LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR LOAN LOSSES Loans at December 31, 2018 and 2017 were comprised as follows: December 31, 2018 December 31, 2017 Commercial, Industrial and Agricultural $ 213,850 $ 138,706 Real Estate 1-4 Family Residential 225,863 111,932 1-4 Family HELOC 88,112 72,017 Multi-family and Commercial 447,840 261,044 Construction, Land Development and Farmland 220,801 156,452 Consumer 20,495 17,605 Other 14,106 14,694 Total 1,231,067 772,450 Less Deferred loan fees (costs) (9 ) 231 Allowance for possible loan losses 10,892 9,731 Loans, net $ 1,220,184 $ 762,488 At December 31, 2018 and 2017 , loans are recorded net of purchase discounts of $4,525 and $272 , respectively. Activity in the allowance for loan losses by portfolio segment was as follows for the year ended December 31, 2018 : Commercial Industrial and Agricultural Multi-family and Commercial Construction Land Development and Farmland 1-4 Family Residential Real Estate Beginning balance $ 2,538 $ 3,166 $ 2,434 $ 773 Charge-offs (381 ) (76 ) (215 ) (36 ) Recoveries 590 221 44 12 Provision (996 ) 1,118 237 584 Ending balance $ 1,751 $ 4,429 $ 2,500 $ 1,333 1-4 Family HELOC Consumer Other Total Beginning balance $ 595 $ 183 $ 42 $ 9,731 Charge-offs (6 ) (26 ) (47 ) (787 ) Recoveries 10 34 2 913 Provision 57 (7 ) 42 1,035 Ending balance $ 656 $ 184 $ 39 $ 10,892 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Activity in the allowance for loan losses by portfolio segment was as follows for the year ended December 31, 2017 : Commercial Industrial and Agricultural Multi-family and Commercial Construction Land Development and Farmland 1-4 Family Residential Real Estate Beginning balance $ 2,432 $ 2,737 $ 1,786 $ 1,178 Charge-offs (976 ) — (45 ) (14 ) Recoveries 378 — 5 — Provision 704 429 688 (391 ) Ending balance $ 2,538 $ 3,166 $ 2,434 $ 773 1-4 Family HELOC Consumer Other Total Beginning balance $ 704 $ 208 $ 37 $ 9,082 Charge-offs — (36 ) — (1,071 ) Recoveries 19 2 — 404 Provision (128 ) 9 5 1,316 Ending balance $ 595 $ 183 $ 42 $ 9,731 Activity in the allowance for loan losses by portfolio segment was as follows for the year ended December 31, 2016 : Commercial Industrial and Agricultural Multi-family and Commercial Construction Land Development and Farmland 1-4 Family Residential Real Estate Beginning balance $ 2,198 $ 2,591 $ 894 $ 1,214 Charge-offs (84 ) — — (25 ) Recoveries 323 18 6 66 Provision (5 ) 128 886 (77 ) Ending balance $ 2,432 $ 2,737 $ 1,786 $ 1,178 1-4 Family HELOC Consumer Other Total Beginning balance $ 699 $ 192 $ 35 $ 7,823 Charge-offs — — (36 ) (145 ) Recoveries 11 12 — 436 Provision (6 ) 4 38 968 Ending balance $ 704 $ 208 $ 37 $ 9,082 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2018 was as follows: Commercial Industrial and Agricultural Multi-family and Commercial Construction Land Development and Farmland 1-4 Family Residential Real Estate Allowance for loan losses Individually evaluated for impairment $ 38 $ — $ 17 $ — Acquired with credit impairment — — — — Collectively evaluated for impairment 1,713 4,429 2,483 1,333 Total $ 1,751 $ 4,429 $ 2,500 $ 1,333 Loans Individually evaluated for impairment $ 978 $ 1,160 $ 1,780 $ 1,246 Acquired with credit impairment 40 232 1,751 262 Collectively evaluated for impairment 212,832 446,448 217,270 224,355 Total $ 213,850 $ 447,840 $ 220,801 $ 225,863 1-4 Family HELOC Consumer Other Total Allowance for loan losses Individually evaluated for impairment $ — $ — $ — $ 55 Acquired with credit impairment — — — — Collectively evaluated for impairment 656 184 39 10,837 Total $ 656 $ 184 $ 39 $ 10,892 Loans Individually evaluated for impairment $ — $ 12 $ — $ 5,176 Acquired with credit impairment — 11 — 2,296 Collectively evaluated for impairment 88,112 20,472 14,106 1,223,595 Total $ 88,112 $ 20,495 $ 14,106 $ 1,231,067 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) The allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2017 was as follows: Commercial Industrial and Agricultural Multi-family and Commercial Construction Land Development and Farmland 1-4 Family Residential Real Estate Allowance for loan losses Individually evaluated for impairment $ 606 $ — $ 57 $ — Acquired with credit impairment 2 — 2 — Collectively evaluated for impairment 1,930 3,166 2,375 773 Total $ 2,538 $ 3,166 $ 2,434 $ 773 Loans Individually evaluated for impairment $ 3,649 $ 1,921 $ 3,800 $ 2,114 Acquired with credit impairment 276 1,157 1,436 45 Collectively evaluated for impairment 134,781 257,966 151,216 109,773 Total $ 138,706 $ 261,044 $ 156,452 $ 111,932 1-4 Family HELOC Consumer Other Total Allowance for loan losses Individually evaluated for impairment $ — $ — $ — $ 663 Acquired with credit impairment — — — 4 Collectively evaluated for impairment 595 183 42 9,064 Total $ 595 $ 183 $ 42 $ 9,731 Loans Individually evaluated for impairment $ 90 $ — $ — $ 11,574 Acquired with credit impairment — — — 2,914 Collectively evaluated for impairment 71,927 17,605 14,694 757,962 Total $ 72,017 $ 17,605 $ 14,694 $ 772,450 Risk characteristics relevant to each portfolio segment are as follows: Commercial and industrial: The commercial and industrial loan portfolio segment includes commercial and industrial loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases or other expansion projects. Collection risk in this portfolio is driven by the creditworthiness of underlying borrowers, particularly cash flow from customers’ business operations. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Multi-family and commercial real estate: Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. The Company also utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting the market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. Non-owner occupied commercial real estate loans are loans secured by multifamily and commercial properties where the primary source of repayment is derived from rental income associated with the property (that is, loans for which 50 percent or more of the source of repayment comes from third party, nonaffiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. These loans are made to finance income-producing properties such as apartment buildings, office and industrial buildings, and retail properties. Owner-occupied commercial real estate loans are loans where the primary source of repayment is the cash flow from the ongoing operations and business activities conducted by the party, or affiliate of the party, who owns the property. At December 31, 2018 , approximately 27% of the outstanding principal balance of the Company’s commercial real estate loan portfolio was secured by owner-occupied properties. Construction and land development: Loans for non-owner-occupied real estate construction or land development are generally repaid through cash flow related to the operation, sale or refinance of the property. The Company also finances construction loans for owner-occupied properties. A portion of the Company’s construction and land portfolio segment is comprised of loans secured by residential product types (residential land and single-family construction). With respect to construction loans to developers and builders that are secured by non-owner occupied properties that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction and land development loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates, market sales activity, and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing. NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) 1 - 4 family residential real estate: Residential real estate loans represent loans to consumers or investors to finance a residence. These loans are typically financed on 15 to 30 year amortization terms, but generally with shorter maturities of 5 to 15 years . Many of these loans are extended to borrowers to finance their primary or secondary residence. Loans to an investor secured by a 1-4 family residence will be repaid from either the rental income from the property or from the sale of the property. This loan segment also includes closed-end home equity loans that are secured by a first or second mortgage on the borrower’s residence. This allows customers to borrow against the equity in their home. Loans in this portfolio segment are underwritten and approved based on a number of credit quality criteria including limits on maximum Loan-to-Value (LTV), minimum credit scores, and maximum debt to income. Real estate market values as of the time the loan is made directly affect the amount of credit extended and, in addition, changes in these residential property values influence the depth of potential losses in this portfolio segment. 