LOANS

12 Months Ended

Dec. 31, 2021

Receivables [Abstract]

LOANS

NOTE 6 LOANS

Loans receivable outstanding at December 31, 2021 and 2020, are summarized as follows:

	December 31,
(Dollars are in thousands)	2021		2020
Real estate secured:
Commercial	$	206,162	$	179,381
Construction and land development		32,325		25,031
Residential 1-4 family		224,530		222,980
Multifamily		33,048		16,569
Farmland		18,735		18,368
Total real estate loans		514,800		462,329
Commercial		54,325		86,010
Agriculture		4,021		4,450
Consumer installment loans		18,756		20,632
All other loans		1,842		2,145
Total loans	$	593,744	$	575,566

Included in commercial loans at December 31, 2021 and 2020, were $6.4 million and $34.8 million of PPP loans that are guaranteed by the SBA.

Also included in total loans above are deferred loan fees of $1.8 million and $2.3 million, at December 31, 2021 and 2020, respectively, which include deferred PPP loan fees. Deferred loan costs were $2.0 million and $1.8 million, at December 31, 2021 and 2020, respectively. Income from net deferred fees and costs is recognized as income over the lives of the respective loans as a yield adjustment. If loans repay prior to scheduled maturities any unamortized fee or cost is recognized at that time.

As a result of PPP originations during 2021 and 2020, net deferred fees totaling $1.6 million and $1.6 million were received, respectively, and $2.0 million and $994 thousand was recognized through earnings, respectively.

Loans receivable on nonaccrual status at December 31, 2021 and 2020 are summarized as follows:

(Dollars are in thousands)	2021		2020
Real estate secured:
Commercial	$	415	$	2,225
Construction and land development		37		57
Residential 1-4 family		2,314		2,700
Multi-family		111		—
Farmland		48		101
Total real estate loans		2,925		5,083
Commercial		9		453
Consumer installment and other loans		7		12
Total loans receivable on nonaccrual status	$	2,941	$	5,548

Total interest income not recognized on nonaccrual loans for 2021 and 2020 was $223 thousand and $494 thousand, respectively.

No accounts received pandemic related forbearance in 2021. During the year ended December 31, 2020, under the provisions of the CARES Act or related guidance issued by banking regulators, modifications, mainly in the form of short-term payment deferrals, were granted on 786 loans totaling $119.6 million. At December 31, 2021, 543 accounts totaling $82.4 million remain, of which 538 accounts totaling $82.3 million are current or less than 90 days past due. All of these accounts are subject to a normal repayment schedule. No accounts at December 31, 2021 were subject to pandemic related forbearance. At December 31, 2020, 673 loans totaling $110.7 million had completed their forbearance period and resumed a normal payment schedule, and 15 loans totaling $836 thousand remained in forbearance. At December 31, 2020, the remaining 98 accounts had been repaid in full or refinanced at market terms and conditions.

Of the accounts that received some form of forbearance during 2020, at December 31, 2021, $15.2 million were to lessors of residential properties, $12.8 to lessors of nonresidential properties and $6.7 million to hotels and restaurants; while at December 31, 2020, $21.4 million were to lessors of residential properties, $16.0 million to lessors of non-residential properties, $12.4 million to hotels and restaurants, and $6.0 million to coal and gas mining operations.

The following table presents information concerning the Company’s investment in loans considered impaired as of December 31, 2021 and December 31, 2020:

As of December 31, 2021 (Dollars are in thousands)	Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	245	$	—	$	99	$	140	$	—
Construction and land development		64		18		24		298		—
Residential 1-4 family		1,720		24		1,508		1,791		—
Multifamily		—		—		—		—		—
Farmland		438		14		320		490		—
Commercial		—		—		—		—		—
Agriculture		—		—		—		—		—
Consumer installment loans		3		—		2		2		—
All other loans		—		—		—		—		—
With an allowance recorded:
Real estate secured:
Commercial		871		3		315		372		94
Construction and land development		—		—		—		—		—
Residential 1-4 family		338		6		340		372		53
Multifamily		—		—		—		—		—
Farmland		121		4		197		209		17
Commercial		109		1		28		35		2
Agriculture		—		—		—		—		—
Consumer installment loans		—		—		—		—		—
All other loans		—		—		—		—		—
Total	$	3,909	$	70	$	2,833	$	3,709	$	166

