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Loans | 9 Months Ended
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Sep. 30, 2020
Loans and Leases Receivable Disclosure [Abstract] |
Loans | Loans The composition of the loan portfolio, by class of loan, at September 30, 2020 and December 31, 2019 was as follows:
| September 30, 2020 |  |  | December 31, 2019
(In thousands) | Loan Balance |  | Accrued Interest Receivable |  | Recorded Investment |  |  | Loan Balance |  | Accrued Interest Receivable |  | Recorded Investment
Commercial, financial and agricultural * | $ | 1,727,016 |  |  | $ | 6,934 |  |  | $ | 1,733,950 |  |  |  | $ | 1,185,110 |  |  | $ | 4,393 |  |  | $ | 1,189,503 |
Commercial real estate * | 1,689,477 |  |  | 6,811 |  |  | 1,696,288 |  |  |  | 1,609,413 |  |  | 5,571 |  |  | 1,614,984 |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 245,288 |  |  | 710 |  |  | 245,998 |  |  |  | 233,637 |  |  | 826 |  |  | 234,463 |
Mortgage | 112,648 |  |  | 249 |  |  | 112,897 |  |  |  | 96,574 |  |  | 228 |  |  | 96,802 |
Installment | 1,060 |  |  | 5 |  |  | 1,065 |  |  |  | 1,488 |  |  | 4 |  |  | 1,492 |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 501,608 |  |  | 1,173 |  |  | 502,781 |  |  |  | 479,081 |  |  | 1,339 |  |  | 480,420 |
Mortgage | 1,117,534 |  |  | 1,519 |  |  | 1,119,053 |  |  |  | 1,176,316 |  |  | 1,381 |  |  | 1,177,697 |
HELOC | 194,342 |  |  | 671 |  |  | 195,013 |  |  |  | 224,766 |  |  | 1,113 |  |  | 225,879 |
Installment | 9,425 |  |  | 26 |  |  | 9,451 |  |  |  | 12,563 |  |  | 32 |  |  | 12,595 |
Consumer | 1,652,638 |  |  | 4,515 |  |  | 1,657,153 |  |  |  | 1,452,375 |  |  | 4,314 |  |  | 1,456,689 |
Leases | 27,510 |  |  | 22 |  |  | 27,532 |  |  |  | 30,081 |  |  | 20 |  |  | 30,101 |
Total loans | $ | 7,278,546 |  |  | $ | 22,635 |  |  | $ | 7,301,181 |  |  |  | $ | 6,501,404 |  |  | $ | 19,221 |  |  | $ | 6,520,625 |
* Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class. In order to support customers, Park participated in the CARES Act Paycheck Protection Program ("PPP"). Included within commercial, financial and agricultural loans are $542.8 million of PPP loans. For its assistance in originating and retaining these loans, Park received an aggregate of $20.2 million in fees from the SBA. Of this $20.2 million of PPP fees, Park recognized $3.8 million and $6.6 million during the three months and nine months ended September 30, 2020, respectively. Loans are shown net of deferred origination fees, costs and unearned income of $30.8 million and $16.3 million at September 30, 2020 and December 31, 2019, respectively, which represented a net deferred income position at each date. At September 30, 2020, included in the net deferred origination fees, costs and unearned income of $30.8 million were $13.6 million in net origination fees related to PPP loans. At September 30, 2020 and December 31, 2019, loans included purchase accounting adjustments of $8.1 million and $11.7 million, respectively, which represented a net deferred income position at each date. This fair market value purchase accounting adjustment related to loans which are not PCI, is expected to be recognized into interest income on a level yield basis over the remaining expected life of the loans. Overdrawn deposit accounts of $4.8 million and $2.2 million had been reclassified to loans at September 30, 2020 and December 31, 2019, respectively, and are included in the commercial, financial and agricultural loan class above. Credit Quality The following tables present the recorded investment in nonaccrual loans, accruing TDRs, and loans past due 90 days or more and still accruing by class of loan at September 30, 2020 and December 31, 2019:
|  | September 30, 2020
(In thousands) |  | Nonaccrual Loans |  | Accruing TDRs |  | Loans Past Due 90 Days or More and Accruing |  | Total Nonperforming Loans
Commercial, financial and agricultural |  | $ | 25,582 |  |  | $ | 7,516 |  |  | $ | 63 |  |  | $ | 33,161 |
