Note 5 - Allowances for Loan Losses

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Allowance for Credit Losses [Text Block]

5.

Allowances for Loan Losses

The following tables provide the activity in and ending balances of the allowance for loan losses by loan portfolio class at and for the years ended

December 31, 2019,

2018,

and

2017:

(dollars in thousands)	Commercial Real Estate			Construction and Land Development			Commercial and Industrial			Owner Occupied Real Estate			Consumer and Other			Residential Mortgage		Unallocated			Total
Year ended December, 201 9
Allowance for loan losses:
Beginning balance:	$	2,462		$	777		$	1,754		$	2,033		$	577		$	894	$	118		$	8,615
Charge-offs		-			-			(1,356	)		-			(126	)		-		-			(1,482	)
Recoveries		-			-			217			2			9			-		-			228
Provisions		581			(89	)		316			257			130			811		(101	)		1,905
Ending balance	$	3,043		$	688		$	931		$	2,292		$	590		$	1,705	$	17		$	9,266
Year ended December, 201 8
Allowance for loan losses:
Beginning Balance:	$	3,774		$	725		$	1,317		$	1,737		$	573		$	392	$	81		$	8,599
Charge-offs		(1,603	)		-			(151	)		(465	)		(219	)		-		-			(2,438	)
Recoveries		50			-			81			20			3			-		-			154
Provisions (credits)		241			52			507			741			220			502		37			2,300
Ending balance	$	2,462		$	777		$	1,754		$	2,033		$	577		$	894	$	118		$	8,615
Year ended December, 201 7
Allowance for loan losses:
Beginning Balance:	$	3,254		$	557		$	2,884		$	1,382		$	588		$	58	$	432		$	9,155
Charge-offs		-			-			(1,366	)		(157	)		(53	)		-		-			(1,576	)
Recoveries		54			-			64			-			2			-		-			120
Provisions (credits)		466			168			(265	)		512			36			334		(351	)		900
Ending balance	$	3,774		$	725		$	1,317		$	1,737		$	573		$	392	$	81		$	8,599

     The following tables provide a summary of the allowance for loan losses and balance of loans receivable by loan class and by impairment method as of

December 31, 2019

and

2018:

(dollars in thousands)	Commercial Real Estate		Construction and Land Development		Commercial and Industrial		Owner Occupied Real Estate		Consumer and Other		Residential Mortgage		Unallocated		Total
December 31, 201 9
Allowance for loan losses:
Individually evaluated for impairment	$	265	$	-	$	23	$	268	$	-	$	-	$	-	$	556
Collectively evaluated for impairment		2,778		688		908		2,024		590		1,705		17		8,710
Total allowance for loan losses	$	3,043	$	688	$	931	$	2,292	$	590	$	1,705	$	17	$	9,266
Loans receivable:
Loans evaluated individually	$	10,331	$	-	$	3,087	$	3,634	$	1,062	$	768	$	-	$	18,882
Loans evaluated collectively		603,300		121,395		220,819		420,766		100,258		262,676		-		1,729,214
Total loans receivable	$	613,631	$	121,395	$	223,906	$	424,400	$	101,320	$	263,444	$	-	$	1,748,096

(dollars in thousands)	Commercial Real Estate		Construction and Land Development		Commercial and Industrial		Owner Occupied Real Estate		Consumer and Other		Residential Mortgage		Unallocated		Total
December 31, 201 8
Allowance for loan losses:
Individually evaluated for impairment	$	295	$	-	$	867	$	217	$	94	$	-	$	-	$	1,473
Collectively evaluated for impairment		2,167		777		887		1,816		483		894		118		7,142
Total allowance for loan losses	$	2,462	$	777	$	1,754	$	2,033	$	577	$	894	$	118	$	8,615
Loans receivable:
Loans evaluated individually	$	10,947	$	-	$	3,662	$	2,560	$	861	$	-	$	-	$	18,030
Loans evaluated collectively		504,791		121,042		196,761		365,335		90,291		140,364		-		1,418,584
Total loans receivable	$	515,738	$	121,042	$	200,423	$	367,895	$	91,152	$	140,364	$	-	$	1,436,614

A loan is considered impaired, when based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan.  Impaired loans include nonperforming loans, but also include internally classified accruing loans. The following table summarizes information with regard to impaired loans by loan portfolio class as of

December 31, 2019

and

2018:

