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Loans and Allowance for Loan and Lease Losses | 9 Months Ended
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Sep. 30, 2022
Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract] |
Loans and Allowance for Loan and Lease Losses | 5. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES Portfolio Segments The Company has divided the loan portfolio into the following portfolio segments based on risk characteristics: 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 had an established relationship through its branch network to provide financing for the retail products sold if applicable underwriting standards were met. The collateral securing these loans generally includes personal property items such as furniture, ATVs and home appliances. Indirect – 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, horse trailers and cargo trailers. As of September 30, 2022 and December 31, 2021, the composition of the loan portfolio by reporting segment and portfolio segment was as follows:
|  | September 30, 2022 |
|  | Bank |  |  | ALC |  |  | Total |
|  | (Dollars in Thousands) |
Real estate loans: |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 36,740 |  |  | $ | — |  |  | $ | 36,740 |
Secured by 1-4 family residential properties |  |  | 83,231 |  |  |  | 1,680 |  |  |  | 84,911 |
Secured by multi-family residential properties |  |  | 72,446 |  |  |  | — |  |  |  | 72,446 |
Secured by non-farm, non-residential properties |  |  | 200,505 |  |  |  | — |  |  |  | 200,505 |
Commercial and industrial loans and leases (1) |  |  | 65,951 |  |  |  | — |  |  |  | 65,951 |
Consumer loans: |  |  |  |  |  |  |  |  |
Direct consumer |  |  | 5,685 |  |  |  | 6,594 |  |  |  | 12,279 |
Branch retail |  |  | — |  |  |  | 16,278 |  |  |  | 16,278 |
Indirect |  |  | 262,742 |  |  |  | — |  |  |  | 262,742 |
Total loans |  |  | 727,300 |  |  |  | 24,552 |  |  |  | 751,852 |
Less: Unearned interest, fees and deferred cost |  |  | 847 |  |  |  | 734 |  |  |  | 1,581 |
Allowance for loan and lease losses |  |  | 8,033 |  |  |  | 1,340 |  |  |  | 9,373 |
Net loans |  | $ | 718,420 |  |  | $ | 22,478 |  |  | $ | 740,898 |
|  | December 31, 2021 |
|  | Bank |  |  | ALC |  |  | Total |
|  | (Dollars in Thousands) |
Real estate loans: |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 67,048 |  |  | $ | — |  |  | $ | 67,048 |
Secured by 1-4 family residential properties |  |  | 70,439 |  |  |  | 2,288 |  |  |  | 72,727 |
Secured by multi-family residential properties |  |  | 46,000 |  |  |  | — |  |  |  | 46,000 |
Secured by non-farm, non-residential properties |  |  | 197,901 |  |  |  | — |  |  |  | 197,901 |
Commercial and industrial loans and leases (1) |  |  | 73,947 |  |  |  | — |  |  |  | 73,947 |
Consumer loans: |  |  |  |  |  |  |  |  |
Direct consumer |  |  | 5,972 |  |  |  | 15,717 |  |  |  | 21,689 |
Branch retail |  |  | — |  |  |  | 25,692 |  |  |  | 25,692 |
Indirect |  |  | 205,940 |  |  |  | — |  |  |  | 205,940 |
Total loans |  |  | 667,247 |  |  |  | 43,697 |  |  |  | 710,944 |
Less: Unearned interest, fees and deferred cost |  |  | (324 | ) |  |  | 2,918 |  |  |  | 2,594 |
Allowance for loan and lease losses |  |  | 7,038 |  |  |  | 1,282 |  |  |  | 8,320 |
Net loans |  | $ | 660,533 |  |  | $ | 39,497 |  |  | $ | 700,030 |
(1) Includes equipment financing leases and PPP loans. As of September 30, 2022 and December 31, 2021, equipment finance leases totaled $10.8 million and $11.0 million, respectively, and PPP loans totaled $31 thousand and $1.7 million, respectively. The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio, 52.5% and 54.0% of the portfolio was concentrated in loans secured by real estate as of September 30, 2022 and December 31, 2021, respectively. Loans with a carrying value of $113.5 million and $6 6.6 million were pledged as collateral to secure Federal Home Loan Bank (“FHLB”) borrowings as of September 30, 2022 and December 31, 2021, 