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Loans Receivable, Net (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Accounts, Notes, Loans and Financing Receivable

Loans receivable, net, at the dates indicated are summarized as follows:


	December 31,
	2022				2021
(Dollars in thousands)	Balance		% of Total Gross Loans		Balance		% of Total Gross Loans
Real Estate Loans:
Construction	$	112,794	20.1	%	$	100,162	19.7	%
Residential Mortgage	110,057		19.6	%	84,966		16.8	%
Commercial	252,154		44.9	%	227,752		44.9	%
Other Commercial and Agricultural Loans	30,648		5.5	%	44,689		8.8	%
Consumer Loans:
Home Equity Lines of Credit ("HELOC")	31,737		5.7	%	28,612		5.6	%
Other Consumer Loans	23,598		4.2	%	21,450		4.2	%
Total Loans Held For Investment, Gross	560,988		100.0	%	507,631		100.0	%
Less:
Allowance For Loan Losses	11,178				11,087
Deferred Loan Fees	806				1,085
	11,984				12,172
Loans Receivable Held For Investment, Net	$	549,004			$	495,459

Financing Receivable Credit Quality Indicators

The following tables summarize the loan grades used by the Bank to measure the credit quality of gross loans receivable, excluding those held for sale, by loan segment at the dates indicated.


	December 31, 2022
(Dollars in thousands)	Pass		Caution		Special Mention		Substandard		Total Loans
Construction Real Estate	$	91,564	$	18,838	$	2,014	$	378	$	112,794
Residential Real Estate	84,028		22,373		888		2,768		110,057
Commercial Real Estate	196,063		47,821		3,271		4,999		252,154
Commercial and Agricultural	25,384		4,593		371		300		30,648
Consumer HELOC	25,694		5,018		402		623		31,737
Other Consumer	16,515		6,725		179		179		23,598
Total	$	439,248	$	105,368	$	7,125	$	9,247	$	560,988


	December 31, 2021
(Dollars in thousands)	Pass		Caution		Special Mention		Substandard		Total Loans
Construction Real Estate	$	67,206	$	25,867	$	6,566	$	523	$	100,162
Residential Real Estate	65,651		14,507		2,062		2,746		84,966
Commercial Real Estate	185,118		34,263		5,670		2,701		227,752
Commercial and Agricultural	40,018		4,297		54		320		44,689
Consumer HELOC	23,417		3,988		624		583		28,612
Other Consumer	15,060		6,244		86		60		21,450
Total	$	396,470	$	89,166	$	15,062	$	6,933	$	507,631

Past Due Financing Receivables

The following tables present an age analysis of past due balances by category at the dates indicated.


	December 31, 2022
(Dollars in thousands)	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	$	—	$	—	$	100	$	100	$	112,694	$	112,794
Residential Real Estate	1,557		—		472		2,029		108,028		110,057
Commercial Real Estate	2,671		89		354		3,114		249,040		252,154
Commercial and Agricultural	6		2		55		63		30,585		30,648
Consumer HELOC	199		—		74		273		31,464		31,737
Other Consumer	272		79		17		368		23,230		23,598
Total	$	4,705	$	170	$	1,072	$	5,947	$	555,041	$	560,988


	December 31, 2021
(Dollars in thousands)	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	$	114	$	—	$	118	$	100,044	$	100,162
Residential Real Estate	297		544		206		1,047		83,919		84,966
Commercial Real Estate	195		—		373		568		227,184		227,752
Commercial and Agricultural	79		134		—		213		44,476		44,689
Consumer HELOC	52		—		44		96		28,516		28,612
Other Consumer	93		4		9		106		21,344		21,450
Total	$	720	$	796	$	632	$	2,148	$	505,483	$	507,631

Schedule of Financing Receivables, Non Accrual Status

The following table shows non-accrual loans by category at the dates indicated.


	December 31, 2022				December 31, 2021				Increase (Decrease)
(Dollars in thousands)	Amount		Percent (1)		Amount		Percent (1)		$		%
Non-accrual Loans:
Construction Real Estate	$	115	0.02	%	$	21	—	%	$	94	447.6	%
Residential Real Estate	1,545		0.28		1,389		0.28		156		11.2
Commercial Real Estate	4,282		0.76		1,057		0.21		3,225		305.1
Commercial and Agricultural	113		0.02		64		0.01		49		76.6
Consumer HELOC	189		0.03		142		0.03		47		33.1
Other Consumer	29		0.01		9		—		20		222.2
Total Non-accrual Loans	$	6,273	1.12	%	$	2,682	0.53	%	$	3,591	133.9	%

(1) PERCENT OF GROSS LOANS RECEIVABLE HELD FOR INVESTMENT, NET OF DEFERRED FEES

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent

The tables below show the allowance for loan losses by loan category for the years indicated.


