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LOANS
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
LOANS

NOTE 6 LOANS

 

There were no loans held for sale at June 30, 2020 and $2 thousand at December 31, 2019, which represents mortgage loans originated for sale. These originations and sales are executed on a best efforts basis.

 

Loans receivable outstanding as of June 30, 2020 and December 31, 2019 are summarized as follows:

 

(Dollars are in thousands)   June 30,
2020		   December 31, 2019
Real estate secured:                
Commercial   $ 170,034     $ 170,436  
Construction and land development     24,622       31,130  
Residential 1-4 family     235,320       242,922  
Multifamily     15,030       13,638  
Farmland     20,115       20,790  
Total real estate loans     465,121       478,916  
Commercial     94,667       53,994  
Agriculture     4,844       4,797  
Consumer installment loans     21,429       23,127  
All other loans     1,505       1,710  
Total loans   $ 587,566     $ 562,544  

 

Included in commercial loans are loans extended under the Paycheck Protection Program totaling $42,863 and $ -, at June 30, 2020 and December 31, 2019, respectively

 

Loans receivable on nonaccrual status as of June 30, 2020 and December 31, 209 are summarized as follows:

 

(Dollars are in thousands)   June 30,
2020		   December 31, 2019
Real estate secured:                
Commercial   $ 3,300     $ 1,601  
Construction and land development     67       45  
Residential 1-4 family     3,272       2,544  
Farmland     403       531  
Total real estate loans     7,042       4,721  
Commercial     111       390  
Consumer installment loans and other loans     30       45  
Total loans receivable on nonaccrual status   $ 7,183     $ 5,156  

 

Total interest income not recognized on nonaccrual loans for the six months ended June 30, 2020 and June 30, 2019 was $287 thousand and $379 thousand, respectively.

 

The following table presents information concerning the Company’s investment in loans considered impaired as of June 30, 2020 and December 31, 2019:

 

 

 As of June 30, 2020

 (Dollars are in thousands)

   Recorded
Investment		   Unpaid Principal Balance   Related
Allowance
With no related allowance recorded:                        
Real estate secured:                        
Commercial   $ 2,362     $ 2,490     $ —    
Construction and land development     109       385       —    
Residential 1-4 family     2,414       2,589       —    
Multifamily     —         —         —    
Farmland     429       599       —    
Commercial     66       68       —    
Agriculture     —         —         —    
Consumer installment loans     7       7       —    
All other loans     —         —         —    
With an allowance recorded:                        
Real estate secured:                        
Commercial     500       527       295  
Construction and land development     —         —         —    
Residential 1-4 family     78       89       39  
Multifamily     —         —         —    
Farmland     212       224       6  
Commercial     34       42       8  
Agriculture     —         —         —    
Consumer installment loans     —         —         —    
All other loans     —         —         —    
Total   $ 6,211     $ 7,020     $ 348  

 

 

As of December 31, 2019

 (Dollars are in thousands)

   Recorded
Investment		   Unpaid Principal Balance   Related
Allowance
With no related allowance recorded:                        
Real estate secured:                        
Commercial   $ 2,416     $ 2,478     $ —    
Construction and land development     70       346       —    
Residential 1-4 family     1,263       1,460       —    
Multifamily     —         —         —    
Farmland     778       970       —    
Commercial     128       178       —    
Agriculture     —         1       —    
Consumer installment loans     —         —         —    
All other loans     —         —         —    
With an allowance recorded:                        
Real estate secured:                        
Commercial     363       379       70  
Construction and land development     —         —         —    
Residential 1-4 family     55       60       44  
Multifamily     —         —         —    
Farmland     216       228       9  
Commercial     286       886       200  
Agriculture     —         —         —    
Consumer installment loans     —         —         —    
All other loans     —         —         —    
Total   $ 5,575     $ 6,986     $ 323  

 

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

 

    Six Months Ended
    June 30, 2020   June 30, 2019

 

(Dollars are in thousands)

   Average
Recorded
Investment		   Interest
Income
Recognized		   Average
Recorded
Investment		   Interest
Income
Recognized
Real estate secured:                                
Commercial   $ 2,344     $ 1     $ 1,833     $ 42  
Construction and land development     81       9       102       —    
Residential 1-4 family     1,674       31       2,316       39  
Multifamily     —         —         49       1  
Farmland     650       10       1,394       13  
Commercial     98       1       891       11  
Agriculture     —         —         —         —    
Consumer installment loans     2       —         2       —    
All other loans     —         —         —         —    
With an allowance recorded:                                
Real estate secured:                                
Commercial     455       —         539       1  
Construction and land development     —         —         —         —    
Residential 1-4 family     62       —         466       10  
Multifamily     —         —         —         —    
Farmland     214       4       297       6  
Commercial     202       1       596       5  
Agriculture     —         —         —         —    
Consumer installment loans     —         —         4       —    
All other loans     —         —         —         —    
Total   $ 5,782     $ 57     $ 8,489     $ 128  

 