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 were $0.3 million as of both September 30, 2022 and December 31, 2021. During the nine months ended September 30, 2022, there were no new loans to these parties, and repayments by active related parties were $5 thousand. During the year ended December 31, 2021, there were no new loans to these parties, and repayments by active related parties were $0.1 million. Allowance for Loan and Lease Losses The following tables present changes in the allowance for loan and lease losses during the nine months ended September 30, 2022 and 2021 and the related loan balances by loan type as of September 30, 2022 and 2021:
|  | As of and for the Nine Months Ended September 30, 2022 |
|  | Construction, Land Development, and Other |  |  | Real Estate 1-4 Family |  |  | Real Estate Multi- Family |  |  | Non- Farm Non- Residential |  |  | Commercial and Industrial |  |  | Direct Consumer |  |  | Branch Retail |  |  | Indirect |  |  | Total |
|  | (Dollars in Thousands) |
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 628 |  |  | $ | 690 |  |  | $ | 437 |  |  | $ | 1,958 |  |  | $ | 860 |  |  | $ | 1,004 |  |  | $ | 304 |  |  | $ | 2,439 |  |  | $ | 8,320 |
Charge-offs |  |  | — |  |  |  | (10 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,604 | ) |  |  | (423 | ) |  |  | (238 | ) |  |  | (2,275 | )
Recoveries |  |  | 2 |  |  |  | 23 |  |  |  | — |  |  |  | 4 |  |  |  | — |  |  |  | 387 |  |  |  | 97 |  |  |  | 34 |  |  |  | 547 |
Provision |  |  | (246 | ) |  |  | 89 |  |  |  | 210 |  |  |  | 30 |  |  |  | 244 |  |  |  | 1,161 |  |  |  | 445 |  |  |  | 848 |  |  |  | 2,781 |
Ending balance |  | $ | 384 |  |  | $ | 792 |  |  | $ | 647 |  |  | $ | 1,992 |  |  | $ | 1,104 |  |  | $ | 948 |  |  | $ | 423 |  |  | $ | 3,083 |  |  | $ | 9,373 |
Ending balance of allowance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | — |  |  | $ | 8 |  |  | $ | — |  |  | $ | — |  |  | $ | 277 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 285 |
Collectively evaluated for impairment |  |  | 384 |  |  |  | 784 |  |  |  | 647 |  |  |  | 1,992 |  |  |  | 827 |  |  |  | 948 |  |  |  | 423 |  |  |  | 3,083 |  |  |  | 9,088 |
Total allowance for loan and lease losses |  | $ | 384 |  |  | $ | 792 |  |  | $ | 647 |  |  | $ | 1,992 |  |  | $ | 1,104 |  |  | $ | 948 |  |  | $ | 423 |  |  | $ | 3,083 |  |  | $ | 9,373 |
Ending balance of loans receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1,048 |  |  | $ | 600 |  |  | $ | — |  |  | $ | 1,765 |  |  | $ | 2,603 |  |  | $ | 18 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,034 |
Collectively evaluated for impairment |  |  | 35,692 |  |  |  | 84,311 |  |  |  | 72,446 |  |  |  | 198,740 |  |  |  | 63,348 |  |  |  | 12,261 |  |  |  | 16,278 |  |  |  | 262,742 |  |  |  | 745,818 |
Loans acquired with deteriorated credit quality |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total loans receivable |  | $ | 36,740 |  |  | $ | 84,911 |  |  | $ | 72,446 |  |  | $ | 200,505 |  |  | $ | 65,951 |  |  | $ | 12,279 |  |  | $ | 16,278 |  |  | $ | 262,742 |  |  | $ | 751,852 |
|  | As of and for the Nine Months Ended September 30, 2021 |
|  | Construction, Land Development, and Other |  |  | Real Estate 1-4 Family |  |  | Real Estate Multi- Family |  |  | Non- Farm Non- Residential |  |  | Commercial and Industrial |  |  | Direct Consumer |  |  | Branch Retail |  |  | Indirect |  |  | Total |
|  | (Dollars in Thousands) |
Allowance for loan and lease losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 393 |  |  | $ | 639 |  |  | $ | 577 |  |  | $ | 1,566 |  |  | $ | 1,008 |  |  | $ | 1,202 |  |  | $ | 373 |  |  | $ | 1,712 |  |  | $ | 7,470 |
Charge-offs |  |  | (22 | ) |  |  | (6 | ) |  |  | — |  |  |  | — |  |  |  | (6 | ) |  |  | (848 | ) |  |  | (299 | ) |  |  | (365 | ) |  |  | (1,546 | )
Recoveries |  |  | 21 |  |  |  | 9 |  |  |  | — |  |  |  | 4 |  |  |  | 10 |  |  |  | 512 |  |  |  | 148 |  |  |  | 48 |  |  |  | 752 |
