Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2019

Loans and Allowance for Loan Losses [Abstract]

The following is a summary of the balances in each class of the Company’s loan portfolio as of the dates indicated:

(dollars in thousands)	December 31, 2019		December 31, 2018
Mortgage loans on real estate:
Residential 1-4 family	$	118,561	$	110,009
Commercial - owner occupied		141,743		155,245
Commercial - non-owner occupied		135,798		131,287
Multifamily		25,865		28,954
Construction		40,716		32,383
Second mortgages		13,941		17,297
Equity lines of credit		52,286		57,649
Total mortgage loans on real estate		528,910		532,824
Commercial and industrial loans		75,383		63,398
Consumer automobile loans		97,294		120,796
Other consumer loans		39,713		48,342
Other ⁽¹⁾		6,565		8,649
Total loans, net of deferred fees		747,865		774,009
Less: Allowance for loan losses		9,660		10,111
Loans, net of allowance and deferred fees ⁽²⁾	$	738,205	$	763,898

(1) Overdrawn accounts are reclassified as loans and included in the Other catergory in the table above. Overdrawn deposit accounts, excluding internal use accounts, totaled $449 thousand and $628 thousand at December 31, 2019 and 2018, respectively.

(2) Net deferred loan costs totaled $557 thousand and $864 thousand at December 31, 2019 and 2018, respectively.

Acquired Loans

The outstanding principal balance and the carrying amount of total acquired loans included in the consolidated balance sheets are as follows:

(dollars in thousands)	December 31, 2019		December 31, 2018
Outstanding principal balance	$	16,850	$	31,940
Carrying amount		16,561		31,497

The outstanding principal balance and related carrying amount of acquired impaired loans, for which the Company applies FASB ASC 310-30 to account for interest earned are as follows:

(dollars in thousands)	December 31, 2019		December 31, 2018
Outstanding principal balance	$	227	$	246
Carrying amount		85		91

The following table presents changes in the accretable yield on acquired impaired loans, for which the Company applies FASB ASC 310-30:

(dollars in thousands)	December 31, 2019			December 31, 2018
Balance at January 1	$	12		$	-
Additions from acquisition of Citizens		-			110
Accretion		(27	)		(98	)
Reclassification from nonaccretable difference		125			-
Other changes, net		(38	)		-
Balance at end of period	$	72		$	12

Credit Quality Information

The following tables present credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of December 31, 2019
(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	116,380	$	-	$	2,181	$	-	$	118,561
Commercial - owner occupied		134,570		1,618		5,555		-		141,743
Commercial - non-owner occupied		132,851		1,622		1,325		-		135,798
Multifamily		25,865		-		-		-		25,865
Construction		40,716		-		-		-		40,716
Second mortgages		13,837		-		104		-		13,941
Equity lines of credit		52,286		-		-		-		52,286
Total mortgage loans on real estate	$	516,505	$	3,240	$	9,165	$	-	$	528,910
Commercial and industrial loans		74,963		66		354		-		75,383
Consumer automobile loans		96,907		-		387		-		97,294
Other consumer loans		39,713		-		-		-		39,713
Other		6,565		-		-		-		6,565
Total	$	734,653	$	3,306	$	9,906	$	-	$	747,865

Credit Quality Information As of December 31, 2018
(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	108,274	$	-	$	1,735	$	-	$	110,009
Commercial - owner occupied		140,664		4,067		10,514		-		155,245
Commercial - non-owner occupied		121,523		3,937		5,827		-		131,287
Multifamily		28,954		-		-		-		28,954
Construction		31,896		71		416		-		32,383
Second mortgages		17,007		-		290		-		17,297
Equity lines of credit		56,893		-		756		-		57,649
Total mortgage loans on real estate	$	505,211	$	8,075	$	19,538	$	-	$	532,824
Commercial and industrial loans		60,967		1,987		444		-		63,398
Consumer automobile loans		120,365		-		431		-		120,796
Other consumer loans		48,298		-		44		-		48,342
Other		8,649		-		-		-		8,649
Total	$	743,490	$	10,062	$	20,457	$	-	$	774,009

Past Due Loans

The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection.

