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Loans and Asset Quality Information
 12 Months Ended
Dec. 31, 2019
Receivables [Abstract]  
Loans and Asset Quality Information Loans and Asset Quality Information
The following is a summary of the major categories of total loans outstanding:
($ in thousands)
December 31, 2019
 
December 31, 2018
 
Amount
 
Percentage
 
Amount
 
Percentage
All  loans:
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
504,271

 
11
%
 
$
457,037

 
11
%
Real estate – construction, land development & other land loans
530,866

 
12
%
 
518,976

 
12
%
Real estate – mortgage – residential (1-4 family) first mortgages
1,105,014

 
25
%
 
1,054,176

 
25
%
Real estate – mortgage – home equity loans / lines of credit
337,922

 
8
%
 
359,162

 
8
%
Real estate – mortgage – commercial and other
1,917,280

 
43
%
 
1,787,022

 
42
%
Installment loans to individuals
56,172

 
1
%
 
71,392

 
2
%
Subtotal
4,451,525

 
100
%
 
4,247,765

 
100
%
Unamortized net deferred loan costs (fees)
1,941

 
 
 
1,299

 
 
Total loans
$
4,453,466

 
 
 
$
4,249,064

 
 

Loans in the amount of $4.0 billion and $3.8 billion were pledged as collateral for certain borrowings as of December 31, 2019 and December 31, 2018, respectively (see Note 9).
Included in the table above are credit card balances outstanding totaling $30.9 million and $26.5 million at December 31, 2019 and 2018, respectively.
The loans above also include loans to executive officers and directors serving the Company at December 31, 2019 and to their associates, totaling approximately $5.5 million and $5.7 million at December 31, 2019 and 2018, respectively. Management does not believe these loans involve more than the normal risk of collectability or present other unfavorable features.

Included in the table above are the following amounts of SBA loans:
($ in thousands)
December 31,
2019
 
December 31,
2018
Guaranteed portions of SBA Loans included in table above
$
54,400

 
53,205

Unguaranteed portions of SBA Loans included in table above
110,782

 
97,572

Total SBA loans included in the table above
$
165,182

 
150,777

 
 
 
 
Sold portions of SBA loans with servicing retained - not included in table above
$
316,730

 
230,424


At December 31, 2019 and 2018, there was a remaining unaccreted discount on the retained portion of sold SBA loans amounting to $7.1 million and $5.7 million, respectively. The discounts are amortized as yield adjustments over the respective lives of the loans, so long as the loans perform.
The Company has several acquired loan portfolios as a result of merger and acquisition transactions. In these transactions, the Company recorded loans at their fair value as required by applicable accounting guidance. Included in these loan portfolios were purchased credit impaired (“PCI”) loans, which are loans for which it is probable at acquisition date that all contractually required payments will not be collected. The remaining loans were considered to be purchased non-impaired loans and their related fair value discount or premium is being recognized as an adjustment to yield over the remaining life of each loan.
As of December 31, 2019, 2018 and 2017, there was a remaining accretable discount of $11.1 million, $15.0 million, and $21.5 million, respectively, related to purchased non-impaired loans. The discounts are amortized as yield adjustments over the respective lives of the loans, so long as the loans perform.
The following table presents changes in the carrying value of PCI loans.
($ in thousands)
Purchased Credit Impaired Loans
For the year
Ended
December 31,
2019
 
For the year
Ended
December 31,
2018
 
For the year
Ended
December 31,
2017
Balance at beginning of period
$
17,393

 
23,165

 
514

Additions due to acquisition of Carolina Bank
—

 
—

 
19,254

Additions due to acquisition of Asheville Savings Bank
—

 
—

 
9,886

Change due to payments received and accretion
(4,863
)
 
(5,799
)
 
(6,016
)
Change due to loan charge-offs
(11
)
 
(4
)
 
(12
)
Transfers to foreclosed real estate
—

 
(10
)
 
(69
)
Other
145

 
41

 
(392
)
Balance at end of period
$
12,664

 
17,393

 
23,165

The following table presents changes in the accretable yield for PCI loans.
($ in thousands)
Accretable Yield for PCI loans
For the year
Ended
December 31,
2019
 
