Allowance for Loan Losses and Impaired Loans (Tables)

12 Months Ended

Dec. 31, 2018

Allowance for Loan Losses and Recorded Investment in Loans

The following table presents activity in the allowance by loan category and information on the loans evaluated individually for impairment and collectively evaluated for impairment as of December 31, 2018 and December 31, 2017:

Allowance for Loan Losses and Recorded Investment in Loans

(dollars in thousands)	Construction & Development			Farmland			Residential			Commercial Mortgage			Commercial & Agricultural			Consumer & Other			Total
December 31, 2018
Allowance for loan losses:
Beginning Balance	$	239		$	358		$	1,875		$	619		$	282		$	80		$	3,453
Charge-offs		(20	)		—			(117	)		(142	)		(23	)		(175	)		(477	)
Recoveries		—			34			44			69			9			38			194
Provision		27			(7	)		5			136			13			151			325
Ending Balance	$	246		$	385		$	1,807		$	682		$	281		$	94		$	3,495
Ending balance: individually evaluated for impairment	$	—		$	29		$	12		$	—		$	—		$	—		$	41
Ending balance: collectively evaluated for impairment	$	246		$	356		$	1,795		$	682		$	281		$	94		$	3,454
Loans outstanding:
Ending Balance	$	33,449		$	33,291		$	235,689		$	176,192		$	37,491		$	20,353		$	536,465
Ending balance: individually evaluated for impairment	$	—		$	4,552		$	1,018		$	—		$	—		$	—		$	5,570
Ending balance: collectively evaluated for impairment	$	33,449		$	28,739		$	234,671		$	176,192		$	37,491		$	20,353		$	530,895

December 31, 2017
Allowance for loan losses:
Beginning Balance	$	319		$	342		$	1,841		$	600		$	210		$	108		$	3,420
Charge-offs		(33	)		(34	)		(89	)		(59	)		(27	)		(76	)		(318	)
Recoveries		56			—			23			—			33			22			134
Provision		(103	)		50			100			78			66			26			217
Ending Balance	$	239		$	358		$	1,875		$	619		$	282		$	80		$	3,453
Ending balance: individually evaluated for impairment	$	—		$	49		$	42		$	—		$	—		$	—		$	91
Ending balance: collectively evaluated for impairment	$	239		$	309		$	1,833		$	619		$	282		$	80		$	3,362
Loans outstanding:
Ending Balance	$	25,475		$	33,353		$	199,120		$	125,661		$	25,672		$	15,590		$	424,871
Ending balance: individually evaluated for impairment	$	—		$	5,069		$	1,556		$	—		$	—		$	—		$	6,625
Ending balance: collectively evaluated for impairment	$	25,475		$	28,284		$	197,564		$	125,661		$	25,672		$	15,590		$	418,246

Credit Risk Profile by Internally Assigned Grades

The following table lists the loan grades utilized by the Bank and the corresponding total of outstanding loans in each category as of December 31, 2018 and December 31, 2017:

Credit Risk Profile by Internally Assigned Grades

	Loan Grades
(dollars in thousands)	Pass		Watch		Special Mention		Substandard		Total
December 31, 2018
Real Estate Secured:
Construction & development	$	31,237	$	2,044	$	147	$	21	$	33,449
Farmland		23,250		4,933		750		4,358		33,291
Residential		213,670		18,794		299		2,926		235,689
Commercial mortgage		148,179		23,468		1,212		3,333		176,192
Non-Real Estate Secured:
Commercial & agricultural		33,537		2,908		70		976		37,491
Consumer & other		18,975		1,364		—		14		20,353
Total	$	468,848	$	53,511	$	2,478	$	11,628	$	536,465
December 31, 2017
Real Estate Secured:
Construction & development	$	24,612	$	652	$	—	$	211	$	25,475
Farmland		23,935		4,895		74		4,449		33,353
Residential		183,543		12,464		200		2,913		199,120
Commercial mortgage		106,102		15,291		1,611		2,657		125,661
Non-Real Estate Secured:
Commercial & agricultural		22,446		2,057		649		520		25,672
Consumer & other		15,262		328		—		—		15,590
Total	$	375,900	$	35,687	$	2,534	$	10,750	$	424,871

Analysis of Nonaccrual and Past Due Loans

The following table presents an age analysis of nonaccrual and past due loans by category as of December 31, 2018 and December 31, 2017:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90+ Days Past Due and Still Accruing		Nonaccrual Loans
December 31, 2018
Real Estate Secured:
Construction & development	$	29	$	—	$	—	$	29	$	33,420	$	33,449	$	—	$	—
Farmland		71		100		989		1,160		32,131		33,291		—		3,914
Residential		762		145		241		1,148		234,541		235,689		—		653
Commercial mortgage		—		—		604		604		175,588		176,192		—		740
Non-Real Estate Secured:
Commercial & agricultural		7		—		264		271		37,220		37,491		—		264
Consumer & other		12		18		8		38		20,315		20,353		—		8
Total	$	881	$	263	$	2,106	$	3,250	$	533,215	$	536,465	$	—	$	5,579
December 31, 2017
Real Estate Secured:
Construction & development	$	—	$	—	$	227	$	227	$	25,248	$	25,475	$	—	$	226
Farmland		188		—		308		496		32,857		33,353		—		3,610
Residential		395		334		710		1,439		197,681		199,120		—		1,211
Commercial mortgage		—		—		194		194		125,467		125,661		—		194
Non-Real Estate Secured:
Commercial & agricultural		70		—		23		93		25,579		25,672		—		94
Consumer & other		2		24		—		26		15,564		15,590		—		—
Total	$	655	$	358	$	1,462	$	2,475	$	422,396	$	424,871	$	—	$	5,335

