Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2019

Allowance For Loan And Lease Losses Writeoffs Net [Abstract]

5.	LOANS AND ALLOWANCE FOR LOAN LOSSES

Portfolio Segments

The Company has divided the loan portfolio into nine 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 farmland.

Commercial and industrial loans and leases – This portfolio segment includes loans and leases to commercial customers for use in the normal course of business. These credits may be loans, lines of credit and leases 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.

Branch retail – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom ALC has an established relationship through its branch network to provide financing for the retail products sold if applicable underwriting standards are met.

Indirect sales – This portfolio segment includes loans secured by collateral that is purchased by consumers at retail stores with whom ALC has an established, centrally-managed relationship to provide financing for the retail products sold if applicable underwriting standards are met.

As of September 30, 2019 and December 31, 2018, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	September 30, 2019
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	27,348	$	—	$	27,348
Secured by 1-4 family residential properties		103,269		6,067		109,336
Secured by multi-family residential properties		46,843		—		46,843
Secured by non-farm, non-residential properties		164,941		—		164,941
Other		842		—		842
Commercial and industrial loans ⁽¹⁾		90,470		—		90,470
Consumer loans:
Consumer		8,136		29,341		37,477
Branch retail		—		30,008		30,008
Indirect sales		—		48,073		48,073
Total loans		441,849		113,489		555,338
Less: Unearned interest, fees and deferred cost		204		5,030		5,234
Allowance for loan losses		3,349		2,236		5,585
Net loans	$	438,296	$	106,223	$	544,519

	December 31, 2018
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	41,340	$	—	$	41,340
Secured by 1-4 family residential properties		102,971		7,785		110,756
Secured by multi-family residential properties		23,009		—		23,009
Secured by non-farm, non-residential properties		156,162		—		156,162
Other		1,308		—		1,308
Commercial and industrial loans ⁽¹⁾		85,779		—		85,779
Consumer loans:
Consumer		6,927		31,656		38,583
Branch retail		—		28,324		28,324
Indirect sales		—		40,609		40,609
Total loans		417,496		108,374		525,870
Less: Unearned interest, fees and deferred cost		331		5,617		5,948
Allowance for loan losses		2,735		2,320		5,055
Net loans	$	414,430	$	100,437	$	514,867

(1)

Includes equipment financing leases.

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 62.9% and 63.2% of the portfolio was concentrated in loans secured by real estate as of September 30, 2019 and December 31, 2018, respectively.

Loans with a carrying value of $29.6 million and $27.0 million were pledged as collateral to secure FHLB borrowings as of September 30, 2019 and December 31, 2018, 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 unrelated parties. 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 September 30, 2019 and December 31, 2018 were $0.9 million and $0.8 million, respectively. During the nine months ended September 30, 2019, there were $0.1 million of new loans to these parties, and repayments by active related parties were $8 thousand. During the year ended December 31, 2018, there were $0.5 million of new loans to these parties, and repayments by active related parties were $0.2 million.

Acquired Loans

The Company acquired loans through the TPB acquisition completed on August 31, 2018. At acquisition, certain acquired loans evidenced deterioration of credit quality since origination and it was probable that all contractually-required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. PCI loans are accounted for under ASC Topic 310-30, Accounting for Purchased Loans with Deteriorated Credit Quality, and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. On the date of completion of the acquisition, the outstanding principal balance and carrying value of PCI loans accounted for under ASC Topic 310-30 were $2.9 million and $2.8 million, respectively.

The carrying amount of PCI loans, which is included within loans on the balance sheet, is set forth in the table below as of September 30, 2019 and December 31, 2018:

	September 30, 2019			December 31, 2018
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	—		$	75
Secured by 1-4 family residential properties		231			492
Outstanding balance		231			567
Fair value adjustment		(51	)		(70	)
Carrying amount, net of fair value adjustment	$	180		$	497

During both the nine months ended September 30, 2019 and the year ended December 31, 2018, the Company did not recognize any accretable yield, or income expected to be collected, associated with these loans. Additionally, the Company did not increase or reverse the allowance for loan losses related to the remaining PCI loans.

