Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4 The Bancorp’s current lending programs are described below: Residential Real Estate. 80% 97% not Fixed rate loans currently originated generally conform to Freddie Mac guidelines for loans purchased under the one‑to‑four family program. Loan interest rates are determined based on secondary market yield requirements and local market conditions. Fixed rate mortgage loans with contractual maturities generally exceeding fifteen may The 15 20 30 15 15 second The Bancorp’s Adjustable Rate Mortgage Loans (“ARMs”) include offerings that reprice annually or are “Mini-Fixed.” The “Mini‑Fixed” mortgage reprices annually after a one, three, five, seven ten Home Equity Line of Credit. second second Fixed term home improvement and equity loans are made up to a maximum of 85% of the appraised value of the improved property, less any outstanding liens. These loans are offered on both a fixed and variable rate basis with a maximum term of 240 months. All home equity loans are made on a direct basis to borrowers. Commercial Real Estate and Multifamily Loans. 15 seven ten While commercial real estate lending is generally considered to involve a higher degree of risk than single‑family residential lending due to the concentration of principal in a limited number of loans and the effects of general economic conditions on real estate developers and managers, the Bancorp has endeavored to reduce this risk in several ways. In originating commercial real estate loans, the Bancorp considers the feasibility of the project, the financial strength of the borrowers and lessees, the managerial ability of the borrowers, the location of the project and the economic environment. Management evaluates the debt coverage ratio and analyzes the reliability of cash flows, as well as the quality of earnings. All such loans are made in accordance with well-defined underwriting standards and are generally supported by personal guarantees, which represent a secondary source of repayment. Loans for the construction of commercial properties are generally located within an area permitting physical inspection and regular review of business records. Projects financed outside of the Bancorp’s primary lending area generally involve borrowers and guarantors who are or were previous customers of the Bancorp or projects that are underwritten according to the Bank’s underwriting standards. Construction and Land Development. six one Loans are also made for the construction of commercial properties. All such loans are made in accordance with well-defined underwriting standards. Generally if the loans are not not not two Commercial Business and Farmland Loans. not Consumer Loans. Manufactured Homes. third Government Loans. (Dollars in thousands) June 30, 2021 December 31, 2020 Loans secured by real estate: Residential real estate $ 268,649 $ 286,048 Home equity 36,684 39,233 Commercial real estate 315,087 298,257 Construction and land development 104,154 93,562 Multifamily 53,639 50,571 Farmland 309 215 Total loans secured by real estate 778,522 767,886 Commercial business 149,414 158,140 Consumer 544 1,025 Manufactured homes 28,135 24,232 Government 8,462 10,142 Subtotal 965,077 961,425 Add (less): Net deferred loan origination fees and purchase premiums.. 4,235 3,871 Undisbursed loan funds and clearings 179 (150 ) Loans receivable $ 969,491 $ 965,146 (Dollars in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending Balance The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended June 30, 2021: Allowance for loan losses: Residential real estate $ 2,176 $ - $ 15 $ 103 $ 2,294 Home equity 309 - - 62 371 Commercial real estate 5,726 - - 213 5,939 Construction and land development 1,587 - - 211 1,798 Multifamily 680 - - 60 740 Farmland - - - - - Commercial business 2,552 - 11 (89 ) 2,474 Consumer 17 (11 ) 1 16 23 Manufactured homes - - - - - Government - - - - - Total $ 13,047 $ (11 ) $ 27 $ 576 $ 13,639 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended June 30, 2020: Allowance for loan losses: Residential real estate $ 1,828 $ (2 ) $ 4 $ (122 ) $ 1,708 Home equity 246 - - (15 ) 231 Commercial real estate 3,693 (80 ) - 99 3,712 Construction and land development 1,223 (17 ) - (5 ) 1,201 Multifamily 