

	December 31,
	2019		2018
	(Dollars in thousands)
Commercial, financial and agricultural	$	570,089	$	581,177
Real estate:
Construction	96,139		67,269
Residential mortgage	1,595,801		1,424,384
Home equity	490,239		468,966
Commercial mortgage	1,124,911		1,041,685
Consumer	569,516		492,268
Leases	—		124
Subtotal	4,446,695		4,075,873
Net deferred costs	2,845		2,493
Total loans and leases	$	4,449,540	$	4,078,366

There are different types of risk characteristics for the loans in each portfolio segment. The construction and real estate segment's predominant risk characteristics are the collateral and the geographic location of the property collateralizing the loan, as well as the operating cash flow for the commercial real estate properties. The commercial, financial and agricultural (and leases) segment's predominant risk characteristics are the cash flows of the business we lend to, the global cash flows and liquidity of the guarantors of such losses, as well as economic and market conditions. The consumer segment's predominant risk characteristics are employment and income levels as they relate to the consumer.

During the year ended December 31, 2019, we foreclosed on one portfolio loan with a carrying value of $142 thousand, and recorded a gain on the transfer of $22 thousand. We did not transfer any loans to the held-for-sale category during the year ended December 31, 2019. In addition, we did not sell any other portfolio loans during the year ended December 31, 2019.

In 2019, we purchased an auto loan portfolio totaling $30.2 million which included a $0.6 million premium over the $29.6 million outstanding balance. At the time of purchase, the auto loans had a weighted average remaining term of 56 months and a weighted average yield, net of servicing costs, of 6.15%. In 2019, we also purchased unsecured consumer loan portfolios

totaling $109.9 million which included a $2.3 million discount to the $112.2 million outstanding balance. At the time of purchase, the unsecured consumer loan portfolios had a weighted average remaining term of 76 months and a weighted average yield, net of servicing costs, of 6.24%.

In 2018, we purchased an auto loan portfolio totaling $20.6 million which included a $0.1 million premium over the $20.5 million outstanding balance. At the time of purchase, the auto loans had a weighted average remaining term of 63 months and a weighted average yield, net of the premium paid and servicing costs, of 3.89%. In 2018, we also purchased an unsecured consumer loan portfolio totaling $38.0 million, which represented the outstanding balance at the time of purchase. At the time of purchase, the unsecured consumer loans had a weighted average remaining term of 41 months and a weighted average yield, net of servicing costs, of 6.99%.

During the year ended December 31, 2018, we foreclosed on one portfolio loan with a carrying value of $40 thousand. We did not transfer any loans to the held-for-sale category during the year ended December 31, 2018. In addition, we did not sell any portfolio loans during the year ended December 31, 2018.

In the normal course of business, our bank makes loans to certain directors, executive officers and their affiliates. These loans are made in the ordinary course of business at normal credit terms. As of December 31, 2019 and December 31, 2018, related party loan balances were $36.3 million and $34.0 million, respectively.



			Real Estate
	Comml., Fin. & Ag.		Constr.			Resi. Mortgage		Home Equity		Comml. Mortgage			Consumer			Leases		Total
	(Dollars in thousands)
December 31, 2019
Allowance:
Individually evaluated for impairment	$	218	$	—		$	—	$	—	$	—		$	17		$	—	$	235
Collectively evaluated for impairment	7,918		1,792			13,327		4,206		11,113			9,380			—		47,736
Total ending balance	$	8,136	$	1,792		$	13,327	$	4,206	$	11,113		$	9,397		$	—	$	47,971

Loans and leases:
Individually evaluated for impairment	$	602	$	—		$	6,516	$	92	$	1,839		$	17		$	—	$	9,066
Collectively evaluated for impairment	569,487		96,139			1,589,285		490,147		1,123,072			569,499			—		4,437,629
Subtotal	570,089		96,139			1,595,801		490,239		1,124,911			569,516			—		4,446,695
Net deferred costs (income)	215		(285		)	4,000		495		(1,496		)	(84		)	—		2,845
Total ending balance	$	570,304	$	95,854		$	1,599,801	$	490,734	$	1,123,415		$	569,432		$	—	$	4,449,540



			Real Estate
	Comml., Fin. & Ag.		Constr.			Resi. Mortgage		Home Equity		Comml. Mortgage			Consumer			Leases		Total
	(Dollars in thousands)
December 31, 2018
Allowance:
Individually evaluated for impairment	$	—	$	—		$	—	$	—	$	—		$	—		$	—	$	—
Collectively evaluated for impairment	8,027		1,202			14,349		3,788		13,358			7,192			—		47,916
Total ending balance	$	8,027	$	1,202		$	14,349	$	3,788	$	13,358		$	7,192		$	—	$	47,916

