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Loans
 3 Months Ended
Mar. 31, 2020
Receivables [Abstract]  
Loans
NOTE 4 – LOANS
Major classifications of loans are summarized as follows:
 
   
March 31,

2020
   
December 31,
2019
 
   
(in thousands)
 
Commercial:
    
Real estate
  $179,799   $178,882 
Land development
   1,598    1,623 
Other
   33,449    34,072 
Residential real estate:
    
First mortgage
   58,493    65,450 
Construction
   1,793    2,041 
Consumer:
    
Home equity and lines of credit
   29,005    29,691 
Other
   532    611 
  
 
 
   
 
 
 
Subtotal
   304,669    312,370 
Net deferred loan fees
   307    304 
Allowance for loan losses
   (2,008)    (2,000) 
  
 
 
   
 
 
 
Loans, net
  $302,968   $310,674 
  
 
 
   
 
 
 
The Company provides several types of loans to its customers, including commercial, residential, construction and consumer loans. Significant loan concentrations are considered to exist for a financial institution 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 the Company’s credit risks are geographically concentrated within the metropolitan Milwaukee, Wisconsin area, there are no concentrations with individual borrowers or groups of related borrowers.
During the normal course of business, the Company may transfer a portion of a loan as a participation loan to another financial institution in order to manage portfolio risk. In order to be eligible for sales treatment, all cash flows from the loan must be divided proportionately, and rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties, and no loan holder can have the right to pledge or exchange the entire loan. As of March 31, 2020 and December 31, 2019, respectively, the Company had transferred $27,750 and $26,153 in participation loans which were eligible for sales treatment to other financial institutions, all of which were being serviced by the Company.
An analysis of past due loans is presented below:
 
   
March 31, 2020
 
   
31-89 Days

Past Due
   
90 Days or
More Past
Due
   
Total Past
Due
   
Current
   
Total Loans
 
   
(in thousands)
 
Commercial:
          
Real estate
  $371   $—     $371   $179,428   $179,799 
Land development
   —      —      —      1,598    1,598 
Other
   —      —      —      33,449    33,449 
Residential real estate:
          
First mortgage
   1,295    227    1,522    56,971    58,493 
Construction
   —      —      —      1,793    1,793 
Consumer:
          
Home equity and lines of credit
   28    7    35    28,970    29,005 
Other
   —      —      —      532    532 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $1,694   $234   $1,928   $302,741   $304,669 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
 
   
December 31, 2019
 
   
31-89 Days

Past Due
   
90 Days or
More Past
Due
   
Total Past
Due
   
Current
   
Total
Loans
 
   
(in thousands)
 
Commercial:
          
Real estate
  $—     $180   $180   $178,702   $178,882 
Land development
   —      —      —      1,623    1,623 
Other
   148    —      148    33,924    34,072 
Residential real estate:
          
First mortgage
   1,059    537    1,596    63,854    65,450 
Construction
   —      —      —      2,041    2,041 
Consumer:
          
Home equity and lines of credit
   13    —      13    29,678    29,691 
Other
   —      —      —      611    611 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $1,220   $717   $1,937   $310,433   $312,370 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
There were no loans 90 days or more past due and accruing interest as of March 31, 2020 or December 31, 2019.
A summary of activity in the allowance for loan losses for the three months ended March 31, 2020 and 12 months ended December 31, 2019 is presented below:
 
   
Commercial
   
Residential
   
Consumer
   
Total
 
   
(in thousands)
 
Three months ended March 31, 2020
        
Allowance for loan losses
        
Beginning balance
  $1,235   $573   $192   $2,000 
Provision (credit) for loan losses
   —      —      —      —   
Loans
charged-off
   —      —      (5)    (5) 
Recoveries
   6    —      7    13 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending balance
  $1,241   $573   $194   $2,008 
  
 
 
   
 
 
   
 
 
   
 
 
 
Three months ended March 31, 2019
        
Allowance for loan losses
        
Beginning balance
  $1,448   $1,250   $564   $3,262 
Provision (credit) for loan losses
   —      —      —      —   
Loans
charged-off
   —      (37)    (1)    (38) 
Recoveries
   196    —      6    202 
  
 
 
   
 
 
   
 
 
   
 
 
 