562 - - 47 609 Farmland - - - - - Commercial business 1,901 (78 ) 16 536 2,375 Consumer 42 (1 ) 5 (16 ) 30 Manufactured homes - - - - - Government 16 - - (16 ) - Total $ 9,511 $ (178 ) $ 25 $ 508 $ 9,866 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the six months ended June 30, 2021: Allowance for loan losses: Residential real estate $ 2,211 $ (4 ) $ 25 $ 62 $ 2,294 Home equity 276 (1 ) - 96 371 Commercial real estate 5,406 - - 533 5,939 Construction and land development 1,405 - - 393 1,798 Multifamily 626 - - 114 740 Farmland - - - - - Commercial business 2,508 - 19 (53 ) 2,474 Consumer 26 (17 ) 5 9 23 Manufactured homes - - - - - Government - - - - - Total $ 12,458 $ (22 ) $ 49 $ 1,154 $ 13,639 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the six months ended June 30, 2020: Allowance for loan losses: Residential real estate $ 1,812 $ (2 ) $ 10 $ (112 ) $ 1,708 Home equity 223 - - 8 231 Commercial real estate 3,773 (80 ) - 19 3,712 Construction and land development 1,098 (17 ) - 120 1,201 Multifamily 529 - - 80 609 Farmland - - - - - Commercial business 1,504 (78 ) 17 932 2,375 Consumer 43 (13 ) 8 (8 ) 30 Manufactured homes - - - - - Government 17 - - (17 ) - Total $ 8,999 $ (190 ) $ 35 $ 1,022 $ 9,866 A deferred cost reserve is maintained for the portfolio of manufactured home loans that have been purchased. This reserve is available for use for manufactured home loan nonperformance and costs associated with nonperformance. If the segment performs in line with expectation, the deferred cost reserve is paid as a premium to the third June 30, 2021 December 31, 2020, The Bancorp's impairment analysis is summarized below: Ending Balances (Dollars in thousands) Individually evaluated for impairment reserves Collectively evaluated for impairment reserves Loan receivables Individually evaluated for impairment Purchased credit impaired individually evaluated for impairment Collectively evaluated for impairment The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at June 30, 2021: Residential real estate $ 85 $ 2,209 $ 268,649 $ 730 $ 1,002 $ 266,917 Home equity 5 366 36,684 164 129 36,391 Commercial real estate 1,204 4,735 315,087 7,260 146 307,681 Construction and land development - 1,798 104,154 - - 104,154 Multifamily - 740 53,639 - 596 53,043 Farmland - - 309 - - 309 Commercial business 476 1,998 149,414 944 1,147 147,323 Consumer - 23 544 - - 544 Manufactured homes - - 28,135 - - 28,135 Government - - 8,462 - - 8,462 Total $ 1,770 $ 11,869 $ 965,077 $ 9,098 $ 3,020 $ 952,959 The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2020: Residential real estate $ 173 $ 2,038 $ 286,048 $ 868 $ 1,297 $ 283,883 Home equity 1 275 39,233 216 137 38,880 Commercial real estate 1,089 4,317 298,257 6,190 151 291,916 Construction and land development - 1,405 93,562 - - 93,562 Multifamily - 626 50,571 95 621 49,855 Farmland - - 215 - - 215 Commercial business 512 1,996 158,140 1,086 1,160 155,894 Consumer - 26 1,025 - - 1,025 Manufactured homes - - 24,232 - - 24,232 Government - - 10,142 - - 10,142 Total $ 1,775 $ 10,683 $ 961,425 $ 8,455 $ 3,366 $ 949,604 The Bancorp's credit quality indicators are summarized below at June 30, 2021 and December 31, 2020: Credit Exposure - Credit Risk Portfolio By Creditworthiness Category June 30, 2021 (Dollars in thousands) 1 5 6 7 8 Loan Segment Pass Pass/monitor Special mention Substandard Total Residential real estate $ 224,121 $ 36,446 $ 3,969 $ 4,113 $ 268,649 Home equity 34,900 712 560 512 36,684 Commercial real estate 233,022 59,866 13,801 8,398 315,087 Construction and land development 80,521 19,971 3,662 - 104,154 Multifamily 46,911 4,951 1,377 400 53,639 Farmland 101 208 - - 309 Commercial business 127,244 20,092 1,162 916 149,414 Consumer 544 - - - 544 Manufactured homes 27,335 740 60 - 28,135 Government 8,462 - - - 8,462 Total $ 783,161 $ 142,986 $ 24,591 $ 14,339 $ 965,077 December 31, 2020 (Dollars in thousands) 1 5 6 7 8 Loan Segment Pass Pass/monitor Special mention Substandard Total Residential real estate $ 234,317 $ 41,805 $ 3,539 $ 6,387 $ 286,048 Home equity 37,044 933 761 495 39,233 Commercial real estate 222,892 55,202 11,983 8,180 298,257 Construction and land development 77,855 12,055 3,652 - 93,562 Multifamily 43,594 5,065 1,408 504 50,571 