Loans, Allowance for Loan Losses, and Credit Quality

The loan composition is summarized as follows.



	September 30, 2019					December 31, 2018
(in thousands)	Amount			% of Total		Amount			% of Total
Commercial & industrial	$	763,742		34	%	$	684,920		32	%
Owner-occupied commercial real estate (“CRE”)	456,508			20		441,353			20
Agricultural (“AG”) production	36,050			2		35,625			2
AG real estate	58,591			3		53,444			2
CRE investment	336,442			15		343,652			16
Construction & land development	61,810			3		80,599			4
Residential construction	41,496			2		30,926			1
Residential first mortgage	343,400			15		357,841			17
Residential junior mortgage	116,179			5		111,328			5
Retail & other	28,713			1		26,493			1
Loans	2,242,931			100	%	2,166,181			100	%
Less allowance for loan losses (“ALLL”)	13,620					13,153
Loans, net	$	2,229,311				$	2,153,028
Allowance for loan losses to loans	0.61		%			0.61		%

As a further breakdown, loans are summarized by originated and acquired as follows.



	September 30, 2019										December 31, 2018
(in thousands)	Originated Amount			% of Total		Acquired Amount			% of Total		Originated Amount			% of Total		Acquired Amount			% of Total
Commercial & industrial	$	660,040		40	%	$	103,702		18	%	$	568,100		38	%	$	116,820		17	%
Owner-occupied CRE	321,323			19		135,185			23		283,531			19		157,822			23
AG production	11,450			1		24,600			4		11,113			1		24,512			4
AG real estate	38,616			2		19,975			3		31,374			2		22,070			3
CRE investment	180,427			11		156,015			26		171,087			12		172,565			25
Construction & land development	52,806			3		9,004			2		66,478			4		14,121			2
Residential construction	41,246			3		250			—		30,926			2		—			—
Residential first mortgage	228,312			14		115,088			19		220,368			15		137,473			20
Residential junior mortgage	89,241			5		26,938			5		78,379			5		32,949			5
Retail & other	27,232			2		1,481			—		23,809			2		2,684			1
Loans	1,650,693			100	%	592,238			100	%	1,485,165			100	%	681,016			100	%
Less ALLL	12,064					1,556					11,448					1,705
Loans, net	$	1,638,629				$	590,682				$	1,473,717				$	679,311
ALLL to loans	0.73		%			0.26		%			0.77		%			0.25		%
Loans as a percent of total loans	74		%			26		%			69		%			31		%

Practically all of the Company’s loans, commitments, and letters of credit have been granted to customers in the Company’s market area. Although the Company has a diversified loan portfolio, the credit risk in the loan portfolio is largely influenced by general economic conditions and trends of the counties and markets in which the debtors operate, and the resulting impact on the operations of borrowers or on the value of underlying collateral, if any.

A roll forward of the allowance for loan losses is summarized as follows.



	Nine Months Ended						Year Ended
(in thousands)	September 30, 2019			September 30, 2018			December 31, 2018
Beginning balance	$	13,153		$	12,653		$	12,653
Provision for loan losses	900			1,360			1,600
Charge-offs	(629		)	(1,110		)	(1,213		)
Recoveries	196			89			113
Net (charge-offs) recoveries	(433		)	(1,021		)	(1,100		)
Ending balance	$	13,620		$	12,992		$	13,153

The following tables present the balance and activity in the ALLL by portfolio segment and the recorded investment in loans by portfolio segment.



