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LOANS
 9 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
LOANS

NOTE 6 LOANS 

 

There were $337 thousand of loans held for sale at September 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 September 30, 2020 and December 31, 2019 are summarized as follows: 

 

(Dollars are in thousands)   September 30,
2020		   December 31, 2019
Real estate secured:                
Commercial   $ 174,898     $ 170,436  
Construction and land development     26,054       31,130  
Residential 1-4 family     226,267       242,922  
Multifamily     14,979       13,638  
Farmland     19,111       20,790  
Total real estate loans     461,309       478,916  
Commercial     96,107       53,994  
Agriculture     4,572       4,797  
Consumer installment loans     21,313       23,127  
All other loans     1,821       1,710  
Total loans   $ 585,122     $ 562,544  

  

Included in commercial loans are 665 loans originated under the Paycheck Protection Program totaling $43,546,000 at September 30, 2020 and none at December 31, 2019.

 

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

 

(Dollars are in thousands)   September 30,
2020		   December 31, 2019
Real estate secured:                
Commercial   $ 1,761     $ 1,601  
Construction and land development     59       45  
Residential 1-4 family     3,172       2,544  
Farmland     205       531  
Total real estate loans     5,197       4,721  
Commercial     118       390  
Consumer installment loans and other loans     28       45  
Total loans receivable on nonaccrual status   $ 5,343     $ 5,156  

  

Total interest income not recognized on nonaccrual loans for the nine months ended September 30, 2020 and September 30, 2019 was $418 thousand and $544 thousand, respectively.

  

The following tables present information concerning the Company’s investment in loans considered impaired as of September 30, 2020 and December 31, 2019:

  

 

  As of September 30, 2020 

(Dollars are in thousands) 

   Recorded
Investment		   Unpaid Principal Balance   Related
Allowance
With no related allowance recorded:                        
Real estate secured:                        
Commercial   $ 984     $ 1,011     $ —    
Construction and land development     104       381       —    
Residential 1-4 family     2,254       2,407       —    
Multifamily     —         —         —    
Farmland     408       577       —    
Commercial     —         —         —    
Agriculture     —         —         —    
Consumer installment loans     6       6       —    
All other loans     —         —         —    
With an allowance recorded:                        
Real estate secured:                        
Commercial     605       672       285  
Construction and land development     —         —         —    
Residential 1-4 family     229       249       49  
Multifamily     —         —         —    
Farmland     210       222       4  
Commercial     33       41       8  
Agriculture     —         —         —    
Consumer installment loans     —         —         —    
All other loans     —         —         —    
Total   $ 4,833     $ 5,566     $ 346  

  

 

 

 

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 tables present information concerning the Company’s average impaired loans and interest recognized on those impaired loans, for the periods indicated:

 

    Nine Months Ended
    September 30, 2020   September 30, 2019

 

 (Dollars are in thousands) 

   Average
Recorded
Investment		   Interest
Income
Recognized		   Average
Recorded
Investment		   Interest
Income
Recognized
Real estate secured:                                
Commercial   $ 2,004     $ 1     $ 1,918     $ 76  
Construction and land development     87       12       96       3  
Residential 1-4 family     1,819       49       2,114       47  
Multifamily     —         —         37       1  
Farmland     590       51       1,235       29  
Commercial     74       1       691       11  
Agriculture     —         —         —         —    
Consumer installment loans     3       —         3       —    
All other loans     —         —         —         —    
With an allowance recorded:                                
Real estate secured:                                
Commercial     493       —         496       1  
Construction and land development     —         —         —         —    
Residential 1-4 family     104       3       364       —    
Multifamily     —         —         —         —    
Farmland     213       7       223       6  
Commercial     160       1       563       —    
Agriculture     —         —         —         —    
Consumer installment loans     —         —         3       —    
All other loans     —         —         —         —    
Total   $ 5,547     $ 125     $ 7,743     $ 174  

  

    Three Months Ended
    September 30, 2020   September 30, 2019

 

  

(Dollars are in thousands) 

   Average
Recorded
Investment		   Interest
Income
Recognized		   Average
Recorded
Investment		   Interest
Income
Recognized
Real estate secured:                                
Commercial   $ 1,673     $ —       $ 1,978     $ 34  
Construction and land development     107       8       84       3  
Residential 1-4 family     2,334       36       1,365       8  
Multifamily     —         —         —         —    
Farmland     419       41       788       16  
Commercial     33       —         45       —    
Agriculture     —         —         —         —    
Consumer installment loans     7       —         6       —    
All other loans     —         —         —         —    
With an allowance recorded:                                
Real estate secured:                                
Commercial     553       —         372       —    
Construction and land development     —         —         —         —    
Residential 1-4 family     154       3       340       —    
Multifamily     —         —         —         —    
Farmland     211       5       111       —    
Commercial     34       1       1,036       1  
Agriculture     —         —         —         —    
Consumer installment loans     —         —         —         —    
All other loans     —         —         —         —    
Total   $ 5,525     $ 94     $ 6,125     $ 62  

  

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

  

 

  

 

 

As of September 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     681     $ —         61       742       174,156     $ 174,898  
Construction and land development     25       —         —         25       26,029       26,054  
Residential 1-4 family     3,516       422       930       4,868       221,399       226,267  
Multifamily     —         —         —         —         14,979       14,979  
Farmland     75       —         103       178       18,933       19,111  
Total real estate loans     4,297       422       1,094       5,813       455,496       461,309  
Commercial     153       —         10       163       95,944       96,107  
Agriculture     211       —         11       222       4,350       4,572  
Consumer installment loans     142       18       3       163       21,150       21,313  
All other loans     —         —         —         —         1,821       1,821  
Total loans     4,803     $ 440       1,118       6,361       578,761     $ 585,122  

 

 

  

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 September 30, 2020 and December 31, 2019 were as follows:

 

                     

As of September 30, 2020 

(Dollars are in thousands) 

   Pass   Special
Mention		   Substandard   Doubtful   Total
Real estate secured:                                        
   Commercial   $ 168,111     $ 5,026     $ 1,761     $ —       $ 174,898  
   Construction and land development     25,752       243       59       —         26,054  
   Residential 1-4 family     221,385       1,742       3,140       —         226,267  
   Multifamily     14,744       235       —         —         14,979  
   Farmland     17,626       1,280       205       —         19,111  
Total real estate loans     447,618       8,526       5,165       —         461,309  
Commercial     93,331       2,708       68       —         96,107  
Agriculture     4,561       —         11       —         4,572  
Consumer installment loans     21,289       7       17       —         21,313  
All other loans     1,821       —         —         —         1,821  
Total   $ 568,620     $ 11,241     $ 5,261     $ —       $ 585,122  
                                         

 

 

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 $43,5 million at September 30, 2020 and $0 at December 31, 2019.