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Loans and Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2020
Loans and Leases Receivable Disclosure [Abstract]  
Loans and Allowance for Credit Losses LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans Held for Sale
The following table presents loans held for sale:
(Dollars in thousands)September 30, 2020December 31, 2019
Commercial real estate$19,919 $— 
1-4 family residential11,6442,735
Commercial5,153 — 
Total loans held for sale$36,716 $2,735 
Commercial real estate loans held for sale totaling $19,919,000 were on nonaccrual status and risk graded as classified at September 30, 2020.
Loans Held for Investment
Loans
The following table presents the amortized cost and unpaid principal balance of loans held for investment:
September 30, 2020December 31, 2019
(Dollars in thousands)Amortized
Cost		Unpaid
Principal		DifferenceAmortized
Cost		Unpaid
Principal		Difference
Commercial real estate$762,531 $766,471 $(3,940)$1,046,961 $1,051,684 $(4,723)
Construction, land development, land244,512 244,966 (454)160,569 162,335 (1,766)
1-4 family residential164,785 165,442 (657)179,425 180,340 (915)
Farmland110,966 111,870 (904)154,975 156,995 (2,020)
Commercial1,536,903 1,554,805 (17,902)1,342,683 1,346,444 (3,761)
Factored receivables1,016,337 1,017,805 (1,468)619,986 621,697 (1,711)
Consumer17,106 17,139 (33)21,925 21,994 (69)
Mortgage warehouse999,771 999,771 — 667,988 667,988 — 
Total loans held for investment4,852,911 $4,878,269 $(25,358)4,194,512 $4,209,477 $(14,965)
Allowance for credit losses(90,995)(29,092)
$4,761,916 $4,165,420 
The difference between the amortized cost and the unpaid principal is primarily (1) premiums and discounts associated with acquired loans totaling $20,121,000 and $13,573,000 at September 30, 2020 and December 31, 2019, respectively, and (2) net deferred origination and factoring fees totaling $5,237,000 and $1,392,000 at September 30, 2020 and December 31, 2019, respectively.
Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $18,933,000 and $18,553,000 at September 30, 2020 and December 31, 2019, respectively, and was included in other assets in the consolidated balance sheets.
At September 30, 2020 and December 31, 2019, the Company had $110,510,000 and $66,754,000, respectively, of customer reserves associated with factored receivables. These amounts represent customer reserves held to settle any payment disputes or collection shortfalls, may be used to pay customers’ obligations to various third parties as directed by the customer, are periodically released to or withdrawn by customers, and are reported as deposits in the consolidated balance sheets.
At September 30, 2020 the balance of the Over-Formula Advance Portfolio included in factored receivables was $62.2 million.
Loans with carrying amounts of $2,185,499,000 and $1,301,851,000 at September 30, 2020 and December 31, 2019, respectively, were pledged to secure Federal Home Loan Bank borrowing capacity and, beginning in 2020, to secure Paycheck Protection Program Liquidity Facility borrowings and Federal Reserve Bank discount window borrowing capacity.
During the three and nine months ended September 30, 2020, loans with carrying amounts of $56,934,000 and $172,565,000, respectively, were transferred from loans held for investment to loans held for sale at fair value concurrently with management’s change in intent and decision to sell the loans. During the three and nine months ended September 30, 2020, loans transferred to held for sale were sold resulting in proceeds of $58,313,000 and $145,513,000, respectively. The Company recorded net losses on transfers and sales of loans of $515,000 and $466,000 for the three and nine months ended September 30, 2020, respectively. Net gains and losses on transfers and sales of loans are recorded as other noninterest income in the consolidated statements of income. During the three and nine months ended September 30, 2019, loans with a carrying amount of $21,180,000 and $27,411,000, respectively, were transferred from loans held for investment to loans held for sale at fair value concurrently with management’s change in intent and decision to sell the loans. During the three and nine months ended September 30, 2019, loans transferred to held for sale were sold resulting in proceeds of $19,322,000 and $25,653,000, respectively, and net gains on transfers and sales of loans of $129,000 and $229,000, respectively, which were recorded as other noninterest income in the consolidated statements of income.
