LOANS, ALLOWANCE FOR LOAN LOSSES, AND CREDIT QUALITY

The loan composition is summarized as follows.



	December 31, 2018					December 31, 2017
(in thousands)	Amount			% of Total		Amount			% of Total
Commercial & industrial	$	684,920		32	%	$	637,337		31	%
Owner-occupied commercial real estate (“CRE”)	441,353			20		430,043			21
Agricultural (“AG”) production	35,625			2		35,455			2
AG real estate	53,444			2		51,778			2
CRE investment	343,652			16		314,463			15
Construction & land development	80,599			4		89,660			4
Residential construction	30,926			1		36,995			2
Residential first mortgage	357,841			17		363,352			17
Residential junior mortgage	111,328			5		106,027			5
Retail & other	26,493			1		22,815			1
Loans	2,166,181			100	%	2,087,925			100	%
Less ALLL	13,153					12,653
Loans, net	$	2,153,028				$	2,075,272
ALLL to loans	0.61		%			0.61		%

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



	December 31, 2018										December 31, 2017
(in thousands)	Originated Amount			% of Total		Acquired Amount			% of Total		Originated Amount			% of Total		Acquired Amount			% of Total
Commercial & industrial	$	568,100		38	%	$	116,820		17	%	$	488,600		39	%	$	148,737		17	%
Owner-occupied CRE	283,531			19		157,822			23		237,548			19		192,495			23
AG production	11,113			1		24,512			4		11,102			1		24,353			3
AG real estate	31,374			2		22,070			3		27,831			2		23,947			3
CRE investment	171,087			12		172,565			25		113,862			9		200,601			24
Construction & land development	66,478			4		14,121			2		56,061			5		33,599			4
Residential construction	30,926			2		—			—		33,615			3		3,380			—
Residential first mortgage	220,368			15		137,473			20		191,186			15		172,166			20
Residential junior mortgage	78,379			5		32,949			5		65,643			5		40,384			5
Retail & other	23,809			2		2,684			1		18,254			2		4,561			1
Loans	1,485,165			100	%	681,016			100	%	1,243,702			100	%	844,223			100	%
Less ALLL	11,448					1,705					10,542					2,111
Loans, net	$	1,473,717				$	679,311				$	1,233,160				$	842,112
ALLL to loans	0.77		%			0.25		%			0.85		%			0.25		%

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. See Note 1 for the Company’s accounting policy on loans and the allowance for loan losses.

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



	Years Ended December 31,
(in thousands)	2018			2017			2016
Beginning balance	$	12,653		$	11,820		$	10,307
Provision for loan losses	1,600			2,325			1,800
Charge-offs	(1,213		)	(1,604		)	(584		)
Recoveries	113			112			297
Net charge-offs	(1,100		)	(1,492		)	(287		)
Ending balance	$	13,153		$	12,653		$	11,820

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 year ended December 31, 2018.



	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	(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	40.1		%	21.6		%	0.9		%	2.3		%	11.2		%	3.9		%	1.6		%	12.5		%	3.6		%	2.3		%	100.0		%
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	(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	40.9		%	21.3		%	1.0		%	2.2		%	10.7		%	3.8		%	1.8		%	12.2		%	3.6		%	2.5		%	100.0		%
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	1			1			—			—			—			—			—			4			5			(3		)	8
Ending balance	$	588		$	408		$	11		$	46		$	240		$	79		$	—		$	246		$	64		$	23		$	1,705
As % of ALLL	34.5		%	23.9		%	0.6		%	2.7		%	14.1		%	4.6		%	—		%	14.4		%	3.8		%	1.4		%	100.0		%
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

For comparison, 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 year ended December 31, 2017.



	TOTAL – Year Ended December 31, 2017
(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	$	3,919		$	2,867		$	150		$	285		$	1,124		$	774		$	304		$	1,784		$	461		$	152		$	11,820
Provision	2,419			(290		)	(21		)	11			263			(35		)	(53		)	(192		)	96			127			2,325
Charge-offs	(1,442		)	—			—			—			—			(13		)	—			(8		)	(72		)	(69		)	(1,604		)
Recoveries	38			30			—			—			1			—			—			25			3			15			112
Net charge-offs	(1,404		)	30			—			—			1			(13		)	—			17			(69		)	(54		)	(1,492		)
Ending balance	$	4,934		$	2,607		$	129		$	296		$	1,388		$	726		$	251		$	1,609		$	488		$	225		$	12,653
As % of ALLL	39.0		%	20.6		%	1.0		%	2.3		%	11.0		%	5.7		%	2.0		%	12.7		%	3.9		%	1.8		%	100.0		%
ALLL:
Individually evaluated	$	163		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	163
Collectively evaluated	4,771			2,607			129			296			1,388			726			251			1,609			488			225			12,490
Ending balance	$	4,934		$	2,607		$	129		$	296		$	1,388		$	726		$	251		$	1,609		$	488		$	225		$	12,653
Loans:
Individually evaluated	$	5,870		$	1,689		$	—		$	248		$	5,290		$	1,053		$	80		$	2,801		$	178		$	12		$	17,221
Collectively evaluated	631,467			428,354			35,455			51,530			309,173			88,607			36,915			360,551			105,849			22,803			2,070,704
Total loans	$	637,337		$	430,043		$	35,455		$	51,778		$	314,463		$	89,660		$	36,995		$	363,352		$	106,027		$	22,815		$	2,087,925
Less ALLL	4,934			2,607			129			296			1,388			726			251			1,609			488			225			12,653
Net loans	$	632,403		$	427,436		$	35,326		$	51,482		$	313,075		$	88,934		$	36,744		$	361,743		$	105,539		$	22,590		$	2,075,272

As a further breakdown, the December 31, 2017 ALLL is summarized by originated and acquired as follows.



	Originated – Year Ended December 31, 2017
(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	$	3,150		$	2,263		$	122		$	222		$	893		$	656		$	266		$	1,372		$	373		$	132		$	9,449
Provision	2,429			(172		)	(10		)	13			261			(28		)	(66		)	(69		)	105			122			2,585
Charge-offs	(1,388		)	—			—			—			—			—			—			(8		)	(72		)	(69		)	(1,537		)
Recoveries	1			24			—			—			—			—			—			2			3			15			45
Net charge-offs	(1,387		)	24			—			—			—			—			—			(6		)	(69		)	(54		)	(1,492		)
Ending balance	$	4,192		$	2,115		$	112		$	235		$	1,154		$	628		$	200		$	1,297		$	409		$	200		$	10,542
As % of ALLL	39.8		%	20.1		%	1.1		%	2.2		%	10.9		%	6.0		%	1.9		%	12.3		%	3.9		%	1.8		%	100.0		%
ALLL:
Individually evaluated	$	163		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	163
Collectively evaluated	4,029			2,115			112			235			1,154			628			200			1,297			409			200			10,379
Ending balance	$	4,192		$	2,115		$	112		$	235		$	1,154		$	628		$	200		$	1,297		$	409		$	200		$	10,542
Loans:
Individually evaluated	$	2,189		$	—		$	—		$	—		$	549		$	—		$	—		$	253		$	12		$	—		$	3,003
Collectively evaluated	486,411			237,548			11,102			27,831			113,313			56,061			33,615			190,933			65,631			18,254			1,240,699
Total loans	$	488,600		$	237,548		$	11,102		$	27,831		$	113,862		$	56,061		$	33,615		$	191,186		$	65,643		$	18,254		$	1,243,702
Less ALLL	4,192			2,115			112			235			1,154			628			200			1,297			409			200			10,542
Net loans	$	484,408		$	235,433		$	10,990		$	27,596		$	112,708		$	55,433		$	33,415		$	189,889		$	65,234		$	18,054		$	1,233,160



	Acquired – Year Ended December 31, 2017
(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	$	769		$	604		$	28		$	63		$	231		$	118		$	38		$	412		$	88		$	20		$	2,371
Provision	(10		)	(118		)	(11		)	(2		)	2			(7		)	13			(123		)	(9		)	5			(260		)
Charge-offs	(54		)	—			—			—			—			(13		)	—			—			—			—			(67		)
Recoveries	37			6			—			—			1			—			—			23			—			—			67
Net charge-offs	(17		)	6			—			—			1			(13		)	—			23			—			—			—
Ending balance	$	742		$	492		$	17		$	61		$	234		$	98		$	51		$	312		$	79		$	25		$	2,111
As % of ALLL	35.1		%	23.3		%	0.8		%	2.9		%	11.1		%	4.6		%	2.4		%	14.8		%	3.7		%	1.3		%	100.0		%
ALLL:
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated	742			492			17			61			234			98			51			312			79			25			2,111
Ending balance	$	742		$	492		$	17		$	61		$	234		$	98		$	51		$	312		$	79		$	25		$	2,111
Loans:
Individually evaluated	$	3,681		$	1,689		$	—		$	248		$	4,741		$	1,053		$	80		$	2,548		$	166		$	12		$	14,218
Collectively evaluated	145,056			190,806			24,353			23,699			195,860			32,546			3,300			169,618			40,218			4,549			830,005
Total loans	$	148,737		$	192,495		$	24,353		$	23,947		$	200,601		$	33,599		$	3,380		$	172,166		$	40,384		$	4,561		$	844,223
Less ALLL	742			492			17			61			234			98			51			312			79			25			2,111
Net loans	$	147,995		$	192,003		$	24,336		$	23,886		$	200,367		$	33,501		$	3,329		$	171,854		$	40,305		$	4,536		$	842,112

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



	Total Nonaccrual Loans
(in thousands)	December 31, 2018			% to Total		December 31, 2017			% to Total
Commercial & industrial	$	2,816		52	%	$	6,016		46	%
Owner-occupied CRE	673			12		533			4
AG production	—			—		—			—
AG real estate	164			3		186			1
CRE investment	210			4		4,531			35
Construction & land development	80			1		—			—
Residential construction	1			—		80			1
Residential first mortgage	1,265			23		1,587			12
Residential junior mortgage	262			5		158			1
Retail & other	—			—		4			—
Nonaccrual loans	$	5,471		100	%	$	13,095		100	%
Percent of total loans	0.2		%			0.6		%



	December 31, 2018										December 31, 2017
(in thousands)	Originated Amount			% of Total		Acquired Amount			% of Total		Originated Amount			% of Total		Acquired Amount			% of Total
Commercial & industrial	$	352		25	%	$	2,464		61	%	$	2,296		70	%	$	3,720		38	%
Owner-occupied CRE	362			26		311			8		86			3		447			4
AG production	—			—		—			—		—			—		—			—
AG real estate	—			—		164			4		—			—		186			2
CRE investment	—			—		210			5		549			17		3,982			41
Construction & land development	—			—		80			2		—			—		—			—
Residential construction	1			—		—			—		—			—		80			1
Residential first mortgage	629			45		636			15		331			10		1,256			13
Residential junior mortgage	65			4		197			5		12			—		146			1
Retail & other	—			—		—			—		4			—		—			—
Nonaccrual loans	$	1,409		100	%	$	4,062		100	%	$	3,278		100	%	$	9,817		100	%
Percent of nonaccrual loans	25.8		%			74.2		%			25.0		%			75.0		%

The following tables present past due loans by portfolio segment.



	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		%



	December 31, 2017
(in thousands)	30-89 Days Past Due (accruing)			90 Days & Over or nonaccrual			Current			Total
Commercial & industrial	$	211		$	6,016		$	631,110		$	637,337
Owner-occupied CRE	671			533			428,839			430,043
AG production	30			—			35,425			35,455
AG real estate	—			186			51,592			51,778
CRE investment	—			4,531			309,932			314,463
Construction & land development	76			—			89,584			89,660
Residential construction	587			80			36,328			36,995
Residential first mortgage	1,039			1,587			360,726			363,352
Residential junior mortgage	14			158			105,855			106,027
Retail & other	4			4			22,807			22,815
Total loans	$	2,632		$	13,095		$	2,072,198		$	2,087,925
Percent of total loans	0.1		%	0.6		%	99.3		%	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.



	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 loans	95.1		%	2.7		%	0.9		%	1.3		%	—		%	—		%	100.0		%



	December 31, 2017
(in thousands)	Grades 1- 4			Grade 5			Grade 6			Grade 7			Grade 8			Grade 9			Total
Commercial & industrial	$	597,854		$	12,999		$	16,129		$	10,355		$	—		$	—		$	637,337
Owner-occupied CRE	397,357			23,340			6,442			2,904			—			—			430,043
AG production	30,431			4,000			—			1,024			—			—			35,455
AG real estate	44,321			4,873			—			2,584			—			—			51,778
CRE investment	299,926			8,399			190			5,948			—			—			314,463
Construction & land development	86,011			2,758			17			874			—			—			89,660
Residential construction	36,915			—			—			80			—			—			36,995
Residential first mortgage	358,067			1,868			683			2,734			—			—			363,352
Residential junior mortgage	105,736			117			—			174			—			—			106,027
Retail & other	22,811			—			—			4			—			—			22,815
Total loans	$	1,979,429		$	58,354		$	23,461		$	26,681		$	—		$	—		$	2,087,925
Percent of total loans	94.8		%	2.8		%	1.1		%	1.3		%	—		%	—		%	100.0		%

The following tables present 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



	December 31, 2017
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial & industrial	$	5,870	$	10,063	$	163	$	6,586	$	718
Owner-occupied CRE	1,689		2,256		—		1,333		132
AG production	—		10		—		—		—
AG real estate	248		307		—		233		26
CRE investment	5,290		8,102		—		5,411		465
Construction & land development	1,053		1,053		—		813		57
Residential construction	80		983		—		91		27
Residential first mortgage	2,801		3,653		—		2,177		180
Residential junior mortgage	178		507		—		154		17
Retail & other	12		14		—		12		1
Total	$	17,221	$	26,948	$	163	$	16,810	$	1,623
Originated impaired loans	$	3,003	$	3,003	$	163	$	2,964	$	241
Acquired impaired loans	14,218		23,945		—		13,846		1,382
Total	$	17,221	$	26,948	$	163	$	16,810	$	1,623

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 December 31, 2018, $9.4 million of the $43.6 million remain in impaired loans.



Nonaccretable discount on PCI loans:	Years Ended December 31,
(in thousands)	2018			2017
Balance at beginning of period	$	9,471		$	14,327
Acquired balance, net	—			8,352
Accretion to loan interest income	(1,976		)	(7,995		)
Transferred to accretable	(990		)	(1,936		)
Disposals of loans	(97		)	(3,277		)
Balance at end of period	$	6,408		$	9,471

Troubled Debt Restructurings

At December 31, 2018, there were four loans classified as troubled debt restructurings with a current outstanding balance of $0.6 million and a pre-modification balance of $2.7 million. In comparison, at December 31, 2017, there were eight loans classified as troubled debt restructurings with an outstanding balance of $5.6 million and a pre-modification balance of $6.9 million. There were no loans which were classified as troubled debt restructurings during the previous twelve months that subsequently defaulted during 2018. As of December 31, 2018, there were no commitments to lend additional funds to debtors whose terms have been modified in troubled debt restructurings.