Note

Loans Receivable

The major classifications of loans in the consolidated balance sheets at

September 30, 2018

and

December 31, 2017

were as follows:

(Dollars In Thousands)	September 30, 2018			December 31, 2017
Construction loans:
Residential	$	19,062		$	15,221
Land acquisition, development & commercial		26,048			35,601
Real estate:
Residential		141,728			121,649
Commercial		187,894			173,999
Commercial, industrial & agricultural		54,782			61,129
Equity lines		28,675			28,835
Consumer		8,003			7,693
Overdrafts		151			68
Total		466,343			444,195
Less allowance for loan losses		(3,947	)		(3,758	)
Loans, net	$	462,396		$	440,437

The past due and nonaccrual status of loans as of

September 30, 2018

was as follows:

(Dollars In Thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Nonaccrual Loans
Construction loans:
Residential	$	−	$	−	$	−	$	−	$	19,062	$	19,062	$	−
Land acquisition, development & commercial		253		−		−		253		25,795		26,048		124
Real estate:
Residential		870		73		−		943		140,785		141,728		546
Commercial		136		83		−		219		187,675		187,894		468
Commercial, industrial & agricultural		28		46		−		74		54,859		54,933		169
Equity lines		303		104		−		407		28,268		28,675		147
Consumer		2		−		−		2		8,001		8,003		−
Total	$	1,592	$	306	$	−	$	1,898	$	464,445	$	466,343	$	1,454

The past-due and nonaccrual status of loans as of

December 31, 2017

was as follows:

(Dollars In Thousands)	30-59 Days Past-Due		60-89 Days Past-Due		90 Days or More Past-Due		Total Past- Due		Current		Total Loans		Nonaccrual Loans
Construction:
Residential	$	–	$	–	$	–	$	–	$	15,221	$	15,221	$	–
Land acquisition, development & commercial		43		–		274		317		35,284		35,601		274
Real Estate:
Residential		589		870		546		2,005		119,644		121,649		173
Commercial		278		19		209		506		173,493		173,999		209
Commercial, industrial & agricultural		130		143		392		665		60,532		61,197		403
Equity lines		544		49		–		593		28,242		28,835		49
Consumer		17		2		36		55		7,638		7,693		36
Total	$	1,601	$	1,083	$	1,457	$	4,141	$	440,054	$	444,195	$	1,144

There were

loans which were past due

ninety

days or more and still accruing interest as of

September 30, 2018.

There was

one

loan, totaling

$373

thousand, which was past due

ninety

days or more and still accruing interest at

December 31, 2017.

Impaired loans, which include TDR’s of

$4.0

million, and the related allowance at

September 30, 2018,

were as follows:

September 30, 2018 With no related allowance: (Dollars In Thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance Total Loans		Interest Income Recognized
Construction loans:
Residential	$	−	$	−	$	−	$	−	$	−
Land acquisition, development & commercial		43		43		−		43		1
Real estate:
Residential		667		667		−		683		16
Commercial		4,264		4,264		−		4,367		120
Commercial, industrial & agricultural		180		180		−		185		2
Equity lines		298		298		−		298		10
Consumer		−		−		−		−		−
Total loans with no allowance	$	5,452	$	5,452	$	−	$	5,576	$	149

September

30, 2018

With an allowance recorded:

(Dollars In Thousands)

Recorded

Investment

in Loans

Unpaid

Principal

Balance

Allowance

Average

Balance

Total

Loans

Interest

Income

Recognized

Construction loans:

Residential

−

Land acquisition, development & commercial

−

Real estate:

Residential

−

Commercial

−

Commercial, industrial & agricultural

−

Equity lines

−

Consumer

−

Total loans with an allowance

−

Impaired loans, which include TDRs of

$4.1

million, and the related allowance at

December 31, 2017,

were as follows:

December 31, 2017 With no related allowance: (Dollars In Thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance Total Loans		Interest Income Recognized
Construction:
Residential	$	−	$	−	$	–	$	−	$	−
Land acquisition, development & commercial		181		331		–		331		10
Real Estate:
Residential		360		640		–		638		30
Commercial		4,098		4,273		–		4,166		161
Commercial, industrial & agricultural		379		379		–		379		15
Equity lines		299		299		–		300		14
Consumer		−		−		–		−		−
Total loans with no allowance	$	5,317	$	5,922	$	–	$	5,814	$	230

December 31, 2017

With an allowance recorded:

(Dollars In Thousands)

Recorded

Investment

in Loans

Unpaid

Principal

Balance

Allowance

Average

Balance

Total Loans

Interest

Income

Recognized

Construction:

Residential

−

Land acquisition, development & commercial

−

Real Estate:

Residential

−

Commercial

−

Commercial, industrial & agricultural

−

Equity lines

−

Consumer

−

Total loans with an allowance

−

Troubled Debt Restructurings

September 30, 2018,

four

loans totaling

$4.0

million were classified as troubled debt restructurings (“TDRs”). This compares to

four

loans totaling

$4.1

million at

December 31, 2017.

Two of the

four

loans totaling

$3.8

million were performing in accordance with their restructured terms and were

not

on nonaccrual status at

September

30,

2018.

The other

two

loans to

one

borrower totaled

$200

thousand and were on nonaccrual status at

September

30,

2018.

loans were modified in a TDR during the

first

nine

months of

2018

2017.

Management considers troubled debt restructurings and subsequent defaults in restructured loans in the determination of the adequacy of the Company’s allowance for loan losses. When identified as a TDR, a loan is evaluated for potential loss based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs if the loan is collateral dependent. Loans identified as TDRs frequently are on non-accrual status at the time of the restructuring and, in some cases, partial charge-offs

may

have already been taken against the loan and a specific allowance

may

have already been established for the loan. As a result of any modification as a TDR, if a specific reserve is associated with the loan it

may

be increased. Additionally, loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future defaults. If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment. As a result, any specific allowance

may

be increased, adjustments

may

be made in the allocation of the total allowance balance, or partial charge-offs

may

be taken to further write-down the carrying value of the loan. Management exercises significant judgment in developing estimates for potential losses associated with TDRs.