XML 21 R11.htm IDEA: XBRL DOCUMENT v3.20.2
LOANS
 9 Months Ended
Sep. 30, 2020
LOANS [Abstract]  
LOANS
NOTE  3 - LOANS

Major classifications of loans at September 30, 2020 and December 31, 2019 are summarized as follows:

  
2020
    
2019
  
Residential real estate
  
$
386,540
    
$
389,985
  
Multifamily real estate
    
35,905
      
36,684
  
Commercial real estate:
                
Owner occupied
    
162,108
      
164,218
  
Non-owner occupied
    
308,478
      
304,316
  
Commercial and industrial
    
91,146
      
105,079
  
SBA PPP
    
113,478
      
–
  
Consumer
    
25,420
      
29,007
  
Construction and land
    
111,221
      
136,138
  
All other
    
34,185
      
29,868
  
   
$
1,268,481
    
$
1,195,295
  

Activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2020 was as follows:

Loan Class
  
Balance
December 31, 2019
    
Provision (credit)
for loan losses
    
Loans
charged-off
    
Recoveries
    
Balance
September 30, 2020
  
                               
Residential real estate
  
$
1,711
    
$
262
    
$
(95
)
  
$
11
    
$
1,889
  
Multifamily real estate
    
1,954
      
494
      
(2,183
)
    
–
      
265
  
Commercial real estate:
                                        
Owner occupied
    
2,441
      
637
      
(566
)
    
7
      
2,519
  
Non-owner occupied
    
3,184
      
1,562
      
(226
)
    
3
      
4,523
  
Commercial and industrial
    
1,767
      
(162
)
    
(5
)
    
45
      
1,645
  
Consumer
    
281
      
66
      
(155
)
    
47
      
239
  
Construction and land
    
1,724
      
(615
)
    
(4
)
    
55
      
1,160
  
All other
    
480
      
111
      
(135
)
    
77
      
533
  
Total
  
$
13,542
    
$
2,355
    
$
(3,369
)
  
$
245
    
$
12,773
  

Activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2019 was as follows:

Loan Class
  
Balance
December 31, 2018
    
Provision (credit)
for loan losses
    
Loans
charged-off
    
Recoveries
    
Balance
September 30, 2019
  
                               
Residential real estate
  
$
1,808
    
$
165
    
$
(121
)
  
$
34
    
$
1,886
  
Multifamily real estate
    
1,649
      
143
      
–
      
7
      
1,799
  
Commercial real estate:
                                        
Owner occupied
    
2,120
      
700
      
(533
)
    
5
      
2,292
  
Non-owner occupied
    
3,058
      
334
      
(57
)
    
2
      
3,337
  
Commercial and industrial
    
1,897
      
191
      
(393
)
    
48
      
1,743
  
Consumer
    
351
      
125
      
(175
)
    
34
      
335
  
Construction and land
    
2,255
      
(349
)
    
(14
)
    
–
      
1,892
  
All other
    
600
      
6
      
(171
)
    
92
      
527
  
Total
  
$
13,738
    
$
1,315
    
$
(1,464
)
  
$
222
    
$
13,811
  

Activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2020 was as follows:

Loan Class
  
Balance
June 30, 2020
    
Provision (credit)
for loan losses
    
Loans
charged-off
    
Recoveries
    
Balance
September 30, 2020
  
                               
Residential real estate
  
$
1,915
    
$
(26
)
  
$
(1
)
  
$
1
    
$
1,889
  
Multifamily real estate
    
2,115
      
333
      
(2,183
)
    
–
      
265
  
Commercial real estate:
                                        
Owner occupied
    
2,470
      
47
      
–
      
2
      
2,519
  
Non-owner occupied
    
4,310
      
362
      
(149
)
    
–
      
4,523
  
Commercial and industrial
    
1,554
      
85
      
–
      
6
      
1,645
  
Consumer
    
230
      
52
      
(56
)
    
13
      
239
  
Construction and land
    
1,233
      
(86
)
    
(4
)
    
17
      
1,160
  
All other
    
561
      
(2
)
    
(41
)
    
15
      
533
  
Total
  
$
14,388
    
$
765
    
$
(2,434
)
  
$
54
    
$
12,773
  

Activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2019 was as follows:

Loan Class
  
Balance
June 30, 2019
    
Provision (credit)
for loan losses
    
Loans
charged-off
    
Recoveries
    
Balance
September 30, 2019
  
                               
Residential real estate
  
$
1,880
    
$
61
    
$
(62
)
  
