XML 28 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Loans and Allowance
 12 Months Ended
Dec. 31, 2017
Loans and Allowance [Abstract]  
Loans and Allowance

Note 5: Loans and Allowance

Classes of loans at December 31, 2017 and 2016 include:    



 

 

 

 

 



 

 

 

 

 



December 31,



2017

 

2016

Real estate

 

 

 

 

 

Commercial

$

 318,684 

 

$

 302,577 

Commercial construction and development

 

 28,164 

 

 

 22,453 

Consumer closed end first mortgage

 

 444,243 

 

 

 478,848 

Consumer open end and junior liens

 

 69,477 

 

 

 71,222 

Total real estate loans

 

 860,568 

 

 

 875,100 

Other loans

 

 

 

 

 

Consumer loans

 

 

 

 

 

Auto

 

 19,640 

 

 

 18,939 

Boat/RVs

 

 169,238 

 

 

 141,602 

Other

 

 6,188 

 

 

 5,892 

Commercial and industrial

 

 131,079 

 

 

 131,103 

Total other loans

 

 326,145 

 

 

 297,536 

Total loans

 

 1,186,713 

 

 

 1,172,636 

Undisbursed loans in process

 

 (13,071)

 

 

 (8,691)

Unamortized deferred loan costs, net

 

 6,503 

 

 

 5,557 

Allowance for loan losses

 

 (12,387)

 

 

 (12,382)

Net loans

$

 1,167,758 

 

$

 1,157,120 



Year-end non-accrual loans, segregated by class of loans, were as follows:



 

 

 

 

 



 

 

 

 

 



December 31,



2017

 

2016

Real estate

 

 

 

 

 

Commercial

$

 1,107 

 

$

 912 

Commercial construction and development

 

 -

 

 

 -

Consumer closed end first mortgage

 

 3,409 

 

 

 3,626 

Consumer open end and junior liens

 

 309 

 

 

 335 

Consumer loans

 

 

 

 

 

Auto

 

 22 

 

 

 5 

Boat/RVs

 

 198 

 

 

 224 

Other

 

 16 

 

 

 24 

Commercial and industrial

 

 159 

 

 

 18 

Total nonaccrual loans

$

 5,220 

 

$

 5,144 



Nonaccrual Loans and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.  Loans are placed on non-accrual status when the loan is greater than 90 days past due, the borrower, in management’s opinion, may be unable to meet payment obligations as they become due or when required by regulatory provisions.   

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income.  The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status.  Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured and generally only after six months of satisfactory performance.

An age analysis of the Company’s past due loans, segregated by class of loans, as of December 31, 2017 and 2016  are as follows:





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2017



 

30-59 Days Past Due

 

 

60-89 Days Past Due

 

 

90 Days or More Past Due

 

 

Total Past Due

 

 

Current

 

 

Total Loans Receivable

 

 

Total Loans 90 Days Past Due and Accruing

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 2,171 

 

$

 3,311 

 

$

 998 

 

$

 6,480 

 

$

 312,204 

 

$

 318,684 

 

$

 -

Commercial construction and development

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 28,164 

 

 

 28,164 

 

 

 -

Consumer closed end first mortgage

 

 5,914 

 

 

 1,340 

 

 

 3,224 

 

 

 10,478 

 

 

 433,765 

 

 

 444,243 

 

 

 31 

Consumer open end and junior liens

 

 540 

 

 

 123 

 

 

 264 

 

 

 927 

 

 

 68,550 

 

 

 69,477 

 

 

 -

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 114 

 

 

 24 

 

 

 1 

 

 

 139 

 

 

 19,501 

 

 

 19,640 

 

 

 -

Boat/RVs

 

 1,613 

 

 

 338 

 

 

 103 

 

 

 2,054 

 

 

 167,184 

 

 

 169,238 

 

 

 -

Other

 

 65 

 

 

 18 

 

 

 12 

 

 

 95 

 

 

 6,093 

 

 

 6,188 

 

 

 

Commercial and industrial

 

 276 

 

 

 10 

 

 

 159 

 

 

 445 

 

 

 130,634 

 

 

 131,079 

 

 

 -

Total

$

 10,693 

 

$

 5,164 

 

$

 4,761 

 

$

 20,618 

 

$

 1,166,095 

 

$

 1,186,713 

 

$

 31 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2016



 

30-59 Days Past Due

 

 

60-89 Days Past Due

 

 

90 Days or More Past Due

 

