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ALLOWANCE FOR LOAN LOSSES
 12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
ALLOWANCE FOR LOAN LOSSES

 

7.ALLOWANCE FOR LOAN LOSSES

 

The following tables show the activity in the allowance for loan losses for the years ended December 31, 2020, 2019 and 2018 and the allocation of the allowance for loan losses as of December 31, 2020, 2019 and 2018 by portfolio segment and by impairment methodology. Commercial loans include $55,546,000 in Paycheck Protection Program (“PPP”) loans at December 31, 2020, and do not carry any associated allowance for loan loss, as they are 100% guaranteed by the Small Business Administration (“SBA”) (dollars in thousands):

 

  December 31, 2020 
       Real Estate   Other       
   Commercial   Commercial   Multi-
Family		   Construction   Residential   Agriculture   Consumer   Unallocated   Total 
Allowance for Loan Losses                                             
                                              
Beginning balance  $950   $1,906   $329   $986   $281   $107   $334   $245   $5,138 
Provision for loan losses   10    1,546    82    (299)   107    (22)   63    33    1,520 
Loans charged-off   (52)   —    —    —    —    —    (6)   —    (58)
Recoveries   14    14    —    —    —    —    —    —    28 
                                             
Ending balance allocated to portfolio segments  $922   $3,466   $411   $687   $388   $85   $391   $278   $6,628 
                                              
Ending balance:                                             
Individually evaluated for impairment  $—   $106   $—   $—   $6   $—   $—   $—   $112 
                                              
Ending balance:                                             
Collectively evaluated for impairment  $922   $3,360   $411   $687   $382   $85   $391   $278   $6,516 
                                              
Loans                                             
                                              
Ending balance  $94,522   $251,348   $48,760   $18,424   $32,329   $6,091   $28,804   $—   $480,278 
                                              
Ending balance:                                             
Individually evaluated for impairment  $—   $6,614   $—   $—   $436   $—   $—   $—   $7,050 
                                              
Ending balance:                                             
Collectively evaluated for impairment  $94,522   $244,734   $48,760   $18,424   $31,893   $ 6,091   $28,804   $—   $473,228 

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

  December 31, 2019 
       Real Estate   Other       
   Commercial   Commercial   Multi-
Family		   Construction   Residential   Agriculture   Consumer   Unallocated   Total 
Allowance for Loan Losses                                             
                                              
Beginning balance  $668   $2,114   $564   $267   $220   $88   $192   $279   $4,392 
Provision for loan losses   275    (219)   (235)   719    61    19    74    (34)   660 
Loans charged-off   —    —    —    —    —    —    —    —    — 
Recoveries   7    11    —    —    —    —    68    —    86 
                                              
Ending balance allocated to portfolio segments  $950   $1,906   $329   $986   $281   $107   $334   $245   $5,138 
                                              
Ending balance:                                             
Individually evaluated for impairment  $—   $133   $—   $—   $9   $—   $—   $—   $142 
                                              
Ending balance:                                             
Collectively evaluated for impairment  $950   $1,773   $329   $986   $272   $107   $334   $245   $4,996 
                                              
Loans                                             
                                              
Ending balance  $43,019   $214,604   $56,818   $23,169   $29,180   $6,479   $26,392   $—   $399,661 
                                              
Ending balance:                                             
Individually evaluated for impairment  $—   $7,152   $—   $—   $452   $—   $—   $—   $7,604 
                                              
Ending balance:                                             
Collectively evaluated for impairment  $43,019   $207,452   $56,818   $23,169   $28,728   $6,479   $26,392   $—   $392,087 

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

    December 31, 2018  
          Real Estate     Other              
    Commercial     Commercial     Multi-
Family		     Construction     Residential     Leases     Agriculture     Consumer     Unallocated     Total  
Allowance for Loan Losses                                                  
                                                   
Beginning balance  $447   $2,174   $1,047   $269   $205   $—   $31   $14   $291   $4,478 
Provision for loan losses   422    (68)   (483)   (2)   15    (1)   57    247    (12)   175 
Loans charged-off   (213)   —    —    —    —    —    —    (69)   —    (282)
Recoveries   12    8    —    —    —    1    —    —    —    21 
                                                  
Ending balance allocated to portfolio segments  $668   $2,114   $564   $267   $220   $—   $88   $192   $279   $4,392 
                                                                               
Ending balance:                                                  
Individually evaluated for impairment  $—   $132   $—   $—   $53   $—   $—   $—   $—   $185 
                                                   
Ending balance:                                                  
Collectively evaluated for impairment  $668   $1,982   $564   $267   $167   $—   $88   $192   $279   $4,207 
                                                   
