XML 23 R12.htm IDEA: XBRL DOCUMENT v3.20.2
Loans and Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2020
Accounts Notes Loans And Financing Receivable Gross Allowance And Net [Abstract]  
Loans and Allowance for Loan Losses

 

Note 3.Loans and Allowance for Loan Losses

 

The Company’s allowance for loan losses has three basic components: specific, general, and unallocated. The specific component is used to individually allocate an allowance for larger balance, non-homogeneous loans identified as impaired. The general component is used to estimate the loss on pools of smaller balance, homogeneous loans, including 1-4 family mortgage loans and other consumer loans. The general component is also used for the remaining pool of larger balance, non-homogeneous loans, not identified as impaired. The unallocated component reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

 

A provision in the CARES Act included the creation of the Paycheck Protection Program (“PPP”) through the Small Business Administration (“SBA”).  Loans provided by the Bank through the PPP may be forgiven based on the borrowers’ compliance with the terms of the program.  The SBA provides a 100% guaranty to the lender of principal and interest, unless the lender violates an obligation under the agreement.  As loan losses are expected to be immaterial, if any at all, due to the SBA guaranty, there is no provision allocated for PPP loans within the allowance for loan loss calculation. The Commercial and Industrial loan portfolio segment in the tables below include 543 PPP loans that totaled $52.8 million at June 30, 2020. There were no loans that were forgiven at June 30, 2020.

 

The following tables present the total allowance for loan losses by portfolio segment for the periods presented.

 

 

 

June 30, 2020

 

(In thousands)

 

Commercial and Industrial

 

 

Commercial Real Estate

 

 

Construction and Land

 

 

Consumer

 

 

Student

 

 

Residential

Real Estate

 

 

Home Equity Lines of Credit

 

 

Unallocated

 

 

Total

 

Allowance for Loan Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, December 31, 2019

 

$

296

 

 

$

1,788

 

 

$

652

 

 

$

154

 

 

$

65

 

 

$

1,596

 

 

$

326

 

 

$

350

 

 

$

5,227

 

Charge-offs

 

 

(99

)

 

 

-

 

 

 

-

 

 

 

(19

)

 

 

(2

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(120

)

Recoveries

 

 

7

 

 

 

5

 

 

 

-

 

 

 

20

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

32

 

Provision (recovery)

 

 

339

 

 

 

382

 

 

 

366

 

 

 

(2

)

 

 

10

 

 

 

182

 

 

 

(16

)

 

 

-

 

 

 

1,261

 

Ending balance,

June 30, 2020

 

$

543

 

 

$

2,175

 

 

$

1,018

 

 

$

153

 

 

$

73

 

 

$

1,778

 

 

$

310

 

 

$

350

 

 

$

6,400

 

Ending balances individually evaluated for impairment

 

$

69

 

 

$

67

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

136

 

Ending balances collectively evaluated for impairment

 

$

474

 

 

$

2,108

 

 

$

1,018

 

 

$

153

 

 

$

73

 

 

$

1,778

 

 

$

310

 

 

$

350

 

 

$

6,264

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

702

 

 

$

9,025

 

 

$

201

 

 

$

-

 

 

$

-

 

 

$

377

 

 

$

-

 

 

 

 

 

 

$

10,305

 

Collectively evaluated for impairment

 

 

86,342

 

 

 

177,979

 

 

 

73,500

 

 

 

6,428

 

 

 

7,832

 

 

 

227,540

 

 

 

32,734

 

 

 

 

 

 

 

612,355

 

Ending balance, June 30, 2020

 

$

87,044

 

 

$

187,004

 

 

$

73,701

 

 

$

6,428

 

 

$

7,832

 

 

$

227,917

 

 

$

32,734

 

 

 

 

 

 

$

622,660

 

 

 

 

June 30, 2019

 

(In thousands)

 

Commercial and Industrial

 

 

Commercial Real Estate

 

 

Construction and Land

 

 

Consumer

 

 

Student

 

 

Residential

Real Estate

 

 

Home Equity Lines of Credit

 

 

Unallocated

 

 

Total

 

Allowance for Loan Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, December 31, 2018

 

$

483

 

 

$

1,738

 

 

$

635

 

 

$

145

 

 

$

68

 

 

$

1,311

 

 

$

446

 

 

$

350

 

 

$

5,176

 

Charge-offs

 

 

(74

)

 

 

-

 

 

 

-

 

 

 

(23

)

 

 

(10

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(107

)

Recoveries

 

 

1

 

 

 

75

 

 

 

