The portfolio consists of commercial mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The mortgage loan portfolio is summarized by geographic region and property type as follows:



	June 30, 2019				December 31, 2018
	Principal		Percent		Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	586,068	19.0	%	$	586,773	19.9	%
Middle Atlantic	210,993		6.8	%	168,969		5.7	%
Mountain	374,429		12.1	%	357,642		12.1	%
New England	9,286		0.3	%	9,418		0.3	%
Pacific	560,882		18.1	%	521,363		17.7	%
South Atlantic	704,523		22.8	%	694,599		23.5	%
West North Central	282,706		9.1	%	291,890		9.9	%
West South Central	363,671		11.8	%	321,810		10.9	%
	$	3,092,558	100.0	%	$	2,952,464	100.0	%
Property type distribution
Office	$	243,948	7.9	%	$	268,932	9.1	%
Medical Office	31,402		1.0	%	33,467		1.1	%
Retail	1,126,770		36.4	%	1,091,627		37.0	%
Industrial/Warehouse	856,481		27.7	%	762,887		25.8	%
Apartment	633,492		20.5	%	600,638		20.3	%
Agricultural	39,226		1.3	%	25,000		0.9	%
Mixed use/other	161,239		5.2	%	169,913		5.8	%
	$	3,092,558	100.0	%	$	2,952,464	100.0	%

We evaluate our mortgage loan portfolio for the establishment of a loan loss allowance by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell.

In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans on a quantitative and qualitative basis. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions.

We rate each of the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of the general loan loss allowance. We also assess the portfolio qualitatively and apply a loss rate to all loans without a specific allowance based on management's assessment of economic conditions, and we apply an additional amount of loss allowance to a group of loans that we have identified as having higher risk of loss.



	Three Months Ended June 30, 2019						Three Months Ended June 30, 2018
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(229	)	$	(7,950	)	$	(696	)	$	(5,800	)
Charge-offs	—			—			—			—
Recoveries	—			—			—			—
Change in provision for credit losses	—			350			—			170
Ending allowance balance	$	(229	)	$	(7,600	)	$	(696	)	$	(5,630	)

	Six Months Ended June 30, 2019						Six Months Ended June 30, 2018
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(229	)	$	(8,010	)	$	(1,418	)	$	(6,100	)
Charge-offs	—			—			—			—
Recoveries	—			—			722			—
Change in provision for credit losses	—			410			—			470
Ending allowance balance	$	(229	)	$	(7,600	)	$	(696	)	$	(5,630	)

The specific allowance represents the total credit loss allowances on loans which are individually evaluated for impairment. The general allowance is for the group of loans discussed above which are collectively evaluated for impairment. The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:

Charge-offs include allowances that have been established on loans that were satisfied either by taking ownership of the collateral or by some other means such as discounted pay-off or loan sale. When ownership of the property is taken it is recorded at the lower of the mortgage loan's carrying value or the property's fair value (based on appraised values) less estimated costs to sell. The real estate owned is recorded as a component of Other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Recoveries are situations where we have received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). We did not own any real estate during the three and six months ended June 30, 2019 and 2018.

Loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, the original interest rate and maturity date have not been modified, and we have not forgiven any principal amounts.

Mortgage loans are considered delinquent when they become 60 days or more past due. In general, when loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan. There were no loans in non-accrual status at June 30, 2019 and December 31, 2018, respectively.

All of our commercial mortgage loans depend on the cash flow of the borrower to be at a sufficient level to service the principal and interest payments as they come due. In general, cash inflows of the borrowers are generated by collecting monthly rent from tenants occupying space within the borrowers' properties. Our borrowers face collateral risks such as tenants going out of business, tenants struggling to make rent payments as they become due, and tenants canceling leases and moving to other locations. We have a number of loans where the real estate is occupied by a single tenant. Our borrowers sometimes face both a reduction in cash flow on their mortgage property as well as a reduction in the fair value of the real estate collateral. If borrowers are unable to replace lost rent revenue and increases in the fair value of their property do not materialize, we could potentially incur more losses than what we have allowed for in our specific and general loan loss allowances.



	30 - 59 Days		60 - 89 Days		90 Days and Over		Total Past Due		Current		Collateral Dependent Receivables		Total Financing Receivables
	(Dollars in thousands)
Commercial Mortgage Loans
June 30, 2019	$	—	$	—	$	—	$	—	$	3,092,558	$	—	$	3,092,558
December 31, 2018	$	—	$	—	$	—	$	—	$	2,952,464	$	—	$	2,952,464

Financing receivables summarized in the following two tables represent all loans that we are either not currently collecting, or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for 60 days or more at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).



	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
June 30, 2019
Mortgage loans with an allowance	$	1,012	$	1,241	$	(229	)
Mortgage loans with no related allowance	—		—		—
	$	1,012	$	1,241	$	(229	)
December 31, 2018
Mortgage loans with an allowance	$	1,024	$	1,253	$	(229	)
Mortgage loans with no related allowance	—		—		—
	$	1,024	$	1,253	$	(229	)



	Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Three months ended June 30, 2019
Mortgage loans with an allowance	$	1,015	$	17
Mortgage loans with no related allowance	—		—
	$	1,015	$	17
Three months ended June 30, 2018
Mortgage loans with an allowance	$	2,473	$	49
Mortgage loans with no related allowance	1,374		20
	$	3,847	$	69
Six months ended June 30, 2019
Mortgage loans with an allowance	$	1,018	$	34
Mortgage loans with no related allowance	—		—
	$	1,018	$	34
Six months ended June 30, 2018
Mortgage loans with an allowance	$	2,491	$	99
Mortgage loans with no related allowance	1,395		41
	$	3,886	$	140

A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty: