5. LOANS AND ALLOWANCE FOR LOAN LOSSES

At December 31, 2011 and 2010, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:


	December 31, 2011
	FUSB		ALC		Total
Real estate loans:
Construction, land development and other land loans	$	40,311,327	$	—	$	40,311,327
Secured by 1-4 family residential properties		43,691,196		40,531,874		84,223,070
Secured by multi-family residential properties		26,721,693		—		26,721,693
Secured by non-farm, non-residential properties		147,517,830		—		147,517,830
Other		820,057		—		820,057
Commercial and industrial loans		43,059,832		—		43,059,832
Consumer loans		18,886,177		45,687,656		64,573,833
Other loans		909,463		—		909,463

Total loans	$	321,917,575	$	86,219,530	$	408,137,105
Less: Unearned interest, fees and deferred cost		277,230		4,508,530		4,785,760
Allowance for loan losses		18,690,699		3,575,980		22,266,679

Net loans	$	302,949,646	$	78,135,020	$	381,084,666


	December 31, 2010
	FUSB		ALC		Total
	(Restated)				(Restated)
Real estate loans:
Construction, land development and other land loans	$	43,839,055	$	—	$	43,839,055
Secured by 1-4 family residential properties		39,330,360		47,058,867		86,389,227
Secured by multi-family residential properties		27,237,358		—		27,237,358
Secured by non-farm, non-residential properties		146,073,923		—		146,073,923
Other		179,008		—		179,008
Commercial and industrial loans		44,392,387		—		44,392,387
Consumer loans		21,192,320		41,832,006		63,024,326
Other loans		1,887,969		—		1,887,969

Total loans	$	324,132,380	$	88,890,873	$	413,023,253
Less: Unearned interest, fees and deferred cost		350,962		4,258,383		4,609,345
Allowance for loan losses		17,026,983		3,908,961		20,935,944

Net loans	$	306,754,435	$	80,723,529	$	387,477,964

The Company grants commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 73.6% and 74.4% of the portfolio is concentrated in loans secured by real estate for 2011 and 2010, respectively.

Portfolio Segments:

The Company has divided the loan portfolio into eight portfolio segments, each with different risk characteristics and methodologies for assessing the risk described as follows:

Construction, land development and other land loans – Commercial construction, land and land development loans include the development of residential housing projects, loans for the development of commercial and industrial use property and loans for the purchase and improvement of raw land. These loans are secured in whole or in part by the underlying real estate collateral and are generally guaranteed by the principals of the borrower.

Secured by 1–4 family residential properties – These loans include conventional mortgage loans on one-to-four family residential properties. These properties may serve as the borrower's primary residence, vacation home or investment property. Also included in this portfolio are home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower's residence, allows customers to borrow against the equity in their home.

Secured by multi-family residential properties – These are mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties – Commercial real estate loans include loans secured by commercial and industrial properties, office or mixed-use facilities, strip shopping centers or other commercial property. These loans are generally guaranteed by the principals of the borrower.

Other real estate loans – Other real estate loans are loans primarily for agricultural production, secured by mortgages on farm land.

Commercial and industrial loans – Includes loans to commercial customers for use in normal business to finance working projects. These credits may be loans and lines to financially strong borrowers, secured by inventories, equipment or receivables, and are generally guaranteed by the principals of the borrower.

Consumer loans – Includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purpose and all other direct consumer installment loans.

Other loans – Other loans comprise overdrawn checking accounts reclassified to loans and overdraft lines of credit.

Related Party Loans:

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, the Bank and ALC, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with others. Such loans do not represent more than normal risk of collectibility, nor do they present other unfavorable features. The amounts of such related party loans and commitments at December 31, 2011 and 2010 were $3,036,740 and $2,161,504, respectively. During the year ended December 31, 2011, new loans to these parties totaled $1,301,901, and repayments were $426,665. New loans to these parties were $906,726 and payments were $2,150,971 in 2010.