-

 

 

 

9

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

85

 

Provision (recovery)

 

 

162

 

 

 

(34

)

 

 

15

 

 

 

10

 

 

 

9

 

 

 

137

 

 

 

(44

)

 

 

-

 

 

 

255

 

Ending balance, June 30, 2019

 

$

572

 

 

$

1,779

 

 

$

650

 

 

$

141

 

 

$

67

 

 

$

1,448

 

 

$

402

 

 

$

350

 

 

$

5,409

 

 

 

 

December 31, 2019

 

(In thousands)

 

Commercial and Industrial

 

 

Commercial Real Estate

 

 

Construction and Land

 

 

Consumer

 

 

Student

 

 

Residential

Real Estate

 

 

Home Equity Lines of Credit

 

 

Unallocated

 

 

Total

 

Allowance for Loan Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, December 31, 2018

 

$

483

 

 

$

1,738

 

 

$

635

 

 

$

145

 

 

$

68

 

 

$

1,311

 

 

$

446

 

 

$

350

 

 

$

5,176

 

Charge-offs

 

 

(328

)

 

 

-

 

 

 

-

 

 

 

(50

)

 

 

(13

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(391

)

Recoveries

 

 

2

 

 

 

80

 

 

 

-

 

 

 

14

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

96

 

Provision (recovery)

 

 

139

 

 

 

(30

)

 

 

17

 

 

 

45

 

 

 

10

 

 

 

285

 

 

 

(120

)

 

 

-

 

 

 

346

 

Ending balance, December 31, 2019

 

$

296

 

 

$

1,788

 

 

$

652

 

 

$

154

 

 

$

65

 

 

$

1,596

 

 

$

326

 

 

$

350

 

 

$

5,227

 

Ending balances individually evaluated for impairment

 

$

-

 

 

$

229

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

229

 

Ending balances collectively evaluated for impairment

 

$

296

 

 

$

1,559

 

 

$

652

 

 

$

154

 

 

$

65

 

 

$

1,596

 

 

$

326

 

 

$

350

 

 

$

4,998

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

187

 

 

$

2,847

 

 

$

233

 

 

$

-

 

 

$

-

 

 

$

379

 

 

$

-

 

 

 

 

 

 

$

3,646

 

Collectively evaluated for impairment

 

 

27,217

 

 

 

179,051

 

 

 

64,998

 

 

 

5,958

 

 

 

8,151

 

 

 

224,937

 

 

 

36,268

 

 

 

 

 

 

 

546,580

 

Ending balance, December 31, 2019

 

$

27,404

 

 

$

181,898

 

 

$

65,231

 

 

$

5,958

 

 

$

8,151

 

 

$

225,316

 

 

$

36,268

 

 

 

 

 

 

$

550,226

 

 

 


Loans by credit quality indicators were as follows at the dates presented:

 

 

 

June 30, 2020

 

(In thousands)

 

Commercial and Industrial

 

 

Commercial Real Estate

 

 

Construction and Land

 

 

Consumer

 

 

Student

 

 

Residential

Real Estate

 

 

Home Equity Lines of Credit

 

 

Total

 

Grade:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

86,035

 

 

$

175,248

 

 

$

71,046

 

 

$

6,426

 

 

$

7,832

 

 

$

220,639

 

 

$

30,691

 

 

$

597,917

 

Special mention

 

 

166

 

 

 

8,500

 

 

 

2,292

 

 

 

2

 

 

 

-

 

 

 

322

 

 

 

127

 

 

 

11,409

 

Substandard

 

 

843

 

 

 

3,256

 

 

 

363

 

 

 

-

 

 

 

-

 

 

 

6,956

 

 

 

1,916

 

 

 

13,334

 

Doubtful

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total

 

$

87,044

 

 

$

187,004

 

 

$

73,701

 

 

$

6,428

 

 

$

7,832

 

 

$

227,917

 

 

$

32,734

 

 

$

622,660

 

 

 

December 31, 2019

 

(In thousands)

Commercial and Industrial

 

 

Commercial Real Estate

 

 

Construction and Land

 

 

Consumer

 

 

Student

 

 

Residential

Real Estate

 

 

Home Equity Lines of Credit

 

 

Total

 

Grade:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

$

26,555

 

 

$

175,063

 

 

$

62,231

 

 

$

5,955

 

 

$

8,151

 

 

$

218,686

 

 

$

34,218

 

 

$

530,859

 

Special mention

 

422

 

 

 

3,487

 

 

 

2,594

 

 

 

3

 

 