 

Total Past Due

 

 

Current

 

 

Total Loans Receivable

 

 

Total Loans 90 Days Past Due and Accruing

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 854 

 

$

 142 

 

$

 785 

 

$

 1,781 

 

$

 300,796 

 

$

 302,577 

 

$

 -

Commercial construction and development

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 22,453 

 

 

 22,453 

 

 

 -

Consumer closed end first mortgage

 

 6,789 

 

 

 1,554 

 

 

 3,675 

 

 

 12,018 

 

 

 466,830 

 

 

 478,848 

 

 

 237 

Consumer open end and junior liens

 

 512 

 

 

 166 

 

 

 304 

 

 

 982 

 

 

 70,240 

 

 

 71,222 

 

 

 -

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 103 

 

 

 25 

 

 

 5 

 

 

 133 

 

 

 18,806 

 

 

 18,939 

 

 

 -

Boat/RVs

 

 1,376 

 

 

 305 

 

 

 213 

 

 

 1,894 

 

 

 139,708 

 

 

 141,602 

 

 

 -

Other

 

 89 

 

 

 26 

 

 

 13 

 

 

 128 

 

 

 5,764 

 

 

 5,892 

 

 

 -

Commercial and industrial

 

 497 

 

 

 32 

 

 

 8 

 

 

 537 

 

 

 130,566 

 

 

 131,103 

 

 

 -

Total

$

 10,220 

 

$

 2,250 

 

$

 5,003 

 

$

 17,473 

 

$

 1,155,163 

 

$

 1,172,636 

 

$

 237 



Impaired Loans

Loans are considered impaired in accordance with the impairment accounting guidance (ASC 310-10-35-16), when, based on current information and events, it is probable 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 commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.  These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

Interest on impaired loans is recorded based on the performance of the loan.  All interest received on impaired loans that are on nonaccrual status is accounted for on the cash-basis method until qualifying for return to accrual status.  Interest is accrued per the contract for impaired loans that are performing.

The following tables present impaired loans as of December 31, 2017, 2016 and 2015:



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2017



Recorded Balance

 

Unpaid Principal Balance

 

Specific Allowance

 

Average Investment in Impaired Loans

 

Interest Income Recognized

Loans without a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 878 

 

$

 878 

 

$

 -

 

$

 765 

 

$

 1 

Commercial construction and development

 

 700 

 

 

 700 

 

 

 -

 

 

 762 

 

 

 33 

Consumer closed end first mortgage

 

 1,543 

 

 

 1,543 

 

 

 -

 

 

 1,451 

 

 

 1 

Commercial and industrial

 

 272 

 

 

 342 

 

 

 -

 

 

 216 

 

 

 5 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans with a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 214 

 

 

 214 

 

 

 100 

 

 

 214 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 1,092 

 

$

 1,092 

 

$

 100 

 

$

 979 

 

$

 1 

Commercial construction and development

$

 700 

 

$

 700 

 

$

 -

 

$

 762 

 

$

 33 

Consumer closed end first mortgage

$

 1,543 

 

$

 1,543 

 

$

 -

 

$

 1,451 

 

$

 1 

Commercial and industrial

$

 272 

 

$

 342 

 

$

 -

 

$

 216 

 

$

 5 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

 3,607 

 

$

 3,677 

 

$

 100 

 

$

 3,408 

 

$

 40 







 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2016



Recorded Balance

 

Unpaid Principal Balance

 

Specific Allowance

 

Average Investment in Impaired Loans

 

Interest Income Recognized

Loans without a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 665 

 

$

 665 

 

$

 -

 

$

 2,207 

 

$

 68 

Commercial construction and development

 

 822 

 

 

 822 

 

 

 -

 

 

 874 

 

 

 40 

Consumer closed end first mortgage

 

 1,869 

 

 

 1,869 

 

 

 -

 

 

 1,328 

 

 

 -

Consumer open end and junior liens

 

 -

 

 

 -

 

 

 -

 

 

 193 

 

 

 -

Commercial and industrial

 

 187 

 

 

 187 

 

 

 -

 

 

 204 

 

 

 1 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans with a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 214 

 

 

 214 

 

 

 100 

 

 

 416 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 879 

 

$

 879 

 

$

 100 

 

$

 2,623 

 

$

 68 

Commercial construction and development

$

 822 

 

$

 822 

 

$

 -

 

$

 874 

 

