Loan Portfolio | Note 3. Loan Portfolio The following table sets forth the composition of the Company’s loan portfolio in dollar amounts and as a percentage of the Company’s total gross loans at the dates indicated: March 31, 2017 December 31, 2016 (dollars in thousands) Amount Percent Amount Percent Commercial, industrial and agricultural $ 150,469 14.04% $ 148,963 14.42% Real estate - one to four family residential: Closed end first and seconds 212,758 19.85% 215,462 20.85% Home equity lines 124,192 11.59% 122,506 11.85% Total real estate - one to four family residential 336,950 31.44% 337,968 32.70% Real estate - multifamily residential 31,569 2.95% 32,400 3.14% Real estate - construction: One to four family residential 18,822 1.76% 16,204 1.57% Other construction, land development and other land 104,277 9.73% 92,466 8.95% Total real estate - construction 123,099 11.49% 108,670 10.52% Real estate - farmland 11,229 1.05% 11,289 1.09% Real estate - non-farm, non-residential: Owner occupied 216,597 20.22% 201,284 19.48% Non-owner occupied 146,464 13.67% 139,649 13.52% Total real estate - non-farm, non-residential 363,061 33.89% 340,933 33.00% Consumer 44,303 4.13% 42,403 4.10% Other 10,776 1.01% 10,605 1.03% Total loans 1,071,456 100.00% 1,033,231 100.00% Less allowance for loan losses (10,952) (11,270) Loans, net $ 1,060,504 $ 1,021,961 Deferred costs , net of deferred fees, are included in the table above and totaled $1.8 million for both March 31, 2017 and December 31, 2016 . The following table presents the aging of the recorded investment in past due loans as of March 31, 2017 by class of loans: (dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Over 90 Days Past Due Total Past Due Total Current* Total Loans Commercial, industrial and agricultural $ 45 $ - $ 58 $ 103 $ 150,366 $ 150,469 Real estate - one to four family residential: Closed end first and seconds 1,237 444 3,773 5,454 207,304 212,758 Home equity lines 301 - 150 451 123,741 124,192 Total real estate - one to four family residential 1,538 444 3,923 5,905 331,045 336,950 Real estate - multifamily residential - - - - 31,569 31,569 Real estate - construction: One to four family residential - - 191 191 18,631 18,822 Other construction, land development and other land - - - - 104,277 104,277 Total real estate - construction - - 191 191 122,908 123,099 Real estate - farmland - - - - 11,229 11,229 Real estate - non-farm, non-residential: Owner occupied 28 70 634 732 215,865 216,597 Non-owner occupied 92 - - 92 146,372 146,464 Total real estate - non-farm, non-residential 120 70 634 824 362,237 363,061 Consumer 17 12 17 46 44,257 44,303 Other - - - - 10,776 10,776 Total loans $ 1,720 $ 526 $ 4,823 $ 7,069 $ 1,064,387 $ 1,071,456 * For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due. The following table presents the aging of the recorded investment in past due loans as of December 31, 2016 by class of loans: (dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Over 90 Days Past Due Total Past Due Total Current* Total Loans Commercial, industrial and agricultural $ 118 $ 89 $ 166 $ 373 $ 148,590 $ 148,963 Real estate - one to four family residential: Closed end first and seconds 3,408 1,472 3,505 8,385 207,077 215,462 Home equity lines 92 219 369 680 121,826 122,506 Total real estate - one to four family residential 3,500 1,691 3,874 9,065 328,903 337,968 Real estate - multifamily residential - - - - 32,400 32,400 Real estate - construction: One to four family residential 240 - 15 255 15,949 16,204 Other construction, land development and other land - - - - 92,466 92,466 Total real estate - construction 240 - 15 255 108,415 108,670 Real estate - farmland - - - - 11,289 11,289 Real estate - non-farm, non-residential: Owner occupied 61 - 225 286 200,998 201,284 Non-owner occupied - - - - 139,649 139,649 Total real estate - non-farm, non-residential 61 - 225 286 340,647 340,933 Consumer 77 7 17 101 42,302 42,403 Other - - - - 10,605 10,605 Total loans $ 3,996 $ 1,787 $ 4,297 $ 10,080 $ 1,023,151 $ 1,033,231 *For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due. The following table presents nonaccrual loans, loans past due 90 days and accruing interest and troubled debt restructurings (accruing) at the dates indicated: (dollars in thousands) March 31, 2017 December 31, 2016 Nonaccrual loans $ 5,606 $ 5,181 Loans past due 90 days and accruing interest 1,272 1,341 Troubled debt restructurings (accruing) 10,669 10,441 At March 31, 2017 and December 31, 2016 , there