6.	LOANS AND ALLOWANCE FOR LOAN LOSSES

Portfolio Segments:

The Company has divided the loan portfolio into eight portfolio segments, each with different risk characteristics 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 borrowing entity.

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 – This portfolio segment includes mortgage loans secured by apartment buildings.

Secured by non-farm, non-residential properties – This portfolio segment includes real estate 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 borrowing entity.

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

Commercial and industrial loans – This portfolio segment includes loans to commercial customers for use in the normal course of business. 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 borrowing entity.

Consumer loans – This portfolio segment includes a variety of secured and unsecured personal loans, including automobile loans, loans for household and personal purposes and all other direct consumer installment loans.

Other loans – Other loans are comprised of credit cards, overdrawn checking accounts reclassified to loans and overdraft lines of credit.

As of March 31, 2015 and December 31, 2014, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	March 31, 2015
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	10,137	$	—	$	10,137
Secured by 1-4 family residential properties		29,545		20,209		49,754
Secured by multi-family residential properties		18,837	—			18,837
Secured by non-farm, non-residential properties		86,982	—			86,982
Other		58	—			58
Commercial and industrial loans		17,897	—			17,897
Consumer loans		7,254		61,321		68,575
Other loans		775	—			775
Total loans		171,485		81,530		253,015
Less: Unearned interest, fees and deferred cost		174		8,222		8,396
Allowance for loan losses		2,880		2,521		5,401
Net loans	$	168,431	$	70,787	$	239,218

	December 31, 2014
	FUSB		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	10,431	$	—	$	10,431
Secured by 1-4 family residential properties		30,795		21,309		52,104
Secured by multi-family residential properties		20,403		—		20,403
Secured by non-farm, non-residential properties		104,883		—		104,883
Other		58		—		58
Commercial and industrial loans		16,838		—		16,838
Consumer loans		7,188		61,833		69,021
Other loans		579		—		579
Total loans		191,175		83,142		274,317
Less: Unearned interest, fees and deferred cost		189		8,444		8,633
Allowance for loan losses		3,486		2,682		6,168
Net loans	$	187,500	$	72,016	$	259,516

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 65.5% and 68.5% of the portfolio was concentrated in loans secured by real estate located primarily within a single geographic region of the United States as of March 31, 2015 and December 31, 2014, respectively.

Related Party Loans:

In the ordinary course of business, the Bank makes loans to certain officers and directors of the Company, including companies with which they are associated. These loans are made on the same terms as those prevailing for comparable transactions with others. Management believes that such loans do not represent more than a normal risk of collectability, nor do they present other unfavorable features. The aggregate balances of such related party loans and commitments as of March 31, 2015 and December 31, 2014 were $3.0 million and $3.1 million, respectively. During the three months ended March 31, 2015, there were no new loans to these parties, and repayments by active related parties were $0.03 million. During the year ended December 31, 2014, there were no new loans to these related parties, and repayments by active related parties were $0.5 million.

Allowance for Loan Losses:

The following tables present changes in the allowance for loan losses by loan portfolio segment and loan type as of March 31, 2015 and December 31, 2014:

	FUSB
	Three Months Ended March 31, 2015
	Commercial		Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141	$	2,810		$	114		$	421		$	—	$	3,486
Charge-offs	—			(77	)		(11	)		(40	)	—			(128	)
Recoveries		10		4			15			18		—			47
Provision		10		(334	)		(52	)		(149	)	—			(525	)
Ending balance		161		2,403			66			250		—			2,880
Ending balance individually evaluated for impairment	—			841		—			—			—			841
Ending balance collectively evaluated for impairment	$	161	$	1,562		$	66		$	250		$	—	$	2,039
Loan receivables:
Ending balance		17,897		116,014			7,254			29,545			775		171,485
Ending balance individually evaluated for impairment	—			9,429		—			—			—			9,429
Ending balance collectively evaluated for impairment	$	17,897	$	106,585		$	7,254		$	29,545		$	775	$	162,056

