Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2021

Summary of Major Classifications of Loans

Major classifications of loans, by collateral code, at June 30, 2021 and December 31, 2020 are summarized as follows: (in thousands)

	June 30, 2021			December 31, 2020
Commercial (secured by real estate)	$	193,965		$	178,571
Commercial and industrial		157,633			155,554
Paycheck Protection Program loans		73,020			101,749
Construction, land and acquisition & development		26,954			23,571
Residential mortgage 1-4 family		79,495			91,777
Consumer installment		58,944			47,393
Total		590,011			598,615
Less allowance for loan losses		(7,387	)		(6,361	)
Total loans, net	$	582,624		$	592,254

Summary of Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of and for the six months ended June 30, 2021 and 2020: (in thousands)

June 30, 2021	Commercial (Secured by Real Estate)			Commercial and Industrial			Paycheck Protection Program (1)		Construction, Land and Acquisition & Development		Residential Mortgage			Consumer Installment			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	3,084		$	1,320		$	—	$	224	$	970		$	719		$	44		$	6,361
Provision		293			722			—		54		(361	)		66			(24	)		750
Charge-offs		—			(55	)		—		—		—			(26	)		—			(81	)
Recoveries		250			35			—		—		69			3			—			357
Ending balance	$	3,627		$	2,022		$	—	$	278	$	678		$	762		$	20		$	7,387
Ending allowance attributable to loans:	.
Individually evaluated for impairment	$	7		$	45		$	—	$	—	$	6		$	—		$	—		$	58
Collectively evaluated for impairment		3,620			1,977			—		278		672			762			20			7,329
Total ending allowance	$	3,627			2,022		$	—		278		678			762			20			7,387
Loans:
Individually evaluated for impairment	$	1,895		$	933		$	—	$	—	$	3,209		$	3		$	—		$	6,040
Collectively evaluated for impairment		192,070			156,700			73,020		26,954		76,286			58,941			—			583,971
Total loans	$	193,965		$	157,633		$	73,020	$	26,954	$	79,495		$	58,944		$	—		$	590,011

December 31, 2020
Allowance for loan losses:
Beginning balance	$	1,661		$	1,478		$	—	$	153	$	369		$	466		$	7		$	4,134
Provision		1,207			(194	)		—		71		627			252			37			2,000
Charge-offs		(30	)		—			—		—		(126	)		(29	)		—			(185	)
Recoveries		246			36			—		—		100			30			—			412
Ending balance	$	3,084		$	1,320		$		$	224	$	970		$	719		$	44		$	6,361
Ending allowance attributable to loans:
Individually evaluated for impairment	$	2		$	35		$	—	$	—	$	14		$	—		$	—		$	51
Collectively evaluated for impairment		3,082			1,285			—		224		956			719			44			6,310
Total ending allowance	$	3,084		$	1,320		$	—	$	224	$	970		$	719		$	44		$	6,361
Loans:
Individually evaluated for impairment	$	2,584		$	1,085		$	—	$	—	$	3,597		$	8		$	—		$	7,274
Collectively evaluated for impairment		175,987			154,469			101,749		23,571		88,180			47,385			—			591,341
Total loans	$	178,571		$	155,554		$	101,749	$	23,571	$	91,777		$	47,393		$	—		$	598,615

(1)

Includes PPP loans that are fully guaranteed by the SBA; thus no allowance for loan losses has been allocated to these loans.