	December 31, 201 9						December 31, 201 8
( dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial real estate	$	6,186	$	6,192	$	-	$	6,332	$	6,337	$	-
Construction and land development		-		-		-		-		-		-
Commercial and industrial		2,719		2,989		-		1,655		5,418		-
Owner occupied real estate		2,127		2,275		-		1,905		2,013		-
Consumer and other		1,062		1,375		-		710		1,082		-
Residential mortgage		768		768		-		-		-		-
Total	$	12,862	$	13,599	$	-	$	10,602	$	14,850	$	-
With an allowance recorded:
Commercial real estate	$	4,145	$	4,667	$	265	$	4,615	$	5,498	$	295
Construction and land development		-		-		-		-		-		-
Commercial and industrial		368		383		23		2,007		2,195		867
Owner occupied real estate		1,507		1,521		268		655		704		217
Consumer and other		-		-		-		151		158		94
Residential mortgage		-		-		-		-		-		-
Total	$	6,020	$	6,571	$	556	$	7,428	$	8,555	$	1,473
Total:
Commercial real estate	$	10,331	$	10,859	$	265	$	10,947	$	11,835	$	295
Construction and land development		-		-		-		-		-		-
Commercial and industrial		3,087		3,372		23		3,662		7,613		867
Owner occupied real estate		3,634		3,796		268		2,560		2,717		217
Consumer and other		1,062		1,375		-		861		1,240		94
Residential mortgage		768		768		-		-		-		-
Total	$	18,882	$	20,170	$	556	$	18,030	$	23,405	$	1,473

The following table presents additional information regarding the Company’s impaired loans for the years ended

December 31, 2019,

2018,

and

2017:

	Years Ended December 31,
	201 9				201 8				201 7
(dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	6,463	$	289	$	10,429	$	288	$	9,579	$	366
Construction and land development		-		-		-		-		-		-
Commercial and industrial		2,144		5		3,341		52		2,270		37
Owner occupied real estate		1,908		38		2,275		58		1,894		58
Consumer and other		909		20		658		21		801		21
Residential mortgage		461		2		-		-		26		1
Total	$	11,885	$	354	$	16,703	$	419	$	14,570	$	483
With an allowance recorded:
Commercial real estate	$	4,281	$	1	$	3,076	$	-	$	6,490	$	14
Construction and land development		-		-		-		-		-		-
Commercial and industrial		838		-		1,862		6		2,517		68
Owner occupied real estate		1,071		31		969		25		1,390		32
Consumer and other		30		-		191		1		420		10
Residential mortgage		-		-		-		-		-		-
Total	$	6,220	$	32	$	6,098	$	32	$	10,817	$	124
Total:
Commercial real estate	$	10,744	$	290	$	13,505	$	288	$	16,069	$	380
Construction and land development		-		-		-		-		-		-
Commercial and industrial		2,982		5		5,203		58		4,787		105
Owner occupied real estate		2,979		69		3,244		83		3,284		90
Consumer and other		939		20		849		22		1,221		31
Residential mortgage		461		2		-		-		26		1
Total	$	18,105	$	386	$	22,801	$	451	$	25,387	$	607

The total average recorded investment on the Company’s impaired loans for the years ended

December 31, 2019,

2018,

and

2017

were

$18.1

million,

$22.8

million, and

$25.4

million, respectively, and the related interest income recognized for those dates was

$386,000,

$451,000,

and

$607,000,

respectively.

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of

December 31, 2019

and

2018:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days and Accruing
At December 31, 201 9
Commercial real estate	$	-	$	313	$	4,159	$	4,472	$	609,159	$	613,631	$	-
Construction and land development		-		-		-		-		121,395		121,395		-
Commercial and industrial		-		50		3,087		3,137		220,769		223,906		-
Owner occupied real estate		-		1,219		3,337		4,556		419,844		424,400		-
Consumer and other		112		241		1,062		1,415		99,905		101,320		-
Residential mortgage		-		-		768		768		262,676		263,444		-
Total	$	112	$	1,823	$	12,413	$	14,348	$	1,733,748	$	1,748,096	$	-

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days and Accruing
At December 31, 201 8
Commercial real estate	$	339	$	921	$	4,631	$	5,891	$	509,847	$	515,738	$	-
Construction and land development		-		-		-		-		121,042		121,042		-
Commercial and industrial		280		-		3,661		3,941		196,482		200,423		-
Owner occupied real estate		-		653		1,188		1,841		366,054		367,895		-
Consumer and other		214		-		861		1,075		90,077		91,152		-
Residential mortgage		302		-		-		302		140,062		140,364		-
Total	$	1,135	$	1,574	$	10,341	$	13,050	$	1,423,564	$	1,436,614	$	-

