XML 20 R9.htm IDEA: XBRL DOCUMENT v3.19.1
Loans and Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2019
Loans and Allowances for Loan Losses  
Loans and Allowance for Loan Losses

(2)   Loans and Allowance for Loan Losses

Loans

A summary of loans, by major class within the Company’s loan portfolio, at March 31, 2019 and December 31, 2018 is as follows:

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

(in thousands)

    

2019

    

2018

Commercial, financial, and agricultural

 

$

204,759

 

$

207,720

Real estate construction - residential

 

 

26,082

 

 

28,610

Real estate construction - commercial

 

 

109,766

 

 

106,784

Real estate mortgage - residential

 

 

248,059

 

 

241,517

Real estate mortgage - commercial

 

 

534,121

 

 

529,536

Installment and other consumer

 

 

31,865

 

 

32,460

Total loans

 

$

1,154,652

 

$

1,146,627

 

The Bank grants real estate, commercial, installment, and other consumer loans to customers located within the Missouri communities surrounding Jefferson City, Columbia, Clinton, Warsaw, Springfield, and the greater Kansas City metropolitan area. As such, the Bank is susceptible to changes in the economic environment in these communities. The Bank does not have a concentration of credit in any one economic sector. Installment and other consumer loans consist primarily of the financing of automotive vehicles. At March 31, 2019, loans of $519.3 million were pledged to the Federal Home Loan Bank as collateral for borrowings and letters of credit.

Allowance for Loan Losses

The following table illustrates the changes in the allowance for loan losses by portfolio segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2019

 

 

Commercial,

 

Real Estate

 

Real Estate

 

Real Estate

 

Real Estate

 

Installment

 

 

 

 

 

 

 

 

Financial, &

 

Construction -

 

Construction -

 

Mortgage -

 

Mortgage -

 

and Other

 

Un-

 

 

 

(in thousands)

   

Agricultural

   

Residential

   

Commercial

   

Residential

   

Commercial

   

Consumer

   

allocated

   

Total

Balance at beginning of period

 

$

3,237

 

$

140

 

$

757

 

$

2,071

 

$

4,914

 

$

334

 

$

199

 

$

11,652

Additions:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Provision for loan losses

 

 

(60)

 

 

(66)

 

 

(119)

 

 

(196)

 

 

617

 

 

18

 

 

(44)

 

 

150

Deductions:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Loans charged off

 

 

53

 

 

 —

 

 

 —

 

 

84

 

 

 8

 

 

52

 

 

 —

 

 

197

Less recoveries on loans

 

 

(108)

 

 

 —

 

 

 —

 

 

(99)

 

 

 —

 

 

(33)

 

 

 —

 

 

(240)

Net loan charge-offs (recoveries)

 

 

(55)

 

 

 —

 

 

 —

 

 

(15)

 

 

 8

 

 

19

 

 

 —

 

 

(43)

Balance at end of period

 

$

3,232

 

$

74

 

$

638

 

$

1,890

 

$

5,523

 

$

333

 

$

155

 

$

11,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2018

 

 

Commercial,

 

Real Estate

 

Real Estate

 

Real Estate

 

Real Estate

 

Installment

 

 

 

 

 

 

 

 

Financial, &

 

Construction -

 

Construction -

 

Mortgage -

 

Mortgage -

 

and Other

 

Un-

 

 

 

(in thousands)

   

Agricultural

   

Residential

   

Commercial

   

Residential

   

Commercial

   

Consumer

   

allocated

   

Total

Balance at beginning of period

 

$

3,325

 

$

170

 

$

807

 

$

1,689

 

$

4,437

 

 

345

 

$

79

 

$

10,852

Additions:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Provision for loan losses

 

 

33

 

 

106

 

 

118

 

 

369

 

 

(421)

 

 

40

 

 

55

 

 

300

Deductions:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Loans charged off

 

 

110

 

 

48

 

 

30

 

 

20

 

 

14

 

 

57

 

 

 —

 

 

279

Less recoveries on loans

 

 

(13)

 

 

(12)

 

 

 —

 

 

(19)

 

 

(6)

 

 

(24)

 

 

 —

 

 

(74)

Net loan charge-offs (recoveries)

 

 

97

 

 

36

 

 

30

 

 

 1

 

 

 8

 

 

33

 

 

 —

 

 

205

Balance at end of period

 

$

3,261

 

$

240

 

$

895

 

$

2,057

 

$

4,008

 

$

352

 

$

134

 

$

10,947

 

Loans, or portions of loans, are charged off to the extent deemed uncollectible or a loss is confirmed. Loan charge-offs reduce the allowance for loan losses, and recoveries of loans previously charged off are added back to the allowance. If management determines that it is probable that all amounts due on a loan will not be collected under the original terms of the loan agreement, the loan is considered to be impaired. These loans are evaluated individually for impairment, and in conjunction with current economic conditions and loss experience, specific reserves are estimated as further discussed below. Loans not individually evaluated are aggregated by risk characteristics and reserves are recorded using a consistent methodology that considers historical loan loss experience by loan type, delinquencies, current economic conditions, loan risk ratings and industry concentration.