 

-

 

 

 

336

 

 

 

127

 

 

 

6,969

 

Substandard

 

427

 

 

 

3,348

 

 

 

406

 

 

 

-

 

 

 

-

 

 

 

6,294

 

 

 

1,923

 

 

 

12,398

 

Doubtful

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total

$

27,404

 

 

$

181,898

 

 

$

65,231

 

 

$

5,958

 

 

$

8,151

 

 

$

225,316

 

 

$

36,268

 

 

$

550,226

 

 

The past due status of loans at the dates presented were:

  

 

 

June 30, 2020

 

(In thousands)

 

30-59 Days

Past Due

 

 

60-89 Days

Past Due

 

 

90+ Days Past Due

 

 

Total Past Due

 

 

Current

 

 

Total Loans

 

 

90+ Days Past Due and Accruing

 

 

Nonaccruals

 

Commercial and industrial

 

$

710

 

 

$

10

 

 

$

702

 

 

$

1,422

 

 

$

85,622

 

 

$

87,044

 

 

$

144

 

 

$

558

 

Commercial real estate

 

 

-

 

 

 

-

 

 

 

989

 

 

 

989

 

 

 

186,015

 

 

 

187,004

 

 

 

-

 

 

 

989

 

Construction and land

 

 

860

 

 

 

-

 

 

 

-

 

 

 

860

 

 

 

72,841

 

 

 

73,701

 

 

 

-

 

 

 

-

 

Consumer

 

 

7

 

 

 

1

 

 

 

-

 

 

 

8

 

 

 

6,420

 

 

 

6,428

 

 

 

-

 

 

 

-

 

Student

 

 

546

 

 

 

157

 

 

 

765

 

 

 

1,468

 

 

 

6,364

 

 

 

7,832

 

 

 

765

 

 

 

-

 

Residential real estate

 

 

392

 

 

 

763

 

 

 

-

 

 

 

1,155

 

 

 

226,762

 

 

 

227,917

 

 

 

-

 

 

 

-

 

Home equity lines of credit

 

 

44

 

 

 

-

 

 

 

65

 

 

 

109

 

 

 

32,625

 

 

 

32,734

 

 

 

65

 

 

 

-

 

Total

 

$

2,559

 

 

$

931

 

 

$

2,521

 

 

$

6,011

 

 

$

616,649

 

 

$

622,660

 

 

$

974

 

 

$

1,547

 

 

 

 

December 31, 2019

 

(In thousands)

 

30-59 Days

Past Due

 

 

60-89 Days

Past Due

 

 

90+ Days Past Due

 

 

Total Past Due

 

 

Current

 

 

Total Loans

 

 

90+ Days Past Due and Accruing

 

 

Nonaccruals

 

Commercial and industrial

 

$

330

 

 

$

-

 

 

$

34

 

 

$

364

 

 

$

27,040

 

 

$

27,404

 

 

$

34

 

 

$

-

 

Commercial real estate

 

 

-

 

 

 

-

 

 

 

989

 

 

 

989

 

 

 

180,909

 

 

 

181,898

 

 

 

-

 

 

 

989

 

Construction and land

 

 

5,472

 

 

 

-

 

 

 

-

 

 

 

5,472

 

 

 

59,759

 

 

 

65,231

 

 

 

-

 

 

 

-

 

Consumer

 

 

11

 

 

 

1

 

 

 

-

 

 

 

12

 

 

 

5,946

 

 

 

5,958

 

 

 

-

 

 

 

-

 

Student

 

 

345

 

 

 

220

 

 

 

1,204

 

 

 

1,769

 

 

 

6,382

 

 

 

8,151

 

 

 

1,205

 

 

 

-

 

Residential real estate

 

 

739

 

 

 

109

 

 

 

397

 

 

 

1,245

 

 

 

224,071

 

 

 

225,316

 

 

 

397

 

 

 

-

 

Home equity lines of credit

 

 

389

 

 

 

-

 

 

 

-

 

 

 

389

 

 

 

35,879

 

 

 

36,268

 

 

 

-

 

 

 

-

 

Total

 

$

7,286

 

 

$

330

 

 

$

2,624

 

 

$

10,240

 

 

$

539,986

 

 

$

550,226

 

 

$

1,636

 

 

$

989

 

 

The following table presents information related to impaired loans, by portfolio segment, at the dates presented.

