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Loans and the Allowance for Credit Losses on Loans (Tables)
 9 Months Ended
Sep. 30, 2023
Loans and the Allowance for Credit Losses on Loans [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:


   
September 30,
    
December 31,
  
(dollars in thousands)
  
2023
    
2022
  
Mortgage loans on real estate:
            
Residential 1-4 family
  
$
184,535
    
$
169,248
  
Commercial - owner occupied
    
162,611
      
184,586
  
Commercial - non-owner occupied
    
279,183
      
245,277
  
Multifamily
    
31,813
      
26,675
  
Construction and land development
    
94,143
      
77,944
  
Second mortgages
    
9,968
      
8,828
  
Equity lines of credit
    
53,784
      
54,340
  
Total mortgage loans on real estate
    
816,037
      
766,898
  
Commercial and industrial loans
    
73,279
      
72,578
  
Consumer automobile loans
    
170,637
      
163,018
  
Other consumer loans
    
20,309
      
22,251
  
Other  (1)
    
2,416
      
2,340
  
Total loans, net of deferred fees (2)
    
1,082,678
      
1,027,085
  
Less:  Allowance for credit losses on loans
    
11,844
      
10,526
  
Loans, net of allowance and deferred fees (2)
  
$
1,070,834
    
$
1,016,559
  
(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 $264 thousand and $269 thousand at September 30, 2023 and December 31, 2022, respectively.
(2)
Net deferred loan fees totaled $1.3 million on September 30, 2023 and $1.0 million on December 31, 2022.
Past Due Loans The following table shows the aging of the Company’s loan portfolio, by class, as of September 30, 2023.


Age Analysis of Past Due Loans as of September 30, 2023


(dollars in thousands)
  
30 - 59 Days
Past Due
    
60 - 89 Days
Past Due
    
90 or More
Days Past
Due and still
Accruing
    
Nonaccrual
(2)
    
Total Current
Loans (1)
    
Total
Loans
  
Mortgage loans on real estate:
                                    
Residential 1-4 family
  
$
-
    
$
-
    
$
398
    
$
145
    
$
183,992
    
$
184,535
  
Commercial - owner occupied
    
-
      
407
      
-
      
-
      
162,204
      
162,611
  
Commercial - non-owner occupied
    
17
      
-
      
-
      
-
      
279,166
      
279,183
  
Multifamily
    
-
      
-
      
-
      
-
      
31,813
      
31,813
  
Construction and land development
    
-
      
-
      
-
      
1,391
      
92,752
      
94,143
  
Second mortgages
    
-
      
-
      
-
      
-
      
9,968
      
9,968
  
Equity lines of credit
    
-
      
-
      
-
      
47
      
53,737
      
53,784
  
Total mortgage loans on real estate
  
$
17
    
$
407
    
$
398
    
$
1,583
    
$
813,632
    
$
816,037
  
Commercial and industrial loans
    
507
      
17
      
116
      
335
      
72,304
      
73,279
  
Consumer automobile loans
    
2,857
      
264
      
148
      
-
      
167,368
      
170,637
  
Other consumer loans
    
231
      
375
      
135
      
-
      
19,568
      
20,309
  
Other
    
54
      
-
      
-
      
-
      
2,362
      
2,416
  
Total
  
$
3,666
    
$
1,063
    
$
797
    
$
1,918
    
$
1,075,234
    
$
1,082,678
  
(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 nonaccrual column and not also in its respective past due column.

The following table shows the aging of the Company’s loan portfolio, by class, as of December 31, 2022.

Age Analysis of Past Due Loans as of December 31, 2022

(dollars in thousands)
  
30 - 59 Days
Past Due
    
60 - 89 Days
Past Due
    
90 or More
Days Past
Due and still
Accruing
    
Nonaccrual
(2)
    
Total Current
Loans (1)
    
Total
Loans
  
Mortgage loans on real estate:
                                    
Residential 1-4 family
  
$
290
    
$
-
    
$
525
    
$
154
    
$
168,279
    
$
169,248
  
Commercial - owner occupied
    
20
      
-
      
-
      
-
      
184,566
      
184,586
  
Commercial - non-owner occupied
    
206
      
-
      
-
      
-
      
245,071
      
245,277
  
Multifamily
    
-
      
-
      
-
      
-
      
26,675
      
26,675
  
Construction and land development
    
-
      
-
      
-
      
945
      
76,999
      
77,944
  
Second mortgages
    
19
      
-
      
-
      
-
      
8,809
      
8,828
  
Equity lines of credit
    
56
      
288
      
-
      
-
      
53,996
      
54,340
  
Total mortgage loans on real estate
  
$
591
    
$
288
    
$
525
    
$
1,099
    
$
764,395
    
$
766,898
  
Commercial and industrial loans
    
221
      
284
      
23
      
144
      
71,906
      
72,578
  
Consumer automobile loans
    
1,538
      
221
      
212
      
-
      
161,047
      
163,018
  
Other consumer loans
    
445
      
372
      
80
      
-
      
21,354
      
22,251
  
Other
    
47
      
-
      
-
      
-
      
2,293
      
2,340
  
Total
  
$
2,842
    
$
1,165
    
$
840
    
$
1,243
    
$
1,020,995
    
$
1,027,085
  
(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 nonaccrual column and not also in its respective past due column.
Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due

