Note

– Loans

Loans net of unearned income, deferred loan origination costs, and net premiums on acquired loans by class were as follows:

	March 31,			December 31,
	20 20			201 9
	(in thousands)
Commercial	$	169,176		$	145,551
Commercial Real Estate:
Construction		71,267			64,911
Farmland		80,579			79,118
Nonfarm nonresidential		261,807			255,459
Residential Real Estate:
Multi-family		75,525			70,950
1-4 Family		220,701			226,629
Consumer		44,814			47,790
Agriculture		36,977			35,064
Other		715			799
Subtotal		961,561			926,271
Less: Allowance for loan losses		(9,150	)		(8,376	)
Loans, net	$	952,411		$	917,895

The following table presents the activity in the allowance for loan losses by portfolio segment for the

three

months ended

March 31, 2020

and

2019:

	Commercial			Commercial Real Estate			Residential Real Estate			Consumer			Agriculture			Other			Total
	(in thousands)
March 31, 20 20 :
Beginning balance	$	1,710		$	4,080		$	1,743		$	485		$	355		$	3		$	8,376
Provision (negative provision)		339			141			220			265			87			(2	)		1,050
Loans charged off		(29	)		(29	)		(75	)		(161	)		(41	)		–			(335	)
Recoveries		5			20			21			4			8			1			59
Ending balance	$	2,025		$	4,212		$	1,909		$	593		$	409		$	2		$	9,150


March 31, 201 9 :
Beginning balance	$	1,299		$	4,676		$	2,452		$	130		$	321		$	2		$	8,880
Provision (negative provision)		143			(165	)		(204	)		193			33			–			–
Loans charged off		–			(15	)		(82	)		(180	)		(1	)		–			(278	)
Recoveries		5			2			61			16			–			–			84
Ending balance	$	1,447		$	4,498		$	2,227		$	159		$	353		$	2		$	8,686

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of

March 31, 2020:

	Commercial		Commercial Real Estate		Residential Real Estate		Consumer		Agriculture		Other		Total
	(in thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	–	$	19	$	1	$	–	$	–	$	–	$	20
Collectively evaluated for impairment		2,025		4,193		1,908		593		409		2		9,130
Total ending allowance balance	$	2,025	$	4,212	$	1,909	$	593	$	409	$	2	$	9,150

Loans:
Loans individually evaluated for impairment	$	158	$	922	$	921	$	143	$	–	$	–	$	2,144
Loans collectively evaluated for impairment		169,018		412,731		295,305		44,671		36,977		715		959,417
Total ending loans balance	$	169,176	$	413,653	$	296,226	$	44,814	$	36,977	$	715	$	961,561

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of

December 31, 2019:

	Commercial		Commercial Real Estate		Residential Real Estate		Consumer		Agriculture		Other		Total
	(in thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	3	$	37	$	2	$	–	$	–	$	–	$	42
Collectively evaluated for impairment		1,707		4,043		1,741		485		355		3		8,334
Total ending allowance balance	$	1,710	$	4,080	$	1,743	$	485	$	355	$	3	$	8,376


Loans:
Loans individually evaluated for impairment	$	74	$	1,064	$	892	$	98	$	42	$	–	$	2,170
Loans collectively evaluated for impairment		145,477		398,424		296,687		47,692		35,022		799		924,101
Total ending loans balance	$	145,551	$	399,488	$	297,579	$	47,790	$	35,064	$	799	$	926,271

Impaired Loans

Impaired loans include restructured loans and loans on nonaccrual or classified as doubtful, whereby collection of the total amount is improbable, or loss, whereby all or a portion of the loan has been written off or a specific allowance for loss had been provided.

The following tables present information related to loans individually evaluated for impairment by class of loans as of

March 31, 2020

and

December 31, 2019

and for the

three

months ended

March 31, 2020

and

2019:

	As of March 31, 20 20						T hree Months Ended March 31, 20 20
	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
	(in thousands)
With No Related Allowance Recorded:
Commercial	$	265	$	158	$	—	$	104	$	—	$	—
Commercial real estate:
Construction		—		—		—		—		—		—
Farmland		414		299		—		296		10		10
Nonfarm nonresidential		1,043		480		—		485		8		—
Residential real estate:
Multi-family		—		—		—		—		—		—
1-4 Family		1,862		846		—		795		3		3
Consumer		354		143		—		121		1		1
Agriculture		297		—		—		21		—		—
Other		—		—		—		—		—		—
Subtotal		4,235		1,926		—		1,822		22		14

