XML 53 R14.htm IDEA: XBRL DOCUMENT v3.20.1
Loans and Allowance
 12 Months Ended
Dec. 31, 2019
Loans and Allowance [Abstract]  
Loans and Allowance

Note 6: Loans and Allowance

Classes of loans at December 31, 2019 and 2018 include:

 

 

 

 

 

 

 

 

 

December 31, 

 

December 31, 

 

    

2019

    

2018

Real estate

 

 

  

 

 

  

Commercial

 

$

504,241

 

$

485,808

Commercial construction and development

 

 

49,496

 

 

53,310

Consumer closed end first mortgage

 

 

415,865

 

 

464,539

Consumer open end and junior liens

 

 

75,596

 

 

77,072

Total real estate loans

 

 

1,045,198

 

 

1,080,729

Other loans

 

 

 

 

 

  

Consumer loans

 

 

 

 

 

  

Auto

 

 

57,107

 

 

43,667

Boat/RVs

 

 

213,305

 

 

216,608

Other consumer loans

 

 

7,319

 

 

6,893

Commercial and industrial

 

 

166,019

 

 

149,359

Total other loans

 

 

443,750

 

 

416,527

Total loans

 

 

1,488,948

 

 

1,497,256

Undisbursed loans in process

 

 

(7,516)

 

 

(10,096)

Unamortized deferred loan costs, net

 

 

8,800

 

 

8,783

Allowance for loan losses

 

 

(13,307)

 

 

(13,281)

Net loans

 

$

1,476,925

 

$

1,482,662

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

December 31, 

 

December 31, 

 

    

2019

    

2018

Real estate

 

 

  

 

 

  

Commercial

 

$

756

 

$

4,782

Commercial construction and development

 

 

631

 

 

62

Consumer closed end first mortgage

 

 

3,682

 

 

2,777

Consumer open end and junior liens

 

 

352

 

 

273

Other loans

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

  

Auto

 

 

256

 

 

88

Boat/RVs

 

 

944

 

 

470

Other consumer loans

 

 

51

 

 

46

Commercial and industrial

 

 

368

 

 

91

Total nonaccrual loans

 

$

7,040

 

$

8,589

 

 

 

 

 

 

 

 

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, 2019 and 2018 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90 Days

 

 

30‑59

 

60‑89

 

90 Days

 

Total

 

 

 

 

Total

 

Past Due

 

 

Days Past

 

Days Past

 

or More

 

Past

 

 

 

 

Loans

 

and

 

 

Due

 

Due

 

Past Due

 

Due

 

Current

 

Receivable

 

Accruing

Real estate

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Commercial

 

$

2,218

 

$

2,751

 

$

422

 

$

5,391

 

$

498,850

 

$

504,241

 

$

 -

Commercial construction and development

 

 

114

 

 

 -

 

 

631

 

 

745

 

 

48,751

 

 

49,496

 

 

 -

Consumer closed end first mortgage

 

 

5,731

 

 

1,774

 

 

2,294

 

 

9,799

 

 

406,066

 

 

415,865

 

 

156

Consumer open end and junior liens

 

 

447

 

 

220

 

 

308

 

 

975

 

 

74,621

 

 

75,596

 

 

 -

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

424

 

 

104

 

 

208

 

 

736

 

 

56,371

 

 

57,107

 

 

 -

Boat/RVs

 

 

1,892

 

 

692

 

 

475

 

 

3,059

 

 

210,246

 

 

213,305

 

 

 -

Other consumer loans

 

 

128

 

 

68

 

 

49

 

 

245

 

 

7,074

 

 

7,319

 

 

 -

Commercial and industrial

 

 

855

 

 

108

 

 

368

 

 

1,331

 

 

164,688

 

 

166,019

 

 

 -

Total

 

$

11,809

 

$

5,717

 

$

4,755

 

$

22,281

 

$

1,466,667

 

$

1,488,948

 

$

156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90 Days

 

 

30‑59

 

60‑89

 

90 Days

 

Total

 

 

 

 

Total

 

Past Due

 

 

Days Past

 

Days Past

 

or More

 

Past

 

 

 

 

Loans

 

and

 

 

Due

 

Due

 

Past Due

 

Due

 

Current

 

Receivable

 

Accruing

Real estate

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Commercial

 

$

1,145

 

$

536

 

$

4,377

 

$

6,058

 

$

479,750

 

$

485,808

 

$

 -

Commercial construction and development

 

 

4,633

 

 

 -

 

 

61

 

 

4,694

 

 

48,616

 

 

53,310

 

 

 -

Consumer closed end first mortgage

 

 

7,847

 

 

1,662

 

 

2,696

 

 

12,205

 

 