The following table shows the Company’s amortized cost basis of loans on nonaccrual status as of January 1, 2023 as well as the amortized cost basis of loans on nonaccrual status and loans past due 90 days and accruing as of September 30, 2023 by class of loan.


   
Nonaccrual
              
(dollars in thousands)
  
January 1, 2023
    
September 30, 2023
    
Nonaccrual with
no ACLL
    
90 Days and still
Accruing
  
Mortgage loans on real estate:
                        
Residential 1-4 family
  
$
154
    
$
145
    
$
-
    
$
398
  
Construction and land development
    
945
      
1,391
      
1,391
      
-
  
Equity lines of credit
    
-
      
47
      
47
      
-
  
Total mortgage loans on real estate
    
1,099
      
1,583
      
1,438
      
398
  
Commercial and industrial loans
    
144
      
335
      
35
      
116
  
Consumer automobile loans
    
-
      
-
      
-
      
148
  
Other consumer loans
     -       -       -       135  
Other
     -       -       -       -  
Total
  
$
1,243
    
$
1,918
    
$
1,473
    
$
797
  
Allowance for Credit Losses by Segment

The following tables presents the activity in the ACLL by portfolio class for the nine months ended September 30, 2023.



ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS
                        For the Nine Months ended September 30, 2023  
(dollars in thousands)
  
Commercial
and Industrial
    
Real Estate
Construction
and Land
Development
    
Real Estate -
Mortgage (1)
    
Real Estate -
Commercial
    
Consumer (2)
    
Other
    
Unallocated
    
Total
  
Allowance for credit losses on loans:
                                            
Balance, beginning
  
$
673
    
$
552
    
$
2,575
    
$
4,499
    
$
2,065
    
$
156
    
$
6
    
$
10,526
  
Day 1 impact of adoption of CECL
    
(11
)
    
19
      
87
      
1,048
      
(365
)
    
(137
)
    
-
      
641
  
Charge-offs
    
(159
)
    
-
      
-
      
-
      
(813
)
    
(228
)
    
-
      
(1,200
)
Recoveries
    
64
      
-
      
28
      
-
      
393
      
41
      
-
      
526
  
Provision for loan losses
    
78
      
258
      
192
      
244
      
270
      
315
      
(6
)
    
1,351
  
Ending Balance
  
$
645
    
$
829
    
$
2,882
    
$
5,791
    
$
1,550
    
$
147
    
$
-
    
$
11,844
  
                                                                 
Individually evaluated
  
$
-
    
$
-
    
$
61
    
$
-
    
$
-
    
$
-
    
$
-
    
$
61
  
Collectively evaluated
    
645
      
829
      
2,821
      
5,791
      
1,550
      
147
      
-
      
11,783
  
                                                                 
Ending Balance
  
$
645
    
$
829
    
$
2,882
    
$
5,791
    
$
1,550
    
$
147
    
$
-
    
$
11,844
  
                                                                 
Loans Balances:
                                                                
Individually evaluated
   $
334
     $
1,463
     $
503
     $
375
     $
-
     $
-
     $
-
     $
2,675
  
Collectively evaluated
    
72,945
      
92,680
      
279,597
      
441,419
      
190,946
      
2,416
      
-
      
1,080,003
  
Ending Balance
  
$
73,279
    
$
94,143
    
$
280,100
    
$
441,794
    
$
190,946
    
$
2,416
    
$
-
    
$
1,082,678
  
(1)
The real estate-mortgage segment includes residential 1 – 4 family, multi-family, second mortgages and equity lines of credit.
(2)
The consumer segment includes consumer automobile loans.

The following tables presents the activity in the ACLL by portfolio segment for the year ended December 31, 2022.

