Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2021

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, 2021		December 31, 2020
Mortgage loans on real estate:
Residential 1-4 family	$	119,053	$	122,800
Commercial - owner occupied		161,885		153,955
Commercial - non-owner occupied		158,528		162,896
Multifamily		23,010		22,812
Construction		39,253		43,732
Second mortgages		9,947		11,178
Equity lines of credit		49,770		50,746
Total mortgage loans on real estate		561,446		568,119
Commercial and industrial loans		124,040		141,746
Consumer automobile loans		76,831		80,390
Other consumer loans		38,182		37,978
Other ⁽¹⁾		7,162		8,067
Total loans, net of deferred fees		807,661		836,300
Less: Allowance for loan losses		9,661		9,541
Loans, net of allowance and deferred fees ⁽²⁾	$	798,000	$	826,759
(1) Overdrawn accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts, excluding internal use accounts, totaled $467 thousand and $271 thousand at March 31, 2021 and December 31, 2020, respectively.
(2) Net deferred loan fees totaled $1.8 million and $2.1 million at March 31, 2021 and December 31, 2020, 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, 2021 and December 31, 2020 are as follows:

(dollars in thousands)	March 31, 2021		December 31, 2020
Outstanding principal balance	$	7,739	$	8,671
Carrying amount		7,685		8,602

The Company did not have any outstanding principal balance or related carrying amount of purchased credit-impaired loans as of March 31, 2021 and December 31, 2020. 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, 2021 and 2020:

(dollars in thousands)	March 31, 2021		March 31, 2020
Balance at January 1	$	-	$	72
Accretion		-		(10	)
Other changes, net		-		-
Balance at end of period	$	-	$	62

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, 2021
(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	118,877	$	-	$	176	$	-	$	119,053
Commercial - owner occupied		158,564		2,444		877		-		161,885
Commercial - non-owner occupied		157,792		736		-		-		158,528
Multifamily		23,010		-		-		-		23,010
Construction		38,255		998		-		-		39,253
Second mortgages		9,947		-		-		-		9,947
Equity lines of credit		49,770		-		-		-		49,770
Total mortgage loans on real estate	$	556,215	$	4,178	$	1,053	$	-	$	561,446
Commercial and industrial loans		123,715		325		-		-		124,040
Consumer automobile loans		76,520		-		311		-		76,831
Other consumer loans		38,182		-		-		-		38,182
Other		7,162		-		-		-		7,162
Total	$	801,794	$	4,503	$	1,364	$	-	$	807,661

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

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, 2021
(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	$	480	$	-	$	36	$	-	$	251	$	118,286	$	119,053
Commercial - owner occupied		-		278		-		-		878		160,729		161,885
Commercial - non-owner occupied		185		-		-		-		-		158,343		158,528
Multifamily		-		-		-		-		-		23,010		23,010
Construction		46		130		88		-		-		38,989		39,253
Second mortgages		-		-		14		-		-		9,933		9,947
Equity lines of credit		-		-		-		-		-		49,770		49,770
Total mortgage loans on real estate	$	711	$	408	$	138	$	-	$	1,129	$	559,060	$	561,446
Commercial and industrial loans		8		548		-		-		-		123,484		124,040
Consumer automobile loans		517		141		265		-		-		75,908		76,831
Other consumer loans		695		218		715		-		-		36,554		38,182
Other		19		2		1		-		-		7,140		7,162
Total	$	1,950	$	1,317	$	1,119	$	-	$	1,129	$	802,146	$	807,661

(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 small business and student 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 $1.5 million at March 31, 2021.

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.

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)	March 31, 2021		December 31, 2020
Mortgage loans on real estate:
Residential 1-4 family	$	251	$	311
Commercial - owner occupied		878		903
Total mortgage loans on real estate	$	1,129	$	1,214
Total	$	1,129	$	1,214

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)	2021		2020
Interest income that would have been recorded under original loan terms	$	27	$	78
Actual interest income recorded for the period		-		-
Reduction in interest income on nonaccrual loans	$	27	$	78

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, 2021								March 31, 2021
(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	$	420	$	75	$	316	$	38	$	395	$	-
Commercial		2,597		950		441		13		1,407		-
Construction		83		-		81		-		82		1
Second mortgages		133		-		131		4		132		1
Total mortgage loans on real estate		3,233		1,025		969		55		2,016		2
Commercial and industrial loans		6		5		-		-		6		-
Other consumer loans		14		12		-		-		13		-
Total	$	3,253	$	1,042	$	969	$	55	$	2,035	$	2

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

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, 2021
(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	$	650		$	339		$	2,560		$	4,434		$	1,302		$	123		$	133	$	9,541
Charge-offs		(4	)		-			(1	)		-			(197	)		(114	)		-		(316	)
Recoveries		2			-			14			1			213			56			-		286
Provision for loan losses		93			(17	)		(24	)		(118	)		(33	)		196			53		150
Ending Balance	$	741		$	322		$	2,549		$	4,317		$	1,285		$	261		$	186	$	9,661

Individually evaluated for impairment	$	-		$	-		$	42		$	13		$	-		$	-		$	-	$	55
Collectively evaluated for impairment		741			322			2,507			4,304			1,285			261			186		9,606
Purchased credit-impaired loans		-			-			-			-			-			-					-

Ending Balance	$	741		$	322		$	2,549		$	4,317		$	1,285		$	261		$	186	$	9,661

Loans Balances:
Individually evaluated for impairment		5			81			522			1,391			12			-			-		2,011
Collectively evaluated for impairment		124,035			39,172			201,258			319,022			115,001			7,162			-		805,650
Purchased credit-impaired loans		-			-			-			-			-			-					-
Ending Balance	$	124,040		$	39,253		$	201,780		$	320,413		$	115,013		$	7,162		$	-	$	807,661

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

⁽²⁾ The consumer segment includes consumer automobile 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

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

⁽²⁾ The consumer segment includes consumer automobile loans.