Allowance for Loan Losses

The following tables present changes in the allowance for loan losses during the nine months ended September 30, 2019 and the year ended December 31, 2018 and the related loan balances by loan portfolio segment and loan type as of September 30, 2019 and December 31, 2018:

	Bank
	Nine Months Ended September 30, 2019
	Construction, Land			1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Other		Commercial		Consumer			Branch Retail		Indirect Sales		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	240		$	322		$	128	$	831	$	1	$	1,138	$	75		$	—	$	—	$	2,735
Charge-offs		—			(47	)		—		—		—		—		(32	)		—		—		(79	)
Recoveries		—			22			—		—		—		3		33			—		—		58
Provision		(78	)		139			233		72		—		259		10			—		—		635
Ending balance	$	162		$	436		$	361	$	903	$	1	$	1,400	$	86		$	—	$	—	$	3,349
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—		$	15		$	—	$	—	$	—	$	394	$	9		$	—	$	—	$	418
Collectively evaluated for impairment		162			421			361		903		1		1,006		77			—		—		2,931
Loans acquired with deteriorated credit quality		—			—			—		—		—		—		—			—		—		—
Total allowance for loan losses	$	162		$	436		$	361	$	903	$	1	$	1,400	$	86		$	—	$	—	$	3,349
Ending balance of loans receivable:
Individually evaluated for impairment	$	—		$	702		$	—	$	496	$	—	$	4,025	$	32		$	—	$	—	$	5,255
Collectively evaluated for impairment		27,348			102,387			46,843		164,445		842		86,445		8,104			—		—		436,414
Loans acquired with deteriorated credit quality		—			180			—		—		—		—		—			—		—		180
Total loans receivable	$	27,348		$	103,269		$	46,843	$	164,941	$	842	$	90,470	$	8,136		$	—	$	—	$	441,849

	ALC
	Nine Months Ended September 30, 2019
	Construction, Land		1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Other		Commercial		Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	24		$	—	$	—	$	—	$	—	$	1,724		$	427		$	145		$	2,320
Charge-offs		—		(34	)		—		—		—		—		(1,501	)		(294	)		(194	)		(2,023	)
Recoveries		—		6			—		—		—		—		470			94			6			576
Provision		—		29			—		—		—		—		862			204			268			1,363
Ending balance	$	—	$	25		$	—	$	—	$	—	$	—	$	1,555		$	431		$	225		$	2,236
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	—		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—
Collectively evaluated for impairment		—		25			—		—		—		—		1,555			431			225			2,236
Total allowance for loan losses	$	—	$	25		$	—	$	—	$	—	$	—	$	1,555		$	431		$	225		$	2,236
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	137		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	137
Collectively evaluated for impairment		—		5,930			—		—		—		—		29,341			30,008			48,073			113,352
Total loans receivable	$	—	$	6,067		$	—	$	—	$	—	$	—	$	29,341		$	30,008		$	48,073		$	113,489

	Bank and ALC
	Nine Months Ended September 30, 2019
	Construction, Land			1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Other		Commercial		Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	240		$	346		$	128	$	831	$	1	$	1,138	$	1,799		$	427		$	145		$	5,055
Charge-offs		—			(81	)		—		—		—		—		(1,533	)		(294	)		(194	)		(2,102	)
Recoveries		—			28			—		—		—		3		503			94			6			634
Provision		(78	)		168			233		72		—		259		872			204			268			1,998
Ending balance	$	162		$	461		$	361	$	903	$	1	$	1,400	$	1,641		$	431		$	225		$	5,585
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—		$	15		$	—	$	—	$	—	$	394	$	9		$	—		$	—		$	418
Collectively evaluated for impairment		162			446			361		903		1		1,006		1,632			431			225			5,167
Loans acquired with deteriorated credit quality		—			—			—		—		—		—		—			—			—			—
Total allowance for loan losses	$	162		$	461		$	361	$	903	$	1	$	1,400	$	1,641		$	431		$	225		$	5,585
Ending balance of loans receivable:
Individually evaluated for impairment	$	—		$	839		$	—	$	496	$	—	$	4,025	$	32		$	—		$	—		$	5,392
Collectively evaluated for impairment		27,348			108,317			46,843		164,445		842		86,445		37,445			30,008			48,073			549,766
Loans acquired with deteriorated credit quality		—			180			—		—		—		—		—			—			—			180
Total loans receivable	$	27,348		$	109,336		$	46,843	$	164,941	$	842	$	90,470	$	37,477		$	30,008		$	48,073		$	555,338