452,334

 

 

464,539

 

 

517

Consumer open end and junior liens

 

 

353

 

 

114

 

 

220

 

 

687

 

 

76,385

 

 

77,072

 

 

 -

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

257

 

 

16

 

 

72

 

 

345

 

 

43,322

 

 

43,667

 

 

 -

Boat/RVs

 

 

2,174

 

 

594

 

 

350

 

 

3,118

 

 

213,490

 

 

216,608

 

 

 -

Other consumer loans

 

 

65

 

 

 8

 

 

41

 

 

114

 

 

6,779

 

 

6,893

 

 

 -

Commercial and industrial

 

 

617

 

 

93

 

 

91

 

 

801

 

 

148,558

 

 

149,359

 

 

 -

Total

 

$

17,091

 

$

3,023

 

$

7,908

 

$

28,022

 

$

1,469,234

 

$

1,497,256

 

$

517

 

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, 2019, 2018 and 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

    

 

 

    

 

 

    

 

 

    

Average

    

 

 

 

 

 

 

Unpaid

 

 

 

 

Investment

 

Interest

 

 

Recorded

 

Principal

 

Specific

 

in Impaired

 

Income

 

 

Balance

 

Balance

 

Allowance

 

Loans

 

Recognized

Loans without a specific valuation allowance

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Real estate

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Commercial

 

$

5,542

 

$

5,542

 

$

 -

 

$

5,878

 

$

377

Commercial construction and development

 

 

642

 

 

642

 

 

 -

 

 

496

 

 

17

Consumer closed end first mortgage

 

 

844

 

 

844

 

 

 -

 

 

903

 

 

 -

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

44

 

 

44

 

 

 -

 

 

86

 

 

 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans with a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer closed end first mortgage

 

 

337

 

 

337

 

 

40

 

 

269

 

 

 -

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boat and RV

 

 

251

 

 

251

 

 

87

 

 

101

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

5,542

 

$

5,542

 

$

 -

 

$

5,878

 

$

377

Commercial construction and development

 

$

642

 

$

642

 

$

 -

 

$

496

 

$

17

Consumer closed end first mortgage

 

$

1,181

 

$

1,181

 

$

40

 

$

1,172

 

$

 -

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boat and RV

 

$

251

 

$

251

 

$

87

 

$

101

 

$

 -

Commercial and industrial

 

$

44

 

$

44

 

$

 -

 

$

86

 

$

 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

7,660

 

$

7,660

 

$

127

 

$

7,733

 

$

396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

    

 

 

    

 

 

    

 

 

    

Average

    

 

 

 

 

 

 

Unpaid

 

 

 

 

Investment

 

Interest

 

 

Recorded

 

Principal

 

Specific

 

in Impaired

 

Income

 

 

Balance

 

Balance

 

Allowance

 

Loans

 

Recognized

Loans without a specific valuation allowance

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Real estate

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Commercial

 

$

6,324

 

$

6,377

 

$

 -

 

$

1,882

 

$

 -

Commercial construction and development

 

 

549

 

 

549

 

 

 -

 

 

633

 

 

27

Consumer closed end first mortgage

 

 

1,137

 

 

1,137

 

 

 -

 

 

1,260

 

 

 -

Commercial and industrial

 

 

131

 

 

131

 

 

 -

 

 

167

 

 

 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans with a specific valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

174

 

 

214

 

 

100

 

 

206

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

6,498

 

$

6,591

 

$

100

 

$

2,088

 

$

 -

Commercial construction and development

 

$

549

 

$

549

 

$

 -

 

$

633

 

$

27

Consumer closed end first mortgage

 

$

1,137

 

$

1,137

 

$

 -

 

$

1,260

 

$

 -

Commercial and industrial

 

$

131

 

$

131

 

$

 -

 

$

167

 

$

 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

8,315

 

$

8,408

 

$

100

 

$

4,148

 

$

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

    

 

 

    

 

 

    

 

 

    

Average

    

 

 

 

 

 

 

 

Unpaid

 

 

 

 

Investment

 

Interest

 

 

Recorded

 

Principal

 

Specific

 

in Impaired

 

Income

 

 

Balance

 

Balance

 

Allowance

 

Loans

 

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

 

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, 2019 and 2018.