	TOTAL – Nine Months Ended September 30, 2019
(in thousands)	Commercial & industrial			Owner- occupied CRE			AG production			AG real estate			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ALLL:
Beginning balance	$	5,271		$	2,847		$	121		$	301		$	1,470		$	510		$	211		$	1,646		$	472		$	304		$	13,153
Provision	356			(57		)	85			46			32			(140		)	357			(75		)	71			225			900
Charge-offs	(59		)	(13		)	—			—			—			—			(226		)	—			(80		)	(251		)	(629		)
Recoveries	90			2			—			—			—			—			—			36			32			36			196
Net (charge-offs) recoveries	31			(11		)	—			—			—			—			(226		)	36			(48		)	(215		)	(433		)
Ending balance	$	5,658		$	2,779		$	206		$	347		$	1,502		$	370		$	342		$	1,607		$	495		$	314		$	13,620
As % of ALLL	42		%	20		%	1		%	3		%	11		%	3		%	2		%	12		%	4		%	2		%	100		%
ALLL:
Individually evaluated	$	308		$	—		$	119		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	427
Collectively evaluated	5,350			2,779			87			347			1,502			370			342			1,607			495			314			13,193
Ending balance	$	5,658		$	2,779		$	206		$	347		$	1,502		$	370		$	342		$	1,607		$	495		$	314		$	13,620
Loans:
Individually evaluated	$	2,143		$	2,552		$	1,251		$	1,089		$	2,483		$	427		$	—		$	2,560		$	221		$	12		$	12,738
Collectively evaluated	761,599			453,956			34,799			57,502			333,959			61,383			41,496			340,840			115,958			28,701			2,230,193
Total loans	$	763,742		$	456,508		$	36,050		$	58,591		$	336,442		$	61,810		$	41,496		$	343,400		$	116,179		$	28,713		$	2,242,931
Less ALLL	5,658			2,779			206			347			1,502			370			342			1,607			495			314			13,620
Net loans	$	758,084		$	453,729		$	35,844		$	58,244		$	334,940		$	61,440		$	41,154		$	341,793		$	115,684		$	28,399		$	2,229,311

As a further breakdown, the ALLL is summarized by originated and acquired as follows.



	Originated – Nine Months Ended September 30, 2019
(in thousands)	Commercial & industrial			Owner- occupied CRE			AG production			AG real estate			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ALLL:
Beginning balance	$	4,683		$	2,439		$	110		$	255		$	1,230		$	431		$	211		$	1,400		$	408		$	281		$	11,448
Provision	395			(17		)	84			45			68			(111		)	323			(42		)	22			227			994
Charge-offs	(59		)	(13		)	—			—			—			—			(226		)	—			(20		)	(251		)	(569		)
Recoveries	90			2			—			—			—			—			—			36			27			36			191
Net (charge-offs) recoveries	31			(11		)	—			—			—			—			(226		)	36			7			(215		)	(378		)
Ending balance	$	5,109		$	2,411		$	194		$	300		$	1,298		$	320		$	308		$	1,394		$	437		$	293		$	12,064
As % of ALLL	42		%	20		%	1		%	2		%	11		%	3		%	3		%	12		%	4		%	2		%	100		%
ALLL:
Individually evaluated	$	308		$	—		$	119		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	427
Collectively evaluated	4,801			2,411			75			300			1,298			320			308			1,394			437			293			11,637
Ending balance	$	5,109		$	2,411		$	194		$	300		$	1,298		$	320		$	308		$	1,394		$	437		$	293		$	12,064
Loans:
Individually evaluated	$	722		$	1,792		$	1,095		$	878		$	—		$	—		$	—		$	—		$	—		$	—		$	4,487
Collectively evaluated	659,318			319,531			10,355			37,738			180,427			52,806			41,246			228,312			89,241			27,232			1,646,206
Total loans	$	660,040		$	321,323		$	11,450		$	38,616		$	180,427		$	52,806		$	41,246		$	228,312		$	89,241		$	27,232		$	1,650,693
Less ALLL	5,109			2,411			194			300			1,298			320			308			1,394			437			293			12,064
Net loans	$	654,931		$	318,912		$	11,256		$	38,316		$	179,129		$	52,486		$	40,938		$	226,918		$	88,804		$	26,939		$	1,638,629



	Acquired – Nine Months Ended September 30, 2019
(in thousands)	Commercial & industrial			Owner- occupied CRE			AG production			AG real estate			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ALLL:
Beginning balance	$	588		$	408		$	11		$	46		$	240		$	79		$	—		$	246		$	64		$	23		$	1,705
Provision	(39		)	(40		)	1			1			(36		)	(29		)	34			(33		)	49			(2		)	(94		)
Charge-offs	—			—			—			—			—			—			—			—			(60		)	—			(60		)
Recoveries	—			—			—			—			—			—			—			—			5			—			5
Net (charge-offs) recoveries	—			—			—			—			—			—			—			—			(55		)	—			(55		)
Ending balance	$	549		$	368		$	12		$	47		$	204		$	50		$	34		$	213		$	58		$	21		$	1,556
As % of ALLL	35		%	24		%	1		%	3		%	13		%	3		%	2		%	14		%	4		%	1		%	100		%
ALLL:
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated	549			368			12			47			204			50			34			213			58			21			1,556
Ending balance	$	549		$	368		$	12		$	47		$	204		$	50		$	34		$	213		$	58		$	21		$	1,556
Loans:
Individually evaluated	$	1,421		$	760		$	156		$	211		$	2,483		$	427		$	—		$	2,560		$	221		$	12		$	8,251
Collectively evaluated	102,281			134,425			24,444			19,764			153,532			8,577			250			112,528			26,717			1,469			583,987
Total loans	$	103,702		$	135,185		$	24,600		$	19,975		$	156,015		$	9,004		$	250		$	115,088		$	26,938		$	1,481		$	592,238
Less ALLL	549			368			12			47			204			50			34			213			58			21			1,556
Net loans	$	103,153		$	134,817		$	24,588		$	19,928		$	155,811		$	8,954		$	216		$	114,875		$	26,880		$	1,460		$	590,682