With An Allowance Recorded:
Commercial		—		—		—		12		—		—
Commercial real estate:
Construction		—		—		—		—		—		—
Farmland		143		143		19		212		2		—
Nonfarm nonresidential		—		—		—		—		—		—
Residential real estate:
Multi-family		—		—		—		—		—		—
1-4 Family		75		75		1		111		2		—
Consumer		—		—		—		—		—		—
Agriculture		—		—		—		—		—		—
Other		—		—		—		—		—		—
Subtotal		218		218		20		335		4		—
Total	$	4,453	$	2,144	$	20	$	2,157	$	26	$	14

	As of December 31, 201 9						T hree Months Ended March 31, 201 9
	Unpaid Principal Balance		Recorded Investment		Allowance For Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
	(in thousands)
With No Related Allowance Recorded:
Commercial	$	138	$	50	$	—	$	52	$	—	$	—
Commercial real estate:
Construction		—		—		—		—		—		—
Farmland		380		293		—		98		5		5
Nonfarm nonresidential		1,057		489		—		256		3		3
Residential real estate:
Multi-family		—		—		—		—		—		—
1-4 Family		1,679		745		—		1,544		22		22
Consumer		309		98		—		14		—		—
Agriculture		304		42		—		32		—		—
Other		—		—		—		—		—		—
Subtotal		3,867		1,717		—		1,996		30		30
With An Allowance Recorded:
Commercial		24		24		3		—		—		—
Commercial real estate:
Construction		—		—		—		—		—		—
Farmland		282		282		37		158		—		—
Nonfarm nonresidential		—		—		—		—		—		—
Residential real estate:
Multi-family		—		—		—		—		—		—
1-4 Family		183		147		2		719		11		—
Consumer		—		—		—		—		—		—
Agriculture		—		—		—		—		—		—
Other		—		—		—		—		—		—
Subtotal		489		453		42		877		11		—
Total	$	4,356	$	2,170	$	42	$	2,873	$	41	$	30

Troubled Debt Restructuring

A troubled debt restructuring (TDR) occurs when the Bank has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty. The Bank’s TDRs typically involve a reduction in interest rate, a deferral of principal for a stated period of time, or an interest only period. All TDRs are considered impaired and the Bank has allocated reserves for these loans to reflect the present value of the concessionary terms granted to the borrower.

The following table presents the types of TDR loan modifications by portfolio segment outstanding as of

March 31, 2020

and

December 31, 2019:

	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
	(in thousands)
March 31, 20 20
Commercial Real Estate:
Nonfarm nonresidential	$	391	$	—	$	391
Residential Real Estate:
1-4 Family		75		—		75
Total TDRs	$	466	$	—	$	466

	TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms		Total TDRs
	(in thousands)
December 31, 201 9
Commercial Real Estate:
Nonfarm nonresidential	$	400	$	—	$	400
Residential Real Estate:
1-4 Family		75		—		75
Total TDRs	$	475	$	—	$	475

March 31, 2020

and

December 31, 2019,

100%

of the Company’s TDRs were performing according to their modified terms. The Company allocated

$1,000

in reserves to borrowers whose loan terms have been modified in TDRs as of

March 31, 2020

and

December 31, 2019.

The Company has committed to lend

additional amounts as of

March 31, 2020

and

December 31, 2019

to borrowers with outstanding loans classified as TDRs.

Management periodically reviews renewals and modifications of previously identified TDRs, for which there was

principal forgiveness, to consider if it is appropriate to remove the TDR classification. If the borrower is

longer experiencing financial difficulty and the renewal/modification did

not

contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate based upon current underwriting, the TDR classification is removed as the borrower has complied with the terms of the loan at the date of renewal/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the renewal/modification. In this instance, the TDR was originally considered a restructuring in a prior year as a result of a modification with an interest rate that was

not

commensurate with the risk of the underlying loan. Additionally, TDR classification can be removed in circumstances in which the Company performs a non-concessionary re-modification of the loan at terms that were considered to be at market for loans with comparable risk. Management expects the borrower will continue to perform under the re-modified terms based on the borrower’s past history of performance.

TDR loan modifications occurred during the

three

months ended

March 31, 2020

March 31, 2019.

During the

first

three

months of

2020

and

2019,

TDRs defaulted on their restructured loan within the

-month period following the loan modification. A default is considered to have occurred once the TDR is past due

days or more or it has been placed on nonaccrual.

