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Loans | 12 Months Ended
--- | ---
Dec. 31, 2019
Loans |
Loans | NOTE 4: Loans Major classifications of loans are summarized as follows:
|  | December 31, |
(Dollars in thousands) |  | 2019 |  | 2018 |
Real estate – residential mortgage |  | $ | 181,295 |  | $ | 184,901 |
Real estate – construction 1 |  |  | 54,246 |  |  | 54,461 |
Commercial, financial and agricultural 2 |  |  | 500,812 |  |  | 455,935 |
Equity lines |  |  | 52,083 |  |  | 55,660 |
Consumer |  |  | 13,756 |  |  | 15,009 |
Consumer finance |  |  | 312,999 |  |  | 296,154 |
|  |  | 1,115,191 |  |  | 1,062,120 |
Less allowance for loan losses |  |  | (32,873) |  |  | (34,023) |
Loans, net |  | $ | 1,082,318 |  | $ | 1,028,097 |
| 1 |  | Includes the Corporation’s real estate construction lending and consumer real estate lot lending.
| 2 |  | Includes the Corporation’s commercial real estate lending, land acquisition and development lending, builder line lending and commercial business lending.
Consumer loans included $449,000 and $275,000 of demand deposit overdrafts at December 31, 2019 and 2018, respectively. The outstanding principal balance and the carrying amount of loans acquired pursuant to the Corporation's acquisition of CVB on October 1, 2013 that were recorded at fair value at the acquisition date in the Consolidated Balance Sheets are as follows:
|  | December 31, 2019 |  | December 31, 2018 |
|  | Acquired Loans - |  | Acquired Loans - |  |  |  |  | Acquired Loans - |  | Acquired Loans - |  |  |  |
|  | Purchased |  | Purchased |  | Acquired Loans - |  | Purchased |  | Purchased |  | Acquired Loans - |
(Dollars in thousands) |  | Credit Impaired |  | Performing |  | Total |  | Credit Impaired |  | Performing |  | Total |
Outstanding principal balance |  | $ | 6,262 |  | $ | 27,839 |  | $ | 34,101 |  | $ | 9,734 |  | $ | 38,768 |  | $ | 48,502 |
Carrying amount |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate – residential mortgage |  | $ | 107 |  | $ | 7,035 |  | $ | 7,142 |  | $ | 284 |  | $ | 8,823 |  | $ | 9,107 |
Commercial, financial and agricultural 1 |  |  | 563 |  |  | 11,338 |  |  | 11,901 |  |  | 1,461 |  |  | 18,982 |  |  | 20,443 |
Equity lines |  |  | 35 |  |  | 8,046 |  |  | 8,081 |  |  | 90 |  |  | 9,063 |  |  | 9,153 |
Consumer |  |  | — |  |  | 3 |  |  | 3 |  |  | — |  |  | 6 |  |  | 6 |
Total acquired loans |  | $ | 705 |  | $ | 26,422 |  | $ | 27,127 |  | $ | 1,835 |  | $ | 36,874 |  | $ | 38,709 |
| 1 |  | Includes acquired loans classified by the Corporation as commercial real estate lending and commercial business lending.
The following table presents a summary of the change in the accretable yield of loans classified as PCI loans:
|  | Year Ended December 31, |
(Dollars in thousands) |  | 2019 |  | 2018 |
Accretable yield, balance at beginning of period |  | $ | 5,987 |  | $ | 7,304 |
Accretion |  |  | (3,360) |  |  | (3,737) |
Reclassification of nonaccretable difference due to improvement in expected cash flows |  |  | 1,587 |  |  | 2,191 |
Other changes, net |  |  | 507 |  |  | 229 |
Accretable yield, balance at end of period |  | $ | 4,721 |  | $ | 5,987 |
Loans on nonaccrual status at December 31, 2019 and 2018 were as follows:
|  | December 31, |
(Dollars in thousands) |  | 2019 |  | 2018 |
Real estate – residential mortgage |  | $ | 1,526 |  | $ | 594 |
Commercial, financial and agricultural: |  |  |  |  |  |  |
Commercial business lending |  |  | 11 |  |  | 24 |
Equity lines |  |  | 229 |  |  | 883 |
Consumer |  |  | 118 |  |  | — |
Consumer finance |  |  | 611 |  |  | 712 |
Total loans on nonaccrual status |  | $ | 2,495 |  | $ | 2,213 |
