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Allowance for Loan Losses (Tables)
 3 Months Ended
Mar. 31, 2017
Loan Receivables Evaluated for Impairment Individually and Collectively by Segment

Loan receivables evaluated for impairment individually and collectively by segment as of March 31, 2017 and December 31, 2016 are as follows:

 

(Dollars in thousands)    Mortgage
Loans		      Commercial
and		      Consumer
and Other		         

As of March 31, 2017

    on Real Estate      Industrial      Loans      Total  

Individually evaluated for impairment

    $ 9,940      $ 92      $ —        $ 10,032  

Collectively evaluated for impairment

      345,383        46,113        3,324        394,820  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Gross Loans

    $ 355,323      $ 46,205      $ 3,324      $ 404,852  
  

 

 

     

 

 

     

 

 

     

 

 

  

As of December 31, 2016

                            

Individually evaluated for impairment

    $ 10,323      $ 92      $ —        $ 10,415  

Collectively evaluated for impairment

      328,118        42,932        3,544        374,594  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Gross Loans

    $ 338,441      $ 43,024      $ 3,544      $ 385,009  
  

 

 

     

 

 

     

 

 

     

 

 

  
Allowance for Loan Losses by Portfolio Segment

Allowance for Loan Losses

The allowance for loan losses disaggregated based on loan receivables evaluated for impairment individually and collectively by segment as of March 31, 2017 and December 31, 2016 are as follows:

 

(Dollars in thousands)   

Mortgage

Loans

     

Commercial

and

      Consumer         

As of March 31, 2017

    on Real Estate      Industrial      Loans      Total  

Individually evaluated for impairment

    $ 694      $ 92      $ —        $ 786  

Collectively evaluated for impairment

      2,727        436        44        3,207  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total allowance for loan losses

    $ 3,421      $ 528      $ 44      $ 3,993  
  

 

 

     

 

 

     

 

 

     

 

 

  

As of December 31, 2016

    Mortgage
Loans
on Real Estate		      Commercial
and
Industrial		      Consumer
Loans		      Total  

Individually evaluated for impairment

    $ 803      $ 92      $ —        $ 895  

Collectively evaluated for impairment

      2,515        401        52        2,968  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total allowance for loan losses

    $ 3,318      $ 493      $ 52      $ 3,863  
  

 

 

     

 

 

     

 

 

     

 

 

  

A disaggregation and an analysis of the change in the allowance for loan losses by segment is shown below.

 

(Dollars in thousands)

For the Three Months Ended

March 31, 2017

    Mortgage
Loans on
Real Estate		      Commercial
and
Industrial		      Consumer
Loans		      Total  

ALLOWANCE FOR LOAN LOSSES:

            

Beginning Balance

    $ 3,318      $ 493      $ 52      $ 3,863  

(Charge-offs)

      (132 )       —          (8 )       (140 ) 

Recoveries

      78        —          2        80  

Provision

      157        35        (2 )       190  
  

 

 

     

 

 

     

 

 

     

 

 

  

Ending Balance

    $ 3,421      $ 528      $ 44      $ 3,993  
  

 

 

     

 

 

     

 

 

     

 

 

  

For the Three Months Ended

March 31, 2016

    Mortgage
Loans on
Real Estate		      Commercial
and
Industrial		      Consumer
Loans		      Total  

ALLOWANCE FOR LOAN LOSSES:

            

Beginning Balance

    $ 3,502      $ 599      $ 122      $ 4,223  

(Charge-offs)

      (83 )       —          (11 )       (94 ) 

Recoveries

      6        5        2        13  

(Recovery) provision

      (15 )       (25 )       5        (35 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Ending Balance

    $ 3,410      $ 579      $ 118      $ 4,107  
  

 

 

     

 

 

     

 

 

     

 

 

  
Internal Risk Rating Grades

Internal Risk Rating Grades

Internal risk rating grades are generally assigned to commercial loans not secured by real estate, commercial mortgages, residential mortgages greater than $1 million, smaller residential mortgages which are impaired, loans to real estate developers and contractors, consumer loans greater than $250,000 with chronic delinquency, and TDRs, as shown in the following table. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled. Risk grades (refer to Note 3) are evaluated as new information becomes available for each borrowing relationship or at least quarterly.

