Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2020

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, 2020		December 31, 2019
Mortgage loans on real estate:
Residential 1-4 family	$	122,800	$	118,561
Commercial - owner occupied		153,955		141,743
Commercial - non-owner occupied		162,896		135,798
Multifamily		22,812		25,865
Construction		43,732		40,716
Second mortgages		11,178		13,941
Equity lines of credit		50,746		52,286
Total mortgage loans on real estate		568,119		528,910
Commercial and industrial loans		141,746		75,383
Consumer automobile loans		80,390		97,294
Other consumer loans		37,978		39,713
Other ⁽¹⁾		8,067		6,565
Total loans, net of deferred fees		836,300		747,865
Less: Allowance for loan losses		9,541		9,660
Loans, net of allowance and deferred fees ⁽²⁾	$	826,759	$	738,205

(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 $271 thousand and $449 thousand at December 31, 2020 and 2019, respectively.

(2)

Net deferred loan costs totaled $2.1 million and $557 thousand at December 31, 2020 and 2019, 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, 2020		December 31, 2019
Outstanding principal balance	$	8,671	$	16,850
Carrying amount		8,602		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 are as follows:

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

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

(dollars in thousands)	December 31, 2020			December 31, 2019
Balance at January 1	$	72		$	12
Accretion		(156	)		(27	)
Reclassification from nonaccretable difference		-			125
Other changes, net		84			(38	)
Balance at end of period	$	-		$	72

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, 2020
(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	122,621	$	-	$	179	$	-	$	122,800
Commercial - owner occupied		148,738		2,462		2,755		-		153,955
Commercial - non-owner occupied		162,148		748		-		-		162,896
Multifamily		22,812		-		-		-		22,812
Construction		42,734		998		-		-		43,732
Second mortgages		11,178		-		-		-		11,178
Equity lines of credit		50,746		-		-		-		50,746
Total mortgage loans on real estate	$	560,977	$	4,208	$	2,934	$	-	$	568,119
Commercial and industrial loans		141,391		355		-		-		141,746
Consumer automobile loans		79,997		-		393		-		80,390
Other consumer loans		37,978		-		-		-		37,978
Other		8,067		-		-		-		8,067
Total	$	828,410	$	4,563	$	3,327	$	-	$	836,300

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 December 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 ⁽²⁾		Total Current Loans ⁽¹⁾		Total Loans
Mortgage loans on real estate:
Residential 1-4 family	$	478	$	164	$	-	$	-	$	311	$	121,847	$	122,800
Commercial - owner occupied		-		-		-		-		903		153,052		153,955
Commercial - non-owner occupied		-		-		-		-		-		162,896		162,896
Multifamily		-		-		-		-		-		22,812		22,812
Construction		-		88		-		-		-		43,644		43,732
Second mortgages		41		-		-		-		-		11,137		11,178
Equity lines of credit		-		-		-		-		-		50,746		50,746
Total mortgage loans on real estate	$	519	$	252	$	-	$	-	$	1,214	$	566,134	$	568,119
Commercial and industrial loans		753		-		-		-		-		140,993		141,746
Consumer automobile loans		1,159		190		196		-		-		78,845		80,390
Other consumer loans		1,120		555		548		-		-		35,755		37,978
Other		24		3		-		-		-		8,040		8,067
Total	$	3,575	$	1,000	$	744	$	-	$	1,214	$	829,767	$	836,300

(1)

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

(2)

For purposes of this table, if a loan is past due and on nonaccrual, it is included in the nonaccural column and not also in its respective past due column.

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 $1.2 million at December 31, 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 ⁽²⁾		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.

(2)

For purposes of this table, if a loan is past due and on nonaccrual, it is included in the nonaccural column and not also in its respective past due column.

