Loans | Loans Classes of loans are as follows: December 31, 2018 2017 (Amounts In Thousands) Agricultural $ 92,673 $ 88,580 Commercial and financial 229,501 218,632 Real estate: Construction, 1 to 4 family residential 72,279 69,738 Construction, land development and commercial 113,807 109,595 Mortgage, farmland 236,454 215,286 Mortgage, 1 to 4 family first liens 912,059 831,591 Mortgage, 1 to 4 family junior liens 152,625 144,200 Mortgage, multi-family 352,434 336,810 Mortgage, commercial 383,314 361,196 Loans to individuals 30,072 26,417 Obligations of state and political subdivisions 52,725 57,626 2,627,943 2,459,671 Net unamortized fees and costs 952 894 2,628,895 2,460,565 Less allowance for loan losses 37,810 29,400 $ 2,591,085 $ 2,431,165 Changes in the allowance for loan losses and the allowance for loan loss balance applicable to impaired loans and the related loan balance of impaired loans for the years ended December 31, 2018 , 2017 and 2016 are as follows: Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi-family and commercial Other Total (Amounts In Thousands) 2018 Allowance for loan losses: Beginning balance $ 2,294 $ 4,837 $ 2,989 $ 3,669 $ 8,668 $ 5,700 $ 1,243 $ 29,400 Charge-offs (95 ) (585 ) — — (830 ) (251 ) (561 ) (2,322 ) Recoveries 119 1,057 148 30 612 107 162 2,235 Provision 471 517 155 273 4,066 2,609 406 8,497 Ending balance $ 2,789 $ 5,826 $ 3,292 $ 3,972 $ 12,516 $ 8,165 $ 1,250 $ 37,810 Ending balance, individually evaluated for impairment $ 479 $ 1,189 $ 4 $ — $ 72 $ 306 $ 64 $ 2,114 Ending balance, collectively evaluated for impairment $ 2,310 $ 4,637 $ 3,288 $ 3,972 $ 12,444 $ 7,859 $ 1,186 $ 35,696 Loan balances: Ending balance $ 92,673 $ 229,501 $ 186,086 $ 236,454 $ 1,064,684 $ 735,748 $ 82,797 $ 2,627,943 Ending balance, individually evaluated for impairment $ 2,460 $ 4,162 $ 1,137 $ 3,612 $ 7,012 $ 9,538 $ 64 $ 27,985 Ending balance, collectively evaluated for impairment $ 90,213 $ 225,339 $ 184,949 $ 232,842 $ 1,057,672 $ 726,210 $ 82,733 $ 2,599,958 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi-family and commercial Other Total (Amounts In Thousands) 2017 Allowance for loan losses: Beginning balance $ 2,947 $ 4,531 $ 2,890 $ 3,417 $ 7,677 $ 4,045 $ 1,023 $ 26,530 Charge-offs (167 ) (583 ) (114 ) (3 ) (553 ) (130 ) (554 ) (2,104 ) Recoveries 146 1,183 662 — 661 376 258 3,286 Provision (632 ) (294 ) (449 ) 255 883 1,409 516 1,688 Ending balance $ 2,294 $ 4,837 $ 2,989 $ 3,669 $ 8,668 $ 5,700 $ 1,243 $ 29,400 Ending balance, individually evaluated for impairment $ 133 $ 1,018 $ 39 $ 238 $ 66 $ 482 $ 190 $ 2,166 Ending balance, collectively evaluated for impairment $ 2,161 $ 3,819 $ 2,950 $ 3,431 $ 8,602 $ 5,218 $ 1,053 $ 27,234 Loan balances: Ending balance $ 88,580 $ 218,632 $ 179,333 $ 215,286 $ 975,791 $ 698,006 $ 84,043 $ 2,459,671 Ending balance, individually evaluated for impairment $ 4,916 $ 2,768 $ 957 $ 7,962 $ 6,654 $ 8,040 $ 190 $ 31,487 Ending balance, collectively evaluated for impairment $ 83,664 $ 215,864 $ 178,376 $ 207,324 $ 969,137 $ 689,966 $ 83,853 $ 2,428,184 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi-family and commercial Other Total (Amounts In Thousands) 2016 Allowance for loan losses: Beginning balance $ 3,082 $ 4,517 $ 2,280 $ 3,342 $ 8,172 $ 4,223 $ 894 $ 26,510 Charge-offs (226 ) (315 ) (34 ) (116 ) (1,181 ) (66 ) (693 ) (2,631 ) Recoveries 181 1,169 849 — 1,043 385 187 3,814 Provision (90 ) (840 ) (205 ) 191 (357 ) (497 ) 635 (1,163 ) Ending balance $ 2,947 $ 4,531 $ 2,890 $ 3,417 $ 7,677 $ 4,045 $ 1,023 $ 26,530 Ending balance, individually evaluated for impairment $ 856 $ 718 $ 105 $ 390 $ 90 $ 34 $ 150 $ 2,343 Ending balance, collectively evaluated for impairment $ 2,091 $ 3,813 $ 2,785 $ 3,027 $ 7,587 $ 4,011 $ 873 $ 24,187 Loan balances: Ending balance $ 92,871 $ 192,995 $ 179,425 $ 202,340 $ 892,869 $ 637,029 $ 79,619 $ 2,277,148 Ending balance, individually evaluated for impairment $ 11,720 $ 2,477 $ 1,136 $ 8,028 $ 7,042 $ 3,111 $ 150 $ 33,664 Ending balance, collectively evaluated for impairment $ 81,151 $ 190,518 $ 178,289 $ 194,312 $ 885,827 $ 633,918 $ 79,469 $ 2,243,484 The Company evaluates the following loans to determine impairment: 1) all nonaccrual and TDR loans, 2) all non consumer and non 1 to 4 family residential loans with prior charge-offs, 3) all non consumer and non 1 to 4 family loan relationships classified as substandard and 4) loans with indications of or suspected deteriorating credit quality. The following table presents the credit quality indicators by type of loans in each category as of December 31, 2018 : Agricultural Commercial and Financial Real Estate: Construction, 1 to 4 family residential Real Estate: Construction, land development and commercial (Amounts In Thousands) 2018 Grade: Excellent $ 3,667 $ 3,322 $ — $ 209 Good 15,342 51,562 13,029 16,667 Satisfactory 39,897 121,759 42,043 68,123 Monitor 27,510 35,897 15,045 19,888 Special Mention 647 11,418 1,767 7,635 Substandard 5,610 5,543 395 1,285 Total $ 92,673 $ 229,501 $ 72,279 $ 113,807 Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family first liens Real Estate: Mortgage, 1 to 4 family junior liens Real Estate: Mortgage, multi- family 2018 Grade: Excellent $ 5,619 $ 2,715 $ 520 $ 22,058 Good 52,364 33,134 4,569 60,047 Satisfactory 126,706 752,473 138,533 187,641 Monitor 41,486 96,187 6,242 60,398 Special Mention 1,055 10,439 1,130 16,065 Substandard 9,224 17,111 1,631 6,225 Total $ 236,454 $ 912,059 $ 152,625 $ 352,434 Real Estate: Mortgage, commercial Loans to individuals Obligations of state and political subdivisions Total 2018 Grade: Excellent $ 34,096 $ — $ 8,117 $ 80,323 Good 86,453 315 15,652 349,134 Satisfactory 177,271 28,797 20,685 1,703,928 Monitor 74,990 647 8,271 386,561 Special Mention 3,228 217 — 53,601 Substandard 7,276 96 — 54,396 Total $ 383,314 $ 30,072 $ 52,725 $ 2,627,943 The following table presents the credit quality indicators by type of loans in each category as of December 31, 2017 : Agricultural Commercial and Financial Real Estate: Construction, 1 to 4 family residential Real Estate: Construction, land development and commercial (Amounts In Thousands) 2017 Grade: Excellent $ 2,585 $ 10,264 $ — $ 2,548 Good 15,755 51,620 4,710 27,296 Satisfactory 40,886 116,375 47,995 35,749 Monitor 17,009 29,392 15,188 39,760 Special Mention 6,898 5,576 1,845 3,358 Substandard 5,447 5,405 — 884 Total $ 88,580 $ 218,632 $ 69,738 $ 109,595 Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family first liens Real Estate: Mortgage, 1 to 4 family junior liens Real Estate: Mortgage, multi-family 2017 Grade: Excellent $ 4,751 $ 2,392 $ 489 $ 16,564 Good 54,409 30,094 4,527 75,768 Satisfactory 109,724 689,645 130,451 195,652 Monitor 32,655 76,766 4,881 42,373 Special Mention 5,306 12,072 1,834 — Substandard 8,441 20,622 2,018 6,453 Total $ 215,286 $ 831,591 $ 144,200 $ 336,810 Real Estate: Mortgage, commercial Loans to individuals Obligations of state and political subdivisions Total 2017 Grade: Excellent $ 30,355 $ 1 $ 8,794 $ 78,743 Good 98,434 118 30,607 393,338 Satisfactory 179,417 25,445 14,693 1,586,032 Monitor 43,786 500 3,532 305,842 Special Mention 6,303 182 — 43,374 Substandard 2,901 171 — 52,342 Total $ 361,196 $ 26,417 $ 57,626 $ 2,459,671 The below are descriptions of the credit quality indicators: Excellent - Excellent rated loans are prime quality loans covered by highly-liquid collateral with generous margins or supported by superior current financial conditions reflecting substantial net worth, relative to total credit extended, and based on assets of a stable and non-speculative nature whose values can be readily verified. Identified repayment source or cash flow is abundant and assured. Good - Good rated loans are adequately secured by readily-marketable collateral or good financial condition characterized by liquidity, flexibility and sound net worth. Loans are supported by sound primary and secondary payment sources and timely and accurate financial information. Satisfactory – Satisfactory rated loans are loans to borrowers of average financial means not especially vulnerable to changes in economic or other circumstances, where the major support for the