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Note 4 - Credit Quality

6 Months Ended

Jun. 30, 2021

Note 4. Credit Quality

The Company uses a risk grading matrix to assign a risk grade to each loan in its portfolio. Loan risk ratings may be upgraded or downgraded to reflect current information identified during the loan review process. The general characteristics of each risk grade are as follows:

●

Pass -- This grade is assigned to loans with acceptable credit quality and risk. The Company further segments this grade based on borrower characteristics that include capital strength, earnings stability, liquidity, leverage, and industry conditions.

●

Special Mention -- This grade is assigned to loans that require an above average degree of supervision and attention. These loans have the characteristics of an asset with acceptable credit quality and risk; however, adverse economic or financial conditions exist that create potential weaknesses deserving of management’s close attention. If potential weaknesses are not corrected, the prospect of repayment may worsen.

●

Substandard -- This grade is assigned to loans that have well defined weaknesses that may make payment default, or principal exposure, possible. These loans will likely be dependent on collateral liquidation, secondary repayment sources, or events outside the normal course of business to meet repayment terms.

●

Doubtful -- This grade is assigned to loans that have the weaknesses inherent in substandard loans; however, the weaknesses are so severe that collection or liquidation in full is unlikely based on current facts, conditions, and values. Due to certain specific pending factors, the amount of loss cannot yet be determined.

●

Loss -- This grade is assigned to loans that will be charged off or charged down when payments, including the timing and value of payments, are uncertain. This risk grade does not imply that the asset has no recovery or salvage value, but simply means that it is not practical or desirable to defer writing off, either all or a portion of, the loan balance even though partial recovery may be realized in the future.

The following table presents the recorded investment of the loan portfolio, by loan class and credit quality, as of the dates indicated. Losses on covered loans are generally reimbursable by the FDIC at the applicable loss share percentage, 80%. Covered loan balances totaled $7.50 million and $9.68 million for June 30, 2021 and December 31, 2020, respectively.

	*June 30, 2021*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*
Commercial loans
Construction, development, and other land	$	56,754	$	1,176	$	2,630	$	-	$	-	$	60,560
Commercial and industrial		141,623		1,588		4,557		-		-		147,768
Multi-family residential		92,541		6,164		1,642		-		-		100,347
Single family non-owner occupied		173,524		5,628		10,844		12		-		190,008
Non-farm, non-residential		584,778		99,699		28,612		-		-		713,089
Agricultural		7,712		409		544		-		-		8,665
Farmland		13,536		1,122		3,627		-		-		18,285
Consumer real estate loans
Home equity lines		82,558		1,166		3,527		-		-		87,251
Single family owner occupied		645,953		2,662		31,248		-		-		679,863
Owner occupied construction		20,874		-		284		-		-		21,158
Consumer and other loans
Consumer loans		120,482		11		1,574		-		-		122,067
Other		4,670		-		-		-		-		4,670
Total loans	$	1,945,005	$	119,625	$	89,089	$	12	$	-	$	2,153,731

	*December 31, 2020*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*

Commercial loans
Construction, development, and other land	$	36,934	$	4,975	$	2,765	$	-	$	-	$	44,674
Commercial and industrial		160,625		7,065		5,519		-		-		173,209
Multi-family residential		103,291		8,586		3,284		-		-		115,161
Single family non-owner occupied		165,146		9,602		12,838		12		-		187,598
Non-farm, non-residential		568,438		125,907		40,448		-		-		734,793
Agricultural		7,724		1,686		339		-		-		9,749
Farmland		13,527		2,597		3,637		-		-		19,761
Consumer real estate loans												-
Home equity lines		91,712		1,488		3,326		-		-		96,526
Single family owner occupied		623,860		3,859		33,335		-		-		661,054
Owner occupied construction		17,232		201		287		-		-		17,720
Consumer and other loans												-
Consumer loans		118,134		28		2,211		-		-		120,373
Other		6,014		-		-		-		-		6,014
Total loans	$	1,912,637	$	165,994	$	107,989	$	12	$	-	$	2,186,632

The following tables present the amortized cost basis of the loan portfolio, by year of origination, loan class, and credit quality, as of the date indicated.

