5.	LOANS AND ALLOWANCE FOR LOAN LOSSES

Portfolio Segments

The Company has divided the loan and lease portfolio into

nine

portfolio segments, each with different risk characteristics described as follows:

Construction, land development and other land loans

– Commercial construction, land and land development loans include the development of residential housing projects, loans for the development of commercial and industrial use property and loans for the purchase and improvement of raw land. 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

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

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.

Other real estate loans

– Other real estate loans are loans primarily for agricultural production, secured by mortgages on farmland.

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.

Consumer loans

– 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 has an established relationship through its branch network to provide financing for the retail products sold if applicable underwriting standards are met.

Indirect sales

– This portfolio segment includes loans secured by collateral that is purchased by consumers at retail stores with whom ALC has an established centrally-managed relationship to provide financing for the retail products sold if applicable underwriting standards are met.

As of

December 31, 2018

and

2017,

the composition of the loan portfolio by reporting segment and portfolio segment was as follows:

	December 31, 2018
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	41,340	$	—	$	41,340
Secured by 1-4 family residential properties		102,971		7,785		110,756
Secured by multi-family residential properties		23,009		—		23,009
Secured by non-farm, non-residential properties		156,162		—		156,162
Other		1,308		—		1,308
Commercial and industrial loans (1)		85,779		—		85,779
Consumer loans:
Consumer		6,927		31,656		38,583
Branch retail		—		28,324		28,324
Indirect sales		—		40,609		40,609
Total loans		417,496		108,374		525,870
Less: Unearned interest, fees and deferred cost		331		5,617		5,948
Allowance for loan losses		2,735		2,320		5,055
Net loans	$	414,430	$	100,437	$	514,867

(

)

Includes equipment financing leases.

	December 31, 2017
	Bank		ALC		Total
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	26,143	$	—	$	26,143
Secured by 1-4 family residential properties		34,272		10,801		45,073
Secured by multi-family residential properties		16,579		—		16,579
Secured by non-farm, non-residential properties		105,133		—		105,133
Other		190		—		190
Commercial and industrial loans		69,969		—		69,969
Consumer loans:
Consumer		5,217		34,083		39,300
Branch retail		—		26,434		26,434
Indirect sales		—		28,637		28,637
Total loans		257,503		99,955		357,458
Less: Unearned interest, fees and deferred cost		374		6,189		6,563
Allowance for loan losses		2,447		2,327		4,774
Net loans	$	254,682	$	91,439	$	346,121

The Company makes commercial, real estate and installment loans to its customers. Although the Company has a diversified loan portfolio,

63.2%

and

54.0%

of the portfolio was concentrated in loans secured by real estate as of

December 31, 2018

and

2017,

respectively.

Loans with a carrying value of

$27.0

million were pledged as collateral to secure FHLB borrowings as of

December 31, 2018.

loans were pledged as collateral as of

December 31, 2017.

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 as of

December 31, 2018

and

2017

were

$0.8

million and

$0.5

million, respectively. During the year ended

December 31, 2018,

there were

$0.5

million of new loans to these parties, and repayments by active related parties were

$0.2

million. During the year ended

December 31, 2017,

there were

new loans to these related parties, and repayments by active related parties were

$11

thousand.

Acquired Loans

The Company acquired loans during the year ended

December 31, 2018.

At acquisition, certain acquired loans evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually-required payments would

not

be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will

not

be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date

may

include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchased credit impaired loans are accounted for under ASC

310

30,

Accounting for Purchased Loans with Deteriorated Credit Quality

, and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is

not

carried over and recorded at the acquisition date. On the date of acquisition, the outstanding principal balance and carrying value of PCI loans accounted for under ASC

310

were

$2.9

and

$2.8

million, respectively.

The carrying amount of these loans is included in the balance sheet amount of loans receivable at

December 31, 2018.