Allowance for Loan Losses:

Changes in the allowance for loan losses by reporting segment and portfolio segment were as follows:


	FUSB
	December 31, 2011
			Commercial				Residential
	Commercial		Real Estate		Consumer		Real Estate		Other		Total
Beginning balance	$	988,372	$	15,205,697	$	374,982	$	359,001	$	98,931	$	17,026,983
Charge-offs		407,048		12,915,432		419,889		972,891		3,077		14,718,337
Recoveries		152,147		44,702		120,248		172,030		—		489,127

Net charge-offs		254,901		12,870,730		299,641		800,861		3,077		14,229,210
Provision		155,456		14,197,600		230,360		1,126,233		183,277		15,892,926

Ending balance	$	888,927	$	16,532,567	$	305,701	$	684,373	$	279,131	$	18,690,699


	ALC
	December 31, 2011
			Commercial				Residential
	Commercial		Real Estate		Consumer		Real Estate		Other		Total
Beginning balance	$	—	$	—	$	2,662,873	$	1,246,088	$	—	$	3,908,961
Charge-offs		—		—		2,993,124		1,049,396		—		4,042,520
Recoveries		—		—		707,703		92,634		—		800,337

Net charge-offs		—		—		2,285,421		956,762		—		3,242,183
Provision		—		—		2,164,997		744,205		—		2,909,202

Ending balance	$	—	$	—	$	2,542,449	$	1,033,531	$	—	$	3,575,980


	FUSB & ALC
	December 31, 2011
			Commercial				Residential
	Commercial		Real Estate		Consumer		Real Estate		Other		Total
											(Restated)
Beginning balance	$	988,372	$	15,205,697	$	3,037,855	$	1,605,089	$	98,931	$	20,935,944
Charge-offs		407,048		12,915,432		3,413,013		2,022,287		3,077		18,760,857
Recoveries		152,147		44,702		827,951		264,664		—		1,289,464

Net charge-offs		254,901		12,870,730		2,585,062		1,757,623		3,077		17,471,393
Provision		155,456		14,197,600		2,395,357		1,870,438		183,277		18,802,128

Ending balance	$	888,927	$	16,532,567	$	2,848,150	$	1,717,904	$	279,131	$	22,266,679


	FUSB
	December 31, 2010
	Commercial		Commercial Real Estate		Consumer		Residential Real Estate		Other			Total
			(Restated)									(Restated)
Beginning balance	$	752,086	$	4,053,202	$	428,187	$	258,480	$	95,544		$	5,587,499
Charge-offs		773,051		4,096,174		405,156		419,864		488			5,694,733
Recoveries		81,857		102,083		118,134		23,599		1,054			326,727

Net charge-offs		691,194		3,994,091		287,022		396,265		(566	)		5,368,006
Provision		927,480		15,146,586		233,817		496,786		2,821			16,807,490

Ending balance	$	988,372	$	15,205,697	$	374,982	$	359,001	$	98,931		$	17,026,983


	ALC
	December 31, 2010
	Commercial		Commercial Real Estate		Consumer		Residential Real Estate		Other			Total
Beginning balance	$	—	$	—	$	3,040,123	$	1,376,023	$	—		$	4,416,146
Charge-offs		—		—		2,457,922		1,189,317		—			3,647,239
Recoveries		—		—		652,561		164,428		—			816,989

Net charge-offs		—		—		1,805,361		1,024,889		—			2,830,250
Provision		—		—		1,428,111		894,954		—			2,323,065

Ending balance	$	—	$	—	$	2,662,873	$	1,246,088	$	—		$	3,908,961


	FUSB & ALC
	December 31, 2010
	Commercial		Commercial Real Estate		Consumer		Residential Real Estate		Other			Total
			(Restated)									(Restated)
Beginning balance	$	752,086	$	4,053,202	$	3,468,310	$	1,634,503	$	95,544		$	10,003,645
Charge-offs		773,051		4,096,174		2,863,078		1,609,181		488			9,341,972
Recoveries		81,857		102,083		770,695		188,027		1,054			1,143,716

Net charge-offs		691,194		3,994,091		2,092,383		1,421,154		(566	)		8,198,256
Provision		927,480		15,146,586		1,661,928		1,391,740		2,821			19,130,555

Ending balance	$	988,372	$	15,205,697	$	3,037,855	$	1,605,089	$	98,931		$	20,935,944

Impaired Loan Evaluations:

The following table details loans individually evaluated for impairment at December 31, 2011 and 2010.


