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Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2019
Receivables [Abstract]  
Allowance for Loan Losses
Note 5 – Allowance for Loan Losses
The following tables summarize the activity in the allowance for loan losses, and ending balance of loans, net of unearned fees for the periods indicated.
                                         
 
Allowance for Loan Losses – Three Months Ended June 30, 2019
 
(in thousands)
 
Beginning
Balance
   
Charge-offs
   
Recoveries
   
Provision
(benefit)
   
Ending Balance
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
2,500
    $
(2
 )   $
3
    $
75
    $
2,576
 
Commercial
   
12,330
     
—  
      
10
     
(241
 )    
12,099
 
                                         
Total mortgage loans on real estate
   
14,830
     
(2
 )    
13
     
(166
 )    
14,675
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
6,015
     
—  
      
183
     
(339
 )    
5,859
 
Home equity loans
   
1,286
     
—  
      
171
     
(215
 )    
1,242
 
Other
   
1,040
     
(153
 )    
108
     
456
     
1,451
 
                                         
Total consumer loans
   
8,341
     
(153
 )    
462
     
(98
 )    
8,552
 
Commercial
   
6,078
     
(138
 )    
85
     
720
     
6,745
 
Construction:
   
     
     
     
     
 
Residential
   
2,408
     
—  
      
—  
      
130
     
2,538
 
Commercial
   
407
     
—  
      
—  
      
(49
 )    
358
 
                                         
Total construction
   
2,815
     
—  
      
—  
      
81
     
2,896
 
                                         
Total
  $
32,064
    $
(293
 )   $
560
    $
537
    $
32,868
 
                                         
       
 
Allowance for Loan Losses – Six Months Ended June 30, 2019
 
(in thousands)
 
Beginning
Balance
   
Charge-offs
   
Recoveries
   
Provision
(benefit)
   
Ending Balance
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
2,676
    $
(2
 )   $
5
    $
(103
 )   $
2,576
 
Commercial
   
12,944
     
—  
      
1,391
     
(2,236
 )    
12,099
 
                                         
Total mortgage loans on real estate
   
15,620
     
(2
 )    
1,396
     
(2,339
 )    
14,675
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
6,042
     
—  
      
278
     
(461
 )    
5,859
 
Home equity loans
   
1,540
     
—  
      
258
     
(556
 )    
1,242
 
Other
   
793
     
(360
 )    
183
     
835
     
1,451
 
                                         
Total consumer loans
   
8,375
     
(360
 )    
719
     
(182
 )    
8,552
 
Commercial
   
6,090
     
(657
 )    
253
     
1,059
     
6,745
 
Construction:
   
     
     
     
     
 
Residential
   
1,834
     
—  
      
—  
      
704
     
2,538
 
Commercial
   
663
     
—  
      
—  
      
(305
 )    
358
 
                                         
Total construction
   
2,497
     
—  
      
—  
      
399
     
2,896
 
                                         
Total
  $
 32,582
    $
 (1,019
 )   $
 2,368
    $
 (1,063
 )   $
 32,868
 
 
 
 
 
 
 
                                 
 
Allowance for Loan Losses – As of June 30, 2019
 
(in thousands)
 
Loans pooled
for evaluation
   
Individually
evaluated for
impairment
   
Loans acquired
with deteriorated
credit quality
   
Total allowance
for loan losses
 
Mortgage loans on real estate:
   
     
     
     
 
Residential
1-4
family
   $
2,522
    $
54
    $
 —  
     $
2,576
 
Commercial
   
12,015
     
84
     
—
      
12,099
 
                                 
Total mortgage loans on real estate
   
14,537
     
138
     
—  
      
14,675
 
Consumer:
   
     
     
     
 
Home equity lines of credit
   
5,764
     
85
     
10
     
5,859
 
Home equity loans
   
1,181
     
61
     
—  
      
1,242
 
Other
   
1,433
     
18
     
—  
      
1,451
 
                                 
Total consumer loans
   
8,378
     
164
     
10
     
8,552
 
Commercial
   
4,605
     
2,140
     
—  
      
6,745
 
Construction:
   
     
     
     
 
Residential
   
2,538
     
—  
      
—  
      
2,538
 
Commercial
   
358
     
—  
      
—  
      
358
 
                                 
Total construction
   
2,896
     
—  
      
—  
      
2,896
 
                                 
Total
  $
 30,416
    $
 2,442
    $
10
    $
 32,868
 
 
 
 
 
                                 
 
Loans, Net of Unearned fees – As of June 30, 2019
 
(in thousands)
 
Loans pooled
for evaluation
   
Individually
evaluated for
impairment
   
Loans acquired
with deteriorated
credit quality
   
Total loans, net
of unearned fees
 
Mortgage loans on real estate:
   
     
     
     
 
Residential
1-4
family
   $
500,304
    $
4,305
    $
1,440
    $
506,049
 
Commercial
   
2,655,692
     
11,030
     
5,959
     
2,672,681
 
                                 
Total mortgage loans on real estate
   
3,155,996
     
15,335
     
7,399
     
3,178,730
 
Consumer:
   
     
     
     
 
Home equity lines of credit
   
327,726
     
2,046
     
1,128
     
330,900
 
Home equity loans
   
29,860
     
2,056
     
429
     
32,345
 
Other
   
70,986
     
156
     
1
     
71,143
 
                                 
Total consumer loans
   
428,572
     
4,258
     
1,558
     
434,388
 
Commercial
   
268,405
     
5,102
     
2,538
     
276,045
 
Construction:
   
     
     
     
 
Residential
   
157,515
     
—  
      
—  
      
157,515
 
Commercial
   
57,009
     
—  
      
—  
      
57,009
 
                                 
Total construction
   
214,524
     
—  
      
—  
      
214,524
 
                                 
Total
  $ 
4,067,497
    $
24,695
    $
11,495
    $
4,103,687
 
 
 
 
 
 
                                         
 
Allowance for Loan Losses – Year Ended December 31, 2018
 
(in thousands)
 
Beginning
Balance
   
Charge-offs
   
Recoveries
   
Provision
(benefit)
   
Ending Balance
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
2,317
    $
(77
)   $
—  
     $
436
    $
2,676
 
