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Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2019
Accounts and Financing Receivable, after Allowance for Credit Loss, Noncurrent [Abstract]  
Allowance for Loan Losses
N
ote 7. Allowance for Loan Losses
(in thousands)
The allowance for loan losses is a reserve established through a provision for possible loan losses charged to expense, which represents management’s best estimate of probable losses that will occur within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio.
The allowance on the majority of the loan portfolio is calculated using a historical chargeoff percentage applied to the current loan balances by loan segment. This historical period is the average of the previous five years with the most current years weighted to show the effect of the most recent chargeoff activity. This percentage is also adjusted for economic factors such as unemployment and general business conditions, both local and nationwide.
The group of loans that are considered to be impaired are individually evaluated for possible loss and a specific reserve is established to cover any loss contingency. Loans that are determined to be a loss with no benefit of remaining in the portfolio are charged off to the allowance. These specific reserves are reviewed periodically for continued impairment and adequacy of the specific reserve and adjusted when necessary.
 
The following table details activity in the allowance for loan losses by portfolio segment for the years ended December 31:
 
 
  
Real
 
  
Business
 
  
 
 
  
 
 
2019
  
Estate
 
  
Loans
 
  
Consumer
 
  
Total
 
Beginning Balance
  
$
2,845
 
  
$
222
 
  
$
305
 
  
$
3,372
 
Provision for loan losses
  
 
231
 
  
 
247
 
  
 
95
 
  
 
573
 
Chargeoffs
  
 
115
 
  
 
107
 
  
 
138
 
  
 
360
 
Recoveries
  
 
114
 
  
 
9
 
  
 
47
 
  
 
170
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Net chargeoffs
  
 
1
 
  
 
98
 
  
 
91
 
  
 
190
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending Balance
  
$
3,075
 
  
$
371
 
  
$
309
 
  
$
3,755
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Period end allowance allocated to:
  
  
  
  
Loans individually evaluated for impairment
  
$
610
 
  
$
72
 
  
$
—  
 
  
$
682
 
Loans collectively evaluated for impairment
  
 
2,465
 
  
 
299
 
  
 
309
 
  
 
3,073
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending Balance
  
$
3,075
 
  
$
371
 
  
$
309
 
  
$
3,755
 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
  
Real
 
  
Business
 
  
 
 
  
 
 
2018
  
Estate
 
  
Loans
 
  
Consumer
 
  
Total
 
Beginning Balance
  
$
2,151
 
  
$
347
 
  
$
521
 
  
$
3,019
 
Provision for (reversal of) loan losses
  
 
606
 
  
 
(113
) 
  
 
(159
) 
  
 
334
 
Chargeoffs
  
 
223
 
  
 
19
 
  
 
145
 
  
 
387
 
Recoveries
  
 
311
 
  
 
7
 
  
 
88
 
  
 
406
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Net chargeoffs
  
 
(88
) 
  
 
12
 
  
 
57
 
  
 
(19
) 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending Balance
  
$
2,845
 
  
$
222
 
  
$
305
 
  
$
3,372
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Period end allowance allocated to:
  
  
  
  
Loans individually evaluated for impairment
  
$
401
 
  
$
—  
 
  
$
—  
 
  
$
401
 
Loans collectively evaluated for impairment
  
 
2,444
 
  
 
222
 
  
 
305
 
  
 
2,971
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending Balance
  
$
2,845
 
  
$
222
 
  
$
305
 
  
$
3,372
 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
  
Real
 
  
Business
 
  
 
 
  
 
 
2017
  
Estate
 
  
Loans
 
  
Consumer
 
  
Total
 
Beginning Balance
  
$
3,117
 
  
$
258
 
  
$
528
 
  
$
3,903
 
Provision for (reversal of) loan losses
  
 
(827
) 
  
 
254
 
  
 
30
 
  
 
(543
) 
Chargeoffs
  
 
169
 
  
 
166
 
  
 
102
 
  
 
437
 
Recoveries
  
 
30
 
  
 
1
 
  
 
65
 
  
 
96
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Net chargeoffs
  
 
139
 
  
 
165
 
  
 
37
 
  
 
341
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending Balance
  
$
2,151
 
  
$
347
 
  
$
521
 
  
$
3,019
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Period end allowance allocated to:
  
  
  
  
Loans individually evaluated for impairment
  
$
442
 
  
$
—  
 
  
$
—  
 
  
$
442
 
Loans collectively evaluated for impairment
  
 
1,709
 
  
 
347
 
  
 
521
 
  
 
2,577
 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending Balance
  
$
2,151
 
  
$
347
 
  
$
521
 
  
$
3,019
 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
The Company’s recorded investment in loans as of December 31, 2019 and 2018 related to each balance in the allowance for possible loan losses by portfolio segment and disaggregated on the basis of the Company’s impairment methodology was as follows:
 
2019
  
Real Estate
 
  
Business
Loans
 
  
Consumer
 
  
Total
 
Loans individually evaluated for impairment
  
$
10,991
 
  
$
144
 
  
$
—  
 
  
$
11,135
 
Loans collectively evaluated for impairment
  
 
449,138
 
  
 
100,187
 
  
 
15,866
 
  
 
564,937
 
Acquired with deteriorated credit quality
  
 
749
 
  
 
—  
 
  
 
—  
 
  
 
749
 
  
 
 
   
 
 
   
 
 
   
 
 
 
  
$
460,878
 
  
$
100,331
 
  
$
15,866
 
  
$
577,075
 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
  
Real
 
  
Business
 
  
 
 
  
 
 
2018
  
Estate
 
  
Loans
 
  
Consumer
 
  
Total
 
Loans individually evaluated for impairment
  
$
10,306
 
  
$
—  
 
  
$
—  
 
  
$
10,306
 
Loans collectively evaluated for impairment
  
 
337,668
 
  
 
67,328
 
  
 
14,020
 
  
 
419,016
 
  
 
 
   
 
 
   
 
 
   
 
 
 
  
$
347,974
 
  
$
67,328
 
  
$
14,020
 
  
$
429,322
 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
Net chargeoffs (recoveries), segregated by class of loans, were as follows:
 
 
  
2019
 
  
2018
 
  
2017
 
Real Estate:
  
  
  
Land Development and Construction
  
$
(18
) 
  
$
56
 
  
$
98
 
Farmland
  
 
—  
 
  
 
3
 
  
 
—  
 
1-4
Family Mortgages
  
 
32
 
  
 
51
 
  
 
41
 
Commercial Real Estate
  
 
(13
) 
  
 
(198
) 
  
 
—  
 
  
 
 
   
 
 
   
 
 
 
Total Real Estate Loans
  
 
1
 
  
 
(88
) 
  
 
139
 
  
 
 
   
 
 
   
 
 
 
Business Loans:
  
  
  
Commercial and Industrial Loans
  
 
98
 
  
 
12
 
  
 
165
 
  
 
 
   
 
 
   
 
 
 
Total Business Loans
  
 
98
 
  
 
12
 
  
 
165
 
  
 
 
   
 
 
   
 
 
 
Consumer Loans:
  
  
  
Credit Cards
  
 
34
 
  
 
36
 
  
 
(7
) 
Other Consumer Loans
  
 
57
 
  
 
21
 
  
 
44
 
  
 
 
   
 
 
   
 
 
 
Total Consumer Loans
  
 
91
 
  
 
57
 
  
 
37
 
  
 
 
   
 
 
   
 
 
 
Total Net Chargeoffs (Recoveries)
  
$
190
 
  
$
(19
) 
  
$
341