extension is sufficient collateral of a marketable nature, and the primary source of repayment is seen to be clear and adequate. Monitor – Monitor rated loans are identified by management as warranting special attention for a variety of reasons that may bear on ultimate collectability. This may be due to adverse trends, a particular industry, loan structure, or repayment that is dependent on projections, or a one-time occurrence. Special Mention – Special mention rated loans are supported by a marginal payment capacity and are marginally protected by collateral. There are identified weaknesses that if not monitored and corrected may adversely affect the Company’s credit position. A special mention credit would typically have a weakness in one of the general categories (cash flow, collateral position or payment history) but not in all categories. Substandard – Substandard loans are not adequately supported by the paying capacity of the borrower and may be inadequately collateralized. These loans have a well-defined weakness or weaknesses. For these loans, it is more probable than not that the Company could sustain some loss if the deficiency(ies) is not corrected. Past due loans as of December 31, 2018 and 2017 were as follows: 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Accruing Loans Past Due 90 Days or More (Amounts In Thousands) December 31, 2018 Agricultural $ 1,026 $ — $ 135 $ 1,161 $ 91,512 $ 92,673 $ — Commercial and financial 988 459 225 1,672 227,829 229,501 — Real estate: Construction, 1 to 4 family residential — — 212 212 72,067 72,279 212 Construction, land development and commercial 233 202 — 435 113,372 113,807 — Mortgage, farmland 193 388 — 581 235,873 236,454 — Mortgage, 1 to 4 family first liens 3,972 833 3,234 8,039 904,020 912,059 158 Mortgage, 1 to 4 family junior liens 199 36 — 235 152,390 152,625 — Mortgage, multi-family — — — — 352,434 352,434 — Mortgage, commercial 733 344 — 1,077 382,237 383,314 — Loans to individuals 195 — 22 217 29,855 30,072 — Obligations of state and political subdivisions — — — — 52,725 52,725 — $ 7,539 $ 2,262 $ 3,828 $ 13,629 $ 2,614,314 $ 2,627,943 $ 370 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Accruing Loans Past Due 90 Days or More (Amounts In Thousands) December 31, 2017 Agricultural $ 324 $ — $ 269 $ 593 $ 87,987 $ 88,580 $ — Commercial and financial 447 20 93 560 218,072 218,632 — Real estate: Construction, 1 to 4 family residential — — — — 69,738 69,738 — Construction, land development and commercial 246 — — 246 109,349 109,595 — Mortgage, farmland 269 — — 269 215,017 215,286 — Mortgage, 1 to 4 family first liens 5,143 1,750 2,939 9,832 821,759 831,591 971 Mortgage, 1 to 4 family junior liens 579 116 — 695 143,505 144,200 — Mortgage, multi-family — — — — 336,810 336,810 — Mortgage, commercial 307 178 16 501 360,695 361,196 — Loans to individuals 206 55 6 267 26,150 26,417 — Obligations of state and political subdivisions — — — — 57,626 57,626 — $ 7,521 $ 2,119 $ 3,323 $ 12,963 $ 2,446,708 $ 2,459,671 $ 971 The Company does not have a significant amount of loans that are past due less than 90 days where there are serious doubts as to the ability of the borrowers to comply with the loan repayment terms. Accruing loans past due 90 days or more decreased $0.60 million from December 31, 2017 to December 31, 2018 . As of December 31, 2018 and 2017 , accruing loans past due 90 days or more were 0.01% and 0.04% of total loans, respectively. The average balance of the accruing loans past due 90 days or more increased in 2018 as compared to 2017 . The average 90 days or more past due accruing loan balance per loan was $0.19 million as of December 31, 2018 compared to $0.12 million as of December 31, 2017 . The loans 90 days or more past due and still accruing are believed to be adequately collateralized. Loans are placed on nonaccrual status when management believes the collection of future principal and interest is not reasonably assured. Certain impaired loan information by loan type at December 31, 2018 and 2017 was as follows: December 31, 2018 December 31, 2017 Nonaccrual