$
7
    
$
1,886
  
Multifamily real estate
    
1,716
      
78
      
–
      
5
      
1,799
  
Commercial real estate:
                                        
Owner occupied
    
1,790
      
500
      
–
      
2
      
2,292
  
Non-owner occupied
    
3,280
      
57
      
–
      
–
      
3,337
  
Commercial and industrial
    
2,000
      
13
      
(280
)
    
10
      
1,743
  
Consumer
    
368
      
(4
)
    
(35
)
    
6
      
335
  
Construction and land
    
2,140
      
(247
)
    
(1
)
    
–
      
1,892
  
All other
    
599
      
(33
)
    
(74
)
    
35
      
527
  
Total
  
$
13,773
    
$
425
    
$
(452
)
  
$
65
    
$
13,811
  

Purchased Impaired Loans

The Company holds purchased loans for which there was, at their acquisition date, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected.  The carrying amount of those loans is as follows at September 30, 2020 and December 31, 2019.
  
2020
    
2019
  
Residential real estate
  
$
2,348
    
$
2,565
  
Commercial real estate
                
Owner occupied
    
1,044
      
1,804
  
Non-owner occupied
    
2,428
      
2,628
  
Commercial and industrial
    
17
      
305
  
Consumer
    
13
      
22
  
Construction and land
    
409
      
483
  
All other
    
175
      
174
  
Total carrying amount
  
$
6,434
    
$
7,981
  
Contractual principal balance
  
$
9,633
    
$
11,681
  
                 
Carrying amount, net of allowance
  
$
6,434
    
$
7,981
  

For those purchased loans disclosed above, the Company did not increase the allowance for loan losses during the nine months ended September 30, 2020 and September 30, 2019.

For those purchased loans disclosed above, where the Company can reasonably estimate the cash flows expected to be collected on the loans, a portion of the purchase discount is allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion is being recognized as interest income over the remaining life of the loan.

Where the Company cannot reasonably estimate the cash flows expected to be collected on the loans, it has continued to account for those loans using the cost recovery method of income recognition.  As such, no portion of a purchase discount adjustment has been determined to meet the definition of an accretable yield adjustment on those loans accounted for using the cost recovery method.  If, in the future, cash flows from the borrower(s) can be reasonably estimated, a portion of the purchase discount would be allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion would be recognized as interest income over the remaining life of the loan.  Until such accretable yield can be calculated, under the cost recovery method of income recognition, all payments will be used to reduce the carrying value of the loan and no income will be recognized on the loan until the carrying value is reduced to zero.  Any loan accounted for under the cost recovery method is also still included as a non-accrual loan in the amounts presented in the tables below.

The accretable yield, or income expected to be collected, on the purchased loans above is as follows at September 30, 2020 and September 30, 2019.

  
2020
    
2019
  
Balance at January 1
  
$
619
    
$
642
  
New loans purchased
    
–
      
–
  
Accretion of income
    
(147
)
    
(149
)
Loans placed on non-accrual
    
–
      
–
  
Income recognized upon full repayment
    
(65
)
    
(74
)
Reclassifications to accretable difference
    
–
      
–
  
Disposals
    
(190
)
    
–
  
Balance at September 30
  
$
217
    
$
419
  

Past Due and Non-performing Loans

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2020 and December 31, 2019.  The recorded investment in non-accrual loans is less than the principal owed on non-accrual loans due to discounts applied to the carrying value of the loan at time of their acquisition and interest payments made by the borrower which have been used to reduce the recorded investment in the loan rather than recognized as interest income.

