Note 5 - Allowance for Loan Losses

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Allowance for Credit Losses [Text Block]

(

5

) Allowance for Loan Losses

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

three

month period ended

March 31, 2019

and

March 31, 2018.

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.

March 31, 2019
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance
Commercial and Agricultural
Commercial	$	370	$	(97	)	$	6	$	(38	)	$	241
Agricultural		248		-			-		(23	)		225
Real Estate
Commercial Construction		115		(29	)		17		(88	)		15
Residential Construction		16		-			-		(11	)		5
Commercial		4,549		(56	)		33		(152	)		4,374
Residential		1,181		(629	)		49		348			949
Farmland		702		(63	)		1		48			688
Consumer and Other
Consumer		86		(70	)		17		36			69
Other		10		-			2		11			23
	$	7,277	$	(944	)	$	125	$	131		$	6,589

March 31, 2018
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance
Commercial and Agricultural
Commercial	$	447	$	(4	)	$	8	$	19		$	470
Agricultural		186		(17	)		1		32			202
Real Estate
Commercial Construction		1,216		-			20		187			1,423
Residential Construction		-		-			-		-			-
Commercial		3,874		-			4		(551	)		3,327
Residential		968		(61	)		12		270			1,189
Farmland		780		-			1		24			805
Consumer and Other
Consumer		34		(59	)		28		45			48
Other		3		-			-		-			3
	$	7,508	$	(141	)	$	74	$	26		$	7,467

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

March 31, 2019,

there were

134

impaired loans totaling

$3.9

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

March 31, 2018,

there were

144

impaired loans totaling

$3.5

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

$10.28

million and

$12.70

million as of

March 31, 2019

and

2018,

respectively. Specific allowance allocations were made for these loans totaling

$1.86

million and

$1.22

million as of

March 31, 2019

and

2018,

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

March 31, 2019

and

2018:

March 31, 2019
	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	$	-	$	241	$	241	$	26	$	51,342	$	51,368
Agricultural		-		225		225		23		15,267		15,290
Real Estate
Commercial Construction		-		15		15		68		44,237		44,305
Residential Construction		-		5		5		-		14,947		14,947
Commercial		819		3,555		4,374		14,107		359,156		373,263
Residential		52		897		949		2,175		178,829		181,004
Farmland		34		654		688		2,102		61,954		64,056
Consumer and Other
Consumer		-		69		69		-		17,907		17,907
Other		-		23		23		-		17,851		17,851
Total End of Period Balance	$	905	$	5,684	$	6,589	$	18,501	$	761,490	$	779,991

March 31, 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	$	-	$	470	$	470	$	77	$	46,616	$	46,693
Agricultural		-		202		202		5		16,346		16,351
Real Estate
Commercial Construction		57		1,366		1,423		485		49,174		49,659
Residential Construction		-		-		-		-		8,145		8,145
Commercial		1,662		1,665		3,327		15,574		338,524		354,098
Residential		21		1,168		1,189		2,023		191,353		193,376
Farmland		30		775		805		1,034		66,077		67,111
Consumer and Other
Consumer		-		48		48		-		18,805		18,805
Other		-		3		3		-		14,259		14,259
Total End of Period Balance	$	1,770	$	5,697	$	7,467	$	19,198	$	749,299	$	768,497