Allowance for Credit Losses
The Company’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected troubled debt restructuring. The activity in the allowance for credit losses (“ACL”) related to loans held for investment is as follows:
(Dollars in thousands)Beginning
Balance		Impact of
Adopting
ASC 326		Initial ACL on Loans Purchased
with Credit Deterioration		Credit Loss
Expense		Charge-offsRecoveriesReclassification
to Held For Sale		Ending
Balance
Three months ended September 30, 2020
Commercial real estate$15,539 $— $— $(2,440)$— $53 $— $13,152 
Construction, land development, land5,917 — — (319)— 2 — 5,600 
1-4 family residential2,027 — — (56)(6)7 — 1,972 
Farmland958 — — (95)— — — 863 
Commercial23,283 — — (657)(528)615 — 22,713 
Factored receivables5,244 — 37,415 3,059 (773)40 — 44,985 
Consumer768 — — 29 (118)31 — 710 
Mortgage warehouse877 — — 123 — — — 1,000 
$54,613 $— $37,415 $(356)$(1,425)$748 $— $90,995 
(Dollars in thousands)Beginning
Balance		Credit Loss
Expense		Charge-offsRecoveriesEnding
Balance
Three months ended September 30, 2019
Commercial real estate$5,677 $147 $(26)$— $5,798 
Construction, land development, land1,035 47 — 2 1,084 
1-4 family residential409 4 — 4 417 
Farmland590 349 — — 939 
Commercial13,899 1,195 (557)234 14,771 
Factored receivables6,861 851 (210)215 7,717 
Consumer563 66 (85)37 581 
Mortgage warehouse382 206 — — 588 
$29,416 $2,865 $(878)$492 $31,895 
(Dollars in thousands)Beginning
Balance		Impact of
Adopting
ASC 326		Initial ACL on Loans Purchased
with Credit Deterioration		Credit Loss
Expense		Charge-offsRecoveriesReclassification
to Held For Sale		Ending
Balance
Nine Months Ended September 30, 2020
Commercial real estate$5,353 $1,372 $— $6,366 $— $61 $— $13,152 
Construction, land development, land1,382 (187)— 4,400 — 5 — 5,600 
1-4 family residential308 513 — 1,138 (27)40 — 1,972 
Farmland670 437 — (324)— 80 —863 
Commercial12,566 (184)— 11,004 (1,173)949 (449)22,713 
Factored receivables7,657 (1,630)37,415 4,475 (3,027)95 —44,985 
Consumer488 (52)— 583 (410)101 —710 
Mortgage warehouse668 — — 332 — — —1,000 
$29,092 $269 $37,415 $27,974 $(4,637)$1,331 $(449)$90,995 
(Dollars in thousands)Beginning
Balance		Credit Loss
Expense		Charge-offsRecoveriesEnding
Balance
Nine months ended September 30, 2019
Commercial real estate$4,493 $1,343 $(39)$1 $5,798 
Construction, land development, land1,134 (63)(78)91 1,084 
1-4 family residential317 86 (43)57 417 
Farmland535 404 — — 939 
Commercial12,865 3,252 (1,671)325 14,771 
Factored receivables7,299 1,839 (1,682)261 7,717 
Consumer615 424 (594)136 581 
Mortgage warehouse313 275 — — 588 
$27,571 $7,560 $(4,107)$871 $31,895 

The ACL as of September 30, 2020 was estimated using the current expected credit loss model. Management determined that the $62,200,000 in Over-Formula Advances obtained through the TFS Acquisition had experienced more than insignificant credit deterioration since origination and thus deemed those Over-Formula Advances to be purchased credit deteriorated ("PCD"). This resulted in recording a $37,400,000 ACL on the Over-Formula Advance Portfolio through purchase accounting during the three months ended September 30, 2020. There was no impact to credit loss expense resulting from the PCD determination. The Company's expectation of loss on the Over-Formula Advance Portfolio did not change between the acquisition date and September 30, 2020 and thus, the PCD ACL was held constant at September 30, 2020. The primary reason for the increase in required ACL during the three months ended September 30, 2020 is related to the $37,400,000 PCD ACL. There was relatively little change to the loss drivers that the Company forecasts to calculate expected losses during the three months ended September 30, 2020.
The primary reasons for the increase in required ACL during the nine months ended September 30, 2020 are the PCD ACL increase discussed previously and significant projected deterioration of the loss drivers that the Company forecasts to calculate expected losses and, to a much lesser extent, changes in qualitative loss factors during the period.