For the year
Ended
December 31,
2018
 
For the year
Ended
December 31,
2017
Balance at beginning of period
$
4,750

 
4,688

 
—

Additions due to acquisition of Carolina Bank
—

 
—

 
3,617

Additions due to acquisition of Asheville Savings Bank
—

 
—

 
1,804

Accretion
(1,486
)
 
(2,050
)
 
(1,846
)
Reclassification from (to) nonaccretable difference
617

 
849

 
423

Other, net
268

 
1,263

 
690

Balance at end of period
$
4,149

 
4,750

 
4,688


During 2019, the Company received $406,000 in payments that exceeded the carrying amount of the related PCI loans, of which $348,000 was recognized as loan discount accretion income and $58,000 was recorded as additional loan interest income. During 2018, the Company received $772,000 in payments that exceeded the carrying amount of the related PCI loans, of which $493,000 was recognized as loan discount accretion income and $279,000 was recorded as additional loan interest income. During 2017, the Company received $1,064,000 in payments that exceeded the carrying amount of the related PCI loans, of which $962,000 was recognized as loan discount accretion income and $102,000 was recorded as additional loan interest income.
Nonperforming assets are defined as nonaccrual loans, restructured loans, loans past due 90 or more days and still accruing interest, and foreclosed real estate. Nonperforming assets are summarized as follows:
ASSET QUALITY DATA ($ in thousands)
December 31,
2019
 
December 31,
2018
Nonperforming assets
 

 
 

Nonaccrual loans
$
24,866

 
22,575

Restructured loans - accruing
9,053

 
13,418

Accruing loans > 90 days past due
—

 
—

Total nonperforming loans
33,919

 
35,993

Foreclosed real estate
3,873

 
7,440

Total nonperforming assets
$
37,792

 
43,433

 
 
 
 
Purchased credit impaired loans not included above (1)
$
12,664

 
17,393

 
 
 
 
(1) In the March 3, 2017 acquisition of Carolina Bank. and the October 1, 2017 acquisition of Asheville Savings Bank, the Company acquired $19.3 million and $9.9 million, respectively, in PCI loans in accordance with ASC 310-30 accounting guidance. These loans are excluded from nonperforming loans, including $0.8 million and $0.6 million in PCI loans at December 31, 2019 and 2018, respectively, that are contractually past due 90 days or more.
At December 31, 2019 and 2018, the Company had $0.6 million and $0.7 million in residential mortgage loans in process of foreclosure, respectively.
At December 31, 2019 and 2018, there were no commitments to lend additional funds to debtors whose loans were nonperforming.
The following is a summary the Company’s nonaccrual loans by major categories.
($ in thousands)
December 31,
2019
 
December 31,
2018
Commercial, financial, and agricultural
$
5,518

 
919

Real estate – construction, land development & other land loans
1,067

 
2,265

Real estate – mortgage – residential (1-4 family) first mortgages
7,552

 
10,115

Real estate – mortgage – home equity loans / lines of credit
1,797

 
1,685

Real estate – mortgage – commercial and other
8,820

 
7,452

Installment loans to individuals
112

 
139

Total
$
24,866

 
22,575


The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2019.
($ in thousands)
Accruing
30-59 Days
Past Due
 
Accruing 60-
89 Days
Past Due
 
Accruing 90
Days or More
Past Due
 
Nonaccrual
Loans
 
Accruing
Current
 
Total Loans
Receivable
Commercial, financial, and agricultural
$
752

 
—

 
—

 
5,518

 
497,788

 
504,058

Real estate – construction, land development & other land loans
37

 
152

 
—

 
1,067

 
529,444

 
530,700

Real estate – mortgage – residential (1-4 family) first mortgages
10,858

 
5,056

 
—

 
7,552

 
1,076,205

 
1,099,671

Real estate – mortgage – home equity loans / lines of credit
770

 
300

 
—

 
1,797

 
334,832

 
337,699

Real estate – mortgage – commercial and other
4,257

 
—

 
—

 
8,820

 
1,897,573

 
1,910,650

Installment loans to individuals
344

 
137

 
—

 
112

 
55,490

 
56,083

Purchased credit impaired
218

 
38

 
762

 
—

 
11,646

 
12,664

Total
$
17,236

 
5,683

 
762

 
24,866

 
4,402,978

 
4,451,525

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
 
 
1,941

Total loans
 
 
 
 
 
 
 
 
 
 
$
4,453,466

The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2018.
($ in thousands)
Accruing
30-59 Days
Past Due
 