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at June 30, 2021	*2021*		*2020*		*2019*		*2018*		*2017*		*Prior*		*Revolving*		*Total*
Construction, development
and other land
Pass	$	22,604	$	13,297	$	6,228	$	4,275	$	1,984	$	7,884	$	482	$	56,754
Special Mention		-		276		-		144		675		45		36		1,176
Substandard		-		-		47		13		271		2,299		-		2,630
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total construction, development, and other land	$	22,604	$	13,573	$	6,275	$	4,432	$	2,930	$	10,228	$	518	$	60,560
Commercial and industrial
Pass	$	32,081	$	7,490	$	18,298	$	16,740	$	4,356	$	5,864	$	15,164	$	99,993
Special Mention		-		233		700		335		159		30		131		1,588
Substandard		6		400		903		261		1,148		789		1,050		4,557
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total commercial and industrial	$	32,087	$	8,123	$	19,901	$	17,336	$	5,663	$	6,683	$	16,345	$	106,138
Paycheck Protection Loans
Pass	$	12,640	$	28,990	$	-	$	-	$	-	$	-	$	-	$	41,630
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total Paycheck Protection Loans	$	12,640	$	28,990	$	-	$	-	$	-	$	-	$	-	$	41,630
Multi-family residential
Pass	$	10,042	$	25,747	$	5,933	$	2,125	$	5,443	$	42,386	$	865	$	92,541
Special Mention		-		-		-		-		2,563		3,601		-		6,164
Substandard		-		-		-		-		673		969		-		1,642
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total multi-family residential	$	10,042	$	25,747	$	5,933	$	2,125	$	8,679	$	46,956	$	865	$	100,347
Non-farm, non-residential
Pass	$	84,705	$	142,842	$	54,883	$	65,458	$	40,496	$	182,786	$	13,608	$	584,778
Special Mention		-		16,654		10,098		2,779		25,664		44,169		335		99,699
Substandard		1,184		724		3,880		5,754		9,877		6,833		360		28,612
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total non-farm, non-residential	$	85,889	$	160,220	$	68,861	$	73,991	$	76,037	$	233,788	$	14,303	$	713,089
Agricultural
Pass	$	1,770	$	2,297	$	1,317	$	730	$	768	$	316	$	514	$	7,712
Special Mention		47		31		190		28		35		19		59		409
Substandard		-		13		252		69		28		182		-		544
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total agricultural	$	1,817	$	2,341	$	1,759	$	827	$	831	$	517	$	573	$	8,665
Farmland
Pass	$	657	$	1,216	$	107	$	1,182	$	529	$	8,129	$	1,716	$	13,536
Special Mention		113		-		-		267		448		294		-		1,122
Substandard		81		15		832		250		258		2,191		-		3,627
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total farmland	$	851	$	1,231	$	939	$	1,699	$	1,235	$	10,614	$	1,716	$	18,285

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at June 30, 2021	*2021*		*2020*		*2019*		*2018*		*2017*		*Prior*		*Revolving*		*Total*
Home equity lines
Pass	$	160	$	267	$	-	$	25	$	1	$	5,701	$	76,404	$	82,558
Special Mention		-		-		-		124		-		102		940		1,166
Substandard		-		-		23		123		121		1,528		1,732		3,527
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total home equity lines	$	160	$	267	$	23	$	272	$	122	$	7,331	$	79,076	$	87,251
Single family Mortgage
Pass	$	118,905	$	235,227	$	70,800	$	53,587	$	51,466	$	288,601	$	891	$	819,477
Special Mention		334		807		948		387		1,163		4,422		229		8,290
Substandard		754		742		1,833		2,262		2,468		34,033		-		42,092
Doubtful		-		-		-		-		-		12		-		12
Loss		-		-		-		-		-		-		-		-
Total single family owner occupied	$	119,993	$	236,776	$	73,581	$	56,236	$	55,097	$	327,068	$	1,120	$	869,871
Owner occupied construction
Pass	$	2,409	$	12,076	$	2,470	$	1,479	$	448	$	1,992	$	-	$	20,874
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		284		-		284
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total owner occupied construction	$	2,409	$	12,076	$	2,470	$	1,479	$	448	$	2,276	$	-	$	21,158
Consumer loans
Pass	$	35,655	$	43,108	$	24,125	$	7,190	$	3,213	$	9,373	$	2,488	$	125,152
Special Mention		-		-		10		-		-		-		1		11
Substandard		-		278		782		123		154		156		81		1,574
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total consumer loans	$	35,655	$	43,386	$	24,917	$	7,313	$	3,367	$	9,529	$	2,570	$	126,737