	December 31, 2011
	Loans Evaluated Individually for Impairment
	Recorded Investment		Balance in Allowance for Loan Losses
Real estate loans:
Construction, land development and other land loans	$	19,673,866	$	6,799,675
Secured by 1-4 family residential properties		186,376		—
Secured by multi-family residential properties		2,883,795		—
Secured by non-farm, non-residential properties		37,569,253		3,775,003
Other		—		—
Commercial and industrial loans		1,602,437		508,945
Consumer loans		—		—
Other loans		—		—

Total loans	$	61,915,727	$	11,083,623


	December 31, 2010
	Loans Evaluated Individually for Impairment
	Recorded Investment		Balance in Allowance for Loan Losses
Real estate loans:
Construction, land development and other land loans	$	24,338,521	$	10,470,402
Secured by 1-4 family residential properties		—		—
Secured by multi-family residential properties		3,956,316		471,628
Secured by non-farm, non-residential properties		21,035,228		1,695,695
Other		—		—
Commercial and industrial loans		1,642,351		—
Consumer loans		—		—
Other loans		—		—

Total loans	$	50,972,416	$	12,637,725

The following table details loans collectively evaluated for impairment at December 31, 2011 and 2010.


	December 31, 2011
	Loans Evaluated Collectively for Impairment
	Recorded Investment		Balance in Allowance for Loan Losses
Real estate loans:
Construction, land development and other land loans	$	20,637,460	$	2,872,985
Secured by 1-4 family residential properties		84,036,794		112,815
Secured by multi-family residential properties		23,837,898		169,691
Secured by non-farm, non-residential properties		109,948,578		2,965,168
Other		820,057		1,555,134
Commercial and industrial loans		41,457,395		379,982
Consumer loans		64,573,733		2,848,150
Other loans		909,463		279,131

Total loans	$	346,221,378	$	11,183,056


	December 31, 2010
	Loans Evaluated Collectively for Impairment
	Recorded Investment		Balance in Allowance for Loan Losses
	(Restated)		(Restated)
Real estate loans:
Construction, land development and other land loans	$	19,500,534	$	978,008
Secured by 1-4 family residential properties		86,389,227		1,605,089
Secured by multi-family residential properties		23,281,042		340,976
Secured by non-farm, non-residential properties		125,038,695		1,214,938
Other		179,008		34,050
Commercial and industrial loans		42,750,036		988,372
Consumer loans		63,024,326		3,037,855
Other loans		1,887,969		98,931

Total loans	$	362,050,837	$	8,298,219

Credit Quality Indicators:

The Bank has established a credit risk rating system to assess and manage the risk in the loan portfolio. It establishes a uniform framework and common language for assessing and monitoring risk in the portfolio.

The following is a guide for an 8-grade system of credit risk:

Minimal Risk: Borrowers in this category have the lowest risk of any resulting loss. Borrowers are of the highest quality, presently and prospectively.

Better Than Average Risk: Borrowers in the high end of medium range between borrowers who are definitely sound and those with minor risk characteristics.

Moderate Risk: Borrowers in this category have little chance of resulting in a loss. This category should include the average loan, under average economic conditions.

Acceptable Risk: Borrowers in this category have a limited chance of resulting in a loss.

Special Mention (Potential Weakness): Borrowers in this category exhibit potential credit weaknesses or downward trends deserving bank management's close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in our credit position at some future date. Special Mention loans are not adversely classified and do not expose our institution to sufficient risk to warrant adverse classification.

Included in Special Mention assets could be workout or turnaround situations, as well as those borrowers previously rated 2-4 who have shown deterioration, for whatever reason, indicating a downgrading from the better grade. The Special Mention rating is designed to identify a specific level of risk and concern about a loan's and/or borrower's quality. Although a Special Mention asset has a higher probability of default than previously rated categories, its default is not imminent.

Substandard (Definite Weakness – Loss Unlikely): These are borrowers with defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. There is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard.

Doubtful: Borrowers classified doubtful have all the weaknesses found in substandard borrowers with the added provision that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely. The possibility of loss is extremely high, but because of certain important, reasonably specific pending factors that may work to strengthen the assets, the loans' classification as estimated losses is deferred until a more exact status may be determined. Pending factors include proposed merger, acquisition or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. Management has a demonstrated a history of failing to live up to agreements, unethical or dishonest business practices and/or conviction on criminal charges.