The Company uses the discounted cash flow (DCF) method to estimate ACL for the commercial real estate, construction, land development, land, 1-4 family residential, commercial (excluding liquid credit), and consumer loan pools. For all loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment as a loss driver. The Company also utilizes and forecasts either one-year percentage change in national retail sales (commercial real estate – non multifamily, commercial general, commercial agriculture, commercial asset-based lending, commercial equipment finance, consumer), one-year percentage change in the national home price index (1-4 family residential and construction, land development, land), or one-year percentage change in national gross domestic product (commercial real estate – multifamily) as a second loss driver depending on the nature of the underlying loan pool and how well that loss driver correlates to expected future losses. Consistent forecasts of the loss drivers are used across the loan segments.
For all DCF models at September 30, 2020, the Company has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over eight quarters on a straight-line basis. The Company leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by the Company when developing the forecast metrics. At September 30, 2020, as compared to January 1, 2020, the Company forecasted a significant increase in national unemployment, significant decrease in one-year percentage change in national retail sales, significant decrease in one-year percentage change in the national home price index, and a significant decrease in one-year percentage change in national gross domestic product for the first forecasted quarter. The Company projected little to no improvement in the loss drivers over the first three quarters with these loss drivers remaining significantly worse compared to recent historical trends over the past several years. Some improvement is expected in the fourth projected quarter. At September 30, 2020, as compared to June 30, 2020, Company forecasts over the reasonable and supportable forecast period were somewhat comparable.
The Company uses a loss-rate method to estimate expected credit losses for the farmland, liquid credit, premium finance, factored receivable, and mortgage warehouse loan pools. For each of these loan segments, the Company applies an expected loss ratio based on internal and peer historical losses adjusted as appropriate for qualitative factors. Qualitative loss factors are based on the Company's judgment of company, market, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, and reasonable and supportable forecasts of economic conditions. Loss factors used to calculate the required ACL on pools that use the loss-rate method reflect the forecasted economic conditions described above.
For the nine months ended September 30, 2020, the TFS Acquisition created the need for an additional $37,400,000 of PCD ACL previously discussed. The projected economic impact of COVID-19 on the Company’s loss drivers and assumptions over the reasonable and supportable forecast period created the need for $23,300,000 of additional ACL. The increase in required ACL was also driven by net charge-offs of $3,300,000 (which carried reserves of $1,600,000 at the time of charge-off), and net new specific allowances recorded on individual loans of $5,700,000. The increase was offset by contraction and changes in mix in the underlying portfolio.
For the three months ended September 30, 2020, the TFS Acquisition created the need for an additional $37,400,000 of PCD ACL previously discussed. The changes in projected loss drivers and assumptions over the reasonable and supportable forecast period increased the ACL by $600,000. The increase in required ACL was also driven by net charge-offs of $700,000 (which carried reserves of $800,000 at the time of charge-off), and net new specific allowances recorded on individual loans of $800,000. Changes in loan volume and changes in mix in the underlying portfolio also increased the reserve.
The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans:
(Dollars in thousands)Real EstateAccounts
Receivable		EquipmentOtherTotalACL
Allocation
September 30, 2020
Commercial real estate$14,198 $— $— $366 $14,564 $1,668 
Construction, land development, land2,112 — — — 2,112 271 
1-4 family residential1,962 — — 181 2,143 24 
Farmland1,914 — 148 572 2,634 — 
Commercial2,875 4,893 7,034 4,124 18,926 4,563 
Factored receivables— 73,875 — — 73,875 40,072 
Consumer— — — 322 322 29 
