(In thousands)	2018			2017

Real estate mortgage:
1-4 family residential	$	195,274		$	171,863
Commercial		343,498			273,106
Multifamily residential		28,814			21,121
Residential construction		19,527			15,088
Commercial construction		8,669			18,385
Land and land development		10,504			9,733
Commercial business		67,786			52,724

Consumer:
Home equity		24,635			22,939
Auto		11,720			7,057
Other consumer		2,918			2,323
Total loans		713,345			594,339

Deferred loan origination fees and costs, net		249			209
Allowance for loan losses		(9,323	)		(8,092	)

Loans, net	$	704,271		$	586,456

The Bank has entered into loan transactions with certain directors, officers and their affiliates (related parties). In the opinion of management, such indebtedness was incurred in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons and does not involve more than normal risk of collectability or present other unfavorable features.

	Residential Real Estate			Commercial Real Estate		Multifamily			Construction			Land & Land Development			Commercial Business		Consumer			Total
	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	195,274		$	343,498	$	28,814		$	28,196		$	10,504		$	67,786	$	39,273		$	713,345

Accrued interest receivable		589			1,403		81			156			24			365		69			2,687

Net deferred loan origination fees and costs		(62	)		104		(30	)		(5	)		(4	)		275		(29	)		249

Recorded investment in loans	$	195,801		$	345,005	$	28,865		$	28,347		$	10,524		$	68,426	$	39,313		$	716,281

Recorded Investment in Loans as Evaluated for Impairment:
Individually evaluated for impairment	$	5,107		$	7,719	$	-		$	-		$	27		$	231	$	243		$	13,327

Collectively evaluated for impairment		190,694			337,286		28,865			28,347			10,497			68,195		39,070			702,954

Recorded investment in loans	$	195,801		$	345,005	$	28,865		$	28,347		$	10,524		$	68,426	$	39,313		$	716,281

	Residential Real Estate		Commercial Real Estate		Multifamily			Construction			Land & Land Development		Commercial Business		Consumer			Total
	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	171,863	$	273,106	$	21,121		$	33,473		$	9,733	$	52,724	$	32,319		$	594,339

Accrued interest receivable		493		929		37			137			31		221		59			1,907

Net deferred loan origination fees and costs		50		26		(15	)		(17	)		2		184		(21	)		209

Recorded investment in loans	$	172,406	$	274,061	$	21,143		$	33,593		$	9,766	$	53,129	$	32,357		$	596,455

Recorded Investment in Loans as Evaluated for Impairment:
Individually evaluated for impairment	$	4,969	$	5,477	$	-		$	-		$	30	$	192	$	196		$	10,864

Collectively evaluated for impairment		167,437		268,584		21,143			33,593			9,736		52,937		32,161			585,591

Recorded investment in loans	$	172,406	$	274,061	$	21,143		$	33,593		$	9,766	$	53,129	$	32,357		$	596,455

	Residential Real Estate		Commercial Real Estate		Multifamily		Construction		Land & Land Development		Commercial Business		Consumer		Total
	(In thousands)
2018:
Individually evaluated for impairment	$	7	$	492	$	-	$	-	$	-	$	-	$	12	$	511

Collectively evaluated for impairment		267		6,333		195		580		210		1,041		186		8,812

Ending balance	$	274	$	6,825	$	195	$	580	$	210	$	1,041	$	198	$	9,323

2017:
Individually evaluated for impairment	$	2	$	-	$	-	$	-	$	-	$	-	$	21	$	23

Collectively evaluated for impairment		250		5,739		106		810		223		839		102		8,069

Ending balance	$	252	$	5,739	$	106	$	810	$	223	$	839	$	123	$	8,092

	Residential Real Estate			Commercial Real Estate		Multifamily			Construction			Land & Land Development			Commercial Business			Consumer			Total
	(In thousands)
2018:
Beginning balance	$	252		$	5,739	$	106		$	810		$	223		$	839		$	123		$	8,092
Provisions		14			1,086		89			(230	)		(13	)		190			217			1,353
Charge-offs		(98	)		-		-			-			-			-			(223	)		(321	)
Recoveries		106			-		-			-			-			12			81			199
Ending balance	$	274		$	6,825	$	195		$	580		$	210		$	1,041		$	198		$	9,323

