
(dollars in thousands)	September 30, 2020		December 31, 2019
Commercial, financial and agricultural:
Small Business Administration Paycheck Protection Program	$	545,277	$	—
Other	526,363		570,089
Real estate:
Construction	118,519		96,139
Residential mortgage	1,676,457		1,595,801
Home equity	533,139		490,239
Commercial mortgage	1,143,209		1,124,911
Consumer	500,416		569,516

Gross loans	5,043,380		4,446,695
Net deferred (fees) costs	(12,754)		2,845
Total loans, net of deferred fees and costs	5,030,626		4,449,540
Allowance for credit losses	(80,542)		(47,971)
Total loans, net of allowance for credit losses	$	4,950,084	$	4,401,569

The bank is a Small Business Administration ("SBA") approved lender and actively participated in assisting customers with loan applications for the SBA’s Paycheck Protection Program, or PPP, which was part of the CARES Act. PPP loans have a two or five-year term and earn interest at 1%. The SBA pays the originating bank a processing fee ranging from 1% to 5%, based on the size of the loan, which the Company is recognizing over the life of the loan. The Company saw tremendous interest in the PPP. From April 3, 2020, the date the SBA began accepting submissions for the initial round of PPP loans through the end of the program in August 2020, the Company funded over 7,200 PPP loans totaling over $558 million and received gross processing fees of over $21 million. Certain PPP loans paid-off shortly after funding resulting in a total outstanding balance of $545.3 million and net deferred fees of $16.7 million as of September 30, 2020. The Company has developed a PPP forgiveness portal and has begun the process of assisting our customers with applying for forgiveness from the SBA. The Company has engaged a third party to assist with this process. Although the Company believes that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program, there could be risks and liabilities by the Company that cannot be determined at this time.


(dollars in thousands)	Consumer - Unsecured
Three Months Ended September 30, 2020
Purchases:
Outstanding balance	$	6,960
Purchase premium (discount)	(280)
Purchase price	$	6,680

Nine Months Ended September 30, 2020
Purchases:
Outstanding balance	$	41,272
Purchase premium (discount)	(1,396)
Purchase price	$	39,876

Three Months Ended September 30, 2019
Purchases:
Outstanding balance	$	30,669
Purchase premium (discount)	(1,176)
Purchase price	$	29,493

Nine Months Ended September 30, 2019
Purchases:
Outstanding balance	$	79,996
Purchase premium (discount)	(1,176)
Purchase price	$	78,820

Note: Purchases of unsecured consumer loans were made under forward flow purchase agreements.

In accordance with ASC 326, a loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table presents the amortized cost basis of collateral-dependent loans by class, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans as of September 30, 2020:


(dollars in thousands)	Secured by 1-4 Family Residential Properties		Secured by Nonfarm Nonresidential Properties		Secured by Real Estate and Business Assets		Total		Allocated ACL
September 30, 2020
Commercial, financial and agricultural	$	—	$	—	$	1,371	$	1,371	$	213
Real estate:

Residential mortgage	9,210		—		—		9,210		—
Home equity	533		—		—		533		—
Commercial mortgage	—		7,558		—		7,558		307


Total	$	9,743	$	7,558	$	1,371	$	18,672	$	520


	December 31, 2019
(dollars in thousands)		Unpaid Principal Balance		Recorded Investment		ALLL Allocated
Impaired loans:
Commercial, financial and agricultural		$	246	$	135	$	—
Real estate:

Residential mortgage		7,230		6,516		—
Home equity		92		92		—
Commercial mortgage		1,839		1,839		—
Total		9,407		8,582		—

Impaired loans with an ACL recorded:
Commercial, financial and agricultural		467		467		218





Consumer		17		17		17
Total		484		484		235
Total impaired loans		$	9,891	$	9,066	$	235


	Three Months Ended						Nine Months Ended
	September 30, 2019					September 30, 2019
(dollars in thousands)		Average Recorded Investment		Interest Income Recognized				Average Recorded Investment		Interest Income Recognized
Commercial, financial and agricultural		$	164	$	2			$	188	$	7
Real estate:
Construction		—		—				1,323		62
Residential mortgage		7,536		63				8,763		776
Home equity		190		—				332		13
Commercial mortgage		2,021		22				2,162		68

Total		$	9,911	$	87			$	12,768	$	926

For the three and nine months ended September 30, 2019, 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 three and nine months ended September 30, 2019, the amount of interest income recognized using a cash-based method of accounting during the period that the loans were impaired was not material.