Age Analysis of Past Due Loans as of December 31, 2019
(dollars in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due and still Accruing		PCI		Nonaccrual ⁽¹⁾		Total Current Loans		Total Loans
Mortgage loans on real estate:
Residential 1-4 family	$	891	$	-	$	-	$	-	$	1,459	$	116,211	$	118,561
Commercial - owner occupied		-		319		-		85		2,795		138,544		141,743
Commercial - non-owner occupied		-		-		-		-		1,422		134,376		135,798
Multifamily		-		-		-		-		-		25,865		25,865
Construction		100		-		-		-		-		40,616		40,716
Second mortgages		49		-		-		-		104		13,788		13,941
Equity lines of credit		25		-		-		-		-		52,261		52,286
Total mortgage loans on real estate	$	1,065	$	319	$	-	$	85	$	5,780	$	521,661	$	528,910
Commercial and industrial loans		211		-		-		-		257		74,915		75,383
Consumer automobile loans		1,115		299		203		-		-		95,677		97,294
Other consumer loans		1,032		891		888		-		-		36,902		39,713
Other		81		9		-		-		-		6,475		6,565
Total	$	3,504	$	1,518	$	1,091	$	85	$	6,037	$	735,630	$	747,865

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

In the table above, the past due totals include student and small business loans with principal and interest amounts that are 97 - 100% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $1.8 million at December 31, 2019.

Age Analysis of Past Due Loans as of December 31, 2018
(dollars in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due and still Accruing		PCI		Nonaccrual⁽¹⁾		Total Current Loans		Total Loans
Mortgage loans on real estate:
Residential 1-4 family	$	1,165	$	553	$	180	$	-	$	1,386	$	106,725	$	110,009
Commercial - owner occupied		1,059		83		-		91		5,283		148,729		155,245
Commercial - non-owner occupied		-		-		-		-		4,371		126,916		131,287
Multifamily		-		-		-		-		-		28,954		28,954
Construction		-		-		205		-		417		31,761		32,383
Second mortgages		17		-		135		-		155		16,990		17,297
Equity lines of credit		60		-		-		-		231		57,358		57,649
Total mortgage loans on real estate	$	2,301	$	636	$	520	$	91	$	11,843	$	517,433	$	532,824
Commercial and industrial loans		1,595		-		-		-		298		61,505		63,398
Consumer automobile loans		1,645		291		114		-		-		118,746		120,796
Other consumer loans		1,333		621		1,851		-		-		44,537		48,342
Other		133		8		12		-		-		8,496		8,649
Total	$	7,007	$	1,556	$	2,497	$	91	$	12,141	$	750,717	$	774,009

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

Nonaccrual Loans

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class

(dollars in thousands)	December 31, 2019		December 31, 2018
Mortgage loans on real estate:
Residential 1-4 family	$	1,459	$	1,386
Commercial - owner occupied		2,795		5,283
Commercial - non-owner occupied		1,422		4,371
Construction		-		417
Second mortgages		104		155
Equity lines of credit		-		231
Total mortgage loans on real estate	$	5,780	$	11,843
Commercial and industrial loans		257		298
Total	$	6,037	$	12,141

Interest Income to be Earned under the Original Terms

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Years Ended December 31,
(dollars in thousand)	2019		2018
Interest income that would have been recorded under original loan terms	$	283	$	533
Actual interest income recorded for the period		115		336
Reduction in interest income on nonaccrual loans	$	168	$	197

Troubled Debt Restructurings by Class

The following tables present TDRs during the periods indicated, by class of loan:

(dollars in thousand)	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2019
Mortgage loans on real estate:
Residential 1-4 family		2	$	512	$	512	$	506
Commercial and industrial		1		75		75		75
Total		3	$	587	$	587	$	581

(dollars in thousand)	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on December 31, 2018
Mortgage loans on real estate:
Residential 1-4 family		1	$	296	$	187	$	188
Equity lines of credit		1		248		231		231
Total mortgage loans on real estate		2		544		418		419
Commercial and industrial		1		146		138		139
Total		3	$	690	$	556	$	558