As of December 31, 2020 (Dollars are in thousands)	Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	1,680	$	16	$	385	$	386	$	—
Construction and land development		89		18		99		376		—
Residential 1-4 family		1,788		53		1,662		1,898		—
Multifamily		—		—		—		—		—
Farmland		550		59		391		560		—
Commercial		59		—		—		—		—
Agriculture		—		—		—		—		—
Consumer installment loans		4		—		5		6		—
All other loans		—		—		—		—		—
With an allowance recorded:
Real estate secured:
Commercial		707		—		1,566		1,678		574
Construction and land development		—		—		—		—		—
Residential 1-4 family		150		3		337		365		72
Multifamily		—		—		—		—		—
Farmland		212		9		208		220		2
Commercial		214		12		429		437		404
Agriculture		—		—		—		—		—
Consumer installment loans		—		—		—		—		—
All other loans		—		—		—		—		—
Total	$	5,453	$	170	$	5,082	$	5,926	$	1,052

An age analysis of past due loans receivable is below. At December 31, 2021 and 2020, there were no loans over 90 days past due that were accruing.

As of December 31, 2021 (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	$	—	$	—	$	—	$	—	$	206,162	$	206,162
Construction and land development		7		—		7		14		32,311		32,325
Residential 1-4 family		2,473		240		486		3,199		221,331		224,530
Multifamily		—		—		111		111		32,937		33,048
Farmland		—		—		—		—		18,735		18,735
Total real estate loans		2,480		240		604		3,324		511,476		514,800
Commercial		5		—		—		5		54,320		54,325
Agriculture		—		—		—		—		4,021		4,021
Consumer installment Loans		56		5		—		61		18,695		18,756
All other loans		—		—		—		—		1,842		1,842
Total loans	$	2,541	$	245	$	604	$	3,390	$	590,354	$	593,744

As of December 31, 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	$	969	$	—	$	—	$	969	$	178,412	$	179,381
Construction and land development		64		—		—		64		24,967		25,031
Residential 1-4 family		5,717		615		690		7,022		215,958		222,980
Multifamily		—		—		—		—		16,569		16,569
Farmland		57		—		—		57		18,311		18,368
Total real estate loans		6,807		615		690		8,112		454,217		462,329
Commercial		214		—		—		214		85,796		86,010
Agriculture		7		1		—		8		4,442		4,450
Consumer installment Loans		214		22		—		236		20,396		20,632
All other loans		—		—		—		—		2,145		2,145
Total loans	$	7,242	$	638	$	690	$	8,570	$	566,996	$	575,566

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 and leases 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 analysis of relevant information 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 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. There were no loans classified as doubtful at either December 31, 2021 or 2020.

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

As of December 31, 2021 (Dollars are in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Real estate secured:
Commercial	$	198,022	$	7,725	$	415	$	—	$	206,162
Construction and land development		31,366		922		37		—		32,325
Residential 1-4 family		221,342		915		2,273		—		224,530
Multifamily		32,499		438		111		—		33,048
Farmland		18,137		550		48		—		18,735
Total real estate loans		501,366		10,550		2,884		—		514,800
Commercial		53,162		1,154		9		—		54,325
Agriculture		4,021		—		—		—		4,021
Consumer installment loans		18,746		2		8		—		18,756
All other loans		1,842		—		—		—		1,842
Total	$	579,137	$	11,706	$	2,901	$	—	$	593,744

As of December 31, 2020 (Dollars are in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Real estate secured:
Commercial	$	171,212	$	6,112	$	2,057	$	—	$	179,381
Construction and land development		23,168		1,806		57		—		25,031
Residential 1-4 family		218,947		1,304		2,729		—		222,980
Multifamily		16,337		232		—		—		16,569
Farmland		17,019		1,249		100		—		18,368
Total real estate loans		446,683		10,703		4,943		—		462,329
Commercial		81,846		3,711		453		—		86,010
Agriculture		4,255		195		—		—		4,450
Consumer installment loans		20,615		5		12		—		20,632
All other loans		2,145		—		—		—		2,145
Total	$	555,544	$	14,614	$	5,408	$	—	$	575,566