Commercial real estate |  | 68,134 |  |  | 4,385 |  |  | 654 |  |  | 73,173 |
Construction real estate: |  |  |  |  |  |  |  |
Commercial |  | 3,142 |  |  | — |  |  | — |  |  | 3,142 |
Mortgage |  | — |  |  | 17 |  |  | — |  |  | 17 |
Installment |  | 14 |  |  | 1 |  |  | — |  |  | 15 |
Residential real estate: |  |  |  |  |  |  |  |
Commercial |  | 4,862 |  |  | 35 |  |  | — |  |  | 4,897 |
Mortgage |  | 14,933 |  |  | 8,097 |  |  | 476 |  |  | 23,506 |
HELOC |  | 1,358 |  |  | 895 |  |  | 65 |  |  | 2,318 |
Installment |  | 312 |  |  | 1,813 |  |  | — |  |  | 2,125 |
Consumer |  | 2,189 |  |  | 1,108 |  |  | 445 |  |  | 3,742 |
Leases |  | 2,524 |  |  | — |  |  | — |  |  | 2,524 |
Total loans |  | $ | 123,050 |  |  | $ | 23,867 |  |  | $ | 1,703 |  |  | $ | 148,620 |
|  | December 31, 2019
(In thousands) |  | Nonaccrual Loans |  | Accruing TDRs |  | Loans Past Due 90 Days or More and Accruing |  | Total Nonperforming Loans
Commercial, financial and agricultural |  | $ | 26,776 |  |  | $ | 6,349 |  |  | $ | 28 |  |  | $ | 33,153 |
Commercial real estate |  | 39,711 |  |  | 2,080 |  |  | 625 |  |  | 42,416 |
Construction real estate: |  |  |  |  |  |  |  |
Commercial |  | 453 |  |  | — |  |  | — |  |  | 453 |
Mortgage |  | 25 |  |  | 84 |  |  | — |  |  | 109 |
Installment |  | 72 |  |  | 5 |  |  | — |  |  | 77 |
Residential real estate: |  |  |  |  |  |  |  |
Commercial |  | 2,025 |  |  | — |  |  | — |  |  | 2,025 |
Mortgage |  | 15,271 |  |  | 8,826 |  |  | 1,209 |  |  | 25,306 |
HELOC |  | 2,062 |  |  | 1,010 |  |  | 44 |  |  | 3,116 |
Installment |  | 462 |  |  | 1,964 |  |  | — |  |  | 2,426 |
Consumer |  | 3,089 |  |  | 980 |  |  | 645 |  |  | 4,714 |
Leases |  | 134 |  |  | — |  |  | 186 |  |  | 320 |
Total loans |  | $ | 90,080 |  |  | $ | 21,298 |  |  | $ | 2,737 |  |  | $ | 114,115 |
The following table provides additional information regarding those nonaccrual and accruing TDR loans that are individually evaluated for impairment and those collectively evaluated for impairment at September 30, 2020 and December 31, 2019.
|  | September 30, 2020 |  |  | December 31, 2019
(In thousands) |  | Nonaccrual and Accruing TDRs |  | Loans Individually Evaluated for Impairment |  | Loans Collectively Evaluated for Impairment |  |  | Nonaccrual and Accruing TDRs |  | Loans Individually Evaluated for Impairment |  | Loans Collectively Evaluated for Impairment
Commercial, financial and agricultural |  | $ | 33,098 |  |  | $ | 33,098 |  |  | $ | — |  |  |  | $ | 33,125 |  |  | $ | 33,088 |  |  | $ | 37 |
Commercial real estate |  | 72,519 |  |  | 72,519 |  |  | — |  |  |  | 41,791 |  |  | 41,791 |  |  | — |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | 3,142 |  |  | 3,142 |  |  | — |  |  |  | 453 |  |  | 453 |  |  | — |
Mortgage |  | 17 |  |  | — |  |  | 17 |  |  |  | 109 |  | — |  |  | 109
Installment |  | 15 |  |  | — |  |  | 15 |  |  |  | 77 |  | — |  |  | 77
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | 4,897 |  |  | 4,897 |  |  | — |  |  |  | 2,025 |  |  | 2,025 |  |  | — |
Mortgage |  | 23,030 |  |  | — |  |  | 23,030 |  |  |  | 24,097 |  |  | — |  |  | 24,097 |
HELOC |  | 2,253 |  |  | — |  |  | 2,253 |  |  |  | 3,072 |  |  | — |  |  | 3,072 |
Installment |  | 2,125 |  |  | — |  |  | 2,125 |  |  |  | 2,426 |  |  | — |  |  | 2,426 |
Consumer |  | 3,297 |  |  | — |  |  | 3,297 |  |  |  | 4,069 |  |  | — |  |  | 4,069 |
Leases |  | 2,524 |  |  | 2,524 |  |  | — |  |  |  | 134 |  |  | 134 |  |  | — |
Total loans |  | $ | 146,917 |  |  | $ | 116,180 |  |  | $ | 30,737 |  |  |  | $ | 111,378 |  |  | $ | 77,491 |  |  | $ | 33,887 |
All of the loans individually evaluated for impairment were evaluated using the fair value of the collateral or the present value of expected future cash flows as the measurement method. The following table presents loans individually evaluated for impairment by class of loan at September 30, 2020 and December 31, 2019.