1 - 4 family HELOC: This loan segment includes open-end home equity loans that are secured by a first or second mortgage on the borrower’s residence. This allows customers to borrow against the equity in their home utilizing a revolving line of credit. These loans are underwritten and approved based on a number of credit quality criteria including limits on maximum LTV, minimum credit scores, and maximum debt to income. Real estate market values as of the time the loan is made directly affect the amount of credit extended and, in addition, changes in these residential property values influence the depth of potential losses in this portfolio segment. Because of the revolving nature of these loans as well as the fact that many represent second mortgages, this portfolio segment can contain more risk than the amortizing 1-4 family residential real estate loans. Consumer: The consumer loan portfolio segment includes non-real estate secured direct loans to consumers for household, family, and other personal expenditures. Consumer loans may be secured or unsecured and are usually structured with short or medium term maturities. These loans are underwritten and approved based on a number of consumer credit quality criteria including limits on maximum LTV on secured consumer loans, minimum credit scores, and maximum debt to income. Many traditional forms of consumer installment credit have standard monthly payments and fixed repayment schedules of one to five years . These loans are made with either fixed or variable interest rates that are based on specific indices. Installment loans fill a variety of needs, such as financing the purchase of an automobile, a boat, a recreational vehicle, or other large personal items, or for consolidating debt. These loans may be unsecured or secured by an assignment of title, as in an automobile loan, or by money in a bank account. In addition to consumer installment loans, this portfolio segment also includes secured and unsecured personal lines of credit as well as overdraft protection lines. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures. Non-accrual loans by class of loan were as follows: December 31, 2018 December 31, 2017 Commercial, Industrial and Agricultural $ 279 $ 2,110 Multi-family and Commercial Real Estate — — Construction, Land Development and Farmland 1,294 2,518 1-4 Family Residential Real Estate 2,556 533 1-4 Family HELOC — — Consumer 65 — Total $ 4,194 $ 5,161 Performing non-accrual loans totaled $2,010 and $1,096 at December 31, 2018 and 2017 , respectively. NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Individually impaired loans by class of loans were as follows at December 31, 2018 : Unpaid Recorded Investment with no Allowance Recorded Recorded Investment with Allowance Recorded Total Recorded Related Commercial, Industrial and Agricultural $ 1,247 $ 765 $ 253 $ 1,018 $ 38 Multi-family and Commercial Real Estate 1,670 1,392 — 1,392 — Construction, Land Development and Farmland 3,920 3,359 172 3,531 17 1-4 Family Residential Real Estate 2,243 1,508 — 1,508 — 1-4 Family HELOC — — — — — Consumer 29 23 — 23 — Total $ 9,109 $ 7,047 $ 425 $ 7,472 $ 55 Individually impaired loans by class of loans were as follows at December 31, 2017 : Unpaid Recorded Investment with no Allowance Recorded Recorded Investment with Allowance Recorded Total Recorded Related Commercial, Industrial and Agricultural $ 4,398 $ 2,959 $ 966 $ 3,925 $ 608 Multi-family and Commercial Real Estate 3,427 3,078 — 3,078 — Construction, Land Development and Farmland 5,317 3,249 1,987 5,236 59 1-4 Family Residential Real Estate 2,857 2,159 — 2,159 — 1-4 Family HELOC 90 90 — 90 — Total $ 16,089 $ 11,535 $ 2,953 $ 14,488 $ 667 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Individually impaired loans by class of loans were as follows at December 31, 2016 : Unpaid Recorded Investment with no Allowance Recorded Recorded Investment with Allowance Recorded Total Recorded Related Commercial, Industrial and Agricultural $ 6,383 $ 3,924 $ 1,780 $ 5,704 $ 747 Multi-family and Commercial Real Estate 5,666 2,914 1,974 4,888 6 Construction, Land Development and Farmland 4,124 3,854 171 4,025 17 1-4 Family Residential Real Estate 2,422 2,035 27 2,062 27 1-4 Family HELOC 2,075 