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

Includes the Corporation’s real estate construction lending and consumer real estate lot lending.

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 agricultural1		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

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		Current1		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

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		Current1		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

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