For comparison purposes, the following tables present the balance and activity in the ALLL by portfolio segment and the recorded investment in loans by portfolio segment for the prior year-end period.



	TOTAL – Year Ended December 31, 2018
(in thousands)	Commercial & industrial			Owner- occupied CRE			AG production			AG real estate			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ALLL:
Beginning balance	$	4,934		$	2,607		$	129		$	296		$	1,388		$	726		$	251		$	1,609		$	488		$	225		$	12,653
Provision	1,107			300			(8		)	5			119			(216		)	(40		)	117			(51		)	267			1,600
Charge-offs	(813		)	(74		)	—			—			(37		)	—			—			(85		)	—			(204		)	(1,213		)
Recoveries	43			14			—			—			—			—			—			5			35			16			113
Net (charge-offs) recoveries	(770		)	(60		)	—			—			(37		)	—			—			(80		)	35			(188		)	(1,100		)
Ending balance	$	5,271		$	2,847		$	121		$	301		$	1,470		$	510		$	211		$	1,646		$	472		$	304		$	13,153
As % of ALLL	40		%	22		%	1		%	2		%	11		%	4		%	2		%	12		%	4		%	2		%	100		%
ALLL:
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated	5,271			2,847			121			301			1,470			510			211			1,646			472			304			13,153
Ending balance	$	5,271		$	2,847		$	121		$	301		$	1,470		$	510		$	211		$	1,646		$	472		$	304		$	13,153
Loans:
Individually evaluated	$	2,927		$	1,506		$	—		$	222		$	1,686		$	603		$	—		$	2,750		$	233		$	12		$	9,939
Collectively evaluated	681,993			439,847			35,625			53,222			341,966			79,996			30,926			355,091			111,095			26,481			2,156,242
Total loans	$	684,920		$	441,353		$	35,625		$	53,444		$	343,652		$	80,599		$	30,926		$	357,841		$	111,328		$	26,493		$	2,166,181
Less ALLL	5,271			2,847			121			301			1,470			510			211			1,646			472			304			13,153
Net loans	$	679,649		$	438,506		$	35,504		$	53,143		$	342,182		$	80,089		$	30,715		$	356,195		$	110,856		$	26,189		$	2,153,028

As a further breakdown, the ALLL is summarized by originated and acquired as follows.



	Originated – Year Ended December 31, 2018
(in thousands)	Commercial & industrial			Owner- occupied CRE			AG production			AG real estate			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ALLL:
Beginning balance	$	4,192		$	2,115		$	112		$	235		$	1,154		$	628		$	200		$	1,297		$	409		$	200		$	10,542
Provision	1,262			385			(2		)	20			113			(197		)	11			187			(31		)	266			2,014
Charge-offs	(813		)	(64		)	—			—			(37		)	—			—			(85		)	—			(201		)	(1,200		)
Recoveries	42			3			—			—			—			—			—			1			30			16			92
Net (charge-offs) recoveries	(771		)	(61		)	—			—			(37		)	—			—			(84		)	30			(185		)	(1,108		)
Ending balance	$	4,683		$	2,439		$	110		$	255		$	1,230		$	431		$	211		$	1,400		$	408		$	281		$	11,448
As % of ALLL	41		%	21		%	1		%	2		%	11		%	4		%	2		%	12		%	4		%	2		%	100		%
ALLL:
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated	4,683			2,439			110			255			1,230			431			211			1,400			408			281			11,448
Ending balance	$	4,683		$	2,439		$	110		$	255		$	1,230		$	431		$	211		$	1,400		$	408		$	281		$	11,448
Loans:
Individually evaluated	$	227		$	321		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	548
Collectively evaluated	567,873			283,210			11,113			31,374			171,087			66,478			30,926			220,368			78,379			23,809			1,484,617
Total loans	$	568,100		$	283,531		$	11,113		$	31,374		$	171,087		$	66,478		$	30,926		$	220,368		$	78,379		$	23,809		$	1,485,165
Less ALLL	4,683			2,439			110			255			1,230			431			211			1,400			408			281			11,448
Net loans	$	563,417		$	281,092		$	11,003		$	31,119		$	169,857		$	66,047		$	30,715		$	218,968		$	77,971		$	23,528		$	1,473,717



