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 loans for the development of residential housing projects, loans for the development of commercial and industrial use property, loans for the purchase and improvement of raw land and loans primarily for agricultural production that are secured by farmland. 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.

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.

Direct consumer – 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. The collateral securing these loans generally includes personal property items such as furniture, ATVs and home appliances.

Indirect sales – This portfolio segment includes loans secured by collateral purchased by consumers at retail stores with whom the Company has an established relationship to provide financing for the retail products sold if applicable underwriting standards are met. The collateral securing these loans generally includes recreational vehicles, campers, boats and horse trailers.

As of June 30, 2020 and December 31, 2019, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	June 30, 2020
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	31,384	$	—	$	31,384
Secured by 1-4 family residential properties		88,549		4,461		93,010
Secured by multi-family residential properties		48,807		—		48,807
Secured by non-farm, non-residential properties		160,683		—		160,683
Commercial and industrial loans ⁽¹⁾		87,771		—		87,771
Consumer loans:
Direct consumer		7,340		25,959		33,299
Branch retail		—		33,000		33,000
Indirect sales ⁽²⁾		89,932		—		89,932
Total loans		514,466		63,420		577,886
Less: Unearned interest, fees and deferred cost		578		4,823		5,401
Allowance for loan losses		4,568		1,855		6,423
Net loans	$	509,320	$	56,742	$	566,062

	December 31, 2019
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	30,820	$	—	$	30,820
Secured by 1-4 family residential properties		98,971		5,566		104,537
Secured by multi-family residential properties		50,910		—		50,910
Secured by non-farm, non-residential properties		162,981		—		162,981
Commercial and industrial loans ⁽¹⁾		90,957		—		90,957
Consumer loans:
Direct consumer		7,816		30,224		38,040
Branch retail		—		32,305		32,305
Indirect sales ⁽²⁾		—		45,503		45,503
Total loans		442,455		113,598		556,053
Less: Unearned interest, fees and deferred cost		262		4,786		5,048
Allowance for loan losses		3,483		2,279		5,762
Net loans	$	438,710	$	106,533	$	545,243

(1)

Includes equipment financing leases.

(2)

Effective January 1, 2020, the Company transferred a total of $45.5 million of its indirect sales portfolio from ALC to the Bank.

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 57.8% and 62.8% of the portfolio was concentrated in loans secured by real estate as of June 30, 2020 and December 31, 2019, respectively.

Loans with a carrying value of $32.6 million and $34.6 million were pledged as collateral to secure Federal Home Loan Bank (“FHLB”) borrowings as of June 30, 2020 and December 31, 2019, respectively.

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 were $0.5 million and $0.9 million as of June 30, 2020 and December 31, 2019, respectively. During the six months ended June 30, 2020, there were no new loans to these parties, and repayments by active related parties were $0.4 million. During the year ended December 31, 2019, there were $0.1 million of new loans to these parties, and repayments by active related parties were $22 thousand.

The Company acquired loans through the acquisition of The Peoples Bank (“TPB”) 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. Purchased credit impaired (“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 condensed consolidated balance sheet, is set forth in the table below as of June 30, 2020 and December 31, 2019:

During both the six months ended June 30, 2020 and the year ended December 31, 2019, 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.

The following tables present changes in the allowance for loan losses during the six months ended June 30, 2020 and 2019 and the related loan balances by loan type as of June 30, 2020 and 2019:

	As of and for the Six Months Ended June 30, 2020
	Construction, Land Development, and Other		1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential		Commercial and Industrial			Direct Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	197	$	466		$	422	$	964	$	1,377		$	1,625		$	395		$	316		$	5,762
Charge-offs		—		(42	)		—		—		—			(962	)		(221	)		(38	)		(1,263	)
Recoveries		—		14			—		8		—			381			90			1			494
Provision		72		84			70		272		(448	)		373			211			796			1,430
Ending balance	$	269	$	522		$	492	$	1,244	$	929		$	1,417		$	475		$	1,075		$	6,423
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	13		$	—	$	—	$	62		$	3		$	—		$	—		$	78
Collectively evaluated for impairment		269		509			492		1,244		867			1,414			475			1,075			6,345
Total allowance for loan losses	$	269	$	522		$	492	$	1,244	$	929		$	1,417		$	475		$	1,075		$	6,423
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	785		$	—	$	2,748	$	62		$	25		$	—		$	—		$	3,620
Collectively evaluated for impairment		31,384		92,058			48,807		157,935		87,709			33,274			33,000			89,932			574,099
Loans acquired with deteriorated credit quality		—		167			—		—		—			—			—			—			167
Total loans receivable	$	31,384	$	93,010		$	48,807	$	160,683	$	87,771		$	33,299		$	33,000		$	89,932		$	577,886