Loans and leases:
Individually evaluated for impairment	$	220	$	2,273		$	10,075	$	275	$	2,348		$	—		$	—	$	15,191
Collectively evaluated for impairment	580,957		64,996			1,414,309		468,691		1,039,337			492,268			124		4,060,682
Subtotal	581,177		67,269			1,424,384		468,966		1,041,685			492,268			124		4,075,873
Net deferred costs (income)	483		(342		)	3,821		—		(1,407		)	(62		)	—		2,493
Total ending balance	$	581,660	$	66,927		$	1,428,205	$	468,966	$	1,040,278		$	492,206		$	124	$	4,078,366



	December 31, 2019						December 31, 2018
	Unpaid Principal Balance		Recorded Investment		Allowance Allocated		Unpaid Principal Balance		Recorded Investment		Allowance Allocated
	(Dollars in thousands)
Impaired loans with no related Allowance recorded:
Commercial, financial and agricultural	$	246	$	135	$	—	$	330	$	220	$	—
Real estate:
Construction	—		—		—		3,076		2,273		—
Residential mortgage	7,230		6,516		—		11,019		10,075		—
Home equity	92		92		—		275		275		—
Commercial mortgage	1,839		1,839		—		2,348		2,348		—
Total impaired loans with no related Allowance recorded	9,407		8,582		—		17,048		15,191		—
Impaired loans with an Allowance recorded:
Commercial, financial and agricultural	467		467		218		—		—		—
Consumer	17		17		17		—		—		—
Total impaired loans with an Allowance recorded	484		484		235		—		—		—
Total impaired loans	$	9,891	$	9,066	$	235	$	17,048	$	15,191	$	—



	Year Ended				Year Ended				Year Ended
	December 31, 2019				December 31, 2018				December 31, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Commercial, financial and agricultural	$	214	$	9	$	435	$	24	$	1,272	$	24
Real estate:
Construction	1,018		62		2,436		111		2,760		99
Residential mortgage	8,322		905		12,681		662		17,122		1,843
Home equity	277		13		482		—		1,213		69
Commercial mortgage	2,098		86		3,368		179		4,893		313
Consumer	3		—		—		—		—		—
Total	$	11,932	$	1,075	$	19,402	$	976	$	27,260	$	2,348

For the years ended December 31, 2019, 2018 and 2017, the amount of interest income recognized on impaired loans within the period that the loans were impaired were primarily related to loans modified in a troubled debt restructuring ("TDR") that were on accrual status. For the years ended December 31, 2019, 2018 and 2017, the amount of interest income recognized using a cash-based method of accounting during the period that the loans were impaired was not material.

The Company had $0.6 million and $0.7 million of residential mortgage loans collateralized by residential real estate property that were in the process of foreclosure at December 31, 2019 and 2018, respectively.

For all loan types, the Company determines delinquency status by considering the number of days full payments required by the contractual terms of the loan are past due. The following tables present by class, the aging of the recorded investment in past due loans and leases as of December 31, 2019 and 2018:



	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans 90+ Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans and Leases Not Past Due		Total
	(Dollars in thousands)
December 31, 2019
Commercial, financial and agricultural	$	476	$	865	$	—	$	467	$	1,808	$	568,496	$	570,304
Real estate:
Construction	643		—		—		—		643		95,211		95,854
Residential mortgage	1,830		589		724		979		4,122		1,595,679		1,599,801
Home equity	759		207		—		92		1,058		489,676		490,734
Commercial mortgage	—		397		—		—		397		1,123,018		1,123,415
Consumer	3,223		943		286		17		4,469		564,963		569,432
Total	$	6,931	$	3,001	$	1,010	$	1,555	$	12,497	$	4,437,043	$	4,449,540



	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans 90+ Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans and Leases Not Past Due		Total
	(Dollars in thousands)
December 31, 2018
Commercial, financial and agricultural	$	1,348	$	162	$	—	$	—	$	1,510	$	580,150	$	581,660
Real estate:
Construction	—		—		—		—		—		66,927		66,927
Residential mortgage	3,966		157		—		2,048		6,171		1,422,034		1,428,205
Home equity	433		104		298		275		1,110		467,856		468,966
Commercial mortgage	—		—		—		—		—		1,040,278		1,040,278
Consumer	2,340		872		238		—		3,450		488,756		492,206
Leases	—		—		—		—		—		124		124
Total	$	8,087	$	1,295	$	536	$	2,323	$	12,241	$	4,066,125	$	4,078,366

Interest income totaling $3.1 million, $1.2 million, and $2.6 million was recognized on nonaccrual loans, including loans held for sale, in 2019, 2018 and 2017, respectively. Additional interest income of $0.3 million, $0.4 million, and $0.4 million would have been recognized in 2019, 2018 and 2017, respectively, had these loans been accruing interest throughout those periods. Additionally, interest income of $0.3 million, $0.7 million, and $0.8 million was collected and recognized on charged-off loans in 2019, 2018 and 2017, respectively.