Commercial
   
11,441
     
(15
 )    
68
     
1,450
     
12,944
 
                                         
Total mortgage loans on real estate
   
13,758
     
(92
 )    
68
     
1,886
     
15,620
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
5,800
     
(277
 )    
846
     
(327
 )    
6,042
 
Home equity loans
   
1,841
     
(24
 )    
297
     
(574
 )    
1,540
 
Other
   
586
     
(783
 )    
288
     
702
     
793
 
                                         
Total consumer loans
   
8,227
     
(1,084
 )    
1,431
     
(199
 )    
8,375
 
Commercial
   
6,512
     
(1,188
 )    
541
     
225
     
6,090
 
Construction:
   
     
     
     
     
 
Residential
   
1,184
     
—  
      
—  
      
650
     
1,834
 
Commercial
   
642
     
—  
      
—  
      
21
     
663
 
                                         
Total construction
   
1,826
     
—  
      
—  
      
671
     
2,497
 
                                         
Total
  $ 
30,323
    $
(2,364
 )   $
2,040
    $
2,583
    $
32,582
 
 
 
 
 
 
                                 
 
Allowance for Loan Losses – As of December 31, 2018
 
(in thousands)
 
Loans pooled
for evaluation
   
Individually
evaluated for
impairment
   
Loans acquired
with deteriorated
credit quality
   
Total allowance
for loan losses
 
Mortgage loans on real estate:
   
     
     
     
 
Residential
1-4
family
   $
2,620
    $
56
    $
 —  
     $
2,676
 
Commercial
   
12,737
     
91
     
116
     
12,944
 
                                 
Total mortgage loans on real estate
   
15,357
     
147
     
116
     
15,620
 
Consumer:
   
     
     
     
 
Home equity lines of credit
   
5,838
     
198
     
6
     
6,042
 
Home equity loans
   
1,486
     
54
     
—  
      
1,540
 
Other
   
779
     
14
     
—  
      
793
 
                                 
Total consumer loans
   
8,103
     
266
     
6
     
8,375
 
Commercial
   
4,309
     
1,781
     
—  
      
6,090
 
Construction:
   
     
     
     
 
Residential
   
1,834
     
—  
      
—  
      
1,834
 
Commercial
   
663
     
—  
      
—  
      
663
 
                                 
Total construction
   
2,497
     
—  
      
—  
      
2,497
 
                                 
Total
  $
30,266
    $
2,194
    $
122
    $
32,582
 
 
 
 
 
                                 
 
Loans, Net of Unearned fees – As of December 31, 2018
 
(in thousands)
 
Loans pooled
for evaluation
   
Individually
evaluated for
impairment
   
Loans acquired
with deteriorated
credit quality
   
Total loans, net
of unearned fees
 
Mortgage loans on real estate:
   
     
     
     
 
Residential
1-4
family
   $
509,267
    $
4,321
    $
1,674
    $
515,262
 
Commercial
   
2,606,819
     
12,563
     
8,456
     
2,627,838
 
                                 
Total mortgage loans on real estate
   
3,116,086
     
16,884
     
10,130
     
3,143,100
 
Consumer:
   
     
     
     
 
Home equity lines of credit
   
322,764
     
2,646
     
1,167
     
326,577
 
Home equity loans
   
33,142
     
3,103
     
439
     
36,684
 
Other
   
55,483
     
196
     
42
     
55,721
 
                                 
Total consumer loans
   
411,389
     
5,945
     
1,648
     
418,982
 
Commercial
   
268,885
     
5,218
     
2,445
     
276,548
 
Construction:
   
     
     
     
 
Residential
   
121,296
     
—  
      
—  
      
121,296
 
Commercial
   
62,088
     
—  
      
—  
      
62,088
 
                                 
Total construction
   
183,384
     
—  
      
—  
      
183,384
 
                                 
Total
  $ 
3,979,744
    $
28,047
    $
14,223
    $
4,022,014
 
                                 
 
 
 
 
 
                                         
 
Allowance for Loan Losses – Three Months Ended June 30, 2018
 
(in thousands)
 
Beginning
Balance
   
Charge-offs
   
Recoveries
   
Provision
(benefit)
   
Ending Balance
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
2,170
    $
(51
 )   $
—  
     $
(128
 )   $
1,991
 
Commercial
   
11,495
     
(15
 )    
21
     
106
     
11,607
 
                                         
Total mortgage loans on real estate
   
13,665
     
(66
 )    
21
     
(22
 )    
13,598
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
5,412
     
(24
 )    
317
     
(657
 )    
5,048
 
Home equity loans
   
1,736
     
—  
      
23
     
(227
 )    
1,532
 
Other
   
570
     
(174
 )    
66
     
95
     
557
 
                                         
Total consumer loans
   
7,718
     
(198
 )    
406
     
(789
 )    
7,137
 
Commercial
   
6,392
     
(54
 )    
80
     
(40
 )    
6,378
 
Construction:
   
     
     
     
     
 
Residential
   
1,351
     
—  
      
—  
      
83
     
1,434
 
Commercial
   
847
     
—  
      
—  
      
130
     
977
 
                                         
Total construction
   
2,198
     
—  
      
—  
      
213
     
2,411
 
                                         
Total
  $
29,973
    $
(318
 )   $
507
    $
(638
 )   $
29,524
 
                                         
       
 
Allowance for Loan Losses – Six Months Ended June 30, 2018
 
(in thousands)
 
Beginning
Balance
   
Charge-offs
   
Recoveries
   
Provision
(benefit)
   
Ending Balance
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
2,317
    $
(52
 )   $
—  
     $
(274
 )   $
1,991
 
Commercial
   
11,441
     
(15
 )    
36
     
145
     
11,607
 
                                         
Total mortgage loans on real estate
   
13,758
     
(67
 )    
36
     
(129
 )    
13,598
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
5,800
     
(104
 )    
526
     
(1,174
 )    
5,048
 
Home equity loans
   
1,841
     
—  
      
37
     
(346
 )    
1,532
 
Other
   
586
     
(368
 )    
144
     
195
     
557
 
                                         
Total consumer loans
   
8,227
     
(472
 )    
707
     
(1,325
 )    
7,137
 
Commercial
   
6,512
     
(259
 )    
130
     
(5
 )    
6,378
 
Construction:
   
     
     
     
     