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

Commercial

 

Consumer

 

 

 

 

    

 

 

    

Special

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Pass

 

Mention

 

Substandard

 

Doubtful

 

Pass

 

Substandard

 

Total

Real estate

 

 

  

 

 

  

 

 

 

 

 

  

 

 

  

 

 

  

 

 

  

Commercial

 

$

469,840

 

$

21,837

 

$

12,564

 

$

 -

 

 

  

 

 

  

 

$

504,241

Commercial construction and development

 

 

46,384

 

 

2,112

 

 

1,000

 

 

 -

 

 

 

 

 

  

 

 

49,496

Consumer closed end first mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

$

411,372

 

$

4,493

 

 

415,865

Consumer open end and junior liens

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75,188

 

 

408

 

 

75,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56,836

 

 

271

 

 

57,107

Boat/RVs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

212,098

 

 

1,207

 

 

213,305

Other consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,265

 

 

54

 

 

7,319

Commercial and industrial

 

 

158,312

 

 

3,205

 

 

4,502

 

 

 -

 

 

 

 

 

 

 

 

166,019

 

 

$

674,536

 

$

27,154

 

$

18,066

 

$

 -

 

$

762,759

 

$

6,433

 

$

1,488,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

Commercial

 

Consumer

 

 

 

 

    

 

 

    

Special

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Pass

 

Mention

 

Substandard

 

Doubtful

 

Pass

 

Substandard

 

Total

Real estate

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Commercial

 

$

465,888

 

$

9,501

 

$

10,419

 

$

 -

 

 

  

 

 

  

 

$

485,808

Commercial construction and development

 

 

46,649

 

 

6,112

 

 

549

 

 

 -

 

 

  

 

 

  

 

 

53,310

Consumer closed end first mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

$

459,771

 

$

4,768

 

 

464,539

Consumer open end and junior liens

 

 

 

 

 

 

 

 

 

 

 

 

 

 

76,752

 

 

320

 

 

77,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,559

 

 

108

 

 

43,667

Boat/RVs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

215,830

 

 

778

 

 

216,608

Other consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,835

 

 

58

 

 

6,893

Commercial and industrial

 

 

141,705

 

 

4,009

 

 

3,645

 

 

 -

 

 

 

 

 

 

 

 

149,359

 

 

$

654,242

 

$

19,622

 

$

14,613

 

$

 -

 

$

802,747

 

$

6,032

 

$

1,497,256

 

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, 2019, 2018 and 2017. 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, 2019

 

    

Commercial

    

Mortgage

    

Consumer

    

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

8,426

 

$

1,548

 

$

3,307

 

$

13,281

Provision charged (credited) to expense

 

 

322

 

 

(79)

 

 

1,707

 

 

1,950

Losses charged off

 

 

(202)

 

 

(241)

 

 

(1,714)

 

 

(2,157)

Recoveries

 

 

28

 

 

 4

 

 

201

 

 

233

Balance, end of period

 

$

8,574

 

$

1,232

 

$

3,501

 

$

13,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

    

Commercial

    

Mortgage

    

Consumer

    

Total

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

7,704

 

$

1,761

 

$

2,922

 

$

12,387

Provision charged (credited) to expense

 

 

914

 

 

(57)

 

 

1,263

 

 

2,120

Losses charged off

 

 

(204)

 

 

(174)

 

 

(1,088)

 

 

(1,466)

Recoveries

 

 

12

 

 

18

 

 

210

 

 

240

Balance, end of period

 

$

8,426

 

$

1,548

 

$

3,307

 

$

13,281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

The following tables provide a breakdown of the allowance for loan losses and loan portfolio balances by segment as of December 31, 2019, 2018 and 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

    

Commercial

    

Mortgage

    

Consumer

    

Total

Allowance balances

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

 -

 

$

40

 

$

87

 

$

127

Collectively evaluated for impairment

 

 

8,574

 

 

1,192

 

 

3,414

 

 

13,180

Total allowance for loan losses

 

$

8,574

 

$

1,232

 

$

3,501

 

$

13,307

Loan balances

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

6,228

 

$

1,181

 

$

251

 

$

7,660

Collectively evaluated for impairment

 

 

713,528

 

 

414,684

 

 

353,076

 

 

1,481,288

Gross loans

 

$

719,756

 

$

415,865

 

$

353,327

 

$

1,488,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

    

Commercial

    

Mortgage

    

Consumer

    

Total

Allowance balances

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

100

 

$

 -

 

$

 -

 

$

100

Collectively evaluated for impairment

 

 

8,326

 

 

1,548

 

 

3,307

 

 

13,181

Loans acquired with deteriorated credit quality

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Total allowance for loan losses

 

$

8,426

 

$

1,548

 

$

3,307

 

$

13,281

Loan balances

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

7,178

 

$

1,137

 

$

 -

 

$

8,315

Collectively evaluated for impairment

 

 

681,299

 

 

463,402

 

 

344,240

 

 

1,488,941

Loans acquired with deteriorated credit quality

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Gross loans

 

$

688,477

 

$

464,539

 

$

344,240

 