|  | September 30, 2020 |  |  | December 31, 2019
(In thousands) |  | Unpaid Principal Balance |  | Recorded Investment |  | Allowance for Loan Losses Allocated |  |  | Unpaid Principal Balance |  | Recorded Investment |  | Allowance for Loan Losses Allocated
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | $ | 19,020 |  |  | $ | 18,923 |  |  | $ | — |  |  |  | $ | 21,194 |  |  | $ | 21,010 |  |  | $ | — |
Commercial real estate |  | 54,824 |  |  | 54,650 |  |  | — |  |  |  | 41,696 |  |  | 41,471 |  |  | — |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | 3,142 |  |  | 3,142 |  |  | — |  |  |  | 453 |  |  | 453 |  |  | — |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | 4,677 |  |  | 4,623 |  |  | — |  |  |  | 1,921 |  |  | 1,854 |  |  | — |
Leases |  | 784 |  |  | 784 |  |  | — |  |  |  | — |  |  | — |  |  | — |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | 14,371 |  |  | 14,175 |  |  | 5,033 |  |  |  | 12,289 |  |  | 12,078 |  |  | 5,104 |
Commercial real estate |  | 17,869 |  |  | 17,869 |  |  | 3,014 |  |  |  | 320 |  |  | 320 |  |  | 35 |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | — |  |  | — |  |  | — |  |  |  | — |  |  | — |  |  | — |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | 274 |  |  | 274 |  |  | 155 |  |  |  | 171 |  |  | 171 |  |  | 42 |
Leases |  | 1,740 |  |  | 1,740 |  |  | 464 |  |  |  | 134 |  |  | 134 |  |  | 49 |
Total |  | $ | 116,701 |  |  | $ | 116,180 |  |  | $ | 8,666 |  |  |  | $ | 78,178 |  |  | $ | 77,491 |  |  | $ | 5,230 |
Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. At September 30, 2020 and December 31, 2019, there were $0.4 million and $0.5 million, respectively, of partial charge-offs on loans individually evaluated for impairment with no related allowance recorded and $197,000 and $210,000, respectively, of partial charge-offs on loans individually evaluated for impairment that also had a specific reserve allocated. The allowance for loan losses included specific reserves related to loans individually evaluated for impairment at September 30, 2020 and December 31, 2019, of $8.7 million and $5.2 million, respectively. These loans with specific reserves had a recorded investment of $34.1 million and $12.7 million at September 30, 2020 and December 31, 2019, respectively. Interest income on nonaccrual loans individually evaluated for impairment is recognized on a cash basis only when Park expects to receive the entire recorded investment in the loans. Interest income on accruing TDRs individually evaluated for impairment continues to be recorded on an accrual basis. The following table presents the average recorded investment and interest income recognized subsequent to impairment on loans individually evaluated for impairment as of and for the three-month and nine-month periods ended September 30, 2020 and September 30, 2019:
| Three Months Ended September 30, 2020 |  |  | Three Months Ended September 30, 2019
(In thousands) | Recorded Investment at September 30, 2020 |  | Average Recorded Investment |  | Interest Income Recognized |  |  | Recorded Investment at September 30, 2019 |  | Average Recorded Investment |  | Interest Income Recognized
Commercial, financial and agricultural | $ | 33,098 |  |  | $ | 29,481 |  |  | $ | 159 |  |  |  | $ | 31,485 |  |  | $ | 23,468 |  |  | $ | 107 |
Commercial real estate | 72,519 |  |  | 58,195 |  |  | 526 |  |  |  | 38,799 |  |  | 29,779 |  |  | 277 |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 3,142 |  |  | 1,212 |  |  | 6 |  |  |  | 1,868 |  |  | 1,922 |  |  | 1 |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 4,897 |  |  | 5,061 |  |  | 65 |  |  |  | 2,238 |  |  | 1,977 |  |  | 27 |
Leases | 2,524 |  |  | 2,079 |  |  | — |  |  |  | 88 |  |  | 90 |  |  | — |
Total | $ | 116,180 |  |  | $ | 96,028 |  |  | $ | 756 |  |  |  | $ | 74,478 |  |  | $ | 57,236 |  |  | $ | 412 |
| Nine Months Ended September 30, 2020 |  |  | Nine Months Ended September 30, 2019
(In thousands) | Recorded Investment at September 30, 2020 |  | Average Recorded Investment |  | Interest Income Recognized |  |  | Recorded Investment at September 30, 2019 |  | Average Recorded Investment |  | Interest Income Recognized
Commercial, financial and agricultural | $ | 33,098 |  |  | $ | 30,426 |  |  | $ | 543 |  |  |  | $ | 31,485 |  |  | $ | 18,368 |  |  | $ | 244 |
Commercial real estate | 72,519 |  |  | 50,479 |  |  | 1,416 |  |  |  | 38,799 |  |  | 29,712 |  |  | 803 |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 3,142 |  |  | 743 |  |  | 14 |  |  |  | 1,868 |  |  | 2,176 |  |  | 23 |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 4,897 |  |  | 4,271 |  |  | 166 |  |  |  | 2,238 |  |  | 2,198 |  |  | 72 |
Leases | 2,524 |  |  | 909 |  |  | — |  |  |  | 88 |  |  | 36 |  |  | — |
Total | $ | 116,180 |  |  | $ | 86,828 |  |  | $ | 2,139 |  |  |  | $ | 74,478 |  |  | $ | 52,490 |  |  | $ | 1,142 |
The following tables present the aging of the recorded investment in past due loans at September 30, 2020 and December 31, 2019 by class of loan.