Accruing 60-
89 Days
Past Due
 
Accruing 90
Days or More
Past Due
 
Nonaccrual
Loans
 
Accruing
Current
 
Total Loans
Receivable
Commercial, financial, and agricultural
$
191

 
5

 
—

 
919

 
455,692

 
456,807

Real estate – construction, land development & other land loans
849

 
212

 
—

 
2,265

 
515,472

 
518,798

Real estate – mortgage – residential (1-4 family) first mortgages
14,178

 
1,369

 
—

 
10,115

 
1,022,261

 
1,047,923

Real estate – mortgage – home equity loans / lines of credit
1,048

 
254

 
—

 
1,685

 
355,831

 
358,818

Real estate – mortgage – commercial and other
709

 
520

 
—

 
7,452

 
1,768,205

 
1,776,886

Installment loans to individuals
359

 
220

 
—

 
139

 
70,422

 
71,140

Purchased credit impaired
990

 
138

 
583

 
—

 
15,682

 
17,393

Total
$
18,324

 
2,718

 
583

 
22,575

 
4,203,565

 
4,247,765

Unamortized net deferred loan fees
 
 
 
 
 
 
 
 
 
 
1,299

Total loans
 
 
 
 
 
 
 
 
 
 
$
4,249,064


The following table presents the activity in the allowance for loan losses for the year ended December 31, 2019.
($ in thousands)
Commercial,
Financial, and
Agricultural
 
Real Estate –
Construction,
Land
Development
& Other Land
Loans
 
Real Estate –
Residential
(1-4 Family)
First
Mortgages
 
Real Estate
– Mortgage
– Home
Equity Lines
of Credit
 
Real Estate
– Mortgage
–
Commercial
and Other
 
Installment
Loans to
Individuals
 
Unallocated
 
Total
As of and for the year ended December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,889

 
2,243

 
5,197

 
1,665

 
7,983

 
952

 
110

 
21,039

Charge-offs
(2,473
)
 
(553
)
 
(657
)
 
(307
)
 
(1,556
)
 
(757
)
 
—

 
(6,303
)
Recoveries
980

 
1,275

 
705

 
629

 
575

 
235

 
—

 
4,399

Provisions
3,157

 
(989
)
 
(1,413
)
 
(860
)
 
1,936

 
542

 
(110
)
 
2,263

Ending balance
$
4,553

 
1,976

 
3,832

 
1,127

 
8,938

 
972

 
—

 
21,398

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2019: Allowance for loan losses
Individually evaluated for impairment
$
1,791

 
50

 
750

 
—

 
983

 
—

 
—

 
3,574

Collectively evaluated for impairment
$
2,720

 
1,926

 
2,976

 
1,127

 
7,931

 
961

 
—

 
17,641

Purchased credit impaired
$
42

 
—

 
106

 
—

 
24

 
11

 
—

 
183

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable as of December 31, 2019:
Ending balance – total
$
504,271

 
530,866

 
1,105,014

 
337,922

 
1,917,280

 
56,172

 
—

 
4,451,525

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,941

Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4,453,466

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2019: Loans
Individually evaluated for impairment
$
4,957

 
796

 
9,546

 
333

 
9,570

 
—

 
—

 
25,202

Collectively evaluated for impairment
$
499,101

 
529,904

 
1,090,125

 
337,366

 
1,901,080

 
56,083

 
—

 
4,413,659

Purchased credit impaired
$
213

 
166

 
5,343

 
223

 
6,630

 
89

 
—

 
12,664

The following table presents the activity in the allowance for loan losses for the year ended December 31, 2018.
($ in thousands)
Commercial,
Financial, and
Agricultural
 
Real Estate –
Construction,
Land
Development
& Other Land
Loans
 
Real Estate –
Residential
(1-4 Family)
First
Mortgages
 
Real Estate
– Mortgage
– Home
Equity Lines
of Credit
 
Real Estate
– Mortgage
–
Commercial
and Other
 
Installment
Loans to
Individuals
 
Unallocated
 
Total
As of and for the year ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
3,111

 
2,816

 
6,147

 
1,827

 
6,475

 
950

 
1,972

 
23,298

Charge-offs
(2,128
)
 
(158
)
 
(1,734
)
 
(711
)
 
(1,459
)
 
(781
)
 
