Loans and Allowance for Loan Losses

Loans

Loans that management has the intent and ability to hold for the forseeable future or until maturity or pay-off are considered held-for-investment. Loans are stated at amortized cost, net of the allowance for loan losses. Amortized cost, or the recorded investment, is the principal balance outstanding, adjusted for charge-offs, deferred loan fees and direct costs on originated loans and unamortized premiums or discounts on purchased loans. Accrued interest receivable is reported in other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets. Interest income is accrued on the principal balance outstanding and is recognized on the interest method. Loan fees, net of direct costs and unamortized premiums and discounts are deferred and amortized as an adjustment to the yield of the related loan over the term of the loan and are included as a noncash adjustment in the net cash provided by operating activities in the Company’s Unaudited Condensed Consolidated Statement of Cash Flows.

The Company has elected to not measure an allowance on its accrued interest receivable as a result of the timely reversal of interest receivable deemed uncollectible. It is the general policy of the Company to stop accruing interest income and apply subsequent interest payments as principal reductions when any commercial, industrial, commercial real estate or construction loan is 90 days or more past due as to principal or interest and/or the ultimate collection of either is in doubt, unless collection of both principal and interest is assured by way of collateralization, guarantees or other security. Accrual of interest income on consumer loans, including residential real estate loans, is generally suspended when any payment of principal or interest is more than 90 days delinquent or when foreclosure proceedings have been initiated or repossession of the underlying collateral has occurred. When a loan is placed on a nonaccrual status, any interest previously accrued but not collected is reversed against current interest income unless the fair value of the collateral for the loan is sufficient to cover the accrued interest.

In general, a loan is returned to accrual status when none of its principal and interest is due and unpaid and the Company expects repayments of the remaining contractual principal and interest or when it is determined to be well secured and in the process of collection. Charge-offs on commercial loans are recognized when available information confirms that some or all of the balance is uncollectible. Consumer loans are subject to mandatory charge-off at a specified delinquency date consistent with regulatory guidelines. In general, charge-offs on consumer loans are recognized at the earlier of the month of liquidation or the month the loan becomes 120 days past due; residential loan deficiencies are charged off in the month the loan becomes 180 days past due; and credit card loans are charged off before the end of the month when the loan becomes 180 days past due with the related interest accrued but not collected reversed against current income. The Company determines past due or delinquency status of a loan based on contractual payment terms.

Troubled Debt Restructurings

A loan is accounted for as a TDR if the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. A TDR typically involves a modification of terms such as establishment of a below market interest rate, a reduction in the principal amount of the loan, a reduction of accrued interest or an extension of the maturity date at a stated interest rate lower than the current market rate for a new loan with similar risk. The Company’s policy for measuring the allowance for credit losses on TDRs, including TDRs that have defaulted, is consistent with its policy for other loans held for investment. The Company’s policy for returning nonaccrual TDRs to accrual status is consistent with its return to accrual policy for all other loans.

Allowance for Loan Losses

The allowance for loan losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Management uses discounted cash flows, default probabilities and loss severities to calculate the allowance for loan losses.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, gross domestic product, or other relevant factors. The Company has internally developed a macroeconomic forecast which projects over a four-year reasonable and supportable forecast period. Management may change the horizon of the forecast in response to changes in portfolio composition or performance as well as changes in the economic environment. After the forecast period, the Company reverts to long run historical average default probabilities and loss severities using a linear model with a variable reversion speed determined on a portfolio basis, for those portfolios with sufficient history.

Economic Forecast: Management selects economic variables it believes to be most relevant based on the composition of the loan portfolio and customer base, including forecasted levels of employment, gross domestic product, real estate price indices, interest rates and corporate bond spreads. The Company uses an internally formulated and approved single baseline economic scenario for the collective estimation. However, management will assess the uncertainty associated with the baseline scenario in each period, and may make adjustments based on alternative scenarios applied through the qualitative framework.

Determining the Contractual Term: Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower. While the Company does have contracts with extension or renewal options included, the vast majority are considered unconditionally cancellable.

