Loans and the Allowance for Credit Losses on Loans (Tables)

6 Months Ended

Jun. 30, 2024

Loans and the Allowance for Credit Losses on Loans [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:

	June 30,		December 31,
(dollars in thousands)	2024		2023
Mortgage loans on real estate:
Residential 1-4 family	$	187,071	$	188,517
Commercial - owner occupied		143,185		156,466
Commercial - non-owner occupied		309,317		285,250
Multifamily		38,645		29,207
Construction and land development		90,184		107,179
Second mortgages		9,996		10,148
Equity lines of credit		59,096		55,981
Total mortgage loans on real estate		837,494		832,748
Commercial and industrial loans		56,635		64,112
Consumer automobile loans		138,912		160,437
Other consumer loans		19,573		19,718
Other ⁽¹⁾		1,988		3,237
Total loans, net of deferred fees ⁽²⁾		1,054,602		1,080,252
Less: Allowance for credit losses on loans		11,828		12,206
Loans, net of allowance and deferred fees ⁽²⁾	$	1,042,774	$	1,068,046

(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 $394 thousand and $244 thousand at June 30, 2024 and December 31, 2023, respectively.

(2)	Net deferred loan fees totaled $1.1 million on June 30, 2024 and $1.2 million on December 31, 2023.

Past Due Loans

The following tables show the aging of the Company’s loan portfolio, by class, as of June 30, 2024 and December 31, 2023.

Age Analysis of Past Due Loans as of June 30, 2024

(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	$	-	$	28	$	42	$	-	$	187,001	$	187,071
Commercial - owner occupied		-		-		-		-		143,185		143,185
Commercial - non-owner occupied		-		-		-		-		309,317		309,317
Multifamily		-		-		-		-		38,645		38,645
Construction and land development		-		-		-		-		90,184		90,184
Second mortgages		-		52		-		-		9,944		9,996
Equity lines of credit		552		-		-		44		58,500		59,096
Total mortgage loans on real estate	$	552	$	80	$	42	$	44	$	836,776	$	837,494
Commercial and industrial loans		861		322		-		-		55,452		56,635
Consumer automobile loans		2,057		654		371		-		135,830		138,912
Other consumer loans		236		127		31		-		19,179		19,573
Other		33		2		3		-		1,950		1,988
Total	$	3,739	$	1,185	$	447	$	44	$	1,049,187	$	1,054,602

Age Analysis of Past Due Loans as of December 31, 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	$	1,194	$	-	$	368	$	142	$	186,813	$	188,517
Commercial - owner occupied		100		-		322		-		156,044		156,466
Commercial - non-owner occupied		-		896		-		-		284,354		285,250
Multifamily		-		-		-		-		29,207		29,207
Construction and land development		-		-		-		-		107,179		107,179
Second mortgages		160		6		-		-		9,982		10,148
Equity lines of credit		205		-		-		46		55,730		55,981
Total mortgage loans on real estate	$	1,659	$	902	$	690	$	188	$	829,309	$	832,748
Commercial and industrial loans		527		427		306		-		62,852		64,112
Consumer automobile loans		3,254		706		661		-		155,816		160,437
Other consumer loans		634		264		123		-		18,697		19,718
Other		29		-		-		-		3,208		3,237
Total	$	6,103	$	2,299	$	1,780	$	188	$	1,069,882	$	1,080,252

(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

The following table shows the Company’s amortized cost basis of loans on nonaccrual status as of June 30, 2024 and December 31, 2023. All nonaccrual loans had an ACLL as of June 30, 2024 and December 31, 2023.

	Nonaccrual
(dollars in thousands)	June 30, 2024		December 31, 2023
Mortgage loans on real estate:
Residential 1-4 family	$	-	$	142
Commercial - non-owner occupied		-		-
Second mortgages		-		-
Equity lines of credit		44		46
Total mortgage loans on real estate		44		188
Commercial and industrial loans		-		-
Consumer automobile loans		-		-
Other consumer loans		-		-
Total	$	44	$	188

Allowance for Credit Losses by Segment

The following tables presents the activity in the ACLL by portfolio class for the six months ended June 30, 2024 and June 30, 2023.