1,178 317 1,495 62 Total $ 20,670 $ 13,905 $ 4,269 $ 18,174 $ 859 Interest income recognized on impaired loans totaled $583 , $703 and $848 for the years ended December 31, 2018 , 2017 and 2016 , respectively. The average recorded investment in impaired loans for the years ended December 31, 2018 , 2017 and 2016 , was as follows: 2018 2017 2016 Commercial, Industrial and Agricultural $ 2,333 $ 5,225 $ 6,055 Multi-family and Commercial Real Estate 2,366 4,138 5,837 Construction, Land Development and Farmland 4,571 4,502 3,243 1-4 Family Residential Real Estate 2,468 2,212 2,715 1-4 Family HELOC 72 784 1,854 Consumer 62 — — Total $ 11,872 $ 16,861 $ 19,704 The Company utilizes a risk grading system to monitor the credit quality of the Company’s commercial loan portfolio which consists of commercial and industrial, commercial real estate and construction loans. Loans are graded on a scale of 1 to 9. Grades 1 - 5 are pass credits, grade 6 is special mention, grade 7 is substandard, grade 8 is doubtful and grade 9 is loss. A description of the risk grades are as follows: Grade 1 - Minimal Risk (Pass) This grade includes loans to borrowers with a strong financial position and history of profits and cash flows sufficient to service the debt. These borrowers have well defined sources of primary/secondary repayment, conservatively leveraged balance sheets and the ability to access a wide range of financing alternatives. Collateral securing these loans is negotiable, of sufficient value and in possession of the Company. Risk of loss is unlikely. NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Grade 2 - High Quality (Pass) This grade includes loans to borrowers with a strong financial condition reflecting dependable net profits and cash flows. The borrower has verifiable liquid net worth providing above average asset protection. An identifiable market exits for the collateral. Risk of loss is unlikely. Grade 3 - Above Average (Pass) This grade includes loans to borrowers with a balance sheet that reflects a comfortable degree of leverage and liquidity. Borrowers are profitable and have a sustained record of servicing debt. An identifiable market exits for the collateral, but liquidation could take up to one year. Risk of loss is unlikely. Grade 4 - Average (Pass) This grade includes loans to borrowers with a financial condition that is satisfactory and comparable to industry standards. The borrower has verifiable net worth, providing over time, average asset protection. Borrower cash flows are sufficient to satisfy debt service requirements. Risk of loss is below average. Grade 5 - Acceptable (Management Attention) (Pass) This grade includes loans to borrowers whose loans are performing, but sources of repayment are not documented by the current credit analysis. There are some declining trends in margins, ratios and/or cash flow. Guarantor(s) have strong net worth(s), but assets may be concentrated in real estate or other illiquid investments. Risk of loss is average. Grade 6 - Special Mention Special mention assets have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These assets pose elevated risk, but their weakness does not yet justify a substandard classification. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices. The special mention rating is designed to identify a specific level of risk and concern about asset quality . Although a special mention asset has a higher probability of default than a pass asset, its default is not imminent. Grade 7 - Substandard A ‘‘substandard’’ extension of credit is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Extensions of credit so classified should have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard credits, does not have to exist in individual extensions of credit classified as substandard. Substandard assets have a high probability of payment default, or they have other well-defined weaknesses. They require supervision that is more intensive by Company management. Substandard assets are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigation. NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Grade 8 - Doubtful An extension of credit classified ‘‘doubtful’’ has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage of and strengthen the credit, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceedings, capital