     Construction,             Commercial      Commercial                
     Land and             Mortgages      Mortgages      Commercial         
(Dollars in thousands)    Land             (Non-Owner      (Owner      and         
As of March 31, 2017    Development      Farmland      Occupied)      Occupied)      Industrial      Total  

Grade:

                  

Pass

    $ 36,423      $ 994      $ 30,571      $ 32,412      $ 44,441      $ 144,841  

Watch

      5,762        —          4,375        7,732        1,538        19,407  

Special mention

      179        —          270        —          40        489  

Substandard

      1,755        —          248        2,406        186        4,595  

Doubtful

      —          —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 44,119      $ 994      $ 35,464      $ 42,550      $ 46,205      $ 169,332  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     Construction,             Commercial      Commercial                
     Land and             Mortgages      Mortgages      Commercial         
     Land             (Non-Owner      (Owner      and         
As of December 31, 2016    Development      Farmland      Occupied)      Occupied)      Industrial      Total  

Grade:

                  

Pass

    $ 32,009      $ 1,023      $ 30,639      $ 31,191      $ 40,841      $ 135,703  

Watch

      5,795        —          4,184        6,652        1,891        18,522  

Special mention

      180        —          272        1,453        125        2,030  

Substandard

      1,834        —          248        2,529        167        4,778  

Doubtful

      —          —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 39,818      $ 1,023      $ 35,343      $ 41,825      $ 43,024      $ 161,033  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
Performing and Non Performing Loans

Loans are considered to be nonperforming when they are delinquent by 90 days or more or non-accruing and credit risk is primarily evaluated by delinquency status, as shown in the table below.

 

            Residential                
(Dollars in thousands)    Residential      Revolving                
As of March 31, 2017    First      and Junior      Consumer         

PAYMENT ACTIVITY STATUS

    Mortgages (1)      Mortgages (2)      Loans (3)      Total  

Performing

    $ 203,131      $ 26,051      $ 3,324      $ 232,506  

Nonperforming

      1,975        1,039        —          3,014  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 205,106      $ 27,090      $ 3,324      $ 235,520  
  

 

 

     

 

 

     

 

 

     

 

 

  
            Residential                
     Residential      Revolving                
As of December 31, 2016    First      and Junior      Consumer         

PAYMENT ACTIVITY STATUS

    Mortgages (4)      Mortgages (5)      Loans (6)      Total  

Performing

    $ 191,852      $ 26,265      $ 3,544      $ 221,661  

Nonperforming

      2,155        160        —          2,315  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 194,007      $ 26,425      $ 3,544      $ 223,976  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1) Residential First Mortgages which have been assigned a risk rating grade of Substandard totaled $3.1million as of March 31, 2017.
(2) Residential Revolving and Junior Mortgages which have been assigned a risk rating grade of Substandard totaled $1.9 million as of March 31, 2017.
(3) No Consumer Loans had been assigned a risk rating grade of Substandard as of March 31, 2017.
(4) Residential First Mortgages which have been assigned a risk rating grade of Substandard totaled $3.3 million as of December 31, 2016.
(5) Residential Revolving and Junior Mortgages which have been assigned a risk rating grade of Substandard totaled $1.1 million as of December 31, 2016.
(6) No Consumer Loans had been assigned a risk rating grade of Substandard as of December 31, 2016.
Company's Recorded Investment and Customers Unpaid Principal Balances for Impaired Loans, with Associated Allowance Amount

The following tables show the Company’s recorded investment and the customers’ unpaid principal balances for impaired loans, with the associated allowance amount, if applicable, as of March 31, 2017 and December 31, 2016, along with the average recorded investment and interest income recognized for the three months ended March 31, 2017 and 2016, respectively.

