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Loans Receivable, Net
 3 Months Ended
Mar. 31, 2023
Loans and Leases Receivable, Net Amount [Abstract]  
Financing Receivables [Text Block]
Loans receivable, net, consisted of the following as of the dates indicated below:
March 31, 2023December 31, 2022
Real Estate Loans:
Construction$108,716,018 $112,793,694 
Residential Mortgage131,958,557 110,056,973 
Commercial255,314,563 252,154,475 
Commercial and Agricultural Loans34,864,923 30,647,975 
Consumer Loans:
Home Equity Lines of Credit (HELOC)32,017,283 31,736,676 
Other Consumer24,185,686 23,598,110 
Total Loans Held for Investment, Gross587,057,030 560,987,903 
Less:
Allowance for Credit Losses12,126,810 11,177,753 
Deferred Loan Fees740,511 806,238 
 12,867,321 11,983,991 
Total Loans Receivable, Net$574,189,709 $549,003,912 
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 credit 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 credit 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 following table presents the Company's recorded investment in loans by credit quality indicators by year of origination as of March 31, 2023.
Term Loans by Year of Origination
Dollars in Thousands20232022202120202019PriorRevolvingTotal
Real Estate - Construction
Pass$3,095 $19,223 $9,564 $2,232 $760 $40,313 $4,999 $80,186 
Caution286 6,875 2,497 288 431 15,645 — 26,022 
Special Mention— 30 39 — — 1,426 — 1,495 
Substandard— — — 140 — 873 — 1,013 
Total3,381 26,128 12,100 2,660 1,191 58,257 4,999 108,716 
Current period gross write-offs— — — — — — — — 
Real Estate - Mortgage
Pass6,970 24,756 11,602 15,090 4,297 27,695 10,441 100,851 
Caution2,754 8,559 5,016 1,609 1,606 5,501 8 25,053 
Special Mention1,338 159 914 362 — 250 — 3,023 
Substandard— — 206 244 52 2,530 — 3,032 
Total11,062 33,474 17,738 17,305 5,955 35,976 10,449 131,959 
Current period gross write-offs— — — — — — — — 
Real Estate - Commercial
Pass4,380 39,104 43,477 14,467 21,036 77,045 2,112 201,621 
Caution1,363 3,945 3,346 6,302 7,214 20,659 100 42,929 
Special Mention— 844 464 792 243 3,426 — 5,769 
Substandard— 72 61 — — 4,863 — 4,996 
Total5,743 43,965 47,348 21,561 28,493 105,993 2,212 255,315 
Current period gross write-offs— — — — — — — — 
Commercial and Agricultural
Pass2,010 8,074 8,882 808 598 3,325 3,918 27,613 
Caution2,122 1,703 1,693 86 25 519 544 6,692 
Special Mention16 52 90 20 1 105 — 284 
Substandard— 24 47 14 15 76 100 276 
Total4,148 9,853 10,712 928 639 4,025 4,562 34,865 
Current period gross write-offs— — 16 — — — — 16 
Home Equity Lines of Credit
Pass— — — — — — 26,274 26,274 
Caution— — — — — — 4,658 4,658 
Special Mention— — — — — — 501 501 
Substandard— — — — — — 584 584 
Total— — — — — — 32,017 32,017 
Current period gross write-offs— — — — — — — — 
Consumer loans
Pass2,190 5,626 2,623 1,221 357 335 4,576 16,928 
Caution1,080 2,957 1,355 764 332 89 269 6,846 
Special Mention— 142 22 — — — 6 170 
Substandard— 59 84 53 31 10 5 242 
Total3,270 8,784 4,084 2,038 720 434 4,856 24,186 
Current period gross write-offs— 10 — — — — 25 35 
Total Loans$27,604 $122,204 $91,982 $44,492 $36,998 $204,685 $59,095 $587,058 
The table below summarizes the balance within each risk category by loan type, excluding loans held for sale, at December 31, 2022.
December 31, 2022
 
Pass
 
Caution
Special Mention
 
Substandard
 
Total Loans
Construction Real Estate$91,564,058 $18,837,894 $2,013,824 $377,918 $112,793,694 
Residential Real Estate84,028,037 22,372,649 887,874 2,768,413 110,056,973 
Commercial Real Estate196,063,300 47,821,422 3,270,916 4,998,837 252,154,475 
Commercial and Agricultural25,383,994 4,593,283 371,071 299,627 30,647,975 
Consumer HELOC25,693,252 5,018,419 401,550 623,455 31,736,676 
Other Consumer16,515,206 6,725,317 178,638 178,949 23,598,110 
Total$439,247,847 $105,368,984 $7,123,873 $9,247,199 $560,987,903 
Past Due and Nonaccrual Loans
The tables below present an age analysis of past due balances by loan category at the dates indicated.
March 31, 2023
 