—

 
(6,971
)
Recoveries
1,195

 
4,097

 
833

 
364

 
1,503

 
309

 
—

 
8,301

Provisions
711

 
(4,512
)
 
(49
)
 
185

 
1,464

 
474

 
(1,862
)
 
(3,589
)
Ending balance
$
2,889

 
2,243

 
5,197

 
1,665

 
7,983

 
952

 
110

 
21,039

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2018: Allowance for loan losses
Individually evaluated for impairment
$
226

 
134

 
955

 
48

 
906

 
—

 
—

 
2,269

Collectively evaluated for impairment
$
2,661

 
2,109

 
4,143

 
1,608

 
7,070

 
941

 
110

 
18,642

Purchased credit impaired
$
2

 
—

 
99

 
9

 
7

 
11

 
—

 
128

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable as of December 31, 2018:
Ending balance – total
$
457,037

 
518,976

 
1,054,176

 
359,162

 
1,787,022

 
71,392

 
—

 
4,247,765

Unamortized net deferred loan fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,299

Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4,249,064

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2018: Loans
Individually evaluated for impairment
$
696

 
1,345

 
12,391

 
296

 
9,525

 
—

 
—

 
24,253

Collectively evaluated for impairment
$
456,111

 
517,453

 
1,035,532

 
358,522

 
1,767,361

 
71,140

 
—

 
4,206,119

Purchased credit impaired
$
230

 
178

 
6,253

 
344

 
10,136

 
252

 
—

 
17,393

The following table presents the activity in the allowance for loan losses for the year ended December 31, 2017.
($ in thousands)
Commercial,
Financial, and
Agricultural
 
Real Estate –
Construction,
Land
Development
& Other Land
Loans
 
Real Estate
–
Residential
(1-4 Family)
First
Mortgages
 
Real Estate
– Mortgage
– Home
Equity Lines
of Credit
 
Real Estate
– Mortgage
–
Commercial
and Other
 
Installment
Loans to
Individuals
 
Unallo-
cated
 
Total
As of and for the year ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
3,829

 
2,691

 
7,704

 
2,420

 
5,098

 
1,145

 
894

 
23,781

Charge-offs
(1,622
)
 
(589
)
 
(2,641
)
 
(978
)
 
(1,182
)
 
(799
)
 
—

 
(7,811
)
Recoveries
1,311

 
2,579

 
1,076

 
333

 
1,027

 
279

 
—

 
6,605

Provisions
(407
)
 
(1,865
)
 
8

 
52

 
1,532

 
325

 
1,078

 
723

Ending balance
$
3,111

 
2,816

 
6,147

 
1,827

 
6,475

 
950

 
1,972

 
23,298

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2017: Allowance for loan losses
Individually evaluated for impairment
$
215

 
18

 
1,099

 
—

 
232

 
—

 
—

 
1,564

Collectively evaluated for impairment
$
2,896

 
2,798

 
4,831

 
1,788

 
6,226

 
950

 
1,972

 
21,461

Purchased credit impaired
$
—

 
—

 
217

 
39

 
17

 
—

 
—

 
273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable as of December 31, 2017:
Ending balance – total
$
381,130

 
539,020

 
972,772

 
379,978

 
1,696,107

 
74,348

 
—

 
4,043,355

Unamortized net deferred loan fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(986
)
Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,042,369

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2017: Loans
Individually evaluated for impairment
$
579

 
2,975

 
14,800

 
368

 
8,493

 
—

 
—

 
27,215

Collectively evaluated for impairment
$
379,903

 
535,638

 
949,113

 
379,327

 
1,675,102

 
73,892

 
—

 
3,992,975

Purchased credit impaired
$
648

 
407

 
8,859

 
283

 
12,512

 
456

 
—

 
23,165


The following table presents loans individually evaluated for impairment by class of loans, excluding purchased credit impaired loans, as of December 31, 2019.
($ in thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
Impaired loans with no related allowance recorded:
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
16

 
19

 
—

 
74

Real estate – mortgage – construction, land development & other land loans
221

 
263

 
—

 
366

Real estate – mortgage – residential (1-4 family) first mortgages
4,300

 
4,539

 
—

 
4,415

Real estate – mortgage –home equity loans / lines of credit
333

 
357

 
—

 
147

Real estate – mortgage –commercial and other
2,643

 
3,328

 
—

 
3,240

Installment loans to individuals
—

 
—

 
—

 
—

Total impaired loans with no allowance
$
7,513

 
8,506

 
—

 
8,242

 
 