September 30, 2020
  
Principal Owed
on Non-accrual
Loans
    
Recorded
Investment in
Non-accrual Loans
    
Loans Past Due
Over 90 Days,
still accruing
  
                   
Residential real estate
  
$
5,583
    
$
4,340
    
$
975
  
Commercial real estate
                        
Owner occupied
    
2,132
      
1,677
      
–
  
Non-owner occupied
    
3,357
      
2,315
      
–
  
Commercial and industrial
    
1,346
      
784
      
–
  
Consumer
    
194
      
125
      
–
  
Construction and land
    
394
      
341
      
149
  
All other
    
14
      
–
      
–
  
Total
  
$
13,020
    
$
9,582
    
$
1,124
  

December 31, 2019
  
Principal
Owed on Non-
accrual Loans
    
Recorded
Investment in
Non-accrual Loans
    
Loans Past Due
Over 90 Days,
still accruing
  
                   
Residential real estate
  
$
5,801
    
$
4,618
    
$
1,425
  
Multifamily real estate
    
4,113
      
3,726
      
–
  
Commercial real estate
                        
Owner occupied
    
3,399
      
2,995
      
–
  
Non-owner occupied
    
3,120
      
1,852
      
340
  
Commercial and industrial
    
1,026
      
420
      
451
  
Consumer
    
364
      
313
      
9
  
Construction and land
    
470
      
440
      
3
  
All other
    
75
      
73
      
–
  
Total
  
$
18,368
    
$
14,437
    
$
2,228
  

Nonaccrual loans and impaired loans are defined differently. Some loans may be included in both categories, and some may only be included in one category.  Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of September 30, 2020 by class of loans:

Loan Class
  
Total
Loans
    
30-89 Days
Past Due
    
Greater than
90 Days
Past Due
    
Total
Past Due
    
Loans Not
Past Due
  
                               
Residential real estate
  
$
386,540
    
$
4,163
    
$
2,637
    
$
6,800
    
$
379,740
  
Multifamily real estate
    
35,905
      
–
      
–
      
–
      
35,905
  
Commercial real estate:
                                        
Owner occupied
    
162,108
      
590
      
316
      
906
      
161,202
  
Non-owner occupied
    
308,478
      
1,129
      
1,228
      
2,357
      
306,121
  
Commercial and industrial
    
91,146
      
157
      
651
      
808
      
90,338
  
SBA PPP
    
113,478
      
–
      
–
      
–
      
113,478
  
Consumer
    
25,420
      
125
      
42
      
167
      
25,253
  
Construction and land
    
111,221
      
–
      
213
      
213
      
111,008
  
All other
    
34,185
      
–
      
–
      
–
      
34,185
  
Total
  
$
1,268,481
    
$
6,164
    
$
5,087
    
$
11,251
    
$
1,257,230
  

The following table presents the aging of the recorded investment in past due loans as of December 31, 2019 by class of loans:

Loan Class
  
Total
Loans
    
30-89 Days
Past Due
    
Greater than
90 Days
Past Due
    
Total
Past Due
    
Loans Not
Past Due
  
                               
Residential real estate
  
$
389,985
    
$
9,479
    
$
3,192
    
$
12,671
    
$
377,314
  
Multifamily real estate
    
36,684
      
–
      
3,726
      
3,726
      
32,958
  
Commercial real estate:
                                        
Owner occupied
    
164,218
      
337
      
1,199
      
1,536
      
162,682
  
Non-owner occupied
    
304,316
      
838
      
1,017
      
1,855
      
302,461
  
Commercial and industrial
    
105,079
      
245
      
708
      
953
      
104,126
  
Consumer
    
29,007
      
309
      
230
      
539
      
28,468
  
Construction and land
    
136,138
      
3,856
      
4
      
3,860
      
132,278
  
All other
    
29,868
      
–
      
73
      
73
      
29,795
  
Total
  
$
1,195,295
    
$
15,064
    
$
10,149
    
$
25,213
    
$
1,170,082
  

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2020:

  
Allowance for Loan Losses
    
Loan Balances
  
Loan Class
  
Individually
Evaluated for
Impairment
    
Collectively
Evaluated for
Impairment
    
Acquired with
Deteriorated
Credit Quality
    
Total
    
Individually
Evaluated for
Impairment
    
Collectively
Evaluated for
Impairment
    
Acquired with
Deteriorated
Credit Quality
    
Total
  
                                                 
Residential real estate
  
$
–
    
$
1,889
    
$
–
    
$
1,889
    
$
59
    
$
384,133
    
$
2,348
    
$
386,540
  
Multifamily real estate
    
–
      
265
      
–
      
265
      
–
      
35,905
      
–
      
35,905
  
Commercial real estate:
                                                                