2017:
Beginning balance	$	335		$	5,160	$	109		$	845		$	295		$	284		$	94		$	7,122
Provisions		15			569		(3	)		(35	)		(72	)		738			89			1,301
Charge-offs		(169	)		-		-			-			-			(200	)		(116	)		(485	)
Recoveries		71			10		-			-			-			17			56			154
Ending balance	$	252		$	5,739	$	106		$	810		$	223		$	839		$	123		$	8,092

2016:
Beginning balance	$	444		$	4,327	$	156		$	551		$	369		$	678		$	99		$	6,624
Provisions		(17	)		833		(47	)		294			(74	)		(385	)		33			637
Charge-offs		(207	)		-		-			-			-			(10	)		(108	)		(325	)
Recoveries		115			-		-			-			-			1			70			186
Ending balance	$	335		$	5,160	$	109		$	845		$	295		$	284		$	94		$	7,122

The following table presents impaired loans individually evaluated for impairment as of and for the year ended September 30, 2018. The Company did not recognize any interest income on impaired loans using the cash receipts method of accounting for the year ended September 30, 2018.

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)

Loans with no related allowance recorded:
Residential real estate	$	4,833	$	5,285	$	-	$	5,082	$	142
Commercial real estate		6,568		6,715		-		6,694		312
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		27		28		-		29		-
Commercial business		231		241		-		316		13
Consumer		122		123		-		120		4

	$	11,781	$	12,392	$	-	$	12,241	$	471

Loans with an allowance recorded:
Residential real estate	$	274	$	282	$	7	$	315	$	-
Commercial real estate		1,151		1,293		492		256		-
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		-		-		-		-		-
Commercial business		-		-		-		-		-
Consumer		121		128		12		137		-

	$	1,546	$	1,703	$	511	$	708	$	-

Total:
Residential real estate	$	5,107	$	5,567	$	7	$	5,397	$	142
Commercial real estate		7,719		8,008		492		6,950		312
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		27		28		-		29		-
Commercial business		231		241		-		316		13
Consumer		243		251		12		257		4

	$	13,327	$	14,095	$	511	$	12,949	$	471

The following table presents impaired loans individually evaluated for impairment as of and for the year ended September 30, 2017. The Company did not recognize any interest income on impaired loans using the cash receipts method of accounting for the year ended September 30, 2017.

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)

Loans with no related allowance recorded:
Residential real estate	$	4,745	$	4,980	$	-	$	4,377	$	144
Commercial real estate		5,477		5,645		-		5,997		204
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		30		30		-		221		1
Commercial business		192		199		-		209		6
Consumer		95		95		-		141		4

	$	10,539	$	10,949	$	-	$	10,945	$	359

Loans with an allowance recorded:
Residential real estate	$	224	$	268	$	2	$	294	$	-
Commercial real estate		-		-		-		-		-
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		-		-		-		-		-
Commercial business		-		-		-		130		-
Consumer		101		101		21		94		-

	$	325	$	369	$	23	$	518	$	-

Total:
Residential real estate	$	4,969	$	5,248	$	2	$	4,671	$	144
Commercial real estate		5,477		5,645		-		5,997		204
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		30		30		-		221		1
Commercial business		192		199		-		339		6
Consumer		196		196		21		235		4

	$	10,864	$	11,318	$	23	$	11,463	$	359

The following table presents impaired loans individually evaluated for impairment as of and for the year ended September 30, 2016. The Company did not recognize any interest income on impaired loans using the cash receipts method of accounting for the year ended September 30, 2016.