Impaired Loans by Class

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans, exclusive of purchased credit-impaired loans, with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class
	As of December 31, 2019								For the Year Ended December 31, 2019
(Dollars in thousands)	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	1,542	$	1,519	$	89	$	39	$	1,416	$	11
Commercial		9,333		4,538		1,611		317		6,822		123
Construction		89		-		88		14		88		4
Second mortgages		247		-		245		111		246		6
Total mortgage loans on real estate		11,211		6,057		2,033		481		8,572		144
Commercial and industrial loans		362		354		-		-		273		4
Other consumer loans		22		-		-		-		21		1
Total	$	11,595	$	6,411	$	2,033	$	481	$	8,866	$	149

Impaired Loans by Class
	As of December 31, 2018								For the Year Ended December 31, 2018
(Dollars in thousands)	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	2,057	$	1,686	$	239	$	51	$	2,073	$	66
Commercial		15,254		12,721		-		-		14,232		455
Construction		509		417		92		18		665		7
Second mortgages		496		347		148		33		508		15
Equity lines of credit		232		-		232		3		301		1
Total mortgage loans on real estate		18,548		15,171		711		105		17,779		544
Commercial and industrial loans		384		78		220		11		446		5
Other consumer loans		38		-		-		-		43		-
Total	$	18,970	$	15,249	$	931	$	116	$	18,268	$	549

Allowance for Loan Losses by Segment

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS For the Year ended December 31, 2019
(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Consumer ⁽²⁾			Other			Total
Allowance for loan losses:
Balance, beginning	$	2,340		$	156	$	5,956		$	1,354		$	305		$	10,111
Charge-offs		-			-		(197	)		(776	)		(425	)		(1,398	)
Recoveries		10			-		200			351			68			629
Provision for loan losses		(1,106	)		102		209			765			348			318
Ending Balance	$	1,244		$	258	$	6,168		$	1,694		$	296		$	9,660

Individually evaluated for impairment	$	-		$	14	$	467		$	-		$	-		$	481
Collectively evaluated for impairment		1,244			244		5,701			1,694			296			9,179
Purchased credit-impaired loans		-			-		-			-			-			-

Ending Balance	$	1,244		$	258	$	6,168		$	1,694		$	296		$	9,660

Loans Balances:
Individually evaluated for impairment		354			88		8,002			-			-			8,444
Collectively evaluated for impairment		74,944			40,628		480,192			137,007			6,565			739,336
Purchased credit-impaired loans		85			-		-			-			-			85
Ending Balance	$	75,383		$	40,716	$	488,194		$	137,007		$	6,565		$	747,865

For the Year ended December 31, 2018
(Dollars in thousands)	Commercial and Industrial			Real Estate Construction			Real Estate - Mortgage ⁽¹⁾			Consumer ⁽²⁾			Other			Total
Allowance for loan losses:
Balance, beginning	$	1,889		$	541		$	5,217		$	1,644		$	157		$	9,448
Charge-offs		(81	)		-			(1,625	)		(769	)		(367	)		(2,842	)
Recoveries		140			-			158			262			84			644
Provision for loan losses		392			(385	)		2,206			217			431			2,861
Ending Balance	$	2,340		$	156		$	5,956		$	1,354		$	305		$	10,111

Individually evaluated for impairment	$	11		$	18		$	87		$	-		$	-		$	116
Collectively evaluated for impairment		2,329			138			5,869			1,354			305			9,995
Purchased credit-impaired loans		-			-			-			-			-			-

Ending Balance	$	2,340		$	156		$	5,956		$	1,354		$	305		$	10,111

Loans Balances:
Individually evaluated for impairment		298			509			15,373			-			-			16,180
Collectively evaluated for impairment		63,009			31,874			485,068			169,138			8,649			757,738
Purchased credit-impaired loans		91			-			-			-			-			91
Ending Balance	$	63,398		$	32,383		$	500,441		$	169,138		$	8,649		$	774,009

(1)	The real estate – mortgage segment included residential 1-4 family, commercial real estate, second mortgages and equity lines of credit.

(2)	The consumer segment includes consumer automobile loans.