratings Management assigns a credit quality rating (risk grade) to each loan. The foundation or primary factor in determining the appropriate credit quality rating is the degree of a debtor’s willingness and ability to perform as agreed. In conjunction with evaluating the performing versus nonperforming nature of our loan portfolio, management evaluates the following credit risk and other relevant factors in determining the appropriate credit quality indicator (rating) for each loan portfolio: Pass Grade: no may ● Strong Cash Flows – borrower’s cash flows must meet or exceed our minimum debt service coverage ratio. ● Collateral Margin – generally, the borrower must have pledged an acceptable collateral class with an adequate collateral margin. ● Qualitative Factors – in addition to meeting our minimum cash flow and collateral requirements, a number of other qualitative factors are also factored into assigning a Pass Grade including the borrower’s level of leverage (debt to equity), prospects, history and experience in their industry, credit history, and any other relevant factors including a borrower’s character. Those borrowers who qualify for unsecured loans must fully demonstrate above average cash flows and strong secondary sources of repayment to mitigate the lack of unpledged collateral. Watch Grade: may one not ● The primary source of repayment may ● The primary source of repayment is adequate, but the secondary source of repayment is insufficient ● In-depth financial analysis would compare to the lower quartile in two ● Volatile or deteriorating collateral ● Management decisions may ● Delinquencies in bank credits or other financial/trade creditors ● Frequent overdrafts ● Significant change in management/ownership Special Mention Grade: may not not not ● Inadequate or incomplete loan documentation or perfection of collateral, or any other deviation from prudent lending practices ● Credit is structured in a manner in which the timing of the repayment source does not ● Current economic or market conditions exist which may ● Adverse trends in the borrower's operations or continued deterioration in the borrower’s financial condition that has not ● The borrower is less than cooperative or unable to produce current and adequate financial information Substandard Grade: not not may may not The following represents, but is not not ● Sustained or substantial deteriorating financial trends, ● Unresolved management problems, ● Collateral is insufficient to repay debt; collateral is not ● Improper perfection of lien position, which is not ● Unanticipated and severe decline in market values, ● High reliance on secondary source of repayment, ● Legal proceedings, such as bankruptcy or a divorce, which has substantially decreased the borrower’s capacity to repay the debt, ● Fraud committed by the borrower, ● IRS liens that take precedence, ● Forfeiture statutes for assets involved in criminal activities, ● Protracted repayment terms outside of policy that are for longer than the same type of credit in our portfolio, ● Any other relevant quantitative or qualitative factor that negatively affects the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Doubtful Grade: one may may may not ● Proposed merger(s), ● Acquisition or liquidation procedures, ● Capital injection, ● Perfecting liens on additional collateral, ● Refinancing plans. Generally, a Doubtful Grade does not six six The following tables summarize loans by internal risk grades and by loan class as of March 31, 2021 December 31, 2020. As of March 31, 2021 Special (Amounts in thousands) Pass Watch Mention Substandard Doubtful Total Loan Portfolio: Commercial $ 103,683 $ 8,555 $ 381 $ 4,978 $ — $ 117,597 PPP 117,991 — — — — 117,991 Commercial real estate: Construction and land development 31,831 117 — 197 — 32,145 Non-owner occupied 490,585 62,451 33,455 5,666 — 592,157 Owner occupied 145,573 12,366 — 7,428 — 165,367 Residential real estate: ITIN 24,441 — — 3,398 — 27,839 1-4 family mortgage 52,655 — — 1,907 — 54,562 Equity lines 18,600 — — — — 18,600 Consumer and other 19,666 2 — 17 — 19,685 Total $ 1,005,025 $ 83,491 $ 33,836 $ 23,591 $ — $ 1,145,943 As of December 31, 2020 Special (Amounts in thousands) Pass Watch Mention Substandard Doubtful Total Loan Portfolio: Commercial $ 102,067 $ 8,549 $ 540 $ 4,403 $ — $ 115,559 PPP 130,814 — — — — 130,814 Commercial real estate: