ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

ALLOWANCE FOR LOAN LOSSES

NOTE 7 ALLOWANCE FOR LOAN LOSSES

In determining the amount of our allowance for loan losses, we evaluate the risk characteristics and credit quality of our loan portfolio, and assess current economic conditions, diversification of the portfolio, collateral adequacy, past loss experience and the level of nonperforming loans. If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future loan losses and we may experience significant increases to our provision.

As a result of the COVID-19 pandemic, and the resulting economic impact, the company provided forbearance, largely in the form of payment deferrals, on $117.4 million in loans to borrowers during the first nine months of 2020. Factors have been incorporated into the allowance determination to consider the effects of credit deterioration due to the economic impact resulting from the pandemic, such as increased unemployment and decreased gross domestic production.

The following table presents activity in the allowance for loan losses for the nine- and three-month periods ending September 30, 2020 and 2019, respectively. Additionally, the allocation of the allowance by recorded portfolio segment and impairment method is presented as of September 30, 2020 and December 31, 2019, respectively.

		Real estate secured
(Dollars are in thousands)		Commercial		Construction and Land Development		Residential 1-4 family		Multifamily		Farmland		Commercial		Agriculture		Consumer and All Other		Unallocated		Total
Nine months ended September 30, 2020
Beginning balance	$	1,248	$	158	$	1,736	$	104	$	109	$	1,789	$	27	$	195	$	2	$	5,368
Charge-offs		(65)		-		(66)		-		(42)		(326)		(15)		(59)		-		(573)
Recoveries		56		-		31		-		33		34		1		37		-		192
Provision		874		32		361		44		20		627		31		13		(2)		2,000
Ending balance	$	2,113	$	190	$	2,062	$	148	$	120	$	2,124	$	44	$	186	$	-	$	6,987
Three months ended September 30, 2020
Beginning balance	$	2,054	$	169	$	2,039	$	145	$	121	$	1,817	$	49	$	181	$	-	$	6,575
Charge-offs		(43)		-		(66)		-		-		-		-		(15)		-		(124)
Recoveries		54		-		14		-		-		3		-		15		-		86
Provision		48		21		75		3		(1)		304		(5)		5		-		450
Ending balance	$	2,113	$	190	$	2,062	$	148	$	120	$	2,124	$	44	$	186	$	-	$	6,987
Allowance for loan losses at September 30, 2020
Individually evaluated for impairment	$	285	$	-	$	49	$	-	$	4	$	8	$	-	$	-	$	-	$	346
Collectively evaluated for impairment		1,828		190		2,013		148		116		2,116		44		186		-		6,641
	$	2,113	$	190	$	2,062	$	148	$	120	$	2,124	$	44	$	186	$	-	$	6,987
Loans at September 30, 2020
Individually evaluated for impairment	$	1,589	$	104	$	2,483	$	-	$	618	$	33	$	-	$	6	$	-	$	4,833
Collectively evaluated for impairment		173,309		25,950		223,784		14,979		18,493		96,074		4,572		23,128		-		580,289
	$	174,898	$	26,054	$	226,267	$	14,979	$	19,111	$	96,107	$	4,572	$	23,134	$	-	$	585,122
Allowance for loan losses at December 31, 2019
Individually evaluated for impairment	$	70	$	-	$	44	$	-	$	9	$	200	$	-	$	-	$	-	$	323
Collectively evaluated for impairment		1,178		158		1,692		104		100		1,589		27		195		2		5,045
	$	1,248	$	158	$	1,736	$	104	$	109	$	1,789	$	27	$	195	$	2	$	5,368
Loans at December 31, 2019
Individually evaluated for impairment	$	2,779	$	70	$	1,318	$	-	$	994	$	414	$	-	$	-	$	-	$	5,575
Collectively evaluated for impairment		167,657		31,060		241,604		13,638		19,796		53,580		4,797		24,837		-		556,969
	$	170,436	$	31,130	$	242,922	$	13,638	$	20,790	$	53,994	$	4,797	$	24,837	$	-	$	562,544

		Real estate secured
(Dollars are in thousands)		Commercial		Construction and Land Development		Residential 1-4 family		Multifamily		Farmland		Commercial		Agriculture		Consumer and All Other		Unallocated		Total
Nine months ended September 30, 2019
Beginning balance	$	1,386	$	202	$	2,437	$	89	$	287	$	448	$	37	$	175	$	275	$	5,336
Charge-offs		-		-		(171)		-		(33)		(1,563)		(9)		(73)		-		(1,849)
Recoveries		16		34		168		30		8		59		1		57		-		373
Provision		(143)		(70)		(566)		(17)		(135)		2,480		(5)		18		(272)		1,290
Ending balance	$	1,259	$	166	$	1,868	$	102	$	127	$	1,424	$	24	$	177	$	3	$	5,150
Three months ended September 30, 2019
Beginning balance	$	1,225	$	146	$	1,967	$	87	$	118	$	1,383	$	35	$	162	$	65	$	5,188
Charge-offs		-		-		(42)		-		-		(1,026)		(9)		(30)		-		(1,107)
Recoveries		14		-		11		-		-		14		-		10		-		49
Provision		20		20		(68)		15		9		1,053		(2)		35		(62)		1,020
Ending balance	$	1,259	$	166	$	1,868	$	102	$	127	$	1,424	$	24	$	177	$	3	$	5,150

During the second quarter of 2019, $4.4 million of non-performing or under-performing real estate loans were sold resulting in $57 thousand of charge-offs and $113 thousand of recoveries.

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.