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 as of September 30, 2020 and December 31, 2019. The following tables also present the amortized cost of loans on nonaccrual status for which there was no related ACL under ASC 326 as of September 30, 2020 and under previous GAAP as of December 31, 2019.


(dollars in thousands)	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans Greater Than 90 Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans and Leases Not Past Due		Total		Nonaccrual Loans With No ACL
September 30, 2020
Commercial, financial and agricultural - SBA PPP	$	—	$	—	$	—	$	—	$	—	$	528,581	$	528,581	$	—
Commercial, financial and agricultural - Other	5,246		85		—		1,536		6,867		521,203		528,070		668
Real estate:
Construction	—		—		—		—		—		118,247		118,247		—
Residential mortgage	12		556		588		4,032		5,188		1,674,872		1,680,060		4,032
Home equity	255		—		—		533		788		533,268		534,056		533
Commercial mortgage	1,778		—		—		6,889		8,667		1,132,598		1,141,265		4,296


Consumer	1,774		691		321		69		2,855		497,492		500,347		—

Total	$	9,065	$	1,332	$	909	$	13,059	$	24,365	$	5,006,261	$	5,030,626	$	9,529


(dollars in thousands)	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans Greater Than 90 Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans and Leases Not Past Due		Total		Nonaccrual Loans With No ALLL
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		979
Home equity	759		207		—		92		1,058		489,676		490,734		92
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	$	1,071

Troubled debt restructurings ("TDRs") included in nonperforming assets at September 30, 2020 consisted of two Hawaii residential mortgage loans with a principal balance of $0.3 million. There were $7.4 million of TDRs still accruing interest at September 30, 2020, none of which were more than 90 days delinquent. At December 31, 2019, there were $7.5 million of TDRs still accruing interest, none of which were more than 90 days delinquent.

The Company offers various types of concessions when modifying a loan. Concessions made to the original contractual terms of the loan typically consists of the deferral of interest and/or principal payments due to deterioration in the borrowers' financial condition. In these cases, the principal balance on the TDR had matured and/or was in default at the time of restructure, and there were no commitments to lend additional funds to the borrower during the three and nine months ended September 30, 2020 and 2019.

As discussed in Note 1 to these financial statements, Section 4013 of CARES Act and the "Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)" provided banks an optional TDR election for certain loan modifications related to COVID-19 as long as the borrowers were not more than 30 days past due as of December 31, 2019 or at the time of modification program implementation, respectively, and meets other applicable criteria. The Company has identified eleven consumer loans totaling $0.2 million, including three consumer loans totaling $0.1 million in the third quarter of 2020, that were modified and did not meet the criteria under Section 4013 of CARES Act or the "Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)". As a result, these loans are included in the TDRs disclosed above. The Company had active loan deferrals with outstanding balances of approximately $290.7 million resulting from the COVID-19 pandemic that were not classified as a TDR at September 30, 2020. The following table sets forth loans on active payment forbearance or deferral as of September 30, 2020:


(dollars in thousands)	Loan Count	Balance		Accrued Interest Receivable		Total Loans		% of Total Loans		Total Loans, excl. PPP		% of Total Loans, excl. PPP
Commercial, financial and agricultural	363	$	64,298	$	844	$	1,056,651	6.1	%	$	528,070	12.2	%
Real estate:
Construction	—	—		—		118,247		—	%	118,247		—	%
Residential mortgage	216	103,130		1,803		1,680,060		6.1	%	1,680,060		6.1	%
Home equity	—	—		—		534,056		—	%	534,056		—	%
Commercial mortgage	25	69,420		469		1,141,265		6.1	%	1,141,265		6.1	%
Consumer	3,209	53,993		1,323		500,347		10.8	%	500,347		10.8	%

Total loans	3,813	$	290,841	$	4,439	$	5,030,626	5.8	%	$	4,502,045	6.5	%

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, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk rating of loans. Loans not meeting the following criteria that are analyzed individually as part of the described process are considered to be pass-rated loans.

