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Loans Receivable, Net
6 Months Ended
Jun. 30, 2022
Loans and Leases Receivable, Net Amount [Abstract]  
Financing Receivables [Text Block]
Loans receivable, net, consisted of the following as of the dates indicated below:
June 30, 2022December 31, 2021
Real Estate Loans:
Construction$97,626,900 $100,162,260 
Residential Mortgage95,994,291 84,965,542 
Commercial241,062,833 227,751,664 
Commercial and Agricultural Loans28,520,637 44,689,391 
Consumer Loans:
Home Equity Lines of Credit (HELOC)28,596,407 28,611,516 
Other Consumer22,516,694 21,449,809 
Total Loans Held For Investment, Gross514,317,762 507,630,182 
Less:
Allowance For Loan Losses11,197,954 11,087,164 
Deferred Loan Fees730,571 1,084,623 
 11,928,525 12,171,787 
Total Loans Receivable, Net$502,389,237 $495,458,395 

During the first six months of 2022, the Company continued its participation in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), by processing applications for PPP loan forgiveness. PPP loans are included in Commercial and Agricultural loans in the tables above and below and had a total balance of $552,000 at June 30, 2022 compared to $9.8 million at December 31, 2021. The balance of unamortized net deferred fees on PPP loans was $39,500 at June 30, 2022 compared to $441,000 at December 31, 2021.
The Company uses a risk based approach based on the following credit quality measures when analyzing the loan portfolio: pass, caution, special mention, and substandard. These indicators are used to rate the credit quality of loans for the purposes of determining the Company’s allowance for loan losses. Pass loans are loans that are performing and are deemed adequately protected by the net worth of the borrower or the underlying collateral value. These loans are considered to have the least amount of risk in terms of determining the allowance for loan losses. Loans that are graded as substandard are considered to have the most risk. These loans typically have an identified weakness or weaknesses and are inadequately protected by the net worth of the borrower or collateral value. All loans 90 days or more past due are automatically classified in this category. The caution and special mention categories fall in between the pass and substandard grades and consist of loans that do not currently expose the Company to sufficient risk to warrant adverse classification but possess weaknesses.
The tables below summarize the balance within each risk category by loan type, excluding loans held for sale, at June 30, 2022 and December 31, 2021.
June 30, 2022 
Pass
 
Caution
Special Mention 
Substandard
 
Total Loans
Construction Real Estate$77,485,354 $18,584,376 $1,134,498 $422,672 $97,626,900 
Residential Real Estate74,994,327 17,634,346 743,027 2,622,591 95,994,291 
Commercial Real Estate188,204,047 47,357,023 3,185,552 2,316,211 241,062,833 
Commercial and Agricultural23,065,973 4,762,460 369,881 322,323 28,520,637 
Consumer HELOC23,193,758 4,393,892 518,867 489,890 28,596,407 
Other Consumer15,572,558 6,571,390 225,759 146,987 22,516,694 
Total$402,516,017 $99,303,487 $6,177,584 $6,320,674 $514,317,762 
December 31, 2021
 
Pass
 
Caution
Special Mention
 
Substandard
 
Total Loans
Construction Real Estate$67,205,984 $25,867,339 $6,566,302 $522,635 $100,162,260 
Residential Real Estate65,650,970 14,506,787 2,061,598 2,746,187 84,965,542 
Commercial Real Estate185,117,439 34,263,196 5,669,666 2,701,363 227,751,664 
Commercial and Agricultural40,017,641 4,296,962 54,380 320,408 44,689,391 
Consumer HELOC23,416,585 3,987,734 624,055 583,142 28,611,516 
Other Consumer15,059,609 6,244,382 85,673 60,145 21,449,809 
Total$396,468,228 $89,166,400 $15,061,674 $6,933,880 $507,630,182 
Past Due and Non-accrual Loans
The tables below present an age analysis of past due balances by loan category at June 30, 2022 and December 31, 2021:
June 30, 2022
 
30-59 Days
Past Due
 
60-89 Days
Past Due
90 Days or
More Past Due
 
Total Past
Due
 
 
Current
 
Total Loans
Receivable
Construction Real Estate$1,249,533 $ $100,472 $1,350,005 $96,276,895 $97,626,900 
Residential Real Estate58,103 128,967 547,933 735,003 95,259,288 95,994,291 
Commercial Real Estate1,016,041  363,406 1,379,447 239,683,386 241,062,833 
Commercial and Agricultural23,690 55,622 50,913 130,225 28,390,412 28,520,637 
Consumer HELOC50,991 27,888 19,724 98,603 28,497,804 28,596,407 
Other Consumer232,555 38,273 14,204 285,032 22,231,662 22,516,694 
Total$2,630,913 $250,750 $1,096,652 $3,978,315 $510,339,447 $514,317,762 
December 31, 2021
 
