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Loans and the Allowance for Loan Losses (Tables)
 6 Months Ended
Jun. 30, 2020
Loans and the Allowance for Loan Losses [Abstract]  
Outstanding Loans By Segment Type
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)
  
June 30, 2020
    
December 31, 2019
  
Mortgage loans on real estate:
            
Residential 1-4 family
  
$
120,683
    
$
118,561
  
Commercial - owner occupied
    
134,597
      
141,743
  
Commercial - non-owner occupied
    
167,780
      
135,798
  
Multifamily
    
22,975
      
25,865
  
Construction
    
40,390
      
40,716
  
Second mortgages
    
11,913
      
13,941
  
Equity lines of credit
    
51,720
      
52,286
  
Total mortgage loans on real estate
    
550,058
      
528,910
  
Commercial and industrial loans
    
177,049
      
75,383
  
Consumer automobile loans
    
86,329
      
97,294
  
Other consumer loans
    
37,123
      
39,713
  
Other
    
6,054
      
6,565
  
Total loans, net of deferred fees
    
856,613
      
747,865
  
Less:  Allowance for loan losses
    
9,701
      
9,660
  
Loans, net of allowance and deferred fees (1)
  
$
846,912
    
$
738,205
  

(1)
Net deferred loan fees totaled $1.8 million and $557 thousand at June 30, 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  June 30, 2020 and December 31, 2019 are as follows:

(dollars in thousands)
  
June 30, 2020
    
December 31, 2019
  
Outstanding principal balance
  
$
12,399
    
$
16,850
  
Carrying amount
    
12,302
      
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 June 30, 2020 and December 31, 2019 are as follows:

(dollars in thousands)
  
June 30, 2020
    
December 31, 2019
  
Outstanding principal balance
  
$
218
    
$
227
  
Carrying amount
    
87
      
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 June 30, 2020 and 2019:

(dollars in thousands)
  
June 30, 2020
    
June 30, 2019
  
Balance at January 1
  
$
72
    
$
12
  
Accretion
    
(19
)
    
(2
)
Balance at end of period
    
53
      
10
  
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 June 30, 2020
  
(dollars in thousands)
  
Pass
    
OAEM
    
Substandard
    
Doubtful
    
Total
  
Mortgage loans on real estate:
                              
Residential 1-4 family
  
$
119,281
    
$
-
    
$
1,402
    
$
-
    
$
120,683
  
Commercial - owner occupied
    
127,169
      
3,121
      
4,307
      
-
      
134,597
  
Commercial - non-owner occupied
    
167,011
      
769
      
-
      
-
      
167,780
  
Multifamily
    
22,975
      
-
      
-
      
-
      
22,975
  
Construction
    
39,392
      
998
      
-
      
-
      
40,390
  
Second mortgages
    
11,809
      
-
      
104
      
-
      
11,913
  
Equity lines of credit
    
51,720
      
-
      
-
      
-
      
51,720
  
Total mortgage loans on real estate
  
$
539,357
    
$
4,888
    
$
5,813
    
$
-
    
$
550,058
  
Commercial and industrial loans
    
176,152
      
463
      
434
      
-
      
177,049
  
Consumer automobile loans
    
85,913
      
-
      
416
      
-
      
86,329
  
Other consumer loans
    
37,123
      
-
      
-
      
-
      
37,123
  
Other
    
6,054
      
-
      
-
      
-
      
6,054
  
Total
  
$
844,599
    
$
5,351
    
$
6,663
    
$
-
    
$
856,613
  

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
All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. 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 June 30, 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
  
