Note 5 - Allowance for Loan Losses

9 Months Ended

Sep. 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

nine

month period ended

September 30, 2019

and

September 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.

September 30, 2019
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance
Commercial and Agricultural
Commercial	$	370	$	(266	)	$	27	$	312		$	443
Agricultural		248		(84	)		4		703			871
Real Estate
Commercial Construction		115		(29	)		61		(5	)		142
Residential Construction		16		-			-		17			33
Commercial		4,549		(56	)		173		(1,376	)		3,290
Residential		1,181		(757	)		166		367			957
Farmland		702		(63	)		10		74			723
Consumer and Other
Consumer		86		(432	)		41		404			99
Other		10		-			4		28			42
	$	7,277	$	(1,687	)	$	486	$	524		$	6,600

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

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, 2019,

there were

123

impaired loans totaling

$3.5

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, 2018,

there were

139

impaired loans totaling

$4.0

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

$5.93

million and

$8.73

million as of

September 30, 2019

and

2018,

respectively. Specific allowance allocations were made for these loans totaling

$1.23

million and

$1.25

million as of

September 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.

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

September 30, 2019

and

2018.

For

September 30, 2018,

there were

no

purchased credit impaired loans and related allowance for loan losses.

September 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	$	152	$	291	$	-	$	443	$	428	$	75,765	$	39	$	76,232
Agricultural		586		285		-		871		848		19,893		-		20,741
Real Estate
Commercial Construction		-		142		-		142		67		73,867		66		74,000
Residential Construction		-		33		-		33		-		20,039		-		20,039
Commercial		823		2,467		-		3,290		11,967		438,733		-		450,700
Residential		48		901		8		957		2,063		196,578		13		198,654
Farmland		30		693		-		723		2,674		71,630		37		74,341
Consumer and Other
Consumer		-		99		-		99		-		22,756		-		22,756
Other		-		42		-		42		-		21,260		-		21,260
Total End of Period Balance	$	1,639	$	4,953	$	8	$	6,600	$	18,047	$	940,521	$	155	$	958,723

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