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Note 5 - Credit Quality

9 Months Ended

Sep. 30, 2022

Note 5. 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:

	*September 30, 2022*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*
Commercial loans
Construction, development, and other land	$	107,937	$	757	$	410	$	-	$	-	$	109,104
Commercial and industrial		145,064		1,084		1,876		-		-		148,024
Multi-family residential		130,970		4,081		438		-		-		135,489
Single family non-owner occupied		185,415		2,358		8,360		-		-		196,133
Non-farm, non-residential		749,705		16,206		11,439		-		-		777,350
Agricultural		10,324		51		162		-		-		10,537
Farmland		9,909		589		1,629		-		-		12,127
Consumer real estate loans
Home equity lines		74,067		430		2,927		-		-		77,424
Single family owner occupied		697,976		2,022		26,782		-		-		726,780
Owner occupied construction		14,438		-		164		-		-		14,602
Consumer and other loans
Consumer loans		148,436		10		2,576		-		-		151,022
Other		4,141		-		-		-		-		4,141
Total loans	$	2,278,382	$	27,588	$	56,763	$	-	$	-	$	2,362,733

	*December 31, 2021*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*

Commercial loans
Construction, development, and other land	$	64,498	$	451	$	857	$	-	$	-	$	65,806
Commercial and industrial		128,770		1,005		3,855		-		-		133,630
Multi-family residential		98,457		1,090		855		-		-		100,402
Single family non-owner occupied		186,184		3,607		8,977		10		-		198,778
Non-farm, non-residential		665,559		25,624		16,323		-		-		707,506
Agricultural		8,758		70		513		-		-		9,341
Farmland		11,939		633		2,441		-		-		15,013
Consumer real estate loans
Home equity lines		76,259		426		3,172		-		-		79,857
Single family owner occupied		671,459		2,420		29,985		-		-		703,864
Owner occupied construction		16,629		-		281		-		-		16,910
Consumer and other loans
Consumer loans		127,514		16		2,264		-		-		129,794
Other		4,668		-		-		-		-		4,668
Total loans	$	2,060,694	$	35,342	$	69,523	$	10	$	-	$	2,165,569

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 September 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Construction, development and other land
Pass	$	39,902	$	45,588	$	8,631	$	3,144	$	2,724	$	7,594	$	354	$	107,937
Special Mention		-		156		-		-		102		463		36		757
Substandard		-		-		362		36		12		-		-		410
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total construction, development, and other land	$	39,902	$	45,744	$	8,993	$	3,180	$	2,838	$	8,057	$	390	$	109,104
Commercial and industrial
Pass	$	60,771	$	26,011	$	13,335	$	8,824	$	9,815	$	9,764	$	16,544	$	145,064
Special Mention		234		22		28		524		179		-		97		1,084
Substandard		147		122		122		425		212		330		518		1,876
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total commercial and industrial	$	61,152	$	26,155	$	13,485	$	9,773	$	10,206	$	10,094	$	17,159	$	148,024
Multi-family residential
Pass	$	40,595	$	15,211	$	26,878	$	3,757	$	1,788	$	41,807	$	934	$	130,970
Special Mention		-		-		-		-		-		4,081		-		4,081
Substandard		-		-		-		-		-		438		-		438
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total multi-family residential	$	40,595	$	15,211	$	26,878	$	3,757	$	1,788	$	46,326	$	934	$	135,489
Non-farm, non-residential
Pass	$	183,767	$	145,439	$	122,934	$	53,060	$	37,644	$	192,843	$	14,018	$	749,705
Special Mention		-		1,946		860		1,205		2,756		9,289		150		16,206
Substandard		-		1,130		682		2,762		714		5,924		227		11,439
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total non-farm, non-residential	$	183,767	$	148,515	$	124,476	$	57,027	$	41,114	$	208,056	$	14,395	$	777,350
Agricultural
Pass	$	4,071	$	3,447	$	1,158	$	469	$	364	$	382	$	433	$	10,324
Special Mention		-		35		16		-		-		-		-		51
Substandard		-		38		3		75		30		16		-		162
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total agricultural	$	4,071	$	3,520	$	1,177	$	544	$	394	$	398	$	433	$	10,537
Farmland
Pass	$	217	$	720	$	814	$	77	$	885	$	5,662	$	1,534	$	9,909
Special Mention		-		110		-		-		227		252		-		589
Substandard		-		-		13		-		256		1,360		-		1,629
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total farmland	$	217	$	830	$	827	$	77	$	1,368	$	7,274	$	1,534	$	12,127

