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LOANS
 9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
LOANS

NOTE 6 LOANS:

 

Loans held for sale of $571 thousand represents mortgage loans originated through secondary mortgage program, which have been originated in the Bank’s name since the second quarter of 2019. Previously, these loans were originated in the name of and funded bythe purchaser and were not included in loans receivable.

 

Loans receivable outstanding are summarized as follows:

 

(Dollars are in thousands)   September 30, 2019   December 31, 2018
Real estate secured:                
Commercial   $ 167,300     $ 140,862  
Construction and land development     29,615       35,119  
Residential 1-4 family     244,273       249,946  
Multifamily     13,057       13,496  
Farmland     21,469       22,114  
Total real estate loans     475,714       461,537  
Commercial     51,662       55,157  
Agriculture     4,839       5,266  
Consumer installment loans     24,221       24,538  
All other loans     1,738       598  
Total loans   $ 558,174     $ 547,096  

 

Loans receivable on nonaccrual status are summarized as follows:

 

(Dollars are in thousands)   September 30, 2019   December 31, 2018
Real estate secured:                
Commercial   $ 1,069     $ 784  
Construction and land development     39       157  
Residential 1-4 family     2,431       3,626  
Multifamily     —         76  
Farmland     539       1,637  
Total real estate loans     4,078       6,300  
Commercial     558       61  
Agriculture     —         1  
Consumer installment loans     —         7  
Total loans receivable on nonaccrual status   $ 4,636     $ 6,369  

 

Total interest income not recognized on nonaccrual loans for the nine months ended September 30, 2019 and 2018 was $544 thousand and $358 thousand, respectively.

 

The following table presents information concerning the Company’s investment in loans considered impaired as of September 30, 2019 and December 31, 2018:

             
As of September 30, 2019
(Dollars are in thousands)		   Recorded
Investment		   Unpaid Principal Balance   Related
Allowance
With no related allowance recorded:                        
Real estate secured:                        
Commercial   $ 2,172     $ 2,229     $ —    
Construction and land development     79       353       —    
Residential 1-4 family     1,508       1,599       —    
Multifamily     —         —         —    
Farmland     756       939       —    
Commercial     90       142       —    
Agriculture     —         —         —    
Consumer installment loans     6       6       —    
All other loans     —         —         —    
With an allowance recorded:                        
Real estate secured:                        
Commercial     368       381       75  
Construction and land development     —         —         —    
Residential 1-4 family     56       61       46  
Multifamily     —         —         —    
Farmland     —         —         —    
Commercial     462       1,136       100  
Agriculture     —         —         —    
Consumer installment loans     —         —         —    
All other loans     —         —         —    
Total   $ 5,497     $ 6,846     $ 221  
  As of December 31, 2018
(Dollars are in thousands)		    

 

Recorded

Investment

      

 

Unpaid Principal Balance

      

 

Related

Allowance

  
With no related allowance recorded:                        
Real estate secured:                        
Commercial   $ 1,887     $ 1,941     $ —    
Construction and land development     114       379       —    
Residential 1-4 family     2,880       3,168       —    
Multifamily     75       117       —    
Farmland     1,693       1,880       —    
Commercial     —         —         —    
Agriculture     —         —         —    
Consumer installment loans     —         —         —    
All other loans     —         —         —    
With an allowance recorded:                        
Real estate secured:                        
Commercial     435       539       40  
Construction and land development     —         —         —    
Residential 1-4 family     431       454       132  
Multifamily     —         —         —    
Farmland     345       358       132  
Commercial     109       109       13  
Agriculture     —         —         —    
Consumer installment loans     7       7       1  
All other loans     —         —         —    
Total   $ 7,976     $ 8,952     $ 318  

 

The following table presents information concerning the Company’s average impaired loans and interest recognized on those impaired loans, for the periods indicated:

 

    Nine months Ended
    September 30, 2019   September 30, 2018
(Dollars are in thousands)   Average
Recorded
Investment		   Interest
Income
Recognized		   Average
Recorded
Investment		   Interest
Income
Recognized
With no related allowance recorded:                                
Real estate secured:                                
Commercial   $ 1,918     $ 76     $ 2,724     $ 95  
Construction and land development     96       3       220       1  
Residential 1-4 family     2,114       47       3,229       137  
Multifamily     37       1       163       5  
Farmland     1,235       29       1,515       51  
Commercial     691       11       166       1  
Agriculture     —         —         4       —    
Consumer installment loans     3       —         2       —    
All other loans     —         —         —         —    
With an allowance recorded:                                
Real estate secured:                                
Commercial     496       1       1,409       16  
Construction and land development     —         —         —         —    
Residential 1-4 family     364       —         391       13  
Multifamily     —         —         —         —    
Farmland     223       6       365       —    
Commercial     563       —         293       2  
Agriculture     —         —         —         —    
Consumer installment loans     3               6       1  
All other loans     —         —         —         —    
Total   $ 7,743     $ 174     $ 10,487     $ 322  

 