$
-
    
$
137
    
$
-
    
$
-
    
$
790
    
$
119,756
    
$
120,683
  
Commercial - owner occupied
    
399
      
-
      
-
      
87
      
3,783
      
130,328
      
134,597
  
Commercial - non-owner occupied
    
401
      
-
      
-
      
-
      
-
      
167,379
      
167,780
  
Multifamily
    
-
      
-
      
-
      
-
      
-
      
22,975
      
22,975
  
Construction
    
93
      
-
      
-
      
-
      
-
      
40,297
      
40,390
  
Second mortgages
    
-
      
-
      
-
      
-
      
104
      
11,809
      
11,913
  
Equity lines of credit
    
30
      
-
      
99
      
-
      
-
      
51,591
      
51,720
  
Total mortgage loans on real estate
  
$
923
    
$
137
    
$
99
    
$
87
    
$
4,677
    
$
544,135
    
$
550,058
  
Commercial and industrial loans
    
87
      
16
      
456
      
-
      
434
      
176,056
      
177,049
  
Consumer automobile loans
    
679
      
161
      
221
      
-
      
-
      
85,268
      
86,329
  
Other consumer loans
    
504
      
159
      
879
      
-
      
-
      
35,581
      
37,123
  
Other
    
51
      
2
      
-
      
-
      
-
      
6,001
      
6,054
  
Total
  
$
2,244
    
$
475
    
$
1,655
    
$
87
    
$
5,111
    
$
847,041
    
$
856,613
  

(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 $1.7 million at June 30, 2020.  The increase in 90 or more days past due and still accruing was primarily related to one commercial credit which is fully guaranteed 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
    
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:

Nonaccrual Loans by Class
  
   
(dollars in thousands)
  
June 30, 2020
    
December 31, 2019
  
Mortgage loans on real estate:
            
Residential 1-4 family
  
$
790
    
$
1,459
  
Commercial - owner occupied
    
3,783
      
2,795
  
Commercial - non-owner occupied
    
-
      
1,422
  
Second mortgages
    
104
      
104
  
Total mortgage loans on real estate
  
$
4,677
    
$
5,780
  
Commercial and industrial loans
    
434
      
257
  
Total
  
$
5,111
    
$
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:

  
Six Months Ended June 30,
  
(dollars in thousand)
  
2020
    
2019
  
Interest income that would have been recorded under original loan terms
  
$
118
    
$
132
  
Actual interest income recorded for the period
    
8
      
71
  
Reduction in interest income on nonaccrual loans
  
$
110
    
$
61
  
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 six months ended
  
 
  
As of June 30, 2020
    
June 30, 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
  
$
1,072
    
$
847
    
$
88
    
$
38
    
$
941
    
$
4
  
Commercial
    
5,179
      
2,868
      
1,374
      
195
      
4,620
      
22
  
Construction
    
86
      
-
      
85
      
11
      
86
      
2
  
Second mortgages
    
243
      
-
      
241
      
135
      
242
      
3
  
Total mortgage loans on real estate
    
6,580
      
3,715
      
1,788
      
379
      
5,889
      
31
  
Commercial and industrial loans
    
517
      
306
      
138
      
59
      
458
      
4
  
Other consumer loans
    
19
      
17
      
-
      
-
      
18
      
-
  
Total
  
$
7,116
    
$
4,038
    
$
1,926
    
$
438
    
$
6,365
    
$
35
  

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 six months ended June 30, 2020
  
                                     
(Dollars in thousands)
  
Commercial
and Industrial
    
Real Estate
Construction
    
Real Estate -
Mortgage (1)
    
Consumer (2)
    
Other
    
Total
  
Allowance for loan losses:
                                    
Balance, beginning
  
$
1,244
    
$
258
    
$
6,168
    
$
1,694
    
$
296
    
$
9,660
  
Charge-offs
    
(9
)
    
-
      
(389
)
    
(491
)
    
(221
)
    
(1,110
)
Recoveries
    
7
      
-
      
339
      
160
      
45
      
551
  
Provision for loan losses
    
(311
)
    
41
      
633
      
125
      
112
      
600
  
Ending Balance
  
$
931
    
$
299
    
$
6,751
    
$
1,488
    
$
232
    
$
9,701
  
                                                 
Individually evaluated for impairment
  
$
59
    
$
11
    
$
368
    
$
-
    
$
-
    
$
438
  
Collectively evaluated for impairment
    
872
      
288
      
6,383
      
1,488
      
232
      
9,263
  
Purchased credit-impaired loans
    
-
      
-
      
-
      
-
      
-
      
-
  
                                                 
Ending Balance
  
$
931
    
$
299
    
$
6,751
    
$
1,488
    
$
232
    
$
9,701
  
                                                 
Loans Balances:
                                                
Individually evaluated for impairment
    
444
      
85
      
5,418
      
17
      
-
      
5,964
  
Collectively evaluated for impairment
    
176,518
      
40,305
      
504,250
      
123,435
      
6,054
      
850,562
  
Purchased credit-impaired loans
    
87
      
-
      
-
      
-
      
-
      
87
  
Ending Balance
  
$
177,049
    
$
40,390
    
$
509,668
    
$
123,452
    
$
6,054
    
$
856,613
  

(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
    
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.