| September 30, 2020
(In thousands) | Accruing Loans Past Due 30-89 Days |  | Past Due Nonaccrual Loans and Loans Past Due 90 Days or More and Accruing (1) |  | Total Past Due |  | Total Current (2) |  | Total Recorded Investment
Commercial, financial and agricultural | $ | 9 |  |  | $ | 11,949 |  |  | $ | 11,958 |  |  | $ | 1,721,992 |  |  | $ | 1,733,950 |
Commercial real estate | 717 |  |  | 947 |  |  | 1,664 |  |  | 1,694,624 |  |  | 1,696,288 |
Construction real estate: |  |  |  |  |  |  |  |  |
Commercial | — |  |  | 38 |  |  | 38 |  |  | 245,960 |  |  | 245,998 |
Mortgage | 68 |  |  | — |  |  | 68 |  |  | 112,829 |  |  | 112,897 |
Installment | — |  |  | — |  |  | — |  |  | 1,065 |  |  | 1,065 |
Residential real estate: |  |  |  |  |  |  |  |  |
Commercial | 119 |  |  | 514 |  |  | 633 |  |  | 502,148 |  |  | 502,781 |
Mortgage | 6,246 |  |  | 8,023 |  |  | 14,269 |  |  | 1,104,784 |  |  | 1,119,053 |
HELOC | 725 |  |  | 627 |  |  | 1,352 |  |  | 193,661 |  |  | 195,013 |
Installment | 118 |  |  | 89 |  |  | 207 |  |  | 9,244 |  |  | 9,451 |
Consumer | 4,499 |  |  | 947 |  |  | 5,446 |  |  | 1,651,707 |  |  | 1,657,153 |
Leases | — |  |  | 66 |  |  | 66 |  |  | 27,466 |  |  | 27,532 |
Total loans | $ | 12,501 |  |  | $ | 23,200 |  |  | $ | 35,701 |  |  | $ | 7,265,480 |  |  | $ | 7,301,181 |
(1) Includes an aggregate of $1.7 million of loans past due 90 days or more and accruing. The remaining loans were past due nonaccrual loans. (2) Includes an aggregate of $101.6 million of nonaccrual loans which were current in regards to contractual principal and interest payments.
| December 31, 2019
(in thousands) | Accruing Loans Past Due 30-89 Days |  | Past Due Nonaccrual Loans and Loans Past Due 90 Days or More and Accruing (1) |  | Total Past Due |  | Total Current (2) |  | Total Recorded Investment
Commercial, financial and agricultural | $ | 582 |  |  | $ | 12,407 |  |  | $ | 12,989 |  |  | $ | 1,176,514 |  |  | $ | 1,189,503 |
Commercial real estate | 160 |  |  | 1,143 |  |  | 1,303 |  |  | 1,613,681 |  |  | 1,614,984 |
Construction real estate: |  |  |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  | — |  |  | 234,463 |  |  | 234,463 |
Mortgage | 397 |  |  | — |  |  | 397 |  |  | 96,405 |  |  | 96,802 |
Installment | 24 |  |  | — |  |  | 24 |  |  | 1,468 |  |  | 1,492 |
Residential real estate: |  |  |  |  |  |  |  |  |
Commercial | — |  |  | 908 |  |  | 908 |  |  | 479,512 |  |  | 480,420 |
Mortgage | 12,841 |  |  | 9,153 |  |  | 21,994 |  |  | 1,155,703 |  |  | 1,177,697 |
HELOC | 652 |  |  | 779 |  |  | 1,431 |  |  | 224,448 |  |  | 225,879 |
Installment | 164 |  |  | 338 |  |  | 502 |  |  | 12,093 |  |  | 12,595 |
Consumer | 6,561 |  |  | 1,621 |  |  | 8,182 |  |  | 1,448,507 |  |  | 1,456,689 |
Leases | 368 |  |  | 186 |  |  | 554 |  |  | 29,547 |  |  | 30,101 |
Total loans | $ | 21,749 |  |  | $ | 26,535 |  |  | $ | 48,284 |  |  | $ | 6,472,341 |  |  | $ | 6,520,625 |
(1) Includes an aggregate of $2.7 million of loans past due 90 days or more and accruing. The remaining loans were past due nonaccrual loans. (2) Includes an aggregate of $66.3 million of nonaccrual loans which were current in regards to contractual principal and interest payments. Credit Quality Indicators Management utilizes past due information as a credit quality indicator across the loan portfolio. Past due information at September 30, 2020 and December 31, 2019 is included in the previous tables. The past due information is the primary credit quality indicator within the following classes of loans: (1) mortgage loans and installment loans in the construction real estate segment; (2) mortgage loans, HELOC and installment loans in the residential real estate segment; and (3) consumer loans. The primary credit indicator for commercial loans is based on an internal grading system that grades all commercial loans on a scale from 1 to 8. Credit grades are continuously monitored by the responsible loan officer and adjustments are made when appropriate. A grade of 1 indicates little or no credit risk and a grade of 8 is considered a loss. Commercial loans that are pass-rated (graded a 1 through a 4) are considered to be of acceptable credit risk. Commercial loans graded a 5 (special mention) are considered to be watch list credits and a higher loan loss reserve percentage is allocated to these loans. Loans classified as special mention have potential weaknesses that require management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of Park’s credit position at some future date. Commercial loans graded a 6 (substandard), also considered watch list credits, are considered to represent higher credit risk and, as a result, a higher loan loss reserve percentage is allocated to these loans. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or the value 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 Park will sustain some loss if the deficiencies are not corrected. Commercial loans graded a 7 (doubtful) are shown as nonaccrual and Park generally charges these loans down to their fair value by taking a partial charge-off or recording a specific reserve. 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. Certain 6-rated loans and all 7-rated loans are placed on nonaccrual status and included within the impaired category. A loan is deemed impaired when management determines the borrower's ability to perform in accordance with the contractual loan agreement is in doubt. Any commercial loan graded an 8 (loss) is completely charged off. The tables below present the recorded investment by loan grade at September 30, 2020 and December 31, 2019 for all commercial loans:
| September 30, 2020
