2020 Annual Report

Modifications have been granted on a case-by-case basis based on specific needs and circumstances affecting each borrower. Interest-only modifications have been primarily granted for three to six-month periods, but range up to twelve months. Payment deferral modifications have been granted for three to six-month periods.

Nonperforming Assets

Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $775,000 at December 31, 2020 and $461,000 at December 31, 2019, an increase of $314,000. There were no loans 90 days past due and still accruing as of December 31, 2020 and 2019. There were no foreclosed assets as of December 31, 2020 and 2019.

The following table presents a summary of nonperforming assets, by category, at the dates indicated:

December 31,

(dollars in thousands)

2020 2019 2018

2017

2016

Nonaccrual Loans: Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6 $ 7 $ 8 $ 9 $ 15 Construction and Land Development . . . . . . . . . . . . . . . . . . . . . 156 176 198 583 604 Real Estate Mortgage: 1 - 4 Family Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 278 317 472 805 CRE Owner Occupied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 — — — — CRE Nonowner Occupied. . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — 801 Total Real Estate Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . 613 278 317 472 1,606 Consumer and Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 58 75 98 Total Nonaccrual Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 775 $ 461 $ 581 $ 1,139 $ 2,323 Total Nonperforming Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 775 $ 461 $ 581 $ 1,139 $ 2,323 Plus: Foreclosed Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 581 4,183 Total Nonperforming Assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 775 $ 461 $ 581 $ 1,720 $ 6,506 Total Restructured Accruing Loans . . . . . . . . . . . . . . . . . . . . . . . . 265 276 181 2,178 3,286 Total Nonperforming Assets and Restructured Accruing Loans . . $ 1,040 $ 737 $ 762 $ 3,898 $ 9,792 Nonaccrual Loans to Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . 0.03 % 0.02 % 0.03 % 0.08 % 0.23 % Nonperforming Loans to Total Loans . . . . . . . . . . . . . . . . . . . . . . 0.03 0.02 0.03 0.08 0.23 Nonperforming Assets to Total Loans Plus Foreclosed Assets (1) . 0.03 0.02 0.03 0.13 0.65 Nonperforming Assets and Restructured Accruing Loans to Total Loans Plus Foreclosed Assets . . . . . . . . . . . . . . . . . . . . . . 0.04 0.04 0.05 0.29 0.97 The balance of nonperforming assets can fluctuate due to changes in economic conditions. The Company has established a policy to discontinue accruing interest on a loan (that is, place the loan on nonaccrual status) after it has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent unless management believes that the collection of interest is expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. If management believes that a loan will not be collected in full, an increase to the allowance for loan losses is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal. There are not any loans, outside of those included in the tables above, that cause management to have serious doubts as to the ability of borrowers to comply with present repayment terms. Due to the low levels of nonaccrual loans, gross income that would have been recorded on nonaccrual loans is $27,000. (1) Nonperforming assets are defined as nonaccrual loans and loans greater than 90 days past due still accruing plus foreclosed assets. There were no loans greater than 90 days past due still accruing for any period shown.

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