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at June 30, 2021	*2021*		*2020*		*2019*		*2018*		*2017*		*Prior*		*Revolving*		*Total*
Total Loans
Pass	$	321,628	$	512,557	$	184,161	$	152,791	$	108,704	$	553,032	$	112,132	$	1,945,005
Special Mention		494		18,001		11,946		4,064		30,707		52,682		1,731		119,625
Substandard		2,025		2,172		8,552		8,855		14,998		49,264		3,223		89,089
Doubtful		-		-		-		-		-		12		-		12
Loss		-		-		-		-		-		-		-		-
Total loans	$	324,147	$	532,730	$	204,659	$	165,710	$	154,409	$	654,990	$	117,086	$	2,153,731

Prior to the adoption of ASU 2016-13, the Company identified loans for potential impairment through a variety of means, including, but not limited to, ongoing loan review, renewal processes, delinquency data, market communications, and public information. When the Company determined that it was probable all principal and interest amounts due would not be collected in accordance with the contractual terms of the loan agreement, the loan was generally deemed impaired.

The following table presents the recorded investment, unpaid principal balance, and related allowance for loan losses for impaired loans, excluding PCI loans, as of the date indicated prior to the adoption of ASU 2016-13:

	*December 31, 2020*
			*Unpaid*
	*Recorded*		*Principal*		*Related*
(Amounts in thousands)	*Investment*		*Balance*		*Allowance*
Impaired loans with no related allowance
Commercial loans
Construction, development, and other land	$	616	$	891	$	-
Commercial and industrial		2,341		2,392		-
Multi-family residential		946		1,593		-
Single family non-owner occupied		4,816		5,785		-
Non-farm, non-residential		8,238		9,467		-
Agricultural		218		226		-
Farmland		1,228		1,311		-
Consumer real estate loans
Home equity lines		1,604		1,772		-
Single family owner occupied		16,778		19,361		-
Owner occupied construction		216		216		-
Consumer and other loans
Consumer loans		818		833		-
Total impaired loans with no allowance		37,819		43,847		-

Impaired loans with a related allowance
Commercial loans
Commercial and industrial		-		-		-
Multi-family residential		-		-		-
Single family non-owner occupied		-		-		-
Non-farm, non-residential		1,068		1,121		319
Farmland		-		-		-
Consumer real estate loans
Home equity lines		-		-		-
Single family owner occupied		338		338		108
Consumer and other loans
Consumer loans		-		-		-
Total impaired loans with an allowance		1,406		1,459		427
Total impaired loans(1)	$	39,225	$	45,306	$	427

(1)	Total recorded investment of impaired loans include loans totaling $31.18 million as of December 31, 2020, that do not meet the Company's evaluation threshold of $500 thousand for individual impairment and are therefore collectively evaluated for impairment.

Prior to the adoption of ASU 2016-13, the Company presented the average recorded investment and interest income recognized on impaired loans, excluding PCI loans. The table below presents the information for the period indicated:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2020*				*2020*
			*Average*				*Average*
	*Interest Income*		*Recorded*		*Interest Income*		*Recorded*
(Amounts in thousands)	*Recognized*		*Investment*		*Recognized*		*Investment*
Impaired loans with no related allowance:
Commercial loans
Construction, development, and other land	$	7	$	882	$	15	$	1,091
Commercial and industrial		60		3,191		89		2,610
Multi-family residential		18		417		29		544
Single family non-owner occupied		37		5,203		72		4,652
Non-farm, non-residential		84		8,886		127		6,780
Agricultural		2		264		3		235
Farmland		15		1,835		36		1,698
Consumer real estate loans
Home equity lines		7		1,652		16		1,560
Single family owner occupied		122		17,251		290		17,401
Owner occupied construction		4		534		10		434
Consumer and other loans
Consumer loans		7		507		11		455
Total impaired loans with no related allowance		363		40,622		698		37,460