loans (1) Accruing loans past due 90 days or more TDR loans Nonaccrual loans (1) Accruing loans past due 90 days or more TDR loans (Amounts In Thousands) (Amounts In Thousands) Agricultural $ 1,338 $ — $ 120 $ 1,651 $ — $ 2,309 Commercial and financial 1,476 — 2,686 825 — 1,943 Real estate: Construction, 1 to 4 family residential — 212 — — — — Construction, land development and commercial — — 328 — — 339 Mortgage, farmland 1,062 — 3,301 1,391 — 1,451 Mortgage, 1 to 4 family first liens 5,799 158 1,143 4,407 971 1,357 Mortgage, 1 to 4 family junior liens — — 24 7 — 25 Mortgage, multi-family 145 — — 218 — — Mortgage, commercial 1,009 — 937 597 — 1,046 Loans to individuals — — — — — — $ 10,829 $ 370 $ 8,539 $ 9,096 $ 971 $ 8,470 (1) There were $4.84 million and $3.62 million of TDR loans included within nonaccrual loans as of December 31, 2018 and 2017 , respectively. The Company may modify the terms of a loan to maximize the collection of amounts due. In most cases, the modification is a reduction in interest rate, conversion to interest only payments or an extension of the maturity date. The borrower is experiencing financial difficulties or is expected to experience financial difficulties in the near-term, so a concessionary modification is granted to the borrower that would otherwise not be considered. TDR loans accrue interest as long as the borrower complies with the revised terms and conditions and has demonstrated repayment performance at a level commensurate with the modified terms over several payment cycles. Below is a summary of information for TDR loans as of December 31, 2018 and 2017 : December 31, 2018 Number of contracts Recorded investment Commitments outstanding (Dollar Amounts In Thousands) Agricultural 5 $ 1,316 $ 91 Commercial and financial 13 3,867 75 Real estate: Construction, 1 to 4 family residential — — — Construction, land development and commercial 2 328 — Mortgage, farmland 8 4,291 — Mortgage, 1 to 4 family first liens 16 1,710 — Mortgage, 1 to 4 family junior liens 1 24 — Mortgage, multi-family — — — Mortgage, commercial 9 1,839 — Loans to individuals — — — 54 $ 13,375 $ 166 December 31, 2017 Number of contracts Recorded investment Commitments outstanding (Dollar Amounts In Thousands) Agricultural 9 $ 3,628 $ 321 Commercial and financial 14 2,575 169 Real estate: Construction, 1 to 4 family residential — — 16 Construction, land development and commercial 2 339 — Mortgage, farmland 7 2,761 — Mortgage, 1 to 4 family first liens 13 1,442 — Mortgage, 1 to 4 family junior liens 1 25 24 Mortgage, multi-family — — — Mortgage, commercial 8 1,324 — Loans to individuals — — — 54 $ 12,094 $ 530 A summary of TDR loans that were modified during the year ended December 31, 2018 and 2017 was as follows: December 31, 2018 Number of Contracts Pre-modification recorded investment Post-modification recorded investment ( Dollar Amounts In Thousands) Agricultural 1 $ 163 $ 163 Commercial and financial 6 2,294 2,294 Real estate: Construction, 1 to 4 family residential — — — Construction, land development and commercial 1 218 218 Mortgage, farmland 2 4,944 4,944 Mortgage, 1 to 4 family first liens 6 627 627 Mortgage, 1 to 4 family junior liens — — — Mortgage, multi-family — — — Mortgage, commercial 2 852 852 Loans to individuals — — — 18 $ 9,098 $ 9,098 December 31, 2017 Number of Contracts Pre-modification recorded investment Post-modification recorded investment ( Dollar Amounts In Thousands) Agricultural 6 $ 10,890 $ 10,890 Commercial and financial 5 2,051 2,051 Real estate: Construction, 1 to 4 family residential — — — Construction, land development and commercial 1 231 231 Mortgage, farmland 2 598 598 Mortgage, 1 to 4 family first liens 2 311 311 Mortgage, 1 to 4 family junior liens — — — Mortgage, multi-family 1 249 249 Mortgage, commercial — — — Loans to individuals — — — 17 $ 14,330 $ 14,330 The Bank has commitments to lend additional borrowings to TDR loan customers. These commitments are in the normal course of business and allow the borrowers to build pre-sold homes and commercial property which increase their overall