Mortgage warehouse— — — — — — 
Total$23,061 $78,768 $7,182 $5,565 $114,576 $46,627 
At September 30, 2020 the balance of the Over-Formula Advance Portfolio included in factored receivables was $62,200,000 and carried an ACL allocation of $37,400,000
The following table presents loans individually and collectively evaluated for impairment, as well as purchased credit impaired (“PCI”) loans, and their respective allowance for credit loss allocations as of December 31, 2019, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:
(Dollars in thousands)Loan EvaluationALLL Allocations
December 31, 2019IndividuallyCollectivelyPCITotal loansIndividuallyCollectivelyPCITotal ALLL
Commercial real estate$7,455 $1,030,439 $9,067 $1,046,961 $344 $5,009 $— $5,353 
Construction, land development, land2,138 155,985 2,446 160,569 271 1,111 — 1,382 
1-4 family residential1,728 177,189 508 179,425 33 275 — 308 
Farmland6,638 148,233 104 154,975 — 670 — 670 
Commercial15,618 1,326,515 550 1,342,683 1,278 11,284 4 12,566 
Factored receivables15,947 604,039 — 619,986 3,178 4,479 — 7,657 
Consumer327 21,598 — 21,925 9 479 — 488 
Mortgage warehouse— 667,988 — 667,988 — 668 — 668 
$49,851 $4,131,986 $12,675 $4,194,512 $5,113 $23,975 $4 $29,092 
The following table presents information pertaining to impaired loans as of December 31, 2019, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13:
Impaired Loans and Purchased Credit
Impaired Loans With a Valuation Allowance		Impaired Loans
Without a Valuation Allowance
(Dollars in thousands)Recorded
Investment		Unpaid
Principal		Related
Allowance		Recorded
Investment		Unpaid
Principal
December 31, 2019
Commercial real estate$878 $907 $344 $6,577 $6,643 
Construction, land development, land935 935 271 1,203 1,305 
1-4 family residential35 22 33 1,693 1,799 
Farmland— — — 6,638 6,819 
Commercial6,032 6,053 1,278 9,586 9,751 
Factored receivables15,940 15,940 3,178 7 7 
Consumer17 16 9 310 311 
Mortgage warehouse— — — — — 
PCI71 55 4 — — 
$23,908 $23,928 $5,117 $26,014 $26,635 
The following table presents average impaired loans, as determined in accordance with ASC 310 prior to the adoption of ASU 2016-13, and interest recognized on such loans, for the three and nine months ended September 30, 2019:
Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2019
Average
Impaired Loans		Interest
Recognized		Average
Impaired Loans		Interest
Recognized
(Dollars in thousands)
Commercial real estate$7,500 $180 $7,675 $180 
Construction, land development, land1,087 5 624 5 
1-4 family residential2,353 13 2,326 15 
Farmland6,737 31 7,186 75 
Commercial15,222 321 16,397 373 
Factored receivables10,453 — 9,455 — 
Consumer458 5 411 5 
Mortgage warehouse— — — — 
PCI71 — 71 — 
$43,881 $555 $44,145 $653 
Past Due and Nonaccrual Loans
The following tables present an aging of contractually past due loans:
(Dollars in thousands)Past Due
30-59 Days		Past Due
60-90 Days		Past Due 90
Days or More		Total
Past Due		CurrentTotalPast Due 90
Days or More
and Accruing
September 30, 2020
Commercial real estate$1,714 $6,993 $2,666 $11,373 $751,158 $762,531 $1,287 
Construction, land development, land608 894 1,184 2,686 241,826 244,512 — 
1-4 family residential1,049 849 1,061 2,959 161,826 164,785 143 
Farmland400 — 284 684 110,282 110,966 — 
Commercial5,954 1,548 6,319 13,821 1,523,082 1,536,903 276 
Factored receivables68,522 7,247 8,638 84,407 931,930 1,016,337 8,638 
Consumer442 83 141 666 16,440 17,106 — 
Mortgage warehouse— — — — 999,771 999,771 — 
Total$78,689 $17,614 $20,293 $116,596 $4,736,315 $4,852,911 $10,344 
(Dollars in thousands)Past Due
30-59 Days		Past Due
60-90 Days		Past Due 90
Days or More		Total
Past Due		CurrentTotalPast Due 90
Days or More
and Accruing
December 31, 2019
Commercial real estate$1,752 $1,328 $1,759 $4,839 $1,042,122 $1,046,961 $— 
Construction, land development, land1,785 842 361 2,988 157,581 160,569 — 
1-4 family residential1,396 723 554 2,673 176,752 179,425 286 
Farmland52 132 2,376 2,560 152,415 154,975 — 
Commercial4,444 4,154 9,555 18,153 1,324,530 1,342,683 808 
Factored receivables29,118 7,182 4,226 40,526 579,460 619,986 4,226 
Consumer508 429 183 1,120 20,805 21,925 49 
Mortgage warehouse— — — — 667,988 667,988 — 
Total$39,055 $14,790 $19,014 $72,859 $4,121,653 $4,194,512 $5,369 
At September 30, 2020, total past due Over-Formula Advances recorded in factored receivables was $38,500,000. This balance was past due 30-59 Days. Aging of the Over-Formula Advances is based upon the service month on which the advances were made by TFS prior to acquisition.