Construction and land development 41,767 2,782 — — — 44,549 Non-owner occupied 456,725 79,845 12,810 640 — 550,020 Owner occupied 152,623 13,945 414 5,985 — 172,967 Residential real estate: ITIN 25,558 — — 3,477 — 29,035 1-4 family mortgage 54,288 195 — 1,442 — 55,925 Equity lines 18,894 — — — — 18,894 Consumer and other 21,952 — — 17 — 21,969 Total $ 1,004,688 $ 105,316 $ 13,764 $ 15,964 $ — $ 1,139,732 Allowance for Loan and Lease Losses The following tables summarize the ALLL by portfolio for the three March 31, 2021 2020. For the Three Months Ended March 31, 2021 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program (1) Real Estate Real Estate Consumer Unallocated Total ALLL by Loan Portfolio: Beginning balance $ 2,402 $ — $ 11,895 $ 1,324 $ 683 $ 606 $ 16,910 Charge-offs — — — (22 ) (68 ) — (90 ) Recoveries 10 — 110 25 62 — 207 Provision (46 ) — 248 (106 ) (120 ) 24 — Ending balance $ 2,366 $ — $ 12,253 $ 1,221 $ 557 $ 630 $ 17,027 ( 1 no For the Three Months Ended March 31, 2020 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program Real Estate Real Estate Consumer Unallocated Total ALLL by Loan Portfolio: Beginning balance $ 1,822 $ — $ 8,096 $ 1,032 $ 933 $ 348 $ 12,231 Charge-offs — — — (6 ) (163 ) — (169 ) Recoveries 7 — — 44 104 — 155 Provision 654 — 1,803 211 98 84 2,850 Ending balance $ 2,483 $ — $ 9,899 $ 1,281 $ 972 $ 432 $ 15,067 While the ALLL composition is an indication of specific amounts or loan categories in which future charge-offs may may not March 31, 2021 December 31, 2020, 4% March 31, 2021 December 31, 2020. As of March 31, 2021 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program (1) Real Estate Real Estate Consumer Unallocated Total ALLL: Individually evaluated for impairment $ 114 $ — $ — $ 70 $ 4 $ — $ 188 Collectively evaluated for impairment 2,252 — 12,253 1,151 553 630 16,839 Total $ 2,366 $ — $ 12,253 $ 1,221 $ 557 $ 630 $ 17,027 Gross loans: Individually evaluated for impairment $ 2,014 $ — $ 721 $ 5,207 $ 17 $ — $ 7,959 Collectively evaluated for impairment 115,583 117,991 788,948 95,794 19,668 — 1,137,984 Total gross loans $ 117,597 $ 117,991 $ 789,669 $ 101,001 $ 19,685 $ — $ 1,145,943 ( 1 no As of December 31, 2020 Paycheck Protection Commercial Residential (Amounts in thousands) Commercial Program (1) Real Estate Real Estate Consumer Unallocated Total ALLL: Individually evaluated for impairment $ 114 $ — $ — $ 74 $ 4 $ — $ 192 Collectively evaluated for impairment 2,288 — 11,895 1,250 679 606 16,718 Total $ 2,402 $ — $ 11,895 $ 1,324 $ 683 $ 606 $ 16,910 Gross loans: Individually evaluated for impairment $ 2,033 $ — $ 3,734 $ 5,318 $ 18 $ — $ 11,103 Collectively evaluated for impairment 113,526 130,814 763,802 98,536 21,951 — 1,128,629 Total gross loans $ 115,559 $ 130,814 $ 767,536 $ 103,854 $ 21,969 $ — $ 1,139,732 ( 1 no The ALLL totaled $17.0 million or 1.49% of total gross loans at March 31, 2021 December 31, 2020. March 31, 2021 December 31, 2020, Other Liabilities Consolidated Balance Sheets March 31, 2021 December 31, 2020 We believe that the ALLL was adequate as of March 31, 2021. no not may COVID- 19 During 2020 COVID‐19 During the current quarter, we decreased our qualitative credit risk factor for “changes in international, national, regional and local conditions” to reflect our more positive outlook on the economy. ALLL Methodology We have lending policies and procedures in place with the objective of optimizing loan income within an accepted risk tolerance level. We review and approve these policies and procedures annually. Monitoring and reporting systems supplement the review process with regular frequency as related to loan production, loan quality, concentrations of credit, potential problem loans, loan delinquencies, and nonperforming loans. We formally assess the adequacy of the ALLL on a quarterly basis. The ALLL is based upon estimates of future loan and lease losses and is maintained at a level considered adequate to provide for probable losses inherent in the outstanding loan and lease portfolio. Our ALLL methodology incorporates management’s current judgments, and reflects management’s estimate of future loan and lease losses and risks inherent in the loan portfolio in accordance with ASC Topic 450 Contingencies 450” 310 Receivables 310” . Management’s assessment of the ALLL is based on our continuing evaluation of all known relevant quantitative