Impaired Loans

The following table is a summary of information related to impaired loans as of December 31, 2018 and December 31, 2017:

Impaired Loans

(dollars in thousands)	Recorded ‎ Investment 1		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2018
With no related allowance recorded:
Construction & development	$	—	$	—	$	—	$	—	$	—
Farmland		3,284		3,284		—		3,523		23
Residential		85		85		—		448		13
Commercial mortgage		—		—		—		—		—
Commercial & agricultural		—		24		—		—		—
Consumer & other		—		—		—		—		—
Subtotal		3,369		3,393		—		3,971		36
With an allowance recorded:
Construction & development		69		69		4		306		11
Farmland		1,539		1,539		38		1,568		86
Residential		5,005		5,162		241		5,348		266
Commercial mortgage		275		358		15		522		27
Commercial & agricultural		37		37		2		47		3
Consumer & other		4		4		—		4		—
Subtotal		6,929		7,169		300		7,795		393
Totals:
Construction & development		69		69		4		306		11
Farmland		4,823		4,823		38		5,091		109
Residential		5,090		5,247		241		5,796		279
Commercial mortgage		275		358		15		522		27
Commercial & agricultural		37		61		2		47		3
Consumer & other		4		4		—		4		—
Total	$	10,298	$	10,562	$	300	$	11,766	$	429

1	Recorded investment is the loan balance, net of any charge-offs

(dollars in thousands)	Recorded ‎ Investment 1		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
December 31, 2017
With no related allowance recorded:
Construction & development	$	—	$	—	$	—	$	—	$	—
Farmland		3,422		3,456		—		3,774		10
Residential		300		300		—		300		8
Commercial mortgage		—		—		—		—		—
Commercial & agricultural		—		26		—		27		—
Consumer & other		—		—		—		—		2
Subtotal		3,722		3,782		—		4,101		20
With an allowance recorded:
Construction & development		361		361		16		718		111
Farmland		1,936		1,936		58		2,224		135
Residential		5,647		5,832		284		6,209		290
Commercial mortgage		602		737		33		1,020		54
Commercial & agricultural		55		55		3		89		13
Consumer & other		—		—		—		2		—
Subtotal		8,601		8,921		394		10,262		603
Totals:
Construction & development		361		361		16		718		111
Farmland		5,358		5,392		58		5,998		145
Residential		5,947		6,132		284		6,509		298
Commercial mortgage		602		737		33		1,020		54
Commercial & agricultural		55		81		3		116		13
Consumer & other		—		—		—		2		2
Total	$	12,323	$	12,703	$	394	$	14,363	$	623

1	Recorded investment is the loan balance, net of any charge-offs

Troubled Debt Restructurings

The following table sets forth information with respect to the Bank’s troubled debt restructurings as of December 31, 2018 and December 31, 2017:

	TDRs identified during the period						TDRs identified in the last twelve ‎ months that subsequently defaulted (1)
(dollars in thousands)	Number of contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment		Number of contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment
December 31, 2018
Construction & development		—	$	—	$	—		—	$	—	$	—
Farmland		—		—		—		—		—		—
Residential		2		80		95		—		—		—
Commercial mortgage		—		—		—		—		—		—
Commercial & agricultural		—		—		—		—		—		—
Consumer & other		1		5		4		—		—		—
Total		3	$	85	$	99		—	$	—	$	—

During the twelve months ended December 31, 2018, three loans were modified that were considered to be TDRs. Term concessions were granted and additional funds were advanced for legal expenses and property taxes. No TDRs identified in the last twelve months subsequently defaulted in the year ended December 31, 2018.

(1)	Loans past due 30 days or more are considered to be in default.

	TDRs identified during the period						TDRs identified in the last twelve ‎ months that subsequently defaulted (1)
(dollars in thousands)	Number of contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment		Number of contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment
December 31, 2017
Construction & development		—	$	—	$	—		—	$	—	$	—
Farmland		2		298		298		—		—		—
Residential		1		48		48		—		—		—
Commercial mortgage		—		—		—		—		—		—
Commercial & agricultural		—		—		—		—		—		—
Consumer & other		—		—		—		—		—		—
Total		3	$	346	$	346		—	$	—	$	—

Carrying Amount of Loans

The carrying amount of those loans at December 31, 2018 was a follows:

(dollars in thousands)	2018
Residential	$	167
Commercial mortgage		347
Commercial & agricultural		200
Outstanding balance	$	714
Carrying amount	$	714

Schedule of Purchased Credit Impaired Loans

Purchased credit impaired loans acquired during the year ended December 31, 2018 for which it was probable at acquisition that all contractually required payments would not be collected are as follows:

(dollars in thousands)	2018
Contractually required payments receivable of loans purchased during the year:
Residential	$	233
Commercial mortgage		1,724
Commercial & agricultural		221
	$	2,178
Cash flows expected to be collected at acquisition	$	1,781
Fair value of acquired loans at acquisition	$	1,781

Summary of Carrying Amounts of Loans

Income is not recognized on purchased credit impaired loans if the Company cannot reasonably estimate cash flows expected to be collected. The carrying amounts of such loans are as follows:

(dollars in thousands)	2018
Loans at beginning of year	$	—
Loans purchased during the year	$	1,781
Loans at December 31, 2018	$	714