	Bank
	Year Ended December 31, 2018
	Construction, Land		1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Other			Commercial			Consumer			Branch Retail		Indirect Sales		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	203	$	238		$	116	$	777	$	2		$	1,049		$	62		$	—	$	—	$	2,447
Charge-offs		—		(9	)		—		—		—			(3	)		(4	)		—		—		(16	)
Recoveries		—		51			—		4		—			11			23			—		—		89
Provision		37		42			12		50		(1	)		81			(6	)		—		—		215
Ending balance	$	240	$	322		$	128	$	831	$	1		$	1,138		$	75		$	—	$	—	$	2,735
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	28	$	50		$	—	$	1	$	—		$	67		$	20		$	—	$	—	$	166
Collectively evaluated for impairment		212		272			128		830		1			1,071			55			—		—		2,569
Loans acquired with deteriorated credit quality		—		—			—		—		—			—			—			—		—		—
Total allowance for loan losses	$	240	$	322		$	128	$	831	$	1		$	1,138		$	75		$	—	$	—	$	2,735
Ending balance of loans receivable:
Individually evaluated for impairment	$	153	$	57		$	—	$	511	$	—		$	67		$	43		$	—	$	—	$	831
Collectively evaluated for impairment		41,114		102,490			23,009		155,651		1,308			85,712			6,884			—		—		416,168
Loans acquired with deteriorated credit quality		73		424			—		—		—			—			—			—		—		497
Total loans receivable	$	41,340	$	102,971		$	23,009	$	156,162	$	1,308		$	85,779		$	6,927		$	—	$	—	$	417,496

	ALC
	Year Ended December 31, 2018
	Construction, Land		1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Other		Commercial		Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	52		$	—	$	—	$	—	$	—	$	1,653		$	393		$	229		$	2,327
Charge-offs		—		(92	)		—		—		—		—		(2,478	)		(415	)		(116	)		(3,101	)
Recoveries		—		23			—		—		—		—		545			113			6			687
Provision		—		41			—		—		—		—		2,004			336			26			2,407
Ending balance	$	—	$	24		$	—	$	—	$	—	$	—	$	1,724		$	427		$	145		$	2,320
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	—		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—
Collectively evaluated for impairment		—		24			—		—		—		—		1,724			427			145			2,320
Total allowance for loan losses	$	—	$	24		$	—	$	—	$	—	$	—	$	1,724		$	427		$	145		$	2,320
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	211		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	211
Collectively evaluated for impairment		—		7,574			—		—		—		—		31,656			28,324			40,609			108,163
Total loans receivable	$	—	$	7,785		$	—	$	—	$	—	$	—	$	31,656		$	28,324		$	40,609		$	108,374

