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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2020

The composition of loans at September 30, 2020 and December 31, 2019 was as follows:

	September 30,			December 31,
	2020			2019
	(in thousands)
Mortgage loans on real estate:
Construction and land development	$	47,243		$	42,561
Secured by farmland		15,745			13,917
Secured by 1-4 family residential properties		247,114			219,580
Multifamily		21,583			14,415
Commercial		312,448			286,600
Commercial and industrial loans		134,233			46,543
Consumer installment loans		16,166			9,541
All other loans		10,947			12,050
Total loans	$	805,479		$	645,207
Net deferred loan (costs) fees		222			(447	)
Allowance for loan losses		(6,661	)		(4,973	)
	$	799,040		$	639,787

Changes In Allowance For Loan Losses

Changes in the allowance for loan losses for the nine months ended September 30, 2020 and 2019 and the year ended December 31, 2019 were as follows:

	Nine Months Ended			Year Ended			Nine Months Ended
	September 30,			December 31,			September 30,
	2020			2019			2019
				(in thousands)
Balance, beginning	$	4,973		$	5,456		$	5,456
Provision charged to operating expense		755			629			567
Recoveries added to the allowance		1,097			201			150
Loan losses charged to the allowance		(164	)		(1,313	)		(1,282	)
Balance, ending	$	6,661		$	4,973		$	4,891

Nonaccrual And Past Due Loans By Class

Nonaccrual and past due loans by class at September 30, 2020 and December 31, 2019 were as follows:

	September 30, 2020
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Days Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	134,233	$	134,233	$	—	$	—
Commercial Real Estate:
Owner Occupied		50		157		—		207		163,247		163,454		—		1,253
Non-owner occupied		—		125		—		125		148,869		148,994		—		1,782
Construction and Farmland:
Residential		—		—		—		—		11,356		11,356		—		—
Commercial		—		—		187		187		51,445		51,632		—		187
Consumer:
Installment		1		—		—		1		16,165		16,166		—		6
Residential:
Equity Lines		—		12		—		12		30,513		30,525		—		47
Single family		177		322		442		941		215,648		216,589		—		1,011
Multifamily		—		—		—		—		21,583		21,583		—		—
All Other Loans		—		—		—		—		10,947		10,947		—		—
Total	$	228	$	616	$	629	$	1,473	$	804,006	$	805,479	$	—	$	4,286

	December 31, 2019
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	47	$	—	$	32	$	79	$	46,464	$	46,543	$	—	$	32
Commercial Real Estate:
Owner Occupied		1,078		—		—		1,078		147,879		148,957		—		320
Non-owner occupied		—		—		—		—		137,643		137,643		—		329
Construction and Farmland:
Residential		—		—		—		—		7,867		7,867		—		—
Commercial		—		—		187		187		48,424		48,611		—		187
Consumer:
Installment		55		6		—		61		9,480		9,541		—		8
Residential:
Equity Lines		121		—		—		121		33,127		33,248		—		65
Single family		471		541		1,251		2,263		184,069		186,332		—		1,244
Multifamily		—		—		—		—		14,415		14,415		—		—
All Other Loans		—		—		—		—		12,050		12,050		—		—
Total	$	1,772	$	547	$	1,470	$	3,789	$	641,418	$	645,207	$	—	$	2,185

Allowance For Loan Losses By Segment

Allowance for loan losses by segment at September 30, 2020 and December 31, 2019 were as follows:

	As of and For the Nine Months Ended
	September 30, 2020
	(in thousands)
	Construction and Farmland		Residential Real Estate		Commercial Real Estate			Commercial			Consumer			All Other Loans			Unallocated			Total
Allowance for credit losses:
Beginning Balance	$	446	$	1,601	$	1,991		$	565		$	54		$	120		$	196		$	4,973
Charge-Offs		—		—		—			(49	)		(83	)		(32	)		—			(164	)
Recoveries		5		257		302			496			30			7			—			1,097
Provision		755		315		(763	)		220			213			129			(114	)		755
Ending balance	$	1,206	$	2,173	$	1,530		$	1,232		$	214		$	224		$	82		$	6,661
Ending balance: Individually evaluated for impairment	$	102	$	152	$	76		$	—		$	—		$	—		$	—		$	330
Ending balance: collectively evaluated for impairment	$	1,104	$	2,021	$	1,454		$	1,232		$	214		$	224		$	82		$	6,331
Loans:
Ending balance	$	62,988	$	268,697	$	312,448		$	134,233		$	16,166		$	10,947		$	—		$	805,479
Ending balance individually evaluated for impairment	$	226	$	3,906	$	3,034		$	165		$	19		$	—		$	—		$	7,350
Ending balance collectively evaluated for impairment	$	62,762	$	264,791	$	309,414		$	134,068		$	16,147		$	10,947		$	—		$	798,129

