Loans and leases receivable disclosure [Text Block] | NOTE 5: LOANS AND ALLOWANCE March 31, December 31, (Dollars in thousands) 2022 2021 Commercial and industrial $ 73,297 $ 83,977 Construction and land development 33,058 32,432 Commercial real estate: Owner occupied 59,429 63,375 Hotel/motel 37,377 43,856 Multi-family 25,253 42,587 Other 113,003 108,553 Total commercial real estate 235,062 258,371 Residential real estate: Consumer mortgage 30,182 29,781 Investment property 48,920 47,880 Total residential real estate 79,102 77,661 Consumer installment 8,412 6,682 Total loans 428,931 459,123 Less: unearned income (514) (759) Loans, net of unearned income $ 428,417 $ 458,364 Loans secured by real estate were approximately 81.0% 31, 2022, the Company’s geographic surrounding areas. In accordance with ASC 310, a portfolio segment is defined as the level at which an entity systematic method for determining its allowance for loan losses. As part of the allowance, the loan portfolio included the following portfolio segments: commercial and development, commercial real estate, residential real estate, and consumer installment. loan portfolio segments are further disaggregated into classes. A class is generally determined measurement attribute, risk characteristics of the loan, and an entity’s The following describes Commercial and industrial (“C&I”) — includes loans to finance business operations, equipment purchases, or for small and medium-sized commercial customers. Also included production. borrower. million included in this category. included in this category at December 31, 2021. Construction and land development (“C&D”) — includes both loans and credit lines for the purpose of purchasing, carrying, lines for construction of residential, multi-family, dependent upon the sale or refinance of the real estate collateral. Commercial real estate includes loans disaggregated into four classes: (1) owner occupied, (2) (3) multifamily and (4) other. ● Owner occupied owner-occupied facilities primarily for small and source of repayment is the cash flow from business operations and activities of the borrower, property. ● Hotel/motel – includes loans for hotels and motels. income generated from the real estate collateral. occupancy and rental rates, as well as the financial health of the borrower. ● Multi-family include loans for 5 or more unit residential property and apartments leased to residents. source of repayment is dependent upon income generated from the real estate collateral. loans takes into consideration the occupancy and rental rates, as well as the financial ● Other multi-family properties, and which retail centers, medical and professional offices, single retail stores, local businesses. estate collateral. The underwriting of these loans takes into consideration the occupancy and the financial health of the borrower. Residential real estate (“RRE”) — includes loans disaggregated into two classes: (1) consumer mortgage and (2) investment property. ● Consumer mortgage consumers that are secured by a primary residence or second home. These loans are underwritten with the Bank’s general loan policies and each borrower’s financial condition, satisfactory credit history ● Investment property Generally, securing the loan. The underwriting of these loans takes into consideration the rental rates and well as the financial health of the borrower. Consumer installment — includes loans to individuals both secured by personal property and unsecured. personal lines of credit, automobile loans, and other retail loans. Bank’s general loan policies and procedures financial condition, satisfactory credit history, The following is a summary of current, accruing past due, and nonaccrual loans by portfolio 31, 2022 and December 31, 2021. Accruing Accruing Total 30-89 Days Greater than Accruing Non- Total (Dollars in thousands) Current Past Due 90 days Loans Accrual Loans March 31, 2022: Commercial and industrial $ 73,290 7 — 73,297 — $ 73,297 Construction and land development 33,057 1 — 33,058 — 33,058 Commercial real estate: Owner occupied 59,429 — — 59,429 — 59,429 Hotel/motel 37,377 — — 37,377 — 37,377 Multi-family 25,253 — — 25,253 — 25,253 Other 112,821 — — 112,821 182 113,003 Total commercial real estate 234,880 — — 234,880 182 235,062 Residential real estate: Consumer mortgage 29,600 393 — 29,993 189 30,182 Investment property 48,817 103 — 48,920 — 48,920 Total residential real estate 78,417 496 — 78,913 189 79,102 Consumer installment 8,397 15 — 8,412 — 8,412 Total $ 428,041 519 — 428,560 371 $ 428,931 December 31, 2021: Commercial and industrial $ 83,974 3 — 83,977 — $ 83,977 Construction and land development 32,228 204 — 32,432 — 32,432 Commercial real estate: Owner