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Loans and the Allowance for Loan Losses (Tables)
 9 Months Ended
Sep. 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)
  
September 30, 2020
    
December 31, 2019
  
Mortgage loans on real estate:
            
Residential 1-4 family
  
$
126,546
    
$
118,561
  
Commercial - owner occupied
    
150,490
      
141,743
  
Commercial - non-owner occupied
    
166,165
      
135,798
  
Multifamily
    
22,735
      
25,865
  
Construction
    
39,256
      
40,716
  
Second mortgages
    
11,647
      
13,941
  
Equity lines of credit
    
49,218
      
52,286
  
Total mortgage loans on real estate
    
566,057
      
528,910
  
Commercial and industrial loans
    
171,235
      
75,383
  
Consumer automobile loans
    
82,494
      
97,294
  
Other consumer loans
    
39,363
      
39,713
  
Other
    
12,741
      
6,565
  
Total loans, net of deferred fees
    
871,890
      
747,865
  
Less:  Allowance for loan losses
    
9,920
      
9,660
  
Loans, net of allowance and deferred fees (1)
  
$
861,970
    
$
738,205
  

(1)
Net deferred loan fees totaled $2.4 million and $557 thousand at September 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  September 30, 2020 and December 31, 2019 are as follows:

(dollars in thousands)
  
September 30, 2020
    
December 31, 2019
  
Outstanding principal balance
  
$
10,475
    
$
16,850
  
Carrying amount
    
10,271
      
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 September 30, 2020 and December 31, 2019 are as follows:

(dollars in thousands)
  
September 30, 2020
    
December 31, 2019
  
Outstanding principal balance
  
$
213
    
$
227
  
Carrying amount
    
88
      
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 September 30, 2020 and 2019:

(dollars in thousands)
  
September 30, 2020
    
September 30, 2019
  
Balance at January 1
  
$
72
    
$
12
  
Accretion
    
(29
)
    
5
  
Balance at end of period
    
43
      
17
  
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 September 30, 2020
  
(dollars in thousands)
  
Pass
    
OAEM
    
Substandard
    
Doubtful
    
Total
  
Mortgage loans on real estate:
                              
Residential 1-4 family
  
$
125,324
    
$
-
    
$
1,222
    
$
-
    
$
126,546
  
Commercial - owner occupied
    
143,807
      
2,851
      
3,832
      
-
      
150,490
  
Commercial - non-owner occupied
    
165,405
      
760
      
-
      
-
      
166,165
  
Multifamily
    
22,735
      
-
      
-
      
-
      
22,735
  
Construction
    
38,258
      
998
      
-
      
-
      
39,256
  
Second mortgages
    
11,543
      
-
      
104
      
-
      
11,647
  
Equity lines of credit
    
49,218
      
-
      
-
      
-
      
49,218
  
Total mortgage loans on real estate
  
$
556,290
    
$
4,609
    
$
5,158
    
$
-
    
$
566,057
  
Commercial and industrial
    
170,430
      
403
      
402
      
-
      
171,235
  
Consumer automobile
    
82,100
      
-
      
394
      
-
      
82,494
  
Other consumer
    
39,363
      
-
      
-
      
-
      
39,363
  
Other
    
12,741
      
-
      
-
      
-
      
12,741
  
Total
  
$
860,924
    
$
5,012
    
$
5,954
    
$
-
    
$
871,890
  

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
    
74,963
      
66
      
354
      
-
      
75,383
  
Consumer automobile
    
96,907
      
-
      
387
      
-
      
97,294
  
Other consumer
    
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 September 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
  