If interest income had been recognized on nonaccrual loans at their stated rates during the years ended December 31, 2019, 2018 and 2017, interest income would have increased by approximately $165,000, $325,000 and $462,000, respectively. The past due status of loans as of December 31, 2019 was as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90+ Days |
|  | 30 - 59 Days |  | 60 - 89 Days |  | 90+ Days |  | Total |  |  |  |  |  |  |  |  |  |  | Past Due and |
(Dollars in thousands) |  | Past Due |  | Past Due |  | Past Due |  | Past Due |  | PCI |  | Current 1 |  | Total Loans |  | Accruing |
Real estate – residential mortgage |  | $ | 1,428 |  | $ | 161 |  | $ | 1,016 |  | $ | 2,605 |  | $ | 107 |  | $ | 178,583 |  | $ | 181,295 |  | $ | — |
Real estate – construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 40,943 |  |  | 40,943 |  |  | — |
Consumer lot lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 13,303 |  |  | 13,303 |  |  | — |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 563 |  |  | 325,991 |  |  | 326,554 |  |  | — |
Land acquisition and development lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 42,891 |  |  | 42,891 |  |  | — |
Builder line lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 26,373 |  |  | 26,373 |  |  | — |
Commercial business lending |  |  | 73 |  |  | 18 |  |  | — |  |  | 91 |  |  | — |  |  | 104,903 |  |  | 104,994 |  |  | — |
Equity lines |  |  | 229 |  |  | 56 |  |  | 223 |  |  | 508 |  |  | 35 |  |  | 51,540 |  |  | 52,083 |  |  | 109 |
Consumer |  |  | 20 |  |  | 10 |  |  | — |  |  | 30 |  |  | — |  |  | 13,726 |  |  | 13,756 |  |  | — |
Consumer finance |  |  | 11,034 |  |  | 1,420 |  |  | 611 |  |  | 13,065 |  |  | — |  |  | 299,934 |  |  | 312,999 |  |  | — |
Total |  | $ | 12,784 |  | $ | 1,665 |  | $ | 1,850 |  | $ | 16,299 |  | $ | 705 |  | $ | 1,098,187 |  | $ | 1,115,191 |  | $ | 109 |
| 1 |  | For the purposes of the table above, “Current” includes loans that are 1-29 days past due.
The table above includes nonaccrual loans that are current of $547,000, 30-59 days past due of $197,000, 60‑89 days past due of $10,000 and 90+ days past due of $1.74 million. The past due status of loans as of December 31, 2018 was as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90+ Days |
|  | 30 - 59 Days |  | 60 - 89 Days |  | 90+ Days |  | Total |  |  |  |  |  |  |  |  |  |  | Past Due and |
(Dollars in thousands) |  | Past Due |  | Past Due |  | Past Due |  | Past Due |  | PCI |  | Current 1 |  | Total Loans |  | Accruing |
Real estate – residential mortgage |  | $ | 1,221 |  | $ | — |  | $ | 37 |  | $ | 1,258 |  | $ | 284 |  | $ | 183,359 |  | $ | 184,901 |  | $ | 9 |
Real estate – construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 42,051 |  |  | 42,051 |  |  | — |
Consumer lot lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,410 |  |  | 12,410 |  |  | — |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate lending |  |  | — |  |  | — |  |  | 315 |  |  | 315 |  |  | 1,461 |  |  | 309,057 |  |  | 310,833 |  |  | 315 |
Land acquisition and development lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 43,404 |  |  | 43,404 |  |  | — |
Builder line lending |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 31,201 |  |  | 31,201 |  |  | — |
Commercial business lending |  |  | 163 |  |  | 19 |  |  | 24 |  |  | 206 |  |  | — |  |  | 70,291 |  |  | 70,497 |  |  | — |
Equity lines |  |  | 46 |  |  | 584 |  |  | 325 |  |  | 955 |  |  | 90 |  |  | 54,615 |  |  | 55,660 |  |  | — |
Consumer |  |  | 31 |  |  | — |  |  | — |  |  | 31 |  |  | — |  |  | 14,978 |  |  | 15,009 |  |  | — |
Consumer finance |  |  | 11,419 |  |  | 1,965 |  |  | 712 |  |  | 14,096 |  |  | — |  |  | 282,058 |  |  | 296,154 |  |  | — |
Total |  | $ | 12,880 |  | $ | 2,568 |  | $ | 1,413 |  | $ | 16,861 |  | $ | 1,835 |  | $ | 1,043,424 |  | $ | 1,062,120 |  | $ | 324 |
| 1 |  | For the purposes of the table above, “Current” includes loans that are 1-29 days past due.
