LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Tables)

3 Months Ended

Mar. 31, 2023

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

Loan Portfolio by Class

The following table presents the loan portfolio by class at March 31, 2023 and December 31, 2022.

(Dollars in thousands)
	March 31, 2023		December 31, 2022
Commercial, financial and agricultural	$	59,090	$	61,458
Real estate - commercial		198,558		199,206
Real estate - construction:
1-4 family residential construction		6,957		7,995
Other construction loans		46,096		42,753
Real estate - mortgage		152,746		150,290
Obligations of states and political subdivisions		21,012		18,770
Personal		4,038		4,040
Total	$	488,497	$	484,512

Activity in the Allowance for Loan Losses by Loan Class

The following table discloses allowance for credit loss activity by loan class for the three months ended March 31, 2023.

					Real estate-				Obligations
	Commercial,				construction		Real estate-		of states
(Dollars in thousands)	financial and		Real estate-		1-4 family		construction		and political		Real estate-
	agricultural		commercial		residential		other		subdivisions		mortgage		Personal		Total
Three Months Ended
March 31, 2023
Allowance for credit losses:
Beginning balance, prior to ASC 326 adoption	$	297	$	1,110	$	69	$	1,077	$	54	$	1,385	$	35	$	4,027
Impact of adopting ASC 326		337		1,204		114		(407)		(9)		(497)		15		757
Initial allowance on loans purchased with credit deterioration				106								248				354
Credit loss expense (1)		(2)		176		(26)		101		—		(23)		17		243
Loans charged off		—		—		—		—		—		(19)		(7)		(26)
Recoveries collected		—		—		—		—		—		18		1		19
Total ending allowance balance (1)	$	632	$	2,596	$	157	$	771	$	45	$	1,112	$	61	$	5,374

(1) Allowance/credit loss expense are not comparable to prior periods due to the adoptions of ASC 326.

The following table discloses allowance for credit loss activity by loan class for the three months ended March 31, 2022, prior to the adoption of ASC 326.

							Obligations
	Commercial,						of states
(Dollars in thousands)	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
Three Months Ended
March 31, 2022
Allowance for loan losses:
Beginning balance	$	251	$	1,020	$	884	$	45	$	1,269	$	39	$	3,508
Provision for credit losses		8		(184)		286		2		(82)		(2)		28
Loans charged off		—		—		—		—		(1)		(2)		(3)
Recoveries collected		—		—		—		—		42		1		43
Total ending allowance balance	$	259	$	836	$	1,170	$	47	$	1,228	$	36	$	3,576

The following table summarizes loans by loan class, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of December 31, 2022, prior to the adoption of ASC 326.

							Obligations
	Commercial,						of states
(Dollars in thousands)	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
December 31, 2022
Loans allocated by:
Individually evaluated for impairment	$	—	$	2,025	$	—	$	—	$	377	$	—	$	2,402
Acquired with credit deterioration		—		334		—		—		419		—		753
Collectively evaluated for impairment		61,458		196,847		50,748		18,770		149,494		4,040		481,357
	$	61,458	$	199,206	$	50,748	$	18,770	$	150,290	$	4,040	$	484,512
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Acquired with credit deterioration		—		—		—		—		—		—		—
Collectively evaluated for impairment		297		1,110		1,146		54		1,385		35		4,027
	$	297	$	1,110	$	1,146	$	54	$	1,385	$	35	$	4,027

Schedule of collateral dependent loans

The following table presents the amortized cost basis of collateral-dependent loans by class of loans and collateral type as of March 31, 2023.

(Dollars in thousands)
	Real Estate
Real estate - mortgage	$	28
Total	$	28

Impaired Loans by Loan Portfolio Class

The following table summarizes information regarding impaired loans by portfolio class as of December 31, 2022, prior to the adoption of ASC 326.

(Dollars in thousands)	As of December 31, 2022
	Recorded		Unpaid Principal		Related
	Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	2,025	$	2,471	$	—
Acquired with credit deterioration		334		344		—
Real estate - mortgage		377		993		—
Acquired with credit deterioration		419		634		—
Total:
Real estate - commercial	$	2,025	$	2,471	$	—
Acquired with credit deterioration		334		344		—
Real estate – mortgage		377		993		—
Acquired with credit deterioration		419		634		—
	$	3,155	$	4,442	$	—

Average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2022 are summarized in the table below, prior to the adoption of ASC 326.

(Dollars in thousands)	Three Months Ended March 31, 2022
	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Income
Impaired Loans
With no related allowance recorded:
Real estate - commercial	$	5,263	$	63	$	—
Acquired with credit deterioration		353		—		—
Real estate - mortgage		357		3		10
Acquired with credit deterioration		470		—		—
With an allowance recorded:
Real estate - mortgage	$	69	$	—	$	—
Total:
Real estate - commercial	$	5,263	$	63	$	—
Acquired with credit deterioration		353		—		—
Real estate - mortgage		426		3		10
Acquired with credit deterioration		470		—		—
	$	6,512	$	66	$	10

Nonaccrual Loans by Classes of the Loan Portfolio

The following tables present the amortized cost basis of loans on nonaccrual status, including nonaccrual status loans with no allowance, and loans past due over 89 days still accruing.

(Dollars in thousands)	Nonaccrual with				Loans Past Due
	No Allowance				Over 89 Days
As of March 31, 2023	for Credit Loss		Nonaccrual		Still Accruing(1)
Commercial, financial and agricultural	$	—	$	23	$	—
Real estate - mortgage		28		—		—
Total	$	28	$	23	$	—

(Dollars in thousands)					Loans Past Due
	Nonaccrual with				Over 89 Days
As of December 31, 2022	No Allowance		Nonaccrual		Still Accruing(1)
Commercial, financial and agricultural	$	—	$	—	$	24
Real estate - commercial		—		—		7
Real estate - mortgage		—		139		4
Personal		—		—		4
Total	$	—	$	139	$	39

(1) These loans are guaranteed, or well-secured, and there is an effective means of collection in process.