cash flow. The additional borrowings are not used to facilitate payments on these loans. There were no TDR loans modified during the year that were in payment default (defined as past due 90 days or more) as of December 31, 2018 or 2017 . Information regarding impaired loans as of and for the year ended December 31, 2018 is as follows: Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized (Amounts in Thousands) 2018 With no related allowance recorded: Agricultural $ 1,395 $ 1,663 $ — $ 1,071 $ 23 Commercial and financial 1,650 2,503 — 1,977 58 Real estate: Construction, 1 to 4 family residential 111 148 — 113 — Construction, land development and commercial 328 344 — 333 18 Mortgage, farmland 3,612 4,071 — 3,068 89 Mortgage, 1 to 4 family first liens 6,089 7,819 — 6,435 36 Mortgage, 1 to 4 family junior liens — 254 — — — Mortgage, multi-family 145 213 — 153 — Mortgage, commercial 1,871 2,486 — 1,940 42 Loans to individuals — 14 — — — $ 15,201 $ 19,515 $ — $ 15,090 $ 266 With an allowance recorded: Agricultural $ 1,065 $ 1,229 $ 479 $ 980 $ 7 Commercial and financial 2,512 2,512 1,189 2,793 107 Real estate: Construction, 1 to 4 family residential 698 698 4 622 28 Construction, land development and commercial — — — — — Mortgage, farmland — — — — — Mortgage, 1 to 4 family first liens 899 974 70 888 25 Mortgage, 1 to 4 family junior liens 24 24 2 25 1 Mortgage, multi-family 7,447 7,447 305 7,543 346 Mortgage, commercial 75 75 1 77 4 Loans to individuals 64 64 64 77 9 $ 12,784 $ 13,023 $ 2,114 $ 13,005 $ 527 Total: Agricultural $ 2,460 $ 2,892 $ 479 $ 2,051 $ 30 Commercial and financial 4,162 5,015 1,189 4,770 165 Real estate: Construction, 1 to 4 family residential 809 846 4 735 28 Construction, land development and commercial 328 344 — 333 18 Mortgage, farmland 3,612 4,071 — 3,068 89 Mortgage, 1 to 4 family first liens 6,988 8,793 70 7,323 61 Mortgage, 1 to 4 family junior liens 24 278 2 25 1 Mortgage, multi-family 7,592 7,660 305 7,696 346 Mortgage, commercial 1,946 2,561 1 2,017 46 Loans to individuals 64 78 64 77 9 $ 27,985 $ 32,538 $ 2,114 $ 28,095 $ 793 Information regarding impaired loans as of and for the year ended December 31, 2017 is as follows: Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized (Amounts in Thousands) 2017 With no related allowance recorded: Agricultural $ 1,822 $ 2,193 $ — $ 2,044 $ 19 Commercial and financial 1,725 2,487 — 2,080 51 Real estate: Construction, 1 to 4 family residential 114 150 — 116 5 Construction, land development and commercial 338 371 — 344 14 Mortgage, farmland 2,523 2,902 — 2,476 56 Mortgage, 1 to 4 family first liens 6,045 7,507 — 6,286 80 Mortgage, 1 to 4 family junior liens 7 482 — 23 — Mortgage, multi-family 218 355 — 231 — Mortgage, commercial 1,564 2,274 — 1,706 45 Loans to individuals — 14 — — — $ 14,356 $ 18,735 $ — $ 15,306 $ 270 With an allowance recorded: Agricultural $ 3,094 $ 3,149 $ 133 $ 3,526 $ 160 Commercial and financial 1,043 1,043 1,018 1,249 60 Real estate: Construction, 1 to 4 family residential — — — — — Construction, land development and commercial 505 505 39 321 14 Mortgage, farmland 5,439 5,439 238 5,596 242 Mortgage, 1 to 4 family first liens 577 593 63 585 20 Mortgage, 1 to 4 family junior liens 25 25 3 26 1 Mortgage, multi-family 6,179 6,179 480 6,247 281 Mortgage, commercial 79 79 2 81 4 Loans to individuals 190 190 190 179 20 $ 17,131 $ 17,202 $ 2,166 $ 17,810 $ 802 Total: Agricultural $ 4,916 $ 5,342 $ 133 $ 5,570 $ 179 Commercial and financial 2,768 3,530 1,018 3,329 111 Real estate: Construction, 1 to 4 family residential 114 150 — 116 5 Construction, land development and commercial 843 876 39 665 28 Mortgage, farmland 7,962 8,341 238 8,072 298 Mortgage, 1 to 4 family first liens 6,622 8,100 63 6,871 100 Mortgage, 1 to 4 family junior liens 32 507 3 49 1 Mortgage, multi-family 6,397 6,534 480 6,478 281 Mortgage, commercial 1,643 2,353 2 1,787 49 Loans to individuals 190 204 190 179 20 $ 31,487 $ 35,937 $ 2,166 $ 33,116 $ 1,072 Information regarding impaired loans as of and for the year ended December 31, 2016 is as follows: Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized (Amounts in Thousands) 2016 With no related allowance recorded: Agricultural $ 800 $ 971 $ — $ 923 $ — Commercial and financial 1,540 2,175 — 1,662 18 Real estate: Construction, 1 to 4 family residential 117 151 — 131 6 Construction, land development and commercial 204 290 — 207 5 Mortgage, farmland 2,594 2,887 — 2,767 67 Mortgage, 1 to 4 family first liens 5,011 6,137 — 5,265 53 Mortgage, 1 to 4 family junior liens 153 646 — 186 — Mortgage, multi-family 243 362 — 288 — Mortgage, commercial 1,901 2,727 — 1,996 46 Loans to individuals — 19 — — — $ 12,563 $ 16,365 $ — $ 13,425 $ 195 With an allowance recorded: Agricultural $ 10,920 $ 10,978 $ 856 $ 11,258 $ 464 Commercial and financial 937 955 718 777 27 Real estate: Construction, 1 to 4 family residential 815 815 105 537 27 Construction, land development and commercial — — — — — Mortgage, farmland 5,434 5,434 390 5,591 240 Mortgage, 1 to 4 family first liens 1,266 1,374 79 1,226 43 Mortgage, 1 to 4 family junior liens 612 667 11 637 27 Mortgage, multi-family — — — — — Mortgage, commercial 967 1,004 34 986 36 Loans to individuals 150 150 150 151 16 $ 21,101 $ 21,377 $ 2,343 $ 21,163 $ 880 Total: Agricultural $ 11,720 $ 11,949 $ 856 $ 12,181 $ 464 Commercial and financial 2,477 3,130 718 2,439 45 Real estate: Construction, 1 to 4 family residential 932 966 105 668 33 Construction, land development and commercial 204 290 — 207 5 Mortgage, farmland 8,028 8,321 390 8,358 307 Mortgage, 1 to 4 family first liens 6,277 7,511 79 6,491 96 Mortgage, 1 to 4 family junior liens 765 1,313 11 823 27 Mortgage, multi-family 243 362 — 288 — Mortgage, commercial 2,868 3,731 34 2,982 82 Loans to individuals 150 169 150 151 16 $ 33,664 $ 37,742 $ 2,343 $ 34,588 $ 1,075 Impaired loans decreased by $3.50 million from December 31, 2017 to December 31, 2018 . Impaired loans include any loan that has been placed on nonaccrual status, accruing loans past due 90 days or more, TDR loans and specific reserve loans. Impaired loans also include loans that, based on management’s evaluation of current information and events, the Bank expects to be unable to collect in full according to the contractual terms of the original loan agreement. Impaired loans were 1.06% and 1.28% of loans held for investment as of December 31, 2018 and 2017, respectively. The decrease in impaired loans is due mainly to a decrease of $4.70 million in specific reserve loans and a decrease of accruing loans past due 90 days or more of $0.60 million , offset by an increase in nonaccrual loans of $1.73 million and an increase in TDR loans of $0.69 million from December 31, 2017 to December 31, 2018 . For loans that are collateral dependent, losses are evaluated based on the portion of a loan that exceeds the fair market value of the collateral that can be identified as uncollectible. In general, this is the amount that the carrying value of the loan exceeds the related appraised value. Generally, it is the Company’s policy not to rely on appraisals that are older than one year prior to the date the impairment is being measured. The most recent appraisal values may be adjusted if, in the Company’s judgment, experience and other market data indicate that the property’s value, use, condition, exit market or other variable affecting its value may have changed since the appraisal was performed, consistent with the December 2006 joint interagency guidance on the allowance for loan losses. The charge-off or loss adjustment supported by an appraisal is considered the minimum charge-off. Any adjustments made to the appraised value are to provide additional charge-off or loss allocations based on the applicable facts and circumstances. In instances where there is an estimated decline in value, either a loss allocation is provided or a charge-off taken pending confirmation of the amount of the loss from an updated appraisal. Upon receipt of the new appraisals, an additional loss allocation may be provided or charge-off taken based on the appraised value of the collateral. On average, appraisals are obtained within one month of