	December 31, 2019
	(in thousands)
	Construction and Farmland			Residential Real Estate			Commercial Real Estate			Commercial			Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	583		$	1,788		$	1,988		$	919		$	53		$	97		$	28	$	5,456
Charge-Offs		—			(406	)		—			(850	)		(5	)		(52	)		—		(1,313	)
Recoveries		8			72			20			52			26			23			—		201
Provision		(145	)		147			(17	)		444			(20	)		52			168		629
Ending balance	$	446		$	1,601		$	1,991		$	565		$	54		$	120		$	196	$	4,973
Ending balance: Individually evaluated for impairment	$	100		$	51		$	149		$	—		$	—		$	—		$	—	$	300
Ending balance: collectively evaluated for impairment	$	346		$	1,550		$	1,842		$	565		$	54		$	120		$	196	$	4,673
Loans:
Ending balance	$	56,478		$	233,995		$	286,600		$	46,543		$	9,541		$	12,050		$	—	$	645,207
Ending balance individually evaluated for impairment	$	433		$	3,681		$	3,053		$	228		$	8		$	—		$	—	$	7,403
Ending balance collectively evaluated for impairment	$	56,045		$	230,314		$	283,547		$	46,315		$	9,533		$	12,050		$	—	$	637,804

Schedule of loan loss provision by change in allowance methodology

The following table represents the effect on the loan loss provision for the nine months ended September 30, 2020 as a result of the change in allowance methodology from that used in prior periods.

(in thousands)	Calculated Provision (Recovery) Based on Current Methodology			Calculation Provision (Recovery) Based on Prior Methodology			Difference
Portfolio Segment:
Construction and Farmland	$	755		$	89		$	666
Residential Real Estate		315			363			(48	)
Commercial Real Estate		(763	)		197			(960	)
Commercial		220			(371	)		591
Consumer		213			126			87
All Other Loans		129			24			105
Total	$	869		$	428		$	441

Impaired Loans By Class

Impaired loans by class as of and for the periods ended September 30, 2020 and December 31, 2019 were as follows:

	As of
	September 30, 2020
	(in thousands)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	274	$	165	$	—	$	197	$	13
Commercial Real Estate:
Owner Occupied		1,295		1,252		—		1,279		18
Non-owner occupied		285		197		—		232		—
Construction and Farmland:
Residential		—		—		—		—		—
Commercial		47		39		—		42		2
Consumer:
Installment		20		19		—		23		1
Residential
Equity lines		273		47		—		49		—
Single family		2,525		2,279		—		2,396		50
Multifamily		—		—		—		—		—
Other Loans		—		—		—		—		—
	$	4,719	$	3,998	$	—	$	4,218	$	84
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate:
Owner Occupied		—		—		—		—		—
Non-owner occupied		1,596		1,584		76		1,585		20
Construction and Farmland:
Residential		—		—		—		—		—
Commercial		187		187		102		187		—
Consumer:
Installment		—		—		—		—		—
Residential
Equity lines		—		—		—		—		—
Single family		1,613		1,596		152		1,606		28
Multifamily		—		—		—		—		—
Other Loans		—		—		—		—		—
	$	3,396	$	3,367	$	330	$	3,378	$	48
Total:
Commercial	$	274	$	165	$	—	$	197	$	13
Commercial Real Estate		3,176		3,033		76		3,096		38
Construction and Farmland		234		226		102		229		2
Consumer		20		19		—		23		1
Residential		4,411		3,922		152		4,051		78
Other		—		—		—		—		—
Total	$	8,115	$	7,365	$	330	$	7,596	$	132

(1)	Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs. Accrued interest and net deferred loan fees or costs totaled $15 thousand at September 30, 2020.

