Loans

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Loans

NOTE 4 — Loans

Major classifications of loans are as follows:

	As of December 31,
	2018			2017
Commercial:
Real estate	$	191,645		$	156,991
Land development		2,187			2,687
Other		30,508			19,715
Residential real estate:
First mortgage		108,084			106,120
Construction		2,097			3,358
Consumer:
Home equity and lines of credit		36,154			42,344
Other		1,914			2,495
Subtotal		372,589			333,710
Net deferred loan fees		503			589
Allowance for loan losses		(3,262	)		(3,093	)
Net loans	$	369,830		$	331,206

Deposit accounts in an overdrawn position and reclassified as loans totaled $133 and $102 at December 31, 2018 and 2017, respectively.

Significant loan concentrations are considered to exist when there are amounts loaned to one borrower, or to multiple borrowers engaged in similar activities, that would cause them to be similarly impacted by economic or other conditions. While credit risks tend to be geographically concentrated in the Bank’s metropolitan Milwaukee market area, and while a significant portion of the Bank’s loan portfolio is secured by commercial and residential real estate, there are no significant concentrations whose primary sources of repayment are reliant upon an individual or group of related borrowers.

A summary of the activity in the allowance for loan losses by portfolio segment is as follows:  

December 31, 2018	Commercial			Residential		Consumer			Total
Beginning balance	$	1,369		$	1,246	$	478		$	3,093
Provision for loan losses		—			—		—			—
Loans charged off		(1	)		—		(123	)		(124	)
Recoveries of loans previously charged off		80			4		209			293
Total ending allowance balance	$	1,448		$	1,250	$	564		$	3,262

December 31, 2017	Commercial		Residential		Consumer			Total
Beginning balance	$	1,345	$	1,224	$	439		$	3,008
Provision for loan losses		—		—		—			—
Loans charged off		—		—		(37	)		(37	)
Recoveries of loans previously charged off		24		22		76			122
Total ending allowance balance	$	1,369	$	1,246	$	478		$	3,093

Information about how loans were evaluated for impairment and the related allowance for loan losses follows:

December 31, 2018	Commercial		Residential		Consumer		Total
Loans:
Individually evaluated for impairment	$	1,165	$	1,176	$	36	$	2,377
Collectively evaluated for impairment		223,175		109,005		38,032		370,212
Total loans	$	224,340	$	110,181	$	38,068	$	372,589
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	6	$	6	$	12
Collectively evaluated for impairment		1,448		1,244		558		3,250
Total allowance for loan losses	$	1,448	$	1,250	$	564	$	3,262

December 31, 2017	Commercial		Residential		Consumer		Total
Loans:
Individually evaluated for impairment	$	2,529	$	1,888	$	—	$	4,417
Collectively evaluated for impairment		176,864		107,590		44,839		329,293
Total loans	$	179,393	$	109,478	$	44,839	$	333,710
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	230	$	—	$	230
Collectively evaluated for impairment		1,369		1,016		478		2,863
Total allowance for loan losses	$	1,369	$	1,246	$	478	$	3,093

Information regarding impaired loans follows:

	Recorded Investment		Principal Balance		Related Allowance		Average Investment		Interest Recognized
December 31, 2018
Loans with no related allowance for loan losses:
Commercial:
Real estate	$	701	$	701		NA	$	658	$	40
Land development		303		303		NA		303		—
Other		161		161		NA		46		2
Residential real estate and consumer:
First mortgage		1,085		1,375		NA		1,235		25
Home equity and lines of credit		30		56		NA		32		—
Total loans with no related allowance for loan losses		2,280		2,596		NA		2,274		67
Loans with related allowance for loan losses:
Residential real estate and consumer:
First mortgage		91		91		6		154		3
Home equity and lines of credit		6		6		6		124		—
Total loans with related allowance for loan losses		97		97		12		278		3
Grand totals	$	2,377	$	2,693	$	12	$	2,552	$	70
December 31, 2017
Loans with no related allowance for loan losses:
Commercial:
Real estate	$	2,024	$	2,024		NA	$	2,192	$	148
Land development		303		303		NA		303		—
Other		202		202		NA		138		3
Residential real estate and consumer:
First mortgage		1,510		1,785		NA		1,838		89
Total loans with no related allowance for loan losses		4,039		4,314		NA		4,471		240
Loans with related allowance for loan losses:
Residential real estate and consumer:
First mortgage		378		392		230		394		15
Total loans with related allowance for loan losses		378		392		230		394		15
Grand totals	$	4,417	$	4,706	$	230	$	4,865	$	255

There were no additional funds committed to impaired loans as of December 31, 2018 and 2017, respectively.