(In thousands) | 5 Rated |  | 6 Rated |  | Nonaccrual and Accruing TDRs |  | PCI (1) |  | Pass-Rated |  | Recorded Investment
Commercial, financial and agricultural * | $ | 15,091 |  |  | $ | 60 |  |  | $ | 33,098 |  |  | $ | 375 |  |  | $ | 1,685,326 |  |  | $ | 1,733,950 |
Commercial real estate * | 88,618 |  |  | 1,060 |  |  | 72,519 |  |  | 8,084 |  |  | 1,526,007 |  |  | 1,696,288 |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  | 3,142 |  |  | 1,012 |  |  | 241,844 |  |  | 245,998 |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |
Commercial | 353 |  |  | 24 |  |  | 4,897 |  |  | 1,530 |  |  | 495,977 |  |  | 502,781 |
Leases | 349 |  |  | — |  |  | 2,524 |  |  | 127 |  |  | 24,532 |  |  | 27,532 |
Total commercial loans | $ | 104,411 |  |  | $ | 1,144 |  |  | $ | 116,180 |  |  | $ | 11,128 |  |  | $ | 3,973,686 |  |  | $ | 4,206,549 |
* Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class. (1) There were no loans acquired with deteriorated credit quality which were nonaccrual or TDRs at September 30, 2020.
| December 31, 2019
(In thousands) | 5 Rated |  | 6 Rated |  | Nonaccrual and Accruing TDRs |  | PCI (1) |  | Pass-Rated |  | Recorded Investment
Commercial, financial and agricultural * | $ | 11,981 |  |  | $ | 3 |  |  | $ | 33,125 |  |  | $ | 966 |  |  | $ | 1,143,428 |  |  | $ | 1,189,503 |
Commercial real estate * | 6,796 |  |  | 945 |  |  | 41,791 |  |  | 9,182 |  |  | 1,556,270 |  |  | 1,614,984 |
Construction real estate: |  |  |  |  |  |  |  |  |  |  |
Commercial | 4,857 |  |  | 1 |  |  | 453 |  |  | 1,044 |  |  | 228,108 |  |  | 234,463 |
Residential real estate: |  |  |  |  |  |  |  |  |  |  |
Commercial | 3,839 |  |  | 30 |  |  | 2,025 |  |  | 1,754 |  |  | 472,772 |  |  | 480,420 |
Leases | — |  |  | — |  |  | 134 |  |  | 523 |  |  | 29,444 |  |  | 30,101 |
Total Commercial Loans | $ | 27,473 |  |  | $ | 979 |  |  | $ | 77,528 |  |  | $ | 13,469 |  |  | $ | 3,430,022 |  |  | $ | 3,549,471 |
* Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class. (1) Excludes loans acquired with deteriorated credit quality which are nonaccrual or TDRs due to additional credit deterioration or modification post acquisition. These loans had a recorded investment of $6,000 at December 31, 2019. Loans and Leases Acquired with Deteriorated Credit Quality In conjunction with the NewDominion acquisition, Park acquired loans with a book value of $277.9 million as of the July 1, 2018 acquisition date. These loans were recorded at the initial fair value of $272.8 million. Loans acquired with deteriorated credit quality with a book value of $5.1 million were recorded at the initial fair value of $4.9 million. The carrying amount of loans acquired with deteriorated credit quality at September 30, 2020 and December 31, 2019 was $1.7 million and $3.0 million, respectively, while the outstanding customer balance was $1.8 million and $3.2 million, respectively. At September 30, 2020 and December 31, 2019, an allowance for loan losses of $2,000 and $101,000, respectively, had been recognized related to the acquired impaired loans. In conjunction with the Carolina Alliance acquisition, Park acquired loans and leases with a book value of $589.7 million as of the April 1, 2019 acquisition date. These loans and leases were recorded at the initial fair value of $578.6 million. Loans and leases acquired with deteriorated credit quality with a book value of $19.9 million were recorded at the initial fair value of $18.4 million. The carrying amount of loans and leases acquired with deteriorated credit quality at September 30, 2020 and December 31, 2019 was $10.2 million and $11.3 million, respectively, while the outstanding customer balance was $12.5 million and $13.8 million, respectively. At September 30, 2020 and December 31, 2019, an allowance for loan losses of $101,000 and $167,000, respectively, had been recognized related to the acquired impaired loans and leases. Troubled Debt Restructurings Management typically classifies loans as TDRs when a borrower is experiencing financial difficulties and Park has granted a concession to the borrower as part of a modification or in the loan renewal process. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of the borrower's debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Company’s internal underwriting policy. Management’s policy is to modify loans by extending the term or by granting a temporary or permanent contractual interest rate below the market rate, not by forgiving debt. A court's discharge of a borrower's debt in a Chapter 7 bankruptcy is considered a concession when the borrower does not reaffirm the discharged debt. Additionally, Park is working with borrowers impacted by the COVID-19 pandemic and providing modifications to include either interest only deferral or principal and interest deferral, in each case, for initial periods up to 90 days. As necessary, Park is making available a second 90-day interest only deferral or principal and interest deferral bringing the total potential deferral period to six months. A majority of these modifications are excluded from TDR classification under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators. In accordance with this guidance, such modified loans will be considered current and will continue to accrue interest during the deferral period. Certain other loans which were modified during the three-month and nine-month periods ended September 30, 2020 and September 30, 2019 did not meet the definition of a TDR as the modification was a delay in a payment that was considered to be insignificant. Management considers a forbearance period of up to three months or a delay in payment of up to 30 days to be insignificant. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note. Management reviews all accruing TDRs quarterly to ensure payments continue to be made in accordance with the modified terms. At September 30, 2020 and December 31, 2019, there were $22.9 million and $34.3 million, respectively, of TDRs included in the nonaccrual loan totals. At September 30, 2020 and December 31, 2019, $12.5 million and $23.2 million, respectively, of these nonaccrual TDRs were performing in accordance with the terms of the restructured notes. At September 30, 2020 and December 31, 2019, loans with a recorded investment of $23.9 million and $21.3 million, respectively, were included in accruing TDR loan totals. Management will continue to review the restructured loans and may determine it is appropriate to move certain nonaccrual TDRs to accrual status in the future. At September 30, 2020 and December 31, 2019, Park had commitments to lend $4.7 million and $7.9 million, respectively, of additional funds to borrowers whose outstanding loan terms had been modified in a TDR. At September 30, 2020 and December 31, 2019, there were $2.0 million and $2.2 million, respectively, of specific reserves related to TDRs. Modifications made in 2020 and 2019 were largely the result of renewals and extending the maturity date of the loans at terms consistent with the original notes. These modifications were deemed to be TDRs primarily due to Park’s conclusion that the borrower would likely not have qualified for similar terms through another lender. Many of the modifications deemed to be TDRs were previously identified as impaired loans, and thus were also previously evaluated for impairment under ASC 310. There were no additional specific reserves recorded during either of the three-month or nine-month periods ended September 30, 2020 or 2019 as a result of TDRs identified in the period. Quarterly, management reviews renewals/modifications of loans previously identified as TDRs to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification did not contain a concessionary interest rate or other concessionary terms and the terms of the renewal/modification are considered to be market terms based on the current risk characteristics of the borrower, management considers the potential removal of the TDR classification. If deemed appropriate, the TDR classification is removed if the borrower has complied with the terms of the loan at the date of the renewal/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the renewal/modification. The majority of these TDRs were originally considered restructurings in a prior year as a result of a renewal/modification with an interest rate that was not commensurate with the risk of the underlying loan at the time of the renewal/modification. The TDR classification was removed on $709,000 and $1.6 million of loans during the three-month and nine-month periods ended September 30, 2020, respectively. The TDR classification was removed on $15,000 and $38,000 of loans during the three-month and nine-month periods ended September 30, 2019, respectively. The terms of certain other loans were modified during the three-month and nine-month periods ended September 30, 2020 and September 30, 2019 that did not meet the definition of a TDR. Excluding COVID-19 related modifications, there were no substandard commercial loans modified during either the three-month period ended September 30, 2020 or the nine-month period ended September 30, 2020 which did not meet the definition of a TDR. There were $0.4 million and $0.6 million of substandard commercial loans modified during the three-month and nine-month periods ended September 30, 2019, respectively, which did not meet the definition of a TDR. Excluding COVID-19 related modifications, consumer loans modified during the three-month and nine-month periods ended September 30, 2020 which did not meet the definition of a TDR had a total recorded investment of $16.7 million and $58.2 million, respectively. Consumer loans modified during the three-month and nine-month periods ended September 30, 2019 which did not meet the definition of a TDR had a total recorded investment of $11.9 million and $21.4 million, respectively. Many of these loans were to borrowers who were not experiencing financial difficulties but who were looking to reduce their cost of funds. During the nine months ended September 30, 2020, Park modified 4,810 consumer loans, with an aggregate balance of $111.0 million, and modified 1,386 commercial loans, with an aggregate balance of $583.7 million, in each case related to a hardship caused by the COVID-19 pandemic and responses thereto. Of the $111.0 million in consumer COVID-19 related modifications, $2.3 million were already classified as TDRs due to previous modifications and $818,000 were classified as TDRs due to the COVID-19 modification. Of the $583.7 million in commercial COVID-19 related modifications, $6.0 million were already classified as TDRs due to previous modifications and $112,000 were classified as TDRs due to the COVID-19 modification. The remaining loans met the exclusion criteria for TDR accounting either in Section 4013 of the CARES Act or in applicable interagency guidance. The following tables detail the number of contracts modified as TDRs during the three-month periods ended September 30, 2020 and September 30, 2019, as well as the recorded investment of these contracts at September 30, 2020 and September 30, 2019. The recorded investment pre- and post-modification is generally the same due to the fact that Park does not typically forgive principal.
