Loans
Note 4

The Company originates commercial, industrial and real estate loans to businesses and faith-based ministries throughout the metropolitan St. Louis, Missouri area, Orange County, California, Colorado Springs, Colorado and other selected cities in the United States. The Company does not have any particular concentration of credit in any one economic sector; however, a substantial portion of the commercial and industrial loans is extended to privately-held commercial companies and franchises in these market areas and are generally secured by the assets of the business. The Company also has a substantial portion of real estate loans secured by mortgages that are extended to faith-based ministries in its market area and selected cities in the United States.

A summary of loan categories is as follows:

	December 31,
(In thousands)	2018		2017
Commercial and industrial	$	277,091	$	236,394
Real estate
Commercial:
Mortgage		95,605		94,675
Construction		11,858		9,359
Faith-based:
Mortgage		316,147		316,073
Construction		20,576		25,948
Industrial Revenue Bonds		—		3,374
Other		310		408
Total loans	$	721,587	$	686,231

The following table presents the aging of loans by loan categories at December 31, 2018:

	Performing						Nonperforming
							90 Days
			30-59		60-89		and		Non-		Total
(In thousands)	Current		Days		Days		Over		accrual		Loans
Commercial and industrial	$	277,091	$	—	$	—	$	—	$	—	$	277,091
Real estate
Commercial:
Mortgage		95,605		—		—		—		—		95,605
Construction		11,858		—		—		—		—		11,858
Faith-based:
Mortgage		316,147		—		—		—		—		316,147
Construction		20,576		—		—		—		—		20,576
Industrial Revenue Bonds		—		—		—		—		—		—
Other		310		—		—		—		—		310
Total	$	721,587	$	—	$	—	$	—	$	—	$	721,587

The following table presents the aging of loans by loan categories at December 31, 2017:

	Performing						Nonperforming
							90 Days
			30-59		60-89		and		Non-		Total
(In thousands)	Current		Days		Days		Over		accrual		Loans
Commercial and industrial	$	236,394	$	—	$	—	$	—	$	—	$	236,394
Real estate
Commercial:
Mortgage		94,675		—		—		—		—		94,675
Construction		9,359		—		—		—		—		9,359
Faith-based:
Mortgage		316,073		—		—		—		—		316,073
Construction		25,948		—		—		—		—		25,948
Industrial Revenue Bonds		3,374		—		—		—		—		3,374
Other		408		—		—		—		—		408
Total	$	686,231	$	—	$	—	$	—	$	—	$	686,231

The following table presents the credit exposure of the loan portfolio by internally assigned credit grade as of December 31, 2018:

	Loans		Performing		Nonperforming
	Subject to		Loans Subject to		Loans Subject
	Normal		Special		to Special
(In thousands)	Monitoring⁽¹⁾		Monitoring⁽²⁾		Monitoring⁽²⁾		Total Loans
Commercial and industrial	$	275,308	$	1,783	$	—	$	277,091
Real estate
Commercial:
Mortgage		95,447		158		—		95,605
Construction		11,858		—		—		11,858
Faith-based:
Mortgage		314,940		1,207		—		316,147
Construction		20,576		—		—		20,576
Industrial Revenue Bonds		—		—		—		—
Other		310		—		—		310
Total	$	718,439	$	3,148	$	—	$	721,587

⁽¹⁾	Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligation.
⁽²⁾	Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

The following table presents the credit exposure of the loan portfolio by internally assigned credit grade as of December 31, 2017:

	Loans		Performing		Nonperforming
	Subject to		Loans Subject to		Loans Subject
	Normal		Special		to Special
(In thousands)	Monitoring⁽¹⁾		Monitoring⁽²⁾		Monitoring⁽²⁾		Total Loans
Commercial and industrial	$	234,271	$	2,123	$	—	$	236,394
Real estate
Commercial:
Mortgage		93,788		887		—		94,675
Construction		9,359		—		—		9,359
Faith-based:
Mortgage		316,042		31		—		316,073
Construction		25,948		—		—		25,948
Industrial Revenue Bonds		3,374		—		—		3,374
Other		408		—		—		408
Total	$	683,190	$	3,041	$	—	$	686,231

⁽¹⁾	Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligation.
⁽²⁾	Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

Impaired loans consist primarily of nonaccrual loans, loans greater than 90 days past due and still accruing interest and troubled debt restructurings, both performing and non-performing. Troubled debt restructuring involves the granting of a concession to a borrower experiencing financial difficulty resulting in the modification of terms of the loan, such as changes in payment schedule or interest rate. There was no ALLL related to impaired loans at both December 31, 2018 and 2017. There were no non-accrual loans at December 31, 2018 and 2017. There were no loans delinquent 90 days or more and still accruing interest at both December 31, 2018 and 2017. At December 31, 2018 and 2017, there were no loans classified as troubled debt restructuring. The average balances of impaired loans during 2018, 2017 and 2016 were $0, $166,000, and $333,000, respectively. Income that would have been recognized on non-accrual loans under the original terms of the contract was $0, $24,000, and $66,000 for 2018, 2017 and 2016, respectively. Income that was recognized on nonaccrual loans was $0, $17,000, and $47,000 for 2018, 2017 and 2016 respectively. There were no foreclosed assets as of December 31, 2018 or 2017.

The Company does not record loans at fair value on a recurring basis. Once a loan is identified as impaired, management measures impairment in accordance with FASB ASC 310. At December 31, 2018 and 2017, there were no impaired loans. The fair value of the collateral is based upon an observable market price or current appraised value and therefore, the Company classifies these assets as nonrecurring Level 3.

A summary of the activity in the allowance for loan losses for the period ended December 31, 2018 is as follows:

	December 31,		Charge-							December 31,
(In thousands)	2017		Offs		Recoveries		Provision			2018
Commercial and industrial	$	3,652	$	—	$	20	$	507		$	4,179
Real estate
Commercial:
Mortgage		1,394		—		—		23			1,417
Construction		70		—		—		19			89
Faith-based:
Mortgage		3,962		—		—		(1	)		3,961
Construction		196		—		—		(41	)		155
Industrial Revenue Bond		52		—		—		(52	)		—
Other		879		—		—		(455	)		424
Total	$	10,205	$	—	$	20	$	—		$	10,225

A summary of the activity in the allowance for loan losses for the period ended December 31, 2017 is as follows:

	December 31,		Charge-							December 31,
(In thousands)	2016		Offs		Recoveries		Provision			2017
Commercial and industrial	$	3,261	$	—	$	30	$	361		$	3,652
Real estate
Commercial:
Mortgage		1,662		—		—		(268	)		1,394
Construction		47		—		—		23			70
Faith-based:
Mortgage		4,027		—		—		(65	)		3,962
Construction		85		—		—		111			196
Industrial Revenue Bond		101		—		—		(49	)		52
Other		992		—		—		(113	)		879
Total	$	10,175	$	—	$	30	$	—		$	10,205

As of December 31, 2018, there were loans totaling $278,153 to affiliates of executive officers or directors. There were no loans to affiliates of executive officers or directors at December 31, 2017.