$
304
    
$
130
    
$
86
    
$
-
    
$
609
    
$
125,417
    
$
126,546
  
Commercial - owner occupied
    
298
      
-
      
-
      
88
      
3,619
      
146,485
      
150,490
  
Commercial - non-owner occupied
    
-
      
-
      
-
      
-
      
-
      
166,165
      
166,165
  
Multifamily
    
123
      
-
      
-
      
-
      
-
      
22,612
      
22,735
  
Construction
    
-
      
-
      
-
      
-
      
-
      
39,256
      
39,256
  
Second mortgages
    
46
      
-
      
-
      
-
      
104
      
11,497
      
11,647
  
Equity lines of credit
    
232
      
-
      
-
      
-
      
-
      
48,986
      
49,218
  
Total mortgage loans on real estate
  
$
1,003
    
$
130
    
$
86
    
$
88
    
$
4,332
    
$
560,418
    
$
566,057
  
Commercial and industrial
    
56
      
-
      
90
      
-
      
226
      
170,863
      
171,235
  
Consumer automobile
    
730
      
236
      
38
      
-
      
-
      
81,490
      
82,494
  
Other consumer
    
428
      
389
      
663
      
-
      
-
      
37,883
      
39,363
  
Other
    
45
      
2
      
-
      
-
      
-
      
12,694
      
12,741
  
Total
  
$
2,262
    
$
757
    
$
877
    
$
88
    
$
4,558
    
$
863,348
    
$
871,890
  

(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 loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $1.0 million at September 30, 2020.

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
    
211
      
-
      
-
      
-
      
257
      
74,915
      
75,383
  
Consumer automobile
    
1,115
      
299
      
203
      
-
      
-
      
95,677
      
97,294
  
Other consumer
    
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)
  
September 30, 2020
    
December 31, 2019
  
Mortgage loans on real estate:
            
Residential 1-4 family
  
$
609
    
$
1,459
  
Commercial - owner occupied
    
3,619
      
2,795
  
Commercial - non-owner occupied
    
-
      
1,422
  
Second mortgages
    
104
      
104
  
Total mortgage loans on real estate
  
$
4,332
    
$
5,780
  
Commercial and industrial
    
226
      
257
  
Total
  
$
4,558
    
$
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:

  
Nine Months Ended September 30,
  
(dollars in thousand)
  
2020
    
2019
  
Interest income that would have been recorded under original loan terms
  
$
145
    
$
198
  
Actual interest income recorded for the period
    
34
      
101
  
Reduction in interest income on nonaccrual loans
  
$
111
    
$
97
  
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 nine months ended
  
 
  
As of September 30, 2020
    
September 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
  
$
788
    
$
665
    
$
87
    
$
37
    
$
759
    
$
6
  
Commercial
    
6,184
      
761
      
3,314
      
200
      
5,052
      
54
  
Construction
    
85
      
-
      
84
      
10
      
85
      
3
  
Second mortgages
    
241
      
-
      
239
      
134
      
240
      
4
  
Total mortgage loans on real estate
    
7,298
      
1,426
      
3,724
      
381
      
6,136
      
67
  
Commercial and industrial
    
294
      
96
      
138
      
84
      
250
      
-
  
Other consumer loans
    
17
      
15
      
-
      
-
      
16
      
1
  
Total
  
$
7,609
    
$
1,537
    
$
3,862
    
$
465
    
$
6,402
    
$
68
  

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
    
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 nine months ended September 30, 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
    
(9
)
    
-
      
(389
)
    
(701
)
    
(278
)
    
-
      
(1,377
)
Recoveries
    
9
      
-
      
352
      
321
      
55
      
-
      
737
  
Provision for loan losses
    
(300
)
    
41
      
989
      
12
      
124
      
34
      
900
  
Ending Balance
  
$
944
    
$
299
    
$
7,120
    
$
1,326
    
$
197
    
$
34
    
$
9,920
  
                                                         
Individually evaluated for impairment
  
$
84
    
$
10
    
$
371
    
$
-
    
$
-
    
$
-
    
$
465
  
Collectively evaluated for impairment
    
860
      
289
      
6,749
      
1,326
      
197
      
34
      
9,455
  
Purchased credit-impaired loans
    
-
      
-
      
-
      
-
      
-
              
-
  
                                                         
Ending Balance
  
$
944
    
$
299
    
$
7,120
    
$
1,326
    
$
197
    
$
34
    
$
9,920
  
                                                         
Loans Balances:
                                                        
Individually evaluated for impairment
    
234
      
84
      
5,066
      
15
      
-
      
-
      
5,399
  
Collectively evaluated for impairment
    
171,001
      
39,172
      
521,647
      
121,842
      
12,741
      
-
      
866,403
  
Purchased credit-impaired loans
    
-
      
-
      
88
      
-
      
-
              
88
  
Ending Balance
  
$
171,235
    
$
39,256
    
$
526,801
    
$
121,857
    
$
12,741
    
$
-
    
$
871,890
  

(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
    
75,029
      
40,628
      
480,107
      
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.