Allowance for Credit Losses and Recorded Investment in Loans

For the Six Months ended June 30, 2024
(dollars in thousands)	Commercial and Industrial			Real Estate Construction and Land Development			Real Estate - Mortgage ⁽¹⁾		Real Estate - Commercial ⁽²⁾			Consumer ⁽³⁾			Other			Unallocated		Total
Allowance for credit losses on loans:
Balance, beginning	$	573		$	982		$	2,904	$	5,742		$	1,827		$	178		$	-	$	12,206
Charge-offs		(117	)		-			-		-			(756	)		(104	)		-		(977	)
Recoveries		6			-			20		11			267			26			-		330
Provision for loan losses		17			(129	)		58		(58	)		372			9			-		269
Ending Balance	$	479		$	853		$	2,982	$	5,695		$	1,710		$	109		$	-	$	11,828

For the Six Months Ended June 30, 2023

(dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾		Real Estate - Commercial ⁽²⁾		Consumer ⁽³⁾			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		(51	)		-		-		-		(534	)		(169	)		-			(754	)
Recoveries		12			-		20		-		312			21			-			365
Provision for loan losses		43			136		198		162		112			228			(6	)		873
Ending Balance	$	666		$	707	$	2,880	$	5,709	$	1,590		$	99		$	-		$	11,651

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

(2)	The real estate-commercial segment included commercial-owner occupied and commercial non-owner occupied.

(3)	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 June 30,				Six Months Ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Provision for credit losses:
Provision for loans	$	191	$	310	$	269	$	873
Provison for (recovery of) unfunded commitments		70		51		72		(136	)
Total	$	261	$	361	$	341	$	737

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:

	June 30, 2024
	Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
Construction and land development
Pass	$	15,683	$	35,372	$	29,170	$	5,149	$	2,523	$	649	$	1,638	$	90,184
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total construction and land development	$	15,683	$	35,372	$	29,170	$	5,149	$	2,523	$	649	$	1,638	$	90,184

Commercial real estate - owner occupied
Pass	$	5,262	$	7,989	$	28,903	$	18,073	$	11,163	$	69,715	$	1,274	$	142,379
OAEM		-		-		-		-		-		56		750		806
Substandard		-		-		-		-		-		-		-		-
Total commercial real estate - owner occupied	$	5,262	$	7,989	$	28,903	$	18,073	$	11,163	$	69,771	$	2,024	$	143,185

Commercial real estate - non-owner occupied
Pass	$	3,259	$	33,843	$	64,109	$	116,726	$	40,179	$	49,548	$	873	$	308,537
OAEM		-		-		-		-		-		780		-		780
Substandard		-		-		-		-		-		-		-		-
Total commercial real estate - non-owner occupied	$	3,259	$	33,843	$	64,109	$	116,726	$	40,179	$	50,328	$	873	$	309,317

Commercial and industrial
Pass	$	5,432	$	13,417	$	16,147	$	3,639	$	1,247	$	5,055	$	11,698	$	56,635
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial and industrial	$	5,432	$	13,417	$	16,147	$	3,639	$	1,247	$	5,055	$	11,698	$	56,635

Multifamily real estate
Pass	$	-	$	7,663	$	1,363	$	2,116	$	592	$	22,998	$	3,913	$	38,645
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total multifamily real estate	$	-	$	7,663	$	1,363	$	2,116	$	592	$	22,998	$	3,913	$	38,645

Residential 1-4 family
Pass	$	4,874	$	32,469	$	41,099	$	33,756	$	25,445	$	60,409	$	57,592	$	255,644
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		339		180		-		519
Total residential 1-4 family	$	4,874	$	32,469	$	41,099	$	33,756	$	25,784	$	60,589	$	57,592	$	256,163

Consumer - automobile
Pass	$	10,721	$	42,895	$	68,183	$	9,739	$	2,948	$	4,426	$	-	$	138,912
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer - automobile	$	10,721	$	42,895	$	68,183	$	9,739	$	2,948	$	4,426	$	-	$	138,912

Consumer - other
Pass	$	468	$	248	$	445	$	280	$	45	$	15,363	$	2,724	$	19,573
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer - other	$	468	$	248	$	445	$	280	$	45	$	15,363	$	2,724	$	19,573

Other
Pass	$	90	$	-	$	-	$	292	$	-	$	1,606	$	-	$	1,988
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total other	$	90	$	-	$	-	$	292	$	-	$	1,606	$	-	$	1,988

Total loans
Pass	$	45,789	$	173,896	$	249,419	$	189,770	$	84,142	$	229,769	$	79,712	$	1,052,497
OAEM		-		-		-		-		-		836		750		1,586
Substandard		-		-		-		-		339		180		-		519
Total loans	$	45,789	$	173,896	$	249,419	$	189,770	$	84,481	$	230,785	$	80,462	$	1,054,602