 
Residential
   
1,184
     
—  
      
—  
      
250
     
1,434
 
Commercial
   
642
     
—  
      
—  
      
335
     
977
 
                                         
Total construction
   
1,826
     
—  
      
—  
      
585
     
2,411
 
                                         
Total
  $
30,323
    $
(798
 )   $
873
    $
(874
 )   $
29,524
 
                                         
 
 
 
 
 
                                 
 
Allowance for Loan Losses – As of June 30, 2018
 
(in thousands)
 
Loans pooled
for evaluation
   
Individually
evaluated for
impairment
   
Loans acquired
with deteriorated
credit quality
   
Total allowance
for loan losses
 
Mortgage loans on real estate:
   
     
     
     
 
Residential
1-4
family
   $
 1,794
    $
 147
    $
 50
    $
 1,991
 
Commercial
   
11,466
     
82
     
59
     
11,607
 
                                 
Total mortgage loans on real estate
   
13,260
     
229
     
109
     
13,598
 
Consumer:
   
     
     
     
 
Home equity lines of credit
   
4,754
     
287
     
7
     
5,048
 
Home equity loans
   
1,340
     
192
     
—  
      
1,532
 
Other
   
503
     
54
     
—  
      
557
 
                                 
Total consumer loans
   
6,597
     
533
     
7
     
7,137
 
Commercial
   
4,228
     
2,127
     
23
     
6,378
 
Construction:
   
     
     
     
 
Residential
   
1,434
     
—  
      
—  
      
1,434
 
Commercial
   
977
     
—  
      
—  
      
977
 
                                 
Total construction
   
2,411
     
—  
      
—  
      
2,411
 
                                 
Total
  $
 26,496
    $
 2,889
    $
 139
    $
 29,524
 
                                 
       
 
Loans, Net of Unearned fees – As of June 30, 2018
 
(in thousands)
 
Loans pooled
for evaluation
   
Individually
evaluated for
impairment
   
Loans acquired
with deteriorated
credit quality
   
Total loans, net
of unearned fees
 
Mortgage loans on real estate:
   
     
     
     
 
Residential
1-4
family
   $
 376,628
    $
 6,344
    $
 1,720
    $
 384,692
 
Commercial
   
1,997,591
     
11,162
     
7,595
     
2,016,348
 
                                 
Total mortgage loans on real estate
   
2,374,219
     
17,506
     
9,315
     
2,401,040
 
Consumer:
   
     
     
     
 
Home equity lines of credit
   
282,611
     
2,250
     
1,575
     
286,436
 
Home equity loans
   
38,074
     
2,457
     
455
     
40,986
 
Other
   
23,213
     
247
     
43
     
23,503
 
                                 
Total consumer loans
   
343,898
     
4,954
     
2,073
     
350,925
 
Commercial
   
230,395
     
4,751
     
2,473
     
237,619
 
Construction:
   
     
     
     
 
Residential
   
73,578
     
—  
      
—  
      
73,578
 
Commercial
   
83,151
     
—  
      
—  
      
83,151
 
                                 
Total construction
   
156,729
     
—  
      
—  
      
156,729
 
                                 
Total
  $
 3,105,241
    $
 27,211
    $
 13,861
    $
 3,146,313
 
                                 
 
 
 
 
As part of the
on-going
monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including, but not limited to, trends relating to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii)
 non-performing
loans, and (iv) delinquency within the portfolio.
The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are graded on a scale ranging from Pass to Loss. A description of the general characteristics of the risk grades is as follows:
•
Pass
– This grade represents loans ranging from acceptable to very little or no credit risk. These loans typically meet most if not all policy standards in regard to: loan amount as a percentage of collateral value, debt service coverage, profitability, leverage, and working capital.
 
 
 
 
 
 
•
Special Mention
– This grade represents “Other Assets Especially Mentioned” in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Company’s position in the future. These loans warrant more than normal supervision and attention.
 
 
 
 
 
 
•
Substandard
– This grade represents “Substandard” loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been written down to the point where this is true. There is a definite need for a well-defined workout/rehabilitation program.
 
 
 
 
•
Doubtful
– This grade represents “Doubtful” loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans.
 
 
 
 
•
Loss
– This grade represents “Loss” loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan, even though some recovery may be affected in the future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified.
 
 
 
 
The following tables present ending loan balances by loan category and risk grade for the periods indicated:
                                         
 
Credit Quality Indicators Originated Loans – As of June 30, 2019
 
(in thousands)
 
Pass
   
Special
Mention
   
Substandard
   
Doubtful / Loss
   
Total Originated
Loans
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
 342,847
    $
 1,048
    $
 4,842
    $
 —  
     $
 348,737
 
Commercial
   
1,964,292
     
32,562
     
9,131
     
—  
      
2,005,985
 
                                         
Total mortgage loans on real estate
   
2,307,139
     
33,610
     
13,973
     
—  
      
2,354,722
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
290,524
     
1,673
     
2,344
     
—  
      
294,541
 
Home equity loans
   
26,265
     
564
     
2,212
     
—  
      
29,041
 
Other
   
53,044
     
189
     
107
     
—  
      
53,340
 
                                         
Total consumer loans
   
369,833
     
2,426
     
4,663
     
—  
      
376,922
 
Commercial
   
237,025
     
5,194
     
5,993
     
311
     
248,523
 
Construction:
   
     
     
     
     
 
Residential
   
148,178
     
—  
      
254
     
—  
      
148,432
 
Commercial
   
55,958
     
331
     
—  
      
—  
      
56,289
 
                                         
Total construction
   
204,136
     
331
     
254
     
—  
      
204,721
 
                                         
Total loans
  $
 3,118,133
    $
 41,561
    $
 24,883
    $
 311
    $
 3,184,888
 
                                         
       
 
Credit Quality Indicators PNCI Loans – As of June 30, 2019
 
(in thousands)
 
Pass
   
Special
Mention
   
Substandard
   
Doubtful / Loss
   
Total PNCI
Loans
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
 154,238
    $
 864
    $
 770
    $
 —  
     $
 155,872
 