	For the Year Ended December 31, 2022
	Real Estate								Consumer
(Dollars in thousands)	Construction		Residential		Commercial		Commercial and Agricultural		HELOC		Other		Total
Beginning Balance	$	2,401	$	1,663	$	4,832	$	1,242	$	518	$	431	$	11,087
(Provision for) Reversal of loan losses	(113)		415		(160)		(305)		30		133		—
Charge-Offs	—		—		—		(105)		—		(162)		(267)
Recoveries	35		46		133		43		51		50		358
Ending Balance	$	2,323	$	2,124	$	4,805	$	875	$	599	$	452	$	11,178

	For the Year Ended December 31, 2021
	Real Estate								Consumer
(Dollars in thousands)	Construction		Residential		Commercial		Commercial and Agricultural		HELOC		Other		Total
Beginning Balance	$	2,487	$	2,264	$	5,754	$	1,113	$	657	$	568	$	12,843
(Provision for) Reversal of loan losses	(274)		(666)		(1,342)		133		(154)		(101)		(2,404)
Charge-Offs	(20)		—		—		(7)		—		(110)		(137)
Recoveries	208		65		420		3		15		74		785
Ending Balance	$	2,401	$	1,663	$	4,832	$	1,242	$	518	$	431	$	11,087

Allowance for Credit Losses on Financing Receivables

The following tables summarize the impaired loans evaluated individually and collectively for impairment within the allowance for loan losses and loans receivable balances at the dates indicated.


	December 31, 2022
	Allowance For Loan Losses						Loans Receivable
(Dollars in thousands)	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total		Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Construction Real Estate	$	—	$	2,323	$	2,323	$	115	$	112,679	$	112,794
Residential Real Estate	—		2,124		2,124		1,089		108,968		110,057
Commercial Real Estate	—		4,805		4,805		4,282		247,872		252,154
Commercial and Agricultural	—		875		875		31		30,617		30,648
Consumer HELOC	—		599		599		49		31,688		31,737
Other Consumer	—		452		452		—		23,598		23,598
Total	$	—	$	11,178	$	11,178	$	5,566	$	555,422	$	560,988

	December 31, 2021
	Allowance For Loan Losses						Loans Receivable
(Dollars in thousands)	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total		Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Construction Real Estate	$	—	$	2,401	$	2,401	$	19	$	100,143	$	100,162
Residential Real Estate	—		1,663		1,663		1,128		83,838		84,966
Commercial Real Estate	—		4,832		4,832		1,047		226,705		227,752
Commercial and Agricultural	—		1,242		1,242		31		44,658		44,689
Consumer HELOC	—		518		518		97		28,515		28,612
Other Consumer	—		431		431		—		21,450		21,450
Total	$	—	$	11,087	$	11,087	$	2,322	$	505,309	$	507,631

Impaired Financing Receivables

The following tables present information related to impaired loans by loan category as of and for the years indicated.


	December 31, 2022
Impaired Loans (Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized















Construction Real Estate	$	115	$	115	$	—	$	117	$	—
Residential Real Estate	1,089		1,626		—		1,133		—
Commercial Real Estate	4,282		4,282		—		4,382		—
Commercial and Agricultural	31		926		—		31		—
Consumer HELOC	49		49		—		52		—
Other Consumer	—		—		—		—		—
Total	$	5,566	$	6,998	$	—	$	5,715	$	—


	December 31, 2021
Impaired Loans (Dollars in thousands)	Recorded Investment			Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized















Construction Real Estate	$	19		$	19	$	—	$	22	$	2
Residential Real Estate	1,128			1,647		—		1,179		4
Commercial Real Estate	1,047			1,047		—		1,078		—
Commercial and Agricultural	31			926		—		46		16
Consumer HELOC	97			97		—		101		—
Other Consumer	—		—	—		—		—		—
Total	$	2,322		$	3,736	$	—	$	2,426	$	22

Troubled Debt Restructurings on Financing Receivables

In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. A troubled debt restructuring ("TDR") is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider (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 Bank 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 Bank had two TDRs with a total balance of $385,000 included in impaired loans at December 31, 2022 compared to three TDRs totaling $694,000 at December 31, 2021. There were no loans restructured as TDRs during 2022 compared to one commercial real estate loan restructured as a TDR during 2021 with a balance of $412,000 at the time of restructure and immediately thereafter. At December 31, 2022 and 2021, there were no TDRs in default. The Bank considers any loan 30 days or more past due to be in default. At December 31, 2022 and 2021, the Bank 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 Bank 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.