ACCOUNTING FOR CERTAIN LOANS ACQUIRED IN A PURCHASE

Purchase Credit Impaired Loans are included in NOTE 5. LOANS AND ALLOWANCE of these Notes to Consolidated Financial Statements. As described in NOTE 5, purchased loans are recorded at the acquisition date fair value, which could result in a fair value discount or premium. Purchased loans with evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for under ASC 310-30, Loans Acquired with Deteriorated Credit Quality. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. The accretable portion of the fair value discount or premium is the difference between the expected cash flows and the net present value of expected cash flows, with such difference accreted into earnings over the term of the loans.

The carrying amount of purchased credit impaired loans as of December 31, 2018 and December 31, 2017 was $17.3 million and $25.3 million, respectively; with no required allowance for loan losses. As customer cash flow expectations improve, nonaccretable yield can be reclassified to accretable yield. The accretable amount, or income expected to be collected, and reclassifications from nonaccretable, are identified in the table below.



	Twelve Months Ended December 31, 2018			Twelve Months Ended December 31, 2017			Twelve Months Ended December 31, 2016
Beginning balance	$	2,890		$	3,950		$	5,612
Additions				1,608
Accretion	(4,118		)	(6,749		)	(6,577		)
Reclassification from nonaccretable	3,387			4,748			5,172
Disposals	(16		)	(667		)	(257		)
Ending balance	$	2,143		$	2,890		$	3,950

The following table presents loans acquired during the period ending December 31, 2017, for which it was probable at acquisition that all contractually required payments would not be collected. There were no loans acquired during the period ending December 31, 2018.



	2017
	IAB		Arlington Bank		Total
Contractually required payments receivable at acquisition date	$	14,131	$	6,183	$	20,314
Nonaccretable difference	8,352		2,891		11,243
Expected cash flows at acquisition date	5,779		3,292		9,071
Accretable difference	941		667		1,608
Basis in loans at acquisition date	$	4,838	$	2,625	$	7,463