Commercial
   
650,821
     
3,141
     
6,775
     
—  
      
660,737
 
                                         
Total mortgage loans on real estate
   
805,059
     
4,005
     
7,545
     
—  
      
816,609
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
33,345
     
795
     
1,091
     
—  
      
35,231
 
Home equity loans
   
2,727
     
69
     
79
     
—  
      
2,875
 
Other
   
17,545
     
254
     
3
     
—  
      
17,802
 
                                         
Total consumer loans
   
53,617
     
1,118
     
1,173
     
—  
      
55,908
 
Commercial
   
24,650
     
1
     
333
     
—  
      
24,984
 
Construction:
   
     
     
     
     
 
Residential
   
9,083
     
—  
      
—  
      
—  
      
9,083
 
Commercial
   
475
     
—  
      
245
     
—  
      
720
 
                                         
Total construction
   
9,558
     
—  
      
245
     
—  
      
9,803
 
                                         
Total loans
  $
 892,884
    $
 5,124
    $
 9,296
    $
 —  
     $
 907,304
 
                                         
 
 
                                         
 
Credit Quality Indicators Originated Loans – As of December 31, 2018
 
(in thousands)
 
Pass
   
Special
Mention
   
Substandard
   
Doubtful / Loss
   
Total Originated
Loans
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
 337,189
    $
 1,724
    $
 4,883
    $
 —  
     $
 343,796
 
Commercial
   
1,861,627
     
33,483
     
15,871
     
—  
      
1,910,981
 
                                         
Total mortgage loans on real estate
   
2,198,816
     
35,207
     
20,754
     
—  
      
2,254,777
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
279,491
     
2,309
     
2,653
     
—  
      
284,453
 
Home equity loans
   
29,289
     
1,054
     
2,317
     
—  
      
32,660
 
Other
   
33,606
     
341
     
73
     
—  
      
34,020
 
                                         
Total consumer loans
   
342,386
     
3,704
     
5,043
     
—  
      
351,133
 
Commercial
   
217,126
     
6,127
     
5,382
     
—  
      
228,635
 
Construction:
   
     
     
     
     
 
Residential
   
90,412
     
32
     
259
     
—  
      
90,703
 
Commercial
   
55,863
     
345
     
—  
      
—  
      
56,208
 
                                         
Total construction
   
146,275
     
377
     
259
     
—  
      
146,911
 
                                         
Total loans
  $
 2,904,603
    $
 45,415
    $
 31,438
    $
 —  
     $
 2,981,456
 
                                         
       
 
Credit Quality Indicators PNCI Loans – As of December 31, 2018
 
(in thousands)
 
Pass
   
Special
Mention
   
Substandard
   
Doubtful / Loss
   
Total PNCI
Loans
 
Mortgage loans on real estate:
   
     
     
     
     
 
Residential
1-4
family
   $
 167,908
    $
 1,086
    $
 798
    $
 —  
     $
 169,792
 
Commercial
   
701,868
     
3,085
     
3,448
     
—  
      
708,401
 
                                         
Total mortgage loans on real estate
   
869,776
     
4,171
     
4,246
     
—  
      
878,193
 
Consumer:
   
     
     
     
     
 
Home equity lines of credit
   
38,780
     
1,124
     
1,053
     
—  
      
40,957
 
Home equity loans
   
3,413
     
74
     
98
     
—  
      
3,585
 
Other
   
21,481
     
173
     
5
     
—  
      
21,659
 
                                         
Total consumer loans
   
63,674
     
1,371
     
1,156
     
—  
      
66,201
 
Commercial
   
45,027
     
321
     
120
     
—  
      
45,468
 
Construction:
   
     
     
     
     
 
Residential
   
30,593
     
—  
      
—  
      
—  
      
30,593
 
Commercial
   
5,880
     
—  
      
—  
      
—  
      
5,880
 
                                         
Total construction
   
36,473
     
—  
      
—  
      
—  
      
36,473
 
                                         
Total
  $
 1,014,950
    $
 5,863
    $
 5,522
    $
 —  
     $
 1,026,335
 
                                         
 
 
Consumer loans, whether unsecured or secured by real estate, automobiles, or other personal property, are susceptible to three primary risks;
non-payment
due to income loss, over-extension of credit and, when the borrower is unable to pay, shortfall in collateral value. Typically, payment performance will follow general economic trends in the marketplace driven primarily by rises in the unemployment rate;
non-payment
is likely due to loss of employment. Loss of collateral value can be due to market demand shifts, damage to collateral itself or a combination of the two. Problem consumer loans are generally identified by payment history and current performance of the borrower (delinquency). The Bank manages its consumer loan portfolios by monitoring delinquency and contacting borrowers to encourage repayment, suggesting modifications if appropriate, and, when continued scheduled payments become unrealistic, initiating repossession or foreclosure through appropriate channels.
Commercial real estate loans generally fall into two categories, owner-occupied and
non-owner
occupied. Loans secured by owner occupied real estate are primarily susceptible to changes in the business conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual fortunes of the business owner, and general economic conditions and changes in business cycles. These same risks apply to commercial loans whether secured by equipment or other personal property or unsecured. Losses on loans secured by owner occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by
non-owner
occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related shifts in lease rates, rental rates or room rates. Most often these shifts are a result of changes in general economic or market conditions or overbuilding and resultant over-supply. Losses are dependent on value of underlying collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs.
Construction loans, whether owner occupied or
non-owner
occupied commercial real estate loans or residential development loans, are not only susceptible to the related risks described above but the added risks of construction itself including cost over-runs, mismanagement of the project, or lack of demand or market changes experienced at time of completion. Again, losses are primarily related to underlying collateral value and changes therein as described above.
Problem commercial loans are generally identified by periodic review of financial information which may include financial statements, tax returns, rent rolls and payment history of the borrower (delinquency). Based on this information the Bank may decide to take any of several courses of action including demand for repayment, additional collateral or guarantors, and, when repayment becomes unlikely through borrower’s income and cash flow, repossession or foreclosure of the underlying collateral.
Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations or revaluations are obtained at initiation of the credit and periodically, but not less than every twelve months depending on collateral type, once repayment is questionable and the loan has been classified.
Once a loan becomes delinquent and repayment becomes questionable, a Bank collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss, using a recent valuation as appropriate to the underlying collateral less estimated costs of sale, and charge the loan down to the estimated net realizable amount. Depending on the length of time until ultimate collection, the Bank may revalue the underlying collateral and take additional charge-offs as warranted. Revaluations may occur as often as every
3-12
months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when collateral is liquidated and actual loss is known. Unpaid balances on loans after or during collection and liquidation may also be pursued through lawsuit and attachment of wages or judgment liens on borrower’s other assets.
The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated:
                                                         