	As of and for the Six Months Ended June 30, 2019
	Construction, Land Development, and Other			1-4 Family			Real Estate Multi- Family		Non- Farm Non- Residential			Commercial and Industrial		Direct Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	241		$	346		$	128	$	831		$	1,138	$	1,799		$	427		$	145		$	5,055
Charge-offs		—			(77	)		—		—			—		(1,090	)		(201	)		(128	)		(1,496	)
Recoveries		—			15			—		—			3		334			59			2			413
Provision		(50	)		105			38		(22	)		63		646			151			184			1,115
Ending balance	$	191		$	389		$	166	$	809		$	1,204	$	1,689		$	436		$	203		$	5,087
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	95		$	16		$	—	$	—		$	65	$	12		$	—		$	—		$	188
Collectively evaluated for impairment		96			373			166		809			1,139		1,677			436			203			4,899
Total allowance for loan losses	$	191		$	389		$	166	$	809		$	1,204	$	1,689		$	436		$	203		$	5,087
Ending balance of loans receivable:
Individually evaluated for impairment	$	421		$	1,141		$	—	$	504		$	65	$	35		$	—		$	—		$	2,166
Collectively evaluated for impairment		27,980			102,043			28,033		158,244			91,424		37,125			29,609			45,466			519,924
Loans acquired with deteriorated credit quality		—			170			—		—			—		—			—			—			170
Total loans receivable	$	28,401		$	103,354		$	28,033	$	158,748		$	91,489	$	37,160		$	29,609		$	45,466		$	522,260

The Company utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, construction, land, multi-family real estate, other commercial real estate, and commercial and industrial loans are 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.

Because residential real estate and consumer loans are 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 June 30, 2020:

	June 30, 2020
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	31,302		$	77		$	5		$	31,384
Secured by multi-family residential properties		48,807			—			—			48,807
Secured by non-farm, non-residential properties		156,033			2,783			1,867			160,683
Commercial and industrial loans		86,129			1,186			456			87,771
Total	$	322,271		$	4,046		$	2,328		$	328,645
As a percentage of total loans		98.06	%		1.23	%		0.71	%		100.00	%

	June 30, 2020
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	91,012		$	1,998		$	93,010
Consumer loans:
Direct consumer		32,942			357			33,299
Branch retail		32,933			67			33,000
Indirect sales		89,873			59			89,932
Total	$	246,760		$	2,481		$	249,241
As a percentage of total loans		99.00	%		1.00	%		100.00	%

The above amounts include PCI loans. As of June 30, 2020, $0.2 million of PCI loans were classified as “Nonperforming.”

The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2019:

	December 31, 2019
	Pass 1-5			Special Mention 6			Substandard 7			Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	30,466		$	354		$	—		$	30,820
Secured by multi-family residential properties		50,910			—			—			50,910
Secured by non-farm, non-residential properties		157,718			2,961			2,302			162,981
Commercial and industrial loans		88,463			714			1,780			90,957
Total	$	327,557		$	4,029		$	4,082		$	335,668
As a percentage of total loans		97.58	%		1.20	%		1.22	%		100.00	%

	December 31, 2019
	Performing			Nonperforming			Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	102,176		$	2,361		$	104,537
Consumer loans:
Direct consumer		37,474			566			38,040
Branch retail		32,024			281			32,305
Indirect sales		45,503			—			45,503
Total	$	217,177		$	3,208		$	220,385
As a percentage of total loans		98.54	%		1.46	%		100.00	%

The above amounts include PCI loans. As of December 31, 2019, $0.2 million of PCI loans were classified as “Nonperforming.”