$

1,497,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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, 2019 and 2018, 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, 2019, 2018 and 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

 

    

Pre-Modification

    

Post-Modification

 

 

No. of Loans

 

Recorded Balance

 

Recorded Balance

Real estate

 

  

 

 

  

 

 

  

Consumer closed end first mortgage

 

 5

 

$

131

 

$

134

Consumer open end and junior liens

 

 2

 

 

33

 

 

33

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

Consumer Loans

 

 

 

 

 

 

 

 

Auto

 

 3

 

 

25

 

 

25

Boat/RVs

 

 4

 

 

316

 

 

316

Other consumer loans

 

 1

 

 

10

 

 

10

Commercial and industrial

 

 1

 

 

49

 

 

49

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

    

Pre-Modification

    

Post-Modification

 

 

No. of Loans

 

Recorded Balance

 

Recorded Balance

Real estate

 

 

 

 

 

 

 

 

Commercial

 

 1

 

$

26

 

$

30

Consumer closed end first mortgage

 

 9

 

 

381

 

 

388

Consumer open end and junior liens

 

 4

 

 

82

 

 

94

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

Auto

 

 3

 

 

31

 

 

30

Boat/RVs

 

 6

 

 

353

 

 

348

Other consumer loans

 

 1

 

 

 4

 

 

 4

Commercial and industrial

 

 1

 

 

60

 

 

61

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

    

Pre-Modification

    

Post-Modification

 

 

No. of Loans

 

Recorded Balance

 

Recorded Balance

Real estate

 

 

 

 

 

 

 

 

Consumer closed end first mortgage

 

 7

 

$

320

 

$

324

Consumer open end and junior liens

 

 2

 

 

16

 

 

16

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

Commercial and industrial

 

 1

 

 

72

 

 

72

 

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, 2019, 2018 and 2017 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

Total

 

    

Rate

    

Term

    

Combination

    

Modification

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

Consumer closed end first mortgage

 

$

 -

 

$

 -

 

$

134

 

$

134

Consumer open end and junior liens

 

 

 -

 

 

 7

 

 

26

 

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

 -

 

 

 8

 

 

17

 

 

25

Boat/RVs

 

 

 -

 

 

16

 

 

300

 

 

316

Other consumer loans

 

 

 -

 

 

10

 

 

 -

 

 

10

Commercial and industrial

 

 

 -

 

 

49

 

 

 -

 

 

49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

Total

 

    

Rate

    

Term

    

Combination

    

Modification

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

 -

 

$

30

 

$

 -

 

$

30

Consumer closed end first mortgage

 

 

 -

 

 

38

 

 

350

 

 

388

Consumer open end and junior liens

 

 

 -

 

 

35

 

 

59

 

 

94

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

  

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

  

Auto

 

 

 -

 

 

30

 

 

 -

 

 

30

Boat/RVs

 

 

 -

 

 

321

 

 

27

 

 

348

Other consumer loans

 

 

 

 

 

 4

 

 

 -

 

 

 4

Commercial and industrial

 

 

 -

 

 

61

 

 

 -

 

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

Total

 

    

Rate

    

Term

    

Combination

    

Modification

Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

Consumer closed end first mortgage

 

$

 -

 

$

27

 

$

297

 

$

324

Consumer open end and junior liens

 

 

 -

 

 

 3

 

 

13

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

Other loans

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

 -

 

 

72

 

 

 -

 

 

72

 

Defaults of any loans modified as troubled debt restructurings made in the years ended December 31, 2019, 2018 and 2017, respectively, are listed in the tables below. Defaults are defined as any loans that become 90 days past due.

 

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

 

 

 

    

Post-Modification Outstanding

 

 

No. of Loans

 

Recorded Balance

Real Estate

 

 

 

 

 

Consumer closed end first mortgage

 

 1

 

$

80

 

 

 

 

 

 

Other loans

 

 

 

 

 

Consumer loans

 

 

 

 

 

Boat/RV

 

 2

 

 

299

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

    

Post-Modification Outstanding

 

 

No. of Loans

 

Recorded Balance

Real Estate

 

 

 

 

 

Consumer closed end first mortgage

 

 1

 

$

48

Consumer open end and junior liens

 

 1

 

 

 5

 

 

 

 

 

 

 

 

 

2017

 

 

 

    

Post-Modification Outstanding

 

 

No. of Loans

 

Recorded Balance

Real Estate

 

 

 

 

 

Consumer closed end first mortgage

 

 1

 

$

79

 

At December 31, 2019 and 2018, the Company had residential real estate owned as a result of foreclosure totaling $805,000 and $541,000, respectively. At December 31, 2019 and 2018, real estate in the process of foreclosure was $1.9 million and $833,000, respectively.