 
 
 
 
 
 
Impaired loans with an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
4,941

 
4,995

 
1,791

 
1,681

Real estate – mortgage – construction, land development & other land loans
575

 
575

 
50

 
586

Real estate – mortgage – residential (1-4 family) first mortgages
5,246

 
5,469

 
750

 
6,206

Real estate – mortgage –home equity loans / lines of credit
—

 
—

 
—

 
55

Real estate – mortgage –commercial and other
6,927

 
7,914

 
983

 
5,136

Installment loans to individuals
—

 
—

 
—

 
—

Total impaired loans with allowance
$
17,689

 
18,953

 
3,574

 
13,664


Interest income recorded on impaired loans during the year ended December 31, 2019 was $1.3 million, and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status and interest income recorded on accruing TDRs.
The following table presents loans individually evaluated for impairment by class of loans, excluding purchased credit impaired loans, as of December 31, 2018.
 
($ in thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
Impaired loans with no related allowance recorded:
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
310

 
310

 
—

 
957

Real estate – mortgage – construction, land development & other land loans
485

 
803

 
—

 
2,366

Real estate – mortgage – residential (1-4 family) first mortgages
4,626

 
4,948

 
—

 
4,804

Real estate – mortgage –home equity loans / lines of credit
22

 
31

 
—

 
91

Real estate – mortgage –commercial and other
3,475

 
4,237

 
—

 
3,670

Installment loans to individuals
—

 
—

 
—

 
—

Total impaired loans with no allowance
$
8,918

 
10,329

 
—

 
11,888

 
 
 
 
 
 
 
 
Impaired loans with an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
386

 
387

 
226

 
422

Real estate – mortgage – construction, land development & other land loans
860

 
864

 
134

 
385

Real estate – mortgage – residential (1-4 family) first mortgages
7,765

 
7,904

 
955

 
8,963

Real estate – mortgage –home equity loans / lines of credit
274

 
275

 
48

 
184

Real estate – mortgage –commercial and other
6,050

 
6,054

 
906

 
5,911

Installment loans to individuals
—

 
—

 
—

 
2

Total impaired loans with allowance
$
15,335

 
15,484

 
2,269

 
15,867


Interest income recorded on impaired loans during the year ended December 31, 2018 was $1.5 million, and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status and interest income recorded on accruing TDRs.
The following table presents loans individually evaluated for impairment by class of loans, excluding purchased credit impaired loans, as of December 31, 2017.
 
($ in thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
Impaired loans with no related allowance recorded:
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
183

 
425

 
—

 
276

Real estate – mortgage – construction, land development & other land loans
2,743

 
3,941

 
—

 
2,846

Real estate – mortgage – residential (1-4 family) first mortgages
5,205

 
5,728

 
—

 
7,067

Real estate – mortgage –home equity loans / lines of credit
368

 
387

 
—

 
129

Real estate – mortgage –commercial and other
3,066

 
3,321

 
—

 
3,143

Installment loans to individuals
—

 
—

 
—

 
—

Total impaired loans with no allowance
$
11,565

 
13,802

 
—

 
13,461

 
 
 
 
 
 
 
 
Impaired loans with an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
396

 
396

 
215

 
214

Real estate – mortgage – construction, land development & other land loans
232

 
241

 
18

 
503

Real estate – mortgage – residential (1-4 family) first mortgages
9,595

 
9,829

 
1,099

 
10,077

Real estate – mortgage –home equity loans / lines of credit
—

 
—

 
—

 
66

Real estate – mortgage –commercial and other
5,427

 
5,427

 
232

 
5,369

Installment loans to individuals
—

 
—

 
—

 
—

Total impaired loans with allowance
$
15,650

 
15,893

 
1,564

 
16,229


Interest income recorded on impaired loans during the year ended December 31, 2017 was $1.3 million, and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status and interest income recorded on accruing TDRs.
The Company tracks credit quality based on its internal risk ratings. Upon origination a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower’s credit score, the loan-to-value ratio, the debt-to-income ratio, etc. Loans that are risk-graded as substandard during the origination process are declined. After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management’s evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type.
The following describes the Company’s internal risk grades in ascending order of likelihood of loss:
 
Risk Grade
Description
Pass:
 
 
1
Loans with virtually no risk, including cash secured loans.
 
2
Loans with documented significant overall financial strength.  These loans have minimum chance of loss due to the presence of multiple sources of repayment – each clearly sufficient to satisfy the obligation.
 
