Note 4 - Allowance for Loan Losses

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Allowance for Credit Losses [Text Block]

(

4

) Allowance for Loan Losses

The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the

nine

month period ended

September 30, 2018

and

September 30, 2017.

Allocation of a portion of the allowance to

one

category of loans does

not

preclude its availability to absorb losses in other loan categories and periodically

may

result in reallocation within the provision categories.

September 30, 2018
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance
Commercial and Agricultural
Commercial	$	447	$	(118	)	$	114	$	(59	)	$	384
Agricultural		186		(123	)		7		245			315
Real Estate
Commercial Construction		1,216		-			39		(1,130	)		125
Residential Construction		-		-			-		17			17
Commercial		3,874		(258	)		39		626			4,281
Residential		968		(124	)		83		255			1,182
Farmland		780		-			11		(61	)		730
Consumer and Other
Consumer		34		(214	)		59		214			93
Other		3		-			1		24			28
	$	7,508	$	(837	)	$	353	$	131		$	7,155

September 30, 2017
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance
Commercial and Agricultural
Commercial	$	456	$	(215	)	$	124	$	71		$	436
Agricultural		168		(160	)		3		238			249
Real Estate
Commercial Construction		323		(49	)		241		473			988
Residential Construction		13		-			-		(7	)		6
Commercial		5,751		(966	)		523		(1,085	)		4,223
Residential		1,396		(648	)		47		334			1,129
Farmland		722		(61	)		2		209			872
Consumer and Other
Consumer		80		(184	)		60		100			56
Other		14		-			2		2			18
	$	8,923	$	(2,283	)	$	1,002	$	335		$	7,977

Management continually evaluates the allowance for loan losses methodology seeking to refine and enhance this process as appropriate, and it is likely that the methodology will continue to evolve over time.

The Company determines its individual reserves during its quarterly review of substandard loans. This process involves reviewing all loans with a risk grade of

6

or greater and an outstanding balance of

$250,000

or more, regardless of the loans impairment classification. At

September 30, 2018,

there were

139

impaired loans totaling

$4.0

million below the

$250,000

review threshold which were

not

individually reviewed for impairment. Those loans were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables. Likewise, at

September 30, 2017,

there were

155

impaired loans totaling

$4.5

million which were below the

$250,000

review threshold and were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.

Since

not

all loans in the substandard category are considered impaired, this quarterly review process

may

result in the identification of specific reserves on unimpaired loans. Management considers those loans graded substandard, but

not

classified as impaired, to be higher risk loans and, therefore, makes specific allocations to the allowance for those loans if warranted. The total of such loans is

$8.73

million and

$12.68

million as of

September 30, 2018

and

2017,

respectively. Specific allowance allocations were made for these loans totaling

$1.25

million and

$1.49

million as of

September 30, 2018

and

2017,

respectively. Since these loans are

not

considered impaired, both the loan balance and related specific allocation are included in the “Collectively Evaluated for Impairment” column of the following tables.

The following tables present breakdowns of the allowance for loan losses, segregated by impairment methodology for

September 30, 2018

and

2017:

September 30, 2018
	Ending Allowance Balance						Ending Loan Balance
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Impairment		Impairment		Total		Impairment		Impairment		Total
Commercial and Agricultural
Commercial	$	-	$	384	$	384	$	39	$	47,253	$	47,292
Agricultural		-		315		315		27		21,388		21,415
Real Estate
Commercial Construction		44		81		125		471		53,099		53,570
Residential Construction		-		17		17		-		12,897		12,897
Commercial		1,394		2,887		4,281		15,164		334,244		349,408
Residential		20		1,162		1,182		1,753		187,400		189,153
Farmland		29		701		730		2,103		67,966		70,069
Consumer and Other
Consumer		-		93		93		-		18,623		18,623
Other		-		28		28		-		17,016		17,016
Total End of Period Balance	$	1,487	$	5,668	$	7,155	$	19,557	$	759,886	$	779,443

September 30, 2017
	Ending Allowance Balance						Ending Loan Balance
	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Impairment		Impairment		Total		Impairment		Impairment		Total
Commercial and Agricultural
Commercial	$	-	$	436	$	436	$	77	$	45,286	$	45,363
Agricultural		-		249		249		5		25,241		25,246
Real Estate
Commercial Construction		69		919		988		497		36,036		36,533
Residential Construction		-		6		6		-		8,905		8,905
Commercial		1,471		2,752		4,223		17,605		328,646		346,251
Residential		21		1,108		1,129		2,204		194,128		196,332
Farmland		24		848		872		1,038		70,865		71,903
Consumer and Other
Consumer		-		56		56		-		18,677		18,677
Other		-		18		18		-		20,836		20,836
Total End of Period Balance	$	1,585	$	6,392	$	7,977	$	21,426	$	748,620	$	770,046