occupied 63,375 — — 63,375 — 63,375 Hotel/motel 43,856 — — 43,856 — 43,856 Multi-family 42,587 — — 42,587 — 42,587 Other 108,366 — — 108,366 187 108,553 Total commercial real estate 258,184 — — 258,184 187 258,371 Residential real estate: Consumer mortgage 29,070 516 — 29,586 195 29,781 Investment property 47,818 — — 47,818 62 47,880 Total residential real estate 76,888 516 — 77,404 257 77,661 Consumer installment 6,657 25 — 6,682 — 6,682 Total $ 457,931 748 — 458,679 444 $ 459,123 Allowance for Loan Losses The Company assesses the adequacy of its allowance for loan losses prior the allowance is based upon management’s trends, known and inherent risks in the portfolio, adverse situations that may affect the timing of future payment), the estimated value of any underlying collateral, conditions, industry and peer bank loan loss rates, and other pertinent factors, including regulatory evaluation is inherently subjective as it requires material estimates including the expected to be received on impaired loans that may be susceptible to significant change. Loans are in part, when management believes that the full collectability of the loan is unlikely. after a “confirming event” has occurred, which serves to validate that full repayment pursuant unlikely. The Company deems loans impaired when, based on current information and events, it is be unable to collect all amounts due according to the contractual terms of the loan agreement. according to the contractual terms means that both the interest and principal payments of a scheduled in the loan agreement. An impairment allowance is recognized if the fair value of the loan is less than the recorded impairment is recognized through the allowance. Loans that are impaired are future cash flows discounted at the loan’s effective measurement is based on the fair value of the collateral, less estimated disposal costs. The level of allowance maintained is believed by management to be adequate portfolio at the balance sheet date. The allowance is increased by provisions charged offs, net of recoveries of amounts previously charged-off. In assessing the adequacy of the allowance, the Company also considers the results of its loan review processes. The Company’s whose credit quality has weakened over time and evaluating the risk characteristics of the Company’s loan review process includes the judgment reviews conducted by bank regulatory agencies as part of their examination process. The review results in the determination of whether or not it is probable to the contractual terms of a loan. As part of the Company’s quarterly assessment commercial and industrial, construction and land development, commercial real estate, residential installment. The Company analyzes each segment and estimates an allowance allocation The allocation of the allowance for loan losses begins with a process of estimating the loan segment. The estimates for these loans are established by category and based credit risk ratings and historical loss data. credit risk grades is based on its experience with similarly graded does not have sufficient historical loss data, the Company may groups. loss rates for the commercial real estate portfolio segment based, in part, on loss rates of peer bank groups. The estimated loan loss allocation for all five loan portfolio segments is then adjusted for management’s probable losses for several “qualitative and environmental” factors. The is particularly subjective and does not lend itself to exact mathematical calculation. This amount probable inherent credit losses which exist, but have not yet been identified, upon quarterly trend assessments in delinquent and nonaccrual loans, credit concentration conditions, changes in lending personnel experience, changes in lending policies or qualitative and environmental factors are considered for each of the five loan segments determined by the processes noted above, is increased or decreased based on the incremental The Company regularly re-evaluates its practices in determining the allowance period each quarter incorporates the effects of at least one economic downturn this look-back period is appropriate due to the risks inherent in the loan portfolio. Absent this look-back period, cycle periods in which the Company experienced significant losses allowance for loan losses and its balance would decrease. its look-back period to 52 quarters to continue to include losses incurred by the Company 2009. downturn in its loss history. factors, previously downgraded as a result of the COVID-19 pandemic, to reflect improvements in our primary market area. pandemic and other changes in economic conditions. The following table details the changes in the allowance for loan losses