 
Analysis of Originated Past Due Loans - As of June 30, 2019
   
 
(in thousands)
 
30-59
 days
    
60-89
 days
    
> 90 days
   
Total Past
Due Loans
   
Current
   
Total
   
> 90 Days and
Still Accruing
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
635
    $
1,132
    $
758
    $
2,525
    $
346,212
    $
348,737
    $
 —  
  
Commercial
   
1,022
     
174
     
901
     
2,097
     
2,003,888
     
2,005,985
     
—  
  
                                                         
Total mortgage loans on real estate
   
1,657
     
1,306
     
1,659
     
4,622
     
2,350,100
     
2,354,722
     
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1,197
     
557
     
157
     
1,911
     
292,630
     
294,541
     
—  
  
Home equity loans
   
565
     
89
     
217
     
871
     
28,170
     
29,041
     
 
Other
   
44
     
13
     
7
     
64
     
53,276
     
53,340
     
12
 
                                                         
Total consumer loans
   
1,806
     
659
     
381
     
2,846
     
374,076
     
376,922
     
12
 
Commercial
   
1,154
     
1,560
     
333
     
3,047
     
245,476
     
248,523
     
10
 
Construction:
   
     
     
     
     
     
     
 
Residential
   
151
     
—  
      
—  
      
151
     
148,281
     
148,432
     
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
56,289
     
56,289
     
—  
  
                                                         
Total construction
   
151
     
—  
      
—  
      
151
     
204,570
     
204,721
     
—  
  
                                                         
Total originated loans
  $
4,768
    $ 
3,525
    $ 
2,373
    $ 
10,666
    $ 
3,174,222
    $ 
3,184,888
    $
22
 
                                                         
 
 
 
The following table shows the ending balance of current and past due PNCI loans by loan category as of the date indicated:
                                                         
 
Analysis of PNCI Past Due Loans - As of June 30, 2019
   
 
(in thousands)
 
30-59
 days
    
60-89
 days
    
> 90 days
   
Total Past
Due Loans
   
Current
   
Total
   
> 90 Days and
Still Accruing
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
—  
     $
682
    $
—  
     $
682
    $
155,190
    $
155,872
    $
 —  
  
Commercial
   
—  
      
195
     
950
     
1,145
     
659,592
     
660,737
     
—  
  
                                                         
Total mortgage loans on real estate
   
—  
      
877
     
950
     
1,827
     
814,782
     
816,609
     
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
101
     
73
     
24
     
198
     
35,033
     
35,231
     
—  
  
Home equity loans
   
62
     
—  
      
—  
      
62
     
2,813
     
2,875
     
—  
  
Other
   
119
     
—  
      
—  
      
119
     
17,683
     
17,802
     
—  
  
                                                         
Total consumer loans
   
282
     
73
     
24
     
379
     
55,529
     
55,908
     
—  
  
Commercial
   
820
     
150
     
113
     
1,083
     
23,901
     
24,984
     
—  
  
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
9,083
     
9,083
     
—  
  
Commercial
   
245
     
—  
      
—  
      
245
     
475
     
720
     
—  
  
                                                         
Total construction
   
245
     
—  
      
—  
      
245
     
9,558
     
9,803
     
—  
  
                                                         
Total PNCI loans
  $
1,347
    $
1,100
    $
1,087
    $
3,534
    $ 
903,770
    $ 
907,304
    $
—  
  
                                                         
 
 
 
The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated:
                                                         
 
Analysis of Originated Past Due Loans - As of December 31, 2018
   
 
(in thousands)
 
30-59
 days
    
60-89
 days
    
> 90 days
   
Total Past
Due Loans
   
Current
   
Total
   
> 90 Days and
Still Accruing
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
1,675
    $
132
    $
478
    $
2,285
    $
341,511
    $
343,796
    $
—  
  
Commercial
   
431
     
1,200
     
296
     
1,927
     
1,909,054
     
1,910,981
     
—  
  
                                                         
Total mortgage loans on real estate
   
2,106
     
1,332
     
774
     
4,212
     
2,250,565
     
2,254,777
     
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
908
     
47
     
609
     
1,564
     
282,889
     
284,453
     
—  
  
Home equity loans
   
1,043
     
24
     
214
     
1,281
     
31,379
     
32,660
     
—  
  
Other
   
298
     
17
     
—  
      
315
     
33,705
     
34,020
     
—  
  
                                                         
Total consumer loans
   
2,249
     
88
     
823
     
3,160
     
347,973
     
351,133
     
—  
  
Commercial
   
1,053
     
579
     
1,247
     
2,879
     
225,756
     
228,635
     
—  
  
Construction:
   
     
     
     
     
     
     
 
Residential
   
209
     
—  
      
—  
      
209
     
90,494
     
90,703
     
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
56,208
     
56,208
     
—  
  
                                                         
Total construction
   
209
     
—  
      
—  
      
209
     
146,702
     
146,911
     
—  
  
                                                         
Total loans
  $
5,617
    $
1,999
    $
2,844
    $
10,460
    $ 
2,970,996
    $ 
2,981,456
    $
—  
  
                                                         
 
 
The following table shows the ending balance of current and past due PNCI loans by loan category as of the date indicated:
                                                         
 
Analysis of PNCI Past Due Loans - As of December 31, 2018
   
 
(in thousands)
 
30-59
 days
    
60-89
 days
    
> 90 days
   
Total Past
Due Loans
   
Current
   
Total
   
> 90 Days and
Still Accruing
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
1,009
    $
133
    $
156
    $
1,298
    $
168,494
    $
169,792
    $
 —  
  