The following table provides an aging analysis of past due loans by class as of June 30, 2020:

	As of June 30, 2020
	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	$	—		$	—		$	—		$	—		$	31,384		$	31,384		$	—
Secured by 1-4 family residential properties		97			31			96			224			92,786			93,010			—
Secured by multi-family residential properties		—			—			—			—			48,807			48,807			—
Secured by non-farm, non-residential properties		22			—			1,417			1,439			159,244			160,683			—
Commercial and industrial loans		58			12			—			70			87,701			87,771			—
Consumer loans:
Direct consumer		253			113			326			692			32,607			33,299			—
Branch retail		132			30			67			229			32,771			33,000			—
Indirect sales		166			—			59			225			89,707			89,932			—
Total	$	728		$	186		$	1,965		$	2,879		$	575,007		$	577,886		$	—
As a percentage of total loans		0.13	%		0.03	%		0.34	%		0.50	%		99.50	%		100.00	%

The above amounts include PCI loans. As of June 30, 2020, $0.2 million of PCI loans were 60-89 days past due.

The following table provides an aging analysis of past due loans by class as of December 31, 2019:

	As of December 31, 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	$	—		$	—		$	—		$	—		$	30,820		$	30,820		$	—
Secured by 1-4 family residential properties		259			108			844			1,211			103,326			104,537			—
Secured by multi-family residential properties		—			—			—			—			50,910			50,910			—
Secured by non-farm, non-residential properties		30			—			1,419			1,449			161,532			162,981			—
Commercial and industrial loans		56			—			—			56			90,901			90,957			—
Consumer loans:
Direct consumer		387			287			531			1,205			36,835			38,040			—
Branch retail		444			189			281			914			31,391			32,305			—
Indirect sales		132			—			—			132			45,371			45,503			—
Total	$	1,308		$	584		$	3,075		$	4,967		$	551,086		$	556,053		$	—
As a percentage of total loans		0.24	%		0.11	%		0.55	%		0.89	%		99.11	%		100.00	%

The above amounts include PCI loans. As of December 31, 2019, $0.2 million of PCI loans were 60-89 days past due.

The following table provides an analysis of non-accruing loans by class as of June 30, 2020 and December 31, 2019:

As of both June 30, 2020 and December 31, 2019, PCI loans comprised $0.2 million of nonaccrual loans.

A significant amount of uncertainty continues to exist as to what the ultimate economic impact of the COVID-19 pandemic will be on the Company’s borrowers. In response to this uncertainty, during the first six months of 2020, the Company has increased qualitative factors in the calculation of the allowance for loan and lease losses. Although we believe that the allowance was sufficient to absorb losses in the portfolio based on circumstances existing as of June 30, 2020, management is continuing to closely monitor the Company’s loan portfolio for indications of credit deterioration, particularly with respect to those loans that have had payments deferred in connection with the pandemic, as well as those loans that management currently considers to potentially be more vulnerable (“at-risk”) as a result of the pandemic. The aggregate balances and categories of these loans are identified in the tables below. It should be noted that the tables below are not necessarily indicative of loans that have experienced credit deterioration; rather, they represent loans that are currently being given heightened attention by management as a result of the pandemic.

In accordance with section 4013 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Company implemented initiatives to provide short-term payment relief to borrowers who have been negatively impacted by COVID-19. Over 1,700 of the Company’s borrowers requested and were granted COVID-19 pandemic-related deferments by the Company during the six months ended June 30, 2020. Although the interpretive guidance defines short-term as six months, the deferments granted by the Company were generally for terms of 90 days or less. The table below summarizes all remaining COVID-19 loan payment deferments made by the Company as of June 30, 2020.

	As of June 30, 2020
	Number of Loans Deferred		Principal Balance of Loans Deferred		% of Portfolio Balance			Principal and Interest Deferments		Principal Only Deferments
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans		7	$	4,544		14.5	%	$	4,544	$	—
Secured by 1-4 family residential properties		50		9,474		10.2	%		8,078		1,396
Secured by multi-family residential properties		12		29,726		60.9	%		15,523		14,203
Secured by non-farm, non-residential properties		49		42,797		26.6	%		37,073		5,724
Commercial and industrial loans		9		1,460		1.7	%		831		629
Consumer loans:
Direct consumer		442		2,188		6.6	%		2,188		—
Branch retail		172		1,856		5.6	%		1,856		—
Indirect sales		123		3,199		3.6	%		3,199		—
Total loans		864	$	95,244		16.5	%	$	73,292	$	21,952

The credit quality of COVID-19 deferred loans will be evaluated on an ongoing basis in accordance with the Company’s uniform framework for establishing and monitoring credit risk. However, in accordance with regulatory guidance related to the CARES Act, loans for which payments were deferred related to COVID-19 will generally not be considered troubled debt restructurings or placed in past due or nonaccrual status during the COVID-19 deferment period.