(Amounts in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at September 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving		Total
Home equity lines
Pass	$	967	$	100	$	76	$	-	$	77	$	-	$	72,847	$	74,067
Special Mention		-		-		-		-		-		-		430		430
Substandard		-		-		28		36		205		1,207		1,451		2,927
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total home equity lines	$	967	$	100	$	104	$	36	$	282	$	1,207	$	74,728	$	77,424
Single family Mortgage
Pass	$	124,170	$	233,991	$	208,988	$	51,754	$	38,014	$	225,285	$	1,189	$	883,391
Special Mention		-		380		91		367		264		3,278		-		4,380
Substandard		378		1,090		708		1,164		2,143		29,659		-		35,142
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total single family owner and non-owner occupied	$	124,548	$	235,461	$	209,787	$	53,285	$	40,421	$	258,222	$	1,189	$	922,913
Owner occupied construction
Pass	$	5,224	$	8,686	$	-	$	23	$	13	$	492	$	-	$	14,438
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		162		-		2		-		164
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total owner occupied construction	$	5,224	$	8,686	$	-	$	185	$	13	$	494	$	-	$	14,602
Consumer loans
Pass	$	67,539	$	43,169	$	18,776	$	9,514	$	3,176	$	8,178	$	2,225	$	152,577
Special Mention		-		3		-		6		-		-		1		10
Substandard		423		892		556		443		46		137		79		2,576
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total consumer loans	$	67,962	$	44,064	$	19,332	$	9,963	$	3,222	$	8,315	$	2,305	$	155,163

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at September 30, 2022	*2022*		*2021*		*2020*		*2019*		*2018*		*Prior*		*Revolving*		*Total*
Total Loans
Pass	$	527,223	$	522,362	$	401,590	$	130,622	$	94,500	$	492,007	$	110,078	$	2,278,382
Special Mention		234		2,652		995		2,102		3,528		17,363		714		27,588
Substandard		948		3,272		2,474		5,103		3,618		39,073		2,275		56,763
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total loans	$	528,405	$	528,286	$	405,059	$	137,827	$	101,646	$	548,443	$	113,067	$	2,362,733