Loss: Borrowers deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectible and of such little value that continuance as active assets of the bank is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off these worthless assets, even though partial recovery may be affected in the future.

The table below illustrates the carrying amount of loans by credit quality indicator at December 31, 2011.


	FUSB
	Pass 1-4		Special Mention 5		Substandard 6		Doubtful 7		Total
Loans secured by real estate:
Construction, land development and other land loans	$	18,047,223	$	698,720	$	21,326,953	$	238,430	$	40,311,326
Secured by 1-4 family residential properties		38,573,606		627,236		4,444,734		45,620		43,691,196
Secured by multi-family residential properties		23,837,899		—		2,883,794		—		26,721,693
Secured by non-farm, non-residential properties		105,589,444		11,579,028		30,349,359		—		147,517,831
Other		820,057		—		—		—		820,057
Commercial and industrial loans		39,675,939		844,882		2,497,612		41,400		43,059,833
Consumer loans		17,616,798		382,726		867,671		18,982		18,886,177
Other loans		908,179		100		1,183		—		909,462

Total	$	245,069,145	$	14,132,692	$	62,371,306	$	344,432	$	321,917,575



	ALC
	Performing		Nonperforming		Total
Loans secured by real estate:
Secured by 1-4 family residential properties	$	38,550,041	$	1,981,833	$	40,531,874
Consumer loans		43,674,948		2,012,708		45,687,656

Total	$	82,224,989	$	3,994,541	$	86,219,530

The table below illustrates the carrying amount of loans by credit quality indicator at December 31, 2010.


	FUSB
	Pass 1-4		Special Mention 5		Substandard 6		Doubtful 7		Total
			(Restated)		(Restated)
Loans secured by real estate:
Construction, land development and other land loans	$	28,536,477	$	2,763,511	$	12,396,945	$	142,122	$	43,839,055
Secured by 1-4 family residential properties		32,712,451		2,444,145		3,958,710		215,054		39,330,360
Secured by multi-family residential properties		23,281,043		894,547		3,061,768		—		27,237,358
Secured by non-farm, non-residential properties		104,070,981		5,640,363		35,665,310		697,269		146,073,923
Other		179,008		—		—		—		179,008
Commercial and industrial loans		40,210,198		917,622		3,131,799		132,768		44,392,387
Consumer loans		19,701,989		726,789		642,736		120,806		21,192,320
Other loans		1,887,969		—		—		—		1,887,969

Total	$	250,580,116	$	13,386,977	$	58,857,268	$	1,308,019	$	324,132,380


	ALC
	Performing		Nonperforming		Total
Loans secured by real estate:
Secured by 1-4 family residential properties	$	44,484,661	$	2,574,206	$	47,058,867
Consumer loans		40,484,945		1,347,061		41,832,006

Total	$	84,969,606	$	3,921,267	$	88,890,873

The following table provides an aging analysis of past due loans and nonaccruing loans by class at December 31, 2011.


	FUSB
	Past Due
	30-89 Days		Greater than 90 Days		Total		Nonaccrual		Current Loans		Total Loans
Loans secured by real estate:
Construction, land development and other land loans	$	3,094,062	$	—	$	3,094,062	$	3,087,081	$	34,130,183	$	40,311,326
Secured by 1-4 family residential properties		1,323,576		38,149		1,361,725		879,090		41,450,381		43,691,196
Secured by multi-family residential properties		—		—		—		2,883,794		23,837,899		26,721,693
Secured by non-farm, non-residential properties		1,281,427		87,466		1,368,893		7,562,784		138,586,154		147,517,831
Other		—		—		—		—		820,057		820,057
Commercial and industrial loans		1,459,027		13,262		1,472,289		129,540		41,458,004		43,059,833
Consumer loans		670,331		71,933		742,264		73,581		18,070,332		18,886,177
Other loans		2,615		12,811		15,426		—		894,036		909,462

Total past due loans	$	7,831,038	$	223,621	$	8,054,659	$	14,615,870	$	299,247,046	$	321,917,575


	ALC
	Past Due
	30-89 Days		Greater than 90 Days		Total		Nonaccrual		Current Loans		Total Loans
Loans secured by real estate:
Secured by 1-4 family residential properties	$	1,134,536	$	1,462,145	$	2,596,681	$	519,688	$	37,415,505	$	40,531,874
Consumer loans		1,310,021		645,953		1,955,974		1,366,756		42,364,926		45,687,656

Total past due loans	$	2,444,557	$	2,108,098	$	4,552,655	$	1,886,444	$	79,780,431	$	86,219,530

The following table provides an aging analysis of past due loans and nonaccruing loans by class at December 31, 2010, (restated).