by portfolio segment 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 recoveries (charge-offs) 2 — — 7 (40) (31) Provision for loan losses (85) (10) (203) (9) 57 (250) Ending balance $ 774 508 2,536 737 103 $ 4,658 March 31, 2021 (Dollars in thousands) Commercial and industrial Construction and land development Commercial real estate Residential real estate Consumer installment Total Quarter ended: Beginning balance $ 807 594 3,169 944 104 $ 5,618 Charge-offs — — — — (5) (5) Recoveries 2 — 50 13 4 69 Net recoveries (charge-offs) 2 — 50 13 (1) 64 Provision for loan losses 19 (43) 40 (6) (10) — Ending balance $ 828 551 3,259 951 93 $ 5,682 The following table presents an analysis of the allowance for loan losses and recorded segment and impairment methodology as of March 31, 2022 and 2021. Collectively evaluated (1) Individually evaluated (2) Total Allowance Recorded Allowance Recorded Allowance Recorded for loan investment for loan investment for loan investment (Dollars 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 March 31, 2021: Commercial and industrial (4) $ 828 88,687 — — 828 88,687 Construction and land development 551 30,332 — — 551 30,332 Commercial real estate 3,259 254,525 — 206 3,259 254,731 Residential real estate 951 82,745 — 103 951 82,848 Consumer installment 93 6,524 — — 93 6,524 Total $ 5,682 462,813 — 309 5,682 463,122 (1) Represents loans collectively evaluated for impairment in accordance Loss Contingencies , and pursuant to amendments by ASU 2010-20 regarding allowance (2) Represents loans individually evaluated for impairment in Receivables , and pursuant to amendments by ASU 2010-20 regarding allowance (3) Includes $4.1 million of PPP loans for which no (4) Includes $28.7 million of PPP loans for which no allowance Credit Quality Indicators The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories standard asset classification system used by the federal banking agencies. indicators for the loan portfolio segments and classes. These categories are utilized to develop loan losses using historical losses adjusted for qualitative and environmental ● Pass – loans which are well protected by the current net worth and paying capacity of the any) or by the fair value, less cost to acquire and sell, of any underlying collateral. ● Special Mention – loans with potential weakness that may, inadequately protect the Company’s position not expose an institution to sufficient risk to warrant an adverse classification. ● Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes even though they are currently performing. These loans are characterized by the distinct possibility Company may incur a loss in the future if these weaknesses are not corrected ● Nonaccrual – includes loans where management has determined that full payment expected. (Dollars in thousands) Mention Substandard Accruing Nonaccrual Total loans March 31, 2022: Commercial and industrial $ 73,060 22 215 — $ 73,297 Construction and land development 33,044 1 13 — 33,058 Commercial real estate: Owner occupied 59,060 247 122 — 59,429 Hotel/motel 37,377 — — — 37,377 Multi-family 25,253 — — — 25,253 Other 111,785 1,008 28 182 113,003 Total commercial real estate 233,475 1,255 150 182 235,062 Residential real estate: Consumer mortgage 28,136 449 1,408 189 30,182 Investment property 48,640 96 184 — 48,920 Total residential real estate 76,776 545 1,592 189 79,102 Consumer installment 8,389 15 8 — 8,412 Total $ 424,744 1,838 1,978 371 $ 428,931 December 31, 2021: Commercial and industrial $ 83,725 26 226 — $ 83,977 Construction and land development 32,212 2 218 — 32,432 Commercial real estate: Owner occupied 61,573 1,675 127 — 63,375 Hotel/motel 36,162 7,694 — — 43,856 Multi-family 39,093 3,494 — — 42,587 Other 107,426 911 29 187 108,553 Total commercial real estate 244,254 13,774 156 187 258,371 Residential real estate: Consumer mortgage 27,647 452 1,487 195 29,781 Investment property 47,459 98 261 62 47,880 Total residential real estate 75,106 550 1,748 257 77,661 Consumer installment 6,650 20 12 — 6,682 Total $ 441,947 14,372 2,360 444 $ 459,123 Impaired loans The following tables present details related to the Company’s not included in the following tables. The related allowance generally represents the following to impaired loans: ● Individually evaluated impaired loans equal to or greater than $500 thousand secured construction and land development, commercial real estate, and residential real estate ● Individually evaluated impaired loans equal to or greater than $250 thousand not secured (nonaccrual commercial and industrial and consumer installment loans). The following tables set forth certain information regarding the Company’s for impairment at March 31, 2022 and December 