ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

ALLOWANCE FOR LOAN LOSSES

8. ALLOWANCE FOR LOAN LOSSES

The Company’s loan portfolio allocated by management's internal risk ratings as of March 31, 2021 and December 31, 2020 are summarized below (Commercial “Pass” loans includes $57,486,000 and $55,546,000 in Paycheck Protection Program (“PPP”) loans at March 31, 2021 and December 31, 2020, respectively):

March 31, 2021	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)			Real Estate
	Commercial		Commercial		Multi-family		Construction		Residential
Grade:
Pass	$	87,216	$	227,925	$	45,254	$	25,242	$	31,234
Watch		6,766		18,100		—		—		515
Special mention		—		1,437		—		—		—
Substandard		—		1,198		—		—		—
Doubtful or loss		—		—		—		—		—
Total	$	93,982	$	248,660	$	45,254	$	25,242	$	31,749
	Credit Risk Profile by Internally Assigned Grade Other Credit Exposure
	Agriculture		Consumer						Total
Grade:
Pass	$	6,034	$	26,462					$	449,367
Watch		—		133						25,514
Special mention		—		—						1,437
Substandard		—		—						1,198
Doubtful or loss		—		—						—
Total	$	6,034	$	26,595					$	477,516
December 31, 2020	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)			Real Estate
	Commercial		Commercial		Multi-family		Construction		Residential
Grade:
Pass	$	90,021	$	229,887	$	48,760	$	18,424	$	31,760
Watch		4,501		20,143		—		—		569
Special mention		—		118		—		—		—
Substandard		—		1,200		—		—		—
Doubtful or loss		—		—		—		—		—
Total	$	94,522	$	251,348	$	48,760	$	18,424	$	32,329
	Credit Risk Profile by Internally Assigned Grade Other Credit Exposure
	Agriculture		Consumer						Total
Grade:
Pass	$	6,091	$	28,668					$	453,611
Watch		—		136						25,349
Special mention		—		—						118
Substandard		—		—						1,200
Doubtful or loss		—		—						—
Total	$	6,091	$	28,804					$	480,278

The allocation of the Company’s allowance for loan losses and by portfolio segment and by impairment methodology are summarized below (Commercial loans includes $57,486,000 and $55,546,000 in PPP loans at March 31, 2021 and December 31, 2020, respectively, and do not carry any associated allowance for loan loss, as they are 100% guaranteed by the Small Business Administration (“SBA” )):

March 31, 2021
(dollars in thousands)				Real Estate											Other
	Commercial			Commercial			Multi-family			Construction		Residential			Agriculture		Consumer			Unallocated		Total
Allowance for Loan Losses
Beginning balance, January 1, 2021	$	922		$	3,466		$	411		$	687	$	388		$	85	$	391		$	278	$	6,628
Provision for loan losses		(149	)		(61	)		(34	)		236		(1	)		—		(19	)		28		—
Loans charged-off		—			—			—			—		—			—		(9	)		—		(9	)
Recoveries		76			1			—			—		—			—		—			—		77
Ending balance, March 31, 2021	$	849		$	3,406		$	377		$	923	$	387		$	85	$	363		$	306	$	6,696
Ending balance:
Individually evaluated for impairment	$	—		$	100		$	—		$	—	$	9		$	—	$	—		$	—	$	109
Ending balance:
Collectively evaluated for impairment	$	849		$	3,306		$	377		$	923	$	378		$	85	$	363		$	306	$	6,587
Loans
Ending balance	$	93,982		$	248,660		$	45,254		$	25,242	$	31,749		$	6,034	$	26,595		$	—	$	477,516
Ending balance:
Individually evaluated for impairment	$	—		$	6,558		$	—		$	—	$	431		$	—	$	—		$	—	$	6,989
Ending balance:
Collectively evaluated for impairment	$	93,982		$	242,102		$	45,254		$	25,242	$	31,318		$	6,034	$	26,595		$	—	$	470,527

December 31, 2020
(dollars in thousands)			Real Estate									Other
	Commercial		Commercial		Multi-family		Construction			Residential		Agriculture			Consumer		Unallocated		Total
Allowance for Loan Losses
Ending balance	$	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
March 31, 2020
(dollars in thousands)			Real Estate									Other
	Commercial		Commercial		Multi-family		Construction			Residential		Agriculture			Consumer		Unallocated		Total
Beginning balance, January 1, 2020	$	950	$	1,906	$	329	$	986		$	281	$	107		$	334	$	245	$	5,138
Provision for loan losses		63		349		64		(98	)		56		(4	)		58		7		495
Loans charged-off		—		—		—		—			—		—			—		—		—
Recoveries		1		3		—		—			—		—			—		—		4
Ending balance, March 31, 2020	$	1,014	$	2,258	$	393	$	888		$	337	$	103		$	392	$	252	$	5,637

The Company’s aging analysis of the loan portfolio at March 31, 2021 and December 31, 2020 are summarized below (Commercial loans includes $57,486,000 and $55,546,000 in PPP loans at March 31, 2021 and December 31, 2020, respectively):

March 31, 2021
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due Greater Than 89 Days		Total Past Due		Current		Total Loans		Past Due Greater Than 89 Days and Accruing		Nonaccrual
Commercial:
Commercial	$	—	$	—	$	—	$	—	$	93,982	$	93,982	$	—	$	—
Real estate:
Commercial		—		—		—		—		248,660		248,660		—		—
Multi-family		—		—		—		—		45,254		45,254		—		—
Construction		—		—		—		—		25,242		25,242		—		—
Residential		—		—		—		—		31,749		31,749		—		—
Other:
Agriculture		—		—		—		—		6,034		6,034		—		—
Consumer		—		—		—		—		26,595		26,595		—		—
Total	$	—	$	—	$	—	$	—	$	477,516	$	477,516	$	—	$	—
December 31, 2020
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due Greater Than 89 Days		Total Past Due		Current		Total Loans		Past Due Greater Than 89 Days and 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	$	—	$	—

The Federal Deposit Insurance Corporation (the “FDIC”) is encouraging financial institutions, like American River Bank, to provide borrowers affected in a variety of ways by the COVID-19 outbreak with payment accommodations that facilitate their ability to work through the immediate impact of the virus. Such assistance provided in a prudent manner to borrowers facing short-term setbacks could help the borrower and our community to recover. The FDIC indicated that these loan accommodation programs should be ultimately targeted toward loan repayment, but that if provided in a prudent manner such programs can help borrowers and communities recover from short-term setbacks.

The FDIC suggested that financial institutions should consider ways to address any deferred or skipped payments such as extending the original maturity date or by making those payments due in a balloon payment at the maturity date of the loan. 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 Coronavirus Aid, Relief, and Economic Security Act (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 arrangements 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. During the first quarter of 2021, both of the loan deferrals comprised of the $4,882,000 at December 31, 2020 began making their scheduled payments and one additional loan, in the amount of $2,017,000, was granted a three-month interest only arrangement and is scheduled to resume contractual payments in the second quarter of 2021.