Owner occupied
    
–
      
2,519
      
–
      
2,519
      
1,402
      
159,662
      
1,044
      
162,108
  
Non-owner occupied
    
303
      
4,220
      
–
      
4,523
      
1,917
      
304,133
      
2,428
      
308,478
  
Commercial and industrial
    
448
      
1,197
      
–
      
1,645
      
743
      
90,386
      
17
      
91,146
  
SBA PPP
    
–
      
–
      
–
      
–
      
–
      
113,478
      
–
      
113,478
  
Consumer
    
–
      
239
      
–
      
239
      
–
      
25,407
      
13
      
25,420
  
Construction and land
    
–
      
1,160
      
–
      
1,160
      
270
      
110,542
      
409
      
111,221
  
All other
    
–
      
533
      
–
      
533
      
–
      
34,010
      
175
      
34,185
  
Total
  
$
751
    
$
12,022
    
$
–
    
$
12,773
    
$
4,391
    
$
1,257,656
    
$
6,434
    
$
1,268,481
  

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2019:

  
Allowance for Loan Losses
    
Loan Balances
  
Loan Class
  
Individually
Evaluated for
Impairment
    
Collectively
Evaluated for
Impairment
    
Acquired with
Deteriorated
Credit Quality
    
Total
    
Individually
Evaluated for
Impairment
    
Collectively
Evaluated for
Impairment
    
Acquired with
Deteriorated
Credit Quality
    
Total
  
                                                 
Residential real estate
  
$
–
    
$
1,711
    
$
–
    
$
1,711
    
$
63
    
$
387,357
    
$
2,565
    
$
389,985
  
Multifamily real estate
    
1,737
      
217
      
–
      
1,954
      
3,726
      
32,958
      
–
      
36,684
  
Commercial real estate:
                                                                
Owner occupied
    
653
      
1,788
      
–
      
2,441
      
2,685
      
159,729
      
1,804
      
164,218
  
Non-owner occupied
    
271
      
2,913
      
–
      
3,184
      
3,830
      
297,858
      
2,628
      
304,316
  
Commercial and industrial
    
390
      
1,377
      
–
      
1,767
      
678
      
104,096
      
305
      
105,079
  
Consumer
    
–
      
281
      
–
      
281
      
–
      
28,985
      
22
      
29,007
  
Construction and land
    
51
      
1,673
      
–
      
1,724
      
431
      
135,224
      
483
      
136,138
  
All other
    
–
      
480
      
–
      
480
      
–
      
29,694
      
174
      
29,868
  
Total
  
$
3,102
    
$
10,440
    
$
–
    
$
13,542
    
$
11,413
    
$
1,175,901
    
$
7,981
    
$
1,195,295
  

In the tables below, total individually evaluated impaired loans include certain purchased loans that were acquired with deteriorated credit quality that are still individually evaluated for impairment.

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2020.  The table includes $689,000 of loans acquired with deteriorated credit quality for which the Company cannot reasonably estimate cash flows such that they are accounted for on the cost recovery method and are still individually evaluated for impairment.

  
Unpaid
Principal
Balance
    
Recorded
Investment
    
Allowance for
Loan Losses
Allocated
  
With no related allowance recorded:
                  
Residential real estate
  
$
179
    
$
59
    
$
-
  
Commercial real estate
                        
Owner occupied
    
2,149
      
1,718
      
-
  
Non-owner occupied
    
1,655
      
778
      
-
  
Commercial and industrial
    
509
      
–
      
-
  
Construction and land
    
321
      
270
      
-
  
     
4,813
      
2,825
      
-
  
With an allowance recorded:
                        
Commercial real estate
                        
Non-owner occupied
    
1,671
      
1,512
      
303
  
Commercial and industrial
    
769
      
743
      
448
  
     
2,440
      
2,255
      
751
  
Total
  
$
7,253
    
$
5,080
    
$
751
  

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2019.  The table includes $758,000 of loans acquired with deteriorated credit quality for which the Company cannot reasonably estimate cash flows such that they are accounted for on the cost recovery method and are still individually evaluated for impairment.

  
Unpaid
Principal
Balance
    
Recorded
Investment
    
Allowance for
Loan Losses
Allocated
  
With no related allowance recorded:
                  
Residential real estate
  
$
188
    
$
63
    
$
-
  
Multifamily real estate
    
96
      
89
      
-
  
Commercial real estate
                        
Owner occupied
    
2,201
      
1,842
      
-
  
Non-owner occupied
    
2,512
      
1,732
      
-
  
Commercial and industrial
    
509
      
–
      
-
  
     
5,506
      
3,726
      
-
  
With an allowance recorded:
                        