Provision |  |  | 128 |  |  |  | 50 |  |  |  | (89 | ) |  |  | 415 |  |  |  | (135 | ) |  |  | 120 |  |  |  | 127 |  |  |  | 901 |  |  |  | 1,517 |
Ending balance |  | $ | 520 |  |  | $ | 692 |  |  | $ | 488 |  |  | $ | 1,985 |  |  | $ | 877 |  |  | $ | 986 |  |  | $ | 349 |  |  | $ | 2,296 |  |  | $ | 8,193 |
Ending balance of allowance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | — |  |  | $ | 10 |  |  | $ | — |  |  | $ | — |  |  | $ | 58 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 68 |
Collectively evaluated for impairment |  |  | 520 |  |  |  | 682 |  |  |  | 488 |  |  |  | 1,985 |  |  |  | 819 |  |  |  | 986 |  |  |  | 349 |  |  |  | 2,296 |  |  |  | 8,125 |
Total allowance for loan and lease losses |  | $ | 520 |  |  | $ | 692 |  |  | $ | 488 |  |  | $ | 1,985 |  |  | $ | 877 |  |  | $ | 986 |  |  | $ | 349 |  |  | $ | 2,296 |  |  | $ | 8,193 |
Ending balance of loans receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | — |  |  | $ | 671 |  |  | $ | — |  |  | $ | 1,053 |  |  | $ | 1,015 |  |  | $ | 21 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,760 |
Collectively evaluated for impairment |  |  | 58,175 |  |  |  | 72,430 |  |  |  | 51,420 |  |  |  | 197,692 |  |  |  | 76,664 |  |  |  | 25,824 |  |  |  | 29,764 |  |  |  | 194,154 |  |  |  | 706,123 |
Loans acquired with deteriorated credit quality |  |  | — |  |  |  | 11 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11 |
Total loans receivable |  | $ | 58,175 |  |  | $ | 73,112 |  |  | $ | 51,420 |  |  | $ | 198,745 |  |  | $ | 77,679 |  |  | $ | 25,845 |  |  | $ | 29,764 |  |  | $ | 194,154 |  |  | $ | 708,894 |
Credit Quality Indicators 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. • 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 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 Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company 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 Company did not have any loans classified as Doubtful (Risk Grade 8) as of September 30, 2022 or December 31, 2021. • 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 Company 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 Company did not have any loans classified as Loss (Risk Grade 9) as of September 30, 2022 or December 31, 2021. 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 September 30, 2022:
|  | September 30, 2022 |
|  | Pass 1-5 |  |  | Special Mention 6 |  |  | Substandard 7 |  |  | Total |
|  | (Dollars in Thousands) |
Loans secured by real estate: |  |  |  |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 35,692 |  |  | $ | — |  |  | $ | 1,048 |  |  | $ | 36,740 |
Secured by multi-family residential properties |  |  | 72,446 |  |  |  | — |  |  |  | — |  |  |  | 72,446 |
Secured by non-farm, non-residential properties |  |  | 198,004 |  |  |  | 656 |  |  |  | 1,845 |  |  |  | 200,505 |
Commercial and industrial loans |  |  | 63,064 |  |  |  | — |  |  |  | 2,887 |  |  |  | 65,951 |
Total |  | $ | 369,206 |  |  | $ | 656 |  |  | $ | 5,780 |  |  | $ | 375,642 |
As a percentage of total loans |  |  | 98.29 | % |  |  | 0.17 | % |  |  | 1.54 | % |  |  | 100.00 | %
|  | September 30, 2022 |
|  | Performing |  |  | Nonperforming |  |  | Total |
|  | (Dollars in Thousands) |
Loans secured by real estate: |  |  |  |  |  |  |  |  |
Secured by 1-4 family residential properties |  | $ | 83,611 |  |  | $ | 1,300 |  |  | $ | 84,911 |
Consumer loans: |  |  |  |  |  |  |  |  |
Direct consumer |  |  | 12,112 |  |  |  | 167 |  |  |  | 12,279 |
Branch retail |  |  | 16,130 |  |  |  | 148 |  |  |  | 16,278 |
Indirect |  |  | 262,742 |  |  |  | — |  |  |  | 262,742 |
Total |  | $ | 374,595 |  |  | $ | 1,615 |  |  | $ | 376,210 |
As a percentage of total loans |  |  | 99.57 | % |  |  | 0.43 | % |  |  | 100.00 | %
The tables below illustrate the carrying amount of loans by credit quality indicator as of December 31, 2021:
|  | December 31, 2021 |
|  | Pass 1-5 |  |  | Special Mention 6 |  |  | Substandard 7 |  |  | Total |