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$2,848,456 $421,916 $205,057 $3,475,429 $105,240,589 $108,716,018 
Residential Real Estate1,076,722 103,930 266,093 1,446,745 130,511,812 131,958,557 
Commercial Real Estate649,004 95,678 349,906 1,094,588 254,219,975 255,314,563 
Commercial and Agricultural24,811 5,538 45,349 75,698 34,789,225 34,864,923 
Consumer HELOC285,415 47,683 76,325 409,423 31,607,860 32,017,283 
Other Consumer183,626 58,143 27,530 269,299 23,916,387 24,185,686 
Total$5,068,034 $732,888 $970,260 $6,771,182 $580,285,848 $587,057,030 
December 31, 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$— $— $100,472 $100,472 $112,693,222 $112,793,694 
Residential Real Estate1,557,114 — 471,430 2,028,544 108,028,429 110,056,973 
Commercial Real Estate2,670,997 89,342 354,406 3,114,745 249,039,730 252,154,475 
Commercial and Agricultural5,683 2,113 55,468 63,264 30,584,711 30,647,975 
Consumer HELOC199,414 — 74,159 273,573 31,463,103 31,736,676 
Other Consumer271,774 78,566 17,321 367,661 23,230,449 23,598,110 
Total$4,704,982 $170,021 $1,073,256 $5,948,259 $555,039,644 $560,987,903 

At March 31, 2023 and December 31, 2022, 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 the dates indicated.
CECLIncurred Loss
March 31, 2023December 31, 2022
Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual LoansNonaccrual Loans
Construction Real Estate$217,970 $— $217,970 $114,630 
Residential Real Estate1,505,185 — 1,505,185 1,544,762 
Commercial Real Estate4,220,087 — 4,220,087 4,281,975 
Commercial and Agricultural101,142 — 101,142 112,652 
Consumer HELOC188,266 — 188,266 188,540 
Other Consumer35,549 — 35,549 28,671 
Total Nonaccrual Loans$6,268,199 $— $6,268,199 $6,271,230 

The Company did not recognize any interest income on nonaccrual loans during the three months ended March 31, 2023.

The following table represents the accrued interest receivables written off by reversing interest income during the three months ended March 31, 2023:
For the Three Months Ended March 31, 2023
Construction Real Estate$2,882 
Residential Real Estate1,031 
Commercial Real Estate— 
Commercial and Agricultural1,103 
Consumer HELOC— 
Other Consumer143 
Total Loans$5,159 

Allowance for Credit Losses

The following table shows the activity in the allowance for credit losses by category for the three months ended March 31, 2023 under the CECL methodology:
 Three Months Ended March 31, 2023
Real EstateConsumer
 ConstructionResidentialCommercialCommercial and AgriculturalHELOCOther
 
Total
Beginning Balance$2,323,397 $2,124,835 $4,804,282 $874,092 $598,807 $452,340 $11,177,753 
Adjustment to allowance for adoption of ASU 2016-13263,737 461,879 (340,492)112,452 107,548 179,070 784,194 
Provision for credit losses(245,136)477,263 (204,984)154,789 (56,733)39,801 165,000 
Charge-Offs— — — (15,880)— (34,940)(50,820)
Recoveries3,960 8,400 5,016 5,300 21,904 6,103 50,683 
Ending Balance$2,345,958 $3,072,377 $4,263,822 $1,130,753 $671,526 $642,374 $12,126,810 
The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans:

•Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.
•Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage.
•Home equity lines of credit are generally secured by second mortgages on residential real estate property.
•Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral.

