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Allowance for Loan Losses
6 Months Ended
Jun. 30, 2022
Accounts and Financing Receivable, after Allowance for Credit Loss, Noncurrent [Abstract]  
Allowance for Loan Losses
Note 8. Allowance for Loan Losses
(in thousands)
The allowance for loan losses is established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio.
The allowance on the majority of the loan portfolio is calculated using a historical chargeoff percentage applied to the current loan balances by loan segment. This historical period is the average of the previous twenty quarters with the most current quarters weighted more heavily to show the effect of the most recent chargeoff activity. This percentage is also adjusted for economic factors such as local unemployment and general business conditions, both local and nationwide.
The group of loans that are considered to be impaired are individually evaluated for possible loss and a specific reserve is established to cover any loss contingency. Loans that are determined to be a loss with no benefit of remaining in the portfolio are charged off to the allowance. These specific reserves are reviewed periodically for continued impairment and adequacy of the specific reserve and are adjusted when necessary.
The following table details activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2022:
 
     Real      Business                
June 30, 2022
   Estate      Loans      Consumer      Total  
Beginning Balance, January 1, 2022
   $ 3,622      $ 645      $ 246      $ 4,513  
Provision for (reversal of) loan losses
     251        65        (167      149  
Chargeoffs
     1        56        46        103  
Recoveries
     110        20        357        487  
    
 
 
    
 
 
    
 
 
    
 
 
 
Net (recoveries) chargeoffs
     (109      36        (311      (384
    
 
 
    
 
 
    
 
 
    
 
 
 
Ending Balance
   $ 3,982      $ 674      $ 390      $ 5,046  
    
 
 
    
 
 
    
 
 
    
 
 
 
Period end allowance allocated to:
                                   
Loans individually evaluated for impairment
   $ —        $ —        $ —        $ —    
Loans collectively evaluated for impairment
     3,982        674        390        5,046  
    
 
 
    
 
 
    
 
 
    
 
 
 
Ending Balance, June 30, 2022
   $ 3,982      $ 674      $ 390      $ 5,046  
    
 
 
    
 
 
    
 
 
    
 
 
 
The following table details activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2021:
 
     Real      Business                
June 30, 2021
   Estate      Loans      Consumer      Total  
Beginning Balance, January 1, 2021
   $ 3,885      $ 611      $ 239      $ 4,735  
Provision for loan losses
     138        181        —          319  
Chargeoffs
     623        175        49        847  
Recoveries
     84        10        50        144  
    
 
 
    
 
 
    
 
 
    
 
 
 
Net chargeoffs (recoveries)
     539        165        (1      703  
    
 
 
    
 
 
    
 
 
    
 
 
 
Ending Balance
   $ 3,484      $ 627      $ 240      $ 4,351  
    
 
 
    
 
 
    
 
 
    
 
 
 
Period end allowance allocated to:
                                   
Loans individually evaluated for impairment
   $ 3      $ 36      $ —        $ 39  
Loans collectively evaluated for impairment
     3,481        591        240        4,312  
    
 
 
    
 
 
    
 
 
    
 
 
 
Ending Balance, June 30, 2021
   $ 3,484      $ 627      $ 240      $ 4,351  
    
 
 
    
 
 
    
 
 
    
 
 
 
The Company’s recorded investment in loans as of June 30, 2022 and December 31, 2021 related to each balance in the allowance for possible loan losses by portfolio segment and disaggregated on the basis of the Company’s impairment methodology was as follows:
 
     Real      Business                
June 30, 2022
   Estate      Loans      Consumer      Total  
Loans individually evaluated for specific impairment
   $ 4,809      $ 196      $ —        $ 5,005  
Loans collectively evaluated for general impairment
     478,153        91,121        15,262        584,536  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 482,962      $ 91,317      $ 15,262      $ 589,541  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
     Real      Business                
December 31, 2021
   Estate      Loans      Consumer      Total  
Loans individually evaluated for specific impairment
   $ 2,102      $ 232      $ —        $ 2,334  
Loans collectively evaluated for general impairment
     462,674        92,890        13,949        569,513  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 464,776      $ 93,122      $ 13,949      $ 571,847