Beginning with the first quarter 2019, management adjusted the look-back period to begin with loss history in the first quarter 2012 and continue to include this starting point going forward. Management determined that with the current economic recovery continuing to set records for its length, the look-back period needed to be expanded to account for this extended economic cycle. This ever increasing look-back period will then be adjusted once a loss producing downturn is recognized by allowing the look-back period to shift forward by eliminating the earliest loss period and replenishing it with losses from the most recent period. Prior to 2019, the Company utilized a five-year look-back period, which was considered a representative historical loss period. The look-back period is consistently evaluated for relevance given the current facts and circumstances.

The following table illustrates the allowance for loan losses and recorded investment by portfolio segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial,

 

Real Estate

 

Real Estate

 

Real Estate

 

Real Estate

 

Installment

 

 

 

 

 

 

 

 

Financial, and

 

Construction -

 

Construction -

 

Mortgage -

 

Mortgage -

 

and Other

 

Un-

 

 

 

(in thousands)

    

Agricultural

    

Residential

    

Commercial

    

Residential

    

Commercial

    

Consumer

    

allocated

    

Total

March 31, 2019

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Allowance for loan losses:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Individually evaluated for impairment

 

$

512

 

$

 —

 

$

 —

 

$

475

 

$

25

 

$

27

 

$

 —

 

$

1,039

Collectively evaluated for impairment

 

 

2,720

 

 

74

 

 

638

 

 

1,415

 

 

5,498

 

 

306

 

 

155

 

 

10,806

Total

 

$

3,232

 

$

74

 

$

638

 

$

1,890

 

$

5,523

 

$

333

 

$

155

 

$

11,845

Loans outstanding:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Individually evaluated for impairment

 

$

2,376

 

$

 —

 

$

151

 

$

4,851

 

$

881

 

$

264

 

$

 —

 

$

8,523

Collectively evaluated for impairment

 

 

202,383

 

 

26,082

 

 

109,615

 

 

243,208

 

 

533,240

 

 

31,601

 

 

 —

 

 

1,146,129

Total

 

$

204,759

 

$

26,082

 

$

109,766

 

$

248,059

 

$

534,121

 

$

31,865

 

$

 —

 

$

1,154,652

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

December 31, 2018

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Allowance for loan losses:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Individually evaluated for impairment

 

$

551

 

$

 —

 

$

 —

 

$

579

 

$

37

 

$

27

 

$

 —

 

$

1,194

Collectively evaluated for impairment

 

 

2,686

 

 

140

 

 

757

 

 

1,492

 

 

4,877

 

 

307

 

 

199

 

 

10,458

Total

 

$

3,237

 

$

140

 

$

757

 

$

2,071

 

$

4,914

 

$

334

 

$

199

 

$

11,652

Loans outstanding:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Individually evaluated for impairment

 

$

2,428

 

$

 —

 

$

153

 

$

4,793

 

$

850

 

$

254

 

$

 —

 

$

8,478

Collectively evaluated for impairment

 

 

205,292

 

 

28,610

 

 

106,631

 

 

236,724

 

 

528,686

 

 

32,206

 

 

 —

 

 

1,138,149

Total

 

$

207,720

 

$

28,610

 

$

106,784

 

$

241,517

 

$

529,536

 

$

32,460

 

$

 —

 

$

1,146,627

 

Impaired Loans

Loans evaluated under ASC 310‑10‑35 include loans which are individually evaluated for impairment. All other loans are collectively evaluated for impairment under ASC 450‑20. Impaired loans individually evaluated for impairment totaled $8.5 million at both March 31, 2019 and December 31, 2018, respectively, and are comprised of loans on non-accrual status and loans which have been classified as troubled debt restructurings (TDRs).