| Three Months Ended September 30, 2020
(In thousands) | Number of Contracts |  | Accruing |  | Nonaccrual |  | Total Recorded Investment
Commercial, financial and agricultural | 3 |  |  | $ | 35 |  |  | $ | 117 |  |  | $ | 152 |
Commercial real estate | 4 |  |  | — |  |  | 359 |  |  | 359 |
Construction real estate: |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  | — |  |  | — |
Mortgage | — |  |  | — |  |  | — |  |  | — |
Installment | — |  |  | — |  |  | — |  |  | — |
Residential real estate: |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  | — |  |  | — |
Mortgage | 5 |  |  | 258 |  |  | 109 |  |  | 367 |
HELOC | 1 |  |  | 21 |  |  | — |  |  | 21 |
Installment | 3 |  |  | 12 |  |  | 7 |  |  | 19 |
Consumer | 64 |  |  | 109 |  |  | 479 |  |  | 588 |
Total loans | 80 |  |  | $ | 435 |  |  | $ | 1,071 |  |  | $ | 1,506 |
| Three Months Ended September 30, 2019
(In thousands) | Number of Contracts |  | Accruing |  | Nonaccrual |  | Total Recorded Investment
Commercial, financial and agricultural | 8 |  |  | $ | 752 |  |  | $ | 5,002 |  |  | $ | 5,754 |
Commercial real estate | 1 |  |  | — |  |  | 241 |  |  | 241 |
Construction real estate: |  |  |  |  |  |  |
Commercial | 1 |  |  | 82 |  |  | — |  |  | 82 |
Mortgage | — |  |  | — |  |  | — |  |  | — |
Installment | — |  |  | — |  |  | — |  |  | — |
Residential real estate: |  |  |  |  |  |  |
Commercial | 1 |  |  | 13 |  |  | — |  |  | 13 |
Mortgage | 4 |  |  | 286 |  |  | 215 |  |  | 501 |
HELOC | 6 |  |  | 31 |  |  | 107 |  |  | 138 |
Installment | 9 |  |  | 407 |  |  | 14 |  |  | 421 |
Consumer | 77 |  |  | 174 |  |  | 542 |  |  | 716 |
Total loans | 107 |  |  | $ | 1,745 |  |  | $ | 6,121 |  |  | $ | 7,866 |
Of those loans which were modified and determined to be a TDR during the three-month period ended September 30, 2020, $0.1 million were on nonaccrual status at December 31, 2019. Of those loans which were modified and determined to be a TDR during the three-month period ended September 30, 2019, $0.6 million were on nonaccrual status at December 31, 2018. The following tables detail the number of contracts modified as TDRs during the nine-month periods ended September 30, 2020 and September 30, 2019, as well as the recorded investment of these contracts at September 30, 2020 and September 30, 2019. The recorded investment pre- and post-modification is generally the same due to the fact that Park does not typically forgive principal.
