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LOANS (Tables)

9 Months Ended

Sep. 30, 2021

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

The composition of loans, excluding loans held for sale, is summarized as follows:


	September 30, 2021			December 31, 2020
	Amount		% of Total	Amount		% of Total
	(in thousands, except percentages)
Real estate mortgages:
Construction and development	$	158,255	13.8%	$	102,559	9.9%
Residential	135,862		11.8%	152,212		14.7%
Commercial	647,694		56.3%	514,923		49.8%
Commercial and industrial	198,550		17.3%	254,395		24.6%
Consumer and other	8,979		0.8%	9,644		1.0%
Gross Loans	1,149,340		100.0%	1,033,733		100.0%
Deferred loan fees	(3,893)			(3,618)
Allowance for loan losses	(14,097)			(11,859)
Loans, net	$	1,131,350		$	1,018,256

Schedule of Financing Receivable Credit Quality Indicators

The following tables summarize the risk category of the Company’s loan portfolio based upon the most recent analysis performed as of September 30, 2021 and December 31, 2020:


	Pass		Special Mention		Substandard		Doubtful		Total
	(dollars in thousands)
As of September 30, 2021
Real estate mortgages:
Construction and development	$	149,332	$	2,255	$	6,668	$	—	$	158,255
Residential	134,372		349		1,076		65		135,862
Commercial	621,743		17,595		8,356		—		647,694
Commercial and industrial	194,978		3,240		89		243		198,550
Consumer and other	8,972		—		7		—		8,979
Total	$	1,109,397	$	23,439	$	16,196	$	308	$	1,149,340

As of December 31, 2020
Real estate mortgages:
Construction and development	$	95,214	$	6,113	$	1,232	$	—	$	102,559
Residential	144,256		6,245		1,627		84		152,212
Commercial	471,555		36,754		6,614		—		514,923
Commercial and industrial	240,646		13,138		611		—		254,395
Consumer and other	8,186		1,435		23		—		9,644
Total	$	959,857	$	63,685	$	10,107	$	84	$	1,033,733

Schedule of Aging Analysis

The following tables present the aging of the recorded investment in loans and leases as of September 30, 2021 and December 31, 2020:


			Past Due Status (Accruing Loans)
	Current		30-59 Days		60-89 Days		90+ Days		Total Past Due		Nonaccrual		Total
As of September 30, 2021
Real estate mortgages:
Construction and development	$	156,283	$	—	$	—	$	—	$	—	$	1,972	$	158,255
Residential	134,687		411		425		—		836		339		135,862
Commercial	645,148		1,826		30		—		1,856		690		647,694
Commercial and industrial	197,819		431		—		—		431		300		198,550
Consumer and other	8,949		23		—		—		23		7		8,979
Total	$	1,142,886	$	2,691	$	455	$	—	$	3,146	$	3,308	$	1,149,340

As of December 31, 2020
Real estate mortgages:
Construction and development	$	101,375	$	117	$	90	$	—	$	207	$	977	$	102,559
Residential	150,837		382		94		42		518		857		152,212
Commercial	512,208		1,196		—		41		1,237		1,478		514,923
Commercial and industrial	252,473		626		1,212		—		1,838		84		254,395
Consumer and other	9,581		18		15		8		41		22		9,644
Total	$	1,026,474	$	2,339	$	1,411	$	91	$	3,841	$	3,418	$	1,033,733

Schedule of Allowance for Credit Loss

The following tables detail activity in the allowance for loan losses by portfolio segment as of September 30, 2021 and September 30, 2020. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


	Real Estate		Commercial		Consumer		Total
Allowance for loan losses:
Balance at December 31, 2020	$	8,057	$	3,609	$	193	$	11,859
Provision for loan losses	2,761		(442)		(69)		2,250
Loans charged off	(44)		—		(2)		(46)
Recoveries of loans previously charged off	12		14		8		34
Ending balance at September 30, 2021	$	10,786	$	3,181	$	130	$	14,097

Ending balance - individually evaluated for impairment	$	288	$	307	$	4	$	599
Ending balance - collectively evaluated for impairment	10,421		2,874		126		13,421
Ending balance - loans acquired with deteriorated credit quality	77		—		—		77
Total ending balance at September 30, 2021	$	10,786	$	3,181	$	130	$	14,097

Loans:
Ending balance - individually evaluated for impairment	$	16,105	$	332	$	30	$	16,467
Ending balance - collectively evaluated for impairment	924,406		198,218		8,949		1,131,573
Ending balance - loans acquired with deteriorated credit quality	1,300		—		—		1,300
Total ending balance at September 30, 2021	$	941,811	$	198,550	$	8,979	$	1,149,340