    Three Months Ended
    June 30, 2020   June 30, 2019

 

 (Dollars are in thousands)

   Average
Recorded
Investment		   Interest
Income
Recognized		   Average
Recorded
Investment		   Interest
Income
Recognized
Real estate secured:                                
Commercial   $ 2,308     $ —       $ 1,806     $ 20  
Construction and land development     86       5       96       —    
Residential 1-4 family     1,880       18       2,034       —    
Multifamily     —         —         36       —    
Farmland     587       —         1,245       6  
Commercial     84       —         1,336       —    
Agriculture     —         —         —         —    
Consumer installment loans     4       —         3       —    
All other loans     —         —         —         —    
With an allowance recorded:                                
Real estate secured:                                
Commercial     502       —         591       1  
Construction and land development     —         —         —         —    
Residential 1-4 family     66       —         484       10  
Multifamily     —         —         —         —    
Farmland     214       2       273       6  
Commercial     160       1       840       5  
Agriculture     —         —         —         —    
Consumer installment loans     —         —         3       —    
All other loans     —         —         —         —    
Total   $ 5,891     $ 26     $ 8,747     $ 48  

 

An age analysis of past due loans receivable as of June 30, 2020 and December 31, 2019 is below. At June 30, 2020 and December 31, 2019, no loans over 90 days past due were accruing.

 

 

 

As of June 30, 2020

(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     1,027       —         919       1,946       168,088     $ 170,034  
Construction and land
development		     —         —         —         —         24,622       24,622  
Residential 1-4 family     2,168       143       860       3,171       232,149       235,320  
Multifamily     —         —         —         —         15,030       15,030  
Farmland     170       —         103       273       19,842       20,115  
Total real estate loans     3,365       143       1,882       5,390       459,731       465,121  
Commercial     130       11       35       176       94,491       94,667  
Agriculture     8       14       —         22       4,822       4,844  
Consumer installment
loans		     67       14       —         81       21,348       21,429  
All other loans     —         —         —         —         1,505       1,505  
Total loans     3,570       182       1,917       5,669       581,897     $ 587,566  

 

 

 

  

As of December 31, 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   $ 502     $ 125     $ 262     $ 889     $ 169,547     $ 170,436  
Construction and land
development		     50       18       18       86       31,044       31,130  
Residential 1-4 family     3,700       1,096       710       5,506       237,416       242,922  
Multifamily     262       —         —         262       13,376       13,638  
Farmland     111       47       152       310       20,480       20,790  
Total real estate loans     4,625       1,286       1,142       7,053       471,863       478,916  
Commercial     406       —         323       729       53,265       53,994  
Agriculture     244       —         21       265       4,532       4,797  
Consumer installment
Loans		     98       24       23       145       22,982       23,127  
All other loans     —         —         —         —         1,710       1,710  
Total loans   $ 5,373     $ 1,310     $ 1,509     $ 8,192     $ 554,352     $ 562,544  

 

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 as of June 30, 2020 and December 31, 2019 was as follows:

                     

As of June 30, 2020

 (Dollars are in thousands)

   Pass   Special
Mention		   Substandard   Doubtful   Total
Real estate secured:                                        
   Commercial   $ 163,058     $ 3,676     $ 3,300     $ —       $ 170,034  
   Construction and land development     24,232       323       67       —         24,622  
   Residential 1-4 family     230,387       1,683       3,250       —         235,320  
   Multifamily     14,791       239       —         —         15,030  
   Farmland     18,665       1,047       403       —         20,115  
Total real estate loans     451,133       6,968       7,020       —         465,121  
Commercial     92,000       2,556       111       —         94,677  
Agriculture     4,830       —         14       —         4,844  
Consumer installment loans     21,391       22       16       —         21,429  
All other loans     1,505       —         —         —         1,505  
Total   $ 570,859     $ 9,546     $ 7,161     $ —       $ 587,566  
                                         

 

As of December 31, 2019

(Dollars are in thousands)

    

Pass

      

Special

Mention

      

 

Substandard 

       Doubtful      

Total 

  
Real estate secured:                                        
   Commercial   $ 165,570     $ 3,265     $ 1,601     $ —       $ 170,436  
   Construction and land development     30,747       360       23       —         31,130  
   Residential 1-4 family     239,210       1,207       2,505       —         242,922  
   Multifamily     13,638       —         —         —         13,638  
   Farmland     18,779       1,480       531       —         20,790  
Total real estate loans     467,944       6,312       4,660       —         478,916  
Commercial     51,086       2,504       118       286       53,994  
Agriculture     4,753       4       40       —         4,797  
Consumer installment loans     23,087       12       28       —         23,127  
All other loans     1,710       —         —         —         1,710  
Total   $ 548,580     $ 8,832     $ 4,846     $ 286     $ 562,544  

 

Included in Commercial loans under the “Pass” classification are loans extended under the Paycheck Protection Program totaling $42,862 and $ -, at June 30, 2020 and December 31, 2019, respectively.