The Bank regularly evaluates various attributes of loans to determine the appropriateness of the allowance for loan losses. The credit quality indicators monitored differ depending on the class of loan.

“Pass” ratings are assigned to loans with adequate collateral and debt service ability such that collectability of the contractual loan payments is highly probable.

“Watch / Special mention” ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectability of the contractual loan payments is still probable.

“Substandard” ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is no longer probable.

“Doubtful” ratings are assigned to loans that do not have adequate collateral and/or debt service ability, and collectability of the contractual loan payments is unlikely.

Information regarding the credit quality indicators most closely monitored for commercial loans by class follows:

December 31, 2018	Pass		Watch and Special Mention		Substandard		Total
Real estate	$	186,303	$	4,403	$	939	$	191,645
Land development		158		1,726		303		2,187
Other		25,939		4,408		161		30,508
Total	$	212,400	$	10,537	$	1,403	$	224,340

December 31, 2017	Pass		Watch and Special Mention		Substandard		Total
Real estate	$	144,763	$	9,786	$	2,442	$	156,991
Land development		2,384		—		303		2,687
Other		14,505		5,178		32		19,715
Total	$	161,652	$	14,964	$	2,777	$	179,393

There were no loans rated as doubtful at December 31, 2018 and December 31, 2017.

Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing according to the contractual terms of the loan.

Information regarding the credit quality indicators most closely monitored for residential real estate and consumer loans by class follows:

December 31, 2018	Performing		Non Performing		Total
Residential real estate:
First mortgages	$	107,018	$	1,066	$	108,084
Construction		2,097		—		2,097
Consumer:
Home equity and lines of credit		35,984		170		36,154
Other		1,914		—		1,914
Total	$	147,013	$	1,236	$	148,249

December 31, 2017	Performing		Non Performing		Total
Residential real estate:
First mortgages	$	105,083	$	1,037	$	106,120
Construction		3,358		—		3,358
Consumer:
Home equity and lines of credit		41,819		525		42,344
Other		2,493		2		2,495
Total	$	152,753	$	1,564	$	154,317

Loan aging and nonaccrual information follows:

December 31, 2018	Current Loans		Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Loans		Nonaccrual Loans
Commercial:
Real estate	$	191,645	$	—	$	—	$	191,645	$	—
Land development		1,884		—		303		2,187		303
Other		30,508		—		—		30,508		16
Residential real estate:
First mortgage		106,523		1,470		91		108,084		1,066
Construction		2,097		—		—		2,097		—
Consumer:
Home equity and lines of credit		35,926		215		13		36,154		170
Other		1,912		2		—		1,914		—
Total	$	370,495	$	1,687	$	407	$	372,589	$	1,555
Total nonaccrual loans to total loans										0.42	%
Total nonaccrual loans to total assets										0.32	%

December 31, 2017	Current Loans		Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Loans		Nonaccrual Loans
Commercial:
Real estate	$	156,985	$	6	$	—	$	156,991	$	—
Land development		2,384		—		303		2,687		303
Other		19,715		—		—		19,715		32
Residential real estate:
First mortgage		103,908		2,156		56		106,120		1,128
Construction		3,358		—		—		3,358		—
Consumer:
Home equity and lines of credit		41,694		526		124		42,344		420
Other		2,483		11		1		2,495		4
Total	$	330,527	$	2,699	$	484	$	333,710	$	1,887
Total nonaccrual loans to total loans										0.57	%
Total nonaccrual loans to total assets										0.40	%

There are no loans 90 or more days past due and accruing interest as of December 31, 2018 or 2017.

Nonperforming loans are as follows:

	As of December 31,
	2018		2017
Nonaccrual loans, other than troubled debt restructurings	$	906	$	1,058
Nonaccrual loans, troubled debt restructurings		649		829
Total nonperforming loans (NPLs)	$	1,555	$	1,887
Restructured loans, accruing	$	459	$	729

There were no new TDRs during the years ended December 31, 2018 and 2017.

The Bank considers a troubled debt restructuring in default if it becomes past due more than 90 days. No troubled debt restructurings defaulted within 12 months of their modification date during the years ended December 31, 2018 and 2017.