The net carrying value of impaired loans is based on the fair values of collateral obtained through independent appraisals or internal evaluations, or by discounting the total expected future cash flows. At both March 31, 2019 and December 31, 2018, $3.8 million of impaired loans were evaluated based on the fair value less estimated selling costs of the loan’s collateral. Once the impairment amount is calculated, a specific reserve allocation is recorded. At March 31, 2019, $1.0 million of the Company’s allowance for loan losses was allocated to impaired loans totaling $8.5 million compared to $1.2 million of the Company’s allowance for loan losses allocated to impaired loans totaling approximately $8.5 million at December 31, 2018. Management determined that $2.3 million, or 27%, of total impaired loans required no reserve allocation at March 31, 2019 compared to $2.1 million, or 25%, at December 31, 2018, primarily due to adequate collateral values, acceptable payment history and adequate cash flow ability.

The categories of impaired loans at March 31, 2019 and December 31, 2018 are as follows:

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

(in thousands)

    

2019

    

2018

Non-accrual loans

 

$

5,431

 

$

5,414

Performing TDRs

 

 

3,092

 

 

3,064

Total impaired loans

 

$

8,523

 

$

8,478

 

The following tables provide additional information about impaired loans at March 31, 2019 and December 31, 2018, respectively, segregated between loans for which an allowance has been provided and loans for which no allowance has been provided.

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Unpaid

    

 

 

 

 

Recorded

 

Principal

 

Specific

(in thousands)

 

Investment

 

Balance

 

Reserves

March 31, 2019

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

  

 

 

  

 

 

  

Commercial, financial and agricultural

 

$

1,203

 

$

1,516

 

$

 —

Real estate - construction commercial

 

 

151

 

 

179

 

 

 —

Real estate - residential

 

 

703

 

 

762

 

 

 —

Real estate - commercial

 

 

233

 

 

373

 

 

 —

Total

 

$

2,290

 

$

2,830

 

$

 —

With an allowance recorded:

 

 

  

 

 

  

 

 

  

Commercial, financial and agricultural

 

$

1,173

 

$

1,252

 

$

512

Real estate - residential

 

 

4,148

 

 

4,421

 

 

475

Real estate - commercial

 

 

648

 

 

874

 

 

25

Installment and other consumer

 

 

264

 

 

294

 

 

27

Total

 

$

6,233

 

$

6,841

 

$

1,039

Total impaired loans

 

$

8,523

 

$

9,671

 

$

1,039

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Unpaid

    

 

 

 

 

Recorded

 

Principal

 

Specific

(in thousands)

 

Investment

 

Balance

 

Reserves

December 31, 2018

 

 

  

 

 

  

 

 

  

With no related allowance recorded:

 

 

  

 

 

  

 

 

  

Commercial, financial and agricultural

 

$

1,264

 

$

1,550

 

$

 —

Real estate - construction commercial

 

 

153

 

 

180

 

 

 —

Real estate - residential

 

 

561

 

 

602

 

 

 —

Real estate - commercial

 

 

115

 

 

119

 

 

 —

Total

 

$

2,093

 

$

2,451

 

$

 —

With an allowance recorded:

 

 

  

 

 

  

 

 

  

Commercial, financial and agricultural

 

$

1,164

 

$

1,236

 

$

551

Real estate - residential

 

 

4,232

 

 

4,458

 

 

579

Real estate - commercial

 

 

735

 

 

1,093

 

 

37

Installment and other consumer

 

 

254

 

 

280

 

 

27

Total

 

$

6,385

 

$

7,067

 

$

1,194

Total impaired loans

 

$

8,478

 

$

9,518

 

$

1,194

 

The following table presents by class, information related to the average recorded investment and interest income recognized on impaired loans during the periods indicated.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

 

2019

 

2018

 

 

 

 

 

 

Interest

 

 

 

 

Interest

 

 

 

Average

 

Recognized

 

Average

 

Recognized

 

 

 

Recorded

 

For the

 

Recorded

 

For the

 

(in thousands)

    

Investment

    

Period Ended

    

Investment

    

Period Ended

    

With no related allowance recorded:

 

 

  

 

 

  

 

 

  

 

 

  

 

Commercial, financial and agricultural

 

$

1,330

 

$

 —

 

$

906

 

$

 —

 

Real estate - construction commercial

 

 

158

 

 

 —

 

 

 —

 

 

 —

 

Real estate - residential

 

 

850

 

 

 —

 

 

919

 

 

 3

 

Real estate - commercial

 

 

170

 

 

 —

 

 

 —

 

 

 —

 

Installment and other consumer

 

 

34

 

 

 —

 

 

 —

 

 

 —

 

Total

 

$

2,542

 

$

 —

 

$

1,825

 

$

 3

 

With an allowance recorded:

 

 

  

 

 

  

 

 

  

 

 

  

 

Commercial, financial and agricultural

 