Commercial
   
1,646
     
1,136
     
1,082
     
3,864
     
704,537
     
708,401
     
—  
  
                                                         
Total mortgage loans on real estate
   
2,655
     
1,269
     
1,238
     
5,162
     
873,031
     
878,193
     
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
304
     
35
     
237
     
576
     
40,381
     
40,957
     
—  
  
Home equity loans
   
74
     
—  
      
—  
      
74
     
3,511
     
3,585
     
—  
  
Other
   
160
     
—  
      
—  
      
160
     
21,499
     
21,659
     
—  
  
                                                         
Total consumer loans
   
538
     
35
     
237
     
810
     
65,391
     
66,201
     
—  
  
Commercial
   
678
     
145
     
113
     
936
     
44,532
     
45,468
     
—  
  
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
30,593
     
30,593
     
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
5,880
     
5,880
     
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
36,473
     
36,473
     
—  
  
                                                         
Total loans
  $  
3,871
    $  
1,449
    $  
1,588
    $  
6,908
    $  
1,019,427
    $  
1,026,335
    $
—  
  
                                                         
 
 
 
 
 
Interest income on originated nonaccrual loans that would have been recognized during the three months ended June 30, 2019 and 2018, if all such loans had been current in accordance with their original terms, totaled $289,000 and $341,000, respectively. Interest income actually recognized on these originated loans during the three months ended June 30, 2019 and 2018 was $53,000 and $53,000, respectively. Interest income on PNCI nonaccrual loans that would have been recognized during the three months ended June 30, 2019 and 2018, if all such loans had been current in accordance with their original terms, totaled $160,000 and $26,000, respectively. Interest income actually recognized on these PNCI loans during the three months ended June 30, 2019 and 2018 was $111,000 and $12,000.
Interest income on originated nonaccrual loans that would have been recognized during the six months ended June 30, 2019 and 2018, if all such loans had been current in accordance with their original terms, totaled $568,000 and $626,000, respectively. Interest income actually recognized on these originated loans during the six months ended June 30, 2019 and 2018 was $86,000 and $75,000, respectively. Interest income on PNCI nonaccrual loans that would have been recognized during the six months ended June 30, 2019 and 2018, if all such loans had been current in accordance with their original terms, totaled $281,000 and $54,000, respectively. Interest income actually recognized on these PNCI loans during the six months ended June 30, 2019 and 2018 was $171,000 and $11,000.
The following table shows the ending balance of nonaccrual originated
and PNCI loans by loan category as of the date indicated:
                                                 
 
Non Accrual Loans
 
 
As of June 30, 2019
   
As of December 31, 2018
 
(in thousands)
 
Originated
   
PNCI
   
Total
   
Originated
   
PNCI
   
Total
 
Mortgage loans on real estate:
   
     
     
     
     
     
 
Residential
1-4
family
   $
3,357
    $
300
    $
3,657
    $
3,244
    $
334
    $
3,578
 
Commercial
   
4,354
     
3,461
     
7,815
     
9,263
     
1,468
     
10,731
 
                                                 
Total mortgage loans on real estate
   
7,711
     
3,761
     
11,472
     
12,507
     
1,802
     
14,309
 
Consumer:
   
     
     
     
     
     
 
Home equity lines of credit
   
880
     
516
     
1,396
     
1,429
     
885
     
2,314
 
Home equity loans
   
1,610
     
34
     
1,644
     
1,722
     
47
     
1,769
 
Other
   
58
     
3
     
61
     
3
     
4
     
7
 
                                                 
Total consumer loans
   
2,548
     
553
     
3,101
     
3,154
     
936
     
4,090
 
Commercial
   
3,873
     
183
     
4,056
     
3,755
     
120
     
3,875
 
Construction:
   
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                 
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                 
Total non accrual loans
  $
14,132
    $
4,497
    $
18,629
    $
19,416
    $
2,858
    $
22,274
 
                                                 
 
 
 
 
 
Impaired originated loans are those where management has concluded that it is probable that the borrower will be unable to pay all amounts due in accordance with the original contractual terms of the loan agreement. The following tables show the recorded investment (financial statement balance), unpaid principal balance, average recorded investment, and interest income recognized for impaired Originated and PNCI loans, segregated by those with no related allowance recorded and those with an allowance recorded for the periods indicated. The average recorded investment in impaired loans and interest income recognized on impaired loans during the three months ended June 30, 2019 and 2018 was not considered significant for financial reporting purposes.
                                                         
 
Impaired Originated Loans – As of, or for the Six Months Ended, June 30, 2019
 
(in thousands)
 
Unpaid
principal
balance
   
Recorded
investment with
no related
allowance
   
Recorded
investment with
related
allowance
   
Total recorded
investment
   
Related
Allowance
   
Average
recorded
investment
   
Interest income
recognized
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
4,739
    $
3,705
    $
300
    $
4,005
    $
54
    $
4,291
    $
18
 
Commercial
   
7,906
     
5,103
     
2,465
     
7,568
     
808
     
10,004
     
40
 
                                                         
Total mortgage loans on real estate
   
12,645
     
8,808
     
2,765
     
11,573
     
862
     
14,295
     
58
 
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1,333
     
1,271
     
—  
      
1,271
     
—  
      
1,510
     
8
 
Home equity loans
   
2,373
     
1,571
     
268
     
1,839
     
61
     
2,003
     
4
 
Other
   
76
     
3
     
54
     
57
     
13
     
48
     
1
 
                                                         
Total consumer loans
   
3,782
     
2,845
     
322
     
3,167
     
74
     
3,561
     
13
 
Commercial
   
5,150
     
1,884
     
3,035
     
4,919
     
1,301
     
5,065
     
15
 
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
  $
21,577
    $
13,537
    $
6,122
    $
19,659
    $
2,237
    $
22,921
    $
86
 
                                                         
       
 
Impaired PNCI Loans – As of, or for the Six Months Ended, June 30, 2019
 
(in thousands)
 
Unpaid
principal
balance
   
Recorded
investment with
no related
allowance
   
Recorded
investment with
related
allowance
   
Total recorded
investment
   
Related
Allowance
   
Average
recorded
investment
   
Interest income
recognized
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
339
    $
300
    $
—  
     $
300
    $
—  
     $
317
    $
—  
  
Commercial
   
5,079
     
3,462
     
—  
      
3,462
     
—  
      
2,465
     
171
 
                                                         
Total mortgage loans on real estate
   
5,418
     
3,762
     
—  
      
3,762
     
—  
      
2,782
     
171
 
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
612
     
534
     
241
     
775
     
85
     
889
     
—  
  
Home equity loans
   
167
     
148
     
69
     
217
     
44
     
229
     
—  
  
Other
   
62
     
62
     
37
     
99
     
6
     
105
     
—  
  
                                                         
Total consumer loans
   
841
     
744
     
347
     
1,091
     
135
     
1,223
     
—  
  
Commercial
   
113
     
113
     
70
     
183
     
70
     
151
     
 
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
  $
6,372
    $
4,619
    $
417
    $
5,036
    $
205
    $
4,156
    $
171
 