Loan Portfolio Summarized by the Past Due Status

(Dollars in thousands)					Greater
	30‑59 Days		60‑89 Days		Than 89 Days		Total Past
As of March 31, 2023	Past Due(1)		Past Due		Past Due		Due
Real estate - mortgage	$	135	$	2	$	—	$	137
Personal		4		—		—		4
Total	$	139	$	2	$	—	$	141

(Dollars in thousands)					Greater
	30‑59 Days		60‑89 Days		Than 89 Days		Total Past
As of December 31, 2022	Past Due(1)		Past Due		Past Due		Due
Commercial, financial and agricultural	$	75	$	—	$	24	$	99
Real estate - commercial		—		104		7		111
Real estate - mortgage		205		36		142		383
Personal		27		1		4		32
	$	307	$	141	$	177	$	625

(1) Loans are considered past due when the borrower is in arrears on two or more monthly payments.

Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2023 and December 31, 2022, respectively.

(Dollars in thousands)			Special
As of March 31, 2023	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	58,493	$	574	$	23	$	—	$	59,090
Real estate - commercial		188,070		9,435		1,053		—		198,558
Real estate - construction:
1-4 family residential construction		6,757		200		—		—		6,957
Other construction loans		41,011		5,085		—		—		46,096
Real estate - mortgage		152,098		217		431		—		152,746
Obligations of states and political subdivisions		21,012		—		—		—		21,012
Personal		4,038		—		—		—		4,038
Total	$	471,479	$	15,511	$	1,507	$	—	$	488,497

(Dollars in thousands)			Special
As of December 31, 2022	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	60,990	$	468	$	—	$	—	$	61,458
Real estate - commercial		186,977		9,802		2,427		—		199,206
Real estate - construction		50,008		740						50,748
Real estate - mortgage		149,272		222		796		—		150,290
Obligations of states and political subdivisions		18,770		—		—		—		18,770
Personal		4,040		—		—		—		4,040
Total	$	470,057	$	11,232	$	3,223	$	—	$	484,512

Based on the most recent analysis performed, the amortized cost basis by risk category of loans by class of loan and by origination year is as follows:

													Revolving		Revolving
(Dollars in thousands)													Loans		Loans
													Amortized		Converted
As of March 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Commercial, financial and agricultural:
Risk Rating
Pass	$	1,402	$	7,712	$	14,484	$	6,448	$	4,717	$	2,499	$	21,253	$	—	$	58,515
Special Mention		—		—		—		—		75		—		500		—		575
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial, financial and agricultural loans	$	1,402	$	7,712	$	14,484	$	6,448	$	4,792	$	2,499	$	21,753	$	—	$	59,090
Commercial, financial and agricultural loans:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate - commercial:
Risk Rating
Pass	$	3,300	$	59,190	$	23,498	$	16,737	$	18,539	$	62,878	$	3,455	$	621	$	188,218
Special Mention		—		—		—		3,998		236		4,954		198		—		9,386
Substandard		—		—		—		—		—		954		—		—		954
Doubtful		—		—		—		—		—		—		—		—		—
Total real estate - commercial loans	$	3,300	$	59,190	$	23,498	$	20,735	$	18,775	$	68,786	$	3,653	$	621	$	198,558
Real estate - commercial:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate - construction - 1-4 family residential:
Risk Rating
Pass	$	—	$	6,026	$	—	$	683	$	—	$	48	$	—	$	—	$	6,757
Special Mention		200		—		—		—		—		—		—		—		200
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total real estate - construction - 1-4 family residential loans	$	200	$	6,026		—	$	683		—	$	48	$	—	$	—	$	6,957
Real estate - construction - 1-4 family residential:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate - construction - other:
Risk Rating
Pass	$	155	$	3,730	$	16,359	$	9,254	$	523	$	3,764	$	7,073	$	168	$	41,026
Special Mention		—		—		2		5,068		—		—		—		—		5,070
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total real estate - construction - other loans	$	155	$	3,730	$	16,361	$	14,322	$	523	$	3,764	$	7,073	$	168	$	46,096
Real estate - construction - other:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

													Revolving		Revolving
(Dollars in thousands)													Loans		Loans
													Amortized		Converted
As of March 31, 2023 (cont.)	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Real estate - mortgage:
Risk Rating
Pass	$	3,928	$	44,574	$	21,773	$	16,098	$	5,978	$	51,829	$	8,240	$	310	$	152,730
Special Mention		—		—		—		—		—		16		—		—		16
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total real estate - mortgage loans	$	3,928	$	44,574	$	21,773	$	16,098	$	5,978	$	51,845	$	8,240	$	310	$	152,746
Real estate - mortgage:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	19	$	—	$	—	$	19
Obligations of states and political subdivisions:
Risk Rating
Pass	$	2,822	$	4,130	$	2,630	$	5,281	$	38	$	6,111	$	—	$	—	$	21,012
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total Obligations of states and political subdivisions	$	2,822	$	4,130	$	2,630	$	5,281	$	38	$	6,111	$	—	$	—	$	21,012
Obligations of states and political subdivisions:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Personal:
Risk Rating
Pass	$	645	$	1,733	$	750	$	196	$	246	$	339	$	93	$	36	$	4,038
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—	$	—
Doubtful		—		—		—		—		—		—		—		—		—
Total personal loans	$	645	$	1,733	$	750	$	196	$	246	$	339	$	93	$	36	$	4,038
Personal:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	7	$	—	$	—	$	7