Non

performing Loans

Non-performing loans include impaired loans and smaller balance homogeneous loans, such as residential mortgage and consumer loans, that are collectively evaluated for impairment. The following table presents the recorded investment in nonaccrual and loans past due

days and still on accrual by class of loan as of

March 31, 2020,

and

December 31, 2019:

	Nonaccrual				Loans Past Due 90 Days And Over Still Accruing
	March 31 , 20 20		December 31, 201 9		March 31 , 20 20		December 31, 201 9
	(in thousands)
Commercial	$	158	$	50	$	—	$	—
Commercial Real Estate:
Construction		—		—		—		—
Farmland		298		431		—		—
Nonfarm nonresidential		89		90		—		—
Residential Real Estate:
Multi-family		—		—		—		—
1-4 Family		812		817		—		—
Consumer		143		98		—		—
Agriculture		—		42		—		—
Other		—		—		—		—
Total	$	1,500	$	1,528	$	—	$	—

The following table presents the aging of the recorded investment in past due loans as of

March 31, 2020

and

December 31, 2019:

	30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days And Over Past Due		Nonaccrual		Total Past Due And Nonaccrual
	(in thousands)
March 31, 20 20
Commercial	$	—	$	1	$	—	$	158	$	159
Commercial Real Estate:
Construction		—		—		—		—		—
Farmland		81		—		—		298		379
Nonfarm nonresidential		19		41		—		89		149
Residential Real Estate:
Multi-family		—		—		—		—		—
1-4 Family		961		147		—		812		1,920
Consumer		97		56		—		143		296
Agriculture		—		3		—		—		3
Other		—		—		—		—		—
Total	$	1,158	$	248	$	—	$	1,500	$	2,906

	30 – 59 Days Past Due		60 – 89 Days Past Due		90 Days And Over Past Due		Nonaccrual		Total Past Due And Nonaccrual
	(in thousands)
December 31, 201 9
Commercial	$	14	$	3	$	—	$	50	$	67
Commercial Real Estate:
Construction		—		—		—		—		—
Farmland		274		—		—		431		705
Nonfarm nonresidential		206		—		—		90		296
Residential Real Estate:
Multi-family		—		—		—		—		—
1-4 Family		1,162		503		—		817		2,482
Consumer		91		164		—		98		353
Agriculture		—		—		—		42		42
Other		—		—		—		—		—
Total	$	1,747	$	670	$	—	$	1,528	$	3,945

Credit Quality Indicators

Management categorizes all loans into risk categories at origination based upon original underwriting. Thereafter, management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends. Loans are analyzed through internal and external loan review processes and are routinely analyzed through credit administration processes which classify the loans as to credit risk. The following definitions are used for risk ratings:

Watch –

Loans

classified as watch are those loans which have or

may

experience a potentially adverse development which necessitates increased monitoring.

Special Mention –

Loans classified as special mention do

not

have all of the characteristics of substandard or doubtful loans. They have

one

or more deficiencies which warrant special attention and which corrective action, such as accelerated collection practices,

may

remedy.

Substandard –

Loans classified as substandard are those loans with clear and defined weaknesses such as a highly leveraged position, unfavorable financial ratios, uncertain repayment sources or poor financial condition which

may

jeopardize the repayment of the debt as contractually agreed. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are

not

corrected.

Doubtful

– Loans classified as doubtful are those loans which have characteristics similar to substandard loans but with an increased risk that collection or liquidation in full is highly questionable and improbable.

As of

March 31, 2020,

and

December 31, 2019,

and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	Pass		Watch		Special Mention		Substandard		Doubtful		Total
	(in thousands)
March 31, 20 20
Commercial	$	146,310	$	20,903	$	—	$	1,963	$	—	$	169,176
Commercial Real Estate:
Construction		71,267		—		—		—		—		71,267
Farmland		73,202		6,568		—		809		—		80,579
Nonfarm nonresidential		252,982		7,152		—		1,673		—		261,807
Residential Real Estate:
Multi-family		75,525		—		—		—		—		75,525
1-4 Family		214,559		3,683		—		2,459		—		220,701
Consumer		44,640		3		—		171		—		44,814
Agriculture		36,785		155		—		37		—		36,977
Other		715		—		—		—		—		715
Total	$	915,985	$	38,464	$	—	$	7,112	$	—	$	961,561

	Pass		Watch		Special Mention		Substandard		Doubtful		Total
	(in thousands)
December 31, 201 9
Commercial	$	130,312	$	11,280	$	—	$	3,959	$	—	$	145,551
Commercial Real Estate:
Construction		64,911		—		—		—		—		64,911
Farmland		71,503		6,663		—		952		—		79,118
Nonfarm nonresidential		245,995		6,986		—		2,478		—		255,459
Residential Real Estate:
Multi-family		70,950		—		—		—		—		70,950
1-4 Family		221,727		2,420		—		2,482		—		226,629
Consumer		47,657		5		—		128		—		47,790
Agriculture		34,853		168		—		43		—		35,064
Other		799		—		—		—		—		799
Total	$	888,707	$	27,522	$	—	$	10,042	$	—	$	926,271