The Company monitors the entire loan portfolio so that risks in the portfolio can be identified on a timely basis and an appropriate allowance maintained. Loan review procedures, including loan grading, periodic credit rescoring and trend analysis of portfolio performance, are utilized by the Company in order to ensure that potential problem loans are identified. Management’s involvement continues throughout the process and includes participation in the work-out process and recovery activity. These formalized procedures are monitored internally and by regulatory agencies. The allowance for credit losses is measured on a collective basis when similar risk characteristics exist. The Company has identified the following portfolio segments: commercial, financial and agricultural; commercial real estate; residential real estate; and consumer. Commercial loans utilize internal risk grades aligned with regulatory classifications to assess risks. Consumer loans utilize credit scoring models as the basis for assessing risk of consumer borrowers. The Company estimates the present value of cash shortfalls resulting from the sum of the marginal losses occurring in each time period, on an annual basis, over the remaining life of the loan. The marginal losses are derived from the projection of principal balance, inclusive of principal cash flow and prepayment schedules, and parameters reflecting the severity of losses (LGD) in the case of default that is given by the marginal probability of default (Marginal PD) for each period of the portfolio’s lifetime. The Company also includes the considerations of a forecasted macroeconomic scenario by adjusting the PDs and LGDs applied, with econometric models dependent on the aforementioned correlated macroeconomic variables included in the forecasted scenarios.

The allowance for credit losses on loans that do not share similar risk characteristics are estimated on an individual basis. Individual evaluations are typically performed for nonaccrual loans and certain accruing loans, based on dollar thresholds. These loans receive specific reserves allocated based on the present value of the loan's expected future cash flows, discounted at the loan's original effective rate, except where foreclosure or liquidation is probable or when the cash flows are predominately dependent on the value of the collateral. In these circumstances, impairment is measured based upon the fair value less cost to sell of the collateral.

The Company adjusts the loss estimates described above when it is determined that expected credit losses may not have been captured in the loss estimates. To adjust the loss estimates, the Company considers qualitative factors such as changes in risk profile/composition; current economic and business conditions and uncertainty of outlook, potentially including alternative economic scenarios; limitations in the data or models used in the collective estimation; credit risk management practices; and other external/environmental factors.

In order to estimate an allowance for credit losses on letters of credit and unfunded commitments, the Company uses a process consistent with that used in developing the allowance for loan losses. The Company estimates future fundings of current, noncancellable, unfunded commitments based on historical funding experience of these commitments before default and adjusted based on historical cancellations. Allowance for loan loss factors, which are based on product and loan grade, and are consistent with the factors used for portfolio loans, are applied to these funding estimates and discounted to the present value to arrive at the reserve balance. The allowance for credit losses on letters of credit and unfunded commitments is recognized in accrued expenses and other liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets with changes recognized within noninterest expense in the Company’s Unaudited Condensed Consolidated Statements of Income. See Note 8, Commitments, Contingencies and Guarantees for additional information.

The following table presents the composition of the loan portfolio.



	March 31, 2020		December 31, 2019
	(In Thousands)
Commercial loans:
Commercial, financial and agricultural	$	27,832,113	$	24,432,238
Real estate – construction	2,171,714		2,028,682
Commercial real estate – mortgage	13,853,405		13,861,478
Total commercial loans	43,857,232		40,322,398
Consumer loans:
Residential real estate – mortgage	13,446,018		13,533,954
Equity lines of credit	2,611,350		2,592,680
Equity loans	229,369		244,968
Credit card	1,023,372		1,002,365
Consumer direct	2,276,045		2,338,142
Consumer indirect	4,096,028		3,912,350
Total consumer loans	23,682,182		23,624,459
Total loans	$	67,539,414	$	63,946,857

Accrued interest receivable totaling $206 million and $205 million at March 31, 2020 and December 31, 2019, respectively, was reported in other assets on the Company's Unaudited Condensed Balance Sheets and is excluded from the related footnote disclosures.

Allowance for Loan Losses and Credit Quality

The following table, which excludes loans held for sale, presents a summary of the activity in the allowance for loan losses. The portion of the allowance that has not been identified by the Company as related to specific loan categories has been allocated to the individual loan categories on a pro rata basis for purposes of the table below:



	Commercial, Financial and Agricultural			Commercial Real Estate (1)			Residential Real Estate (2)			Consumer (3)			Total
	(In Thousands)
Three months ended March 31, 2020
Allowance for loan losses:
Beginning balance, prior to adoption of ASC 326	$	408,197		$	118,633		$	99,089		$	295,074		$	920,993
Impact of adopting ASC 326	18,389			(35,034		)	47,390			154,186			184,931
Beginning balance, after adoption of ASC 326	426,586			83,599			146,479			449,260			1,105,924
Provision for loan losses	140,413			24,548			7,032			184,953			356,946
Loans charged-off	(24,207		)	(87		)	(1,999		)	(115,866		)	(142,159		)
Loan recoveries	5,193			173			1,423			23,572			30,361
Net charge-offs	(19,014		)	86			(576		)	(92,294		)	(111,798		)
Ending balance	$	547,985		$	108,233		$	152,935		$	541,919		$	1,351,072
Three months ended March 31, 2019
Allowance for loan losses:
Beginning balance	$	393,315		$	112,437		$	101,929		$	277,561		$	885,242
Provision for loan losses	59,180			4,662			2,183			116,267			182,292
Loans charged-off	(9,503		)	(25		)	(5,012		)	(112,873		)	(127,413		)
Loan recoveries	4,760			1,462			3,589			16,090			25,901
Net charge-offs	(4,743		)	1,437			(1,423		)	(96,783		)	(101,512		)
Ending balance	$	447,752		$	118,536		$	102,689		$	297,045		$	966,022


(1)	Includes commercial real estate – mortgage and real estate – construction loans.


(2)	Includes residential real estate – mortgage, equity lines of credit and equity loans.


(3)	Includes credit card, consumer direct and consumer indirect loans.

The increase in the allowance for loan losses from January 1, 2020 to March 31, 2020, was primarily driven by the deteriorating economic outlook resulting from the COVID-19 pandemic as well as the impact of declining oil prices.

The table below provides a summary of the allowance for loan losses and related loan balances by portfolio at December 31, 2019.



	Commercial, Financial and Agricultural		Commercial Real Estate (1)		Residential Real Estate (2)		Consumer (3)		Total
	(In Thousands)
December 31, 2019
Ending balance of allowance attributable to loans:
Individually evaluated for impairment	$	88,164	$	13,255	$	22,775	$	2,638	$	126,832
Collectively evaluated for impairment	320,033		105,378		76,314		292,436		794,161
Total allowance for loan losses	$	408,197	$	118,633	$	99,089	$	295,074	$	920,993
Ending balance of loans:
Individually evaluated for impairment	$	238,653	$	78,301	$	155,728	$	13,362	$	486,044
Collectively evaluated for impairment	24,193,585		15,811,859		16,215,874		7,239,495		63,460,813
Total loans	$	24,432,238	$	15,890,160	$	16,371,602	$	7,252,857	$	63,946,857


(1)	Includes commercial real estate – mortgage and real estate – construction loans.


(2)	Includes residential real estate – mortgage, equity lines of credit and equity loans.


(3)	Includes credit card, consumer direct and consumer indirect loans.

The following table presents information on nonaccrual loans, by loan class at March 31, 2020.



	March 31, 2020
	Nonaccrual		Nonaccrual With No Recorded Allowance
	(In Thousands)
Commercial, financial and agricultural	$	323,881	$	34,522
Real estate – construction	13,676		—
Commercial real estate – mortgage	114,839		33,438
Residential real estate – mortgage	147,058		—
Equity lines of credit	33,354		—
Equity loans	8,027		—
Credit card	—		—
Consumer direct	7,160		—
Consumer indirect	28,721		—
Total loans	$	676,716	$	67,960

The following table presents information on individually evaluated impaired loans, by loan class at December 31, 2019.



	December 31, 2019
	Individually Evaluated Impaired Loans With No Recorded Allowance						Individually Evaluated Impaired Loans With a Recorded Allowance
	Recorded Investment		Unpaid Principal Balance		Allowance		Recorded Investment		Unpaid Principal Balance		Allowance
	(In Thousands)
Commercial, financial and agricultural	$	51,203	$	52,991	$	—	$	187,450	$	249,486	$	88,164
Real estate – construction	—		—		—		5,972		5,979		850
Commercial real estate – mortgage	46,232		51,286		—		26,097		27,757		12,405
Residential real estate – mortgage	—		—		—		111,623		111,623		8,974
Equity lines of credit	—		—		—		15,466		15,472		10,896
Equity loans	—		—		—		28,639		29,488		2,905
Credit card	—		—		—		—		—		—
Consumer direct	—		—		—		11,601		13,596		1,903
Consumer indirect	—		—		—		1,761		1,761		735
Total loans	$	97,435	$	104,277	$	—	$	388,609	$	455,162	$	126,832

The following table presents information on individually impaired loans, by loan class for the three months ended March 31, 2019.



	Three Months Ended March 31, 2019
	Average Recorded Investment		Interest Income Recognized
	(In Thousands)
Commercial, financial and agricultural	$	413,888	$	963
Real estate – construction	134		2
Commercial real estate – mortgage	82,864		215
Residential real estate – mortgage	106,397		649
Equity lines of credit	15,257		174
Equity loans	31,718		276
Credit card	—		—
Consumer direct	5,559		68
Consumer indirect	364		—
Total loans	$	656,181	$	2,347

The Company monitors the credit quality of its commercial portfolio using an internal dual risk rating, which considers both the obligor and the facility. The obligor risk ratings are defined by ranges of default probabilities of the borrowers, through internally assigned letter grades (AAA through D2) and the facility risk ratings are defined by ranges of the loss given default. The combination of those two approaches results in the assessment of the likelihood of loss and it is mapped to the regulatory classifications. The Company assigns internal risk ratings at loan origination and at regular intervals subsequent to origination. Loan review intervals are dependent on the size and risk grade of the loan, and are generally conducted at least annually. Additional reviews are conducted when information affecting the loan’s risk grade becomes available. The general characteristics of the risk grades are as follows:

•

The Company’s internally assigned letter grades “AAA” through “B-” correspond to the regulatory classification “Pass.” These loans do not have any identified potential or well-defined weaknesses and have a high likelihood of orderly repayment. Exceptions exist when either the facility is fully secured by a CD and held at the Company or the facility is secured by properly margined and controlled marketable securities.

•

Internally assigned letter grades “CCC+” through “CCC” correspond to the regulatory classification “Special Mention.” Loans within this classification have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Special mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

•

Internally assigned letter grades “CCC-” through “D1” correspond to the regulatory classification “Substandard.” A loan classified as substandard is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.


•	The internally assigned letter grade “D2” corresponds to the regulatory classification “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in a loan classified as 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 or improbable.

The Company considers payment history as the best indicator of credit quality for the consumer portfolio. Nonperforming loans in the tables below include loans classified as nonaccrual, loans 90 days or more past due and loans modified in a TDR 90 days or more past due.

The following tables, which exclude loans held for sale, illustrate the credit quality indicators associated with the Company’s loans, by loan class.



	Commercial
	March 31, 2020
	Recorded Investment of Term Loans by Origination Year
	2020		2019		2018		2017		2016		Prior		Recorded Investment of Revolving Loans		Recorded Investment of Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Commercial, financial and agricultural
Pass	$	1,106,835	$	3,278,768	$	2,917,757	$	3,319,000	$	1,164,840	$	3,965,678	$	10,814,825	$	—	$	26,567,703
Special Mention	3		15,162		63,090		101,070		25,458		93,458		331,603		—		629,844
Substandard	—		18,569		73,723		17,835		35,367		91,158		304,282		—		540,934
Doubtful	1,328		—		29,107		4,158		20,687		18,860		19,492		—		93,632
Total commercial, financial and agricultural	$	1,108,166	$	3,312,499	$	3,083,677	$	3,442,063	$	1,246,352	$	4,169,154	$	11,470,202	$	—	$	27,832,113
Real estate - construction
Pass	$	54,956	$	598,239	$	735,319	$	428,388	$	103,582	$	78,487	$	144,882	$	—	$	2,143,853
Special Mention	—		—		—		—		1,486		2,499		—		—		3,985
Substandard	—		5,637		7,749		—		5,837		4,653		—		—		23,876
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate - construction	$	54,956	$	603,876	$	743,068	$	428,388	$	110,905	$	85,639	$	144,882	$	—	$	2,171,714
Commercial real estate - mortgage
Pass	$	621,191	$	3,201,350	$	3,856,095	$	1,759,006	$	1,085,493	$	2,710,254	$	236,345	$	—	$	13,469,734
Special Mention	2,892		—		103,329		4,361		2,506		67,356		—		—		180,444
Substandard	—		1,171		8,901		59,215		32,879		85,684		11,897		—		199,747
Doubtful	—		—		461		—		—		3,019		—		—		3,480
Total commercial real estate - mortgage	$	624,083	$	3,202,521	$	3,968,786	$	1,822,582	$	1,120,878	$	2,866,313	$	248,242	$	—	$	13,853,405



	December 31, 2019
	Commercial, Financial and Agricultural		Real Estate - Construction		Commercial Real Estate - Mortgage
	(In Thousands)
Pass	$	23,319,645	$	1,979,310	$	13,547,273
Special Mention	543,928		67		168,679
Substandard	488,813		49,305		134,420
Doubtful	79,852		—		11,106
	$	24,432,238	$	2,028,682	$	13,861,478



	Consumer
	March 31, 2020
	Recorded Investment of Term Loans by Origination Year
	2020		2019		2018		2017		2016		Prior		Recorded Investment of Revolving Loans		Recorded Investment of Revolving Loans Converted to Term Loans		Total
	(In Thousands)
Residential real estate - mortgage
Performing	$	508,538	$	2,609,558	$	1,388,842	$	1,398,484	$	1,503,951	$	5,883,578	$	—	$	—	$	13,292,951
Nonperforming	—		776		6,007		11,581		11,055		123,648		—		—		153,067
Total residential real estate - mortgage	$	508,538	$	2,610,334	$	1,394,849	$	1,410,065	$	1,515,006	$	6,007,226	$	—	$	—	$	13,446,018
Equity lines of credit
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	2,571,031	$	3,670	$	2,574,701
Nonperforming	—		—		—		—		—		—		36,453		196		36,649
Total equity lines of credit	$	—	$	—	$	—	$	—	$	—	$	—	$	2,607,484	$	3,866	$	2,611,350
Equity loans
Performing	$	2,004	$	15,471	$	14,046	$	5,886	$	4,680	$	178,892	$	—	$	—	$	220,979
Nonperforming	—		—		339		149		—		7,902		—		—		8,390
Total equity loans	$	2,004	$	15,471	$	14,385	$	6,035	$	4,680	$	186,794	$	—	$	—	$	229,369
Credit card
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	999,665	$	—	$	999,665
Nonperforming	—		—		—		—		—		—		23,707		—		23,707
Total credit card	$	—	$	—	$	—	$	—	$	—	$	—	$	1,023,372	$	—	$	1,023,372
Consumer direct
Performing	$	239,046	$	704,151	$	591,586	$	168,069	$	79,114	$	33,047	$	438,676	$	—	$	2,253,689
Nonperforming	—		4,009		13,092		2,738		878		388		1,251		—		22,356
Total consumer direct	$	239,046	$	708,160	$	604,678	$	170,807	$	79,992	$	33,435	$	439,927	$	—	$	2,276,045
Consumer indirect
Performing	$	598,254	$	1,548,308	$	1,099,575	$	468,646	$	161,401	$	182,083	$	—	$	—	$	4,058,267
Nonperforming	—		5,829		13,623		8,482		4,838		4,989		—		—		37,761
Total consumer indirect	$	598,254	$	1,554,137	$	1,113,198	$	477,128	$	166,239	$	187,072	$	—	$	—	$	4,096,028



	December 31, 2019
	Residential Real Estate -Mortgage		Equity Lines of Credit		Equity Loans		Credit Card		Consumer Direct		Consumer Indirect
	(In Thousands)
Performing	$	13,381,709	$	2,553,000	$	236,122	$	979,569	$	2,313,082	$	3,870,839
Nonperforming	152,245		39,680		8,846		22,796		25,060		41,511
	$	13,533,954	$	2,592,680	$	244,968	$	1,002,365	$	2,338,142	$	3,912,350

The following tables present an aging analysis of the Company’s past due loans, excluding loans classified as held for sale.



	March 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due, Nonaccrual or TDR		Not Past Due, Nonaccrual or TDR		Total
	(In Thousands)
Commercial, financial and agricultural	$	31,493	$	7,588	$	3,013	$	323,881	$	1,931	$	367,906	$	27,464,207	$	27,832,113
Real estate – construction	9,356		66		574		13,676		69		23,741		2,147,973		2,171,714
Commercial real estate – mortgage	13,439		5,241		912		114,839		3,333		137,764		13,715,641		13,853,405
Residential real estate – mortgage	67,938		25,187		5,744		147,058		55,116		301,043		13,144,975		13,446,018
Equity lines of credit	16,382		6,244		3,295		33,354		—		59,275		2,552,075		2,611,350
Equity loans	2,636		1,147		293		8,027		22,392		34,495		194,874		229,369
Credit card	13,230		8,932		23,707		—		—		45,869		977,503		1,023,372
Consumer direct	34,553		19,738		15,196		7,160		14,898		91,545		2,184,500		2,276,045
Consumer indirect	76,547		24,249		9,040		28,721		—		138,557		3,957,471		4,096,028
Total loans	$	265,574	$	98,392	$	61,774	$	676,716	$	97,739	$	1,200,195	$	66,339,219	$	67,539,414



	December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Total Past Due and Impaired		Not Past Due or Impaired		Total
	(In Thousands)
Commercial, financial and agricultural	$	29,273	$	16,462	$	6,692	$	268,288	$	1,456	$	322,171	$	24,110,067	$	24,432,238
Real estate – construction	7,603		2		571		8,041		72		16,289		2,012,393		2,028,682
Commercial real estate – mortgage	5,325		5,458		6,576		98,077		3,414		118,850		13,742,628		13,861,478
Residential real estate – mortgage	72,571		21,909		4,641		147,337		57,165		303,623		13,230,331		13,533,954
Equity lines of credit	15,766		6,581		1,567		38,113		—		62,027		2,530,653		2,592,680
Equity loans	2,856		1,028		195		8,651		23,770		36,500		208,468		244,968
Credit card	11,275		9,214		22,796		—		—		43,285		959,080		1,002,365
Consumer direct	33,658		20,703		18,358		6,555		12,438		91,712		2,246,430		2,338,142
Consumer indirect	83,966		28,430		9,730		31,781		—		153,907		3,758,443		3,912,350
Total loans	$	262,293	$	109,787	$	71,126	$	606,843	$	98,315	$	1,148,364	$	62,798,493	$	63,946,857

It is the Company’s policy to classify TDRs that are not accruing interest as nonaccrual loans. It is also the Company’s policy to classify TDR past due loans that are accruing interest as TDRs and not according to their past due status. The tables above reflect this policy.

Modifications to borrowers' loan agreements are considered TDRs if a concession is granted for economic or legal reasons related to a borrower’s financial difficulties that otherwise would not be considered. Within each of the Company’s loan classes, TDRs typically involve modification of the loan interest rate to a below market rate or an extension or deferment of the loan. Loans that have been restructured for COVID-19 related hardships and meet certain criteria under the CARES Act are not categorized as TDRs. During the three months ended March 31, 2020, $5.2 million of TDR modifications included an interest rate concession and $43.6 million of TDR modifications resulted from modifications to the loan’s structure. During the three months ended March 31, 2019, $4.7 million of TDR modifications included an interest rate concession and $15.8 million of TDR modifications resulted from modifications to the loan’s structure.

The following tables present an analysis of the types of loans that were restructured and classified as TDRs, excluding loans classified as held for sale.



	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
	Number of Contracts	Post-Modification Outstanding Recorded Investment		Number of Contracts	Post-Modification Outstanding Recorded Investment
	(Dollars in Thousands)
Commercial, financial and agricultural	10	$	41,238	3	$	11,570
Real estate – construction	—	—		—	—
Commercial real estate – mortgage	2	1,740		—	—
Residential real estate – mortgage	8	844		20	5,233
Equity lines of credit	1	36		—	—
Equity loans	1	192		4	176
Credit card	—	—		—	—
Consumer direct	89	4,762		13	3,519
Consumer indirect	—	—		—	—

The impact to the allowance for loan losses related to modifications classified as TDRs was approximately $5.3 million and $3.7 million for the three months ended March 31, 2020 and March 31, 2019, respectively.

The Company considers TDRs aged 90 days or more past due, charged off or classified as nonaccrual subsequent to modification, where the loan was not classified as a nonperforming loan at the time of modification, as subsequently defaulted.

The following tables provide a summary of initial subsequent defaults that occurred within one year of the restructure date. The tables exclude loans classified as held for sale as of period-end and includes loans no longer in default as of period-end.



	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
	Number of Contracts	Recorded Investment at Default		Number of Contracts	Recorded Investment at Default
	(Dollars in Thousands)
Commercial, financial and agricultural	—	$	—	—	$	—
Real estate – construction	—	—		—	—
Commercial real estate – mortgage	—	—		—	—
Residential real estate – mortgage	1	84		—	—
Equity lines of credit	—	—		—	—
Equity loans	—	—		2	151
Credit card	—	—		—	—
Consumer direct	4	217		2	15
Consumer indirect	—	—		—	—

At March 31, 2020 and December 31, 2019, there were $43.1 million and $43.8 million, respectively, of commitments to lend additional funds to borrowers whose terms have been modified in a TDR.

Foreclosure Proceedings

OREO totaled $21 million and $22 million at March 31, 2020 and December 31, 2019, respectively. OREO included $13 million and $14 million of foreclosed residential real estate properties at March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020 and December 31, 2019, there were $52 million and $57 million, respectively, of loans secured by residential real estate properties for which formal foreclosure proceedings were in process.