|  | (Dollars in Thousands) |
Loans secured by real estate: |  |  |  |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 67,046 |  |  | $ | — |  |  | $ | 2 |  |  | $ | 67,048 |
Secured by multi-family residential properties |  |  | 43,472 |  |  |  | 2,528 |  |  |  | — |  |  |  | 46,000 |
Secured by non-farm, non-residential properties |  |  | 189,425 |  |  |  | 7,442 |  |  |  | 1,034 |  |  |  | 197,901 |
Commercial and industrial loans |  |  | 72,116 |  |  |  | 333 |  |  |  | 1,498 |  |  |  | 73,947 |
Total |  | $ | 372,059 |  |  | $ | 10,303 |  |  | $ | 2,534 |  |  | $ | 384,896 |
As a percentage of total loans |  |  | 96.66 | % |  |  | 2.68 | % |  |  | 0.66 | % |  |  | 100.00 | %
|  | December 31, 2021 |
|  | Performing |  |  | Nonperforming |  |  | Total |
|  | (Dollars in Thousands) |
Loans secured by real estate: |  |  |  |  |  |  |  |  |
Secured by 1-4 family residential properties |  | $ | 71,526 |  |  | $ | 1,201 |  |  | $ | 72,727 |
Consumer loans: |  |  |  |  |  |  |  |  |
Direct consumer |  |  | 20,939 |  |  |  | 750 |  |  |  | 21,689 |
Branch retail |  |  | 25,486 |  |  |  | 206 |  |  |  | 25,692 |
Indirect |  |  | 205,940 |  |  |  | — |  |  |  | 205,940 |
Total |  | $ | 323,891 |  |  | $ | 2,157 |  |  | $ | 326,048 |
As a percentage of total loans |  |  | 99.34 | % |  |  | 0.66 | % |  |  | 100.00 | %
The following table provides an aging analysis of past due loans by class as of September 30, 2022:
|  | As of September 30, 2022 |
|  | 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 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 36,740 |  |  | $ | 36,740 |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 288 |  |  |  | 15 |  |  |  | 223 |  |  |  | 526 |  |  |  | 84,385 |  |  |  | 84,911 |  |  |  | — |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 72,446 |  |  |  | 72,446 |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 382 |  |  |  | — |  |  |  | — |  |  |  | 382 |  |  |  | 200,123 |  |  |  | 200,505 |  |  |  | — |
Commercial and industrial loans |  |  | 406 |  |  |  | — |  |  |  | — |  |  |  | 406 |  |  |  | 65,545 |  |  |  | 65,951 |  |  |  | — |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct consumer |  |  | 289 |  |  |  | 143 |  |  |  | 150 |  |  |  | 582 |  |  |  | 11,697 |  |  |  | 12,279 |  |  |  | — |
Branch retail |  |  | 195 |  |  |  | 142 |  |  |  | 148 |  |  |  | 485 |  |  |  | 15,793 |  |  |  | 16,278 |  |  |  | — |
Indirect |  |  | 101 |  |  |  | — |  |  |  | 59 |  |  |  | 160 |  |  |  | 262,583 |  |  |  | 262,742 |  |  |  | — |
Total |  | $ | 1,661 |  |  | $ | 300 |  |  | $ | 580 |  |  | $ | 2,541 |  |  | $ | 749,312 |  |  | $ | 751,852 |  |  | $ | — |
As a percentage of total loans |  |  | 0.22 | % |  |  | 0.04 | % |  |  | 0.08 | % |  |  | 0.34 | % |  |  | 99.66 | % |  |  | 100.00 | % |  |  |
The following table provides an aging analysis of past due loans by class as of December 31, 2021:
|  | As of December 31, 2021 |
|  | 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 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 67,048 |  |  | $ | 67,048 |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 349 |  |  |  | 23 |  |  |  | 20 |  |  |  | 392 |  |  |  | 72,335 |  |  |  | 72,727 |  |  |  | — |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 46,000 |  |  |  | 46,000 |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 403 |  |  |  | — |  |  |  | — |  |  |  | 403 |  |  |  | 197,498 |  |  |  | 197,901 |  |  |  | — |
Commercial and industrial loans |  |  | 54 |  |  |  | — |  |  |  | 234 |  |  |  | 288 |  |  |  | 73,659 |  |  |  | 73,947 |  |  |  | — |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct consumer |  |  | 652 |  |  |  | 589 |  |  |  | 730 |  |  |  | 1,971 |  |  |  | 19,718 |  |  |  | 21,689 |  |  |  | — |
Branch retail |  |  | 377 |  |  |  | 182 |  |  |  | 206 |  |  |  | 765 |  |  |  | 24,927 |  |  |  | 25,692 |  |  |  | — |
Indirect |  |  | 43 |  |  |  | 14 |  |  |  | — |  |  |  | 57 |  |  |  | 205,883 |  |  |  | 205,940 |  |  |  | — |