were approximately $1.8 million and $2.2 million , respectively , in troubled debt restructurings (“TDRs”) included in nonaccrual loans. The past due status of a loan is based on the contractual due date of the most delinquent payment due. Loans, including impaired loans, are generally classified as nonaccrual if they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well-secured and in the process of collection. Loans greater than 90 days past due may remain on an accrual status if management determines it has adequate collateral to cover the principal and interest. If a loan or a portion of a loan is adversely classified, or is partially charged off, the loan is generally classified as nonaccrual. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on a nonaccrual status immediately, rather than delaying such action until the loans become 90 days past due. When a loan is placed on nonaccrual status, previously accrued and uncollected interest is reversed, and the amortization of related deferred loan fees or costs is suspended. While a loan is classified as nonaccrual and the future collectability of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to principal outstanding. When the future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan has been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Cash interest receipts in excess of that amount are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered. These policies are applied consistently across our loan portfolio. A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed. Outstanding principal balance and the carrying amount of loans acquired pursuant to the Company’s acquisition of VCB (or “Acquired Loans”) that were recorded at fair value at the acquisition date and are included in the consolidated balance sheet at March 31, 2017 and December 31, 2016 were as follows: March 31, 2017 December 31, 2016 Acquired Acquired Loans - Acquired Loans - Acquired Purchased Loans - Acquired Purchased Loans - Acquired Credit Purchased Loans - Credit Purchased Loans - (dollars in thousands) Impaired Performing Total Impaired Performing Total Commercial, industrial and agricultural $ 393 $ 2,341 $ 2,734 $ 420 $ 2,452 $ 2,872 Real estate - one to four family residential: Closed end first and seconds 1,136 4,730 5,866 1,135 4,914 6,049 Home equity lines 32 7,991 8,023 32 8,417 8,449 Total real estate - one to four family residential 1,168 12,721 13,889 1,167 13,331 14,498 Real estate - multifamily residential - 1,566 1,566 - 1,652 1,652 Real estate - construction: One to four family residential - 353 353 - 360 360 Other construction, land development and other land 236 115 351 252 2,182 2,434 Total real estate - construction 236 468 704 252 2,542 2,794 Real estate - farmland - - - - - - Real estate - non-farm, non-residential: Owner occupied 2,527 10,846 13,373 2,988 12,298 15,286 Non-owner occupied 943 6,084 7,027 1,475 6,639 8,114 Total real estate - non-farm, non-residential 3,470 16,930 20,400 4,463 18,937 23,400 Consumer - 138 138 - 148 148 Other - 476 476 - 642 642 Total loans $ 5,267 $ 34,640 $ 39,907 $ 6,302 $ 39,704 $ 46,006 The following table presents the recorded investment in nonaccrual loans and loans past due 90 days and accruing interest by class at March 31, 2017 and December 31, 2016 : Over 90 Days Past Nonaccrual Due and Accruing March 31, December 31, March 31, December 31, (dollars in thousands) 2017 2016 2017 2016 Commercial, industrial and agricultural $ 758 $ 784 $ - $ - Real estate - one to four family residential: Closed end first and seconds 3,290 3,240 1,136 1,135 Home equity lines 324 543 - - Total real estate - one to four family residential 3,614 3,783 1,136 1,135 Real estate - construction: One to four family residential 191 15 - - Total real estate - construction 191 15 - - Real estate - non-farm, non-residential: Owner occupied 1,026 578 136 206 Total real estate - non-farm, non-residential 1,026 578 136 206 Consumer 17 21 - - Total loans $ 5,606 $ 5,181 $ 1,272 $ 1,341 The Company uses a risk grading system for real estate (including multifamily residential, construction, farmland and non-farm, non-residential) and commercial loans. Loans are graded on a scale from 1 to 9. Non-impaired real estate and commercial loans are assigned an allowance factor which increases with the severity of risk grading. A general description of the characteristics of the risk grades is as follows: Pass Grades · Risk Grade 1 loans have little or no risk and are