order. The Company has not experienced any significant time lapses in recognizing the required provisions for collateral dependent loans, nor has the Company delayed appropriate charge-offs. When an updated appraisal value has been obtained, the Company has used the appraisal amount in helping to determine the appropriate charge-off or required reserve. The Company also evaluates any changes in the financial condition of the borrower and guarantors (if applicable), economic conditions, and the Company’s loss experience with the type of property in question. Any information utilized in addition to the appraisal is intended to identify additional charge-offs or provisions, not to override the appraised value. The Company separates its portfolio loans and leases into segments for determining the allowance for loan losses. The Company's portfolio segments includes agricultural, commercial and financial, real estate, loans to individuals and obligations of state and political subdivisions. The Company further separates its portfolio into classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Classes with the real estate portfolio segment includes 1 to 4 family residential constructions, land development and commercial construction, farmland, 1 to 4 family first liens, 1 to 4 family junior liens, multi-family and commercial. Loans that exhibit probable or observed credit weaknesses, as well as loans that have been modified in a TDR, are subject to individual review for impairment. When individual loans are reviewed for impairment, the Company determines allowances based on management's estimate of the borrower's ability to repay the loan given the availability of the collateral, other sources of cash flow, as well as evaluation of legal options available. Allowances for impaired loans are measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or the fair value of the underlying collateral. Historical loss rates are applied to loans that are not individually reviewed for impairment. The 20 quarter migration analysis performed by management uses loan level attributes to track the movement of loans through the various credit risk rating categories in order to estimate the percentage of historical loss to apply to each specific credit risk rating in each loan category. The credit risk rating system currently utilized for allowance analysis purposes encompasses six categories. The Company's allowance for loan loss methodology incorporates a variety of risk considerations, both quantitative and qualitative, in establishing an allowance for loan losses that management believes is appropriate at each reporting date. Quantitative factors include the Company's historical loss experience, delinquency and charge-off trends, collateral values, changes in impaired loans, and other factors. Quantitative factors also incorporate known information about individual loans, including borrowers' sensitivity to interest rate movements. Qualitative factors include changes in lending policies and procedures; changes in national and local economic and business conditions; changes in the nature and volume of the loan portfolio; changes in the experience, ability and depth of lending management and staff; changes in the quality of the Bank's loan review system; the existence and effect of concentrations of credit; and the effect of any other identified external factors. Determinations relating to the possible level of future loan losses are based in part on subjective judgments by management. Future loan losses in excess of current estimates, could materially adversely affect our results of operations or financial position. As the Company adds new products and increases the complexity of its loan portfolio, it will enhance its methodology accordingly. Although management believes the levels of the allowance for loan losses as of December 31, 2018 and 2017 were adequate to absorb probable losses inherent in the loan portfolio, a decline in local economic conditions, or other factors, could result in increasing losses that cannot be reasonably predicted at this time. |