Total nonperforming assets, which consist of
non-accrual loans, loans past due 90 days or more and still accruing, and OREO decreased to $2,723,000 on March 31, 2021 from $3,168,000 on December 31, 2020. OREO decreased to $761,000 on
March 31, 2021 from $1,105,000 on December 31, 2020. The decrease in OREO was due in large part to the sale of one large OREO property during the first quarter. Non-performing loans decreased
slightly from $2,063,000 at December 31, 2020 to $1,963,000 at March 31, 2021.
As discussed in more detail below under
Results of OperationsAllowance and Provision for Loan Losses, management has provided for the anticipated losses on these loans in the allowance for loan losses. Loan payments received on
non-accrual loans are first applied to principal. When a loan is placed on non-accrual status there are several negative implications. First, all interest accrued but
unpaid at the time of the classification is reversed and deducted from the interest income totals for the Bank. Second, accruals of interest are discontinued until it becomes certain that both principal and interest can be repaid. Third, there may
be actual losses that necessitate additional provisions for loan losses charged against earnings.
As a result of the COVID-19 pandemic, we anticipate that our commercial, commercial real estate, residential and consumer borrowers will continue to encounter economic difficulties, which could lead to increases in our levels of
nonperforming assets, impaired loans and troubled debt restructurings. Any potential financial impacts are unknown at this time.
represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. On December 31, 2020, the Bank was carrying three OREO properties on its books at a value of
$1,105,000. During the three months ended March 31, 2021, the Bank acquired one additional OREO property and disposed of two OREO properties, and as of March 31, 2021 the Bank is carrying two OREO properties at a value of $761,000. The
OREO properties are available for sale and are being actively marketed.
The Bank had loans in the amount of $384,000 at March 31,
2021 classified as performing TDRs as compared to $392,000 at December 31, 2020. None of these TDRs were included in non-accrual loans. These loans have had their original terms modified to facilitate
payment by the borrower. The loans have been classified as TDRs primarily due to a change to interest only payments and the maturity of these modified loans is primarily less than one year.
We have developed relief programs to assist borrowers in financial need due to the effects of the
COVID-19 pandemic. Accordingly, we offered short-term modifications made in response to COVID-19 to certain borrowers who were current and otherwise not past due. These
include short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, deferral of principal only (interest only payments), or other delays in payment that are insignificant.
Since the beginning of the pandemic in the spring of 2020, the Bank has modified a total of 191 loans. The principal balances of these loans on
March 31, 2021 (adjusted for payoffs) totaled approximately $90 million. As of March 31, 2020, 5 of the 191 previously modified loans remain in deferment. The principal balance of these 5 loans is approximately $6.12 million,
which represents 1.00% of the total loan portfolio. Of the total deferrals, all 5 loans are for deferrals of principal only. There are no loans for which principal and interested are being deferred.