	Bank and ALC
	Year Ended December 31, 2018
	Construction, Land		1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Other			Commercial			Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	203	$	290		$	116	$	777	$	2		$	1,049		$	1,715		$	393		$	229		$	4,774
Charge-offs		—		(101	)		—		—		—			(3	)		(2,482	)		(415	)		(116	)		(3,117	)
Recoveries		—		74			—		4		—			11			568			113			6			776
Provision		37		83			12		50		(1	)		81			1,998			336			26			2,622
Ending balance	$	240	$	346		$	128	$	831	$	1		$	1,138		$	1,799		$	427		$	145		$	5,055
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	28	$	50		$	—	$	1	$	—		$	67		$	20		$	—		$	—		$	166
Collectively evaluated for impairment		212		296			128		830		1			1,071			1,779			427			145			4,889
Loans acquired with deteriorated credit quality		—		—			—		—		—			—			—			—			—			—
Total allowance for loan losses	$	240	$	346		$	128	$	831	$	1		$	1,138		$	1,799		$	427		$	145		$	5,055
Ending balance of loans receivable:
Individually evaluated for impairment	$	153	$	268		$	—	$	511	$	—		$	67		$	43		$	—		$	—		$	1,042
Collectively evaluated for impairment		41,114		110,064			23,009		155,651		1,308			85,712			38,540			28,324			40,609			524,331
Loans acquired with deteriorated credit quality		73		424			—		—		—			—			—			—			—			497
Total loans receivable	$	41,340	$	110,756		$	23,009	$	156,162	$	1,308		$	85,779		$	38,583		$	28,324		$	40,609		$	525,870

Credit Quality Indicators

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 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 as substandard.

•

Doubtful (Risk Grade 8): Loans classified as doubtful have all of the weaknesses found in substandard loans, with the added characteristic that the weaknesses make collection of debt in full, based on currently existing facts, conditions and values, highly questionable or 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. Such pending factors may include proposed merger, acquisition or liquidation procedures, capital injection, perfection of 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. The Bank did not have any loans classified as Doubtful (Risk Grade 8) as of September 30, 2019 or December 31, 2018.

•

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 realized in the future. The Bank did not have any loans classified as Loss (Risk Grade 9) as of September 30, 2019 or December 31, 2018.

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 have demonstrated characteristics that indicate a probability of loss.

The tables below illustrate the carrying amount of loans by credit quality indicator as of September 30, 2019:

	Bank
	Pass 1-5		Special Mention 6		Substandard 7		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	26,997	$	351	$	—	$	27,348
Secured by 1-4 family residential properties		101,001		137		2,131		103,269
Secured by multi-family residential properties		46,843		—		—		46,843
Secured by non-farm, non-residential properties		159,511		4,422		1,008		164,941
Other		842		—		—		842
Commercial and industrial loans		85,353		720		4,397		90,470
Consumer loans		8,096		—		40		8,136
Total	$	428,643	$	5,630	$	7,576	$	441,849

The above amounts include purchased credit impaired loans. As of September 30, 2019, $0.2 million of purchased credit impaired loans were rated “Substandard.”

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	5,936	$	131	$	6,067
Consumer loans:
Consumer		28,908		433		29,341
Branch retail		29,858		150		30,008
Indirect sales		48,003		70		48,073
Total	$	112,705	$	784	$	113,489

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2018:

	Bank
	Pass 1-5		Special Mention 6		Substandard 7		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	40,200	$	914	$	226	$	41,340
Secured by 1-4 family residential properties		100,485		154		2,332		102,971
Secured by multi-family residential properties		23,009		—		—		23,009
Secured by non-farm, non-residential properties		153,077		1,996		1,089		156,162
Other		1,308		—		—		1,308
Commercial and industrial loans		83,261		1,977		541		85,779
Consumer loans		6,848		—		79		6,927
Total	$	408,188	$	5,041	$	4,267	$	417,496

The above amounts include purchased credit impaired loans. As of December 31, 2018, $0.5 million of purchased credit impaired loans were rated “Substandard.”