The amount of these loans is shown below:

	December 31, 2018
	(Dollars in Thousands)
Real estate loans:
Construction, land development and other land loans	$	75
Secured by 1-4 family residential properties		492
Outstanding balance	$	567
Carrying amount, net of fair value adjustment of $70 thousand at December 31, 2018	$	497

The Company did

not

recognize any accretable yield, or income expected to be collected, associated with these loans. Additionally, during the year ended

December 31, 2018,

the Company did

not

increase or reverse the allowance for loan losses related to these purchased credit impaired loans.

Allowance for Loan Losses

The following tables present changes in the allowance for loan losses during the years ended

December 31, 2018

and

2017

and the related loan balances by loan portfolio segment and loan type as of

December 31, 2018

and

2017

	Bank
	Year Ended December 31, 2018
	Construction, Land		1-4 Family			Real Estate Multi-Family		Non- Farm N on-Residential		Other			Commercial			Consumer			Branch Retail		Indirect Sales		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	203	$	238		$	116	$	777	$	2		$	1,049		$	62		$	—	$	—	$	2,447
Charge-offs		—		(9	)		—		—		—			(3	)		(4	)		—		—		(16	)
Recoveries		—		51			—		4		—			11			23			—		—		89
Provision		37		42			12		50		(1	)		81			(6	)		—		—		215
Ending balance	$	240	$	322		$	128	$	831	$	1		$	1,138		$	75		$	—	$	—	$	2,735

Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	28	$	50		$	—	$	1	$	—		$	67		$	20		$	—	$	—	$	166
Collectively evaluated for impairment		212		272			128		830		1			1,071			55			—		—		2,569
Loans acquired with deteriorated credit quality		—		—			—		—		—			—			—			—		—		—
Total allowance for loan losses	$	240	$	322		$	128	$	831	$	1		$	1,138		$	75		$	—	$	—	$	2,735
Ending balance of loans receivable:
Individually evaluated for impairment	$	153	$	57		$	—	$	511	$	—		$	67		$	43		$	—	$	—	$	831
Collectively evaluated for impairment		41,114		102,490			23,009		155,651		1,308			85,712			6,884			—		—		416,168
Loans acquired with deteriorated credit quality		73		424			—		—		—			—			—			—		—		497
Total loans receivable	$	41,340	$	102,971		$	23,009	$	156,162	$	1,308		$	85,779		$	6,927		$	—	$	—	$	417,496

	ALC
	Year Ended December 31, 2018
	Construction, Land		1-4 Family			Real Estate Multi-Family		Non- Farm Non-Residential		Other		Commercial		Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	52		$	—	$	—	$	—	$	—	$	1,653		$	393		$	229		$	2,327
Charge-offs		—		(92	)		—		—		—		—		(2,478	)		(415	)		(116	)		(3,101	)
Recoveries		—		23			—		—		—		—		545			113			6			687
Provision		—		41			—		—		—		—		2,004			336			26			2,407
Ending balance	$	—	$	24		$	—	$	—	$	—	$	—	$	1,724		$	427		$	145		$	2,320

Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	—		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—
Collectively evaluated for impairment		—		24			—		—		—		—		1,724			427			145			2,320
Total allowance for loan losses	$	—	$	24		$	—	$	—	$	—	$	—	$	1,724		$	427		$	145		$	2,320
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	211		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	211
Collectively evaluated for impairment		—		7,574			—		—		—		—		31,656			28,324			40,609			108,163
Total loans receivable	$	—	$	7,785		$	—	$	—	$	—	$	—	$	31,656		$	28,324		$	40,609		$	108,374

	Bank and ALC
	Year Ended December 31, 2018
	Construction, Land		1-4 Family			Real Estate Multi-Family		Non- Farm Non-Residential		Other			Commercial			Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	203	$	290		$	116	$	777	$	2		$	1,049		$	1,715		$	393		$	229		$	4,774
Charge-offs		—		(101	)		—		—		—			(3	)		(2,482	)		(415	)		(116	)		(3,117	)
Recoveries		—		74			—		4		—			11			568			113			6			776
Provision		37		83			12		50		(1	)		81			1,998			336			26			2,622
Ending balance	$	240	$	346		$	128	$	831	$	1		$	1,138		$	1,799		$	427		$	145		$	5,055

Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	28	$	50		$	—	$	1	$	—		$	67		$	20		$	—		$	—		$	166
Collectively evaluated for impairment		212		296			128		830		1			1,071			1,779			427			145			4,889
Loans acquired with deteriorated credit quality		—		—			—		—		—			—			—			—			—			—
Total allowance for loan losses	$	240	$	346		$	128	$	831	$	1		$	1,138		$	1,799		$	427		$	145		$	5,055
Ending balance of loans receivable:
Individually evaluated for impairment	$	153	$	268		$	—	$	511	$	—		$	67		$	43		$	—		$	—		$	1,042
Collectively evaluated for impairment		41,114		110,064			23,009		155,651		1,308			85,712			38,540			28,324			40,609			524,331
Loans acquired with deteriorated credit quality		73		424			—		—		—			—			—			—			—			497
Total loans receivable	$	41,340	$	110,756		$	23,009	$	156,162	$	1,308		$	85,779		$	38,583		$	28,324		$	40,609		$	525,870

	Bank
	Year Ended December 31, 2017
	Construction, Land			1-4 Family			Real Estate Multi-Family		Non- Farm Non-Residential			Other		Commercial			Consumer			Branch Retail		Indirect Sales		Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	535		$	304		$	88	$	903		$	2	$	527		$	50		$	—	$	—	$	2,409
Charge-offs		—			—			—		—			—		(16	)		(63	)		—		—		(79	)
Recoveries		—			103			—		69			—		19			56			—		—		247
Provision		(332	)		(169	)		28		(195	)		—		519			19			—		—		(130	)
Ending balance	$	203		$	238		$	116	$	777		$	2	$	1,049		$	62		$	—	$	—	$	2,447

Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—		$	5		$	—	$	21		$	—	$	72		$	—		$	—	$	—	$	98
Collectively evaluated for impairment		203			233			116		756			2		977			62			—		—		2,349
Total allowance for loan losses	$	203		$	238		$	116	$	777		$	2	$	1,049		$	62		$	—	$	—	$	2,447
Ending balance of loans receivable:
Individually evaluated for impairment	$	—		$	187		$	—	$	532		$	—	$	72		$	—		$	—	$	—	$	791
Collectively evaluated for impairment		26,143			34,085			16,579		104,601			190		69,897			5,217			—		—		256,712
Total loans receivable	$	26,143		$	34,272		$	16,579	$	105,133		$	190	$	69,969		$	5,217		$	—	$	—	$	257,503

	ALC
	Year Ended December 31, 2017
	Construction, Land		1-4 Family			Real Estate Multi-Family		Non- Farm Non-Residential		Other		Commercial		Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	—	$	107		$	—	$	—	$	—	$	—	$	1,717		$	467		$	156		$	2,447
Charge-offs		—		(28	)		—		—		—		—		(2,297	)		(538	)		(49	)		(2,912	)
Recoveries		—		32			—		—		—		—		545			98			—			675
Provision		—		(59	)		—		—		—		—		1,688			366			122			2,117
Ending balance	$	—	$	52		$	—	$	—	$	—	$	—	$	1,653		$	393		$	229		$	2,327

Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—	$	—		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—
Collectively evaluated for impairment		—		52			—		—		—		—		1,653			393			229			2,327
Total allowance for loan losses	$	—	$	52		$	—	$	—	$	—	$	—	$	1,653		$	393		$	229		$	2,327
Ending balance of loans receivable:
Individually evaluated for impairment	$	—	$	—		$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—
Collectively evaluated for impairment		—		10,801			—		—		—		—		34,083			26,434			28,637			99,955
Total loans receivable	$	—	$	10,801		$	—	$	—	$	—	$	—	$	34,083		$	26,434		$	28,637		$	99,955