Farmland - 215 - - 215 Commercial business 135,671 20,067 1,341 1,061 158,140 Consumer 1,025 - - - 1,025 Manufactured homes 23,501 731 - - 24,232 Government 10,142 - - - 10,142 Total $ 786,041 $ 136,073 $ 22,684 $ 16,627 $ 961,425 The Bancorp has established a standard loan grading system to assist management, lenders and review personnel in their analysis and supervision of the loan portfolio. The use and application of these grades by the Bancorp is uniform and conforms to regulatory definitions. The loan grading system is as follows: 1 Superior Quality Loans in this category are substantially risk free. Loans fully collateralized by a Bank certificate of deposit or Bank deposits with a hold are substantially risk free. 2 Excellent Quality The borrower generates excellent and consistent cash flow for debt coverage, excellent average credit scores, excellent liquidity and net worth and are reputable operators with over 15 3 Great Quality The borrower generates more than sufficient cash flow to fund debt service and cash flow is improving. Average credit scores are very strong. Operators are reputable with significant years of experience. Liquidity, net worth, current and debt to tangible net worth ratios are very strong. Loan to value is significantly below policy and collateral condition is significantly above average. 4 Above Average Quality The borrower generates more than sufficient cash flow to fund debt service but cash flow trends may 5 Average Quality Borrowers are considered creditworthy and can repay the debt in the normal course of business, however, cash flow trends may 6 Pass Borrowers are considered credit worthy but financial condition may may may 7 Special Mention A special mention asset has identified weaknesses that deserve Management’s close attention. If left uncorrected, these weaknesses may not not Loans in this category may may may may 1:1. may may may may may may 8 Substandard This classification consists of loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Financial statements normally reveal some or all of the following: poor trends, lack of earnings and cash flow, excessive debt, lack of liquidity, and the absence of creditor protection. Loans are still considered collectible, but due to increased risks and defined weaknesses of the credit, some loss could be incurred in collection if the deficiencies are not Performing loans are loans that are paying as agreed and are approximately less than ninety During the six June 30, 2021, one six June 30, 2021. six June, 2020, six June 30, 2020. not The Bancorp's individually evaluated impaired loans are summarized below: For the six months ended For the three months ended As of June 30, 2021 June 30, 2021 June 30, 2021 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Residential real estate $ 1,571 $ 2,904 $ - $ 1,735 $ 42 $ 1,655 $ 20 Home equity 271 283 - 317 5 300 1 Commercial real estate 1,538 2,121 - 1,295 26 1,354 14 Construction and land development - - - - - - - Multifamily 596 678 - 670 11 648 6 Farmland - - - - - - - Commercial business 1,408 1,408 - 1,447 36 1,422 18 Consumer - - - - - - - Manufactured homes - - - - - - - Government - - - - - - - With an allowance recorded: Residential real estate $ 161 $ 161 $ 85 $ 198 $ 5 $ 162 $ - Home equity 22 22 5 15 - 23 - Commercial real estate 5,868 5,868 1,204 5,655 113 5,901 63 Construction and land development - - - - - - - Multifamily - - - - - - - Farmland - - - - - - - Commercial business 683 683 476 719 22 704 11 Consumer - - - - - - - Manufactured homes - - - - - - - Government - - - - - - - Total: Residential real estate $ 1,732 $ 3,065 $ 85 $ 1,933 $ 47 $ 1,817 $ 20 Home equity $ 293 $ 305 $ 5 $ 332 $ 5 $ 323 $ 1 Commercial real estate $ 7,406 $ 7,989 $ 1,204 $ 6,950 $ 139 $ 7,255 $ 77 Construction & land development $ - $ - $ - $ - $ - $ - $ - Multifamily $ 596 $ 678 $ - $ 670 $ 11 $ 648 $ 6 Farmland $ - $ - $ - $ - $ - $ - $ - Commercial business $ 2,091 $ 2,091 $ 476 $ 2,166 $ 58 $ 2,126 $ 29 Consumer $ - $ - $ - $ - $ - $ - $ - Manufactured homes $ - $ - $ - $ - $ - $ - $ - Government $ - $ - $ - $ - $ - $ - $ - For the six months ended For the three months ended As of December 31, 2020 June 30, 2020 June 30, 2020 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Residential