	ALC
	Three Months Ended March 31, 2015
	Commercial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,336		$	346		$	—	$	2,682
Charge-offs	—		—			(655	)		(80	)	—			(735	)
Recoveries	—		—			209			7		—			216
Provision	—		—			313			45		—			358
Ending balance	—		—			2,203			318		—			2,521
Ending balance individually evaluated for impairment	—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,203		$	318		$	—	$	2,521
Loan receivables:
Ending balance	—		—			61,321			20,209		—			81,530
Ending balance individually evaluated for impairment	—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	61,321		$	20,209		$	—	$	81,530

	FUSB & ALC
	Three Months Ended March 31, 2015
	Commercial		Commercial Real Estate			Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	141	$	2,810		$	2,450		$	767		$	—	$	6,168
Charge-offs	—			(77	)		(666	)		(120	)	—			(863	)
Recoveries		10		4			224			25		—			263
Provision		10		(334	)		261			(104	)	—			(167	)
Ending balance		161		2,403			2,269			568		—			5,401
Ending balance individually evaluated for impairment	—			841		—			—			—			841
Ending balance collectively evaluated for impairment	$	161	$	1,562		$	2,269		$	568		$	—	$	4,560
Loan receivables:
Ending balance		17,897		116,014			68,575			49,754			775		253,015
Ending balance individually evaluated for impairment	—			9,429		—			—			—			9,429
Ending balance collectively evaluated for impairment	$	17,897	$	106,585		$	68,575		$	49,754		$	775	$	243,586

	FUSB
	Year Ended December 31, 2014
	Commercial			Commercial Real Estate			Consumer			Residential Real Estate			Other			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	592		$	4,852		$	180		$	635		$	13		$	6,272
Charge-offs		(289	)		(1,329	)		(147	)		(176	)		—			(1,941	)
Recoveries		307			587			129			51			1			1,075
Provision		(469	)		(1,300	)		(48	)		(89	)		(14	)		(1,920	)
Ending balance		141			2,810			114			421			—			3,486
Ending balance individually evaluated for impairment		—			762			—			—			—			762
Ending balance collectively evaluated for impairment	$	141		$	2,048		$	114		$	421		$	—		$	2,724
Loan receivables:
Ending balance		16,838			135,775			7,188			30,795			579			191,175
Ending balance individually evaluated for impairment		—			10,509			—			96			—			10,605
Ending balance collectively evaluated for impairment	$	16,838		$	125,266		$	7,188		$	30,699		$	579		$	180,570

	ALC
	Year Ended December 31, 2014
	Commercial		Commercial Real Estate		Consumer			Residential Real Estate			Other		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	—	$	2,667		$	457		$	—	$	3,124
Charge-offs		—		—		(2,778	)		(311	)		—		(3,089	)
Recoveries		—		—		772			29			—		801
Provision		—		—		1,675			171			—		1,846
Ending balance		—		—		2,336			346			—		2,682
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	2,336		$	346		$	—	$	2,682
Loan receivables:
Ending balance		—		—		61,833			21,309			—		83,142
Ending balance individually evaluated for impairment		—		—		—			—			—		—
Ending balance collectively evaluated for impairment	$	—	$	—	$	61,833		$	21,309		$	—	$	83,142

	FUSB & ALC
	Year Ended December 31, 2014
	Commercial			Commercial Real Estate			Consumer			Residential Real Estate			Other			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	592		$	4,852		$	2,847		$	1,092		$	13		$	9,396
Charge-offs		(289	)		(1,329	)		(2,925	)		(487	)		—			(5,030	)
Recoveries		307			587			901			80			1			1,876
Provision		(469	)		(1,300	)		1,627			82			(14	)		(74	)
Ending balance		141			2,810			2,450			767			—			6,168
Ending balance individually evaluated for impairment		—			762			—			—			—			762
Ending balance collectively evaluated for impairment	$	141		$	2,048		$	2,450		$	767		$	—		$	5,406
Loan receivables:
Ending balance		16,838			135,775			69,021			52,104			579			274,317
Ending balance individually evaluated for impairment		—			10,509			—			96			—			10,605
Ending balance collectively evaluated for impairment	$	16,838		$	125,266		$	69,021		$	52,008		$	579		$	263,712

Credit Quality:

The Bank utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, each loan is graded, based on pre-determined risk metrics, and categorized into one of nine risk grades. These risk grades can be summarized into categories described as pass, special mention, substandard, doubtful and loss, as described in further detail below.