    Three Months Ended
    September 30, 2019   September 30, 2018
(Dollars are in thousands)   Average
Recorded
Investment		   Interest
Income
Recognized		   Average
Recorded
Investment		   Interest
Income
Recognized
With no related allowance recorded:                                
Real estate secured:                                
Commercial   $ 1,978     $ 34     $ 2,710     $ 41  
Construction and land development     84       3       145       1  
Residential 1-4 family     1,365       8       3,093       50  
Multifamily     —         —         80       1  
Farmland     788       16       1,816       9  
Commercial     45       —         10       1  
Agriculture     —         —         1       —    
Consumer installment loans     6       —         —         —    
All other loans     —         —         —         —    
With an allowance recorded:                                
Real estate secured:                                
Commercial     372       —         544       —    
Construction and land development     —         —         —         —    
Residential 1-4 family     340       —         393       6  
Multifamily     —         —         —         —    
Farmland     111       —         357       —    
Commercial     1,036       1       110       —    
Agriculture     —         —         —         —    
Consumer installment loans     —         —         7       —    
All other loans     —         —         —         —    
Total   $ 6,125     $ 62     $ 9,266     $ 109  

  

An age analysis of past due loans receivable is below. At September 30, 2019 and December 31, 2018, there were no loans over 90 days past due that were accruing.

                         
As of September 30, 2019
(Dollars are in thousands)		   Loans
30-59
Days
Past
Due		   Loans
60-89
Days
Past
Due		   Loans
90 or
More
Days
Past
Due		   Total
Past
Due
Loans		   Current
Loans		   Total
Loans
Real estate secured:                                                
Commercial   $ —       $ 758     $ 317     $ 1,075     $ 166,225     $ 167,300  
Construction and land
development		     57       14       2       73       29,542       29,615  
Residential 1-4 family     2,616       1,112       733       4,461       239,812       244,273  
Multifamily     121       —         —         121       12,936       13,057  
Farmland     —         —         152       152       21,317       21,469  
Total real estate loans     2,794       1,884       1,204       5,882       469,832       475,714  
Commercial     35       110       516       661       51,001       51,662  
Agriculture     40       —         —         40       4,799       4,839  
Consumer installment
loans		     71       8       —         79       24,142       24,221  
All other loans     38       —         —         38       1,700       1,738  
Total loans   $ 2,978     $ 2,002     $ 1,720     $ 6,700     $ 551,474     $ 558,174  

 

As of December 31, 2018
(Dollars are in thousands)		   Loans
30-59
Days
Past
Due		   Loans
60-89
Days
Past
Due		   Loans
90 or
More
Days
Past
Due		   Total
Past
Due
Loans		   Current
Loans		   Total
Loans
Real estate secured:                                                
Commercial   $ 80     $ 31     $ 137     $ 248     $ 140,614     $ 140,862  
Construction and land
development		     70       —         27       97       35,022       35,119  
Residential 1-4 family     3,468       564       525       4,557       245,389       249,946  
Multifamily     —         273       —         273       13,223       13,496  
Farmland     316       —         1090       1406       20,708       22,114  
Total real estate loans     3,934       868       1,779       6,581       454,956       461,537  
Commercial     68       —         61       129       55,028       55,157  
Agriculture     22       —         —         22       5,244       5,266  
Consumer installment
loans		     74       15       —         89       24,449       24,538  
All other loans     —         —         —         —         598       598  
Total loans   $ 4,098     $ 883     $ 1,840     $ 6,821     $ 540,275     $ 547,096  

 

The Company categorizes loans receivable 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, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans receivable as to credit risk. The Company uses the following definitions for risk ratings:

 

Pass - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors.

 

Special Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.

 

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must 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 doubtful have all the weaknesses inherent in loans classified as substandard, plus 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.

 

Based on the most recent analysis performed, the risk categories of loans receivable was as follows:

                     
As of September 30, 2019
(Dollars are in thousands)		   Pass   Special
Mention		   Substandard   Doubtful   Total
Real estate secured:                                        
   Commercial   $ 163,299     $ 2,932     $ 1,069     $ —       $ 167,300  
   Construction and land development     29,196       369       50       —         29,615  
   Residential 1-4 family     240,610       1,172       2,491       —         244,273  
   Multifamily     13,057       —         —         —         13,057  
   Farmland     19,415       1,515       539       —         21,469  
Total real estate loans     465,577       5,988       4,149       —         475,714  
Commercial     48,607       2,483       81       491       51,662  
Agriculture     4,783       12       44       —         4,839  
Consumer installment loans     24,218       2       1       —         24,221  
All other loans     1,738       —         —         —         1,738  
Total   $ 544,923     $ 8,485     $ 4,275     $ 491     $ 558,174  
                                         

 

As of December 31, 2018
(Dollars are in thousands)		   Pass   Special
Mention		   Substandard   Doubtful   Total
Real estate secured:                                        
   Commercial   $ 137,146     $ 2,890     $ 826     $ —       $ 140,862  
   Construction and land development     34,231       718       170       —         35,119  
   Residential 1-4 family     243,950       1,523       4,473       —         249,946  
   Multifamily     13,357       63       76       —         13,496  
   Farmland     18,126       2,331       1,657       —         22,114  
Total real estate loans     446,810       7,525       7,202       —         461,537  
Commercial     52,156       2,940       61       —         55,157  
Agriculture     5,255       10       1       —         5,266  
Consumer installment loans     24,493       35       10       —         24,538  
All other loans     598       —         —         —         598  
Total   $ 529,312     $ 10,510     $ 7,274     $ —       $ 547,096