                                                         
       
 
Impaired Originated Loans – As of, or for the Twelve Months Ended, December 31, 2018
 
(in thousands)
 
Unpaid
principal
balance
   
Recorded
investment with
no related
allowance
   
Recorded
investment with
related
allowance
   
Total recorded
investment
   
Related
Allowance
   
Average
recorded
investment
   
Interest income
recognized
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
4,594
    $
3,663
    $
308
    $
3,971
    $
56
    $
3,517
    $
90
 
Commercial
   
13,081
     
10,676
     
1,765
     
12,441
     
42
     
13,115
     
137
 
                                                         
Total mortgage loans on real estate
   
17,675
     
14,339
     
2,073
     
16,412
     
98
     
16,632
     
227
 
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1,900
     
1,749
     
111
     
1,860
     
71
     
1,885
     
43
 
Home equity loans
   
2,374
     
1,892
     
65
     
1,957
     
2
     
1,520
     
23
 
Other
   
3
     
—  
      
3
     
3
     
3
     
17
     
2
 
                                                         
Total consumer loans
   
4,277
     
3,641
     
179
     
3,820
     
76
     
3,422
     
68
 
Commercial
   
5,433
     
2,924
     
2,287
     
5,211
     
1,774
     
4,654
     
91
 
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
5
     
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
5
     
—  
  
                                                         
Total
  $  
27,385
    $
20,904
    $
4,539
    $
25,443
    $
1,948
    $  
24,713
    $
386
 
                                                         
 
 
 
 
 
  
Impaired PNCI Loans – As of, or for the Twelve Months Ended, December 31, 2018
 
(in thousands)
 
Unpaid
principal
balance
   
Recorded
investment with
no related
allowance
   
Recorded
investment with
related
allowance
   
Total recorded
investment
   
Related
Allowance
   
Average
recorded
investment
   
Interest income
recognized
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
375
    $
334
    $
—  
     $
334
    $
—  
     $
529
    $
5
 
Commercial
   
3,110
     
1,468
     
—  
      
1,468
     
—  
      
1,713
     
183
 
                                                         
Total mortgage loans on real estate
   
3,485
     
1,802
     
—  
      
1,802
     
—  
      
2,242
     
188
 
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1,027
     
587
     
367
     
954
     
127
     
1,120
     
18
 
Home equity loans
   
252
     
47
     
197
     
244
     
101
     
155
     
—  
  
Other
   
106
     
21
     
85
     
106
     
11
     
114
     
—  
  
                                                         
Total consumer loans
   
1,385
     
655
     
649
     
1,304
     
239
     
1,389
     
18
 
Commercial
   
120
     
113
     
7
     
120
     
7
     
60
     
1
 
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
  $
4,990
    $
2,570
    $
656
    $
3,226
    $
246
    $
3,691
    $
207
 
                                                         
       
  
Impaired Originated Loans – As of, or for the Six Months Ended, June 30, 2018
 
(in thousands)
 
Unpaid
principal
balance
   
Recorded
investment with
no related
allowance
   
Recorded
investment with
related
allowance
   
Total recorded
investment
   
Related
Allowance
   
Average
recorded
investment
   
Interest income
recognized
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
5,656
    $
3,947
    $
1,050
    $
4,997
    $
147
    $
4,600
    $
28
 
Commercial
   
11,280
     
9,763
     
1,076
     
10,839
     
82
     
10,975
     
9
 
                                                         
Total mortgage loans on real estate
   
16,936
     
13,710
     
2,126
     
15,836
     
229
     
15,575
     
37
 
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1,244
     
1,108
     
106
     
1,214
     
29
     
1,315
     
3
 
Home equity loans
   
2,558
     
1,828
     
351
     
2,179
     
38
     
1,784
     
15
 
Other
   
3
     
—  
      
3
     
3
     
3
     
3
     
—  
  
                                                         
Total consumer loans
   
3,805
     
2,936
     
460
     
3,396
     
70
     
3,102
     
18
 
Commercial
   
4,952
     
809
     
3,942
     
4,751
     
2,127
     
4,686
     
20
 
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
68
     
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
68
     
—  
  
                                                         
Total
  $
25,693
    $
17,455
    $
6,528
    $
23,983
    $
2,426
    $
23,431
    $
75
 
                                                         
       
  
Impaired PNCI Loans – As of, or for the Six Months Ended, June 30, 2018
 
(in thousands)
 
Unpaid
principal
balance
   
Recorded
investment with
no related
allowance
   
Recorded
investment with
related
allowance
   
Total recorded
investment
   
Related
Allowance
   
Average
recorded
investment
   
Interest income
recognized
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
   $
1,417
    $
1,348
    $
—  
     $
1,348
    $
—  
     $
1,339
    $
—
 
Commercial
   
323
     
323
     
—  
      
323
     
—  
      
161
     
9
 
                                                         
Total mortgage loans on real estate
   
1,740
     
1,671
     
—  
      
1,671
     
—  
      
1,500
     
9
 
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1,098
     
529
     
506
     
1,035
     
258
     
1,035
     
2
 
Home equity loans
   
293
     
36
     
242
     
278
     
154
     
281
     
—
 
Other
   
244
     
—  
      
244
     
244
     
51
     
259
     
—
 
                                                         
Total consumer loans
   
1,635
     
565
     
992
     
1,557
     
463
     
1,575
     
2
 
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
     
—  
  
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
  $
3,375
    $
2,236
    $
992
    $
3,228
    $
463
    $
3,075
    $
11
 
                                                         
 
Originated loans classified as TDRs and impaired were $10,998,000​​​​​​​, $10,253,000, and $9,450,000 at June 30, 2019, December 31, 2018, and June 30, 2018, respectively. PNCI loans classified as TDRs and impaired were $811,000, $615,000, and $1,459,000 at June 30, 2019, December 31, 2018 and June 30, 2018, respectively. The Company had no significant obligations to lend additional funds on Originated or PNCI TDRs as of June 30, 2019, December 31, 2018, or June 30, 2018.
The following tables show certain information regarding TDRs that occurred during the periods indicated:
 