30-59 Days
Past Due
 
60-89 Days
Past Due
90 Days or More Past Due
 
Total Past
Due
 
 
Current
 
Total Loans
Receivable
Construction Real Estate$4,291 $114,516 $— $118,807 $100,043,453 $100,162,260 
Residential Real Estate296,556 543,716 205,713 1,045,985 83,919,557 84,965,542 
Commercial Real Estate195,271 — 372,405 567,676 227,183,988 227,751,664 
Commercial and Agricultural79,381 133,610 — 212,991 44,476,400 44,689,391 
Consumer HELOC51,430 — 44,382 95,812 28,515,704 28,611,516 
Other Consumer93,560 3,648 8,797 106,005 21,343,804 21,449,809 
Total$720,489 $795,490 $631,297 $2,147,276 $505,482,906 $507,630,182 

At June 30, 2022 and December 31, 2021, the Company did not have any loans that were 90 days or more past due and still accruing interest. The Company's strategy is to work with its borrowers to reach acceptable payment plans while protecting its interests in the existing collateral.  In the event an acceptable arrangement cannot be reached, the Company may have to acquire these properties through foreclosure or other means and subsequently sell, develop, or liquidate them.
The following table shows non-accrual loans by category at June 30, 2022 compared to December 31, 2021:
Non-accrual Loans:June 30, 2022December 31, 2021
Construction Real Estate$118,966 $21,434 
Residential Real Estate1,398,656 1,389,498 
Commercial Real Estate755,463 1,057,496 
Commercial and Agricultural118,016 64,479 
Consumer HELOC71,268 141,683 
Other Consumer13,976 8,797 
Total Non-accrual Loans$2,476,345 $2,683,387 

Allowance for Loan Losses
The following tables show the activity in the allowance for loan losses by category for the three and six months ended June 30, 2022 and 2021:
 Three Months Ended June 30, 2022
Real EstateConsumer
 ConstructionResidentialCommercialCommercial and AgriculturalHELOCOther
 
Total
Beginning Balance$2,336,583 $1,628,316 $4,932,948 $1,242,919 $555,403 $432,794 $11,128,963 
(Reversal of) Provision for Loan Losses(239,158)224,160 (227,132)159,404 46,567 36,159  
Charge-Offs     (11,821)(11,821)
Recoveries6,961 18,220 30,498 1,495 4,877 18,761 80,812 
Ending Balance$2,104,386 $1,870,696 $4,736,314 $1,403,818 $606,847 $475,893 $11,197,954 
Three Months Ended June 30, 2021
Real EstateConsumer
ConstructionResidentialCommercialCommercial and AgriculturalHELOCOtherTotal
Beginning Balance$2,325,093 $1,943,579 $5,489,541 $1,078,898 $601,563 $508,199 $11,946,873 
(Reversal of) Provision for Loan Losses(195,992)(199,394)(679,947)448,895 (34,984)(73,578)(735,000)
Charge-Offs— — — — — (19,415)(19,415)
Recoveries— 24,276 146,937 708 — 59,381 231,302 
Ending Balance$2,129,101 $1,768,461 $4,956,531 $1,528,501 $566,579 $474,587 $11,423,760 
 Six Months Ended June 30, 2022
Real EstateConsumer
 ConstructionResidentialCommercialCommercial and AgriculturalHELOCOther
 
Total
Beginning Balance$2,401,196 $1,663,423 $4,832,440 $1,241,828 $517,512 $430,765 $11,087,164 
(Reversal of) Provision for Loan Losses(312,373)179,342 (145,605)137,162 81,749 59,725  
Charge-Offs     (43,692)(43,692)
Recoveries15,563 27,931 49,479 24,828 7,586 29,095 154,482 
Ending Balance$2,104,386 $1,870,696 $4,736,314 $1,403,818 $606,847 $475,893 $11,197,954 
Six Months Ended June 30, 2021
Real EstateConsumer
ConstructionResidentialCommercialCommercial and AgriculturalHELOCOtherTotal
Beginning Balance$2,486,910 $2,264,414 $5,753,641 $1,112,952 $657,356 $567,623 $12,842,896 
(Reversal of) Provision for Loan Losses(357,809)(520,299)(952,687)420,592 (90,777)(104,020)(1,605,000)
Charge-Offs— — — (6,699)— (57,692)(64,391)
Recoveries— 24,346 155,577 1,656 — 68,676 250,255 
Ending Balance$2,129,101 $1,768,461 $4,956,531 $1,528,501 $566,579 $474,587 $11,423,760 
Allowance for Loan Losses and Loans Receivable Evaluated for Impairment
The tables below summarize the impaired loan balances evaluated individually and collectively for impairment within the allowance for loan losses and loans receivable balances at June 30, 2022 and December 31, 2021.
 Allowance For Loan LossesLoans Receivable
June 30, 2022Individually Evaluated For ImpairmentCollectively Evaluated For Impairment
 