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)

Loans with no related allowance recorded:
Residential real estate	$	3,891	$	4,171	$	-	$	5,044	$	144
Commercial real estate		6,298		6,394		-		6,595		197
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		241		238		-		18		-
Commercial business		231		224		-		281		5
Consumer		175		175		-		198		5

	$	10,836	$	11,202	$	-	$	12,136	$	351

Loans with an allowance recorded:
Residential real estate	$	451	$	450	$	43	$	86	$	-
Commercial real estate		-		-		-		-		-
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		-		-		-		-		-
Commercial business		-		-		-		-		-
Consumer		74		74		5		79		-

	$	525	$	524	$	48	$	165	$	-

Total:
Residential real estate	$	4,342	$	4,621	$	43	$	5,130	$	144
Commercial real estate		6,298		6,394		-		6,595		197
Multifamily		-		-		-		-		-
Construction		-		-		-		-		-
Land and land development		241		238		-		18		-
Commercial business		231		224		-		281		5
Consumer		249		249		5		277		5

	$	11,361	$	11,726	$	48	$	12,301	$	351

	At September 30, 2018						At September 30, 2017
	Nonaccrual Loans		Loans 90+ Days Past Due Still Accruing		Total Nonperforming Loans		Nonaccrual Loans		Loans 90+ Days Past Due Still Accruing		Total Nonperforming Loans
	(In thousands)

Residential real estate	$	2,711	$	91	$	2,802	$	2,358	$	83	$	2,441
Commercial real estate		1,284		-		1,284		1,253		-		1,253
Multifamily		-		-		-		-		-		-
Construction		-		-		-		-		-		-
Land and land development		27		-		27		30		-		30
Commercial business		-		-		-		81		-		81
Consumer		160		-		160		101		10		111

Total	$	4,182	$	91	$	4,273	$	3,823	$	93	$	3,916

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)

Residential real estate	$	2,088	$	649	$	1,202	$	3,939	$	191,862	$	195,801
Commercial real estate		696		-		210		906		344,099		345,005
Multifamily		-		-		-		-		28,865		28,865
Construction		-		-		-		-		28,347		28,347
Land and land development		-		27		-		27		10,497		10,524
Commercial business		7		-		-		7		68,419		68,426
Consumer		43		37		32		112		39,201		39,313

Total	$	2,834	$	713	$	1,444	$	4,991	$	711,290	$	716,281

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)

Residential real estate	$	2,288	$	1,255	$	1,540	$	5,083	$	167,323	$	172,406
Commercial real estate		-		-		-		-		274,061		274,061
Multifamily		176		-		-		176		20,967		21,143
Construction		-		-		-		-		33,593		33,593
Land and land development		48		-		30		78		9,688		9,766
Commercial business		201		-		-		201		52,928		53,129
Consumer		29		11		10		50		32,307		32,357

Total	$	2,742	$	1,266	$	1,580	$	5,588	$	590,867	$	596,455

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, public information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings:

Special Mention:

Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard:

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful:

Loans classified as doubtful have all the weaknesses inherent in those classified as 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.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. The following table presents the recorded investment in loans by risk category as of the date indicated:

	Residential Real Estate		Commercial Real Estate		Multifamily		Construction		Land and Land Development		Commercial Business		Consumer		Total
	(In thousands)
September 30, 2018:
Pass	$	190,647	$	338,256	$	28,365	$	28,347	$	10,207	$	66,162	$	39,246	$	701,230
Special Mention		19		-		-		-		290		-		-		309
Substandard		5,061		6,749		500		-		27		2,264		67		14,668
Doubtful		74		-		-		-		-		-		-		74
Loss		-		-		-		-		-		-		-		-

Total	$	195,801	$	345,005	$	28,865	$	28,347	$	10,524	$	68,426	$	39,313	$	716,281

September 30, 2017:
Pass	$	165,192	$	268,481	$	20,299	$	33,500	$	9,736	$	52,398	$	32,172	$	581,778
Special Mention		895		1,982		844		93		-		641		53		4,508
Substandard		6,152		3,598		-		-		30		90		111		9,981
Doubtful		167		-		-		-		-		-		21		188
Loss		-		-		-		-		-		-		-		-

Total	$	172,406	$	274,061	$	21,143	$	33,593	$	9,766	$	53,129	$	32,357	$	596,455

The following table summarizes TDRs by accrual status at September 30, 2018 and 2017. There was $5,000 of specific reserve included in the allowance for loan losses related to TDRs at September 30, 2018. There was no specific reserve included in the allowance for loan losses related to TDRs at September 30, 2017.