TDR Information for the Three Months Ended June 30, 2019
 
(dollars in thousands)
 
Number
   
Pre-mod

outstanding
principal
balance
    
Post-mod

outstanding
principal
balance
    
Financial
impact due to
TDR taken as
additional
provision
   
Number that
defaulted during
the period
   
Recorded
investment of
TDRs that
defaulted during
the period
   
Financial impact
due to the
default of
previous TDR
taken as charge-
offs or additional
provisions
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
    
    $
    $
    $
—  
      
—  
     $
—  
     $
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total mortgage loans on real estate
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1
     
65
     
68
     
—  
      
—  
      
—  
      
—  
  
Home equity loans
   
1
     
28
     
27
     
27
     
—  
      
—  
      
—  
  
Other
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total consumer loans
   
2
     
93
     
95
     
27
     
—  
      
—  
      
—  
  
Commercial
   
4
     
1,754
     
1,722
     
2
     
     
     
—  
  
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
   
6
    $
1,847
    $
1,817
    $
29
     
—  
     $
—  
     $
—  
  
                                                         
       
  
TDR Information for the Six Months Ended June 30, 2019
 
(dollars in thousands)
 
Number
   
Pre-mod

outstanding
principal
balance
    
Post-mod

outstanding
principal
balance
    
Financial
impact due to
TDR taken as
additional
provision
   
Number that
defaulted during
the period
   
Recorded
investment of
TDRs that
defaulted during
the period
   
Financial impact
due to the
default of
previous TDR
taken as charge-
offs or additional
provisions
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
    
1
    $
163
    $
162
    $
—  
      
—  
     $
—  
     $
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total mortgage loans on real estate
   
1
     
163
     
162
     
—  
      
—  
      
—  
      
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1
     
65
     
68
     
—  
      
—  
      
—  
      
—  
  
Home equity loans
   
2
     
149
     
147
     
29
     
—  
      
—  
      
—  
  
Other
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total consumer loans
   
3
     
214
     
215
     
29
     
—  
      
—  
      
—  
  
Commercial
   
6
     
1,768
     
1,737
     
2
     
1
     
7
     
—  
  
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
   
10
    $
2,145
    $
2,114
    $
31
     
1
    $
7
    $
—  
  
                                                         
       
  
TDR Information for the Three Months Ended June 30, 2018
 
(dollars in thousands)
 
Number
   
Pre-mod

outstanding
principal
balance
    
Post-mod

outstanding
principal
balance
    
Financial
impact due to
TDR taken as
additional
provision
   
Number that
defaulted during
the period
   
Recorded
investment of
TDRs that
defaulted during
the period
   
Financial impact
due to the
default of
previous TDR
taken as charge-
offs or additional
provisions
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
    
—  
     $
—  
     $
—  
     $
—  
      
—  
     $
—  
     $
—  
  
Commercial
   
1
     
34
     
34
     
34
     
—  
      
—  
      
—  
  
                                                         
Total mortgage loans on real estate
   
1
     
34
     
34
     
34
     
—  
      
—  
      
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
     
     
     
—  
      
—  
      
—  
      
—  
  
Home equity loans
   
     
     
     
—  
      
—  
      
—  
      
—  
  
Other
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total consumer loans
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
2
     
416
     
421
     
(2
 )    
4
     
340
     
(2
 )
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
   
3
    $
450
    $
455
    $
32
     
4
    $
340
    $
(2
 )
                                                         
  
TDR Information for the Six Months Ended June 30, 2018
 
(dollars in thousands)
 
Number
   
Pre-mod

outstanding
principal
balance
    
Post-mod

outstanding
principal
balance
    
Financial
impact due to
TDR taken as
additional
provision
   
Number that
defaulted during
the period
   
Recorded
investment of
TDRs that
defaulted during
the period
   
Financial impact
due to the
default of
previous TDR
taken as charge-
offs or additional
provisions
 
Mortgage loans on real estate:
   
     
     
     
     
     
     
 
Residential
1-4
family
    
—  
     $
—  
     $
—  
     $
—  
      
—  
     $
—  
     $
—  
  
Commercial
   
2
     
417
     
417
     
46
     
1
     
169
     
—  
  
                                                         
Total mortgage loans on real estate
   
2
     
417
     
417
     
46
     
1
     
169
     
—  
  
Consumer:
   
     
     
     
     
     
     
 
Home equity lines of credit
   
1
     
133
     
138
     
—  
      
—  
      
—  
      
—  
  
Home equity loans
   
1
     
121
     
121
     
—  
      
—  
      
—  
      
—  
  
Other
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total consumer loans
   
2
     
254
     
259
     
—  
      
—  
      
—  
      
—  
  
Commercial
   
2
     
416
     
421
     
(2
 )    
4
     
340
     
(2
 )
Construction:
   
     
     
     
     
     
     
 
Residential
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
Commercial
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total construction
   
—  
      
—  
      
—  
      
—  
      
—  
      
—  
      
—  
  
                                                         
Total
   
6
    $
1,087
    $
1,097
    $
44
     
5
    $
509
    $
(2
 )
                                                         
Modifications classified as TDRs can include one or a combination of the following: rate modifications, term extensions, interest only modifications, either temporary or long-term, payment modifications, and collateral substitutions/additions.
For all new TDRs, an impairment analysis is conducted. If the loan is determined to be collateral dependent, any additional amount of impairment will be calculated based on the difference between estimated collectible value and the current carrying balance of the loan. This difference could result in an increased provision and is typically charged off. If the asset is determined not to be collateral dependent, the impairment is measured on the net present value difference between the expected cash flows of the restructured loan and the cash flows which would have been received under the original terms. The effect of this could result in a requirement for additional provision to the reserve. The effect of these required provisions for the period are indicated above.
Typically if a
TDR defaults during the period, the loan is then considered collateral dependent and, if it was not already considered collateral dependent, an appropriate provision will be reserved or charge will be taken. The additional provisions required resulting from default of previously modified TDR’s are noted above. Loans that defaulted within the twelve month period subsequent to modification were not considered significant for financial reporting purposes.