$

1,276

 

$

11

 

$

1,857

 

$

 8

 

Real estate - construction residential

 

 

 —

 

 

 —

 

 

15

 

 

 —

 

Real estate - residential

 

 

4,160

 

 

25

 

 

4,379

 

 

32

 

Real estate - commercial

 

 

946

 

 

 9

 

 

2,012

 

 

15

 

Installment and other consumer

 

 

232

 

 

 1

 

 

139

 

 

 —

 

Total

 

$

6,614

 

$

46

 

$

8,402

 

$

55

 

Total impaired loans

 

$

9,156

 

$

46

 

$

10,227

 

$

58

 

 

The recorded investment varies from the unpaid principal balance primarily due to partial charge-offs taken resulting from current appraisals received. The amount recognized as interest income on impaired loans continuing to accrue interest, primarily related to troubled debt restructurings, was $46,000 for the three months ended March 31, 2019 compared to $58,000 for the three months ended March 31, 2018. The average recorded investment in impaired loans is calculated on a monthly basis during the periods reported.

Delinquent and Non-Accrual Loans

The delinquency status of loans is determined based on the contractual terms of the notes. Borrowers are generally classified as delinquent once payments become 30 days or more past due. The Company’s policy is to discontinue the accrual of interest income on any loan when, in the opinion of management, the ultimate collectability of interest or principal is no longer probable. In general, loans are placed on non-accrual when they become 90 days or more past due. However, management considers many factors before placing a loan on non-accrual, including the delinquency status of the loan, the overall financial condition of the borrower, the progress of management’s collection efforts and the value of the underlying collateral. Subsequent interest payments received on non-accrual loans are applied to principal if any doubt exists as to the collectability of such principal; otherwise, such receipts are recorded as interest income on a cash basis. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial condition of the borrower indicates that the timely collectability of interest and principal is probable and the borrower demonstrates the ability to pay under the terms of the note through a sustained period of repayment performance, which is generally six months.

The following table provides aging information for the Company’s past due and non-accrual loans at March 31, 2019 and December 31, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Current or

    

 

 

    

90 Days

    

 

 

    

 

 

 

 

Less Than

 

 

 

 

Past Due

 

 

 

 

 

 

 

 

30 Days

 

30 - 89 Days

 

And Still

 

 

 

 

 

 

(in thousands)

 

Past Due

 

Past Due

 

Accruing

 

Non-Accrual

 

Total

March 31, 2019

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Commercial, Financial, and Agricultural

 

$

202,850

 

$

162

 

$

 —

 

$

1,747

 

$

204,759

Real Estate Construction - Residential

 

 

26,082

 

 

 —

 

 

 —

 

 

 —

 

 

26,082

Real Estate Construction - Commercial

 

 

109,143

 

 

472

 

 

 —

 

 

151

 

 

109,766

Real Estate Mortgage - Residential

 

 

243,864

 

 

1,252

 

 

140

 

 

2,803

 

 

248,059

Real Estate Mortgage - Commercial

 

 

532,539

 

 

1,074

 

 

 —

 

 

508

 

 

534,121

Installment and Other Consumer

 

 

31,391

 

 

247

 

 

 5

 

 

222

 

 

31,865

Total

 

$

1,145,869

 

$

3,207

 

$

145

 

$

5,431

 

$

1,154,652

December 31, 2018

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Commercial, Financial, and Agricultural

 

$

205,597

 

$

266

 

$

 —

 

$

1,857

 

$

207,720

Real Estate Construction - Residential

 

 

28,404

 

 

206

 

 

 —

 

 

 —

 

 

28,610

Real Estate Construction - Commercial

 

 

106,531

 

 

100

 

 

 —

 

 

153

 

 

106,784

Real Estate Mortgage - Residential

 

 

235,734

 

 

2,907

 

 

156

 

 

2,720

 

 

241,517

Real Estate Mortgage - Commercial

 

 

527,968

 

 

1,094

 

 

 —

 

 

474

 

 

529,536

Installment and Other Consumer

 

 

32,002

 

 

242

 

 

 6

 

 

210

 

 

32,460

Total

 

$

1,136,236

 

$

4,815

 

$

162

 

$

5,414

 

$

1,146,627

 

Credit Quality

The Company categorizes loans into risk categories based upon an internal rating system reflecting management’s risk assessment. Loans are placed on watch status when one or more weaknesses are identified that may result in the borrower being unable to meet repayment terms or the Company’s credit position could deteriorate at some future date. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified may have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Such loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. A loan is classified as a troubled debt restructuring  (TDR) when a borrower is experiencing financial difficulties that lead to the restructuring of a loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. Loans classified as TDRs that are accruing interest are classified as performing TDRs. Loans classified as TDRs, that are not accruing interest are classified as nonperforming TDRs and are included with all other nonaccrual loans for presentation purposes. It is the Company’s policy to discontinue the accrual of interest income on loans when management believes that the collection of interest or principal is doubtful.