Nonaccrual Loans

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

(dollars in thousands)	December 31, 2020		December 31, 2019
Mortgage loans on real estate:
Residential 1-4 family	$	311	$	1,459
Commercial - owner occupied		903		2,795
Commercial - non-owner occupied		-		1,422
Second mortgages		-		104
Total mortgage loans on real estate	$	1,214	$	5,780
Commercial and industrial loans		-		257
Total	$	1,214	$	6,037

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)	2020		2019
Interest income that would have been recorded under original loan terms	$	45	$	283
Actual interest income recorded for the period		34		115
Reduction in interest income on nonaccrual loans	$	11	$	168

Troubled Debt Restructurings by Class

The following table presents TDRs during the period 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, 2020
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

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 Year Ended
	As of December 31, 2020								December 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	$	474	$	366	$	87	$	1	$	458	$	10
Commercial		3,490		1,306		121		1		2,559		46
Construction		83		-		83		-		84		5
Second mortgages		133		-		133		9		134		5
Total mortgage loans on real estate		4,180		1,672		424		11		3,235		66
Commercial and industrial loans		6		6		-		-		7		-
Other consumer loans		14		14		-		-		15		1
Total	$	4,200	$	1,692	$	424	$	11	$	3,257	$	67

									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 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, 2020

(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Real Estate - Commercial			Consumer ⁽²⁾			Other			Unallocated		Total
Allowance for loan losses:
Balance, beginning	$	1,244		$	258	$	2,505		$	3,663		$	1,694		$	296		$	-	$	9,660
Charge-offs		(25	)		-		(149	)		(654	)		(822	)		(355	)		-		(2,005	)
Recoveries		47			10		69			317			377			66			-		886
Provision for loan losses		(616	)		71		135			1,108			53			116			133		1,000
Ending Balance	$	650		$	339	$	2,560		$	4,434		$	1,302		$	123		$	133	$	9,541

Individually evaluated for impairment	$	-		$	-	$	10		$	1		$	-		$	-		$	-	$	11
Collectively evaluated for impairment		650			339		2,550			4,433			1,302			123			133		9,530
Purchased credit-impaired loans		-			-		-			-			-			-					-

Ending Balance	$	650		$	339	$	2,560		$	4,434		$	1,302		$	123		$	133	$	9,541

Loans Balances:
Individually evaluated for impairment		6			83		586			1,427			14			-			-		2,116
Collectively evaluated for impairment		141,740			43,649		206,950			315,424			118,354			8,067			-		834,184
Purchased credit-impaired loans		-			-		-			-			-			-					-
Ending Balance	$	141,746		$	43,732	$	207,536		$	316,851		$	118,368		$	8,067		$	-	$	836,300

For the Year ended December 31, 2019

(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Real Estate - Commercial			Consumer ⁽²⁾			Other			Unallocated		Total
Allowance for loan losses:
Balance, beginning	$	2,340		$	156	$	2,497		$	3,459		$	1,354		$	305		$	-	$	10,111
Charge-offs		-			-		(170	)		(27	)		(776	)		(425	)		-		(1,398	)
Recoveries		10			-		113			87			351			68			-		629
Provision for loan losses		(1,106	)		102		65			144			765			348			-		318
Ending Balance	$	1,244		$	258	$	2,505		$	3,663		$	1,694		$	296		$	-	$	9,660

Individually evaluated for impairment	$	-		$	14	$	150		$	317		$	-		$	-		$	-	$	481
Collectively evaluated for impairment		1,244			244		2,355			3,346			1,694			296			-		9,179
Purchased credit-impaired loans		-			-		-			-			-			-					-

Ending Balance	$	1,244		$	258	$	2,505		$	3,663		$	1,694		$	296		$	-	$	9,660

Loans Balances:
Individually evaluated for impairment		354			88		1,853			6,149			-			-			-		8,444
Collectively evaluated for impairment		74,944			40,628		208,800			271,392			137,007			6,565			-		739,336
Purchased credit-impaired loans		85			-		-			-			-			-					85
Ending Balance	$	75,383		$	40,716	$	210,653		$	277,541		$	137,007		$	6,565		$	-	$	747,865

(1)

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

(2)

The consumer segment includes consumer automobile loans.