| Nine Months Ended September 30, 2020
(In thousands) | Number of Contracts |  | Accruing |  | Nonaccrual |  | Total Recorded Investment
Commercial, financial and agricultural | 10 |  |  | $ | 117 |  |  | $ | 1,110 |  |  | $ | 1,227 |
Commercial real estate | 8 |  |  | 1,136 |  |  | 2,068 |  |  | 3,204 |
Construction real estate: |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  | — |  |  | — |
Mortgage | 1 |  |  | 10 |  |  | — |  |  | 10 |
Installment | 1 |  |  | — |  |  | 14 |  |  | 14 |
Residential real estate: |  |  |  |  |  |  |
Commercial | 1 |  |  | — |  |  | 8 |  |  | 8 |
Mortgage | 24 |  |  | 735 |  |  | 1,005 |  |  | 1,740 |
HELOC | 6 |  |  | 25 |  |  | 18 |  |  | 43 |
Installment | 16 |  |  | 191 |  |  | 63 |  |  | 254 |
Consumer | 177 |  |  | 235 |  |  | 655 |  |  | 890 |
Total loans | 244 |  |  | $ | 2,449 |  |  | $ | 4,941 |  |  | $ | 7,390 |
| Nine Months Ended September 30, 2019
(In thousands) | Number of Contracts |  | Accruing |  | Nonaccrual |  | Total Recorded Investment
Commercial, financial and agricultural | 24 |  |  | $ | 3,237 |  |  | $ | 6,059 |  |  | $ | 9,296 |
Commercial real estate | 5 |  |  | — |  |  | 3,236 |  |  | 3,236 |
Construction real estate: |  |  |  |  |  |  |
Commercial | 2 |  |  | 82 |  |  | — |  |  | 82 |
Mortgage | 1 |  |  | — |  |  | — |  |  | — |
Installment | — |  |  | — |  |  | — |  |  | — |
Residential real estate: |  |  |  |  |  |  |
Commercial | 2 |  |  | 13 |  |  | 36 |  |  | 49 |
Mortgage | 18 |  |  | 340 |  |  | 673 |  |  | 1,013 |
HELOC | 14 |  |  | 121 |  |  | 243 |  |  | 364 |
Installment | 25 |  |  | 951 |  |  | 52 |  |  | 1,003 |
Consumer | 251 |  |  | 199 |  |  | 987 |  |  | 1,186 |
Total loans | 342 |  |  | $ | 4,943 |  |  | $ | 11,286 |  |  | $ | 16,229 |
Of those loans which were modified and determined to be a TDR during the nine-month period ended September 30, 2020, $0.4 million were on nonaccrual status at December 31, 2019. Of those loans which were modified and determined to be a TDR during the nine-month period ended September 30, 2019, $1.8 million were on nonaccrual status at December 31, 2018. The following tables present the recorded investment in loans which were modified as TDRs within the previous 12 months and for which there was a payment default during the three-month and nine-month periods ended September 30, 2020 and September 30, 2019, respectively. For these tables, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms. The additional allowance for loan loss resulting from the defaults on TDR loans was immaterial.
| Three Months Ended September 30, 2020 |  |  | Three Months Ended September 30, 2019
(In thousands) | Number of Contracts |  | Recorded Investment |  |  | Number of Contracts |  | Recorded Investment
Commercial, financial and agricultural | — |  |  | $ | — |  |  |  | 2 |  |  | $ | 2 |
Commercial real estate | 1 |  |  | 50 |  |  |  | — |  |  | — |
Construction real estate: |  |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  |  | — |  |  | — |
Mortgage | — |  |  | — |  |  |  | — |  |  | — |
Installment | 1 |  |  | 14 |  |  |  | — |  |  | — |
Residential real estate: |  |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  |  | — |  |  | — |
Mortgage | 4 |  |  | 365 |  |  |  | 4 |  |  | 257 |
HELOC | 1 |  |  | 16 |  |  |  | 5 |  |  | 135 |
Installment | 1 |  |  | 16 |  |  |  | 2 |  |  | 66 |
Consumer | 26 |  |  | 263 |  |  |  | 51 |  |  | 477 |
Leases | — |  |  | — |  |  |  | — |  |  | — |
Total loans | 34 |  |  | $ | 724 |  |  |  | 64 |  |  | $ | 937 |
Of the $0.7 million in modified TDRs which defaulted during the three-month period ended September 30, 2020, $65,000 were accruing loans and $0.7 million were nonaccrual loans. Of the $0.9 million in modified TDRs which defaulted during the three-month period ended September 30, 2019, $48,000 were accruing loans and $0.9 million were nonaccrual loans.
| Nine Months Ended September 30, 2020 |  |  | Nine Months Ended September 30, 2019
(In thousands) | Number of Contracts |  | Recorded Investment |  |  | Number of Contracts |  | Recorded Investment
Commercial, financial and agricultural | 2 |  |  | $ | 89 |  |  |  | 3 |  |  | $ | 65 |
Commercial real estate | 2 |  |  | 278 |  |  |  | — |  |  | — |
Construction real estate: |  |  |  |  |  |  |  |
Commercial | — |  |  | — |  |  |  | — |  |  | — |
Mortgage | — |  |  | — |  |  |  | — |  |  | — |
Installment | 1 |  |  | 14 |  |  |  | — |  |  | — |
Residential real estate: |  |  |  |  |  |  |  |
Commercial | 1 |  |  | 8 |  |  |  | 1 |  |  | 13 |
Mortgage | 8 |  |  | 768 |  |  |  | 7 |  |  | 370 |
HELOC | 1 |  |  | 16 |  |  |  | 7 |  |  | 165 |
Installment | 2 |  |  | 28 |  |  |  | 2 |  |  | 66 |
Consumer | 32 |  |  | 365 |  |  |  | 58 |  |  | 530 |
Leases | — |  |  | — |  |  |  | — |  |  | — |
Total loans | 49 |  |  | $ | 1,566 |  |  |  | 78 |  |  | $ | 1,209 |
Of the $1.6 million in modified TDRs which defaulted during the nine-month period ended September 30, 2020, $621,000 were accruing loans and $0.9 million were nonaccrual loans. Of the $1.2 million in modified TDRs which defaulted during the nine-month period ended September 30, 2019, $87,000 were accruing loans and $1.1 million were nonaccrual loans.

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