	Accruing		Nonaccrual		Total
	(In thousands)
September 30, 2018:
Residential real estate	$	2,396	$	21	$	2,417
Commercial real estate		6,435		65		6,500
Commercial business		231		-		231
Consumer		83		-		83

Total	$	9,145	$	86	$	9,231

September 30, 2017:
Residential real estate	$	2,610	$	25	$	2,635
Commercial real estate		4,225		1,253		5,478
Commercial business		111		82		193
Consumer		95		-		95

Total	$	7,041	$	1,360	$	8,401

	Number of Loans		Pre- Modification Principal Balance		Post- Modification Principal Balance
			(Dollars in thousands)
September 30, 2018:
Residential real estate		1	$	140	$	120
Commercial real estate		1		1,674		1,674
Commercial business		1		170		170
Consumer		1		3		3

Total		4	$	1,987	$	1,967

September 30, 2017:
Residential real estate		2	$	473	$	474
Commercial real estate		1		233		233
Land and land development		1		31		32
Commercial business		1		103		103

Total		5	$	840	$	842

September 30, 2016:
Residential real estate		5	$	181	$	247
Commercial real estate		1		94		131
Commercial business		3		186		216
Total		9	$	461	$	594

For the TDRs listed above, the terms of modification included temporary interest-only payment periods, reduction of the stated interest rate, extension of the maturity date, deferral of the contractual principal and interest payments, and the renewal of matured loans where the debtor was unable to access funds elsewhere at a market interest rate for debt with similar risk characteristics.

There were no principal charge-offs recorded as a result of TDRs during the years ended September 30, 2018, 2017 and 2016. Provisions for loan losses related to TDRs totaled $5,000 for the year ended September 30, 2018. There were no provisions for loan losses related to TDRs for the years ended September 30, 2017 and 2016. In the event that a TDR subsequently defaults, the Company evaluates the restructuring for possible impairment. As a result, the related allowance for loan losses may be increased or charge-offs may be taken to reduce the carrying amount of the loan.

During the years ended September 30, 2018, 2017, and 2016, the Company did not have any TDRs that were modified within the previous twelve months for which there was a payment default (defined as more than 90 days past due or in the process of foreclosure).

The Company originates loans to commercial customers under the SBA 7(a) and other programs, and sells the guaranteed portion of the SBA loans with servicing retained. Loan servicing rights on originated SBA loans that have been sold are initially recorded at fair value. Capitalized servicing rights are then amortized in proportion to and over the period of estimated net servicing income. Impairment of servicing rights is assessed using the present value of estimated future cash flows.

The aggregate fair value of loan servicing rights at September 30, 2018 and 2017 approximated its carrying value. A valuation model employed by an independent third party calculates the present value of future cash flows and is used to estimate fair value at the date of sale and on a quarterly basis for impairment analysis purposes. Management periodically compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. Key assumptions used to estimate the fair value of the loan servicing rights at September 30, 2018 and 2017 were as follows:

For purposes of impairment, risk characteristics such as interest rate, loan type, term and investor type are used to stratify the loan servicing rights. Impairment is recognized through a valuation allowance to the extent that fair value is less than the carrying amount. Changes in the valuation allowance are reported in net gain on sales of loans in the consolidated statements of income.

The unpaid principal balance of SBA loans serviced for others was $120.6 million and $61.2 million at September 30, 2018 and 2017, respectively. An analysis of loan servicing fees on SBA loans for the years ended September 30, 2018, 2017 and 2016 is as follows:

Contractually specified late fees and ancillary fees earned on SBA loans are included in interest income on loans in the consolidated statements of income. Net servicing income (contractually specified servicing fees offset by direct servicing expenses) related to SBA loans are included in other noninterest income in the consolidated statements of income.

(In thousands)	2018			2017			2016

Balance as of October 1	$	1,389		$	310		$	-
Servicing rights capitalized		1,565			1,188			345
Amortization		(372	)		(109	)		(35	)
Change in valuation allowance		(177	)		-			-
Balance as of September 30	$	2,405		$	1,389		$	310

(In thousands)	2018		2017		2016

Balance as of October 1	$	-	$	-	$	-
Additions charged to earnings		177		-		-
Recoveries credited to earnings		-		-		-
Write-downs charged against allowance		-		-		-
Balance as of September 30	$	177	$	-	$	-