Note

Loans Receivable

The major classifications of loans in the consolidated balance sheets at

December 31, 2018

and

2017

were as follows:

(Dollars in Thousands)	December 31,
	2018			2017
Construction:
Residential	$	17,232		$	15,221
Land acquisition, development & commercial		28,903			35,601
Real Estate:
Residential		143,385			121,649
Commercial		184,989			173,999
Commercial, industrial & agricultural		60,183			61,129
Equity lines		28,969			28,835
Consumer		7,719			7,693
Overdrafts		82			68
Total loans		471,462			444,195
Less allowance for loan losses		(3,992	)		(3,758	)
Loans, net	$	467,470		$	440,437

The past-due and nonaccrual status of loans as of

December 31, 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:
Residential	$	507	$	–	$	–	$	507	$	16,725	$	17,232	$	–
Land acquisition, development & commercial		243		–		–		243		28,660		28,903		125
Real Estate:
Residential		513		–		–		513		142,872		143,385		532
Commercial		856		–		–		856		184,133		184,989		463
Commercial, industrial & agricultural		206		–		–		206		60,059		60,265		162
Equity lines		398		–		–		398		28,571		28,969		400
Consumer		21		3		–		24		7,695		7,719		1
Total	$	2,744	$	3	$	–	$	2,747	$	468,715	$	471,462	$	1,683

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

residential real estate loans that were past due

ninety

days or more and still accruing interest at

December 31, 2018.

There was

one

residential real estate loan, totaling

$373

thousand that was past due

ninety

days or more and still accruing interest at

December 31, 2017.

Impaired loans, which include TDRs of

$4.0

million, and the related allowance at

December 31, 2018,

were as follows:

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		43		43		–		43		−
Real Estate:
Residential		538		538		–		557		12
Commercial		4,228		4,228		–		4,350		155
Commercial, industrial & agricultural		63		63		–		66		−
Equity lines		210		298		–		299		−
Consumer		−		−		–		−		−
Total loans with no allowance	$	5,082	$	5,170	$	–	$	5,315	$	167

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

−

Impaired loans, which include TDRs of

$4.1

million, and the related allowance at

December 31, 2017,

were as follows:

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

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

December 31, 2018,

four

loans totaling

$4.0

million were classified as troubled debt restructurings (“TDRs”). Two of the

four

loans totaling

$3.8

million were performing in accordance with their restructured terms and were

not

on nonaccrual status at year end

2018.

The other

two

loans from

one

borrower totaled

$195

thousand and were on nonaccrual status at year end

2018.

All

four

TDRs were current with their restructured terms at

December 31, 2018.

December 31, 2017,

four

loans totaling

$4.1

million were classified as troubled debt restructurings (“TDRs”). Two of the

four

loans totaling

$3.9

million were performing in accordance with their restructured terms and were

not

on nonaccrual status at year end

2017.

The other

two

loans from

one

borrower totaled

$219

thousand and were on nonaccrual status at year end

2017.

All

four

TDRs were current with their restructured terms at

December 31, 2017.

There was

valuation allowance related to total TDRs at

December 31, 2018

December 31, 2017.

loans were modified in a TDR during the years ended

December 31, 2018

December 31, 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, the specific reserve associated with the loan

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.