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within our internal risk rating system as of

December 31, 2019

and

2018:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
At December 31, 201 9 :
Commercial real estate	$	609,382	$	90	$	4,159	$	-	$	613,631
Construction and land development		121,395		-		-		-		121,395
Commercial and industrial		220,819		-		3,087		-		223,906
Owner occupied real estate		418,997		1,770		3,633		-		424,400
Consumer and other		100,258		-		1,062		-		101,320
Residential mortgage		262,555		121		768		-		263,444
Total	$	1,733,406	$	1,981	$	12,709	$	-	$	1,748,096

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
At December 31, 201 8 :
Commercial real estate	$	510,186	$	921	$	4,631	$	-	$	515,738
Construction and land development		121,042		-		-		-		121,042
Commercial and industrial		196,751		10		3,382		280		200,423
Owner occupied real estate		364,032		1,303		2,560		-		367,895
Consumer and other		90,291		-		861		-		91,152
Residential mortgage		140,240		124		-		-		140,364
Total	$	1,422,542	$	2,358	$	11,434	$	280	$	1,436,614

The following table shows non-accrual loans by class as of

December 31, 2019

and

2018:

(dollars in thousands)	December 31, 201 9		December 31, 201 8
Commercial real estate	$	4,159	$	4,631
Construction and land development		-		-
Commercial and industrial		3,087		3,661
Owner occupied real estate		3,337		1,188
Consumer and other		1,062		861
Residential mortgage		768		-
Total	$	12,413	$	10,341

If these loans were performing under their original contractual rate, interest income on such loans would have increased approximately

$548,000,

$498,000,

and

$590,000,

for

2019,

2018,

and

2017,

respectively.  

Troubled Debt Restructurings

A modification to the contractual terms of a loan which results in a concession to a borrower that is experiencing financial difficulty is classified as a troubled debt restructuring (“TDR”). The concessions made in a TDR are those that would

not

otherwise be considered for a borrower or collateral with similar risk characteristics. A TDR is typically the result of efforts to minimize potential losses that

may

be incurred during loan workouts, foreclosure, or repossession of collateral at a time when collateral values are declining. Concessions include a reduction in interest rate below current market rates, a material extension of time to the loan term or amortization period, partial forgiveness of the outstanding principal balance, acceptance of interest only payments for a period of time, or a combination of any of these conditions.

The following table summarizes information with regard to outstanding troubled debt restructurings at

December 31, 2019

and

2018:

(dollars in thousands)	Number of Loans		Accrual Status		Non- Accrual Status		Total TDRs
December 31, 201 9
Commercial real estate		1	$	6,173	$	-	$	6,173
Construction and land development		-		-		-		-
Commercial and industrial		-		-		-		-
Owner occupied real estate		-		-		-		-
Consumer and other		-		-		-		-
Residential mortgage		-		-		-		-
Total		1	$	6,173	$	-	$	6,173
December 31, 201 8
Commercial real estate		1	$	6,316	$	-	$	6,316
Construction and land development		-		-		-		-
Commercial and industrial		3		-		1,224		1,224
Owner occupied real estate		1		-		242		242
Consumer and other		-		-		-		-
Residential mortgage		-		-		-		-
Total		5	$	6,316	$	1,466	$	7,782

All TDRs are considered impaired and are therefore individually evaluated for impairment in the calculation of the allowance for loan losses. Some TDRs

may

not

ultimately result in the full collection of principal and interest as restructured and could lead to potential incremental losses. These potential incremental losses would be factored into our estimate of the allowance for loan losses. The level of any subsequent defaults will likely be affected by future economic conditions.

There were

no

loan modifications made during the

twelve

months ended

December 31, 2019

and

2018

that met the criteria of a TDR.

After a loan is determined to be a TDR, we continue to track its performance under the most recent restructured terms. There were

no

TDRs that subsequently defaulted during the year ended

December 31, 2019.

There were

three

TDRs that subsequently defaulted during the year ended

December 31, 2018.

There was

one

residential mortgage in the process of foreclosure as of

December 31, 2019.

There were

no

residential mortgages in the process of foreclosure at

December 31, 2018.

There was

no

other real estate owned relating to residential real estate at

December 31, 2019

and

2018.