injection, perfecting liens on additional collateral, or refinancing plans. Generally, the doubtful classification should not extend for a long period of time because in most cases the pending factors or events that warranted the doubtful classification should be resolved either positively or negatively in a reasonable period of time. Grade 9 - Loss Extensions of credit classified ‘‘loss’’ are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. Amounts classified loss should be promptly charged off. The Company will not attempt long term recoveries while the credit remains on the Company’s books. Losses should be taken in the period in which they surface as uncollectible. With loss assets, the underlying borrowers are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Once an asset is classified loss, there is little prospect of collecting either its principal or interest. Consumer purpose loans are initially assigned a default loan grade of 99 (Pass) and are risk graded (Grade 6, 7, or 8) according to delinquency status when applicable. Credit quality indicators by class of loan were as follows at December 31, 2018 : Pass Special Mention Substandard Total Commercial, Industrial and Agricultural $ 212,761 $ — $ 1,089 $ 213,850 1-4 Family Residential Real Estate 221,546 1,125 3,192 225,863 1-4 Family HELOC 88,112 — — 88,112 Multi-family and Commercial Real Estate 442,127 3,135 2,578 447,840 Construction, Land Development and Farmland 218,053 579 2,169 220,801 Consumer 20,236 — 259 20,495 Other 14,106 — — 14,106 Total $ 1,216,941 $ 4,839 $ 9,287 $ 1,231,067 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Credit quality indicators by class of loan were as follows at December 31, 2017 : Pass Special Mention Substandard Total Commercial, Industrial and Agricultural $ 135,833 $ 5 $ 2,868 $ 138,706 1-4 Family Residential Real Estate 108,426 1,392 2,114 111,932 1-4 Family HELOC 71,927 — 90 72,017 Multi-family and Commercial Real Estate 259,123 — 1,921 261,044 Construction, Land Development and Farmland 149,886 2,998 3,568 156,452 Consumer 17,605 — — 17,605 Other 14,694 — — 14,694 Total $ 757,494 $ 4,395 $ 10,561 $ 772,450 Past due loan balances by class of loan were as follows at December 31, 2018 : 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total Past Due Current Total Loans Commercial, Industrial and Agricultural $ 22 $ 153 $ 279 $ 454 $ 213,396 $ 213,850 1-4 Family Residential Real Estate 1,104 335 1,203 2,642 223,221 225,863 1-4 Family HELOC 50 — — 50 88,062 88,112 Multi-family and Commercial Real Estate — 104 — 104 447,736 447,840 Construction, Land Development and Farmland 214 — 171 385 220,416 220,801 Consumer 11 30 46 87 20,408 20,495 Other — — — — 14,106 14,106 Total $ 1,401 $ 622 $ 1,699 $ 3,722 $ 1,227,345 $ 1,231,067 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) Past due loan balances by class of loan were as follows at December 31, 2017 : 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Total Past Due Current Total Loans Commercial, Industrial and Agricultural $ 7 $ — $ 1,548 $ 1,555 $ 137,151 $ 138,706 1-4 Family Residential Real Estate 617 — — 617 111,315 111,932 1-4 Family HELOC — 7 — 7 72,010 72,017 Multi-family and Commercial Real Estate 1,254 — — 1,254 259,790 261,044 Construction, Land Development and Farmland 265 444 2,073 2,782 153,670 156,452 Consumer 14 — — 14 17,591 17,605 Other — — — — 14,694 14,694 Total $ 2,157 $ 451 $ 3,621 $ 6,229 $ 766,221 $ 772,450 At December 31, 2018, there were loans of $6 past due 90 days or more and still accruing interest. There were no loans past due 90 days or more and still accruing interest at December 31, 2017 . Troubled debt restructurings occurring during the year ended December 31, 2018 by class of loan were as follows: Number of Contracts Pre-Modification Oustanding Recorded Investments Post-Modification Oustanding Recorded Investments 1-4 Family Residential Estate 1 $ 1,254 $ 1,254 Multi-family and Commercial Real Estate 1 661 585 Total 2 $ 1,915 $ 1,839 Troubled debt restructurings occurring during the year ended December 31, 2017 by class of loan were as follows: Number of Contracts Pre-Modification Oustanding Recorded Investments Post-Modification Oustanding Recorded Investments Construction, Land Development and Farmland 