Note 5 - Allowance for Loan Losses

6 Months Ended

Jun. 30, 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

six

month period ended

June 30, 2019

and

June 30, 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.

June 30, 2019
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance
Commercial and Agricultural
Commercial	$	370	$	(125	)	$	16	$	122		$	383
Agricultural		248		-			1		789			1,038
Real Estate
Commercial Construction		115		(29	)		54		(130	)		10
Residential Construction		16		-			-		(14	)		2
Commercial		4,549		(56	)		38		(790	)		3,741
Residential		1,181		(647	)		159		152			845
Farmland		702		(63	)		3		47			689
Consumer and Other
Consumer		86		(179	)		27		129			63
Other		10		-			3		5			18
	$	7,277	$	(1,099	)	$	301	$	310		$	6,789

June 30, 2018
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance
Commercial and Agricultural
Commercial	$	447	$	(116	)	$	85	$	28		$	444
Agricultural		186		(123	)		7		192			262
Real Estate
Commercial Construction		1,216		-			38		(1,172	)		82
Residential Construction		-		-			-		-			-
Commercial		3,874		(258	)		37		753			4,406
Residential		968		(89	)		75		112			1,066
Farmland		780		-			9		79			868
Consumer and Other
Consumer		34		(135	)		49		82			30
Other		3		-			2		(4	)		1
	$	7,508	$	(721	)	$	302	$	70		$	7,159

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.

Part I (Continued)

Item

1

(Continued)

(

5

) Allowance for Loan Losses

(Continued)

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

June 30, 2019,

there were

123

impaired loans totaling

$3.8

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

June 30, 2018,

there were

125

impaired loans totaling

$3.1

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

$9.26

million and

$9.55

million as of

June 30, 2019

and

2018,

respectively. Specific allowance allocations were made for these loans totaling

$1.66

million and

$1.30

million as of

June 30, 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.

Part I (Continued)

Item

1

(Continued)

(

5

)

Allowance for Loan Losses (Continued)

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

June 30, 2019

and

2018.

For

June 30, 2018,

there were

no

purchased credit impaired loans and related allowance for loan losses.

June 30, 2019
	Ending Allowance Balance								Ending Loan Balance
	Individually		Collectively		Purchased				Individually		Collectively		Purchased
	Evaluated for		Evaluated for		Credit				Evaluated for		Evaluated for		Credit
	Impairment		Impairment		Impaired		Total		Impairment		Impairment		Impaired		Total
Commercial and Agricultural
Commercial	$	-	$	383	$	-	$	383	$	16	$	68,477	$	42	$	68,535
Agricultural		588		450		-		1,038		850		18,011		-		18,861
Real Estate
Commercial Construction		-		10		-		10		67		72,842		69		72,978
Residential Construction		-		2		-		2		354		18,268		-		18,622
Commercial		897		2,844		-		3,741		14,243		419,573		-		433,816
Residential		49		796		-		845		1,914		203,260		14		205,188
Farmland		32		657		-		689		2,752		71,480		40		74,272
Consumer and Other
Consumer		-		63		-		63		-		23,066		-		23,066
Other		-		18		-		18		-		19,933		-		19,933
Total End of Period Balance	$	1,566	$	5,223	$	-	$	6,789	$	20,196	$	914,910	$	165	$	935,271

June 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	$	-	$	444	$	444	$	77	$	44,952	$	45,029
Agricultural		-		262		262		5		20,032		20,037
Real Estate
Commercial Construction		54		28		82		481		48,428		48,909
Residential Construction		-		-		-		-		11,541		11,541
Commercial		1,371		3,035		4,406		15,187		336,876		352,063
Residential		21		1,045		1,066		1,910		185,681		187,591
Farmland		28		840		868		1,032		66,835		67,867
Consumer and Other
Consumer		-		30		30		-		18,746		18,746
Other		-		1		1		-		15,013		15,013
Total End of Period Balance	$	1,474	$	5,685	$	7,159	$	18,692	$	748,104	$	766,796

Part I (Continued)

Item

1

(Continued)