Total
Individually Evaluated For ImpairmentCollectively Evaluated For ImpairmentTotal
Construction Real Estate$ $2,104,386 $2,104,386 $117,117 $97,509,783 $97,626,900 
Residential Real Estate 1,870,696 1,870,696 1,131,090 94,863,201 95,994,291 
Commercial Real Estate 4,736,314 4,736,314 750,323 240,312,510 241,062,833 
Commercial and Agricultural 1,403,818 1,403,818 31,446 28,489,191 28,520,637 
Consumer HELOC 606,847 606,847 51,544 28,544,863 28,596,407 
Other Consumer 475,893 475,893  22,516,694 22,516,694 
Total$ $11,197,954 $11,197,954 $2,081,520 $512,236,242 $514,317,762 
Allowance For Loan LossesLoans Receivable
December 31, 2021Individually Evaluated For ImpairmentCollectively Evaluated For ImpairmentTotalIndividually Evaluated For ImpairmentCollectively Evaluated For ImpairmentTotal
Construction Real Estate$ $2,401,196 $2,401,196 $19,133 $100,143,127 $100,162,260 
Residential Real Estate 1,663,423 1,663,423 1,128,452 83,837,090 84,965,542 
Commercial Real Estate 4,832,440 4,832,440 1,046,974 226,704,690 227,751,664 
Commercial and Agricultural 1,241,828 1,241,828 31,446 44,657,945 44,689,391 
Consumer HELOC 517,512 517,512 97,302 28,514,214 28,611,516 
Other Consumer 430,765 430,765 — 21,449,809 21,449,809 
Total$— $11,087,164 $11,087,164 $2,323,307 $505,306,875 $507,630,182 

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Non-accrual commercial loans under $200,000 and non-accrual consumer loans under $100,000 are considered immaterial and are excluded from the impairment review. Once a loan is identified as individually impaired, management measures the impairment and records the loan at fair value. Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sell, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method.
The following tables present information related to impaired loans by loan category at June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021.
June 30, 2022December 31, 2021
Impaired LoansRecorded
Investment
Unpaid
Principal
Balance
Related
Allowance
Recorded
Investment
Unpaid
Principal
Balance
 
Related
Allowance
Construction Real Estate$117,117 $117,117 $ $19,133 $19,133 $— 
Residential Real Estate1,131,090 1,668,090  1,128,452 1,646,952 — 
Commercial Real Estate750,323 750,324  1,046,974 1,046,974 — 
Commercial and Agricultural31,446 926,446  31,446 926,446 — 
Consumer HELOC51,544 51,544  97,302 97,302 — 
Other Consumer   — — — 
Total$2,081,520 $3,513,521 $ $2,323,307 $3,736,807 $— 
Three Months Ended June 30,
20222021
Impaired LoansAverage Recorded InvestmentInterest Income
Recognized
Average Recorded
Investment
Interest Income
Recognized
Construction Real Estate$117,739 $ $34,249 $— 
Residential Real Estate1,142,322  1,217,428 — 
Commercial Real Estate756,649  1,095,734 3,171 
Commercial and Agricultural31,446  53,046 — 
Consumer HELOC52,914  155,306 — 
Other Consumer  598 — 
Total$2,101,070 $ $2,556,361 $3,171 
Six Months Ended June 30,
20222021
Impaired LoansAverage Recorded
Investment
Interest Income
Recognized
Average Recorded
Investment
Interest Income
Recognized
Construction Real Estate$118,503 $— $36,776 $— 
Residential Real Estate1,153,767 — 1,242,528 — 
Commercial Real Estate762,720 — 1,095,991 5,027 
Commercial and Agricultural31,446 — 53,046 — 
Consumer HELOC53,463 — 156,501 — 
Other Consumer — 1,193 — 
Total$2,119,899 $ $2,586,035 $5,027 

Troubled Debt Restructurings and Loan Modifications
In the course of resolving delinquent loans, the Company may choose to restructure the contractual terms of certain loans. A troubled debt restructuring ("TDR") is a restructuring in which the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider (FASB ASC Topic 310-40).  The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation. The Company grants such concessions to reassess the borrower’s financial status and develop a plan for repayment. At the date of modification, TDRs are initially classified as nonaccrual TDRs. They are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower's financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).
The Company had three TDRs with a combined balance of $404,000 included in impaired loans at June 30, 2022 compared to three TDRs with a combined balance of $694,000 at December 31, 2021. There were no loans restructured as TDRs during the six months ended June 30, 2022 or the six months ended June 30, 2021 and no TDRs were in default at those dates. The Company considers any loan 30 days or more past due to be in default. At June 30, 2022 and December 31, 2021, the Company had no commitments to extend additional credit to borrowers whose loan terms have been modified in a TDR. All TDRs are also classified as impaired loans and are included in the loans individually evaluated for impairment.
Our policy with respect to accrual of interest on loans restructured as a TDR follows relevant supervisory guidance.  That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, continued accrual of interest at the restructured interest rate is probable.  If a borrower was materially delinquent on payments prior to the restructuring but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward.  Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status.
The Company will continue to closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms.  If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status.  The Bank's policy with respect to nonperforming loans requires the borrower to become current and then make a minimum of six consecutive payments in accordance with the loan terms before that loan can be placed back on accrual status.  Further, the borrower must show capacity to continue performing into the future prior to restoration of accrual status.