For the Year ended December 31, 2022
(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
  
$
683
    
$
459
    
$
2,390
    
$
4,787
    
$
1,362
    
$
184
    
$
-
    
$
9,865
  
Charge-offs
    
(297
)
    
-
      
(25
)
    
-
      
(1,368
)
    
(332
)
    
-
      
(2,022
)
Recoveries
    
134
      
-
      
61
      
22
      
648
      
112
      
-
      
977
  
Provision for loan losses
    
153
      
93
      
149
      
(310
)
    
1,423
      
192
      
6
      
1,706
  
Ending Balance
  
$
673
    
$
552
    
$
2,575
    
$
4,499
    
$
2,065
    
$
156
    
$
6
    
$
10,526
  
                                                                 
Individually evaluated for impairment
  
$
-
    
$
6
    
$
21
    
$
3
    
$
-
    
$
-
    
$
-
    
$
30
  
Collectively evaluated for impairment
    
673
      
546
      
2,554
      
4,496
      
2,065
      
156
      
6
      
10,496
  
                                                                 
Ending Balance
  
$
673
    
$
552
    
$
2,575
    
$
4,499
    
$
2,065
    
$
156
    
$
6
    
$
10,526
  
                                                                 
Loans Balances:
                                                                
Individually evaluated for impairment
   $
144
     $
1,020
     $
279
     $
413
     $
-
     $
-
     $
-
     $
1,856
  
Collectively evaluated for impairment
    
72,434
      
76,924
      
258,812
      
429,450
      
185,269
      
2,340
      
-
      
1,025,229
  
Ending Balance
  
$
72,578
    
$
77,944
    
$
259,091
    
$
429,863
    
$
185,269
    
$
2,340
    
$
-
    
$
1,027,085
  
(1)
The real estate-mortgage segment includes residential 1 – 4 family, multi-family, second mortgages and equity lines of credit.
(2)
The consumer segment includes consumer automobile loans.
Breakdown of Provision for Credit Losses
The following table presents a breakdown of the provision for credit losses for the periods indicated.

 
Three Months Ended September 30,
       Nine Months Ended September 30,  
(dollars in thousands)
2023
  
2022
     2023   2022
  
Provision for credit losses:
                            
Provision for loans
  
$
478
    
$
402
     $
1,351     $
1,073  
Provison (recovery) for unfunded commitments
    
27
   
-
       (109 )     -  
Total
  
$
505
    
$
402
     $
1,242     $
1,073  
Risk Category Loans by Class of Loans

The following tables present credit quality exposures by internally assigned risk ratings originated as of the dates indicated:


   
September 30, 2023
  
   
Term Loans Amortized Cost Basis by Origination Year
              
(dollars in thousands)
  
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving
Loans
    
Total
  
Construction and land development
                                                
Pass
  
$
27,785
    
$
34,339
    
$
24,879
    
$
3,399
    
$
301
    
$
419
    
$
1,630
    
$
92,752
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
117
      
1,274
      
-
      
-
      
-
      
1,391
  
Total construction and land development
  
$
27,785
    
$
34,339
    
$
24,996
    
$
4,673
    
$
301
    
$
419
    
$
1,630
    
$
94,143
  
                                                                 
Commercial real estate - owner occupied
                                                                
Pass
  
$
7,352
    
$
34,082
    
$
21,805
    
$
13,859
    
$
10,899
    
$
64,449
    
$
5,247
    
$
157,693
  
OAEM
    
-
      
-
      
-
      
-
      
237
      
4,396
      
285
      
4,918
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total commercial real estate - owner occupied
  
$
7,352
    
$
34,082
    
$
21,805
    
$
13,859
    
$
11,136
    
$
68,845
    
$
5,532
    
$
162,611
  
                                                                 
Commercial real estate - non-owner occupied
                                                                
Pass
  
$
26,999
    
$
53,484
    
$
97,508
    
$
39,035
    
$
11,419
    
$
48,479
    
$
2,259
    
$
279,183
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total commercial real estate - non-owner occupied
  
$
26,999
    
$
53,484
    
$
97,508
    
$
39,035
    
$
11,419
    
$
48,479
    
$
2,259
    
$
279,183
  
                                                                 
Commercial and industrial
                                                                
Pass
  
$
15,350
    
$
26,931
    
$
5,126
    
$
2,441
    
$
2,302
    
$
7,174
    
$
13,620
    
$
72,944
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
335
      
-
      
335
  
Total commercial and industrial
  
$
15,350
    
$
26,931
    
$
5,126
    
$
2,441
    
$
2,302
    
$
7,509
    
$
13,620
    
$
73,279
  
                                                                 
Multifamily real estate
                                                                
Pass
  
$
9,699
    
$
3,502
    
$
2,168
    
$
612
    
$
5,991
    
$
9,188
    
$
653
    
$
31,813
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total multifamily real estate
  
$
9,699
    
$
3,502
    
$
2,168
    
$
612
    
$
5,991
    
$
9,188
    
$
653
    
$
31,813
  
                                                                 
Residential 1-4 family
                                                                
Pass
  
$
23,298
    
$
38,752
    
$
40,529
    
$
26,889
    
$
13,286
    
$
53,167
    
$
51,824
    
$
247,745
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
350
      
47
      
145
      
-
      
542
  
Total residential 1-4 family
  
$
23,298
    
$
38,752
    
$
40,529
    
$
27,239
    
$
13,333
    
$
53,312
    
$
51,824
    
$
248,287
  
                                                                 
Consumer - automobile
                                                                
Pass
  
$
49,881
    
$
92,976
    
$
14,922
    
$
4,932
    
$
2,029
    
$
5,897
    
$
-
    
$
170,637
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total consumer - automobile
  