·	Pass (Risk Grades 1-5): Loans in this category include obligations in which the probability of default is considered low.

Special Mention (Risk Grade 6): Loans 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 the Bank’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. Although a special mention asset has a higher probability of default than pass rated categories, its default is not imminent.

Substandard (Risk Grade 7): Loans in this category have 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 (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans 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 such that partial loss of principal is likely; however, 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. Loans classified as doubtful may include loans to borrowers that have demonstrated a history of failing to live up to agreements.

Loss (Risk Grade 9): Loans are classified in this category when borrowers are deemed incapable of repayment of unsecured debt. Loans to such borrowers are considered uncollectable 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 that it is not prudent to defer writing off these assets, even though partial recovery may be affected in the future.

At ALC, because the loan portfolio is more uniform in nature, each loan is categorized into one of two risk grades, depending on whether the loan is considered to be performing or nonperforming. Performing loans are loans that are paying principal and interest in accordance with a contractual agreement. Nonperforming loans are loans that are either not paying as contractually agreed or that have demonstrated characteristics that indicate a probability of loss.

The tables below illustrate the carrying amount of loans by credit quality indicator as of March 31, 2015.

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	5,641	$	2,515	$	1,981	$	—	$	10,137
Secured by 1-4 family residential properties		28,870	—			662		13		29,545
Secured by multi-family residential properties		16,478	—			2,359	—			18,837
Secured by non-farm, non-residential properties		76,457		4,584		5,941	—			86,982
Other		58	—		—		—			58
Commercial and industrial loans		15,959		1,213		725	—			17,897
Consumer loans		7,167	—			87	—			7,254
Other loans		775	—		—		—			775
Total	$	151,405	$	8,312	$	11,755	$	13	$	171,485

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	19,652	$	557	$	20,209
Consumer loans		60,060		1,261		61,321
Total	$	79,712	$	1,818	$	81,530

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2014.

	FUSB
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	5,326	$	2,515	$	2,590	$	—	$	10,431
Secured by 1-4 family residential properties		27,956		638		2,201		—		30,795
Secured by multi-family residential properties		18,033		—		2,370		—		20,403
Secured by non-farm, non-residential properties		86,812		10,905		7,166		—		104,883
Other		58		—		—		—		58
Commercial and industrial loans		14,915		1,222		701		—		16,838
Consumer loans		6,744		105		339		—		7,188
Other loans		577		—		2		—		579
Total	$	160,421	$	15,385	$	15,369	$	—	$	191,175

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	20,778	$	531	$	21,309
Consumer loans		60,459		1,374		61,833
Total	$	81,237	$	1,905	$	83,142

The following tables provide an aging analysis of past due loans by class as of March 31, 2015.

	FUSB
	As of March 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	86	$	86	$	10,051	$	10,137	$	—
Secured by 1-4 family residential properties		244		18		429		691		28,854		29,545		30
Secured by multi-family residential properties	—		—		—		—			18,837		18,837	—
Secured by non-farm, non-residential properties		62	—			1,043		1,105		85,877		86,982	—
Other	—		—		—		—			58		58	—
Commercial and industrial loans		28	—		—			28		17,869		17,897	—
Consumer loans		16	—			17		33		7,221		7,254	—
Other loans	—		—			11		11		764		775	—
Total	$	350	$	18	$	1,586	$	1,954	$	169,531	$	171,485	$	30

	ALC
	As of March 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		182		147		524		853		19,356		20,209		426
Secured by multi-family residential properties	—		—		—		—		—		—		—
Secured by non-farm, non-residential properties	—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—
Commercial and industrial loans	—		—		—		—		—		—		—
Consumer loans		672		558		1,238		2,468		58,853		61,321		1,237
Other loans	—		—		—		—		—		—		—
Total	$	854	$	705	$	1,762	$	3,321	$	78,209	$	81,530	$	1,663

The following tables provide an aging analysis of past due loans by class as of December 31, 2014.