2 $ 2,110 $ 1,640 Total 2 $ 2,110 $ 1,640 Troubled debt restructurings occurring during the year ended December 31, 2016 by class of loan were as follows: Number of Contracts Pre-Modification Oustanding Recorded Investments Post-Modification Oustanding Recorded Investments 1-4 Family Residential Estate 1 $ 1,712 $ 1,712 Total 1 $ 1,712 $ 1,712 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) During the year ended December 31, 2018 , one modification occurred that consisted of an interest only monthly payment restructure and had no effect on the allowance for loan losses or interested income. The other modification was a restructure of five loans, including purchased credit impaired loans, in which a charge off occurred of $76 . The 1-4 Family Residential loan with a related balance of $1,254 was paid during 2018. During the year ended December 31, 2017 , two loans were modified in a troubled debt restructuring. One modification consisted of a partial charge off totaling $470 , and a payment restructure with the modification having no effect on interest income for the remaining balance of $308 at December 31, 2017. The other modification consisted of a temporary suspension of required monthly payments of a loan with a balance of $108 at December 31, 2017 and had no effect on the allowance for loan losses or interest income. There were no charge offs resulting from the modification during the year ended December 31, 2016 . The modification consisted of changes in the amortization terms of the loans and payment modifications. The modification had no effect on the allowance for loan losses and interest income was not significantly affected. There were no subsequent defaults on loans modified in troubled debt restructurings during the years ended December 31, 2018 , 2017 and 2016 . The Company has acquired loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that not all contractually required payments would be collected. The carrying amount of those loans was as follows at December 31, 2018 and 2017 , respectively: 2018 2017 Commercial, Industrial and Agricultural $ 63 $ 298 Multi-family and Commercial Real Estate 233 1,217 Construction, Land Development and Farmland 1,958 1,508 1-4 Family Residential Real Estate 324 47 1-4 Family HELOC — — Consumer 18 — Total outstanding balance 2,596 3,070 Less remaining purchase discount 300 156 Allowance for loan losses — 4 Carrying amount, net of allowance $ 2,296 $ 2,910 During the the year ended December 31, 2018, loans with non-accretable purchase discounts totaling $146 were paid in full resulting in the recognition of the discounts in interest income. During the year ended December 31, 2017, a loan with non-accretable purchase discount totaling $354 was paid in full resulting in the recognition of the discounts in interest income. During the year ended December 31, 2016, a loan with non-accretable purchase discount totaling $708 was paid in full resulting in the recognition of the discount in interest income. Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the years ended December 31, 2018 , 2017 and 2016 : 2018 2017 2016 Balance at January 1, $ — $ 87 $ 233 New loans purchased 260 — — Loan charge offs (104 ) — — Accretion income (46 ) (87 ) (146 ) Balance at December 31, $ 110 $ — $ 87 NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED) The Company decreased the allowance for loan losses on purchased credit impaired loans by $4 , $2 and $241 during the years ended December 31, 2018 , 2017 and 2016 , respectively. In the normal course of business, the Company will enter into various credit arrangements with its executive officers, directors and their affiliates. These arrangements generally take the form of commercial lines of credit, personal lines of credit, mortgage loans, term loans or revolving arrangements secured by personal residences. An analysis of the activity with respect to loans to related parties for the years ended December 31, 2018 , 2017 and 2016 , is as follows: 2018 2017 2016 Balance - January 1, $ 8,581 $ 11,935 $ 10,484 New loans during the year 919 4,356 4,442 Repayments during the year (2,106 ) (7,710 ) (2,991 ) Balance - December 31, $ 7,394 $ 8,581 $ 11,935 During the three year period ended December 31, 2018 , none of these loans were restructured or charged off. |