Allowance for Loan Losses

9 Months Ended

Sep. 30, 2020

Allowance for Loan Losses

Allowance for Loan Losses

NOTE 5: Allowance for Loan Losses

The following table presents the changes in the allowance for loan losses by major classification during the nine months ended September 30, 2020:

	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance for loan losses:
Balance at December 31, 2019	$	2,080	$	681	$	7,121	$	733	$	465	$	21,793	$	32,873
Provision charged (credited) to operations		337		232		3,446		(78)		(37)		5,650		9,550
Loans charged off		(9)		—		(18)		—		(174)		(7,005)		(7,206)
Recoveries of loans previously charged off		79		—		3		—		135		3,422		3,639
Balance at September 30, 2020	$	2,487	$	913	$	10,552	$	655	$	389	$	23,860	$	38,856

The following table presents the changes in the allowance for loan losses by major classification during the nine months ended September 30, 2019:

	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance for loan losses:
Balance at December 31, 2018	$	2,246	$	727	$	6,688	$	1,106	$	257	$	22,999	$	34,023
Provision (credited) charged to operations		(85)		77		103		(214)		229		5,895		6,005
Loans charged off		(46)		—		(29)		(19)		(261)		(10,092)		(10,447)
Recoveries of loans previously charged off		20		—		4		—		173		3,440		3,637
Balance at September 30, 2019	$	2,135	$	804	$	6,766	$	873	$	398	$	22,242	$	33,218

The following table presents, as of September 30, 2020, the balance of the allowance for loan losses and the balance of loans by impairment methodology.

	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance balance attributable to loans:
Individually evaluated for impairment	$	129	$	—	$	106	$	—	$	105	$	—	$	340
Collectively evaluated for impairment		2,358		913		10,446		655		284		23,860		38,516
Acquired loans - PCI		—		—		—		—		—		—		—
Total allowance	$	2,487	$	913	$	10,552	$	655	$	389	$	23,860	$	38,856
Loans:
Individually evaluated for impairment	$	2,904	$	—	$	1,399	$	112	$	110	$	—	$	4,525
Collectively evaluated for impairment		203,416		66,187		702,070		49,212		13,426		311,946		1,346,257
Acquired loans - PCI		1,724		—		5,398		81		371		—		7,574
Total loans	$	208,044	$	66,187	$	708,867	$	49,405	$	13,907	$	311,946	$	1,358,356

The following table presents, as of December 31, 2019, the balance of the allowance for loan losses, the allowance by impairment methodology, total loans and loans by impairment methodology.

	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance balance attributable to loans:
Individually evaluated for impairment	$	72	$	—	$	77	$	—	$	118	$	—	$	267
Collectively evaluated for impairment		2,008		681		7,044		733		347		21,793		32,606
Acquired loans - PCI		—		—		—		—		—		—		—
Total allowance	$	2,080	$	681	$	7,121	$	733	$	465	$	21,793	$	32,873
Loans:
Individually evaluated for impairment	$	3,671	$	—	$	1,451	$	31	$	121	$	—	$	5,274
Collectively evaluated for impairment		177,517		54,246		498,798		52,017		13,635		312,999		1,109,212
Acquired loans - PCI		107		—		563		35		—		—		705
Total loans	$	181,295	$	54,246	$	500,812	$	52,083	$	13,756	$	312,999	$	1,115,191

Loans by credit quality indicators as of September 30, 2020 were as follows:

			Special				Substandard
(Dollars in thousands)	Pass		Mention		Substandard		Nonaccrual		Total1
Real estate – residential mortgage	$	205,126	$	1,245	$	915	$	758	$	208,044
Real estate – construction:
Construction lending		50,971		—		—		—		50,971
Consumer lot lending		15,216		—		—		—		15,216
Commercial, financial and agricultural:
Commercial real estate lending		408,667		16,840		10,695		—		436,202
Land acquisition and development lending		36,767		6,402		—		—		43,169
Builder line lending		20,023		—		—		—		20,023
Commercial business lending		203,669		5,704		100		—		209,473
Equity lines		49,039		165		8		193		49,405
Consumer		13,426		58		4		419		13,907
	$	1,002,904	$	30,414	$	11,722	$	1,370	$	1,046,410

1 At September 30, 2020, the Corporation did not have any loans classified as Doubtful or Loss.

Included in the table above are loans purchased in connection with the acquisition of Peoples of $83.71 million pass rated, $1.39 million special mention, $2.70 million substandard and $309,000 substandard nonaccrual.

			Non-
(Dollars in thousands)	Performing		Performing		Total
Consumer finance	$	311,664	$	282	$	311,946

Loans by credit quality indicators as of December 31, 2019 were as follows:

			Special				Substandard
(Dollars in thousands)	Pass		Mention		Substandard		Nonaccrual		Total1
Real estate – residential mortgage	$	177,049	$	1,839	$	881	$	1,526	$	181,295
Real estate – construction:
Construction lending		40,943		—		—		—		40,943
Consumer lot lending		13,303		—		—		—		13,303
Commercial, financial and agricultural:
Commercial real estate lending		323,218		3,266		70		—		326,554
Land acquisition and development lending		33,870		9,021		—		—		42,891
Builder line lending		25,995		378		—		—		26,373
Commercial business lending		104,291		692		—		11		104,994
Equity lines		51,662		181		11		229		52,083
Consumer		13,632		6		—		118		13,756
	$	783,963	$	15,383	$	962	$	1,884	$	802,192

1 At December 31, 2019, the Corporation did not have any loans classified as Doubtful or Loss.

			Non-
(Dollars in thousands)	Performing		Performing		Total
Consumer finance	$	312,388	$	611	$	312,999