	FUSB
	As of December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	41	$	—	$	86	$	127	$	10,304	$	10,431	$	—
Secured by 1-4 family residential properties		200		20		852		1,072		29,723		30,795		—
Secured by multi-family residential properties		—		—		—		—		20,403		20,403		—
Secured by non-farm, non-residential properties		268		159		1,743		2,170		102,713		104,883		—
Other		—		—		—		—		58		58		—
Commercial and industrial loans		—		8		—		8		16,830		16,838		—
Consumer loans		12		3		24		39		7,149		7,188		—
Other loans		4		—		12		16		563		579		11
Total	$	525	$	190	$	2,717	$	3,432	$	187,743	$	191,175	$	11

	ALC
	As of December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days And Accruing
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		182		147		501		830		20,480		21,310		401
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans		671		558		1,346		2,575		59,257		61,832		1,335
Other loans		—		—		—		—		—		—		—
Total	$	853	$	705	$	1,847	$	3,405	$	79,737	$	83,142	$	1,736

The following table provides an analysis of non-accruing loans by class as of March 31, 2015 and December 31, 2014.

	Loans on Non-Accrual Status
	March 31, 2015		December 31, 2014
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	347	$	956
Secured by 1-4 family residential properties		800		1,277
Secured by multi-family residential properties	—			—
Secured by non-farm, non-residential properties		1,135		2,314
Commercial and industrial loans		130		139
Consumer loans		110		140
Total loans	$	2,522	$	4,826

Impaired Loans:

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the related loan agreement. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. All loans of $0.5 million or more that have a credit quality risk grade of seven or above are identified for impairment analysis. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

As of March 31, 2015, the carrying amount of impaired loans consisted of the following:

	March 31, 2015
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	—
Secured by 1-4 family residential properties		96		96	—
Secured by multi-family residential properties		752		752		—
Secured by non-farm, non-residential properties		5,247		5,247		—
Commercial and industrial	—		—			—
Total loans with no related allowance recorded	$	7,540	$	7,540	$	—

Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties	—		—			—
Secured by multi-family residential properties		1,889		1,889		841
Secured by non-farm, non-residential properties	—		—		—
Commercial and industrial	—		—		—
Total loans with an allowance recorded	$	1,889	$	1,889	$	841

Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	—
Secured by 1-4 family residential properties		96		96	—
Secured by multi-family residential properties		2,641		2,641		841
Secured by non-farm, non-residential properties		5,247		5,247	—
Commercial and industrial	—		—		—
Total impaired loans	$	9,429	$	9,429	$	841

As of December 31, 2014, the carrying amount of impaired loans consisted of the following:

	December 31, 2014
Impaired loans with no related allowance recorded	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,445	$	1,445	$	—
Secured by 1-4 family residential properties		96		96		—
Secured by multi-family residential properties		755		1,146		—
Secured by non-farm, non-residential properties		6,091		6,091		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	8,387	$	8,778	$	—

Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	603	$	603	$	71
Secured by 1-4 family residential properties		—		—		—
Secured by multi-family residential properties		1,615		1,615		691
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with an allowance recorded	$	2,218	$	2,218	$	762

Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	2,048	$	2,048	$	71
Secured by 1-4 family residential properties		96		96		—
Secured by multi-family residential properties		2,370		2,761		691
Secured by non-farm, non-residential properties		6,091		6,091		—
Commercial and industrial		—		—		—
Total impaired loans	$	10,605	$	10,996	$	762