Allowance for Loans Losses (Continued)


	Real Estate		Commercial		Consumer		Total
Allowance for loan losses:
Balance at December 31, 2019	$	7,254	$	1,885	$	126	$	9,265
Provision for loan losses	1,118		1,723		(141)		2,700
Loans charged off	(48)		—		(15)		(63)
Recoveries of loans previously charged off	9		122		83		214
Ending balance at September 30, 2020	$	8,333	$	3,730	$	53	$	12,116

Ending balance - individually evaluated for impairment	$	2,115	$	406	$	—	$	2,521
Ending balance - collectively evaluated for impairment	6,079		3,324		53		9,456
Ending balance - loans acquired with deteriorated credit quality	139		—		—		139
Total ending balance at September 30, 2020	$	8,333	$	3,730	$	53	$	12,116

Loans:
Ending balance - individually evaluated for impairment	$	18,390	$	810	$	6	$	19,206
Ending balance - collectively evaluated for impairment	738,670		236,083		10,592		985,345
Ending balance - loans acquired with deteriorated credit quality	1,429		—		—		1,429
Total ending balance at September 30, 2020	$	758,489	$	236,893	$	10,598	$	1,005,980

Schedule of Impaired Loans


	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
September 30, 2021
With no related allowance recorded:
Real estate mortgages:
Construction and development	$	5,049	$	5,049	$	—	$	5,063
Residential	1,236		1,236		—		1,694
Commercial	8,987		8,694		—		8,328
Commercial and industrial	32		32		—		45
Consumer and other	18		18		—		22
Total with no related allowance recorded	15,322		15,029		—		15,152

With an allowance recorded:
Real estate mortgages:
Construction and development	1,376		1,376		131		1,382
Residential	478		549		125		490
Commercial	279		279		109		280
Commercial and industrial	300		300		307		319
Consumer and other	12		12		4		13
Total with an allowance recorded	2,445		2,516		676		2,484
Total impaired loans	$	17,767	$	17,545	$	676	$	17,636

Impaired Loans (Continued)


	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
December 31, 2020
With no related allowance recorded:
Real estate mortgages:
Construction and development	$	977	$	977	$	—	$	970
Residential	1,537		1,537		—		1,669
Commercial	5,117		5,117		—		5,425
Commercial and industrial	65		65		—		91
Consumer and other	22		22		—		24
Total with no related allowance recorded	7,718		7,718		—		8,179

With an allowance recorded:
Real estate mortgages:
Construction and development	644		644		106		668
Residential	1,557		1,628		628		1,636
Commercial	3,373		3,373		847		3,526
Commercial and industrial	791		791		478		886
Consumer and other	15		15		7		15
Total with an allowance recorded	6,380		6,451		2,066		6,731
Total impaired loans	$	14,098	$	14,169	$	2,066	$	14,910

Impaired Loans (Continued)

A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the loan agreement. The following tables detail our interest income recognized on impaired loans, by portfolio class in the nine months ended September 30, 2021 and 2020.


	Recorded Investment		Average Recorded Investment		Interest Income Recognized
Nine Months Ended September 30, 2021
With no related allowance recorded:
Real estate mortgages:
Construction and development	$	5,049	$	5,063	$	113
Residential	1,236		1,694		59
Commercial	8,987		8,328		242
Commercial and industrial	32		45		2
Consumer and other	18		22		1
Total with no related allowance recorded	15,322		15,152		417

With an allowance recorded:
Real estate mortgages:
Construction and development	1,376		1,382		14
Residential	478		490		12
Commercial	279		280		7
Commercial and industrial	300		319		11
Consumer and other	12		13		—
Total with an allowance recorded	2,445		2,484		44
Total impaired loans	$	17,767	$	17,636	$	461

Impaired Loans (Continued)


	Recorded Investment		Average Recorded Investment		Interest Income Recognized
Nine Months Ended September 30, 2020
With no related allowance recorded:
Real estate mortgages:
Construction and development	$	1,490	$	1,506	$	78
Residential	2,345		1,759		95
Commercial	4,915		4,619		202
Commercial and industrial	340		340		34
Consumer and other	6		7		—
Total with no related allowance recorded	9,096		8,231		409

With an allowance recorded:
Real estate mortgages:
Construction and development	1,234		1,258		37
Residential	552		560		20
Commercial	9,283		9,706		100
Commercial and industrial	470		483		16
Consumer and other	—		—		—
Total with an allowance recorded	11,539		12,007		173
Total impaired loans	$	20,635	$	20,238	$	582