The table above includes nonaccrual loans that are current of $458,000, 30-59 days past due of $97,000, 60‑89 days past due of $560,000 and 90+ days past due of $1.10 million. Loan modifications that were classified as TDRs, and the recorded investment in those loans at the time of their modification, during the years ended December 31, 2019 and 2018 and 2017 were as follows:
|  | Year Ended December 31, |
|  | 2019 |  | 2018 |  | 2017 |
|  | Number of |  | Recorded |  | Number of |  | Recorded |  | Number of |  | Recorded |
(Dollars in thousands) |  | Loans |  | Investment |  | Loans |  | Investment |  | Loans |  | Investment |
Real estate – residential mortgage |  | 2 |  | $ | 95 |  | 1 |  | $ | 140 |  | 2 |  | $ | 365 |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate lending |  | — |  |  | — |  | — |  |  | — |  | 7 |  |  | 6,800 |
Consumer |  | 1 |  |  | 121 |  | 1 |  | $ | 5 |  | — |  |  | — |
Total |  | 3 |  | $ | 216 |  | 2 |  | $ | 145 |  | 9 |  | $ | 7,165 |
One TDR during the year ended December 31, 2019, one during the year ended December 31, 2018 and nine during the year ended December 31, 2017 included modifications of the loan’s interest rate. Two TDRs during the year ended December 31, 2019 and one during the year ended December 31, 2018 included modifications of the loan’s payment structure. Three TDRs during the year ended December 31, 2017 included a modification of the term of the loan. There were no TDRs in the years ended December 31, 2019, 2018 or 2017 that included a reduction in principal as part of the loan’s modification. All TDRs are considered impaired loans and are individually evaluated in the determination of the allowance for loan losses. A TDR payment default occurs when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or a TDR becomes 90 days or more past due. The specific reserve associated with a TDR is reevaluated when a TDR payment default occurs. There were no TDR payment defaults during the years ended December 31, 2019 and 2018. During the year ended December 31, 2017, TDR payment defaults occurred on three loans totaling $4.65 million that were part of a single commercial relationship and became more than 90 days past due. Impaired loans, which included TDRs of $4.35 million, and the related allowance at December 31, 2019 were as follows:
|  |  |  | Recorded |  | Recorded |  |  |  |  |  |  |
|  |  |  | Investment |  | Investment |  |  |  | Average |  |  |
|  | Unpaid |  | in Loans |  | in Loans |  |  |  | Balance- |  | Interest |
|  | Principal |  | without |  | with |  | Related |  | Impaired |  | Income |
(Dollars in thousands) |  | Balance |  | Specific Reserve |  | Specific Reserve |  | Allowance |  | Loans |  | Recognized |
Real estate – residential mortgage |  | $ | 3,891 |  | $ | 2,192 |  | $ | 1,479 |  | $ | 72 |  | $ | 3,506 |  | $ | 155 |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate lending |  |  | 1,459 |  |  | 4 |  |  | 1,447 |  |  | 77 |  |  | 1,581 |  |  | 82 |
Equity lines |  |  | 31 |  |  | 31 |  |  | — |  |  | — |  |  | 32 |  |  | 2 |
Consumer |  |  | 130 |  |  | — |  |  | 121 |  |  | 118 |  |  | 123 |  |  | — |
Total |  | $ | 5,511 |  | $ | 2,227 |  | $ | 3,047 |  | $ | 267 |  | $ | 5,242 |  | $ | 239 |
Impaired loans, which included TDRs of $5.45 million, and the related allowance at December 31, 2018 were as follows:
|  |  |  | Recorded |  | Recorded |  |  |  |  |  |  |
|  |  |  | Investment |  | Investment |  |  |  | Average |  |  |
|  | Unpaid |  | in Loans |  | in Loans |  |  |  | Balance- |  | Interest |
|  | Principal |  | without |  | with |  | Related |  | Impaired |  | Income |
(Dollars in thousands) |  | Balance |  | Specific Reserve |  | Specific Reserve |  | Allowance |  | Loans |  | Recognized |
Real estate – residential mortgage |  | $ | 3,057 |  | $ | 1,288 |  | $ | 1,677 |  | $ | 92 |  | $ | 3,056 |  | $ | 142 |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate lending |  |  | 2,468 |  |  | 1,498 |  |  | 927 |  |  | 10 |  |  | 2,653 |  |  | 132 |
Commercial business lending |  |  | 33 |  |  | 25 |  |  | — |  |  | — |  |  | 26 |  |  | — |
Equity lines |  |  | 365 |  |  | 31 |  |  | 326 |  |  | 326 |  |  | 359 |  |  | 2 |
Consumer |  |  | 5 |  |  | — |  |  | 5 |  |  | — |  |  | 5 |  |  | — |
Total |  | $ | 5,928 |  | $ | 2,842 |  | $ | 2,935 |  | $ | 428 |  | $ | 6,099 |  | $ | 276 |

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