	Bank and ALC
	Year Ended December 31, 2017
	Construction, Land			1-4 Family			Real Estate Multi-Family		Non- Farm Non-Residential			Other		Commercial			Consumer			Branch Retail			Indirect Sales			Total
	(Dollars in Thousands)
Allowance for loan losses:
Beginning balance	$	535		$	411		$	88	$	903		$	2	$	527		$	1,767		$	467		$	156		$	4,856
Charge-offs		—			(28	)		—		—			—		(16	)		(2,360	)		(538	)		(49	)		(2,991	)
Recoveries		—			135			—		69			—		19			601			98			—			922
Provision		(332	)		(228	)		28		(195	)		—		519			1,707			366			122			1,987
Ending balance	$	203		$	290		$	116	$	777		$	2	$	1,049		$	1,715		$	393		$	229		$	4,774

Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	—		$	5		$	—	$	21		$	—	$	72		$	—		$	—		$	—		$	98
Collectively evaluated for impairment		203			285			116		756			2		977			1,715			393			229			4,676
Total allowance for loan losses	$	203		$	290		$	116	$	777		$	2	$	1,049		$	1,715		$	393		$	229		$	4,774
Ending balance of loans receivable:
Individually evaluated for impairment	$	—		$	187		$	—	$	532		$	—	$	72		$	—		$	—		$	—		$	791
Collectively evaluated for impairment		26,143			44,886			16,579		104,601			190		69,897			39,300			26,434			28,637			356,667
Total loans receivable	$	26,143		$	45,073		$	16,579	$	105,133		$	190	$	69,969		$	39,300		$	26,434		$	28,637		$	357,458

Credit Quality Indicators

The Bank utilizes a credit grading system that provides a uniform framework for establishing and monitoring credit risk in the loan portfolio. Under this system, each loan is graded based on pre-determined risk metrics and categorized into

one

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 Bank 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 Bank’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Bank 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.

	●	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 Bank 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 affected in the future.

At ALC, because the loan portfolio is more uniform in nature, each loan is categorized into

one

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

December 31, 2018:

	Bank
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	40,200	$	914	$	226	$	—	$	41,340
Secured by 1-4 family residential properties		100,485		154		2,332		—		102,971
Secured by multi-family residential properties		23,009		—		—		—		23,009
Secured by non-farm, non-residential properties		153,077		1,996		1,089		—		156,162
Other		1,308		—		—		—		1,308
Commercial and industrial loans		83,261		1,977		541		—		85,779
Consumer loans		6,848		—		79		—		6,927
Total	$	408,188	$	5,041	$	4,267	$	—	$	417,496

The above amounts include purchased credit impaired loans. As of

December 31, 2018,

$0.5

million of purchased credit impaired loans were rated “Substandard.”

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	7,657	$	128	$	7,785
Consumer loans:
Consumer		30,826		830		31,656
Branch retail		28,171		153		28,324
Indirect sales		40,491		118		40,609
Total	$	107,145	$	1,229	$	108,374

The tables below illustrate the carrying amount of loans by credit quality indicator as of

December

31,

2017:

	Bank
	Pass 1-5		Special Mention 6		Substandard 7		Doubtful 8		Total
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	25,872	$	84	$	187	$	—	$	26,143
Secured by 1-4 family residential properties		33,278		339		655		—		34,272
Secured by multi-family residential properties		16,579		—		—		—		16,579
Secured by non-farm, non-residential properties		99,847		4,766		520		—		105,133
Other		190		—		—		—		190
Commercial and industrial loans		67,689		2,066		214		—		69,969
Consumer loans		5,155		—		62		—		5,217
Total	$	248,610	$	7,255	$	1,638	$	—	$	257,503

	ALC
	Performing		Nonperforming		Total
	(Dollars in Thousands)
Loans secured by real estate:
Secured by 1-4 family residential properties	$	10,495	$	306	$	10,801
Consumer loans:
Consumer		32,933		1,150		34,083
Branch retail		26,121		313		26,434
Indirect sales		28,490		147		28,637
Total	$	98,039	$	1,916	$	99,955