 

     As of March 31, 2017      As of December 31, 2016  

(Dollars in thousands)

IMPAIRED LOANS

    Recorded
Investment		      Customers’ Unpaid
Principal Balance		      Related
Allowance		      Recorded
Investment		      Customers’ Unpaid
Principal Balance		      Related
Allowance		  

With no related allowance:

                  

Construction, Land and Land Development

    $ 1,455      $ 1,535      $ —        $ 1,531      $ 1,539      $ —    

Residential First Mortgages

      2,104        2,171        —          2,112        2,176        —    

Residential Revolving and Junior Mortgages (1)

      995        999        —          995        999        —    

Commercial Mortgages (Non-owner occupied)

      248        248        —          248        248        —    

Commercial Mortgages (Owner occupied)

      2,030        2,351        —          1,860        2,178        —    

Commercial and Industrial

      —          —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     6,832        7,304        —          6,746        7,140        —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

With an allowance recorded:

                  

Construction, Land and Land Development

      239        285        140        243        286        145  

Residential First Mortgages

      1,942        1,942        338        1,951        1,951        367  

Residential Revolving and Junior Mortgages (1)

      526        528        175        544        546        199  

Commercial Mortgages (Non-owner occupied)

      —          —          —          —          —          —    

Commercial Mortgages (Owner occupied)

      401        421        41        839        854        92  

Commercial and Industrial

      92        101        92        92        101        92  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     3,200        3,277        786        3,669        3,738        895  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Impaired Loans:

                  

Construction, Land and Land Development

      1,694        1,820        140        1,774        1,825        145  

Residential First Mortgages

      4,046        4,113        338        4,063        4,127        367  

Residential Revolving and Junior Mortgages (1)

      1,521        1,527        175        1,539        1,545        199  

Commercial Mortgages (Non-owner occupied)

      248        248        —          248        248        —    

Commercial Mortgages (Owner occupied)

      2,431        2,772        41        2,699        3,032        92  

Commercial and Industrial

      92        101        92        92        101        92  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 10,032      $ 10,581      $ 786      $ 10,415      $ 10,878      $ 895  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Notes:

 

(1) Junior mortgages include equity lines.

 

     For the three months ended  
     March 31, 2017      March 31, 2016  
(Dollars in thousands)    Average
Recorded
Investment		      Interest
Income
Recognized		      Average
Recorded
Investment		      Interest
Income
Recognized		  

With no related allowance:

            

Construction, land and land development

    $ 1,493      $ 13      $ 991      $ 14  

Residential First Mortgages

      2,108        5        2,783        26  

Residential Revolving and Junior Mortgages (1)

      995        10        468        9  

Commercial Mortgages (Non-owner occupied)

      248        4        256        4  

Commercial Mortgages (Owner occupied)

      2,159        5        1,090        17  

Commercial and Industrial

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  
     7,003        37        5,588        70  
  

 

 

     

 

 

     

 

 

     

 

 

  

With an allowance recorded:

            

Construction, land and land development

      241        1        260        1  

Residential First Mortgages

      1,946        24        2,905        21  

Residential Revolving and Junior Mortgages (1)

      527        5        309        4  

Commercial Mortgages (Non-owner occupied)

      —          —          —          —    

Commercial Mortgages (Owner occupied)

      406        —          2,208        14  

Commercial and Industrial

      92        —          280        1  
  

 

 

     

 

 

     

 

 

     

 

 

  
     3,212        30        5,962        41  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

            

Construction, land and land development

      1,734        14        1,251        15  

Residential First Mortgages

      4,054        29        5,688        47  

Residential Revolving and Junior Mortgages (1)

      1,522        15        777        13  

Commercial Mortgages (Non-owner occupied)

      248        4        256        4  

Commercial Mortgages (Owner occupied)

      2,565        5        3,298        31  

Commercial and Industrial

      92        —          280        1  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 10,215      $ 67      $ 11,550      $ 111  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1) Junior mortgages include equity lines.
Summary of Properties Included in Other Real Estate Owned (OREO)

The table below details the properties included in other real estate owned (“OREO”) as of March 31, 2017 and December 31, 2016. There were no collateralized consumer residential mortgage loans in the process of foreclosure as of March 31, 2017.

 

     As of March 31, 2017      As of December 31, 2016  
     No. of      Carrying      No. of      Carrying  
(Dollars in thousands)    Properties      Value      Properties      Value  

Residential

      2      $ 831        2      $ 891  

Land lots

      7        586        7        547  

Convenience store

      1        60        1        59  

Restaurant

      1        55        1        55  

Commerical properties

      3        904        3        942  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

      14      $ 2,436        14      $ 2,494