and qualitative internal and external risk factors provides the foundation for the four ( 1 Historical valuation allowances established in accordance with ASC 450, ( 2 General valuation allowances established in accordance with ASC 450, ( 3 Specific valuation allowances established in accordance with ASC 310, ( 4 Unallocated valuation allowances established in accordance with ASC 310 450, not All four may not not no not may The allowance is increased by provisions charged to expense and reduced by net charge-offs. In periodic evaluations of the adequacy of the allowance balance, management considers past loan and lease loss experience by type of credit, known and inherent risks in the portfolio, adverse situations that may Our assessment of the adequacy of the ALLL includes the periodic re-grading of classified loans based on changes in their individual credit characteristics including delinquency, seasoning, recent financial performance of the borrower, economic factors, changes in the interest rate environment and other factors as warranted. Loans are initially rated when originated. They are reviewed as they are renewed, when there is a new loan to the same borrower and/or when identified facts demonstrate heightened risk of default. Our loan portfolio is evaluated by general loan class including commercial, commercial real estate (which includes construction and other real estate), residential real estate (which includes 1 4 450, General valuation allowances, as prescribed by ASC 450, Impaired loans Management monitors delinquent loans continuously and identifies problem loans to be evaluated individually for impairment testing. For loans that are determined impaired, a formal impairment measurement is performed at least quarterly on a loan-by-loan basis. If the measurement of each impaired loans’ value is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value through the ALLL. For collateral dependent loans, this can be accomplished by charging off the impaired portion of the loan based on the underlying value of the collateral. For non-collateral dependent loans, we establish a specific component within the ALLL based on the present value of the future cash flows. If we determine the sources of repayment will not Risk Characteristics and Underwriting The following is a brief summary, by loan type, of management’s evaluation of the general risk characteristics and underwriting standards: Commercial Loans may may Most commercial loans are generally secured by the assets being financed and other business assets such as accounts receivable or inventory. Management may may may PPP Loans April 2020 100% March 31, 2021, may no Commercial Real Estate ( CRE ) Loans The properties securing the CRE portfolio are diverse in terms of type and primary source of repayment. This diversity helps reduce our exposure to adverse economic events that affect any single industry. We monitor and evaluate CRE loans based on occupancy status (investor versus owner occupied), collateral, geography, and risk grade criteria. Generally, CRE loans are made to developers and builders that are secured by non-owner occupied properties require the borrower to have had an existing relationship with the Company and a proven record of success. Construction loans are underwritten utilizing feasibility studies, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of cost and value associated with the complete project (as-is value). These estimates may may Residential Real Estate Loans not We originate some single-family residence construction loans. The loan amounts are no $1 12 may Consumer Loans third not one Concentrations of Credit Risk As of March 31, 2021, may may may Credit review Confirmation of the quality of our loan grading process is obtained by independent reviews conducted by outside consultants specifically hired for this purpose and by periodic examination by various bank regulatory agencies. We maintain an independent loan review program that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to the Board of Directors, Loan Committee and Audit Committee. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as our policies and procedures. Reserve For Unfunded Commitments The reserve for unfunded commitments, which is included in Other Liabilities Consolidated Balance Sheets March 31, 2021 December 31, 2020. Consolidated Statements of Income. |