	December 31, 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	$	40,168	$	36,581	$	25,770	$	3,630	$	297	$	285	$	448	$	107,179
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total construction and land development	$	40,168	$	36,581	$	25,770	$	3,630	$	297	$	285	$	448	$	107,179

Commercial real estate - owner occupied
Pass	$	10,145	$	33,720	$	21,058	$	13,708	$	12,025	$	56,978	$	5,680	$	153,314
OAEM		-		-		-		-		77		2,985		-		3,062
Substandard		-		-		-		-		-		90		-		90
Total commercial real estate - owner occupied	$	10,145	$	33,720	$	21,058	$	13,708	$	12,102	$	60,053	$	5,680	$	156,466

Commercial real estate - non-owner occupied
Pass	$	31,539	$	53,217	$	96,755	$	38,704	$	10,517	$	51,451	$	2,263	$	284,446
OAEM		-		-		-		-		804		-		-		804
Substandard		-		-		-		-		-		-		-		-
Total commercial real estate - non-owner occupied	$	31,539	$	53,217	$	96,755	$	38,704	$	11,321	$	51,451	$	2,263	$	285,250

Commercial and industrial
Pass	$	18,248	$	21,698	$	4,300	$	1,691	$	2,192	$	2,075	$	13,908	$	64,112
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total commercial and industrial	$	18,248	$	21,698	$	4,300	$	1,691	$	2,192	$	2,075	$	13,908	$	64,112

Multifamily real estate
Pass	$	6,568	$	3,841	$	2,151	$	605	$	5,955	$	9,005	$	1,082	$	29,207
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total multifamily real estate	$	6,568	$	3,841	$	2,151	$	605	$	5,955	$	9,005	$	1,082	$	29,207

Residential 1-4 family
Pass	$	27,497	$	41,062	$	39,937	$	26,368	$	13,009	$	52,148	$	54,087	$	254,108
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		350		46		142		-		538
Total residential 1-4 family	$	27,497	$	41,062	$	39,937	$	26,718	$	13,055	$	52,290	$	54,087	$	254,646

Consumer - automobile
Pass	$	52,750	$	83,885	$	13,184	$	4,152	$	1,618	$	4,848	$	-	$	160,437
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer - automobile	$	52,750	$	83,885	$	13,184	$	4,152	$	1,618	$	4,848	$	-	$	160,437

Consumer - other
Pass	$	323	$	765	$	330	$	109	$	11	$	16,089	$	2,091	$	19,718
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total consumer - other	$	323	$	765	$	330	$	109	$	11	$	16,089	$	2,091	$	19,718

Other
Pass	$	1,620	$	-	$	292	$	-	$	-	$	1,325	$	-	$	3,237
OAEM		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total other	$	1,620	$	-	$	292	$	-	$	-	$	1,325	$	-	$	3,237

Total loans
Pass	$	188,858	$	274,769	$	203,777	$	88,967	$	45,624	$	194,204	$	79,559	$	1,075,758
OAEM		-		-		-		-		881		2,985		-		3,866
Substandard		-		-		-		350		46		232		-		628
Total loans	$	188,858	$	274,769	$	203,777	$	89,317	$	46,551	$	197,421	$	79,559	$	1,080,252

The following tables detail the current period gross charge-offs of loans by year of origination for the six months ended June 30, 2024 and June 30, 2023:

	June 30, 2024
	Current Period Charge-offs by Origination Year
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial and industrial	$	-	$	-	$	108	$	-	$	-	$	9	$	-	$	117
Consumer - automobile		-		151		438		131		17		15		-		752
Consumer - other		-		-		-		-		-		4		-		4
Other ⁽¹⁾		104		-		-		-		-		-		-		104
Total	$	104	$	151	$	546	$	131	$	17	$	28	$	-	$	977

(1)	Gross charge-offs of other loans for the six months ended June 30, 2024 included $104 thousand of demand deposit overdrafts that originated in 2024.

	June 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	$	-	$	51	$	-	$	-	$	-	$	-	$	-	$	51
Consumer - automobile		-		265		142		45		18		49		-		519
Consumer - other		-		-		5		-		3		7		-		15
Other ⁽¹⁾		147		22		-		-		-		-		-		169
Total	$	147	$	338	$	147	$	45	$	21	$	56	$	-	$	754

(1)	Gross charge-offs of other loans for the six months ended June 30, 2023 included $147 thousand of demand deposit overdrafts that originated in 2023.