3
Loans with documented satisfactory overall financial strength.  These loans have a low loss potential due to presence of at least two clearly identified sources of repayment – each of which is sufficient to satisfy the obligation under the present circumstances.
 
4
Loans to borrowers with acceptable financial condition.  These loans could have signs of minor operational weaknesses, lack of adequate financial information, or loans supported by collateral with questionable value or marketability.  
 
5
Loans that represent above average risk due to minor weaknesses and warrant closer scrutiny by management.  Collateral is generally available and felt to provide reasonable coverage with realizable liquidation values in normal circumstances.  Repayment performance is satisfactory.
 
P
(Pass)
Consumer loans (<$500,000) that are of satisfactory credit quality with borrowers who exhibit good personal credit history, average personal financial strength and moderate debt levels.  These loans generally conform to Bank policy, but may include approved mitigated exceptions to the guidelines.  
Special Mention:
 
 
6
Existing loans with defined weaknesses in primary source of repayment that, if not corrected, could cause a loss to the Bank.
Classified:
 
 
7
An existing loan inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged, if any.  These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
 
8
Loans that have a well-defined weakness that make the collection or liquidation in full highly questionable and improbable.  Loss appears imminent, but the exact amount and timing is uncertain.
 
9
Loans that are considered uncollectible and are in the process of being charged-off.  This grade is a temporary grade assigned for administrative purposes until the charge-off is completed.
 
F
(Fail)
Consumer loans (<$500,000) with a well-defined weakness, such as exceptions of any kind with no mitigating factors, history of paying outside the terms of the note, insufficient income to support the current level of debt, etc.  
The following table presents the Company’s recorded investment in loans by credit quality indicators as of December 31, 2019.
 
 
($ in thousands)
Pass
 
Special Mention
Loans
 
Classified
Accruing Loans
 
Classified
Nonaccrual
Loans
 
Total
Commercial, financial, and agricultural
$
486,081

 
7,998

 
4,461

 
5,518

 
504,058

Real estate – construction, land development & other land loans
522,767

 
4,075

 
2,791

 
1,067

 
530,700

Real estate – mortgage – residential (1-4 family) first mortgages
1,063,735

 
13,187

 
15,197

 
7,552

 
1,099,671

Real estate – mortgage – home equity loans / lines of credit
328,903

 
1,258

 
5,741

 
1,797

 
337,699

Real estate – mortgage – commercial and other
1,873,594

 
20,800

 
7,436

 
8,820

 
1,910,650

Installment loans to individuals
55,203

 
413

 
355

 
112

 
56,083

Purchased credit impaired
8,098

 
2,590

 
1,976

 
—

 
12,664

Total
$
4,338,381

 
50,321

 
37,957

 
24,866

 
4,451,525

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
1,941

Total loans
 
 
 
 
 
 
 
 
4,453,466

The following table presents the Company’s recorded investment in loans by credit quality indicators as of December 31, 2018.
 
 
($ in thousands)
Pass
 
Special Mention
Loans
 
Classified
Accruing Loans
 
Classified
Nonaccrual
Loans
 
Total
Commercial, financial, and agricultural
$
452,373

 
3,056

 
459

 
919

 
456,807

Real estate – construction, land development & other land loans
509,251

 
5,668

 
1,614

 
2,265

 
518,798

Real estate – mortgage – residential (1-4 family) first mortgages
1,004,457

 
12,238

 
21,113

 
10,115

 
1,047,923

Real estate – mortgage – home equity loans / lines of credit
348,792

 
1,688

 
6,653

 
1,685

 
358,818

Real estate – mortgage – commercial and other
1,750,810

 
14,484

 
4,140

 
7,452

 
1,776,886

Installment loans to individuals
70,357

 
231

 
413

 
139

 
71,140

Purchased credit impaired
8,355

 
5,214

 
3,824

 
—

 
17,393

Total
$
4,144,395

 
42,579

 
38,216

 
22,575

 
4,247,765

Unamortized net deferred loan fees
 
 
 
 
 
 
 
 
1,299

Total loans
 
 
 
 
 
 
 