At-Risk Categories

While most industries have and will continue to experience adverse impacts as a result of the COVID-19 pandemic, the Company has identified certain loan categories considered to be “at-risk” of significant impact. The “at-risk” categories have been further subdivided into those deemed by management to be of “high-risk” and those deemed to be of “moderate-risk.” The categories were determined based on management’s current judgment as to the risk that the borrower and underlying collateral supporting the loans could ultimately be negatively impacted by the economic impact of the COVID-19 pandemic.

Hotels/motels – These are loans that are secured by real estate and furniture, fixtures and equipment for hotel or motel facilities. This category may also include hotel or motel facilities that were under construction as of June 30, 2020 and for which the Company is financing the construction costs. While all loans in this category are to individual owner groups, 90% of the loan balance is to major franchises. The primary source of income for the borrowers comes from nightly occupancy of the facilities. Due to an overall decrease in travel during the COVID-19 pandemic, and due to restrictions on travel by many state and local governmental authorities, employers and other entities, the hotel industry has seen declines in occupancy rates, resulting in decreased revenue. Additionally, there is uncertainty as to when the public will have the confidence to utilize hotels and motels at the levels that the industry experienced prior to COVID-19. Therefore, these loans are currently considered by management to be of high-risk of potential loss.

Restaurants – These are loans that are secured by real estate, equipment and leasehold improvements for restaurant facilities. This category may also include restaurant facilities that were under construction as of June 30, 2020 and for which the Company is financing the construction costs. The restaurant category is comprised of franchised fast food restaurants, which account for 54% of the restaurants loan balance, and dine-in restaurants, which represent the remaining 46% of the loan balance. The primary source of income for the borrowers comes from the operation of the restaurant facilities. Fast food restaurants have shown the ability to adapt more quickly to governmental restrictions due to COVID-19 because of their established presence with drive-through business, and, therefore, are considered by management to be of moderate risk of potential loss. Dine-in restaurants, which rely more heavily on the presence of diners within the facilities, have had to adapt to decreased dining capacities, as well as offering a drive-up concept, in the current environment. Due to the greater impact that restrictions placed by governmental authorities have had on dine-in restaurants, these loans are currently considered by management to be of high-risk of potential loss.

Retail – These are loans that are generally secured by retail centers of various sizes. Typically, they have multiple retail-styled tenants. The tenants can range from national or regional retail outlets to small box retailers, restaurants, finance companies, hair and nail salons, and other similar retailers. The primary source of income for these borrowers is from the rental income of tenants that could be experiencing decreased business during the COVID-19 pandemic. These loans are currently considered by management to be of moderate-risk of potential loss.

1-4 family investment – These are loans that are generally secured by residential dwellings. The borrowers may be companies or individuals that have purchased 1-4 family property for the purpose of leasing the property to households as a residence. Lease terms are typically for 12 months. The primary source of income for the borrower is rental income from the tenant. The borrowers may hold the properties for an indefinite period of time or may sell the properties to similar investors of like properties. These loans are currently considered by management to be of moderate-risk of potential loss.

The table below summarizes the “at-risk” categories and the relative percentage of the Company’s loan portfolio for each as of June 30, 2020.

	June 30, 2020
	Balance of Risk Category		% of Total Loan Balance
	(Dollars in Thousands)
High-risk loan categories:
Hotels/motels	$	10,410		1.8	%
Dine-in restaurants		4,459		0.8	%
Total high-risk loans		14,869		2.6	%
Moderate-risk loan categories:
Fast food restaurants		5,326		0.9	%
Retail		34,587		6.0	%
1-4 family investment		21,874		3.8	%
Total moderate-risk loans		61,787		10.7	%
Total at-risk loans	$	76,656		13.3	%

Management will continue to evaluate credit exposures on these loans on an ongoing basis in accordance with the Company’s uniform framework for establishing and monitoring credit risk.

