Loans (Tables)

6 Months Ended

Jun. 30, 2020

Loans consist of the following:

(Dollars in thousands)	June 30, 2020			December 31, 2019
Commercial	$	215,139		$	137,114
Commercial real estate		198,948			196,748
Residential real estate		177,799			174,259
Construction & land development		28,123			23,960
Consumer		18,851			19,052
Total loans before deferred costs		638,860			551,133
Deferred loan (fees) costs		(2,061	)		500
Total Loans	$	636,799		$	551,633

Summary of Allowance for Loan Losses

(Dollars in thousands)	Commercial			Commercial Real Estate		Residential Real Estate			Construction & Land Development			Consumer				Unallocated			Total
Three months ended June 30, 2020
Beginning balance	$	2,609		$	2,300	$	1,347		$	255		$	518			$	91		$	7,120
Provision for loan losses		(343	)		480		237			82			2				259			717
Charge-offs		(4	)		—		—			—			(12	)						(16	)
Recoveries		4			1		1			—			8							14
Net charge-offs		—			1		1			—			(4	)						(2	)
Ending balance	$	2,266		$	2,781	$	1,585		$	337		$	516			$	350		$	7,835
Six months ended June 30, 2020
Beginning balance	$	2,408		$	2,153	$	1,152		$	203		$	481			$	620		$	7,017
Provision for loan losses		(131	)		627		446			134			89				(270	)		895
Charge-offs		(19	)		—		(15	)		—			(69	)						(103	)
Recoveries		8			1		2			—			15							26
Net recoveries		(11	)		1		(13	)		—			(54	)						(77	)
Ending balance	$	2,266		$	2,781	$	1,585		$	337		$	516		$	$	350		$	7,835
Three months ended June 30, 2019
Beginning balance	$	1,997		$	1,808	$	1,222		$	170		$	325			$	765		$	6,287
Provision for loan losses		277			138		5			(66	)		46				(115	)		285
Charge-offs		(11	)		—		—			—			(43	)						(54	)
Recoveries		4			—		2			—			13							19
Net (charge-offs) recoveries		(7	)		—		2			—			(30	)						(35	)
Ending balance	$	2,267		$	1,946	$	1,229		$	104		$	341			$	650		$	6,537
Six months ended June 30, 2019
Beginning balance	$	2,178		$	1,791	$	1,245		$	258		$	306			$	129		$	5,907
Provision for loan losses		(62	)		155		(19	)		(154	)		129				521			570
Charge-offs		(16	)		—		—			—			(108	)						(124	)
Recoveries		167			—		3			—			14							184
Net charge-offs		151			—		3			—			(94	)						60
Ending balance	$	2,267		$	1,946	$	1,229		$	104		$	341			$	650		$	6,537

Allowances for Loan Losses and Ending Balances by Portfolio Class and Based on Impairment Method

The following table presents the balance in the allowance for loan losses and the ending loan balances by portfolio class, based on the impairment method as of June 30, 2020 and December 31, 2019:

(Dollars in thousands)	Commercial		Commercial Real Estate		Residential Real Estate		Construction		Consumer		Unallocated		Total
June 30, 2020
Allowance for loan losses:
Individually evaluated for impairment	$	6	$	19	$	1	$	—	$	7	$	—	$	33
Collectively evaluated for impairment		2,260		2,762		1,584		337		509		350		7,802
Total ending allowance balance	$	2,266	$	2,781	$	1,585	$	337	$	516	$	350	$	7,835
Loans:
Loans individually evaluated for impairment	$	2,465	$	2,596	$	728	$	—	$	146			$	5,935
Loans collectively evaluated for impairment		212,674		196,352		177,071		28,123		18,705				632,925
Total ending loans balance	$	215,139	$	198,948	$	177,799	$	28,123	$	18,851			$	638,860
December 31, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	16	$	17	$	1	$	—	$	—	$	—	$	34
Collectively evaluated for impairment		2,392		2,136		1,151		203		481		620		6,983
Total ending allowance balance	$	2,408	$	2,153	$	1,152	$	203	$	481	$	620	$	7,017
Loans:
Loans individually evaluated for impairment	$	2,555	$	2,637	$	853	$	—	$	14			$	6,059
Loans collectively evaluated for impairment		134,559		194,111		173,406		23,960		19,038				545,074
Total ending loans balance	$	137,114	$	196,748	$	174,259	$	23,960	$	19,052			$	551,133

Schedule of Impairment by Class of Loans

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2020 and December 31, 2019:

(Dollars in thousands)	Unpaid Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total recorded investment¹		Related Allowance
June 30, 2020
Commercial	$	2,899	$	2,281	$	183	$	2,464	$	6
Commercial real estate		2,968		2,363		241		2,604		19
Residential real estate		920		549		180		729		1
Consumer		148		—		151		151		7
Total impaired loans	$	6,935	$	5,193	$	755	$	5,948	$	33
December 31, 2019
Commercial	$	2,982	$	2,541	$	16	$	2,557	$	16
Commercial real estate		2,952		2,471		176		2,647		17
Residential real estate		1,024		457		396		853		1
Consumer		14		14		—		14		—
Total impaired loans	$	6,972	$	5,483	$	588	$	6,071	$	34

¹	includes principal, accrued interest, unearned fees, and origination costs

Schedule of Average Recorded Investment in Impaired Loans and Related Interest Income Recognized