$

 40 

Consumer closed end first mortgage

$

 1,869 

 

$

 1,869 

 

$

 -

 

$

 1,328 

 

$

 -

Consumer open end and junior liens

$

 -

 

$

 -

 

$

 -

 

$

 193 

 

$

 -

Commercial and industrial

$

 187 

 

$

 187 

 

$

 -

 

$

 204 

 

$

 1 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

 3,757 

 

$

 3,757 

 

$

 100 

 

$

 5,222 

 

$

 109 





 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2015



Recorded Balance

 

Unpaid Principal Balance

 

Specific Allowance

 

Average Investment in Impaired Loans

 

Interest Income Recognized

Loans without a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 3,608 

 

$

 3,608 

 

$

 -

 

$

 4,115 

 

$

 172 

Commercial construction and development

 

 595 

 

 

 595 

 

 

 -

 

 

 735 

 

 

 31 

Consumer closed end first mortgage

 

 1,126 

 

 

 1,126 

 

 

 -

 

 

 1,131 

 

 

 -

Consumer open end and junior liens

 

 481 

 

 

 481 

 

 

 -

 

 

 381 

 

 

 -

Commercial and industrial

 

 214 

 

 

 214 

 

 

 -

 

 

 423 

 

 

 2 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans with a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 676 

 

 

 676 

 

 

 100 

 

 

 793 

 

 

 20 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 4,284 

 

$

 4,284 

 

$

 100 

 

$

 4,908 

 

$

 192 

Commercial construction and development

$

 595 

 

$

 595 

 

$

 -

 

$

 735 

 

$

 31 

Consumer closed end first mortgage

$

 1,126 

 

$

 1,126 

 

$

 -

 

$

 1,131 

 

$

 -

Consumer open end and junior liens

$

 481 

 

$

 481 

 

$

 -

 

$

 381 

 

$

 -

Commercial and industrial

$

 214 

 

$

 214 

 

$

 -

 

$

 423 

 

$

 2 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

 6,700 

 

$

 6,700 

 

$

 100 

 

$

 7,578 

 

$

 225 



The following information presents the credit risk profile of the Company’s loan portfolio based on rating category and payment activity as of December 31, 2017 and 2016.

Commercial Loan Grades

Definition of Loan Grades.  Loan grades are numbered 1 through 8.  Grades 1-4 are "pass" credits, grade 5 [Special Mention] loans are "criticized" assets, and grades 6 [Substandard], 7 [Doubtful] and 8 [Loss] are "classified" assets.  The use and application of these grades by the Bank conform to the Bank's policy and regulatory definitions.

Pass.  Pass credits are loans in grades prime through fair.  These are at least considered to be credits with acceptable risks and would be granted in the normal course of lending operations. 

Special Mention.  Special mention credits have potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the credits or in the Bank’s credit position at some future date.  If weaknesses cannot be identified, classifying as special mention is not appropriate.  Special mention credits are not adversely classified and do not expose the Bank to sufficient risk to warrant an adverse classification.  No apparent loss of principal or interest is expected. 

Substandard.  Substandard credits are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged.  Financial statements normally reveal some or all of the following:  poor trends, lack of earnings and cash flow, excessive debt, lack of liquidity, and the absence of creditor protection.  Credits so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful.  A doubtful extension of credit has all the weaknesses inherent in a substandard asset 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.  The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined.  Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and refinancing plans.  Doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded Substandard.   



Retail Loan Grades

Pass.  Pass credits are loans that are currently performing as agreed and are not troubled debt restructurings. 

Special Mention.  Special mention credits have potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the credits or in the Bank’s credit position at some future date.  If weaknesses cannot be identified, classifying as special mention is not appropriate.  Special mention credits are not adversely classified and do not expose the Bank to sufficient risk to warrant an adverse classification.  No apparent loss of principal or interest is expected. 

Substandard.  Substandard credits are loans that have reason to be considered to have a weakness and placed on non-accrual.  This would include all retail loans over 90 days and troubled debt restructurings.