Impaired loans with a related allowance:
Commercial loans
Construction, development, and other land		-		-		-		-
Commercial and industrial		-		-		-		-
Multi-family residential		-		944		-		943
Single family non-owner occupied		-		-		-		-
Non-farm, non-residential		14		1,884		14		1,611
Farmland		-		-		-		-
Consumer real estate loans
Home equity lines		-		-		-		-
Single family owner occupied		11		1,777		24		1,508
Owner occupied construction		-		-		-		-
Total impaired loans with a related allowance		25		4,605		38		4,062
Total impaired loans	$	388	$	45,227	$	736	$	41,522

The Company generally places a loan on nonaccrual status when it is 90 days or more past due. Covered nonaccrual loans totaled $230 thousand at June 30, 2021; the total was comprised of consumer real estate loans. The following table presents nonaccrual loans, by loan class, as of the dates indicated:

	*June 30, 2021*
(Amounts in thousands)	*No Allowance*		*With an Allowance*		*Total*
Commercial loans
Construction, development, and other land	$	364	$	-	$	364
Commercial and industrial		1,853		-		1,853
Multi-family residential		328		-		328
Single family non-owner occupied		4,077		-		4,077
Non-farm, non-residential		5,796		287		6,083
Agricultural		135		-		135
Farmland		480		-		480
Consumer real estate loans						-
Home equity lines		979		-		979
Single family owner occupied		9,234		-		9,234
Owner occupied construction		-		-		-
Consumer and other loans						-
Consumer loans		552		-		552
Total nonaccrual loans	$	23,798	$	287	$	24,085

During the three month period of 2021, $15 thousand in nonaccrual loan interest was recognized; for the six month period of 2021 $24 thousand in nonaccrual loan interest was recognized.

The following table presents nonaccrual loans prior to the adoption of ASU 2016-13. PCI loans were generally not classified as nonaccrual due to the accrual of interest income under the accretion method of accounting. Covered nonaccrual loans totaled $297 thousand at December 31, 2020; the total was comprised of consumer real estate loans. The following table presents nonaccrual loans, by loan class, as of the date indicated:



(Amounts in thousands)	*December 31, 2020*
Commercial loans
Construction, development, and other land	$	244
Commercial and industrial		895
Multi-family residential		946
Single family non-owner occupied		2,990
Non-farm, non-residential		6,343
Agricultural		217
Farmland		489
Consumer real estate loans
Home equity lines		1,122
Single family owner occupied		7,976
Owner occupied construction		-
Consumer and other loans
Consumer loans		781
Total nonaccrual loans	$	22,003

The following table presents the aging of past due loans, by loan class, as of the date indicated. Nonaccrual loans 30 days or more past due are included in the applicable delinquency category.

	*June 30, 2021*
													*Amortized Cost of*
	*30 - 59 Days*		*60 - 89 Days*		*90+ Days*		*Total*		*Current*		*Total*		*> 90 Days Accruing*
(Amounts in thousands)	*Past Due*		*Past Due*		*Past Due*		*Past Due*		*Loans*		*Loans*		*No Allowance*

Commercial loans
Construction, development, and other land	$	766	$	-	$	357	$	1,123	$	59,437	$	60,560	$	-
Commercial and industrial		601		413		1,234		2,248		145,520		147,768		-
Multi-family residential		-		-		328		328		100,019		100,347		-
Single family non-owner occupied		725		563		2,264		3,552		186,456		190,008		211
Non-farm, non-residential		638		356		2,859		3,853		709,236		713,089		-
Agricultural		123		206		21		350		8,315		8,665		-
Farmland		-		8		333		341		17,944		18,285		-
Consumer real estate loans
Home equity lines		288		135		696		1,119		86,132		87,251		95
Single family owner occupied		2,751		1,551		3,865		8,167		671,696		679,863		-
Owner occupied construction		-		-		-		-		21,158		21,158		-
Consumer and other loans
Consumer loans		1,897		368		255		2,520		119,547		122,067		21
Other		-		-		-		-		4,670		4,670		-
Total loans	$	7,789	$	3,600	$	12,212	$	23,601	$	2,130,130	$	2,153,731	$	327

The following table presents the aging of past due loans, by loan class, as of the date indicated prior to the adoption of ASU 2016-13. Nonaccrual loans 30 days or more past due are included in the applicable delinquency category. Loans acquired with credit deterioration, with a discount, continued to accrue interest based on expected cash flows; therefore, PCI loans were not generally considered nonaccrual. Non-covered accruing loans contractually past due 90 days or more totaled $295 thousand as of December 31, 2020.