(Amounts in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
Construction, development
and other land
Pass	$	40,207	$	10,127	$	3,081	$	3,704	$	1,308	$	5,717	$	354	$	64,498
Special Mention		-		266		-		128		-		21		36		451
Substandard		-		-		128		11		291		427		-		857
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total construction, development, and other land	$	40,207	$	10,393	$	3,209	$	3,843	$	1,599	$	6,165	$	390	$	65,806
Commercial and industrial
Pass	$	34,539	$	18,887	$	13,679	$	13,772	$	4,817	$	5,890	$	16,544	$	108,128
Special Mention		32		60		597		192		28		-		96		1,005
Substandard		184		355		706		384		842		866		518		3,855
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total commercial and industrial	$	34,755	$	19,302	$	14,982	$	14,348	$	5,687	$	6,756	$	17,158	$	112,988
Paycheck Protection Loans
Pass	$	16,482	$	4,160	$	-	$	-	$	-	$	-	$	-	$	20,642
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total Paycheck Protection Loans	$	16,482	$	4,160	$	-	$	-	$	-	$	-	$	-	$	20,642
Multi-family residential
Pass	$	11,307	$	24,299	$	4,644	$	1,897	$	8,413	$	46,962	$	935	$	98,457
Special Mention		-		-		-		-		-		1,090		-		1,090
Substandard		-		-		-		-		-		855		-		855
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total multi-family residential	$	11,307	$	24,299	$	4,644	$	1,897	$	8,413	$	48,907	$	935	$	100,402
Non-farm, non-residential
Pass	$	147,978	$	146,381	$	62,651	$	50,943	$	43,776	$	199,812	$	14,018	$	665,559
Special Mention		397		3,334		823		2,595		9,190		9,135		150		25,624
Substandard		1,161		711		2,508		2,531		3,232		5,953		227		16,323
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total non-farm, non-residential	$	149,536	$	150,426	$	65,982	$	56,069	$	56,198	$	214,900	$	14,395	$	707,506
Agricultural
Pass	$	4,564	$	1,548	$	998	$	534	$	346	$	335	$	433	$	8,758
Special Mention		43		27		-		-		-		-		-		70
Substandard		44		11		282		39		17		120		-		513
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total agricultural	$	4,651	$	1,586	$	1,280	$	573	$	363	$	455	$	433	$	9,341
Farmland
Pass	$	428	$	1,047	$	82	$	1,125	$	887	$	6,835	$	1,535	$	11,939
Special Mention		189		-		-		240		5		199		-		633
Substandard		-		14		519		249		264		1,395		-		2,441
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total farmland	$	617	$	1,061	$	601	$	1,614	$	1,156	$	8,429	$	1,535	$	15,013

(Amounts in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
Home equity lines
Pass	$	115	$	59	$	-	$	25	$	2	$	2,168	$	73,890	$	76,259
Special Mention		-		-		-		-		-		-		426		426
Substandard		-		-		28		249		128		1,316		1,451		3,172
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total home equity lines	$	115	$	59	$	28	$	274	$	130	$	3,484	$	75,767	$	79,857
Single family Mortgage
Pass	$	239,917	$	225,294	$	61,925	$	46,716	$	41,757	$	240,845	$	1,189	$	857,643
Special Mention		399		510		937		269		137		3,775		-		6,027
Substandard		1,213		799		1,475		1,668		1,878		31,929		-		38,962
Doubtful		-		-		-		-		-		10		-		10
Loss		-		-		-		-		-		-		-		-
Total single family owner and non-owner occupied	$	241,529	$	226,603	$	64,337	$	48,653	$	43,772	$	276,559	$	1,189	$	902,642
Owner occupied construction
Pass	$	9,689	$	4,729	$	178	$	22	$	428	$	1,583	$	-	$	16,629
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		281		-		281
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total owner occupied construction	$	9,689	$	4,729	$	178	$	22	$	428	$	1,864	$	-	$	16,910
Consumer loans
Pass	$	65,018	$	31,065	$	16,548	$	4,980	$	2,306	$	10,040	$	2,225	$	132,182
Special Mention		-		-		16		-		-		-		-		16
Substandard		328		663		824		107		78		186		78		2,264
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total consumer loans	$	65,346	$	31,728	$	17,388	$	5,087	$	2,384	$	10,226	$	2,303	$	134,462

(Amounts in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
Total Loans
Pass	$	570,244	$	467,596	$	163,786	$	123,718	$	104,040	$	520,187	$	111,123	$	2,060,694
Special Mention		1,060		4,197		2,373		3,424		9,360		14,220		708		35,342
Substandard		2,930		2,553		6,470		5,238		6,730		43,328		2,274		69,523
Doubtful		-		-		-		-		-		10		-		10
Loss		-		-		-		-		-		-		-		-
Total loans	$	574,234	$	474,346	$	172,629	$	132,380	$	120,130	$	577,745	$	114,105	$	2,165,569