	FUSB
	Past Due
	30-89 Days		Greater than 90 Days		Total		Nonaccrual		Current Loans		Total Loans
Loans secured by real estate:
Construction, land development and other land loans	$	707,815	$	333,199	$	1,041,014	$	1,045,143	$	41,752,898	$	43,839,055
Secured by 1-4 family residential properties		1,534,732		127,315		1,662,047		1,701,617		35,966,696		39,330,360
Secured by multi-family residential properties		—		—		—		3,072,794		24,164,564		27,237,358
Secured by non-farm, non-residential properties		8,780,522		2,085,397		10,865,919		6,087,070		129,120,934		146,073,923
Other		—		—		—		—		179,008		179,008
Commercial and industrial loans		1,002,643		37,338		1,039,981		224,679		43,127,727		44,392,387
Consumer loans		900,641		28,628		929,269		144,749		20,118,302		21,192,320
Other loans		—		—		—		—		1,887,969		1,887,969

Total past due loans	$	12,926,353	$	2,611,877	$	15,538,230	$	12,276,052	$	296,318,098	$	324,132,380


	ALC
	Past Due
	30-89 Days		Greater than 90 Days		Total		Nonaccrual		Current Loans		Total Loans
Loans secured by real estate:
Secured by 1-4 family residential properties	$	1,829,662	$	1,989,548	$	3,819,210	$	584,658	$	42,654,999	$	47,058,867
Consumer loans		1,373,240		635,666		2,008,906		711,395		39,111,706		41,832,007

Total past due loans	$	3,202,902	$	2,625,214	$	5,828,116	$	1,296,053	$	81,766,705	$	88,890,874

Impaired Loans:

At December 31, 2011, the carrying amount of impaired loans consisted of the following:


	December 31, 2011
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
Loans secured by real estate
Construction, land development and other land loans	$	7,005,366	$	7,005,366	$	—
Secured by 1-4 family residential properties		186,376		186,376		—
Secured by multi-family residential properties		2,883,795		2,883,795		—
Secured by non-farm, non-residential properties		24,410,538		24,410,538		—
Commercial and industrial		100,250		100,250		—

Total loans with no related allowance recorded	$	34,586,325	$	34,586,325	$	—


Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	12,668,500	$	12,668,500	$	6,799,675
Secured by non-farm, non-residential properties		13,158,715		13,158,715		3,775,003
Commercial and industrial		1,502,187		1,502,187		508,945

Total loans with an allowance recorded	$	27,329,402	$	27,329,402	$	11,083,623


Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	19,673,866	$	19,673,866	$	6,799,675
Secured by 1-4 family residential properties		186,376		186,376		—
Secured by multi-family residential properties		2,883,795		2,883,795		—
Secured by non-farm, non-residential properties		37,569,253		37,569,253		3,775,003
Commercial and industrial		1,602,437		1,602,437		508,945

Total impaired loans	$	61,915,727	$	61,915,727	$	11,083,623

At December 31, 2010, the carrying amount of impaired loans consisted of the following:


	December 31, 2010, as Restated
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
Loans secured by real estate
Construction, land development and other land loans	$	1,192,845	$	1,192,845	$	—
Secured by multi-family residential properties		2,128,527		2,128,527		—
Secured by non-farm, non-residential properties		13,470,223		13,470,223		—
Commercial and industrial		1,642,351		1,642,351		—

Total loans with no related allowance recorded	$	18,433,946	$	18,433,946	$	—


Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	23,145,676	$	23,145,676	$	10,470,402
Secured by multi-family residential properties		1,827,789		1,827,789		471,628
Secured by non-farm, non-residential properties		7,565,005		7,565,005		1,695,695

Total loans with an allowance recorded	$	32,538,470	$	32,538,470	$	12,637,725


Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	24,338,521	$	24,338,521	$	10,470,402
Secured by multi-family residential properties		3,956,316		3,956,316		471,628
Secured by non-farm, non-residential properties		21,035,228		21,035,228		1,695,695
Commercial and industrial		1,642,351		1,642,351		—