$
49,881
    
$
92,976
    
$
14,922
    
$
4,932
    
$
2,029
    
$
5,897
    
$
-
    
$
170,637
  
                                                                 
Consumer - other
                                                                
Pass
  
$
294
    
$
630
    
$
424
    
$
125
    
$
14
    
$
16,505
    
$
2,317
    
$
20,309
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total consumer - other
  
$
294
    
$
630
    
$
424
    
$
125
    
$
14
    
$
16,505
    
$
2,317
    
$
20,309
  
                                                                 
Other
                                                                
Pass
  
$
1,121
    
$
-
    
$
-
    
$
-
    
$
-
    
$
1,295
    
$
-
    
$
2,416
  
OAEM
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total other
  
$
1,121
    
$
-
    
$
-
    
$
-
    
$
-
    
$
1,295
    
$
-
    
$
2,416
  
                                                                 
Total loans
                                                                
Pass
  
$
161,779
    
$
284,696
    
$
207,361
    
$
91,292
    
$
46,241
    
$
206,573
    
$
77,550
    
$
1,075,492
  
OAEM
    
-
      
-
      
-
      
-
      
237
      
4,396
      
285
      
4,918
  
Substandard
    
-
      
-
      
117
      
1,624
      
47
      
480
      
-
      
2,268
  
Total loans
  
$
161,779
    
$
284,696
    
$
207,478
    
$
92,916
    
$
46,525
    
$
211,449
    
$
77,835
    
$
1,082,678
  



The following table details the current period gross charge-offs of loans by year of origination as of September 30, 2023:


   
September 30, 2023
  
   
Current Period Charge-offs by Origination Year
              
(dollars in thousands)
  
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving
Loans
Amortized
Cost Basis
    
Total
  
Commercial and industrial
   $
-     $
140     $
15     $
4     $
-     $
-     $
-     $
159  
Consumer - automobile
    
9
      
382
      
267
      
68
      
18
      
51
      
-
      
795
  
Consumer - other
    
-
      
-
      
5
      
-
      
3
      
10
      
-
      
18
  
Other (1)
    
206
      
22
      
-
      
-
      
-
      
-
      
-
      
228
  
Total
  
$
215
    
$
544
    
$
287
    
$
72
    
$
21
    
$
61
    
$
-
    
$
1,200
  
(1)
Gross charge-offs of other loans for the first nine months ended September 30, 2023 included $206 thousand of demand deposit overdrafts that originated in 2023.
The following tables present credit quality exposures by internally assigned risk ratings as of December 31, 2022:


Credit Quality Information
            As of December 31, 2022  
(dollars in thousands)
  
Pass
    
OAEM
    
Substandard
    
Total
  
Mortgage loans on real estate:
                        
Residential 1-4 family
  
$
169,094
    
$
 -    
$
 154    
$
 169,248  
Commercial - owner occupied
    
184,301
       285       -       184,586  
Commercial - non-owner occupied
    
245,277
       -       -       245,277  
Multifamily
    
26,675
       -       -       26,675  
Construction
    
76,999
       -       945       77,944  
Second mortgages
    
8,828
       -       -       8,828  
Equity lines of credit
    
54,340
       -       -       54,340  
Total mortgage loans on real estate
  
$
765,514
    
$
 285    
$
 1,099    
$
 766,898  
Commercial and industrial loans
    
72,434
       -       144       72,578  
Consumer automobile loans
    
162,738
       -       280       163,018  
Other consumer loans
    
22,251
       -       -       22,251  
Other
    
2,340
       -       -       2,340  
Total
  
$
1,025,277
    
$
 285    
$
 1,523    
$
 1,027,085  
Impaired Loans by Class
As of December 31, 2022, the Company measured the amount of impairment by evaluating loans either in their collective homogenous pools or individually. The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the period presented. The average balances are calculated based on daily average balances.
Impaired Loans by Class
                           
For the Year Ended
  
   
As of December 31, 2022
    
December 31, 2022
  
(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
  
$
285
    
$
44
    
$
235
    
$
21
    
$
282
    
$
7
  
Commercial
    
430
      
55
      
358
      
3
      
420
      
-
  
Construction
    
1,321
      
829
      
191
      
6
      
1,208
      
3
  
Total mortgage loans on real estate
    
2,036
      
928
      
784
      
30
      
1,910
      
10
  
Commercial and industrial loans
    
144
      
144
      
-
      
-
      
144
      
5
  
Total
  
$
2,180
    
$
1,072
    
$
784
    
$
30
    
$
2,054
    
$
15