	Acquired – Year Ended December 31, 2018
(in thousands)	Commercial & industrial			Owner- occupied CRE			AG production			AG real estate			CRE investment			Construction & land development			Residential construction			Residential first mortgage			Residential junior mortgage			Retail & other			Total
ALLL:
Beginning balance	$	742		$	492		$	17		$	61		$	234		$	98		$	51		$	312		$	79		$	25		$	2,111
Provision	(155		)	(85		)	(6		)	(15		)	6			(19		)	(51		)	(70		)	(20		)	1			(414		)
Charge-offs	—			(10		)	—			—			—			—			—			—			—			(3		)	(13		)
Recoveries	1			11			—			—			—			—			—			4			5			—			21
Net (charge-offs) recoveries	1			1			—			—			—			—			—			4			5			(3		)	8
Ending balance	$	588		$	408		$	11		$	46		$	240		$	79		$	—		$	246		$	64		$	23		$	1,705
As % of ALLL	34		%	24		%	1		%	3		%	14		%	5		%	—		%	14		%	4		%	1		%	100		%
ALLL:
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated	588			408			11			46			240			79			—			246			64			23			1,705
Ending balance	$	588		$	408		$	11		$	46		$	240		$	79		$	—		$	246		$	64		$	23		$	1,705
Loans:
Individually evaluated	$	2,700		$	1,185		$	—		$	222		$	1,686		$	603		$	—		$	2,750		$	233		$	12		$	9,391
Collectively evaluated	114,120			156,637			24,512			21,848			170,879			13,518			—			134,723			32,716			2,672			671,625
Total loans	$	116,820		$	157,822		$	24,512		$	22,070		$	172,565		$	14,121		$	—		$	137,473		$	32,949		$	2,684		$	681,016
Less ALLL	588			408			11			46			240			79			—			246			64			23			1,705
Net loans	$	116,232		$	157,414		$	24,501		$	22,024		$	172,325		$	14,042		$	—		$	137,227		$	32,885		$	2,661		$	679,311

The following table presents nonaccrual loans by portfolio segment in total and then as a further breakdown by originated or acquired.



	Total Nonaccrual Loans
(in thousands)	September 30, 2019			% of Total		December 31, 2018			% of Total
Commercial & industrial	$	2,279		25	%	$	2,816		52	%
Owner-occupied CRE	2,302			25		673			12
AG production	1,251			14		—			—
AG real estate	846			9		164			3
CRE investment	1,111			12		210			4
Construction & land development	—			—		80			1
Residential construction	—			—		1			—
Residential first mortgage	865			9		1,265			23
Residential junior mortgage	576			6		262			5
Retail & other	8			—		—			—
Nonaccrual loans	$	9,238		100	%	$	5,471		100	%
Percent of total loans	0.4		%			0.2		%



	September 30, 2019										December 31, 2018
(in thousands)	Originated Amount			% of Total		Acquired Amount			% of Total		Originated Amount			% of Total		Acquired Amount			% of Total
Commercial & industrial	$	833		16	%	$	1,446		35	%	$	352		25	%	$	2,464		61	%
Owner-occupied CRE	1,792			35		510			12		362			26		311			8
AG production	1,095			22		156			4		—			—		—			—
AG real estate	635			13		211			5		—			—		164			4
CRE investment	—			—		1,111			27		—			—		210			5
Construction & land development	—			—		—			—		—			—		80			2
Residential construction	—			—		—			—		1			—		—			—
Residential first mortgage	458			9		407			10		629			45		636			15
Residential junior mortgage	263			5		313			7		65			4		197			5
Retail & other	—			—		8			—		—			—		—			—
Nonaccrual loans	$	5,076		100	%	$	4,162		100	%	$	1,409		100	%	$	4,062		100	%
Percent of nonaccrual loans	55		%			45		%			26		%			74		%

The following tables present past due loans by portfolio segment.



