Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2020

Loans and the Allowance for Loan Losses [Abstract]

The following is a summary of the balances in each class of the Company’s portfolio of loans held for investment as of the dates indicated:

(dollars in thousands)	March 31, 2020		December 31, 2019
Mortgage loans on real estate:
Residential 1-4 family	$	118,026	$	118,561
Commercial - owner occupied		138,414		141,743
Commercial - non-owner occupied		152,859		135,798
Multifamily		24,953		25,865
Construction		40,489		40,716
Second mortgages		13,898		13,941
Equity lines of credit		52,750		52,286
Total mortgage loans on real estate		541,389		528,910
Commercial and industrial loans		69,397		75,383
Consumer automobile loans		92,241		97,294
Other consumer loans		42,702		39,713
Other		14,490		6,565
Total loans, net of deferred fees		760,219		747,865
Less: Allowance for loan losses		9,669		9,660
Loans, net of allowance and deferred fees ⁽¹⁾	$	750,550	$	738,205

(1) Net deferred loan fees totaled $511 thousand and $557 thousand at March 31, 2020 and December 31, 2019, respectively.

Acquired Loans

The outstanding principal balance and the carrying amount of total acquired loans included in the consolidated balance sheets as of March 31, 2020 and December 31, 2019 are as follows:

(dollars in thousands)	March 31, 2020		December 31, 2019
Outstanding principal balance	$	15,692	$	16,850
Carrying amount	$	15,434	$	16,561

The outstanding principal balance and related carrying amount of purchased credit-impaired loans, for which the Company applies FASB ASC 310-30 to account for interest earned, as of March 31, 2020 and December 31, 2019 are as follows:

(dollars in thousands)	March 31, 2020		December 31, 2019
Outstanding principal balance	$	223	$	227
Carrying amount	$	86	$	85

The following table presents changes in the accretable yield on purchased credit-impaired loans, for which the Company applies FASB ASC 310-30, at March 31, 2020:

(dollars in thousands)	March 31, 2020			March 31, 2019
Balance at January 1	$	72		$	12
Accretion		(10	)		(1	)
Balance at end of period	$	62		$	11

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 March 31, 2020
(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	116,167	$	-	$	1,859	$	-	$	118,026
Commercial - owner occupied		132,161		1,534		4,719		-		138,414
Commercial - non-owner occupied		150,824		723		1,312		-		152,859
Multifamily		24,953		-		-		-		24,953
Construction		40,489		-		-		-		40,489
Second mortgages		13,794		-		104		-		13,898
Equity lines of credit		52,750		-		-		-		52,750
Total mortgage loans on real estate	$	531,138	$	2,257	$	7,994	$	-	$	541,389
Commercial and industrial loans		69,088		56		253		-		69,397
Consumer automobile loans		91,859		-		382		-		92,241
Other consumer loans		42,702		-		-		-		42,702
Other		14,490		-		-		-		14,490
Total	$	749,277	$	2,313	$	8,629	$	-	$	760,219

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

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 March 31, 2020
(dollars in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due and still Accruing		PCI		Nonaccrual		Total Current Loans ⁽¹⁾		Total Loans
Mortgage loans on real estate:
Residential 1-4 family	$	1,056	$	-	$	-	$	-	$	1,165	$	115,805	$	118,026
Commercial - owner occupied		293		-		-		86		2,638		135,397		138,414
Commercial - non-owner occupied		410		-		-		-		1,311		151,138		152,859
Multifamily		-		-		-		-		-		24,953		24,953
Construction		99		-		-		-		-		40,390		40,489
Second mortgages		394		73		13		-		104		13,314		13,898
Equity lines of credit		56		100		40		-		-		52,554		52,750
Total mortgage loans on real estate	$	2,308	$	173	$	53	$	86	$	5,218	$	533,551	$	541,389
Commercial and industrial loans		928		408		9		-		253		67,799		69,397
Consumer automobile loans		1,172		233		265		-		-		90,571		92,241
Other consumer loans		1,377		342		923		-		-		40,060		42,702
Other		149		3		5		-		-		14,333		14,490
Total	$	5,934	$	1,159	$	1,255	$	86	$	5,471	$	746,314	$	760,219

(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 March 31, 2020. The increase in 30-59 days past due loans was primarily related to credits that were 30 days past due as of period end of which the majority subsequently become current.

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		Total Current Loans ⁽¹⁾		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.

Nonaccrual Loans

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

(dollars in thousands)	March 31, 2020		December 31, 2019
Mortgage loans on real estate:
Residential 1-4 family	$	1,165	$	1,459
Commercial - owner occupied		2,638		2,795
Commercial - non-owner occupied		1,311		1,422
Second mortgages		104		104
Total mortgage loans on real estate	$	5,218	$	5,780
Commercial and industrial loans		253		257
Total	$	5,471	$	6,037

Interest Income to be Earned Under 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:

	Three Months Ended March 31,
(dollars in thousand)	2020		2019
Interest income that would have been recorded under original loan terms	$	78	$	64
Actual interest income recorded for the period		-		-
Reduction in interest income on nonaccrual loans	$	78	$	64

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
									For the three months ended
	As of March 31, 2020								March 31, 2020
(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	$	1,482	$	1,223	$	88	$	39	$	1,325	$	-
Commercial		6,984		4,283		1,679		301		6,038		-
Construction		88		-		86		12		87		1
Second mortgages		245		-		243		104		244		2
Total mortgage loans on real estate		8,799		5,506		2,096		456		7,694		3
Commercial and industrial loans		306		263		-		-		267		-
Other consumer loans		20		19		-		-		20		-
Total	$	9,125	$	5,788	$	2,096	$	456	$	7,981	$	3

Impaired Loans by Class
									For the Year Ended
	As of December 31, 2019								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

Allowance for Loan Losses by Segment

The following tables present, 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 three months ended March 31, 2020
(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Consumer ⁽²⁾			Other			Unallocated			Total
Allowance for loan losses:
Balance, beginning	$	1,244		$	258	$	6,168		$	1,694		$	296		$	-		$	9,660
Charge-offs		-			-		(46	)		(270	)		(124	)		-			(440	)
Recoveries		2			-		9			125			13			-			149
Provision for loan losses		(244	)		27		109			124			236			48			300
Ending Balance	$	1,002		$	285	$	6,240		$	1,673		$	421		$	48		$	9,669

Individually evaluated for impairment	$	-		$	12	$	444		$	-		$	-		$	-		$	456
Collectively evaluated for impairment		1,002			273		5,796			1,673			421			48			9,213
Purchased credit-impaired loans		-			-		-			-			-						-

Ending Balance	$	1,002		$	285	$	6,240		$	1,673		$	421		$	48		$	9,669

Loans Balances:																0.50	%
Individually evaluated for impairment		263			86		7,516			19			-			-			7,884
Collectively evaluated for impairment		69,048			40,403		493,384			134,924			14,490			-			752,249
Purchased credit-impaired loans		86			-		-			-			-						86
Ending Balance	$	69,397		$	40,489	$	500,900		$	134,943		$	14,490		$	-		$	760,219

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

⁽²⁾	The consumer segment includes consumer automobile loans.

For the Year ended December 31, 2019
(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Consumer ⁽²⁾			Other			Unallocated		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

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

⁽²⁾	The consumer segment includes consumer automobile loans.