	*December 31, 2020*
	*30 - 59 Days*		*60 - 89 Days*		*90+ Days*		*Total*		*Current*		*Total*
(Amounts in thousands)	*Past Due*		*Past Due*		*Past Due*		*Past Due*		*Loans*		*Loans*

Commercial loans
Construction, development, and other land	$	1,039	$	-	$	235	$	1,274	$	43,400	$	44,674
Commercial and industrial		669		230		700		1,599		171,425		173,024
Multi-family residential		103		-		946		1,049		114,112		115,161
Single family non-owner occupied		925		488		2,144		3,557		184,226		187,783
Non-farm, non-residential		601		296		3,368		4,265		730,528		734,793
Agricultural		70		189		88		347		9,402		9,749
Farmland		43		-		457		500		19,261		19,761
Consumer real estate loans
Home equity lines		649		380		425		1,454		95,072		96,526
Single family owner occupied		5,317		2,265		3,891		11,473		649,581		661,054
Owner occupied construction		82		-		-		82		17,638		17,720
Consumer and other loans
Consumer loans		2,637		746		651		4,034		116,339		120,373
Other		-		-		-		-		6,014		6,014
Total loans	$	12,135	$	4,594	$	12,905	$	29,634	$	2,156,998	$	2,186,632

ASC 326 prescribes that when an entity determines foreclosure is probable, the expected credit loss is required to be measured based on the fair value of the collateral. As a practical expedient, an entity may use the fair value as of the reporting date when recording the net carrying amount of the asset. For the collateral dependent asset ("CDA") a credit loss expense is recorded for loan amounts in excess of fair value of the collateral. The table below summarizes collateral dependent loans, where foreclosure is probable, by type of collateral, and the extent to which they are collateralized during the period.

		*June 30, 2021*
(Amounts in thousands)	*Balance*		*Collateral Coverage*		%
Commercial Real Estate
Hotel	$	-	$	-		-
Office		-		-		-
Other		2,791		2,858		102.40	%
Retail		-		-		-
Multi-Family
Industrial		-		-		-
Office		-		-		-
Other		-		-		-
Commercial and industrial
Industrial		-		-		-
Other		-		-		-
Home equity loans		41		41		100.00	%
Consumer owner occupied		185		185		100.00	%
Consumer		-		-		-
Total collateral dependent loans	$	3,017	$	3,084		102.22	%

The Company may make concessions in interest rates, loan terms and/or amortization terms when restructuring loans for borrowers experiencing financial difficulty. Certain TDRs are classified as nonperforming at the time of restructuring and are returned to performing status after six months of satisfactory payment performance; however, these loans remain identified as impaired until full payment or other satisfaction of the obligation occurs.

The CARES Act included a provision allowing banks to not apply the guidance on accounting for troubled debt restructurings to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020, and the earlier of (i) December 31, 2021, or (ii) 60 days after the end of the COVID-19 national emergency. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt this provision of the CARES Act.

From March, 2020, through June 30, 2021, the Company modified a total of 3,861 loans with principal balances totaling $469.21 million related to COVID-19 relief. Those modifications were generally short-term payment deferrals and are not considered TDRs based on the CARES Act. The Company’s policy is to downgrade commercial loans modified for COVID-19 to Special Mention due to a higher-than-usual level of risk, which caused the significant increase in loans in that rating. Subsequent upgrade or downgrade will be on a case by case basis. The Company will consider upgrading these loans back to pass once the modification period has ended and timely contractual payments resume. Further downgrade would be based on a number of factors, including but not limited to additional modifications, payment performance and current underwriting. As of June 30, 2021, total COVID-19 loan deferrals stood at $4.02 million.