Total |  | $ | 1,878 |  |  | $ | 808 |  |  | $ | 1,190 |  |  | $ | 3,876 |  |  | $ | 707,068 |  |  | $ | 710,944 |  |  | $ | — |
As a percentage of total loans |  |  | 0.27 | % |  |  | 0.11 | % |  |  | 0.17 | % |  |  | 0.55 | % |  |  | 99.45 | % |  |  | 100.00 | % |  |  |
The following table provides an analysis of non-accruing loans by class as of September 30, 2022 and December 31, 2021:
|  | Loans on Non-Accrual Status |
|  | September 30, 2022 |  |  | December 31, 2021 |
|  | (Dollars in Thousands) |
Loans secured by real estate: |  |  |  |  |  |
Construction, land development and other land loans |  | $ | — |  |  | $ | 2 |
Secured by 1-4 family residential properties |  |  | 1,090 |  |  |  | 780 |
Secured by multi-family residential properties |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | — |  |  |  | — |
Commercial and industrial loans |  |  | 631 |  |  |  | 277 |
Consumer loans: |  |  |  |  |  |
Direct consumer |  |  | 149 |  |  |  | 743 |
Branch retail |  |  | 148 |  |  |  | 206 |
Indirect |  |  | 59 |  |  |  | — |
Total loans |  | $ | 2,077 |  |  | $ | 2,008 |
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 both September 30, 2022 and December 31, 2021, 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 September 30, 2022, the carrying amount of the Company’s impaired loans consisted of the following:
|  | September 30, 2022 |
|  | 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 |  | $ | 1,048 |  |  | $ | 1,048 |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 585 |  |  |  | 585 |  |  |  | — |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 1,765 |  |  |  | 1,765 |  |  |  | — |
Commercial and industrial |  |  | 2,249 |  |  |  | 2,249 |  |  |  | — |
Direct consumer |  |  | 18 |  |  |  | 18 |  |  |  | — |
Total loans with no related allowance recorded |  | $ | 5,665 |  |  | $ | 5,665 |  |  | $ | — |
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 |  |  | 15 |  |  |  | 15 |  |  |  | 8 |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  |  | 354 |  |  |  | 354 |  |  |  | 277 |
Direct consumer |  |  | — |  |  |  | — |  |  |  | — |
Total loans with an allowance recorded |  | $ | 369 |  |  | $ | 369 |  |  | $ | 285 |
Total impaired loans |  |  |  |  |  |  |  |  |
Loans secured by real estate |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 1,048 |  |  | $ | 1,048 |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 600 |  |  |  | 600 |  |  |  | 8 |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 1,765 |  |  |  | 1,765 |  |  |  | — |
Commercial and industrial |  |  | 2,603 |  |  |  | 2,603 |  |  |  | 277 |
Direct consumer |  |  | 18 |  |  |  | 18 |  |  |  | — |
Total impaired loans |  | $ | 6,034 |  |  | $ | 6,034 |  |  | $ | 285 |
As of December 31, 2021, the carrying amount of the Company’s impaired loans consisted of the following:
|  | December 31, 2021 |
|  | 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 |  |  | 630 |  |  |  | 630 |  |  |  | — |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 1,051 |  |  |  | 1,051 |  |  |  | — |
Commercial and industrial |  |  | 823 |  |  |  | 823 |  |  |  | — |
Direct consumer |  |  | 21 |  |  |  | 21 |  |  |  | — |
Total loans with no related allowance recorded |  | $ | 2,525 |  |  | $ | 2,525 |  |  | $ | — |
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 |  |  | 16 |  |  |  | 16 |  |  |  | 10 |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  |  | 57 |  |  |  | 57 |  |  |  | 57 |
Direct consumer |  |  | — |  |  |  | — |  |  |  | — |
Total loans with an allowance recorded |  | $ | 73 |  |  | $ | 73 |  |  | $ | 67 |
Total impaired loans |  |  |  |  |  |  |  |  |
Loans secured by real estate |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | — |  |  | $ | — |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 646 |  |  |  | 646 |  |  |  | 10 |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 1,051 |  |  |  | 1,051 |  |  |  | — |
Commercial and industrial |  |  | 880 |  |  |  | 880 |  |  |  | 57 |
