Note 3 - Loans

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables, Excluding Allowance for Credit Losses [Text Block]

Note

3.

Loans

Loans at

December 31, 2019

 and

2018

 are summarized as follows (in thousands):

	2019			2018
Real estate loans:
Construction and land development	$	43,164		$	45,867
Secured by 1-4 family residential		229,438			215,945
Other real estate		236,555			219,553
Commercial and industrial loans		50,153			44,605
Consumer and other loans		15,036			16,886
Total loans	$	574,346		$	542,856
Allowance for loan losses		(4,934	)		(5,009	)
Loans, net	$	569,412		$	537,847

Net deferred loan fees included in the above loan categories were

$340

 thousand and

$274

 thousand at

December 31, 2019

 and

2018

, respectively. Consumer and other loans included

$374

 thousand and

$275

 thousand of demand deposit overdrafts at

December 31, 2019

 and

2018

, respectively.

The following tables provide a summary of loan classes and an aging of past due loans as of

December 31, 2019

 and

2018

 (in thousands):

	December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More Past Due and Accruing
Real estate loans:
Construction and land development	$	—	$	136	$	30	$	166	$	42,998	$	43,164	$	367	$	30
1-4 family residential		1,428		306		115		1,849		227,589		229,438		630		67
Other real estate loans		457		—		416		873		235,682		236,555		462		—
Commercial and industrial		45		50		—		95		50,058		50,153		—		—
Consumer and other loans		83		79		—		162		14,874		15,036		—		—
Total	$	2,013	$	571	$	561	$	3,145	$	571,201	$	574,346	$	1,459	$	97

	December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More Past Due and Accruing
Real estate loans:
Construction and land development	$	88	$	80	$	—	$	168	$	45,699	$	45,867	$	327	$	—
1-4 family residential		747		393		423		1,563		214,382		215,945		663		—
Other real estate loans		145		36		2,207		2,388		217,165		219,553		1,985		222
Commercial and industrial		—		25		210		235		44,370		44,605		197		13
Consumer and other loans		90		—		—		90		16,796		16,886		—		—
Total	$	1,070	$	534	$	2,840	$	4,444	$	538,412	$	542,856	$	3,172	$	235

Credit Quality Indicators

As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans. The Company utilizes a risk grading matrix to assign a rating to each of its loans. The loan ratings are summarized into the following categories: pass, special mention, substandard, doubtful, and loss. Pass rated loans include all risk rated credits other than those included in special mention, substandard, or doubtful. Loans classified as loss are charged-off. Loan officers assign risk grades to loans at origination and as renewals arise. The Bank’s Credit Administration department reviews risk grades for accuracy on a quarterly basis and as credit issues arise. In addition, a certain amount of loans are reviewed each year through the Company’s internal and external loan review process. A description of the general characteristics of the loan grading categories is as follows:

Pass

–

Loans classified as pass exhibit acceptable operating trends, balance sheet trends, and liquidity. Sufficient cash flow exists to service the loan. All obligations have been paid by the borrower as agreed.

Special

Mention

–

Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses

may

result in deterioration of the repayment prospects for the loan or the Bank’s credit position at some future date.

Substandard

–

Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are

not

corrected.

Doubtful

–

Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The Company considers all doubtful loans to be impaired and places the loan on non-accrual status.

Loss

–

Loans classified as loss are considered uncollectable and of such little value that their continuance as bankable assets is

not

warranted.

The following tables provide an analysis of the credit risk profile of each loan class as of

December 31, 2019

 and

2018

 (in thousands):

	December 31, 2019
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	42,636	$	—	$	528	$	—	$	43,164
Secured by 1-4 family residential		228,029		524		885		—		229,438
Other real estate loans		233,240		537		2,778		—		236,555
Commercial and industrial		48,527		948		678		—		50,153
Consumer and other loans		10,976		4,060		—		—		15,036
Total	$	563,408	$	6,069	$	4,869	$	—	$	574,346

	December 31, 2018
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	45,054	$	235	$	578	$	—	$	45,867
Secured by 1-4 family residential		214,089		924		932		—		215,945
Other real estate loans		213,681		900		4,972		—		219,553
Commercial and industrial		44,373		19		213		—		44,605
Consumer and other loans		16,886		—		—		—		16,886
Total	$	534,083	$	2,078	$	6,695	$	—	$	542,856