real estate $ 1,895 $ 3,228 $ - $ 2,107 $ 49 $ 2,090 $ 25 Home equity 352 363 - 384 9 362 4 Commercial real estate 1,177 1,761 - 1,379 47 1,295 34 Construction & land development - - - - - - - Multifamily 716 798 - 784 14 775 7 Farmland - - - - - - - Commercial business 1,497 1,514 - 1,588 40 1,475 23 Consumer - - - - - - - Manufactured homes - - - - - - - Government - - - - - - - With an allowance recorded: Residential real estate $ 270 $ 314 $ 173 $ 107 $ 1 $ 120 $ - Home equity 1 9 1 5 - - - Commercial real estate 5,164 5,164 1,089 67 1 92 1 Construction & land development - - - - - - - Multifamily - - - - - - - Farmland - - - - - - - Commercial business 749 749 512 676 19 826 16 Consumer - - - - - - - Manufactured homes - - - - - - - Government - - - - - - - Total: Residential real estate $ 2,165 $ 3,542 $ 173 $ 2,214 $ 50 $ 2,210 $ 25 Home equity $ 353 $ 372 $ 1 $ 389 $ 9 $ 362 $ 4 Commercial real estate $ 6,341 $ 6,925 $ 1,089 $ 1,446 $ 48 $ 1,387 $ 35 Construction & land development $ - $ - $ - $ - $ - $ - $ - Multifamily $ 716 $ 798 $ - $ 784 $ 14 $ 775 $ 7 Farmland $ - $ - $ - $ - $ - $ - $ - Commercial business $ 2,246 $ 2,263 $ 512 $ 2,264 $ 59 $ 2,301 $ 39 Consumer $ - $ - $ - $ - $ - $ - $ - Manufactured homes $ - $ - $ - $ - $ - $ - $ - Government $ - $ - $ - $ - $ - $ - $ - The Bancorp's age analysis of past due loans is summarized below: (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater Than 90 Days Past Due Total Past Due Current Total Loans Recorded Investments Greater than 90 Days Past Due and Accruing June 30, 2021 Residential real estate $ 1,894 $ 1,191 $ 2,396 $ 5,481 $ 263,168 $ 268,649 $ 79 Home equity 398 47 413 858 35,826 36,684 - Commercial real estate 619 488 1,421 2,528 312,559 315,087 95 Construction and land development 328 - 42 370 103,784 104,154 41 Multifamily 256 - 120 376 53,263 53,639 - Farmland - - - - 309 309 - Commercial business 1,316 - 215 1,531 147,883 149,414 33 Consumer 1 - - 1 543 544 - Manufactured homes 249 109 - 358 27,777 28,135 - Government - - - - 8,462 8,462 - Total $ 5,061 $ 1,835 $ 4,607 $ 11,503 $ 953,574 $ 965,077 $ 248 December 31, 2020 Residential real estate $ 2,797 $ 1,119 $ 4,875 $ 8,791 $ 277,257 $ 286,048 $ 80 Home equity 616 323 416 1,355 37,878 39,233 29 Commercial real estate 1,172 237 680 2,089 296,168 298,257 437 Construction and land development 471 - 20 491 93,071 93,562 20 Multifamily 94 266 150 510 50,061 50,571 - Farmland - - - - 215 215 - Commercial business 845 96 269 1,210 156,930 158,140 - Consumer 2 - - 2 1,023 1,025 - Manufactured homes 303 173 - 476 23,756 24,232 - Government 380 - - 380 9,762 10,142 - Total $ 6,680 $ 2,214 $ 6,410 $ 15,304 $ 946,121 $ 961,425 $ 566 The Bancorp's loans on nonaccrual status are summarized below: (Dollars in thousands) June 30, 2021 December 31, 2020 Residential real estate $ 4,180 $ 6,390 Home equity 495 476 Commercial real estate 6,521 5,390 Construction and land development. - - Multifamily 400 504 Farmland - - Commercial business 429 1,039 Consumer - - Manufactured homes - - Government - - Total $ 12,025 $ 13,799 As a result of acquisition activity, the Bancorp acquired loans for which there was evidence of credit quality deterioration since origination and it was determined that it was probable that the Bancorp would be unable to collect all contractually required principal and interest payments. At June 30, 2021, December 31, 2020, Accretable interest taken from the purchase credit impaired portfolio, or income recorded for the six months ended June 30, is as follows: (dollars in thousands) Total 2020 $ 57 2021 21 Accretable interest taken from the purchase credit impaired portfolio, or income recorded for the three months ended June 30, is as follows: (dollars in thousands) Total 2020 $ 28 2021 - The accretable interest portion of the purchase credit impaired portfolio has fully amortized at June 30, 2021. Accretable yield, or income recorded for the six June 30, (dollars in thousands) Total 2020 $ 975 2021 605 Accretable yield, or income recorded for the three June 30, (dollars in thousands) Total 2020 $ 615 2021 300 Accretable yield, or income expected to be recorded in the future is as follows: (dollars in thousands) Total 2021 $ 384 2022 758 2023 271 Total $ 1,413 |