Loans                                                  
                                                   
Ending balance  $29,650   $199,894   $56,139   $5,685   $16,338   $32   $4,419   $10,714   $—   $322,871 
                                                   
Ending balance:                                                  
Individually evaluated for impairment  $—   $7,783   $—   $—   $919   $—   $—   $—   $—   $8,702 
                                                   
Ending balance:                                                  
Collectively evaluated for impairment  $29,650   $192,111   $56,139   $5,685   $15,419   $32   $4,419   $10,714   $—   $314,169 

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

The following tables show the loan portfolio allocated by management’s internal risk ratings as of December 31, 2020 and 2019. Commercial “Pass” loans include $55,546,000 in PPP loans at December 31, 2020 (dollars in thousands):

                                         
    December 31, 2020 
    Credit Risk Profile by Internally Assigned Grade 
        Real Estate   Other Credit Exposure      
   Commercial   Commercial   Multi-Family   Construction   Residential   Agriculture   Consumer   Total 
Grade:                                        
Pass  $90,021   $229,887   $48,760   $18,424   $31,760   $6,091   $28,668   $453,611 
Watch   4,501    20,143    —    —    569    —    136    25,349 
Special mention   —    118    —    —    —    —    —    118 
Substandard   —    1,200    —    —    —    —    —    1,200 
Doubtful   —    —    —    —    —    —    —    — 
                                         
Total  $94,522   $251,348   $48,760   $18,424   $32,329   $6,091   $28,804   $480,278 

                                         
    December 31, 2019 
    Credit Risk Profile by Internally Assigned Grade 
        Real Estate   Other Credit Exposure      
   Commercial   Commercial   Multi-Family   Construction   Residential   Agriculture   Consumer   Total 
Grade:                                        
Pass  $38,085   $208,140   $56,818   $23,169   $28,570   $6,479   $26,317   $387,578 
Watch   4,915    6,329    —    —    610    —    75    11,929 
Special mention   19    —    —    —    —    —    —    19 
Substandard   —    135    —    —    —    —    —    135 
Doubtful   —    —    —    —    —    —    —    — 
                                         
Total  $43,019   $214,604   $56,818   $23,169   $29,180   $6,479   $26,392   $399,661 

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

The following tables show an aging analysis of the loan portfolio at December 31, 2020 and 2019. Commercial loans include $55,546,000 in PPP loans at December 31, 2020 (dollars in thousands):

 

   December 31, 2020 
           Past Due               Past Due     
           Greater               Greater Than     
   30-59 Days   60-89 Days   Than   Total Past           90 Days and     
   Past Due   Past Due   90 Days   Due   Current   Total Loans   Accruing   Nonaccrual 
Commercial:                                        
Commercial  $—   $—   $—   $—   $94,522   $94,522   $—   $— 
                                         
Real estate:                                        
Commercial   —    `—    —    —    251,348    251,348    —    — 
Multi-family   —    —    —    —    48,760    48,760    —    — 
Construction   —    —    —    —    18,424    18,424    —    — 
Residential   —    —    —    —    32,329    32,329    —    — 
                                         
Other:                                        
Agriculture   —    —    —    —    6,091    6,091    —    — 
Consumer   —    —    —    —    28,804    28,804    —    — 
                                         
Total  $—   $—   $—   $—   $480,278   $480,278   $—   $— 

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

   December 31, 2019 
           Past Due               Past Due     
           Greater               Greater Than     
   30-59 Days   60-89 Days   Than   Total Past           90 Days and     
   Past Due   Past Due   90 Days   Due   Current   Total Loans   Accruing   Nonaccrual 
Commercial:                                        
Commercial  $—   $—   $—   $—   $43,019   $43,019   $—   $— 
                                         
Real estate:                                        
Commercial   —    —    —    —    214,604    214,604    —    — 
Multi-family   —    —    —    —    56,818    56,818    —    — 
Construction   —    —    —    —    23,169    23,169    —    — 
Residential   —    —    —    —    29,180    29,180    —    — 
                                         
Other:                                        
Agriculture   —    —    —    —    6,479    6,479    —    — 
Consumer   75    —    —    —    26,317    26,392    —    — 
                                         
Total  $75   $—   $—   $—   $399,586   $399,661   $—   $— 

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

The following tables show information related to impaired loans as of and for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):

 

   December 31, 2020 
       Unpaid       Average   Interest 
   Recorded   Principal   Related   Recorded   Income 
   Investment   Balance   Allowance   Investment   Recognized 
With no related allowance recorded:                         
Real estate:                         
Commercial  $5,075   $5,209   $—   $5,323   $320 
Residential   312    399    —    316    13 
                          