TDRs included in nonperforming assets at December 31, 2019 consisted of one Hawaii residential mortgage loan with a principal balance of $0.3 million. Concessions made to the original contractual terms of these loans consisted primarily of the deferral of interest and/or principal payments due to deterioration in the borrowers' financial condition. The principal balances on these TDRs had matured and/or were in default at the time of restructure and we have no commitments to lend additional funds to any of these borrowers. At December 31, 2018, TDRs included in nonperforming assets consisted of three loans with a combined principal balance of $0.4 million.

There were $7.5 million of TDRs still accruing interest at December 31, 2019, none of which were more than 90 days delinquent. At December 31, 2018, there were $12.9 million of TDRs still accruing interest, none of which were more than 90 days delinquent.

Some loans modified in a TDR may already be on nonaccrual status and partial charge-offs may have already been taken against the outstanding loan balance. Thus, these loans have already been identified as impaired and have already been evaluated under the Company's Allowance methodology. As a result, some loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan. The loans modified in a TDR did not have a material effect on our Provision and Allowance during the years ended December 31, 2019 and 2018.



	Year Ended December 31, 2019
	Number of Loans	Recorded Investment (as of period end)		Increase in the Allowance
	(Dollars in thousands)
Real estate: Residential mortgage	1	$	104	$	—
Total	1	$	104	$	—

	Year Ended December 31, 2018
	Number of Loans	Recorded Investment (as of period end)		Increase in the Allowance
	(Dollars in thousands)
Real estate: Residential mortgage	3	$	575	$	—
Total	3	$	575	$	—

	Year Ended December 31, 2017
	Number of Loans	Recorded Investment (as of period end)		Increase in the Allowance
	(Dollars in thousands)
Real estate: Residential mortgage	3	$	104	$	—
Total	3	$	104	$	—

The Company categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans and leases as to credit risk. This analysis includes non-homogeneous loans and leases, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans and leases classified as special mention, while still adequately protected by the borrower's capital adequacy and payment capability, exhibit distinct weakening trends and/or elevated levels of exposure to external conditions. If left unchecked or uncorrected, these potential weaknesses may result in deteriorated prospects of repayment. These exposures require management's close attention so as to avoid becoming undue or unwarranted credit exposures.

Substandard. Loans and leases classified as substandard are inadequately protected by the borrower's current financial condition and payment capability or of the collateral pledged, if any. Loans and leases so classified have a well-defined weakness or weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans and leases classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, its classification as an estimate loss is deferred until its more exact status may be determined.

Loss. Loans and leases classified as loss are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean the loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Losses are taken in the period in which they surface as uncollectible.

Loans and leases not meeting the criteria above are considered to be pass rated loans and leases. The following tables present by class and credit indicator, the recorded investment in the Company's loans and leases as of December 31, 2019 and 2018:



	Pass		Special Mention		Substandard		Loss		Subtotal		Net Deferred Costs (Income)			Total
	(Dollars in thousands)
December 31, 2019
Commercial, financial and agricultural	$	523,342	$	20,677	$	26,070	$	—	$	570,089	$	215		$	570,304
Real estate:
Construction	96,139		—		—		—		96,139		(285		)	95,854
Residential mortgage	1,593,072		840		1,889		—		1,595,801		4,000			1,599,801
Home equity	490,147		—		92		—		490,239		495			490,734
Commercial mortgage	1,094,364		17,440		13,107		—		1,124,911		(1,496		)	1,123,415
Consumer	569,212		—		193		111		569,516		(84		)	569,432
Total	$	4,366,276	$	38,957	$	41,351	$	111	$	4,446,695	$	2,845		$	4,449,540



	Pass		Special Mention		Substandard		Loss		Subtotal		Net Deferred Costs (Income)			Total
	(Dollars in thousands)
December 31, 2018
Commercial, financial and agricultural	$	552,706	$	7,961	$	20,510	$	—	$	581,177	$	483		$	581,660
Real estate:
Construction	67,269		—		—		—		67,269		(342		)	66,927
Residential mortgage	1,422,240		—		2,144		—		1,424,384		3,821			1,428,205
Home equity	468,394		—		572		—		468,966		—			468,966
Commercial mortgage	1,029,581		10,412		1,692		—		1,041,685		(1,407		)	1,040,278
Consumer	492,030		—		80		158		492,268		(62		)	492,206
Leases	124		—		—		—		124		—			124
Total	$	4,032,344	$	18,373	$	24,998	$	158	$	4,075,873	$	2,493		$	4,078,366