During 2017, special mention commercial business loans increased as management determined that a few credits had potential weaknesses deserving management’s close attention. These credits were performing as agreed as of December 31, 2017.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2017



 

Commercial

 

Consumer

 

 

 



 

Pass

 

Special Mention

 

Substandard

 

Doubtful

 

Pass

 

Special Mention

 

Substandard

 

Total

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

 309,451 

 

$

 4,219 

 

$

 4,996 

 

$

 18 

 

 

 

 

 

 

 

 

 

 

$

 318,684 

Commercial construction and development

 

 

 27,464 

 

 

 -

 

 

 700 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 28,164 

Consumer closed end first mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 439,075 

 

$

 -

 

$

 5,168 

 

 

 444,243 

Consumer open end and junior liens

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 69,130 

 

 

 -

 

 

 347 

 

 

 69,477 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 19,616 

 

 

 -

 

 

 24 

 

 

 19,640 

Boat/RVs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 169,036 

 

 

 -

 

 

 202 

 

 

 169,238 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 6,133 

 

 

 -

 

 

 55 

 

 

 6,188 

Commercial and industrial

 

 

 120,211 

 

 

 5,784 

 

 

 5,084 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 131,079 



 

$

 457,126 

 

$

 10,003 

 

$

 10,780 

 

$

 18 

 

$

 702,990 

 

$

 -

 

$

 5,796 

 

$

 1,186,713 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



December 31, 2016



 

Commercial

 

Consumer

 

 

 



 

Pass

 

Special Mention

 

Substandard

 

Doubtful

 

Pass

 

Special Mention

 

Substandard

 

Total

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

 295,548 

 

$

 3,705 

 

$

 3,297 

 

$

 27 

 

 

 

 

 

 

 

 

 

 

$

 302,577 

Commercial construction and development

 

 

 21,782 

 

 

 254 

 

 

 417 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 22,453 

Consumer closed end first mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 473,329 

 

$

 -

 

$

 5,519 

 

 

 478,848 

Consumer open end and junior liens

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 70,769 

 

 

 -

 

 

 453 

 

 

 71,222 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 18,931 

 

 

 -

 

 

 8 

 

 

 18,939 

Boat/RVs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 141,294 

 

 

 -

 

 

 308 

 

 

 141,602 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 5,859 

 

 

 -

 

 

 33 

 

 

 5,892 

Commercial and industrial

 

 

 128,436 

 

 

 2,513 

 

 

 154 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 131,103 



 

$

 445,766 

 

$

 6,472 

 

$

 3,868 

 

$

 27 

 

$

 710,182 

 

$

 -

 

$

 6,321 

 

$

 1,172,636 



Allowance for Loan Losses

The risk characteristics of each loan portfolio segment are as follows:

Commercial Loans

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.  Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan.  Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location.  Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Commercial construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analyses of absorption and lease rates and financial analyses of the developers and property owners.  Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project.  Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Commercial business loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Residential and Consumer

With respect to residential loans that are secured by one-to-four family residences and are primarily owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance (PMI) if that ratio is exceeded. Consumer open end and junior lien loans are typically secured by a subordinate interest in one-to-four family residences, and other consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.



The following tables detail activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2017, 2016 and 2015.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses on other segments.



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2017



Commercial

 

Mortgage

 

Consumer

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of year

$

 7,358 

 

$

 2,303 

 

$

 2,721 

 

$

 12,382 

Provision charged (credited) to expense

 

 483 

 

 

 (271)

 

 

 1,008 

 

 

 1,220 

Losses charged off

 

 (161)

 

 

 (284)

 

 

 (967)

 

 

 (1,412)

Recoveries

 

 24 

 

 

 13 

 

 

 160 

 

 

 197 

Balance, end of period

$

 7,704 

 

$

 1,761 

 

$

 2,922 

 

$

 12,387 





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2016



Commercial

 

Mortgage

 

Consumer

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

$

 7,090 

 

$

 2,683 

 

$

 2,868 

 

$

 12,641 

Provision charged (credited) to expense

 

 457 

 

 

 15 

 

 

 378 

 

 

 850 

Losses charged off

 

 (274)

 

 

 (420)

 

 

 (788)

 

 

 (1,482)

Recoveries

 

 85 

 

 

 25 

 

 

 263 

 

 

 373 

Balance, end of period

$

 7,358 

 

$

 2,303 

 

$

 2,721 

 

$

 12,382 







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2015



Commercial

 

Mortgage

 

Consumer

 

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of year

$

 7,085 

 

$

 3,471 

 

$

 2,612 

 

$

 13,168 

Provision charged to expense

 

 (389)

 

 

 (179)

 

 

 693 

 

 

 125 

Losses charged off

 

 (104)

 

 

 (643)

 

 

 (640)

 

 

 (1,387)

Recoveries

 

 498 

 

 

 34 

 

 

 203 

 

 

 735 

Balance, end of period

$

 7,090 

 

$

 2,683 

 

$

 2,868 

 

$

 12,641 



The following tables provide a breakdown of the allowance for loan losses and loan portfolio balances by segment as of December 31, 2017, 2016, and 2015.