	As of
	December 31, 2019
	(in thousands)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	364	$	228	$	—	$	269	$	21
Commercial Real Estate:
Owner Occupied		369		356		—		358		4
Non-owner occupied		407		329		—		335		—
Construction and Farmland:
Residential		—		—		—		—		—
Commercial		301		246		—		263		25
Consumer:
Installment		9		8		—		9		—
Residential:
Equity lines		276		65		—		68		1
Single family		2,854		2,435		—		2,583		80
Multifamily		366		367		—		375		21
Other Loans		—		—		—		—		—
	$	4,946	$	4,034	$	—	$	4,260	$	152
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	—
Commercial Real Estate:
Owner Occupied		—		—		—		—		—
Non-owner occupied		2,369		2,377		149		2,405		103
Construction and Farmland:
Residential		—		—		—		—		—
Commercial		187		187		100		187		8
Consumer:
Installment		—		—		—		—		—
Residential:
Equity lines		—		—		—		—		—
Single family		879		822		51		833		38
Multifamily		—		—		—		—		—
Other Loans		—		—		—		—		—
	$	3,435	$	3,386	$	300	$	3,425	$	149
Total:
Commercial	$	364	$	228	$	—	$	269	$	21
Commercial Real Estate		3,145		3,062		149		3,098		107
Construction and Farmland		488		433		100		450		33
Consumer		9		8		—		9		—
Residential		4,375		3,689		51		3,859		140
Other		—		—		—		—		—
Total	$	8,381	$	7,420	$	300	$	7,685	$	301

(1)	Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs. Accrued interest and net deferred loan fees or costs totaled $17 thousand at December 31, 2019.

Credit Quality Information By Class

Credit quality information by class at September 30, 2020 and December 31, 2019 was as follows:

	As of
	September 30, 2020
	(in thousands)
INTERNAL RISK RATING GRADES	Pass		Pass Monitored		Special Mention		Substandard		Doubtful		Loss		Total
Commercial - Non Real Estate:
Commercial & Industrial	$	129,431	$	4,569	$	216	$	17	$	—	$	—	$	134,233
Commercial Real Estate:
Owner Occupied		124,878		29,265		8,059		1,252		—		—		163,454
Non-owner occupied		85,311		42,235		19,667		1,781		—		—		148,994
Construction and Farmland:
Residential		9,257		2,099		—		—		—		—		11,356
Commercial		19,301		27,477		4,571		283		—		—		51,632
Residential:
Equity Lines		30,353		125		—		37		10		—		30,525
Single family		193,335		17,859		2,357		2,908		130		—		216,589
Multifamily		14,682		4,935		1,966		—		—		—		21,583
All other loans		8,586		—		2,361		—		—		—		10,947
Total	$	615,134	$	128,564	$	39,197	$	6,278	$	140	$	—	$	789,313

		Performing				Nonperforming
Consumer Credit Exposure by Payment Activity		$	16,165			$	1

	As of
	December 31, 2019
	(in thousands)
INTERNAL RISK RATING GRADES	Pass		Pass Monitored		Special Mention		Substandard		Doubtful		Loss		Total
Commercial - Non Real Estate:
Commercial & Industrial	$	42,578	$	3,815	$	105	$	45	$	—	$	—	$	46,543
Commercial Real Estate:
Owner Occupied		103,958		38,989		5,654		356		—		—		148,957
Non-owner occupied		103,909		25,939		5,866		1,929		—		—		137,643
Construction and Farm land:
Residential		5,094		2,773		—		—		—		—		7,867
Commercial		17,018		30,661		437		495		—		—		48,611
Residential:
Equity Lines		32,295		889		—		42		22		—		33,248
Single family		162,195		19,427		2,347		2,225		138		—		186,332
Multifamily		11,714		1,337		998		366		—		—		14,415
All other loans		11,963		40		47		—		—		—		12,050
Total	$	490,724	$	123,870	$	15,454	$	5,458	$	160	$	—	$	635,666

		Performing				Nonperforming
Consumer Credit Exposure by Payment Activity			9,480				61