The following table presents loans modified as TDRs, by loan class and accrual status, as of the dates indicated:

	*June 30, 2021*						*December 31, 2020*
(Amounts in thousands)	*Nonaccrual(1)*		*Accruing*		*Total*		*Nonaccrual(1)*		*Accruing*		*Total*
Commercial loans
Construction, development, and other land	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and industrial		405		619		1,024		-		1,326		1,326
Single family non-owner occupied		655		592		1,247		1,585		1,265		2,850
Non-farm, non-residential		1,374		2,076		3,450		-		2,407		2,407
Consumer real estate loans
Home equity lines		-		72		72		-		77		77
Single family owner occupied		1,198		4,707		5,905		229		4,927		5,156
Owner occupied construction		-		214		214		-		216		216
Consumer and other loans
Consumer loans		-		29		29		-		30		30
Total TDRs	$	3,632	$	8,309	$	11,941	$	1,814	$	10,248	$	12,062

Allowance for credit losses related to TDRs					$	159					$	-

(1)	Nonaccrual TDRs are included in total nonaccrual loans disclosed in the nonaccrual table above.

The following table presents interest income recognized on TDRs for the periods indicated:

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2021*		*2020*		*2021*		*2020*
(Amounts in thousands)
Interest income recognized	$	94	$	152	$	198	$	250

The following tables present loans modified as TDRs, by type of concession made and loan class, that were restructured during the periods indicated:

	*Three Months Ended June 30,*
	*2021*						*2020*
					*Post-modification*						*Post-modification*
	*Total*		*Pre-modification*		*Recorded*		*Total*		*Pre-modification*		*Recorded*
(Amounts in thousands)	*Contracts*		*Recorded Investment*		*Investment(1)*		*Contracts*		*Recorded Investment*		*Investment(1)*
Below market interest rate and extended payment term
Single family non-owner occupied		-		-		-		-		-		-
Single family owner occupied		-		-		-		-		-		-
Total below market interest rate and extended payment term		-		-		-		-		-		-
Payment deferral
Construction, development, and other land		-		-		-		-		-		-
Commercial and industrial		-		-		-		1		1,106		1,106
Single family non-owner occupied		-		-		-		-		-		-
Non-farm, non-residential		-		-		-		2		1,538		1,538
Single family owner occupied		-		-		-		1		70		54
Total principal deferral		-		-		-		4		2,714		2,698
Total		-	$	-	$	-		4	$	2,714	$	2,698

(1)	Represents the loan balance immediately following modification

	*Six Months Ended June 30,*
	*2021*						*2020*
					*Post-modification*						*Post-modification*
	*Total*		*Pre-modification*		*Recorded*		*Total*		*Pre-modification*		*Recorded*
(Amounts in thousands)	*Contracts*		*Recorded Investment*		*Investment(1)*		*Contracts*		*Recorded Investment*		*Investment(1)*
Below market interest rate Single family non-owner occupied		-		-		-		1	$	50	$	50
Total below market interest rate		-		-		-		1		50		50
Below market interest rate and extended payment term
Single family non-owner occupied		-		-		-		-		-		-
Single family owner occupied		-		-		-		-		-		-
Total below market interest rate and extended payment term		-		-		-		-		-		-
Payment deferral
Construction, development, and other land		-		-		-		1		63		63
Commercial and industrial		-		-		-		2		1,708		1,708
Single family non-owner occupied		-		-		-		1		529		529
Non-farm, non-residential		1		1,390		1,374		3		2,115		2,115
Single family owner occupied		-		-		-		3		742		726
Home equity lines		-		-		-		-		-		-
Total principal deferral		1		1,390		1,374		10		5,157		5,141
Total		1	$	1,390	$	1,374		11	$	5,207	$	5,191

(1)	Represents the loan balance immediately following modification

There were no payment defaults on loans modified as TDRs restructured within the previous 12 months as of June 30, 2021, and one loan for $209 thousand as of June 30, 2020.

The following table provides information about other real estate owned (“OREO”), which consists of properties acquired through foreclosure, as of the dates indicated:

	*June 30, 2021*			*December 31, 2020*
(Amounts in thousands)
OREO		$	1,324	$	2,083

OREO secured by residential real estate			$420	$	769
Residential real estate loans in the foreclosure process⁽¹⁾			3,606		4,141

(1)	The recorded investment in consumer mortgage loans collateralized by residential real estate that are in the process of foreclosure according to local requirements of the applicable jurisdiction