Paycheck Protection Program

Sections 1102 and 1106 of the CARES Act added a new loan program administered by the Small Business Administration (“SBA”) entitled the Paycheck Protection Program (“PPP”). The PPP is intended to provide economic relief to small businesses throughout the United States that have been adversely impacted by COVID-19. An Interim Final Rule related to the PPP was issued on April 2, 2020, and additional clarifications to the Interim Final Rule have been provided subsequently by the SBA. PPP loans are 100% guaranteed by the SBA and are forgivable in whole, or in part, if the proceeds are used by the borrower for payroll and other permitted purposes in accordance with the requirements of the PPP. If not forgiven in whole or in part, the loans carry a fixed interest rate of 1.00% per annum with payments deferred for the first six months of the loan. As compensation for originating a PPP loan, the Company receives lender processing fees from the SBA ranging from 1% to 5% of the original loan balance, depending on the size of the loan. Processing fees, net of origination costs, are deferred and amortized over the contractual life of the loan as interest income. Upon forgiveness of a loan by the SBA, any unrecognized net deferred fees will be recognized as interest income in that period.

PPP loans were initially originated for a term of two years; however, a June 5, 2020 amendment to the CARES Act (i) provided for a five-year minimum loan term for loans originated beginning on that date and (ii) permitted lenders and borrowers to amend loans previously issued under two-year terms to terms of five to ten years if mutually agreed upon by both the lender and the borrower. As of June 30, 2020, the Company had originated 158 PPP loans with an aggregate principal balance of $13.8 million. Of this amount, $13.7 million of the loans were originated under two-year terms, while $0.1 million of the loans were originated under five-year terms.

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. Loans of less than $0.5 million may also be impaired if in management’s judgement circumstances warrant impairment. At ALC, all loans of $50 thousand or more that are 90 days or more past due are identified for impairment analysis. As of both June 30, 2020 and December 31, 2019, there were $0.1 million of impaired loans with no related allowance recorded at ALC. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

As of June 30, 2020, the carrying amount of the Company’s impaired loans consisted of the following:

	June 30, 2020
	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		932		932		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,748		2,748		—
Commercial and industrial		—		—		—
Direct consumer		—		—		—
Total loans with no related allowance recorded	$	3,680	$	3,680	$	—
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		20		20		13
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		62		62		62
Direct consumer		25		25		3
Total loans with an allowance recorded	$	107	$	107	$	78
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		952		952		13
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		2,748		2,748		—
Commercial and industrial		62		62		62
Direct consumer		25		25		3
Total impaired loans	$	3,787	$	3,787	$	78

The above amounts include PCI loans. As of June 30, 2020, PCI loans comprised $0.2 million of impaired loans without a related allowance recorded.

As of December 31, 2019, the carrying amount of the Company’s impaired loans consisted of the following:

	December 31, 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		984		984		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,877		1,877		—
Commercial and industrial		—		—		—
Direct consumer		—		—		—
Total loans with no related allowance recorded	$	2,861	$	2,861	$	—
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		21		21		14
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		206		206		206
Direct consumer		29		29		7
Total loans with an allowance recorded	$	256	$	256	$	227
Total impaired loans
Loans secured by real estate	.
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		1,005		1,005		14
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		1,877		1,877		—
Commercial and industrial		206		206		206
Direct consumer		29		29		7
Total impaired loans	$	3,117	$	3,117	$	227

The above amounts include PCI loans. As of December 31, 2019, PCI loans comprised $0.2 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 six months ended June 30, 2020 and the year ended December 31, 2019 were as follows:

Loans on which the accrual of interest has been discontinued amounted to $3.4 million and $3.7 million as of June 30, 2020 and December 31, 2019, respectively. If interest on those loans had been accrued, there would have been $45 thousand and $41 thousand of interest accrued for the periods ended June 30, 2020 and December 31, 2019, respectively. Interest income related to these loans for the six months ended June 30, 2020 and the year ended December 31, 2019 was $27 thousand and $147 thousand, respectively.

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 six months ended June 30, 2020 or the year ended December 31, 2019. 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 June 30, 2020 and December 31, 2019, the Company had $12 thousand and $16 thousand, respectively, of non-accruing loans that were previously restructured and that remained on non-accrual status. For both the six months ended June 30, 2020 and the year ended December 31, 2019, 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 June 30, 2020 and December 31, 2019, the number of loans remaining in each loan category that the Company had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

As of June 30, 2020 and December 31, 2019, 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 as of both June 30, 2020 and December 31, 2019.