   $5,387   $5,608   $—   $5,639   $333 
                          
With an allowance recorded:                         
Real estate:                         
Commercial  $1,539   $1,599   $106   $1,589   $91 
Residential   124    124    6    132    7 
                          
   $1,663   $1,723   $112   $1,721   $98 
                          
Total:                         
Real estate:                         
Commercial  $6,614   $6,808   $106   $6,912   $411 
Residential   436    523    6    448    20 
                          
   $7,050   $7,331   $112   $7,376   $431 

 

   December 31, 2019 
       Unpaid       Average   Interest 
   Recorded   Principal   Related   Recorded   Income 
   Investment   Balance   Allowance   Investment   Recognized 
With no related allowance recorded:                         
Real estate:                         
Commercial  $5,530   $5,664   $—   $5,654   $333 
Residential   318    405    —    323    20 
                          
   $5,848   $6,069   $—   $5,977   $353 
                          
With an allowance recorded:                         
Real estate:                         
Commercial  $1,622   $1,693   $133   $1,719   $101 
Residential   134    134    9    149    7 
                          
   $1,756   $1,827   $142   $1,868   $108 
                          
Total:                         
Real estate:                         
Commercial  $7,152   $7,357   $133   $7,373   $434 
Residential   452    539    9    472    27 
                          
   $7,604   $7,896   $142   $7,845   $461 

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

   December 31, 2018 
       Unpaid       Average   Interest 
   Recorded   Principal   Related   Recorded   Income 
   Investment   Balance   Allowance   Investment   Recognized 
With no related allowance recorded:                         
Commercial  $—   $—   $—   $—   $4 
Real estate:                         
Commercial   5,645    5,879    —    5,711    283 
Residential   323    410    —    326    18 
                          
   $5,968   $6,289   $—   $6,037   $305 
                          
With an allowance recorded:                         
Real estate:                         
Commercial  $2,138   $2,217   $132   $2,199   $133 
Residential   596    596    53    611    29 
                          
   $2,734   $2,813   $185   $2,810   $162 
                          
Total:                         
Commercial  $—   $—   $—   $—   $4 
Real estate:                         
Commercial   7,783    8,096    132    7,910    416 
Residential   919    1,006    53    937    47 
                          
   $8,702   $9,102   $185   $8,847   $467 

 

Interest income on non-accrual loans is generally recognized on a cash basis and was approximately $1,000 and $43,000 for the years ended December 31, 2019 and 2018. There was no interest income on non-accrual loans recognized on a cash basis for the year ended December 31, 2020.

 

Troubled Debt Restructurings and Loan Modifications for Affected Borrowers

 

There were no modifications made during the period ended December 31, 2020 or December 31, 2019 that were considered troubled debt restructurings. As of December 31, 2020, and 2019, the Company has a recorded investment in troubled debt restructurings of $5,854,000 and $5,970,000, respectively. The Company has allocated $112,000 and $78,000 of specific allowance for those loans at December 31, 2020 and 2019 and has not committed to lend additional amounts.

 

There were no payment defaults on troubled debt restructurings within 12 months following the modification during the year ended December 31, 2020 and 2019.

 

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

AMERICAN RIVER BANKSHARES AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.ALLOWANCE FOR LOAN LOSSES (Continued)

 

Troubled Debt Restructurings and Loan Modifications for Affected Borrowers (Continued)

 

The CARES Act permits banks to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the loan modification is made between March 1, 2020 and December 31, 2020 or 60 days after the end of the COVID-19 emergency declaration and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. The federal banking agencies also issued guidance to encourage banks to make loan modifications for borrowers affected by COVID-19 and to assure banks that they will not be criticized by examiners for doing so.

During 2020, the Company made arrangements with some of its borrowers to defer principal and interest payments from three to six months and extend the original maturities by a like term, defer principal and interest payments from three to six months, with the amount deferred due at maturity, and defer principle payments for six months, with the amount deferred due at maturity. These arrangements are not considered TDRs as the CARES Act provided relief from certain requirements under U.S. GAAP. Section 4013 of the CARES Act gives entities temporary relief from the accounting and disclosure requirements for TDRs under Accounting Standards Codification (“ASC”) 310-40 in certain situations. All of these deferral arrangements made by the Company in 2020 met such requirements. The Company continues to accrue interest on all of the loan deferrals. The amount of deferred loans at June 30, 2020 totaled $96,465,000. This balance has been reduced by paydowns, payoffs, or loans returning to normal payments, to $4,882,000 as of December 31, 2020. These loans are not considered past due until after the deferral period is over and scheduled payments have resumed.