Note 4 - Allowance for Loan Losses

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Allowance for Credit Losses [Text Block]

Note 4. Allowance for Loan Losses

The following tables present, as of March 31, 2022, December 31, 2021 and March 31, 2021, the total allowance for loan losses, the allowance by impairment methodology, and loans by impairment methodology (in thousands):

	March 31, 2022
	Construction and Land Development			Secured by 1-4 Family Residential			Other Real Estate		Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2021	$	345		$	1,077		$	3,230	$	718		$	340		$	5,710
Charge-offs		—			—			—		(8	)		(98	)		(106	)
Recoveries		4			5			2		140			73			224
Provision for (recovery of) loan losses		(1	)		(113	)		145		(40	)		9			—
Ending Balance, March 31, 2022	$	348		$	969		$	3,377	$	810		$	324		$	5,828
Ending Balance:
Individually evaluated for impairment		—			—			—		—			—			—
Collectively evaluated for impairment		348			969			3,377		810			324			5,828
Loans:
Ending Balance	$	49,308		$	290,408		$	384,191	$	103,682		$	8,834		$	836,423
Individually evaluated for impairment		—			619			28		1,483			—			2,130
Collectively evaluated for impairment		49,308			289,789			384,163		102,199			8,834			834,293

	December 31, 2021
	Construction and Land Development		Secured by 1-4 Family Residential			Other Real Estate			Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2020	$	306	$	1,022		$	4,956		$	784		$	417		$	7,485
Charge-offs		—		(15	)		(992	)		(6	)		(434	)		(1,447	)
Recoveries		6		65			3			7			241			322
Provision for (recovery of) loan losses		33		5			(737	)		(67	)		116			(650	)
Ending Balance, December 31, 2021	$	345	$	1,077		$	3,230		$	718		$	340		$	5,710
Ending Balance:
Individually evaluated for impairment		—		—			—			55			—			55
Collectively evaluated for impairment		345		1,077			3,230			663			340			5,655
Loans:
Ending Balance	$	55,721	$	291,990		$	364,921		$	99,805		$	12,681		$	825,118
Individually evaluated for impairment		—		765			30			1,509			—			2,304
Collectively evaluated for impairment		55,721		291,225			364,891			98,296			12,681			822,814

	March 31, 2021
	Construction and Land Development			Secured by 1-4 Family Residential		Other Real Estate		Commercial and Industrial		Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2020	$	306		$	1,022	$	4,956	$	784	$	417		$	7,485
Charge-offs		—			—		—		—		(66	)		(66	)
Recoveries		—			2		1		2		62			67
Provision for (recovery of) loan losses		(16	)		7		39		46		(76	)		—
Ending Balance, March 31, 2021	$	290		$	1,031	$	4,996	$	832	$	337		$	7,486
Ending Balance:
Individually evaluated for impairment		—			—		2,065		123		—			2,188
Collectively evaluated for impairment		290			1,031		2,931		709		337			5,298
Loans:
Ending Balance	$	25,720		$	236,870	$	248,864	$	117,545	$	9,203		$	638,202
Individually evaluated for impairment		269			430		4,567		1,548		—			6,814
Collectively evaluated for impairment		25,451			236,440		244,297		115,997		9,203			631,388

Impaired loans and the related allowance at March 31, 2022, December 31, 2021 and March 31, 2021, were as follows (in thousands):

	March 31, 2022
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Secured by 1-4 family residential	$	743	$	618	$	—	$	618	$	—	$	732	$	1
Other real estate loans		39		28		—		28		—		29		—
Commercial and industrial		1,680		1,484		—		1,484		—		1,491		—
Total		2,462		2,130		—		2,130		—		2,252		1

	December 31, 2021
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	91	$	—
Secured by 1-4 family residential		889		765		—		765		—		429		9
Other real estate loans		40		30		—		30		—		2,384		—
Commercial and industrial		1,673		—		1,509		1,509		55		1,613		—
Total	$	2,602	$	795	$	1,509	$	2,304	$	55	$	4,517	$	9

	March 31, 2021
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	323	$	269	$	—	$	269	$	—	$	273	$	—
Secured by 1-4 family residential		556		430		—		430		—		440		—
Other real estate loans		4,619		297		4,270		4,567		2,065		4,443		1
Commercial and industrial		1,639		—		1,548		1,548		123		1,548		—
Total	$	7,137	$	996	$	5,818	$	6,814	$	2,188	$	6,704	$	1

The “Recorded Investment” amounts in the table above represent the outstanding principal balance on each loan represented in the table. The “Unpaid Principal Balance” represents the outstanding principal balance on each loan represented in the table plus any amounts that have been charged off on each loan and/or payments that have been applied towards principal on non-accrual loans. Only loan classes with balances are included in the tables above.

As of March 31, 2022, loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $1.6 million. At March 31, 2022, none of the loans classified as TDRs were performing under the restructured terms and all were considered non-performing assets. There were $1.6 million in TDRs at December 31, 2021, $7 thousand of which were performing under the restructured terms. Modified terms under TDRs may include rate reductions, extension of terms that are considered to be below market, conversion to interest only, and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. There were no loans modified under TDRs during the three months ended  March 31, 2022 and 2021.

For the three months ended March 31, 2022 and 2021, there were no TDRs that subsequently defaulted within twelve months of the loan modification. Management defines default as over ninety days past due or the foreclosure and repossession of the collateral or charge-off of the loan during the twelve month period subsequent to the modification.

During the fourth quarter of 2020, the Company modified terms of certain loans for customers that continued to be negatively impacted by the COVID-19 pandemic. The loan modifications lowered borrower loan payments by allowing interest only payments for periods ranging between 6 and 24 months. As of March 31, 2022, loans that were modified totaled $8.9 million. All modified loans were performing and were not considered TDRs because they were modified in accordance with relief provisions of the CARES Act.