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2017



Commercial

 

Mortgage

 

Consumer

 

Total

Allowance balances

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

 100 

 

$

 -

 

$

 -

 

$

 100 

Collectively evaluated for impairment

 

 7,604 

 

 

 1,761 

 

 

 2,922 

 

 

 12,287 

Total allowance for loan losses

$

 7,704 

 

$

 1,761 

 

$

 2,922 

 

$

 12,387 

Loan balances

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

 2,064 

 

$

 1,543 

 

$

 -

 

$

 3,607 

Collectively evaluated for impairment

 

 475,863 

 

 

 442,700 

 

 

 264,543 

 

 

 1,183,106 

Gross loans

$

 477,927 

 

$

 444,243 

 

$

 264,543 

 

$

 1,186,713 







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2016



Commercial

 

Mortgage

 

Consumer

 

Total

Allowance balances

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

 100 

 

$

 -

 

$

 -

 

$

 100 

Collectively evaluated for impairment

 

 7,258 

 

 

 2,303 

 

 

 2,721 

 

 

 12,282 

Total allowance for loan losses

$

 7,358 

 

$

 2,303 

 

$

 2,721 

 

$

 12,382 

Loan balances

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

 1,888 

 

$

 1,869 

 

$

 -

 

$

 3,757 

Collectively evaluated for impairment

 

 454,245 

 

 

 476,979 

 

 

 237,655 

 

 

 1,168,879 

Gross loans

$

 456,133 

 

$

 478,848 

 

$

 237,655 

 

$

 1,172,636 







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



December 31, 2015



Commercial

 

Mortgage

 

Consumer

 

Total

Allowance balances

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

 100 

 

$

 -

 

$

 -

 

$

 100 

Collectively evaluated for impairment

 

 6,990 

 

 

 2,683 

 

 

 2,868 

 

 

 12,541 

Total allowance for loan losses

$

 7,090 

 

$

 2,683 

 

$

 2,868 

 

$

 12,641 

Loan balances

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

 5,093 

 

$

 1,126 

 

$

 481 

 

$

 6,700 

Collectively evaluated for impairment

 

 370,589 

 

 

 490,325 

 

 

 215,781 

 

 

 1,076,695 

Gross loans

$

 375,682 

 

$

 491,451 

 

$

 216,262 

 

$

 1,083,395 





Troubled Debt Restructurings

Certain categories of impaired loans include loans that have been modified in a troubled debt restructuring that involves granting economic concessions to borrowers who have experienced financial difficulties.  These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions.  Modifications of terms for our loans and their inclusion as troubled debt restructurings are based on individual facts and circumstances.  

When we modify loans in a troubled debt restructuring, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, or we use the current fair value of the collateral, less selling costs for collateral dependent loans. If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through a specific reserve or a charge-off to the allowance.

Loans retain their accrual status at the time of their modification.  As a result, if a loan is on nonaccrual at the time it is modified, it stays as nonaccrual until a period of satisfactory performance, generally six months, is obtained.  If a loan is on accrual at the time of the modification, the loan is evaluated to determine the collection of principal and interest is reasonably assured and generally stays on accrual.

At December 31, 2017 and 2016, the Company had a number of loans that were modified in troubled debt restructurings and impaired.  The modification of terms of such loans included one or a combination of the following:  an extension of maturity, a reduction of the stated interest rate or a permanent reduction of the recorded investment in the loan.  

The following tables describe troubled debts restructured during the years ended December 31, 2017, 2016 and 2015.