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	7,657	$	128	$	7,785
Consumer loans:
Consumer		30,826		830		31,656
Branch retail		28,171		153		28,324
Indirect sales		40,491		118		40,609
Total	$	107,145	$	1,229	$	108,374

The following tables provide an aging analysis of past due loans by class as of September 30, 2019:

	Bank
	As of September 30, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		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	$	349	$	—	$	—	$	349	$	26,999	$	27,348	$	—
Secured by 1-4 family residential properties		1,949		212		—		2,161		101,108		103,269		—
Secured by multi-family residential properties		—		—		—		—		46,843		46,843		—
Secured by non-farm, non-residential properties		1,334		—		14		1,348		163,593		164,941		—
Other		—		—		—		—		842		842		—
Commercial and industrial loans		918		—		—		918		89,552		90,470		—
Consumer loans		16		—		1		17		8,119		8,136		—
Total	$	4,566	$	212	$	15	$	4,793	$	437,056	$	441,849	$	—

The above amounts include purchased credit impaired loans. As of September 30, 2019, $0.2 million of purchased credit impaired loans were 60-89 days past due.

	ALC
	As of September 30, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		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		60		—		131		191		5,876		6,067		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans:
Consumer		535		275		434		1,244		28,097		29,341		—
Branch retail		122		73		150		345		29,663		30,008		—
Indirect sales		194		75		70		339		47,734		48,073		—
Total	$	911	$	423	$	785	$	2,119	$	111,370	$	113,489	$	—

The following tables provide an aging analysis of past due loans by class as of December 31, 2018:

	Bank
	As of December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		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	$	415	$	582	$	74	$	1,071	$	40,269	$	41,340	$	—
Secured by 1-4 family residential properties		991		36		539		1,566		101,405		102,971		—
Secured by multi-family residential properties		—		—		—		—		23,009		23,009		—
Secured by non-farm, non-residential properties		458		13		—		471		155,691		156,162		—
Other		—		—		—		—		1,308		1,308		—
Commercial and industrial loans		2,608		30		384		3,022		82,757		85,779		—
Consumer loans		80		—		4		84		6,843		6,927		—
Total	$	4,552	$	661	$	1,001	$	6,214	$	411,282	$	417,496	$	—

The above amounts include purchased credit impaired loans. As of December 31, 2018, $0.3 million of purchased credit impaired loans were 90 or more days past due.

	ALC
	As of December 31, 2018
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		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		60		65		128		253		7,532		7,785		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans:
Consumer		563		354		830		1,747		29,909		31,656		—
Branch retail		164		98		153		415		27,909		28,324
Indirect sales		184		79		118		381		40,228		40,609		—
Total	$	971	$	596	$	1,229	$	2,796	$	105,578	$	108,374	$	—

The following table provides an analysis of non-accruing loans by class as of September 30, 2019 and December 31, 2018:

	Loans on Non-Accrual Status
	September 30, 2019		December 31, 2018
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	—	$	73
Secured by 1-4 family residential properties		719		1,097
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		23		14
Other		8		—
Commercial and industrial loans		30		424
Consumer loans:
Consumer		468		879
Branch retail		150		153
Indirect sales		70		119
Total loans	$	1,468	$	2,759

As of September 30, 2019 and December 31, 2018, purchased credit impaired loans comprised $0.2 million and $0.5 million of nonaccrual loans, respectively.

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 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 liquidation of the collateral at the Bank. All loans of $0.5 million or more that have a credit quality risk grade of seven or above are identified for impairment analysis. At management’s discretion, additional loans may be impaired based on homogeneous factors such as changes in the nature and volume of the portfolio, portfolio quality, adequacy of the underlying collateral value, loan concentrations, historical charge-off trends and economic conditions that may affect the borrower’s ability to pay. At ALC, all loans of $50 thousand or more that are 90 days or more past due are identified for impairment analysis. As of September 30, 2019 and December 31, 2018, there were $0.1 million and $0.2 million, respectively, of impaired loans with no related allowance recorded at ALC. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

As of September 30, 2019, the carrying amount of impaired loans at the Bank and ALC consisted of the following:

	September 30, 2019
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		997		997		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		496		496		—
Commercial and industrial		—		—		—
Consumer		—		—		—
Total loans with no related allowance recorded	$	1,493	$	1,493	$	—
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		22		22		15
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		4,025		4,025		394
Consumer		32		32		9
Total loans with an allowance recorded	$	4,079	$	4,079	$	418
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		1,019		1,019		15
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		496		496		—
Commercial and industrial		4,025		4,025		394
Consumer		32		32		9
Total impaired loans	$	5,572	$	5,572	$	418

The above amounts include purchased credit impaired loans. As of September 30, 2019, purchased credit impaired loans comprised $0.2 million of impaired loans without a related allowance recorded.