Ending balance
  $1,644   $1,213   $569   $3,426 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
A summary of the allowance for loan losses for loans evaluated individually and collectively for impairment is presented below:
 
   
March 31, 2020
 
   
Commercial
   
Residential
   
Consumer
   
Total
 
   
(in thousands)
 
Loans:
        
Individually evaluated for impairment
  $6,693   $661   $32   $7,386 
Collectively evaluated for impairment
   208,153    59,625    29,505    297,283 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total loans
  $214,846   $60,286   $29,537   $304,669 
  
 
 
   
 
 
   
 
 
   
 
 
 
Allowance for loan losses:
        
Individually evaluated for impairment
  $—     $62   $5   $67 
Collectively evaluated for impairment
   1,241    511    189    1,941 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total allowance for loan losses
  $1,241   $573   $194   $2,008 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
   
December 31, 2019
 
   
Commercial
   
Residential
   
Consumer
   
Total
 
   
(in thousands)
 
Loans:
        
Individually evaluated for impairment
  $6,931   $1,078   $32   $8,041 
Collectively evaluated for impairment
   207,646    66,413    30,270    304,329 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total loans
  $214,577   $67,491   $30,302   $312,370 
  
 
 
   
 
 
   
 
 
   
 
 
 
Allowance for loan losses:
        
Individually evaluated for impairment
  $—     $62   $5   $67 
Collectively evaluated for impairment
   1,235    511    187    1,933 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total allowance for loan losses
  $1,235   $573   $192   $2,000 
  
 
 
   
 
 
   
 
 
   
 
 
 
The Company 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 and 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.
A summary of the Company’s internal risk ratings of loans is presented below:
 
   
March 31, 2020
 
   
Pass
   
Watch and
Special
Mention
   
Substandard
   
Total
 
   
(in thousands)
 
Commercial:
        
Real estate
  $169,812   $4,627   $5,360   $179,799 
Land development
   —      1,598    —      1,598 
Other
   25,603    7,045    801    33,449 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $195,415   $13,270   $6,161   $214,846 
  
 
 
   
 
 
   
 
 
   
 
 
 
 
   
December 31, 2019
 
   
Pass
   
Watch and
Special
Mention
   
Substandard
   
Total
 
   
(in thousands)
 
Commercial:
        
Real estate
  $168,834   $4,418   $5,630   $178,882 
Land development
   —      1,623    —      1,623 
Other
   27,522    5,517    1,033    34,072 
  
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $196,356   $11,558   $6,663   $214,577 
  
 
 
   
 
 
   
 
 
   
 
 
 
There were no loans rated Doubtful or Loss as of March 31, 2020 and December 31, 2019.
Residential real estate and consumer loans are generally evaluated based on whether or not loans are performing in accordance with their contractual terms. Information regarding the credit quality indicators most closely monitored for residential real estate and consumer loans is presented below:
 
   
March 31, 2020
 
   
Performing
   
Non
Performing
   
Total
 
   
(in thousands)
 
Residential real estate:
      
First mortgage
  $57,012   $1,481   $58,493 
Construction
   1,793    —      1,793 
Consumer:
      
Home equity and lines of credit
   28,865    140    29,005 
Other
   532    —      532 
  
 
 
   
 
 
   
 
 
 
Total
  $88,202   $1,621   $89,823 
  
 
 
   
 
 
   
 
 
 
 
   
December 31, 2019
 
   
Performing
   
Non
Performing
   
Total
 
   
(in thousands)
 
Residential real estate:
      
First mortgages
  $63,760   $1,690   $65,450 
Construction
   2,041    —      2,041 
Consumer:
      
Home equity and lines of credit
   29,548    143    26,691 
Other
   611    —      611 
  
 
 
   
 
 
   
 
 
 
Total
  $95,960   $1,833   $97,793 
  
 
 
   
 
 
   
 
 
 
Information regarding impaired loans is presented below:
 
   
As of and for the Three Months Ended March 31, 2020
 
   
Recorded
Investment
   
Unpaid
Principal
   
Reserve
   
Average
Investment
   
Interest
Recognized
 
   
(in thousands)
 
Impaired loans with reserve:
          
Commercial:
          
