7. TROUBLED DEBT RESTRUCTURING

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

NOTE 7. TROUBLED DEBT RESTRUCTURING

In the determination of the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings by adjusting the loan grades of such loans, which are considered in the qualitative factors within the allowance for loan loss methodology. Defaults resulting in charge-offs affect the historical loss experience ratios which are a component of the allowance calculation. Additionally, specific reserves may be established on restructured loans which are evaluated individually for impairment.

During the twelve months ended December 31, 2018, the Bank modified 21 loans that were considered to be troubled debt restructurings. These modifications include rate adjustments, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan(s) current, or any combination thereof.

	December 31, 2018
			Pre-Modification		Post-Modification
(dollars in thousands)			Outstanding		Outstanding
Troubled Debt Restructurings	Number of Contracts		Recorded Investment		Recorded Investment
Real Estate		1	$	742	$	742
Commercial		2		1,248		1,248
Consumer		18	$	183	$	183
Total		21	$	2,173	$	2,173

As of December 31, 2018, there were 5 loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 30 days past due.

	December 31, 2018
			Pre-Modification		Post-Modification
(dollars in thousands)			Outstanding		Outstanding
Troubled Debt Restructurings	Number of Contracts		Recorded Investment		Recorded Investment
Real Estate		2	$	142	$	142
Consumer		3		12		12
Total		5	$	154	$	154

During the twelve months ended December 31, 2017, the Bank modified 6 loans that were considered to be troubled debt restructurings. These modifications included rate adjustments, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan(s) current, or any combination thereof.

	December 31, 2017
			Pre-Modification		Post-Modification
(dollars in thousands)			Outstanding		Outstanding
Troubled Debt Restructurings	Number of Contracts		Recorded Investment		Recorded Investment
Consumer		3	$	32	$	32
Total		3	$	32	$	32

As of December 31, 2017, there were 3 loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 30 days past due.

	December 31, 2017
			Pre-Modification		Post-Modification
(dollars in thousands)			Outstanding		Outstanding
Troubled Debt Restructurings	Number of Contracts		Recorded Investment		Recorded Investment
Real Estate		1	$	67	$	67
Construction/Land Development		2		1,502		1,502
Total		3	$	1,569	$	1,569