The average net investment in impaired loans and interest income recognized and received on impaired loans during the three months ended March 31, 2015 and the year ended December 31, 2014 were as follows:

	March 31, 2015
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	1,637	$	12	$	15
Secured by 1-4 family residential properties		96	—		—
Secured by multi-family residential properties		2,458		88		83
Secured by non-farm, non-residential properties		5,798		63		50
Commercial and industrial	—		—		—
Total	$	9,989	$	163	$	148

	December 31, 2014
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	2,769	$	46	$	46
Secured by 1-4 family residential properties		143		3		3
Secured by multi-family residential properties		3,565		178		170
Secured by non-farm, non-residential properties		8,186		324		320
Commercial and industrial		80		1		1
Total	$	14,743	$	552	$	540

Loans on which the accrual of interest has been discontinued amounted to $2.5 million and $4.8 million as of March 31, 2015 and December 31, 2014, respectively. If interest on those loans had been accrued, there would have been $30 thousand and $0.1 million accrued for the three- and twelve-month periods ended March 31, 2015 and December 31, 2014, respectively. Interest income recorded related to these loans as of March 31, 2015 and December 31, 2014 was $30 thousand and $0.2 million, respectively. Accruing loans past due 90 days or more amounted to $1.7 million as of both March 31, 2015 and December 31, 2014.

Troubled Debt Restructurings:

Troubled debt restructurings include loans with respect to which concessions have been granted to borrowers that generally would not have otherwise been considered had the borrowers not been experiencing financial difficulty. The concessions granted may include payment schedule modifications, interest rate reductions, maturity date extensions, modification of note structure, principal balance reductions or some combination of these concessions. Restructured loans may involve loans remaining on non-accrual, moving to non-accrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Non-accrual restructured loans are included with all other non-accrual loans. In addition, all accruing restructured loans are reported as troubled debt restructurings. Generally, restructured loans remain on non-accrual 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 non-accrual status. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan remains on non-accrual. As of March 31, 2015 and 2014, respectively, the Company had $1.5 million and $4.9 million of non-accruing loans that were previously restructured and that remained on non-accrual status. For the three months ended March 31, 2015, the Company had $0.2 million in restructured loans that were restored to accrual status based on a sustained period of repayment performance. For the year ended December 31, 2014, the Company had no restructured loans that were restored to accrual status based on a sustained period of repayment performance.

The following table provides the number of loans that the Bank had modified in a troubled debt restructuring by loan portfolio as of March 31, 2015 and December 31, 2014, as well as the pre- and post-modification principal balance as of March 31, 2015 and December 31, 2014.

	March 31, 2015						December 31, 2014
	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		3	$	2,220	$	1,756		4	$	3,282	$	2,365
Secured by 1-4 family residential properties		4		200		152		4		200		156
Secured by non-farm, non-residential properties		5		1,368		1,189		6		1,448		1,299
Commercial loans		3		159		103		4		159		109
Total		15	$	3,947	$	3,200		18	$	5,089	$	3,929

The following table provides the number of loans modified in a troubled debt restructuring that have subsequently defaulted, by loan portfolio, as of March 31, 2015 and December 31, 2014.

	March 31, 2015				December 31, 2014
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(Dollars in Thousands)
Construction, land development and other land loans	—		$	—		—	$	—
Secured by non-farm, non-residential properties		2		886		2		886
Total		2	$	886		2	$	886

Restructured loan modifications primarily included maturity date extensions and payment schedule modifications. There were no modifications to principal balances of the loans that were restructured. Accordingly, there was no impact on the Company’s allowance for loan losses resulting from the modifications.

All loans with a principal balance of $0.5 million or more that have been modified in a troubled debt restructuring are considered impaired and evaluated individually for impairment. The nature and extent of impairment of restructured loans, including those that have experienced a subsequent payment default, are considered in the determination of an appropriate level of allowance for loan losses. This evaluation resulted in an allowance for loan losses of $10 thousand and $0.9 million as of March 31, 2015 and December 31, 2014, respectively.