As of December 31, 2018, the carrying amount of impaired loans at the Bank and ALC consisted of the following:

	December 31, 2018
	Carrying Amount		Unpaid Principal Balance		Related Allowances
	(Dollars in Thousands)
Impaired loans with no related allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	73	$	73	$	—
Secured by 1-4 family residential properties		635		635		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Consumer		—		—		—
Total loans with no related allowance recorded	$	708	$	708	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	153	$	153	$	28
Secured by 1-4 family residential properties		57		57		50
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		511		511		1
Commercial and industrial		67		67		67
Consumer		43		43		20
Total loans with an allowance recorded	$	831	$	831	$	166
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	226	$	226	$	28
Secured by 1-4 family residential properties		692		692		50
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		511		511		1
Commercial and industrial		67		67		67
Consumer		43		43		20
Total impaired loans	$	1,539	$	1,539	$	166

The above amounts include purchased credit impaired loans. As of December 31, 2018, purchased credit impaired loans comprised $0.5 million of impaired loans without a related allowance recorded.

The average net investment in impaired loans and interest income recognized and received on impaired loans during the nine months ended September 30, 2019 and the year ended December 31, 2018 were as follows:

	Nine Months Ended September 30, 2019
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	181	$	—	$	—
Secured by 1-4 family residential properties		1,021		43		37
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		645		22		21
Other		—		—		—
Commercial and industrial		991		5		5
Consumer		38		1		1
Total	$	2,876	$	71	$	64

	Year Ended December 31, 2018
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	70	$	8	$	8
Secured by 1-4 family residential properties		794		16		16
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		523		34		35
Other		1		—		—
Commercial and industrial		57		4		5
Consumer		15		3		3
Total	$	1,460	$	65	$	67

Loans on which the accrual of interest has been discontinued amounted to $1.5 million and $2.8 million as of September 30, 2019 and December 31, 2018, respectively. If interest on those loans had been accrued, there would have been $30 thousand and $44 thousand of interest accrued for the periods ended September 30, 2019 and December 31, 2018, respectively. Interest income related to these loans for the nine months ended September 30, 2019 and the year ended December 31, 2018 was $13 thousand and $27 thousand, respectively.

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, modifications of note structure, principal balance reductions or some combination of these concessions. There were no loans modified with concessions granted during the nine-month period ended September 30, 2019 or the year ended December 31, 2018. 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, then the loan remains on non-accrual. As of September 30, 2019 and December 31, 2018, the Company had $18 thousand and $65 thousand, respectively, of non-accruing loans that were previously restructured and that remained on non-accrual status. For both the nine months ended September 30, 2019 and the year ended December 31, 2018, the Company had no loans that were restored to accrual status based on a sustained period of repayment performance.

The following table provides, as of September 30, 2019 and December 31, 2018, the number of loans remaining in each loan category that the Bank had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

	September 30, 2019						December 31, 2018
	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		1	$	107	$	66		1	$	107	$	73
Secured by 1-4 family residential properties		3		318		30		3		318		118
Secured by non-farm, non-residential properties		—		—		—		1		53		34
Commercial loans		2		116		63		2		116		72
Total		6	$	541	$	159		7	$	594	$	297

As of September 30, 2019 and December 31, 2018, no loans that previously had been modified in a troubled debt restructuring had defaulted subsequent to modification.

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 attributable to such restructured loans of $1 thousand and $2 thousand as of September 30, 2019 and December 31, 2018, respectively.