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2020		2019		2020		2019
Average recorded investment:
Commercial	$	2,523	$	1,582	$	2,488	$	1,228
Commercial real estate		2,550		2,152		2,553		2,233
Residential real estate		820		943		833		986
Consumer		95		15		52		9
Average recorded investment in impaired loans	$	5,988	$	4,692	$	5,926	$	4,456
Interest income recognized:
Commercial	$	19	$	28	$	37	$	37
Commercial real estate		4		3		6		6
Residential real estate		9		12		19		23
Consumer		1		—		1		—
Interest income recognized on a cash basis on impaired loans	$	33	$	43	$	63	$	66

Schedule of Aging of Past Due and Nonaccrual Loans

The following table presents the aging of past due loans and nonaccrual loans as of June 30, 2020 and December 31, 2019 by class of loans:

			Accruing Loans
(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days + Past Due		Non- Accrual		Total Past Due and Non- Accrual		Total Loans
June 30, 2020
Commercial	$	213,726	$	4	$	3	$	25	$	1,381	$	1,413	$	215,139
Commercial real estate		196,634		11		—		—		2,303		2,314		198,948
Residential real estate		176,946		202		10		—		641		853		177,799
Construction & land development		28,123		—		—		—		—		—		28,123
Consumer		18,795		23		1		—		32		56		18,851
Total Loans	$	634,224	$	240	$	14	$	25	$	4,357	$	4,636	$	638,860
December 31, 2019
Commercial	$	135,707	$	15	$	—	$	67	$	1,325	$	1,407	$	137,114
Commercial real estate		194,157		186		—		—		2,405		2,591		196,748
Residential real estate		173,023		264		277		174		521		1,236		174,259
Construction & land development		23,960		—		—		—		—		—		23,960
Consumer		18,640		365		—		—		47		412		19,052
Total Loans	$	545,487	$	830	$	277	$	241	$	4,298	$	5,646	$	551,133

Summary of Deferral Activity Related to Loan Modification Programs to Customers

The table below summarizes the Company’s deferral activity at June 30, 2020 under the COVID-19 related loan modification program to customers. Loan modifications consist of three to four months deferral of principal and interest payments, and extension of maturity date. All loans provided modifications were performing in accordance with their terms at the time of modification. In accordance with the CARES Act, these loans are not required to be evaluated as TDR’s.

	June 30, 2020
	Deferred		Outstanding
(Dollars in thousands)	# of loans		Portfolio		Deferred		%
Commercial:
Commercial	72		$	215,139	$	10,450		5
Commercial real estate	77			198,948		51,645		26
Construction		3		28,123		535		2
Total Commercial		152		442,210		62,630		14
Consumer:
Residential real estate	33			177,799		3,663		2
RV	12			9,271		254		3
Other consumer		15		9,580		211		2
Total Consumer		60		196,650		4,128		2
Total Loans	212		$	638,860	$	66,758		10

Summary of Troubled Debt Restructurings

(Dollars in thousands)	Number of loans restructured	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
For the Three months ended June 30, 2020
Commercial	4	$	112	$	112
Commercial Real Estate	1		80		80
Residential	1		66		66
Consumer	6		146		146
Total Restructured Loans	12	$	404	$	404
For the Six months ended June 30, 2019
Commercial	5	$	181	$	181
Commercial Real Estate	1		80		80
Residential	1		66		66
Consumer	6		146		146
Total Restructured Loans	13	$	473	$	473

Summary of Loans by Credit Quality Indicator

Based on the most recent analysis performed, the risk category of loans by class is as follows as of June 30, 2020 and December 31, 2019:

(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Not Rated		Total
June 30, 2020
Commercial	$	192,349	$	4,601	$	15,408	$	—	$	2,781	$	215,139
Commercial real estate		171,443		9,930		15,547		—		2,028		198,948
Residential real estate		180		—		21		—		177,598		177,799
Construction & land development		22,513		93		478		—		5,039		28,123
Consumer		—		—		71		—		18,780		18,851
Total	$	386,485	$	14,624	$	31,525	$	—	$	206,226	$	638,860
December 31, 2019
Commercial	$	110,731	$	15,040	$	10,295	$	—	$	1,048	$	137,114
Commercial real estate		174,045		11,546		9,994		—		1,163		196,748
Residential real estate		183		—		237		—		173,839		174,259
Construction & land development		19,423		104		—		—		4,433		23,960
Consumer		—		—		73		—		18,979		19,052
Total	$	304,382	$	26,690	$	20,599	$	—	$	199,462	$	551,133

Schedule of Loans Not Rated by Class of Loans

The following table presents loans that are not rated by class of loans as of June 30, 2020 and December 31, 2019. Nonperforming loans include loans past due 90 days or more and loans on nonaccrual of interest status.

(Dollars in thousands)	Performing		Non- Performing		Total
June 30, 2020
Commercial	$	2,781	$	—	$	2,781
Commercial real estate		2,028		—		2,028
Residential real estate		177,016		582		177,598
Construction & land development		5,039		—		5,039
Consumer		18,766		14		18,780
Total	$	205,630	$	596	$	206,226
December 31, 2019
Commercial	$	1,048	$	—	$	1,048
Commercial real estate		1,163		—		1,163
Residential real estate		173,407		432		173,839
Construction & land development		4,433		—		4,433
Consumer		18,979		—		18,979
Total	$	199,030	$	432	$	199,462