The Company generally places a loan on nonaccrual status when it is 90 days or more past due. The following table presents nonaccrual loans, by loan class, as of the dates indicated:

	*September 30, 2022*						*December 31, 2021*
(Amounts in thousands)	*No Allowance*		*With an Allowance*		*Total*		*No Allowance*		*With an Allowance*		*Total*
Commercial loans
Construction, development, and other land	$	33	$	-	$	33	$	409	$	-	$	409
Commercial and industrial		265		-		265		1,734		-		1,734
Multi-family residential		396		-		396		208		-		208
Single family non-owner occupied		1,320		-		1,320		2,304		-		2,304
Non-farm, non-residential		2,273		-		2,273		3,439		1,100		4,539
Agricultural		18		-		18		136		-		136
Farmland		133		-		133		222		-		222
Consumer real estate loans
Home equity lines		503		-		503		767		-		767
Single family owner occupied		8,416		-		8,416		8,957		-		8,957
Owner occupied construction		-		-		-		-		-		-
Consumer and other loans
Consumer loans		1,946		-		1,946		1,492		-		1,492
Total nonaccrual loans	$	15,303	$	-	$	15,303	$	19,668	$	1,100	$	20,768

During the third quarter of 2022, $1 thousand in nonaccrual loan interest was recognized compared to $14 thousand for the same period of 2021. During the first nine months of 2022 $4 thousand in nonaccrual loan interest was recognized compared to $38 thousand for the same period of 2021 .

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

	*September 30, 2022*
													*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	$	40	$	8	$	25	$	73	$	109,031	$	109,104	$	-
Commercial and industrial		319		186		45		550		147,474		148,024		-
Multi-family residential		-		-		-		-		135,489		135,489		-
Single family non-owner occupied		398		239		335		972		195,161		196,133		-
Non-farm, non-residential		780		-		1,377		2,157		775,193		777,350		-
Agricultural		30		18		11		59		10,478		10,537		-
Farmland		-		-		133		133		11,994		12,127		-
Consumer real estate loans
Home equity lines		425		183		309		917		76,507		77,424		-
Single family owner occupied		4,686		2,057		3,454		10,197		716,583		726,780		-
Owner occupied construction		-		-		-		-		14,602		14,602		-
Consumer and other loans
Consumer loans		3,767		1,616		944		6,327		144,695		151,022		-
Other		-		-		-		-		4,141		4,141		-
Total loans	$	10,445	$	4,307	$	6,633	$	21,385	$	2,341,348	$	2,362,733	$	-

	December 31, 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	$	52	$	-	$	120	$	172	$	65,634	$	65,806	$	-
Commercial and industrial		325		35		1,394		1,754		131,876		133,630		-
Multi-family residential		97		-		-		97		100,305		100,402		-
Single family non-owner occupied		1,210		583		795		2,588		196,190		198,778		-
Non-farm, non-residential		1,002		441		2,333		3,776		703,730		707,506		-
Agricultural		73		7		101		181		9,160		9,341		-
Farmland		52		-		222		274		14,739		15,013		-
Consumer real estate loans
Home equity lines		275		388		333		996		78,861		79,857		-
Single family owner occupied		4,740		2,584		3,880		11,204		692,660		703,864		-
Owner occupied construction		139		-		-		139		16,771		16,910		-
Consumer and other loans
Consumer loans		3,469		1,182		1,049		5,700		124,094		129,794		-
Other		-		-		-		-		4,668		4,668		-
Total loans	$	11,434	$	5,220	$	10,227	$	26,881	$	2,138,688	$	2,165,569	$	-

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. As of September 30, 2022, there were no collateral dependent loans.