	September 30, 2019
(in thousands)	30-89 Days Past Due (accruing)			90 Days & Over or nonaccrual			Current			Total
Commercial & industrial	$	215		$	2,279		$	761,248		$	763,742
Owner-occupied CRE	—			2,302			454,206			456,508
AG production	—			1,251			34,799			36,050
AG real estate	—			846			57,745			58,591
CRE investment	—			1,111			335,331			336,442
Construction & land development	—			—			61,810			61,810
Residential construction	—			—			41,496			41,496
Residential first mortgage	319			865			342,216			343,400
Residential junior mortgage	283			576			115,320			116,179
Retail & other	124			8			28,581			28,713
Total loans	$	941		$	9,238		$	2,232,752		$	2,242,931
Percent of total loans	—		%	0.4		%	99.6		%	100.0		%



	December 31, 2018
(in thousands)	30-89 Days Past Due (accruing)			90 Days & Over or nonaccrual			Current			Total
Commercial & industrial	$	—		$	2,816		$	682,104		$	684,920
Owner-occupied CRE	557			673			440,123			441,353
AG production	19			—			35,606			35,625
AG real estate	35			164			53,245			53,444
CRE investment	180			210			343,262			343,652
Construction & land development	—			80			80,519			80,599
Residential construction	—			1			30,925			30,926
Residential first mortgage	758			1,265			355,818			357,841
Residential junior mortgage	12			262			111,054			111,328
Retail & other	10			—			26,483			26,493
Total loans	$	1,571		$	5,471		$	2,159,139		$	2,166,181
Percent of total loans	0.1		%	0.2		%	99.7		%	100.0		%

A description of the loan risk categories used by the Company follows.

Grades 1-4, Pass: Credits exhibit adequate cash flows, appropriate management and financial ratios within industry norms and/or are supported by sufficient collateral. Some credits in these rating categories may require a need for monitoring but elements of concern are not severe enough to warrant an elevated rating.

Grade 5, Watch: Credits with this rating are adequately secured and performing but are being monitored due to the presence of various short-term weaknesses which may include unexpected, short-term adverse financial performance, managerial problems, potential impact of a decline in the entire industry or local economy and delinquency issues. Loans to individuals or loans supported by guarantors with marginal net worth or collateral may be included in this rating category.

Grade 6, Special Mention: Credits with this rating have potential weaknesses that, without the Company’s attention and correction may result in deterioration of repayment prospects. These assets are considered Criticized Assets. Potential weaknesses may include adverse financial trends for the borrower or industry, repeated lack of compliance with Company requests, increasing debt to net worth, serious management conditions and decreasing cash flow.

Grade 7, Substandard: Assets with this rating are characterized by the distinct possibility the Company will sustain some loss if deficiencies are not corrected. All foreclosures, liquidations, and nonaccrual loans are considered to be categorized in this rating, regardless of collateral sufficiency.

Grade 8, Doubtful: Assets with this rating exhibit all the weaknesses as one rated Substandard with the added characteristic that such weaknesses make collection or liquidation in full highly questionable.

Grade 9, Loss: Assets in this category are considered uncollectible. Pursuing any recovery or salvage value is impractical but does not preclude partial recovery in the future.

The following tables present total loans by risk categories.



	September 30, 2019
(in thousands)	Grades 1- 4			Grade 5			Grade 6			Grade 7			Grade 8		Grade 9		Total
Commercial & industrial	$	725,484		$	22,299		$	2,076		$	13,883		$	—	$	—	$	763,742
Owner-occupied CRE	428,332			15,110			963			12,103			—		—		456,508
AG production	27,350			4,044			1,669			2,987			—		—		36,050
AG real estate	48,740			4,077			2,344			3,430			—		—		58,591
CRE investment	332,078			2,345			908			1,111			—		—		336,442
Construction & land development	61,794			—			16			—			—		—		61,810
Residential construction	41,496			—			—			—			—		—		41,496
Residential first mortgage	338,627			1,664			1,193			1,916			—		—		343,400
Residential junior mortgage	115,595			—			—			584			—		—		116,179
Retail & other	28,705			—			—			8			—		—		28,713
Total loans	$	2,148,201		$	49,539		$	9,169		$	36,022		$	—	$	—	$	2,242,931
Percent of total	95.8		%	2.2		%	0.4		%	1.6		%	—		—		100.0		%