Total impaired loans	$	50,972,416	$	50,972,416	$	12,637,725

The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows:


	December 31, 2011
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
Loans secured by real estate
Construction, land development and other land loans	$	12,172,751	$	649,101	$	687,182
Secured by 1 – 4 family residential properties		37,275		—		—
Secured by multi-family residential properties		3,312,803		—		1,587,278
Secured by non-farm, non-residential properties		32,572,055		1,429,182		—
Commercial and industrial		1,634,368		140,357		141,405

Total	$	49,729,252	$	2,218,640	$	2,415,865


	December 31, 2010
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
Loans secured by real estate
Construction, land development and other land loans	$	5,794,634	$	907,914	$	896,075
Secured by multifamily residential properties		2,156,154		212,421		222,325
Secured by nonfarm, nonresidential properties		27,330,014		1,061,667		1,065,789
Commercial and industrial		1,642,351		70,732		63,547

Total	$	36,923,153	$	2,252,734	$	2,247,736

Loans on which the accrual of interest has been discontinued amounted to $16,502,314 and $13,572,105 at December 31, 2011 and 2010, respectively. If interest on those loans had been accrued, such income would have approximated $1,459,843 and $799,054 for 2011 and 2010, respectively. Interest income actually recorded on those loans amounted to $35,519 and $88,240 for 2011 and 2010, respectively. Accruing loans past due 90 days or more amounted to $2,331,718 and $5,237,091 for 2011 and 2010, respectively.

Troubled Debt Restructurings:

Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. The concessions granted generally involve the modification of terms of the loan, such as changes in payment schedule or interest rate, which generally would not otherwise be considered. Restructured loans can involve loans remaining on nonaccrual, moving to nonaccrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Nonaccrual restructured loans are included and treated with all other nonaccrual loans. In addition, all accruing restructured loans are being reported as troubled debt restructurings. Generally, restructured loans remain on nonaccrual until the customer has attained a sustained period of repayment performance under the modified loan terms (generally a minimum of six months). However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can meet the new terms and whether the loan should be returned to or maintained on nonaccrual status. If the borrower's ability to meet the revised payment schedule is not reasonably assured, the loan remains on nonaccrual. Based on the above, the Company had $1,821,696 and $1,311,000 of non-accruing loans that were restructured and remained on nonaccrual status at December 31, 2011 and 2010, respectively. In addition, the Company had $2,488,060 of restructured loans that were restored to accrual status based on a sustained period of repayment performance at December 31, 2011.

The following table provides the number of loans modified in a troubled debt restructuring by loan portfolio during the years ended December 31, 2011 and 2010, and the recorded investment and unpaid principal balance as of December 31, 2011.


	December 31, 2011						December 31, 2010
	Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance		Number of Loans		Pre- Modification Outstanding Principal Balance		Post- Modification Principal Balance
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		9	$	3,181,663	$	2,488,060		—	$	—	$	—
Secured by non-farm, non-residential properties		3		2,583,030		1,746,792		1		2,142,427		2,142,427
Commercial loans		2		79,853		74,904		—		—		—

Total		14	$	5,844,546	$	4,309,756		1	$	2,142,427	$	2,142,427

Restructured loan modifications may include payment schedule modifications, interest rate concessions, maturity date extensions, modification of note structure, principal reduction or some combination of these concessions. During the years ended December 31, 2011 and 2010, restructured loan modifications of loans secured by real estate, commercial and industrial loans, primarily included maturity date extensions and payment schedule modifications.

The change in troubled debt restructuring from December 31, 2010 to December 31, 2011 is as follows:


	December 31, 2011		December 31, 2010		Change
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	2,488,060	$	—	$	2,488,060
Secured by non-farm, non-residential properties		1,746,792		2,142,427		(395,635	)
Commercial and industrial loans		74,904		—		74,904

Total	$	4,309,756	$	2,142,427	$	2,167,329

All loans $500,000 and over modified in a troubled debt restructuring are evaluated for impairment. The nature and extent of impairment of restructured loans, including those which have experienced a subsequent payment default, is considered in the determination of an appropriate level of allowance for loan losses. This evaluation resulted in an allowance for loan losses of $494,352 and $281,829 for 2011 and 2010, respectively.