	*September 30, 2022*						*December 31, 2021*
(Amounts in thousands)	*Balance*		*Collateral Coverage*		%		*Balance*		*Collateral Coverage*		%
Commercial Real Estate
Hotel	$	-	$	-		-	$	-	$	-		-
Office		-		-		-		-		-		-
Other		-		-		-		2,216		2,312		104.33	%
Retail		-		-		-		-		-		-
Multi-Family
Industrial		-		-		-		-		-		-
Office		-		-		-		-		-		-
Other		-		-		-		-		-		-
Commercial and industrial
Industrial		-		-		-		-		-		-
Other		-		-		-		-		-		-
Home equity loans		-		-		-		-		-		-
Consumer owner occupied		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total collateral dependent loans	$	-	$	-		-	$	2,216	$	2,312		104.33	%

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.

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

	*September 30, 2022*						*December 31, 2021*
(Amounts in thousands)	*Nonaccrual(1)*		*Accruing*		*Total*		*Nonaccrual(1)*		*Accruing*		*Total*
Commercial loans
Commercial and industrial	$	-	$	409	$	409	$	396	$	470	$	866
Single family non-owner occupied		147		844		991		857		1,100		1,957
Non-farm, non-residential		-		766		766		-		2,021		2,021
Consumer real estate loans
Home equity lines		-		59		59		-		67		67
Single family owner occupied		1,328		4,925		6,253		1,266		4,755		6,021
Owner occupied construction		-		-		-		-		212		212
Consumer and other loans
Consumer loans		-		25		25		-		27		27
Total TDRs	$	1,475	$	7,028	$	8,503	$	2,519	$	8,652	$	11,171

Allowance for credit losses related to TDRs					$	-					$	-

(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 September 30,*				*Nine Months Ended September 30,*
	*2022*		*2021*		*2022*		*2021*
(Amounts in thousands)
Interest income recognized	$	97	$	92	$	299	$	290

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 September 30,*
	*2022*						*2021*
(Amounts in thousands)	*Total Contracts*		*Pre-modification Recorded Investment*		*Post-modification Recorded Investment(1)*		*Total Contracts*		*Pre-modification Recorded Investment*		*Post-modification Recorded Investment(1)*
Payment deferral
Single family owner occupied		1	$	94	$	72		-		-		-
Total payment deferral		1	$	94	$	72		-	$	-	$	-
Below market interest rate and extended payment term
Single family owner occupied		-	$	-	$	-		2	$	302	$	283
Total below market interest rate and extended term		-	$	-	$	-		2	$	302	$	283
Total		1	$	94	$	72		2	$	302	$	283

(1)	Represents the loan balance immediately following modification

	*Nine Months Ended September 30,*
	*2022*						*2021*
(Amounts in thousands)	*Total Contracts*		*Pre-modification Recorded Investment*		*Post-modification Recorded Investment(1)*		*Total Contracts*		*Pre-modification Recorded Investment*		*Post-modification Recorded Investment(1)*
Below market interest rate
Single family owner occupied		1	$	31	$	32		-	$	-	$	-
Total below market interest rate		1	$	31	$	32		-		-		-
Below market interest rate and extended payment term
Single family owner occupied		-	$	-	$	-		2	$	302	$	283
Total below market interest rate and extended payment term		-	$	-	$	-		2	$	302	$	283
Payment deferral
Single family owner occupied		3	$	331	$	317		-		-		-
Non-farm, non-residential		-		-		-		1		1,390		1,368
Total payment deferral		3	$	331	$	317		1	$	1,390	$	1,368
Total		4	$	362	$	349		3	$	1,692	$	1,651

(1)	Represents the loan balance immediately following modification

There were no payment defaults for loans modified as TDRs restructured within the previous 12 months as of September 30, 2022, and there was one payment default in the amount of $ 1.37 million as of September 30, 2021 .

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

	*September 30, 2022*		*December 31, 2021*
(Amounts in thousands)
OREO	$	559	$	1,015

OREO secured by residential real estate	$	231	$	337
Residential real estate loans in the foreclosure process⁽¹⁾	$	2,678	$	2,210

(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