generally secured by cash or cash equivalents; · Risk Grade 2 loans have minimal risk to well qualified borrowers and no significant questions as to safety; · Risk Grade 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment; · Risk Grade 4 loans are satisfactory loans with borrowers not as strong as risk grade 3 loans but may exhibit a higher degree of financial risk based on the type of business supporting the loan; and · Risk Grade 5 loans are loans that warrant more than the normal level of supervision and have the possibility of an event occurring that may weaken the borrower’s ability to repay. Special Mention · Risk Grade 6 loans have increasing potential weaknesses beyond those at which the loan originally was granted and if not addressed could lead to inadequately protecting the Company’s credit position. Classified Grades · Risk Grade 7 loans are substandard loans and are inadequately protected by the current sound worth or paying capacity of the obligor or the collateral pledged. These have well defined weaknesses that jeopardize the liquidation of the debt with the distinct possibility the Company will sustain some loss if the deficiencies are not corrected; · Risk Grade 8 loans are doubtful of collection and the possibility of loss is high but pending specific borrower plans for recovery, its classification as a loss is deferred until its more exact status is determined; and · Risk Grade 9 loans are loss loans which are considered uncollectable and of such little value that their continuance as a bank asset is not warranted. The Company uses a past due grading system for consumer loans, including one to four family residential first and seconds and home equity lines. The past due status of a loan is based on the contractual due date of the most delinquent payment due. The past due grading of consumer loans is based on the following categories: current, 1-29 days past due, 30-59 days past due, 60-89 days past due and over 90 days past due. The consumer loans are segregated between performing and nonperforming loans. Performing loans are those that have made timely payments in accordance with the terms of the loan agreement and are not past due 90 days or more. Nonperforming loans are those that do not accrue interest, are greater than 90 days past due and accruing interest or considered impaired. Non-impaired consumer loans are assigned an allowance factor which increases with the severity of past due status. This component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the loan portfolio. The allocation methodology applied by the Company includes management’s ongoing review and grading of the loan portfolio into criticized loan categories (defined as specific loans warranting either specific allocation, or a classified status of substandard, doubtful or loss). The allocation methodology focuses on evaluation of several factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, consideration of migration analysis and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the level of classified loans, the risk characteristics of the various classifications of loans, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect potential credit losses. Because each of the criteria used is subject to change, the allocation of the allowance for loan losses is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular loan category. The total allowance is available to absorb losses from any segment of the portfolio. In determining the allowance for loan losses, the Company considers its portfolio segments and loan classes to be the same. The following table presents commercial loans by credit quality indicator at March 31, 2017 : Acquired Loans - Purchased Special Credit (dollars in thousands) Pass Mention Substandard Doubtful Impaired Impaired Total Commercial, industrial and agricultural $ 145,087 $ 3,066 $ 707 $ 28 $ 1,188 $ 393 $ 150,469 Real estate - multifamily residential 31,569 - - - - - 31,569 Real estate - construction: One to four family residential 18,260 131 265 - 166 - 18,822 Other construction, land development and other land 96,695 - 210 - 7,136 236 104,277 Total real estate - construction 114,955 131 475 - 7,302 236 123,099 Real estate - farmland 7,239 3,481 - - 509 - 11,229 Real estate - non-farm, non-residential: Owner occupied 199,338 4,826 1,969 - 7,937 2,527 216,597 Non-owner occupied 136,290 1,193 680 - 7,358 943 146,464 Total real estate - non-farm, non-residential 335,628 6,019 2,649 - 15,295 3,470 363,061 