The following table details the amortized cost of collateral dependent loans:
March 31, 2023
Construction Real Estate$217,970 
Residential Real Estate1,062,365 
Commercial Real Estate4,220,087 
Commercial and Agricultural31,446 
Consumer HELOC47,683 
Total Loans$5,579,551 

Prior to the adoption of ASC 326 on January 1, 2023, the Company calculated the allowance for loan losses under the Incurred Loss methodology. The following table shows the activity in the allowance for loan losses by category for the three months ended March 31, 2022:
Three Months Ended March 31, 2022
Real EstateConsumer
ConstructionResidentialCommercialCommercial and AgriculturalHELOCOtherTotal
Beginning Balance$2,401,196 $1,663,423 $4,832,440 $1,241,828 $517,512 $430,765 $11,087,164 
Provision for Loan Losses(73,215)(44,818)81,527 (22,242)35,182 23,566 — 
Charge-Offs— — — — — (31,871)(31,871)
Recoveries8,602 9,711 18,981 23,333 2,709 10,334 73,670 
Ending Balance$2,336,583 $1,628,316 $4,932,948 $1,242,919 $555,403 $432,794 $11,128,963 

Prior to the adoption of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual status and accruing troubled debt restructurings. When determining if the Company would be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower’s capacity to pay, which included such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. Non-accrual commercial loans under $200,000 and non-accrual consumer loans under $100,000 were considered immaterial and are excluded from the impairment review. The tables below include all loans deemed impaired, whether or not individually assessed for impairment. If a loan was deemed impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment was expected solely from the collateral.
Interest payments on impaired loans were typically applied to principal unless collectability of the principal amount was reasonably assured, in which case interest was recognized on a cash basis.

The table below summarizes the impaired loan balances evaluated individually and collectively for impairment within the allowance for loan losses and loans receivable balances at December 31, 2022:
Allowance For Loan LossesLoans Receivable
December 31, 2022Individually Evaluated For ImpairmentCollectively Evaluated For ImpairmentTotalIndividually Evaluated For ImpairmentCollectively Evaluated For ImpairmentTotal
Construction Real Estate$— $2,323,397 $2,323,397 $114,630 $112,679,064 $112,793,694 
Residential Real Estate— 2,124,835 2,124,835 1,089,308 108,967,665 110,056,973 
Commercial Real Estate— 4,804,282 4,804,282 4,281,702 247,872,773 252,154,475 
Commercial and Agricultural— 874,092 874,092 31,446 30,616,529 30,647,975 
Consumer HELOC— 598,807 598,807 48,792 31,687,884 31,736,676 
Other Consumer— 452,340 452,340 — 23,598,110 23,598,110 
Total$— $11,177,753 $11,177,753 $5,565,878 $555,422,025 $560,987,903 

The following tables present information related to impaired loans by loan category at December 31, 2022 and for the three months ended March 31, 2022.
December 31, 2022
Impaired LoansRecorded
Investment		Unpaid Principal BalanceRelated
Allowance
Construction Real Estate$114,630 $114,630 $— 
Residential Real Estate1,089,308 1,626,308 — 
Commercial Real Estate4,281,702 4,281,702 — 
Commercial and Agricultural31,446 926,446 — 
Consumer HELOC48,792 48,792 — 
Other Consumer— — — 
Total$5,565,878 $6,997,878 $— 

Three Months Ended March 31, 2022
Impaired LoansAverage Recorded InvestmentInterest Income
Recognized
Construction Real Estate$18,511 $— 
Residential Real Estate1,239,308 — 
Commercial Real Estate1,038,300 — 
Commercial and Agricultural31,446 — 
Consumer HELOC96,578 — 
Other Consumer— — 
Total$2,424,143 $— 

Modifications to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.
Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. As such multiple types of modifications may have been made on the same loan within the current reporting period each much be reported. The combination is at least two of the following: a term extension, principal forgiveness, and interest rate reduction.

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The Company had two modified loans with a combined balance of $375,000 at March 31, 2023, compared to two modified loans with a combined balance of $385,000 at December 31, 2022.

The Company did not modify any loans to borrowers experiencing financial difficulty during the three months ended March 31, 2023 or 2022.

As of March 31, 2023 and 2022, there were no loans modified with borrowers experiencing financial difficulty for which there was a payment default within 12 months of the restructuring date. The Company considers any loan 30 days or more past due to be in default.

Allowance for Credit Losses - Unfunded Commitments

The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable (i.e., commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted as a provision for (reversal of) credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans, and are discussed in this Note 8. The allowance for credit losses for unfunded loan commitments of $1.0 million and $0 at March 31, 2023 and December 31, 2022, respectively, is separately classified on the balance sheet within "Other Liabilities."

The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the three months ended March 31, 2023.
Total Allowance for Credit Losses - Unfunded Commitments
Balance, December 31, 2022$— 
Adjustment to allowance for unfunded commitments for adoption of ASU 2016-131,213,614 
(Reversal of) provision for unfunded commitments(165,000)
Balance, March 31, 2023$1,048,614