Special Mention. Loans 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 classified as substandard are inadequately protected by the borrower's current financial condition and payment capability or of the collateral pledged, if any. Loans 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 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 estimated loss is deferred until its more exact status may be determined.

Loss. Loans 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.


	Amortized Cost of Term Loans by Origination Year
(dollars in thousands)	2020		2019		2018		2017		2016		Prior		Amortized Cost of Revolving Loans		Total
September 30, 2020
Commercial, financial and agricultural - SBA PPP:
Risk Rating
Pass	$	528,581	$	—	$	—	$	—	$	—	$	—	$	—	$	528,581



Subtotal	528,581		—		—		—		—		—		—		528,581
Commercial, financial and agricultural - Other:
Risk Rating
Pass	68,156		63,398		60,700		43,948		41,585		91,001		78,224		447,012
Special Mention	4,958		11,714		8,784		31,839		2,123		13,757		420		73,595
Substandard	200		1,528		1,111		1,105		2,206		1,313		—		7,463

Subtotal	73,314		76,640		70,595		76,892		45,914		106,071		78,644		528,070
Construction:
Risk Rating
Pass	19,436		20,931		41,893		11,201		2,202		19,238		2,401		117,302
Special Mention	—		—		945		—		—		—		—		945


Subtotal	19,436		20,931		42,838		11,201		2,202		19,238		2,401		118,247
Residential mortgage:
Risk Rating
Pass	416,073		302,683		141,156		159,808		197,665		456,398		—		1,673,783
Special Mention	—		—		—		1,437		147		—		—		1,584
Substandard	—		—		540		1,328		884		1,941		—		4,693
Loss	—		—		—		—		—		—		—		—
Subtotal	416,073		302,683		141,696		162,573		198,696		458,339		—		1,680,060
Home equity:
Risk Rating
Pass	13,407		16,993		16,713		778		390		4,794		480,238		533,313
Special Mention	—		—		—		—		—		—		210		210
Substandard	—		—		—		—		204		329		—		533

Subtotal	13,407		16,993		16,713		778		594		5,123		480,448		534,056
Commercial mortgage:
Risk Rating
Pass	93,195		149,180		137,886		163,112		108,333		365,488		16,926		1,034,120
Special Mention	—		2,602		24,134		7,685		13,623		24,137		—		72,181
Substandard	—		2,593		11,500		1,998		4,296		14,577		—		34,964

Subtotal	93,195		154,375		173,520		172,795		126,252		404,202		16,926		1,141,265
Consumer:
Risk Rating
Pass	72,249		133,485		77,840		52,150		21,327		71,599		71,057		499,707
Special Mention	—		—		—		—		—		—		250		250
Substandard	27		11		40		9		1		168		—		256
Loss	15		—		—		49		—		70		—		134
Subtotal	72,291		133,496		77,880		52,208		21,328		71,837		71,307		500,347
Total	$	1,216,297	$	705,118	$	523,242	$	476,447	$	394,986	$	1,064,810	$	649,726	$	5,030,626


(dollars in thousands)	Pass		Special Mention		Substandard		Loss		Subtotal		Net Deferred Costs (Income)		Total
September 30, 2020
Commercial, financial and agricultural: SBA PPP	$	545,277	$	—	$	—	$	—	$	545,277	$	(16,696)	$	528,581
Commercial, financial and agricultural: Other	445,305		73,595		7,463		—		526,363		1,707		528,070
Real estate:
Construction	117,574		945		—		—		118,519		(272)		118,247
Residential mortgage	1,670,180		1,584		4,693		—		1,676,457		3,603		1,680,060
Home equity	532,396		210		533		—		533,139		917		534,056
Commercial mortgage	1,036,064		72,181		34,964		—		1,143,209		(1,944)		1,141,265


Consumer	499,776		250		256		134		500,416		(69)		500,347

Total	$	4,846,572	$	148,765	$	47,909	$	134	$	5,043,380	$	(12,754)	$	5,030,626


(dollars in thousands)	Pass		Special Mention		Substandard		Loss		Subtotal		Net Deferred Costs (Income)		Total
December 31, 2019
Commercial, financial and agricultural: Other	$	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