Summary of Impaired Loans

Impaired loans at June 30, 2021 and December 31, 2020 were as follows: (in thousands)

June 30, 2021	Recorded Investment		Unpaid Principal Balance		Allocated Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial (secured by real estate)	$	577	$	1,623	$	—	$	1,232	$	7
Commercial and industrial		315		315		—		355		—
Paycheck Protection Program		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		2,057		2,057		—		1,793		20
Consumer installment		3		3		—		8		—
		2,952		3,998		—		3,388		27
With an allowance recorded:
Commercial (secured by real estate)		1,318		1,096		7		1,356		40
Commercial and industrial		618		618		45		692		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		1,152		1,154		6		1,816		36
Consumer installment		—		—		—		—		—
		3,088		2,868		58		3,864		76
Total impaired loans	$	6,040	$	6,866	$	58	$	7,252	$	103

December 31, 2020
With no related allowance recorded:
Commercial (secured by real estate)	$	1,136	$	2,232	$	—	$	1,138	$	42
Commercial and industrial		395		395		—		395		—
Paycheck Protection Program		—		—		—		—		—
Construction, land and acquisition & development		—		—		—		—		—
Residential mortgage		1,986		1,987		—		2,041		9
Consumer installment		8		8		—		9		1
		3,525		4,622		—		3,583		52
With an allowance recorded:
Commercial (secured by real estate)		1,448		1,449		2		—		91
Commercial and industrial		690		690		35		1,481		6
Construction, land and acquisition & development		—		—		—		727		—
Residential mortgage		1,611		1,613		14		—		73
Consumer installment		—		—		—		1,634		—
		3,749		3,752		51		3,842		170
Total impaired loans	$	7,274	$	8,374	$	51	$	7,425	$	222

Summary of Recorded Investment in Past Due Loans, as Well as Nonaccrual Loans

The following table presents the aging of the recorded investment in past due loans, as well as the recorded investment in nonaccrual loans, as of June 30, 2021 and December 31, 2020 by class of loans: (in thousands)

June 30, 2021	30 -59 Days Past Due		60- 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total		Nonaccrual
Commercial (secured by real estate)	$	—	$	—	$	—	$	—	$	193,965	$	193,965	$	496
Commercial and industrial		47		484		—		531		157,102		157,633		1,001
Paycheck Protection Program		—		—		—		—		73,020		73,020		—
Construction, land and acquisition & development		—		—		—		—		26,954		26,954		—
Residential mortgage		383		1,166		171		1,720		77,775		79,495		3,062
Consumer installment		6		10		—		16		58,928		58,944		46
Total	$	436	$	1,660	$	171	$	2,267	$	587,744	$	590,011	$	4,606

December 31, 2020
Commercial (secured by real estate)	$	3,386	$	—	$	1,136	$	4,522	$	174,049	$	178,571	$	1,157
Commercial and industrial		29		—		1,085		1,114		154,440		155,554		1,085
Paycheck Protection Program		—		—		—		—		101,749		101,749		—
Construction, land and acquisition & development		1,392		—		—		1,392		22,179		23,571		—
Residential mortgage		4,308		1,094		1,444		6,846		84,931		91,777		2,587
Consumer installment		78		—		73		151		47,242		47,393		73
Total	$	9,193	$	1,094	$	3,738	$	14,025	$	584,590	$	598,615	$	4,902

Summary of Risk Category of Loans by Class of Loans

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans. As of June 30, 2021 and December 31, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: (in thousands)

June 30, 2021	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	192,292	$	1,177	$	496	$	—	$	193,965
Commercial and industrial		156,632		—		1,001		—		157,633
Paycheck Protection Program		73,020		—		—		—		73,020
Construction, land and acquisition & development		26,954		—		—		—		26,954
Residential mortgage		75,054		—		4,441		—		79,495
Consumer installment		58,898		—		46		—		58,944
Total	$	582,850	$	1,177	$	5,984	$	—	$	590,011

December 31, 2020	Pass		Special Mention		Substandard		Doubtful/ Loss		Total
Commercial (secured by real estate)	$	176,629	$	785	$	1,157	$	—	$	178,571
Commercial and industrial		154,469		—		1,085		—		155,554
Paycheck Protection Program		101,749		—		—		—		101,749
Construction, land and acquisition & development		23,571		—		—		—		23,571
Residential mortgage		87,738		62		3,977		—		91,777
Consumer installment		47,332		—		61		—		47,393
Total	$	591,488	$	847	$	6,280	$	—	$	598,615