Multifamily real estate
  
$
4,017
    
$
3,637
    
$
1,737
  
Commercial real estate
                        
Owner occupied
    
1,189
      
1,162
      
653
  
Non-owner occupied
    
2,654
      
2,537
      
271
  
Commercial and industrial
    
689
      
678
      
390
  
Construction and land
    
460
      
431
      
51
  
     
9,009
      
8,445
      
3,102
  
Total
  
$
14,515
    
$
12,171
    
$
3,102
  

The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the nine months ended September 30, 2020 and September 30, 2019.  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Nine Months Ended September 30, 2020
    
Nine Months Ended September 30, 2019
  
Loan Class
  
Average
Recorded
Investment
    
Interest
Income
Recognized
    
Cash Basis
Interest
Recognized
    
Average
Recorded
Investment
    
Interest
Income
Recognized
    
Cash Basis
Interest
Recognized
  
                                     
Residential real estate
  
$
61
    
$
–
    
$
–
    
$
217
    
$
–
    
$
–
  
Multifamily real estate
    
2,808
      
–
      
–
      
3,823
      
–
      
–
  
Commercial real estate:
                                                
Owner occupied
    
2,073
      
8
      
8
      
3,779
      
10
      
10
  
Non-owner occupied
    
3,855
      
75
      
75
      
9,009
      
664
      
664
  
Commercial and industrial
    
739
      
3
      
3
      
517
      
3
      
3
  
Construction and land
    
332
      
–
      
–
      
910
      
123
      
123
  
Total
  
$
9,868
    
$
86
    
$
86
    
$
18,255
    
$
800
    
$
800
  

The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the three months ended September 30, 2020 and September 30, 2019.  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Three months ended September 30, 2020
    
Three months ended September 30, 2019
  
Loan Class
  
Average
Recorded
Investment
    
Interest
Income
Recognized
    
Cash Basis
Interest
Recognized
    
Average
Recorded
Investment
    
Interest
Income
Recognized
    
Cash Basis
Interest
Recognized
  
                                     
Residential real estate
  
$
60
    
$
–
    
$
–
    
$
170
    
$
–
    
$
–
  
Multifamily real estate
    
1,854
      
–
      
–
      
3,768
      
–
      
–
  
Commercial real estate:
                                                
Owner occupied
    
1,738
      
5
      
5
      
3,683
      
4
      
4
  
Non-owner occupied
    
3,347
      
39
      
39
      
7,439
      
478
      
478
  
Commercial and industrial
    
753
      
2
      
2
      
535
      
1
      
1
  
Construction and land
    
287
      
–
      
–
      
480
      
2
      
2
  
Total
  
$
8,039
    
$
46
    
$
46
    
$
16,075
    
$
485
    
$
485
  

Troubled Debt Restructurings

A loan is classified as a troubled debt restructuring ("TDR") when loan terms are modified due to a borrower's financial difficulties and a concession is granted to a borrower that would not have otherwise been considered. Most of the Company’s loan modifications involve a restructuring of loan terms prior to maturity to temporarily reduce the payment amount and/or to require only interest for a temporary period, usually up to six months.  These modifications generally do not meet the definition of a TDR because the modifications are considered to be an insignificant delay in payment.  The determination of an insignificant delay in payment is evaluated based on the facts and circumstances of the individual borrower(s).

The following table presents TDR’s as of September 30, 2020 and December 31, 2019:

September 30, 2020
  
TDR’s on
Non-accrual
    
Other
TDR’s
    
Total
TDR’s
  
                   
Residential real estate
  
$
23
    
$
204
    
$
227
  
Commercial real estate
                        
Owner occupied
    
–
      
199
      
199
  
Non-owner occupied
    
856
      
–
      
856
  
Commercial and industrial
    
184
      
–
      
184
  
Total
  
$
1,063
    
$
403
    
$
1,466
  

December 31, 2019
  
TDR’s on
Non-accrual
    
Other
TDR’s
    
Total
TDR’s
  
                   
Residential real estate
  
$
32
    
$
157
    
$
189
  
Multifamily real estate
    
3,636
      
–
      
3,636
  
Commercial real estate
                        
Owner occupied
    
1,162
      
207
      
1,369
  
Non-owner occupied
    
–
      
2,656
      
2,656
  
Commercial and industrial
    
191
      
–
      
191
  
Total
  
$
5,021
    
$
3,020
    
$
8,041
  

At September 30, 2020, $222,000 in specific reserves were allocated to loans that had restructured terms resulting in a provision for loan losses of $287,000 for the three months ended September 30, 2020 and $499,000 for the nine months ended September 30, 2020.  This compares to a provision for loan losses on restructured loans of $263,000 for the three months ended September 30, 2019 and $413,000 for the nine months ended September 30, 2019.  At December 31, 2019, $2,471,000 in specific reserves were allocated to loans that had restructured terms.  There were no commitments to lend additional amounts to these borrowers.