The following table presents the risk categories by class at March 31, 2019 and December 31, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Commercial,

    

Real Estate

    

Real Estate

    

Real Estate

    

Real Estate

    

Installment

    

 

 

 

 

Financial, &

 

Construction -

 

Construction -

 

Mortgage -

 

Mortgage -

 

and other

 

 

 

(in thousands)

 

Agricultural

 

Residential

 

Commercial

 

Residential

 

Commercial

 

Consumer

 

Total

At March 31, 2019

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Watch

 

$

10,254

 

$

583

 

$

4,032

 

$

11,831

 

$

36,716

 

$

 8

 

$

63,424

Substandard

 

 

173

 

 

 —

 

 

 —

 

 

1,391

 

 

696

 

 

 3

 

 

2,263

Performing TDRs

 

 

629

 

 

 —

 

 

 —

 

 

2,048

 

 

373

 

 

42

 

 

3,092

Non-accrual

 

 

1,747

 

 

 —

 

 

151

 

 

2,803

 

 

508

 

 

222

 

 

5,431

Total

 

$

12,803

 

$

583

 

$

4,183

 

$

18,073

 

$

38,293

 

$

275

 

$

74,210

At December 31, 2018

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Watch

 

$

8,871

 

$

588

 

$

4,063

 

$

12,790

 

$

36,408

 

$

 8

 

$

62,728

Substandard

 

 

53

 

 

 —

 

 

 —

 

 

1,411

 

 

702

 

 

 3

 

 

2,169

Performing TDRs

 

 

570

 

 

 —

 

 

 —

 

 

2,073

 

 

377

 

 

44

 

 

3,064

Non-accrual

 

 

1,857

 

 

 —

 

 

153

 

 

2,720

 

 

474

 

 

210

 

 

5,414

Total

 

$

11,351

 

$

588

 

$

4,216

 

$

18,994

 

$

37,961

 

$

265

 

$

73,375

 

Troubled Debt Restructurings

At March 31, 2019, loans classified as TDRs totaled $5.0 million, of which $1.9 million were classified as non-performing TDRs and included in non-accrual loans and $3.1 million were classified as performing TDRs. At December 31, 2018, loans classified as TDRs totaled $5.0 million, of which $2.0 million were classified as non-performing TDRs and included in non-accrual loans and $3.0 million were classified as performing TDRs. Both performing and nonperforming TDRs are considered impaired loans. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. Accordingly, specific reserves of $512,000 and $543,000 related to TDRs were allocated to the allowance for loan losses at March 31, 2019 and December 31, 2018, respectively.

The following table summarizes loans that were modified as TDRs during the periods indicated. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

2019

 

2018

 

 

Recorded Investment (1)

 

Recorded Investment (1)

 

 

Number of

 

Pre-

 

Post-

 

Number of

 

Pre-

 

Post-

(in thousands)

    

Contracts

    

Modification

    

Modification

    

Contracts

    

Modification

    

Modification

Troubled Debt Restructurings

 

  

 

 

  

 

 

  

 

  

 

 

  

 

 

 

Commercial, financial and agricultural

 

 2

 

$

80

 

$

80

 

 —

 

$

 —

 

$

 —

Total

 

 2

 

$

80

 

$

80

 

 —

 

$

 —

 

$

 —

(1)

The amounts reported post-modification are inclusive of all partial pay-downs and charge-offs, and no portion of the debt was forgiven. Loans modified as a TDR that were fully paid down, charged-off or foreclosed upon during the period ended are not reported.

The Company’s portfolio of loans classified as TDRs include concessions for the borrower given financial condition such as interest rates below the current market rate, deferring principal payments, and extending maturity dates. There were two loans meeting the TDR criteria that were modified during the three months ended March 31, 2019, compared to no loans during the three months ended March 31, 2018.

The Company considers a TDR to be in default when it is 90 days or more past due under the modified terms, a charge-off occurs, or it is the process of foreclosure. There were no loans modified as a TDR that defaulted during any of the three months ended March 31, 2019 and 2018, respectively, and within twelve months of their modification date. During 2018, one real estate mortgage loan went to foreclosure totaling $48,000. See Lending and Credit Management section for further information.