Total commercial loans $ 634,478 $ 12,697 $ 3,831 $ 28 $ 24,294 $ 4,099 $ 679,427 The following table presents commercial loans by credit quality indicator at December 31, 2016 : Acquired Loans - Purchased Special Credit (dollars in thousands) Pass Mention Substandard Impaired Impaired Total Commercial, industrial and agricultural $ 136,533 $ 9,839 $ 531 $ 1,640 $ 420 $ 148,963 Real estate - multifamily residential 32,400 - - - - 32,400 Real estate - construction: One to four family residential 15,624 319 91 170 - 16,204 Other construction, land development and other land 84,832 - 212 7,170 252 92,466 Total real estate - construction 100,456 319 303 7,340 252 108,670 Real estate - farmland 7,270 3,504 - 515 - 11,289 Real estate - non-farm, non-residential: Owner occupied 179,400 9,359 1,892 7,645 2,988 201,284 Non-owner occupied 127,817 2,222 689 7,446 1,475 139,649 Total real estate - non-farm, non-residential 307,217 11,581 2,581 15,091 4,463 340,933 Total commercial loans $ 583,876 $ 25,243 $ 3,415 $ 24,586 $ 5,135 $ 642,255 At March 31, 2017 and December 31, 2016 , the Company did not have any loans classified as Loss. The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at March 31, 2017 : (dollars in thousands) Performing Nonperforming Total Real estate - one to four family residential: Closed end first and seconds $ 201,933 $ 10,825 $ 212,758 Home equity lines 123,817 375 124,192 Total real estate - one to four family residential 325,750 11,200 336,950 Consumer 43,985 318 44,303 Other 10,776 - 10,776 Total consumer loans $ 380,511 $ 11,518 $ 392,029 The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at December 31, 2016 : (dollars in thousands) Performing Nonperforming Total Real estate - one to four family residential: Closed end first and seconds $ 204,847 $ 10,615 $ 215,462 Home equity lines 121,912 594 122,506 Total real estate - one to four family residential 326,759 11,209 337,968 Consumer 42,077 326 42,403 Other 10,605 - 10,605 Total consumer loans $ 379,441 $ 11,535 $ 390,976 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 loan agreement. The Company measures impaired loans based on the present value of expected future cash flows discounted at the effective interest rate of the loan or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The Company maintains a valuation allowance to the extent that the measure of the impaired loan is less than the recorded investment. TDRs are considered impaired loans. TDRs occur when we agree to modify the original terms of a loan by granting a concession due to the deterioration in the financial condition of the borrower. These concessions can be temporary and are made in an attempt to avoid foreclosure and with the intent to restore the loan to a performing status once sufficient payment history can be demonstrated. These concessions could include, without limitation, rate reductions to below market rates, payment deferrals, forbearance, and, in some cases, forgiveness of principal or interest. At the time of a TDR, the loan is placed on nonaccrual status. A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed. The following table presents a rollforward of the Company’s allowance for loan losses for the three months ended March 31, 2017 : Beginning Ending Balance Balance (dollars in thousands) January 1, 2017 Charge-offs Recoveries Provision March 31, 2017 Commercial, industrial and agricultural $ 3,035 $ (207) $ 98 $ (265) $ 2,661 Real estate - one to four family residential: Closed end first and seconds 1,487 (193) 70 113 1,477 Home equity lines 653 (76) 3 (76) 504 Total real estate - one to four family residential 2,140 (269) 73 37 1,981 Real estate - multifamily residential 71 - - (22) 49 Real estate - construction: One to four family residential 197 - 1 45 243 Other construction, land development and other land 2,632 - - 427 3,059 Total real estate - construction 2,829 - 1 472 3,302 Real estate - farmland 157 - - (2) 155 Real estate - non-farm, non-residential: Owner occupied 1,267 - - 4 1,271 Non-owner occupied 584 - - (156) 428 Total real estate - non-farm, non-residential 1,851 - - (152) 1,699 Consumer 459 (9) 11 48 509 Other 728 (24) 8 (116) 596 Total $ 11,270 $ (509) $ 191 $ - $ 10,952 The following table presents a rollforward of the Company’s allowance for loan losses for the three months ended March 31, 2016 : Beginning Ending Balance Balance (dollars in thousands) January 1, 2016 Charge-offs Recoveries Provision March 31, 2016 Commercial, industrial and