Loans

12 Months Ended

Dec. 31, 2019

NOTE 4 — Loans

Major classifications of loans are as follows:


	As of December 31,
	2019	2018
Commercial:
Real estate	$ 178,882	$ 191,645
Land development	1,623	2,187
Other	34,072	30,508
Residential real estate:
First mortgage	65,450	108,084
Construction	2,041	2,097
Consumer:
Home equity and lines of credit	29,691	36,154
Other	611	1,914
Subtotal	312,370	372,589
Net deferred loan fees	304	503
Allowance for loan losses	(2,000)	(3,262)
Net loans	$ 310,674	$ 369,830

Deposit accounts in an overdrawn position and reclassified as loans totaled $114 and $133 at December 31, 2019 and 2018, respectively.

NOTE 4— Loans – (continued)

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 Company’s metropolitan Milwaukee market area, and while a significant portion of the Company’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, 2019	Commercial	Residential	Consumer	Total
Beginning balance	$ 1,448	$ 1,250	$ 564	$ 3,262
Provision (credit) for loan losses	(222)	(599)	(211)	(1,032)
Loans charged off	(214)	(83)	(269)	(566)
Recoveries of loans previously charged off	223	5	108	336
Total ending allowance balance	$ 1,235	$ 573	$ 192	$ 2,000


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

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


December 31, 2019	Commercial	Residential	Consumer	Total
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

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

NOTE 4— Loans – (continued)

Information regarding impaired loans follows:


	Recorded Investment	Principal Balance	Related Allowance	Average Investment	Interest Recognized
December 31, 2019
Loans with no related allowance for loan losses:
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 and consumer:
First mortgage	1,016	1,350	NA	1,056	18
Home equity and lines of credit	27	56	NA	29	-
Total loans with no related allowance for loan losses	7,974	8,337	NA	3,523	128

Loans with related allowance for loan losses:
Residential real estate and consumer:
First mortgage	62	62	62	43	-
Home equity and lines of credit	5	6	5	16	-
Total loans with related allowance for loan losses	67	68	67	59	-

Grand totals	$ 8,041	$ 8,405	$ 67	$ 3,582	$ 128

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

NOTE 4 — Loans – (continued)

There were no additional funds committed to impaired loans as of December 31, 2019 and 2018, respectively.

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 / 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, 2019	Pass	Watch and Special Mention	Substandard	Total
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


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

There were no loans rated as doubtful at December 31, 2019 and December 31, 2018.

NOTE 4 — Loans – (continued)

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, 2019	Performing	Non Performing	Total
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	29,691
Other	611	-	611
Total	$ 95,960	$ 1,833	$ 97,793


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

NOTE 4 — Loans – (continued)

Loan aging and non-accrual information follows:


December 31, 2019	Current Loans	Loans Past Due 30-89 Days	Loans Past Due 90+ Days	Total Loans	Non-accrual Loans
Commercial:
Real estate	$ 178,702	$ -	$ 180	$ 178,882	$ 180
Land development	1,623	-	-	1,623	-
Other	33,924	148	-	34,072	-
Residential real estate:
First mortgage	63,854	1,059	537	65,450	1,690
Construction	2,041	-	-	2,041	-
Consumer:
Home equity and lines of credit	29,678	13	-	29,691	143
Other	611	-	-	611	-
Total	$ 310,433	$ 1,220	$ 717	$ 312,370	$ 2,013

			Total non-accrual loans to total loans			0.64%
			Total non-accrual loans to total assets			0.47%


December 31, 2018	Current Loans	Loans Past Due 30-89 Days	Loans Past Due 90+ Days	Total Loans	Non-accrual 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 non-accrual loans to total loans			0.42%
		Total non-accrual loans to total assets			0.32%

There are no loans 90 or more days past due and accruing interest as of December 31, 2019 or 2018.

NOTE 4 — Loans – (continued)

Non-performing loans are as follows:


	Years ended December 31,
	2019	2018
Non-accrual loans, other than troubled debt restructurings	$ 1,416	$ 906
Non-accrual loans, troubled debt restructurings	597	649
Total non-performing loans (NPLs)	$ 2,013	$ 1,555
Restructured loans, accruing	$ 446	$ 459

There were no new TDRs during the years ended December 31, 2019 and 2018.

The Company 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, 2019 and 2018.