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Allowance for loan losses and credit quality
 12 Months Ended
Dec. 31, 2019
Loans and Leases Receivable Disclosure [Abstract]  
Allowance for Credit Losses [Text Block]
Allowance for Loan Losses and Credit Quality
Changes in the ALL, by class of loans, were as follows for the years ended:
December 31, 2019
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Unallocated
Total
 
(Dollars in thousands)
Balance, December 31, 2018
$
1,368

$
617

$
2,933

$
354

$
23

$
82

$
362

$
5,739

Provision (credit) for loan
   losses
150

157

305

239

7

(6
)
(77
)
775

Recoveries of amounts
   charged off
5

—

—

1

4

—

—

10

 
1,523

774

3,238

594

34

76

285

6,524

Amounts charged off
(131
)
—

(60
)
(200
)
(11
)
—

—

(402
)
Balance, December 31, 2019
$
1,392

$
774

$
3,178

$
394

$
23

$
76

$
285

$
6,122

December 31, 2018
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Unallocated
Total
 
(Dollars in thousands)
Balance, December 31, 2017
$
1,361

$
488

$
2,707

$
395

$
30

$
64

$
363

$
5,408

Provision (credit) for loan
   losses
118

128

228

(38
)
(3
)
18

(1
)
450

Recoveries of amounts
   charged off
20

1

—

—

17

—

—

38

 
1,499

617

2,935

357

44

82

362

5,896

Amounts charged off
(131
)
—

(2
)
(3
)
(21
)
—

—

(157
)
Balance, December 31, 2018
$
1,368

$
617

$
2,933

$
354

$
23

$
82

$
362

$
5,739

 
 
 
 
 
 
 
 
 

The allocation of the ALL, summarized on the basis of the Company's impairment methodology by class of loan, as of the balance sheet dates, was as follows:
December 31, 2019
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Unallocated
Total
 
(Dollars in thousands)
Individually evaluated
   for impairment
$
39

$
—

$
149

$
8

$
—

$
—

$
—

$
196

Collectively evaluated
   for impairment
1,353

774

3,029

386

23

76

285

5,926

Total allocated
$
1,392

$
774

$
3,178

$
394

$
23

$
76

$
285

$
6,122

December 31, 2018
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Unallocated
Total
 
(Dollars in thousands)
Individually evaluated
   for impairment
$
47

$
—

$
9

$
10

$
—

$
—

$
—

$
66

Collectively evaluated
   for impairment
1,321

617

2,924

344

23

82

362

5,673

Total allocated
$
1,368

$
617

$
2,933

$
354

$
23

$
82

$
362

$
5,739



Despite the allocation shown in the tables above, the ALL is general in nature and is available to absorb losses from any class of loan.

The recorded investment in loans, summarized on the basis of the Company's impairment methodology by class of loan, as of the balance sheet dates, was as follows:
December 31, 2019
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Total
 
(Dollars in thousands)
Individually evaluated
   for impairment
$
1,515

$
223

$
3,204

$
299

$
—

$
—

$
5,241

Collectively evaluated
   for impairment
190,610

69,394

286,679

47,400

3,562

67,358

665,003

Total
$
192,125

$
69,617

$
289,883

$
47,699

$
3,562

$
67,358

$
670,244


December 31, 2018
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Total
 
(Dollars in thousands)
Individually evaluated
   for impairment
$
1,678

$
119

$
2,276

$
352

$
—

$
—

$
4,425

Collectively evaluated
   for impairment
185,642

55,203

274,224

46,876

3,241

72,850

638,036

Total
$
187,320

$
55,322

$
276,500

$
47,228

$
3,241

$
72,850

$
642,461



Risk and collateral ratings are assigned to loans and are subject to ongoing monitoring by lending and credit personnel with such ratings updated annually or more frequently if warranted. The following is an overview of the Company's loan rating system:

1-3 Rating - Pass
Risk-rating grades "1" through "3" comprise loans ranging from those with lower than average credit risk, defined as borrowers with high liquidity, excellent financial condition, strong management, favorable industry trends or loans secured by highly liquid assets, through those with marginal credit risk, defined as borrowers that, while creditworthy, exhibit some characteristics requiring special attention by the account officer.

4/M Rating - Satisfactory/Monitor
Borrowers exhibit potential credit weaknesses or downward trends warranting management's attention. While potentially weak, these borrowers are currently marginally acceptable; no loss of principal or interest is envisioned. When warranted, these credits may be monitored on the watch list.

5-7 Rating - Substandard
Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. The loan may be inadequately protected by the net worth and paying capacity of the obligor and/or the underlying collateral is inadequate.