agricultural $ 1,894 $ (46) $ 26 $ 348 $ 2,222 Real estate - one to four family residential: Closed end first and seconds 1,609 (373) 81 320 1,637 Home equity lines 795 - 12 312 1,119 Total real estate - one to four family residential 2,404 (373) 93 632 2,756 Real estate - multifamily residential 78 - - 11 89 Real estate - construction: One to four family residential 295 - 1 (9) 287 Other construction, land development and other land 2,423 - - (116) 2,307 Total real estate - construction 2,718 - 1 (125) 2,594 Real estate - farmland 272 - - 4 276 Real estate - non-farm, non-residential: Owner occupied 1,964 (208) 63 (470) 1,349 Non-owner occupied 1,241 - 61 (428) 874 Total real estate - non-farm, non-residential 3,205 (208) 124 (898) 2,223 Consumer 287 (33) 15 37 306 Other 469 (15) 8 8 470 Total $ 11,327 $ (675) $ 267 $ 17 $ 10,936 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of March 31, 2017 : Allowance allocated to loans: Total Loans: Acquired Acquired Individually Collectively loans - Individually Collectively loans - evaluated evaluated purchased evaluated evaluated purchased for for credit for for credit (dollars in thousands) impairment impairment impaired Total impairment impairment impaired Total Commercial, industrial and agricultural $ 638 $ 2,023 $ - $ 2,661 $ 1,188 $ 148,888 $ 393 $ 150,469 Real estate - one to four family residential: Closed end first and seconds 557 903 17 1,477 7,052 204,570 1,136 212,758 Home equity lines 50 454 - 504 225 123,935 32 124,192 Total real estate - one to four family residential 607 1,357 17 1,981 7,277 328,505 1,168 336,950 Real estate - multifamily residential - 49 - 49 - 31,569 - 31,569 Real estate - construction: One to four family residential 54 189 - 243 166 18,656 - 18,822 Other construction, land development and other land 1,572 1,487 - 3,059 7,136 96,905 236 104,277 Total real estate - construction 1,626 1,676 - 3,302 7,302 115,561 236 123,099 Real estate - farmland 37 118 - 155 509 10,720 - 11,229 Real estate - non-farm, non-residential: Owner occupied 449 822 - 1,271 7,937 206,133 2,527 216,597 Non-owner occupied 157 271 - 428 7,358 138,163 943 146,464 Total real estate - non-farm, non-residential 606 1,093 - 1,699 15,295 344,296 3,470 363,061 Consumer 59 450 - 509 301 44,002 - 44,303 Other - 596 - 596 - 10,776 - 10,776 Total $ 3,573 $ 7,362 $ 17 $ 10,952 $ 31,872 $ 1,034,317 $ 5,267 $ 1,071,456 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of December 31, 2016 : Allowance allocated to loans: Total Loans: Acquired Acquired Individually Collectively loans - Individually Collectively loans - evaluated evaluated purchased evaluated evaluated purchased for for credit for for credit (dollars in thousands) impairment impairment impaired Total impairment impairment impaired Total Commercial, industrial and agricultural $ 865 $ 2,170 $ - $ 3,035 $ 1,640 $ 146,903 $ 420 $ 148,963 Real estate - one to four family residential: Closed end first and seconds 416 1,054 17 1,487 7,110 207,217 1,135 215,462 Home equity lines 50 603 - 653 225 122,249 32 122,506 Total real estate - one to four family residential 466 1,657 17 2,140 7,335 329,466 1,167 337,968 Real estate - multifamily residential - 71 - 71 - 32,400 - 32,400 Real estate - construction: One to four family residential 55 142 - 197 170 16,034 - 16,204 Other construction, land development and other land 1,368 1,264 - 2,632 7,170 85,044 252 92,466 Total real estate - construction 1,423 1,406 - 2,829 7,340 101,078 252 108,670 Real estate - farmland 40 117 - 157 515 10,774 - 11,289 Real estate - non-farm, non-residential: Owner occupied 321 946 - 1,267 7,645 190,651 2,988 201,284 Non-owner occupied 177 407 - 584 7,446 130,728 1,475 139,649 Total real estate - non-farm, non-residential 498 1,353 - 1,851 15,091 321,379 4,463 340,933 Consumer 63 396 - 459 309 42,094 - 42,403 Other - 728 - 728 - 10,605 - 10,605 Total $ 3,355 $ 7,898 $ 17 $ 11,270 $ 32,230 $ 994,699 $ 6,302 $ 1,033,231 The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2017 : Recorded Recorded Unpaid Investment Investment Average Interest Recorded Principal With No With Related Recorded Income (dollars in thousands) Investment Balance Allowance Allowance Allowance Investment Recognized Commercial, industrial and agricultural $ 1,188 $ 1,199 $ 550 $ 638 $ 638 $ 1,346 $ 20 Real estate - one to four family residential: Closed end first and seconds 7,052 7,665 3,423 3,629 557 7,080 89 Home equity lines 225 225 175 50 50 225 1 Total real estate - one to four