Direct consumer |  |  | 21 |  |  |  | 21 |  |  |  | — |
Total impaired loans |  | $ | 2,598 |  |  | $ | 2,598 |  |  | $ | 67 |
The average net investment in impaired loans and interest income recognized and received on impaired loans during the nine months ended September 30, 2022 and the year ended December 31, 2021 were as follows:
|  | Nine Months Ended September 30, 2022 |
|  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Interest Income Received |
|  | (Dollars in Thousands) |
Loans secured by real estate |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | 116 |  |  | $ | 2 |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 624 |  |  |  | 4 |  |  |  | 4 |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 1,116 |  |  |  | 38 |  |  |  | 35 |
Commercial and industrial |  |  | 872 |  |  |  | 7 |  |  |  | 4 |
Direct consumer |  |  | 19 |  |  |  | 1 |  |  |  | 1 |
Total |  | $ | 2,747 |  |  | $ | 52 |  |  | $ | 44 |
|  | Year Ended December 31, 2021 |
|  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Interest Income Received |
|  | (Dollars in Thousands) |
Loans secured by real estate |  |  |  |  |  |  |  |  |
Construction, land development and other land loans |  | $ | — |  |  | $ | — |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 773 |  |  |  | 31 |  |  |  | 31 |
Secured by multi-family residential properties |  |  | — |  |  |  | — |  |  |  | — |
Secured by non-farm, non-residential properties |  |  | 2,377 |  |  |  | 140 |  |  |  | 108 |
Commercial and industrial |  |  | 637 |  |  |  | 61 |  |  |  | 40 |
Direct consumer |  |  | 22 |  |  |  | 9 |  |  |  | 2 |
Total |  | $ | 3,809 |  |  | $ | 241 |  |  | $ | 181 |
Loans on which the accrual of interest has been discontinued amounted to $2.1 million and $2.0 million as of September 30, 2022 and December 31, 2021, respectively. If interest on those loans had been accrued, there would have been $17 thousand and $52 thousand of interest accrued for the periods ended September 30, 2022 and December 31, 2021, respectively. Interest income related to these loans for the nine months ended September 30, 2022 and the year ended December 31, 2021 was $27 thousand and $30 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 months ended September 30, 2022 and two loans with balances totaling $0.6 million modified with concessions granted during the year ended December 31, 2021. 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. The Company did not have any non-accruing loans that were previously restructured and that remained on non-accrual status as of both September 30, 2022 and December 31, 2021. For both the nine months ended September 30, 2022 and the year ended December 31, 2021, 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, 2022 and December 31, 2021, 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.
|  | September 30, 2022 |  |  | December 31, 2021 |
|  | 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 |  |  | $ | — |  |  |  | 1 |  |  | $ | 107 |  |  | $ | — |
Secured by 1-4 family residential properties |  |  | 2 |  |  |  | 59 |  |  |  | 12 |  |  |  | 2 |  |  |  | 59 |  |  |  | 12 |
Secured by non-farm, non-residential properties |  |  | 2 |  |  |  | 621 |  |  |  | 613 |  |  |  | 2 |  |  |  | 621 |  |  |  | 617 |
Commercial loans |  |  | 2 |  |  |  | 116 |  |  |  | 24 |  |  |  | 2 |  |  |  | 116 |  |  |  | 31 |
Total |  |  | 7 |  |  | $ | 903 |  |  | $ | 649 |  |  |  | 7 |  |  | $ | 903 |  |  | $ | 660 |
As of September 30, 2022 and December 31, 2021, 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 and lease 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 and lease losses. This evaluation resulted in an allowance for loan and lease losses attributable to such restructured loans of $7 thousand as of both September 30, 2022 and December 31, 2021.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI https://asc.fasb.org/subtopic&trid=2196772 + Details
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