 
4,249,064


Troubled Debt Restructurings
The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extension of terms and other actions intended to minimize potential losses.
The majority of the Company’s troubled debt restructurings modified during the years ended December 31, 2019, 2018, and 2017 related to interest rate reductions combined with extension of terms. The Company does not generally grant principal forgiveness.
All loans classified as troubled debt restructurings are considered to be impaired and are evaluated as such for determination of the allowance for loan losses. The Company’s troubled debt restructurings can be classified as either nonaccrual or accruing based on the loan’s payment status. The troubled debt restructurings that are nonaccrual are reported within the nonaccrual loan totals presented previously.
The following table presents information related to loans modified in a troubled debt restructuring during the year ended December 31, 2019.
($ in thousands)
For the year ended
December 31, 2019
 
Number of
Contracts
 
Pre-
Modification
Restructured
Balances
 
Post-
Modification
Restructured
Balances
TDRs – Accruing
 

 
 

 
 

Commercial, financial, and agricultural
2

 
$
395

 
$
395

Real estate – construction, land development & other land loans
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
3

 
387

 
391

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

Real estate – mortgage – commercial and other
1

 
274

 
274

Installment loans to individuals
—

 
—

 
—

 
 
 
 
 
 
TDRs – Nonaccrual
 
 
 
 
 
Commercial, financial, and agricultural
—

 
—

 
—

Real estate – construction, land development & other land loans
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
—

 
—

 
—

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

Installment loans to individuals
—

 
—

 
—

 
 
 
 
 
 
Total TDRs arising during period
6

 
$
1,056

 
$
1,060



The following table presents information related to loans modified in a troubled debt restructuring during the year ended December 31, 2018.
($ in thousands)
For the year ended
December 31, 2018
 
Number of
Contracts
 
Pre-
Modification
Restructured
Balances
 
Post-
Modification
Restructured
Balances
TDRs – Accruing
 

 
 

 
 

Commercial, financial, and agricultural
—

 
$
—

 
$
—

Real estate – construction, land development & other land loans
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
2

 
254

 
273

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

Installment loans to individuals
—

 
—

 
—

 
 
 
 
 
 
TDRs – Nonaccrual
 
 
 
 
 
Commercial, financial, and agricultural
—

 
—

 
—

Real estate – construction, land development & other land loans
1

 
61

 
61

Real estate – mortgage – residential (1-4 family) first mortgages
3

 
340

 
350

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

Installment loans to individuals
—

 
—

 
—

 
 
 
 
 
 
Total TDRs arising during period
6

 
$
655

 
$
684



The following table presents information related to loans modified in a troubled debt restructuring during the year ended December 31, 2017.
($ in thousands)
For the year ended
December 31, 2017
 
Number of
Contracts
 
Pre-
Modification
Restructured
Balances
 
Post-
Modification
Restructured
Balances
TDRs – Accruing
 

 
 

 
 

Commercial, financial, and agricultural
—

 
$
—

 
$
—

Real estate – construction, land development & other land loans
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
—

 
—

 
—

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

Real estate – mortgage – commercial and other
6

 
4,120

 
4,095

Installment loans to individuals
—

 
—

 
—

 
 
 
 
 
 
TDRs – Nonaccrual
 
 
 
 
 
Commercial, financial, and agricultural
1

 
38

 
25

Real estate – construction, land development & other land loans
1

 
32

 
32

Real estate – mortgage – residential (1-4 family) first mortgages
2

 
262

 
262

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

Installment loans to individuals
—

 
—

 
—

 
 
 
 
 
 
Total TDRs arising during period
10

 
$
4,452

 
$
4,414


Accruing restructured loans that were modified in the previous 12 months and that defaulted during the years ended December 31, 2019, 2018, and 2017 are presented in the table below. The Company considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to foreclosed real estate.
($ in thousands)
For the Year ended
December 31, 2019
 
For the Year ended
December 31, 2018
 
For the Year ended
December 31, 2017
 
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
Accruing TDRs that subsequently defaulted
 

 
 

 
 

 
 

 
 

 
 

Real estate – mortgage – residential (1-4 family first mortgages)
1

 
$
93

 
1

 
60

 
2

 
880

Real estate – mortgage – commercial and other
—

 
—

 
3

 
1,333

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Total accruing TDRs that subsequently defaulted
1

 
$
93

 
4

 
$
1,393

 
2

 
$
880