The following tables provide an aging analysis of past due loans by class as of

December 31,

2018:

	Bank
	As of December 31, 2018
	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	$	415	$	582	$	74	$	1,071	$	40,269	$	41,340	$	—
Secured by 1-4 family residential properties		991		36		539		1,566		101,405		102,971		—
Secured by multi-family residential properties		—		—		—		—		23,009		23,009		—
Secured by non-farm, non-residential properties		458		13		—		471		155,691		156,162		—
Other		—		—		—		—		1,308		1,308		—
Commercial and industrial loans		2,608		30		384		3,022		82,757		85,779		—
Consumer loans		80		—		4		84		6,843		6,927		—
Total	$	4,552	$	661	$	1,001	$	6,214	$	411,282	$	417,496	$	—

The above amounts include purchased credit impaired loans. As of

December 31, 2018,

$0.3

million were

or more days past due.

	ALC
	As of December 31, 2018
	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	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		60		65		128		253		7,532		7,785		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans:
Consumer		563		354		830		1,747		29,909		31,656		—
Branch retail		164		98		153		415		27,909		28,324
Indirect sales		184		79		118		381		40,228		40,609		—
Total	$	971	$	596	$	1,229	$	2,796	$	105,578	$	108,374	$	—

The following tables provide an aging analysis of past due loans by class as of

December 31, 2017:

	Bank
	As of December 31, 2017
	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	$	—	$	—	$	—	$	—	$	26,143	$	26,143	$	—
Secured by 1-4 family residential properties		227		—		52		279		33,993		34,272		—
Secured by multi-family residential properties		—		—		—		—		16,579		16,579		—
Secured by non-farm, non-residential properties		13		—		—		13		105,120		105,133		—
Other		—		—		—		—		190		190		—
Commercial and industrial loans		70		—		—		70		69,899		69,969		—
Consumer loans		42		—		—		42		5,175		5,217		—
Total	$	352	$	—	$	52	$	404	$	257,099	$	257,503	$	—

	ALC
	As of December 31, 2017
	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	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Secured by 1-4 family residential properties		61		23		290		374		10,427		10,801		—
Secured by multi-family residential properties		—		—		—		—		—		—		—
Secured by non-farm, non-residential properties		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—
Commercial and industrial loans		—		—		—		—		—		—		—
Consumer loans:
Consumer		490		323		1,111		1,924		32,159		34,083		—
Branch retail		120		164		286		570		25,864		26,434
Indirect sales		161		66		147		374		28,263		28,637		—
Total	$	832	$	576	$	1,834	$	3,242	$	96,713	$	99,955	$	—

The following table provides an analysis of non-accruing loans by class as of

December 31, 2018

and

2017:

	Loans on Non-Accrual Status
	December 31, 2018		December 31, 2017
	(Dollars in Thousands)
Loans secured by real estate:
Construction, land development and other land loans	$	73	$	—
Secured by 1-4 family residential properties		1,097		501
Secured by multi-family residential properties		—		—
Secured by non-farm, non-residential properties		14		29
Commercial and industrial loans		424		12
Consumer loans:
Consumer		879		1,173
Branch retail		153		285
Indirect sales		119		148
Total loans	$	2,759	$	2,148

As of

December 31, 2018,

purchased credit impaired loans comprised

$0.5

million of nonaccrual loans.

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

days or more past due are identified for impairment analysis. As of

December 31, 2018,

there were

$0.2

million of impaired loans with

related allowance recorded at ALC. There were

impaired loans at ALC as of

December 31, 2017.

Impaired loans, or portions thereof, are charged off when deemed uncollectable.