Real estate
  $—     $—     $—     $—     $—   
Land development
   —      —      —      —      —   
Other
   —      —      —      —      —   
Residential real estate:
          
First mortgages
   62    62    62    62    —   
Construction
   —      —      —      —      —   
Consumer:
          
Home equity and lines of credit
   5    6      5    5    —   
Other
   —      —    —      —      —   
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total impaired loans with reserve
   67    68    67    67    —   
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Impaired loans with no reserve:
          
Commercial:
          
Real estate
   5,838    5838    NA    5,855    67 
Land development
   —      —      NA    —      —   
Other
   855    855    NA    835    17 
Residential real estate:
          
First mortgages
   599    870    NA    720    85 
Construction
   —      —      NA    —      —   
Consumer:
          
Home equity and lines of credit
   27    56    NA    27    1 
Other
   —      —      NA    —      —   
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total impaired loans with no reserve
   7,319    7,619    NA    7,437    170 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total impaired loans
  $7,386   $7,687   $67   $7,504   $170 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
   
As of and for the Year Ended December 31, 2019
 
   
Recorded
Investment
   
Unpaid
Principal
   
Reserve
   
Average
Investment
   
Interest
Recognized
 
   
(in thousands)
 
Impaired loans with reserve:
          
Commercial:
          
Real estate
  $—     $—     $—     $—     $—   
Land development
   —      —      —      —      —   
Other
   —      —      —      —      —   
Residential real estate:
          
First mortgages
   62    62    62    43    —   
Construction
   —      —      —      —      —   
Consumer:
          
Home equity and lines of credit
   5    6    5    16    —   
Other
   —      —      —      —      —   
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total impaired loans with reserve
   67    68    67    59    —   
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Impaired loans with no reserve:
          
Commercial:
          
Real estate
   5,840    5,840    NA    1,824    87 
Land development
   —      —      NA    126    —   
Other
   1,091    1,091    NA    488    23 
Residential real estate:
          
First mortgages
   1,016    1,350    NA    1,056    18 
Construction
   —      —      NA    —      —   
Consumer:
          
Home equity and lines of credit
   27    56    NA    29    —   
Other
   —      —      NA    —      —   
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total impaired loans with no reserve
   7,974    8,337    NA    3,523    128 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total impaired loans
  $8,041   $8,405   $67   $3,582   $128 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Management regularly monitors impaired loan relationships. In the event facts and circumstances change, additional reserves may be necessary.
There were no additional funds committed to impaired loans as of March 31, 2020 and December 31, 2019.
Nonperforming loans are as follows:
 
   
March 31,
2020
   
December 31,
2019
 
   
(in thousands)
 
Nonaccrual loans, other than troubled debt restructurings
  $1,211   $1,416 
Nonaccrual loans, troubled debt restructurings
   410    597 
  
 
 
   
 
 
 
Total nonperforming loans (NPLs)
  $1,621   $2,013 
  
 
 
   
 
 
 
Restructured loans, accruing
  $442   $466 
  
 
 
   
 
 
 
 
There were no loans modified as troubled debt restructurings during the three months ended March 31, 2020 and year ended December 31, 2019. As of April 30, 2020, we have approximately $18.3 million of loans where customers asked us to forebear approximately $461,000 of principal, interest or escrow payments from 1 month to 3 months in time. Any modifications or forbearances permitted to
COVID-19
affected borrowers, per regulatory guidance, are not required to be recorded as TDRs.
The Company considers a troubled debt restructuring in default if it becomes past due more than 90 days. There were no
troubled debt restructurings within the past twelve months for which there was a default during the three months ended March 31, 2020 and 2019.
Information on
non-accrual
loans is presented below:
 
   
March 31,

2020
  
December 31,
2019
 
   
(in thousands)
 
Commercial:
   
Real estate
  $—    $180 
Land development
   —     —   
Other
   —     —   
Residential real estate:
   
First mortgages
   1,481   1,690 
Construction
   —     —   
Consumer:
   
Home equity and lines of credit
   140   143 
Other
   —     —   
  
 
 
  
 
 
 
Total
non-accrual
loans
  $ 1,621  $ 2,013 
  
 
 
  
 
 
 
Total
non-accrual
loans to total loans
   0.53%   0.64% 
Total
non-accrual
loans to total assets
   0.36%   0.47%