	December 31, 2018
(in thousands)	Grades 1- 4			Grade 5			Grade 6			Grade 7			Grade 8		Grade 9		Total
Commercial & industrial	$	649,475		$	16,145		$	6,178		$	13,122		$	—	$	—	$	684,920
Owner-occupied CRE	405,198			22,776			6,569			6,810			—		—		441,353
AG production	29,363			3,302			2,351			609			—		—		35,625
AG real estate	46,248			3,246			2,983			967			—		—		53,444
CRE investment	334,080			6,792			—			2,780			—		—		343,652
Construction & land development	75,365			5,138			16			80			—		—		80,599
Residential construction	30,926			—			—			—			—		—		30,926
Residential first mortgage	353,239			1,406			510			2,686			—		—		357,841
Residential junior mortgage	111,037			17			—			274			—		—		111,328
Retail & other	26,493			—			—			—			—		—		26,493
Total loans	$	2,061,424		$	58,822		$	18,607		$	27,328		$	—	$	—	$	2,166,181
Percent of total	95.1		%	2.7		%	0.9		%	1.3		%	—		—		100.0		%

The following tables present impaired loans.



	Total Impaired Loans – September 30, 2019
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial & industrial	$	2,143	$	4,271	$	308	$	2,807	$	739
Owner-occupied CRE	2,552		2,930		—		2,742		170
AG production	1,251		1,263		119		1,295		12
AG real estate	1,089		1,091		—		1,098		2
CRE investment	2,483		2,490		—		2,524		8
Construction & land development	427		427		—		480		—
Residential construction	—		—		—		—		—
Residential first mortgage	2,560		2,785		—		2,611		97
Residential junior mortgage	221		231		—		225		2
Retail & other	12		15		—		12		3
Total	$	12,738	$	15,503	$	427	$	13,794	$	1,033
Originated impaired loans	$	4,487	$	4,707	$	427	$	4,649	$	176
Acquired impaired loans	8,251		10,796		—		9,145		857
Total	$	12,738	$	15,503	$	427	$	13,794	$	1,033



	Total Impaired Loans – December 31, 2018
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial & industrial	$	2,927	$	6,736	$	—	$	4,041	$	660
Owner-occupied CRE	1,506		1,833		—		1,659		137
AG production	—		—		—		—		—
AG real estate	222		281		—		238		26
CRE investment	1,686		2,484		—		1,606		163
Construction & land development	603		1,506		—		603		21
Residential construction	—		—		—		—		—
Residential first mortgage	2,750		2,907		—		2,478		176
Residential junior mortgage	233		262		—		62		15
Retail & other	12		12		—		12		1
Total	$	9,939	$	16,021	$	—	$	10,699	$	1,199
Originated impaired loans	$	548	$	548	$	—	$	899	$	154
Acquired impaired loans	9,391		15,473		—		9,800		1,045
Total	$	9,939	$	16,021	$	—	$	10,699	$	1,199

Total purchased credit impaired loans (in aggregate since the Company’s 2013 acquisitions) were initially recorded at a fair value of $43.6 million on their respective acquisition dates, net of an initial $34.4 million nonaccretable mark and a zero accretable mark. At September 30, 2019, $8.3 million of the $43.6 million remain in impaired loans.



Nonaccretable discount on purchased credit impaired loans:	Nine Months Ended						Year Ended
(in thousands)	September 30, 2019			September 30, 2018			December 31, 2018
Balance at beginning of period	$	6,408		$	9,471		$	9,471
Accretion to loan interest income	(3,293		)	(1,872		)	(1,976		)
Transferred to accretable	—			(513		)	(990		)
Disposals of loans	(660		)	(97		)	(97		)
Balance at end of period	$	2,455		$	6,989		$	6,408

Troubled Debt Restructurings

At September 30, 2019, there were five loans classified as troubled debt restructurings with a current outstanding balance of $1.2 million (including performing TDRs of $0.5 million and the remainder on nonaccrual) and pre-modification balance of $1.4 million. In comparison, at December 31, 2018, there were four loans classified as troubled debt restructurings with an outstanding balance of $0.6 million and pre-modification balance of $2.7 million. There were no loans classified as troubled debt restructurings during the previous twelve months that subsequently defaulted during the nine months ended September 30, 2019. As of September 30, 2019, there were no commitments to lend additional funds to debtors whose terms have been modified in troubled debt restructurings.