NOTE 3: Loans

Major classifications of loans are summarized as follows:


	June 30,		December 31,
(Dollars in thousands)	2019		2018
Real estate – residential mortgage	$	182,981	$	184,901
Real estate – construction 1		58,372		54,461
Commercial, financial and agricultural 2		474,087		455,935
Equity lines		53,741		55,660
Consumer		13,145		15,009
Consumer finance		308,009		296,154
		1,090,335		1,062,120
Less allowance for loan losses		(33,401)		(34,023)
Loans, net	$	1,056,934	$	1,028,097

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

Includes the Corporation’s commercial real estate lending, land acquisition and development lending, builder line lending and commercial business lending.

Consumer loans included $232,000 and $275,000 of demand deposit overdrafts at June 30, 2019 and December 31, 2018, respectively.

The outstanding principal balance and the carrying amount of loans acquired pursuant to the Corporation's acquisition of Central Virginia Bank (CVB) on October 1, 2013 that were recorded at fair value at the acquisition date in the Consolidated Balance Sheets are as follows:


	June 30, 2019						December 31, 2018
	Acquired Loans -		Acquired Loans -				Acquired Loans -		Acquired Loans -
	Purchased		Purchased		Acquired Loans -		Purchased		Purchased		Acquired Loans -
(Dollars in thousands)	Credit Impaired		Performing		Total		Credit Impaired		Performing		Total
Outstanding principal balance	$	7,126	$	35,570	$	42,696	$	9,734	$	38,768	$	48,502
Carrying amount
Real estate – residential mortgage	$	115	$	7,856	$	7,971	$	284	$	8,823	$	9,107
Commercial, financial and agricultural1		460		17,070		17,530		1,461		18,982		20,443
Equity lines		35		8,938		8,973		90		9,063		9,153
Consumer		—		4		4		—		6		6
Total acquired loans	$	610	$	33,868	$	34,478	$	1,835	$	36,874	$	38,709

Includes acquired loans classified by the Corporation as commercial real estate lending and commercial business lending.

The following table presents a summary of the change in the accretable yield of loans classified as purchased credit impaired (PCI):


	Six Months Ended June 30,
(Dollars in thousands)	2019		2018
Accretable yield, balance at beginning of period	$	5,987	$	7,304
Accretion		(1,760)		(1,423)
Reclassification of nonaccretable difference due to improvement in expected cash flows		727		1,217
Other changes, net		349		(422)
Accretable yield, balance at end of period	$	5,303	$	6,676

Loans on nonaccrual status were as follows:


	June 30,		December 31,
(Dollars in thousands)	2019		2018
Real estate – residential mortgage	$	585	$	594
Commercial, financial and agricultural:
Commercial business lending		—		24
Equity lines		322		883
Consumer		121		—
Consumer finance		305		712
Total loans on nonaccrual status	$	1,333	$	2,213

The past due status of loans as of June 30, 2019 was as follows:


															90+ Days
	30 - 59 Days		60 - 89 Days		90+ Days		Total								Past Due and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		PCI		Current1		Total Loans		Accruing
Real estate – residential mortgage	$	1,231	$	276	$	37	$	1,544	$	115	$	181,322	$	182,981	$	—
Real estate – construction:
Construction lending		—		—		—		—		—		46,324		46,324		—
Consumer lot lending		—		—		—		—		—		12,048		12,048		—
Commercial, financial and agricultural:
Commercial real estate lending		—		—		379		379		460		314,930		315,769		379
Land acquisition and development lending		—		—		—		—		—		43,515		43,515		—
Builder line lending		—		—		—		—		—		34,348		34,348		—
Commercial business lending		—		—		—		—		—		80,455		80,455		—
Equity lines		142		—		195		337		35		53,369		53,741		9
Consumer		10		5		—		15		—		13,130		13,145		1
Consumer finance		8,973		1,472		305		10,750		—		297,259		308,009		—
Total	$	10,356	$	1,753	$	916	$	13,025	$	610	$	1,076,700	$	1,090,335	$	389

For the purposes of the table above, “Current” includes loans that are 1-29 days past due.

The table above includes nonaccrual loans that are current of $721,000, 30-59 days past due of $74,000, 60-89 days past due of $10,000 and 90+ days past due of $528,000.

The past due status of loans as of December 31, 2018 was as follows:


															90+ Days
	30 - 59 Days		60 - 89 Days		90+ Days		Total								Past Due and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		PCI		Current1		Total Loans		Accruing
Real estate – residential mortgage	$	1,221	$	—	$	37	$	1,258	$	284	$	183,359	$	184,901	$	9
Real estate – construction:
Construction lending		—		—		—		—		—		42,051		42,051		—
Consumer lot lending		—		—		—		—		—		12,410		12,410		—
Commercial, financial and agricultural:
Commercial real estate lending		—		—		315		315		1,461		309,057		310,833		315
Land acquisition and development lending		—		—		—		—		—		43,404		43,404		—
Builder line lending		—		—		—		—		—		31,201		31,201		—
Commercial business lending		163		19		24		206		—		70,291		70,497		—
Equity lines		46		584		325		955		90		54,615		55,660		—
Consumer		31		—		—		31		—		14,978		15,009		—
Consumer finance		11,419		1,965		712		14,096		—		282,058		296,154		—
Total	$	12,880	$	2,568	$	1,413	$	16,861	$	1,835	$	1,043,424	$	1,062,120	$	324

For the purposes of the table above, “Current” includes loans that are 1-29 days past due.

The table above includes nonaccrual loans that are current of $458,000, 30-59 days past due of $97,000, 60‑89 days past due of $560,000 and 90+ days past due of $1.10 million.

There was one loan modification during the three and six months ended June 30, 2019 that was classified as a troubled debt restructuring (TDR). This TDR was a consumer loan with a recorded investment of $121,000 at the time of its modification and included a modification of the loan’s interest rate. There were no loan modifications that were classified as TDRs during the first six months of 2018.

All TDRs are considered impaired loans and are individually evaluated in the determination of the allowance for loan losses. A TDR payment default occurs when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or a TDR becomes 90 days or more past due. The specific reserve associated with a TDR is reevaluated when a TDR payment default occurs. There were no TDR payment defaults during the first six months of 2019 or 2018.

Impaired loans, which included TDRs of $4.45 million, and the related allowance at June 30, 2019 were as follows:



			Recorded		Recorded
			Investment		Investment				Average
	Unpaid		in Loans		in Loans				Balance-		Interest
	Principal		without		with		Related		Impaired		Income
(Dollars in thousands)	Balance		Specific Reserve		Specific Reserve		Allowance		Loans		Recognized
Real estate – residential mortgage	$	2,824	$	1,264	$	1,463	$	81	$	2,798	$	66
Commercial, financial and agricultural:
Commercial real estate lending		1,596		13		1,556		70		1,608		42
Equity lines		225		30		187		187		218		1
Consumer		131		—		125		121		126		—
Total	$	4,776	$	1,307	$	3,331	$	459	$	4,750	$	109

Impaired loans, which included TDRs of $5.45 million, and the related allowance at December 31, 2018 were as follows:



			Recorded		Recorded
			Investment		Investment				Average
	Unpaid		in Loans		in Loans				Balance-		Interest
	Principal		without		with		Related		Impaired		Income
(Dollars in thousands)	Balance		Specific Reserve		Specific Reserve		Allowance		Loans		Recognized
Real estate – residential mortgage	$	3,057	$	1,288	$	1,677	$	92	$	3,056	$	142
Commercial, financial and agricultural:
Commercial real estate lending		2,468		1,498		927		10		2,653		132
Commercial business lending		33		25		—		—		26		—
Equity lines		365		31		326		326		359		2
Consumer		5		—		5		—		5		—
Total	$	5,928	$	2,842	$	2,935	$	428	$	6,099	$	276