 

 

 

 

 

 

 



 

 

 

 

 

 

 



2017



No. of Loans

 

Pre-Modification Recorded Balance

 

Post-Modification Recorded Balance

Real estate

 

 

 

 

 

 

 

Consumer closed end first mortgage

 7 

 

$

 320 

 

$

 324 

Consumer open end and junior liens

 2 

 

 

 16 

 

 

 16 

Commercial and industrial

 1 

 

 

 72 

 

 

 72 







 

 

 

 

 

 

 



 

 

 

 

 

 

 



2016



No. of Loans

 

Pre-Modification Recorded Balance

 

Post-Modification Recorded Balance

Real estate

 

 

 

 

 

 

 

Commercial

 1 

 

$

 406 

 

$

 406 

Construction and development

 1 

 

 

 83 

 

 

 83 

Consumer closed end first mortgage

 14 

 

 

 881 

 

 

 911 

Consumer open end and junior liens

 1 

 

 

 39 

 

 

 39 



 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

Auto

 1 

 

 

 4 

 

 

 4 

Boat/RVs

 3 

 

 

 56 

 

 

 56 

Other

 2 

 

 

 7 

 

 

 7 







 

 

 

 

 

 

 



 

 

 

 

 

 

 



2015



No. of Loans

 

Pre-Modification Recorded Balance

 

Post-Modification Recorded Balance

Real estate

 

 

 

 

 

 

 

Commercial

 4 

 

$

 2,399 

 

$

 2,406 

Construction and development

 1 

 

 

 155 

 

 

 155 

Consumer closed end first mortgage

 8 

 

 

 287 

 

 

 287 

Consumer open end and junior liens

 3 

 

 

 51 

 

 

 51 



 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

Auto

 2 

 

 

 25 

 

 

 25 

Commercial and industrial

 1 

 

 

 88 

 

 

 83 



The impact on the allowance for loan losses was insignificant as a result of these modifications. 



Newly restructured loans by type for the years ended December 31, 2017, 2016 and 2015 are as follows:



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



2017



 

Rate

 

 

Term

 

 

Combination

 

 

Total Modification

Real estate

 

 

 

 

 

 

 

 

 

 

 

Consumer closed end first mortgage

$

 -

 

$

 27 

 

 

 297 

 

$

 324 

Consumer open end and junior liens

 

 -

 

 

 3 

 

 

 13 

 

 

 16 

Commercial and industrial

 

 -

 

 

 72 

 

 

 -

 

 

 72 





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



2016



 

Rate

 

 

Term

 

 

Combination

 

 

Total Modification

Real estate

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 -

 

$

 406 

 

$

 -

 

$

 406 

Commercial construction and development

 

 -

 

 

 83 

 

 

 -

 

 

 83 

Consumer closed end first mortgage

 

 -

 

 

 47 

 

 

 864 

 

 

 911 

Consumer open end and junior liens

 

 -

 

 

 -

 

 

 39 

 

 

 39 



 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 -

 

 

 -

 

 

 4 

 

 

 4 

Boat/RVs

 

 -

 

 

 48 

 

 

 8 

 

 

 56 

Other

 

 -

 

 

 7 

 

 

 -

 

 

 7 





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



2015



 

Rate

 

 

Term

 

 

Combination

 

 

Total Modification

Real Estate

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

 -

 

$

 2,406 

 

$

 -

 

$

 2,406 

Construction and development

 

 -

 

 

 -

 

 

 155 

 

 

 155 

Consumer closed end first mortgage

 

 -

 

 

 11 

 

 

 276 

 

 

 287 

Consumer open end and junior liens

 

 -

 

 

 51 

 

 

 -

 

 

 51 



 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 -

 

 

 25 

 

 

 -

 

 

 25 

Commercial and industrial

 

 -

 

 

 83 

 

 

 -

 

 

 83 

Defaults of any loans modified as troubled debt restructurings made in the years ended December 31, 2017, 2016 and 2015, respectively, are listed in the tables below.  Defaults are defined as any loans that become 90 days past due.    





 

 

 

 



 

 

 

 



2017



No. of Loans

 

Post-Modification Outstanding Recorded Balance

Real Estate

 

 

 

 

Consumer closed end first mortgage

 1 

 

$

 79 





 

 

 

 



 

 

 

 



2016



No. of Loans

 

Post-Modification Outstanding Recorded Balance

Real Estate

 

 

 

 

Consumer closed end first mortgage

 5 

 

$

 179 



 

 

 

 

Other Loans

 

 

 

 

Consumer Loans

 

 

 

 

Boat/RV

 1 

 

 

 7 





 

 

 

 



 

 

 

 



December 31, 2015



No. of Loans

 

Post-Modification Outstanding Recorded Balance

Real Estate

 

 

 

 

Commercial

 1 

 

$

 820 



At December 31, 2017, the Company held residential real estate held for sale as a result of foreclosure totaling $251,000 and real estate in the process of foreclosure of $970,000.  As of December 31, 2017, the Company also held $482,000 in other repossessed assets, such as autos, boats, RVs and horse trailers.