31, 2021. . March 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 real estate: Other $ 202 (20) 182 $ — Total commercial real estate 202 (20) 182 — Total $ 202 (20) 182 $ — (1) Unpaid principal balance represents the contractual obligation (2) Charge-offs and payments applied represents cumulative charge-offs taken, as well applied against the outstanding principal balance subsequent (3) Recorded investment represents the unpaid principal balance December 31, 2021 (Dollars in thousands) Unpaid principal balance (1) Charge-offs and payments applied (2) Recorded investment (3) Related allowance With no allowance recorded: Commercial real estate: Other $ 205 (18) 187 $ — Total commercial real estate 205 (18) 187 — Residential real estate: Investment property 68 (6) 62 — Total residential real estate 68 (6) 62 — Total $ 273 (24) 249 $ — (1) Unpaid principal balance represents the contractual obligation (2) Charge-offs and payments applied represents cumulative charge-offs taken, as well applied against the outstanding principal balance subsequent (3) Recorded investment represents the unpaid principal balance The following table provides the average recorded investment in impaired loans, if amount of interest income recognized on impaired loans after impairment by portfolio respective periods. Quarter ended March 31, 2022 Quarter ended March 31, 2021 Average Total interest Average Total interest recorded income recorded income (Dollars in thousands) investment recognized investment recognized Impaired loans: Commercial real estate: Other $ 236 — 208 $ — Total commercial real estate 236 — 208 — Residential real estate: Investment property 15 — 104 — Total residential real estate 15 — 104 — Total $ 251 — 312 $ — Troubled Debt Impaired loans also include troubled debt restructurings (“TDRs”). From Troubled Debt Restructurings,” provides banks the option 340-10 TDR classifications for a limited period of time to account for the effects Statement on COVID-19 Loan Modifications, encourages banks to agencies’ interpretation of how accounting rules under ASC 310-40, certain COVID-19-related modifications. The Interagency Statement on on June 23, 2020 by the Interagency Examiner Guidance for Assessing Safety and COVID-19 Pandemic on Institutions. section 4013 of the CARES Act. If a loan modification is not eligible under section 4013, account for the loan modification under section 4013, the Revised Statement includes loan modification is not a TDR in accordance with ASC 310-40. The Company evaluates loan extensions or modifications not qualified under Interagency Statement and related regulatory guidance on COVID-19 Loan Modifications 340-10 with respect to the classification of the loan as a TDR. concessions to borrowers that are experiencing financial difficulty. in required payments of principal and interest for a specified period, reduction reduction of accrued interest, extension of the maturity date, or reduction A concession has been granted when, as a result of the restructuring, the Bank does amounts owed, including interest at the original stated rate. able to access funds elsewhere at a market rate for debt with risk characteristics the determination of whether a loan modification is a TDR, the Company considers surrounding each modification. collateral protection in determining the appropriate accrual status at the time of restructure. Similar to other impaired loans, TDRs are measured for impairment based on the present value of expected the loan’s original effective collateral dependent. If the recorded investment in the loan exceeds the measure of establishing a valuation allowance as part of the allowance for loan losses or a charge In periods subsequent to the modification, all TDRs are evaluated individually, for possible impairment. The following is a summary of accruing and nonaccrual TDRs, which are included in the impaired related allowance for loan losses, by portfolio segment and class as of March 31, 2022 respectively. TDRs Related (Dollars in thousands) Accruing Nonaccrual Total Allowance March 31, 2022 Commercial real estate: Other $ — 182 182 $ — Total commercial real estate — 182 182 — Total $ — 182 182 $ — TDRs Related (In thousands) Accruing Nonaccrual Total Allowance December 31, 2021 Commercial real estate: Other $ — 187 187 $ — Total commercial real estate — 187 187 — Investment property — 62 62 — Total residential real estate — 62 62 — Total $ — 249 249 $ — At March 31, 2022 there were no significant outstanding commitments to advance additional loans had been restructured. There were no loans modified in a TDR during the quarters ended March 31, periods, the Company had no loans modified in a TDR within the previous 12 default. |