XML 22 R12.htm IDEA: XBRL DOCUMENT

Note 4 - Loans

3 Months Ended

Sep. 30, 2021

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 4 – Loans

Major classifications of loans were as follows:

	September 30, 2021			June 30, 2021
Commercial	$	95,568		$	112,337
Commercial real estate:
Construction		17,477			10,525
Other		269,627			269,679
1 – 4 Family residential real estate:
Owner occupied		137,037			118,269
Non-owner occupied		20,123			19,151
Construction		6,591			9,073
Consumer		32,109			29,646
Subtotal		578,532			568,680
Net deferred loan fees and costs		(1,371	)		(2,253	)
Allowance for loan losses		(6,677	)		(6,471	)
Net Loans	$	570,484		$	559,956

The commercial loan category in the above table includes PPP loans of $29,505 as of September 30, 2021 and $50,686 as of June 30, 2021.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2021:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer			Total

Allowance for loan losses:
Beginning balance	$	904	$	3,949	$	1,307	$	311		$	6,471
Provision for loan losses		2		36		110		42			190
Loans charged-off		—		—		—		(34	)		(34	)
Recoveries		—		—		13		37			50
Total ending allowance balance	$	906	$	3,985	$	1,430	$	356		$	6,677

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2020:

						1-4 Family
				Commercial		Residential
				Real		Real
	Commercial			Estate		Estate		Consumer			Total

Allowance for loan losses:
Beginning balance	$	947		$	3,623	$	989	$	119		$	5,678
Provision for loan losses		15			70		8		37			130
Loans charged-off		(22	)		—		—		(44	)		(66	)
Recoveries		—			1		—		24			25
Total ending allowance balance	$	940		$	3,694	$	997	$	136		$	5,767

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2021. Included in the recorded investment in loans is $1,292 of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Ending allowance for loan losses balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	3	$	—	$	3
Acquired loans collectively evaluated for impairment		1		67		100		—		168
Originated loans collectively evaluated for impairment		905		3,918		1,327		356		6,506
Total ending allowance balance	$	906	$	3,985	$	1,430	$	356	$	6,677

Recorded investment in loans:
Loans individually evaluated for impairment	$	429	$	911	$	558	$	—	$	1,898
Acquired loans collectively evaluated for impairment		810		12,219		32,402		5,807		51,238
Originated loans collectively evaluated for impairment		93,125		273,879		132,022		26,291		525,317
Total ending loans balance	$	94,364	$	287,009	$	164,982	$	32,098	$	578,453

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2021. Included in the recorded investment in loans is $1,184 of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	—	$	3	$	—	$	4
Acquired loans collectively evaluated for impairment		—		83		77		—		160
Originated loans collectively evaluated for impairment		903		3,866		1,227		311		6,307
Total ending allowance balance	$	904	$	3,949	$	1,307	$	311	$	6,471

Recorded investment in loans:
Loans individually evaluated for impairment	$	437	$	921	$	596	$	—	$	1,954
Acquired loans collectively evaluated for impairment		834		6,542		21,363		6,488		35,227
Originated loans collectively evaluated for impairment		109,016		272,563		125,689		23,162		530,430
Total ending loans balance	$	110,287	$	280,026	$	147,648	$	29,650	$	567,611

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of September 30, 2021 and for the three months ended September 30, 2021:

	As of September 30, 2021						Three Months ended September 30, 2021
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	421	$	298	$	—	$	299	$	—	$	—
Commercial real estate:
Other		1,053		911		—		914		3		3
1-4 Family residential real estate:
Owner occupied		403		359		—		363		2		2
Non-owner occupied		267		199		—		200		—		—
With an allowance recorded:
Commercial		130		131		3		131		2		2
Total	$	2,274	$	1,898	$	3	$	1,907	$	7	$	7

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of June 30, 2021 and for the three months ended September 30, 2020:

	As of June 30, 2021						Three Months ended September 30, 2020
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	421	$	303	$	—	$	—	$	—	$	—
Commercial real estate:
Other		1,062		921		—		826		1		1
1-4 Family residential real estate:
Owner occupied		409		367		—		539		6		6
Non-owner occupied		267		202		—		229		—		—
With an allowance recorded:
Commercial		133		134		1		171		2		2
Commercial real estate:
Other		—		—		—		206		3		3
1-4 Family residential real estate:
Owner occupied		28		27		3		—		—		—
Total	$	2,320	$	1,954	$	4	$	1,971	$	12	$	12

The following table presents the recorded investment in non-accrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2021 and June 30, 2021:

	September 30, 2021				June 30, 2021
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	298	$	—	$	303	$	—
Commercial real estate:
Other		865		—		874		—
1 – 4 Family residential:
Owner occupied		357		—		392		29
Non-owner occupied		199		—		202		—
Consumer		—		—		—		12
Total	$	1,719	$	—	$	1,771	$	41

Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of September 30, 2021 by class of loans:

	Days Past Due
	30 - 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	—	$	—	$	—	$	—	$	94,364	$	94,364
Commercial real estate:
Construction		—		—		—		—		17,459		17,459
Other		—		—		629		629		268,921		269,550
1-4 Family residential:
Owner occupied		—		209		123		332		137,854		138,186
Non-owner occupied		—		—		—		—		20,131		20,131
Construction		—		—		—		—		6,665		6,665
Consumer		130		16		—		146		31,952		32,098
Total	$	130	$	225	$	752	$	1,107	$	577,346	$	578,453

The above table of past due loans includes the recorded investment in non-accrual loans of $209 in the 60 to 89 days category, $752 in the 90 days or greater category and $758 in the loans not past due category.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2021 by class of loans:

	Days Past Due
	30 - 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	—	$	—	$	—	$	—	$	110,287	$	110,287
Commercial real estate:
Construction		—		—		—		—		10,478		10,478
Other		—		175		629		804		268,744		269,548
1-4 Family residential:
Owner occupied		29		—		365		394		118,937		119,331
Non-owner occupied		—		—		—		—		19,148		19,148
Construction		—		—		—		—		9,169		9,169
Consumer		95		11		—		106		29,544		29,650
Total	$	124	$	186	$	994	$	1,304	$	566,307	$	567,611

The above table of past due loans includes the recorded investment in non-accrual loans of $994 in the 90 days or greater category and $777 in the loans not past due category.

Troubled Debt Restructurings (TDR):

The Corporation has certain loans that have been modified in order to maximize collection of loan balances that are classified as TDRs. A modified loan is usually classified as a TDR if, for economic reasons, management grants a concession to the original terms and conditions of the loan to a borrower who is experiencing financial difficulties that it would not have otherwise considered. In response to COVID-19, on March 22, 2020 the Corporation adopted a loan modification program to assist borrowers impacted by the virus. The program is available to most borrowers whose loan was not past due on March 22, 2020, the date this loan modification program was adopted. The program offers principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Borrowers are eligible for an additional 90 days of payment deferrals if situations warrant a need for an extension. Interest will be deferred but will continue to accrue during the deferment period and the maturity date on amortizing loans will be extended by the number of months the payment was deferred. Consistent with issued regulatory guidance, modifications made under this program in response to COVID-19 will not be classified as TDRs. As of September 30, 2021, four borrowers with an aggregate outstanding balance of $51 are in payment deferral status under this loan modification program.

As of September 30, 2021 and June 30, 2021, the Corporation had $675 and $688, respectively, of loans classified as TDRs which are included in impaired loans above. As of September 30, 2021 and June 30, 2021, the Corporation had not committed to lend any additional funds to customers with outstanding loans that were classified as troubled debt restructurings. As of September 30, 2021 and June 30, 2021, the Corporation had $3 and $4, respectively, of specific reserve allocated to these loans.

During the three-month periods ended September 30, 2021 and 2020, there were no loan modifications completed that were classified as troubled debt restructurings. There were no charge-offs from troubled debt restructurings that were completed during the three-month periods ended September 30, 2021 and 2020.

There were no loans classified as troubled debt restructurings for which there was a payment default within 12 months following the modification during the three-month periods ended September 30, 2021 and 2020. A loan is considered in payment default once it is 90 days contractually past due under the modified terms.

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, current economic trends and other relevant information. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with a total outstanding loan relationship greater than $100 and non-homogeneous loans, such as commercial and commercial real estate loans. Management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt and affirms the risk ratings for the loans and leases in their respective portfolio on an annual basis. The Corporation uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. Loans listed as not rated are either less than $100 or are included in groups of homogeneous loans. Generally, 1-4 Family Residential and Consumer loans are not risk rated, except when collateral is used for a business purpose. These loans are evaluated based on delinquency status, which are disclosed in the previous table within this footnote. Based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans was as follows:

	As of September 30, 2021
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	92,817	$	707	$	291	$	298	$	251
Commercial real estate:
Construction		17,459		—		—		—		—
Other		258,628		4,430		4,677		865		950
1-4 Family residential real estate:
Owner occupied		1,028		—		6		357		136,795
Non-owner occupied		19,425		157		79		199		271
Construction		1,439		—		—		—		5,226
Consumer		551		—		—		—		31,547
Total	$	391,347	$	5,294	$	5,053	$	1,719	$	175,040

As of June 30, 2021, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

	As of June 30, 2021
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	109,118	$	280	$	309	$	303	$	277
Commercial real estate:
Construction		10,478		—		—		—		—
Other		259,327		3,700		4,718		874		929
1-4 Family residential real estate:
Owner occupied		1,715		—		6		392		117,218
Non-owner occupied		18,312		163		197		202		274
Construction		1,849		—		—		—		7,320
Consumer		694		—		—		—		28,956
Total	$	401,493	$	4,143	$	5,230	$	1,771	$	154,974