During the three and nine months ended September 30, 2020 there was one loan added as a TDR in residential real estate for $56,000.  The modification involves reducing the borrowers’ required monthly payment by consolidating the borrower’s debt, reducing their interest rate, and/or lengthening the amortization period for loan repayment, each in an effort to help the borrowers keep their loan current.  The modifications did not include a permanent reduction of the recorded investment in the loans.  There were no new TDR’s that occurred during the three and nine months ended September 30, 2019.   During the three and nine months ended September 30, 2020 and September 30, 2019, there were no TDR’s for which there as a payment default within twelve months following the modification.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law at the end of March 2020.  Provisions of the CARES Act permit certain loan payment modifications by banks that would normally be considered TDR’s to be exempt from the TDR rules.  To qualify under the CARES Act, a loan could not be past due at the time the payment modification was granted.

The following table presents the status of the remaining loans as of September 30, 2020 with some degree of payment modification under the CARES Act.

September 30, 2020
  
Modified to
Interest Only
Payment
    
Modified to Defer
Principal and
Interest Payment
    
Total
  
                   
Residential real estate
  
$
1,739
    
$
415
    
$
2,154
  
Multifamily real estate
    
-
      
671
      
671
  
Commercial real estate
                        
Owner occupied
    
4,732
      
6,580
      
11,312
  
Non-owner occupied
    
14,466
      
19,626
      
34,092
  
Commercial and industrial
    
974
      
99
      
1,073
  
Construction and land
    
4,219
      
14,550
      
18,769
  
Total
  
$
26,130
    
$
41,941
    
$
68,071
  

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Company analyzes non-homogeneous loans, such as commercial, commercial real estate, multifamily residential and commercial purpose loans secured by residential real estate, on a monthly basis.  For consumer loans, including consumer loans secured by residential real estate, and smaller balance non-homogeneous loans, the analysis involves monitoring the performing status of the loan.  At the time such loans become past due by 90 days or more, the Company evaluates the loan to determine if a change in risk category is warranted. The Company uses the following definitions for risk ratings:

Special Mention.  Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

As of September 30, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
  
Pass
    
Special
Mention
    
Substandard
    
Doubtful
    
Total
Loans
  
                               
Residential real estate
  
$
372,551
    
$
2,973
    
$
11,016
    
$
–
    
$
386,540
  
Multifamily real estate
    
33,444
      
2,461
      
–
      
–
      
35,905
  
Commercial real estate:
                                        
Owner occupied
    
154,564
      
3,627
      
3,917
      
–
      
162,108
  
Non-owner occupied
    
296,137
      
9,487
      
2,854
      
–
      
308,478
  
Commercial and industrial
    
86,182
      
3,238
      
1,726
      
–
      
91,146
  
SBA PPP
    
113,478
      
–
      
–
      
–
      
113,478
  
Consumer
    
25,224
      
1
      
195
      
–
      
25,420
  
Construction and land
    
106,928
      
3,628
      
665
      
–
      
111,221
  
All other
    
34,125
      
–
      
60
      
–
      
34,185
  
Total
  
$
1,222,633
    
$
25,415
    
$
20,433
    
$
–
    
$
1,268,481
  

As of December 31, 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
  
Pass
    
Special
Mention
    
Substandard
    
Doubtful
    
Total
Loans
  
                               
Residential real estate
  
$
374,835
    
$
3,477
    
$
11,673
    
$
-
    
$
389,985
  
Multifamily real estate
    
28,103
      
4,855
      
3,726
      
-
      
36,684
  
Commercial real estate:
                                        
Owner occupied
    
152,695
      
5,123
      
6,400
      
-
      
164,218
  
Non-owner occupied
    
290,096
      
8,617
      
5,603
      
-
      
304,316
  
Commercial and industrial
    
101,085
      
2,693
      
1,301
      
-
      
105,079
  
Consumer
    
28,618
      
5
      
384
      
-
      
29,007
  
Construction and land
    
123,473
      
11,868
      
797
      
-
      
136,138
  
All other
    
29,698
      
97
      
73
      
-
      
29,868
  
Total
  
$
1,128,603
    
$
36,735
    
$
29,957
    
$
-
    
$
1,195,295