The following tables summarize the loan ratings applied by management to the Company's loans by class as of the balance sheet dates:
December 31, 2019
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Total
 
(Dollars in thousands)
Pass
$
174,798

$
47,326

$
168,654

$
35,625

$
3,499

$
67,358

$
497,260

Satisfactory/Monitor
14,520

21,819

117,004

10,974

57

—

164,374

Substandard
2,807

472

4,225

1,100

6

—

8,610

Total
$
192,125

$
69,617

$
289,883

$
47,699

$
3,562

$
67,358

$
670,244


December 31, 2018
Residential Real Estate
Construction Real Estate
Commercial Real Estate
Commercial
Consumer
Municipal
Total
 
(Dollars in thousands)
Pass
$
170,416

$
41,141

$
174,802

$
34,303

$
3,209

$
72,850

$
496,721

Satisfactory/Monitor
14,008

14,053

98,327

12,150

31

—

138,569

Substandard
2,896

128

3,371

775

1

—

7,171

Total
$
187,320

$
55,322

$
276,500

$
47,228

$
3,241

$
72,850

$
642,461



The following tables provide information with respect to impaired loans by class of loan as of and for the years ended December 31, 2019 and 2018:
 
December 31, 2019
For The Year Ended December 31, 2019
 
Recorded Investment
(1)
Principal Balance
(1)
Related Allowance
Average Recorded Investment
Interest Income Recognized
 
(Dollars in thousands)
Residential real estate
$
218

$
228

$
39

 
 
Commercial real estate
1,762

1,783

149

 
 
Commercial
11

12

8

 
 
With an allowance recorded
1,991

2,023

196

 
 
 
 
 
 
 
 
Residential real estate
1,297

1,832

—

 
 
Construction real estate
223

241

—

 
 
Commercial real estate
1,442

1,539

—

 
 
Commercial
288

290

—

 
 
With no allowance recorded
3,250

3,902

—

 
 
 
 
 
 
 
 
Residential real estate
1,515

2,060

39

$
1,625

$
149

Construction real estate
223

241

—

159

4

Commercial real estate
3,204

3,322

149

2,382

110

Commercial
299

302

8

322

23

Total
$
5,241

$
5,925

$
196

$
4,488

$
286



 
December 31, 2018
For The Year Ended December 31, 2018
 
Recorded Investment
(1)
Principal Balance
(1)
Related Allowance
Average Recorded Investment
Interest Income Recognized
 
(Dollars in thousands)
Residential real estate
$
228

$
238

$
47

 
 
Commercial real estate
193

193

9

 
 
Commercial
12

13

10

 
 
With an allowance recorded
433

444

66

 
 
 
 
 
 
 
 
Residential real estate
1,450

2,039

—

 
 
Construction real estate
119

135

—

 
 
Commercial real estate
2,083

2,174

—

 
 
Commercial
340

340

—

 
 
With no allowance recorded
3,992

4,688

—

 
 
 
 
 
 
 
 
Residential real estate
1,678

2,277

47

$
1,730

$
65

Construction real estate
119

135

—

88

4

Commercial real estate
2,276

2,367

9

1,699

77

Commercial
352

353

10

367

29

Total
$
4,425

$
5,132

$
66

$
3,884

$
175


____________________
(1)
Does not reflect government guaranties on impaired loans as of December 31, 2019 and 2018 totaling $587 thousand and $641 thousand, respectively.
 
 
 
 
 
 

The following is a summary of TDR loans by class of loan as of the balance sheet dates:
 
December 31, 2019
December 31, 2018
 
Number of Loans
Principal Balance
Number of Loans
Principal Balance
 
(Dollars in thousands)
Residential real estate
25

$
1,515

27

$
1,678

Construction real estate
2

100

2

119

Commercial real estate
8

966

9

1,172

Commercial
5

290

4

340

Total
40

$
2,871

42

$
3,309


The TDR loans above represent loan modifications in which a concession was provided to the borrower, including due date extensions, maturity date extensions, interest rate reductions or the forgiveness of accrued interest. Troubled loans that are restructured and meet established thresholds are classified as impaired and a specific reserve amount is allocated to the ALL on the basis of the fair value of the collateral for collateral dependent loans, an observable market price, or the present value of anticipated future cash flows.

The following table provides new TDR activity by class of loan for the years ended December 31, 2019 and 2018:
 
New TDRs During the
New TDRs During the
 
Year Ended December 31, 2019
Year Ended December 31, 2018
 
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
 
(Dollars in thousands)
Residential real estate
1

$
77

$
79

3

$
190

$
193

Construction real estate
—

—

—

1

44

44

Commercial real estate
—

—

—

1

204

204

Commercial
1

15

15

2

31

31



At December 31, 2019, there was one residential TDR loan with a recorded investment balance of $79 thousand that had been modified within the previous twelve months that defaulted during the year then ended. At December 31, 2018, there were no TDR loans modified within the previous twelve months that had subsequently defaulted during the year then ended. TDR loans are considered defaulted at 90 days past due.

At December 31, 2019 and 2018, the Company was not committed to lend any additional funds to borrowers whose loans were nonperforming, impaired or restructured.