family residential 7,277 7,890 3,598 3,679 607 7,305 90 Real estate - construction: One to four family residential 166 166 16 150 54 168 2 Other construction, land development and other land 7,136 7,136 1,745 5,391 1,572 7,144 95 Total real estate - construction 7,302 7,302 1,761 5,541 1,626 7,312 97 Real estate - farmland 509 512 257 252 37 512 8 Real estate - non-farm, non-residential: Owner occupied 7,937 7,940 6,133 1,804 449 7,678 100 Non-owner occupied 7,358 7,358 6,097 1,261 157 7,608 77 Total real estate - non-farm, non-residential 15,295 15,298 12,230 3,065 606 15,286 177 Consumer 301 313 - 301 59 305 4 Total loans* $ 31,872 $ 32,514 $ 18,396 $ 13,476 $ 3,573 $ 32,066 $ 396 * PCI loans are excluded from this table. The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2016 : Recorded Recorded Unpaid Investment Investment Average Interest Recorded Principal With No With Related Recorded Income (dollars in thousands) Investment Balance Allowance Allowance Allowance Investment Recognized Commercial, industrial and agricultural $ 1,640 $ 1,640 $ 668 $ 972 $ 865 $ 1,094 $ 70 Real estate - one to four family residential: Closed end first and seconds 7,110 7,712 3,760 3,350 416 6,893 393 Home equity lines 225 225 175 50 50 453 2 Total real estate - one to four family residential 7,335 7,937 3,935 3,400 466 7,346 395 Real estate - construction: One to four family residential 170 170 17 153 55 178 8 Other construction, land development and other land 7,170 7,170 1,745 5,425 1,368 5,885 317 Total real estate - construction 7,340 7,340 1,762 5,578 1,423 6,063 325 Real estate - farmland 515 517 261 254 40 525 34 Real estate - non-farm, non-residential: Owner occupied 7,645 7,647 6,195 1,450 321 6,176 407 Non-owner occupied 7,446 7,446 6,166 1,280 177 11,509 380 Total real estate - non-farm, non-residential 15,091 15,093 12,361 2,730 498 17,685 787 Consumer 309 322 3 306 63 323 17 Total loans* $ 32,230 $ 32,849 $ 18,990 $ 13,240 $ 3,355 $ 33,036 $ 1,628 *PCI loans are excluded from this table. Determining the fair value of purchased credit-impaired (“PCI”) loans at November 14, 2014 required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of the cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is the nonaccretable difference and is not recorded. In accordance with U.S. GAAP, the Company did not “carry over” any allowances for loan losses that were reserved for the VCB loan portfolio prior to the Company’s acquisition of VCB. PCI loans had unpaid principal balances of $6.0 million and $7.1 million and recorded carrying values of $5.3 million and $6.3 million at March 31, 2017 and December 31, 2016 , respectively. The following table presents a summary of the changes in the accretable yield of the PCI loan portfolio for the periods indicated: Three months ended Three months ended March 31, 2017 March 31, 2016 (dollars in thousands) Accretable Yield Accretable Yield Balance at beginning of period $ 903 $ 1,280 Accretion (110) (129) Reclassification of nonaccretable difference due to improvement in expected cash flows 248 24 Other changes, net 583 46 Balance at end of period $ 1,624 $ 1,221 The following table presents, by loan class, information related to loans modified as TDRs during the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 Pre- Post- Pre- Post- Modification Modification Modification Modification Number of Recorded Recorded Number of Recorded Recorded (dollars in thousands) Loans Balance Balance* Loans Balance Balance* Commercial, industrial and agricultural - $ - $ - 1 $ 68 $ 68 Real estate - one to four family residential: Closed end first and seconds 1 112 111 1 41 41 Total 1 $ 112 $ 111 2 $ 109 $ 109 * The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported. The following table present s , by loan class, information related to the loans modified as TDRs that subsequently defaulted (i.e., 90 days or more past due following a modification) during the three months ended March 31, 2017 and 2016 and were modified as TDRs within the 12 months prior to default: Three Months Ended Three Months Ended March 31, 2017 March 31, 2016 Number of Recorded Number of Recorded (dollars in thousands) Loans Balance Loans Balance Real estate - one to four family residential: Closed end first and seconds 2 $ 501 - $ - Total 2 $ 501 - $ - At March 31, 2017 , $1.6 million in foreclosed residential real estate properties were included in OREO, and $127 thousand in residential real estate loans were in the process of foreclosure. |