As of

December 31, 2018,

the carrying amount of impaired loans consisted of the following:

	December 31, 2018
	Carrying Amount		Unpaid Principal Balance		Related Allowances
Impaired loans with no related allowance recorded	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	73	$	73	$	—
Secured by 1-4 family residential properties		635		635		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Consumer		—		—		—
Total loans with no related allowance recorded	$	708	$	708	$	—
Impaired loans with an allowance recorded
Loans secured by real estate
Construction, land development and other land loans	$	153	$	153	$	28
Secured by 1-4 family residential properties		57		57		50
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		511		511		1
Commercial and industrial		67		67		67
Consumer		43		43		20
Total loans with an allowance recorded	$	831	$	831	$	166
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	226	$	226	$	28
Secured by 1-4 family residential properties		692		692		50
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		511		511		1
Commercial and industrial		67		67		67
Consumer		43		43		20
Total impaired loans	$	1,539	$	1,539	$	166

The above amounts include purchased credit impaired loans. As of

December 31, 2018,

purchased credit impaired loans comprised

$0.5

million of impaired loans without a related allowance recorded.

As of

December 31, 2017,

the carrying amount of impaired loans at the Bank consisted of the following:

	December 31, 2017
	Carrying Amount		Unpaid Principal Balance		Related Allowances
Impaired loans with no related allowance recorded	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		—		—		—
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		—		—		—
Commercial and industrial		—		—		—
Total loans with no related allowance recorded	$	—	$	—	$	—
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		187		187		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		532		532		21
Commercial and industrial		72		72		72
Total loans with an allowance recorded	$	791	$	791	$	98
Total impaired loans
Loans secured by real estate
Construction, land development and other land loans	$	—	$	—	$	—
Secured by 1-4 family residential properties		187		187		5
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		532		532		21
Commercial and industrial		72		72		72
Total impaired loans	$	791	$	791	$	98

The average net investment in impaired loans and interest income recognized and received on impaired loans as of

December 31, 2018

and

2017

was as follows:

	December 31, 2018
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	70	$	8	$	8
Secured by 1-4 family residential properties		794		16		16
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		523		34		35
Other		1		—		—
Commercial and industrial		57		4		5
Consumer		15		3		3
Total	$	1,460	$	65	$	67

	December 31, 2017
	Average Recorded Investment		Interest Income Recognized		Interest Income Received
	(Dollars in Thousands)
Loans secured by real estate
Construction, land development and other land loans	$	902	$	—	$	—
Secured by 1-4 family residential properties		190		13		14
Secured by multi-family residential properties		—		—		—
Secured by non-farm, non-residential properties		537		35		35
Commercial and industrial		59		7		5
Total	$	1,688	$	55	$	54

Loans on which the accrual of interest has been discontinued amounted to

$2.8

million and

$2.1

million as of

December

31,

2018

and

2017,

respectively. If interest on those loans had been accrued, there would have been

$44

thousand and

$19

thousand of interest accrued as of

December 31, 2018

and

2017,

respectively. Interest income related to these loans for the year ended

December 31, 2018

and

2017

was

$27

thousand and

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

loans modified with concessions granted during the year ended

December 31, 2018 or 2017.

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. As of both

December 31, 2018

and

2017,

the Company had

$0.1

million of non-accruing loans that were previously restructured and that remained on non-accrual status. For both of the years ended

December 31, 2018 and 2017,

the Company had

loans that were restored to accrual status based on a sustained period of repayment performance.

The following table provides the number of loans remaining in each loan category, as of

December

31,

2018

and

2017,

that the Bank had previously modified in a troubled debt restructuring, as well as the pre- and post-modification principal balance as of each date.

	December 31, 2018						December 31, 2017
	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	$	73		1	$	107	$	82
Secured by 1-4 family residential properties		3		318		118		3		318		165
Secured by non-farm, non-residential properties		1		53		34		1		53		37
Commercial loans		2		116		72		2		116		81
Total		7	$	594	$	297		7	$	594	$	365

As of

December 31, 2018

and

2017,

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

modifications to principal balances of the loans that were restructured. Accordingly, there was

impact on the Company’s allowance for loan 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 losses. This evaluation resulted in an allowance for loan losses attributable to such restructured loans of

thousand as of both

December 31, 2018

and

2017.