 

 

 

June 30, 2020

 

(In thousands)

 

Recorded Investment

 

 

Unpaid Principal Balance

 

 

Related Allowance

 

 

Average Recorded Investment

 

 

Interest Income Recognized

 

With no specific allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

144

 

 

$

144

 

 

$

-

 

 

$

165

 

 

$

2

 

Commercial real estate

 

 

8,227

 

 

 

8,227

 

 

 

-

 

 

 

8,263

 

 

 

171

 

Construction and land

 

 

201

 

 

 

201

 

 

 

-

 

 

 

210

 

 

 

5

 

Residential real estate

 

 

377

 

 

 

377

 

 

 

-

 

 

 

378

 

 

 

4

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

558

 

 

$

558

 

 

$

69

 

 

$

939

 

 

$

8

 

Commercial real estate

 

 

798

 

 

 

798

 

 

 

67

 

 

 

804

 

 

 

15

 

Total:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

702

 

 

$

702

 

 

$

69

 

 

$

1,104

 

 

$

10

 

Commercial real estate

 

 

9,025

 

 

 

9,025

 

 

 

67

 

 

 

9,067

 

 

 

186

 

Construction and land

 

 

201

 

 

 

201

 

 

 

-

 

 

 

210

 

 

 

5

 

Residential real estate

 

 

377

 

 

 

377

 

 

 

-

 

 

 

378

 

 

 

4

 

Total

 

$

10,305

 

 

$

10,305

 

 

$

136

 

 

$

10,759

 

 

$

205

 

 

 

 

December 31, 2019

 

(In thousands)

 

Recorded Investment

 

 

Unpaid Principal Balance

 

 

Related Allowance

 

 

Average Recorded Investment

 

 

Interest Income Recognized

 

With no specific allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

187

 

 

$

187

 

 

$

-

 

 

$

287

 

 

$

13

 

Commercial real estate

 

 

1,048

 

 

 

1,048

 

 

 

-

 

 

 

1,213

 

 

 

61

 

Construction and land

 

 

233

 

 

 

233

 

 

 

-

 

 

 

494

 

 

 

25

 

Residential real estate

 

 

379

 

 

 

379

 

 

 

-

 

 

 

384

 

 

 

16

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

1,799

 

 

 

1,813

 

 

 

229

 

 

 

1,806

 

 

 

38

 

Total:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

187

 

 

$

187

 

 

$

-

 

 

$

287

 

 

$

13

 

Commercial real estate

 

 

2,847

 

 

 

2,861

 

 

 

229

 

 

 

3,019

 

 

 

99

 

Construction and land

 

 

233

 

 

 

233

 

 

 

-

 

 

 

494

 

 

 

25

 

Residential real estate

 

 

379

 

 

 

379

 

 

 

-

 

 

 

384

 

 

 

16

 

Total

 

$

3,646

 

 

$

3,660

 

 

$

229

 

 

$

4,184

 

 

$

153

 

TDRs are those loans for which a concession has been granted to a borrower experiencing financial difficulties.  TDRs are identified at the point when the borrower enters into a modification agreement.  The following table summarizes a modification that was classified as a TDR during the three and six months ended June 30, 2020.  There were no loan modifications that were classified as TDRs during the three and six months ended June 30, 2019.

 

(Dollars in thousands)

 

Three and Six Months Ended

June 30, 2020

 

Class of Loan

 

Number of Contracts

 

Pre-Modification Outstanding Recorded Investment

 

 

Post-Modification Outstanding Recorded Investment

 

Commercial real estate

 

1

 

$

6,221

 

 

$

6,221

 

 

TDRs are considered impaired loans and are individually evaluated for impairment in the determination of the allowance for loan losses.  TDR payment defaults occur when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or the TDR becomes 90 days or more past due. There were no TDR defaults during the three and six months ended June 30, 2020 and 2019.  

 

At June 30, 2020, there were six loans totaling $8.6 million that have been identified as TDRs, which were current and performing in accordance with the modified terms.  At December 31, 2019, there were five loans in the portfolio, totaling $2.5 million, that were identified as TDRs, which were current and performing in accordance with the modified terms.   

 

At June 30, 2020 and 2019, the Company had no foreclosed residential real estate property in its possession or in the process of foreclosure.  

 

In response to COVID-19 and under the provisions of the CARES Act, the Company granted short-term loan modifications for the deferral of scheduled payments for a 90-day period beginning in April 2020.  Modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not considered TDRs. Borrowers who were considered current were ones whose loans were less than 30 days past due on their contractual payments at the time a modification was entered.  At June 30, 2020, the Company modified 194 loans totaling $92.8 million under this guidance and, such loans were not considered TDRs.