The following table presents the amortized cost basis of loans on nonaccrual status and the amortized cost basis of loans on nonaccrual status for which there was no related allowance for credit losses:
September 30, 2020December 31, 2019
(Dollars in thousands)NonaccrualNonaccrual
With No ACL		NonaccrualNonaccrual
With No ACL
Commercial real estate$12,235 $4,700 $7,501 $6,623 
Construction, land development, land2,089 1,180 3,922 2,987 
1-4 family residential1,761 1,640 1,730 1,694 
Farmland2,452 2,452 6,494 6,494 
Commercial19,462 5,210 16,080 9,977 
Factored receivables— — — — 
Consumer322 247 327 310 
Mortgage warehouse— — — — 
$38,321 $15,429 $36,054 $28,085 
The following table presents accrued interest on nonaccrual loans reversed through interest income:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2020201920202019
Commercial real estate$371 $13 $435 $32 
Construction, land development, land1 — 1 9 
1-4 family residential21 — 31 12 
Farmland36 26 36 27 
Commercial37 13 76 50 
Factored receivables— — — — 
Consumer— 2 2 3 
Mortgage warehouse— — — — 
$466 $54 $581 $133 
There was no interest earned on nonaccrual loans during the three and nine months ended September 30, 2020 and 2019.
The following table presents information regarding nonperforming loans:
(Dollars in thousands)September 30, 2020December 31, 2019
Nonaccrual loans(1)
$38,321 $36,054 
Factored receivables greater than 90 days past due8,638 4,226 
Other nonperforming factored receivables(2)
10,029 — 
Troubled debt restructurings accruing interest3 333 
$56,991 $40,613 
(1)Includes troubled debt restructurings of $15,743,000 and $4,888,000 at September 30, 2020 and December 31, 2019, respectively.
(2)Other nonperforming factored receivables represent the portion of the Over-Formula Advance Portfolio that is not covered by Covenant's indemnification. This amount is also considered Classified from a risk rating perspective.
Credit Quality Information
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including: current collateral and financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk on a regular basis. Large groups of smaller balance homogeneous loans, such as consumer loans, are analyzed primarily based on payment status. The Company uses the following definitions for risk ratings:
Pass – Pass rated loans have low to average risk and are not otherwise classified.
Classified – Classified loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Certain classified loans have 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.
PCI (Prior to the Adoption of ASU 2016-13) – At acquisition, PCI loans had the characteristics of classified loans and it was probable, at acquisition, that all contractually required principal and interest payments would not be collected. The Company evaluates these loans on a projected cash flow basis with this evaluation performed quarterly.
Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. As of September 30, 2020 and December 31, 2019, based on the most recent analysis performed, the risk category of loans is as follows:
Revolving
Loans		Revolving
Loans
Converted
To Term
Loans		Total
(Dollars in thousands)Year of Origination
September 30, 202020202019201820172016Prior
Commercial real estate
Pass$374,993 $85,458 $95,818 $92,112 $35,576 $53,189 $7,124 $908 $745,178 
Classified13,918 437 182 636 852 1,328 — — 17,353 
Total commercial real estate$388,911 $85,895 $96,000 $92,748 $36,428 $54,517 $7,124 $908 $762,531 
Construction, land development, land
Pass$141,940 $29,654 $55,887 $12,362 $268 $1,776 $13 $500 $242,400 
Classified905 838 — — — 369 — — 2,112 
Total construction, land development, land$142,845 $30,492 $55,887 $12,362 $268 $2,145 $13 $500 $244,512 
1-4 family residential
Pass$35,959 $12,614 $15,172 $13,316 $11,773 $30,076 $38,669 $5,320 $162,899 
Classified570 76 16 — 359 758 107 — 1,886 
Total 1-4 family residential$36,529 $12,690 $15,188 $13,316 $12,132 $30,834 $38,776 $5,320 $164,785 
Farmland
Pass$19,870 $17,100 $16,458 $15,168 $13,829 $21,150 $2,130 $486 $106,191 
Classified1,207 417 1,672 145 — 560 774 — 4,775 
Total farmland$21,077 $17,517 $18,130 $15,313 $13,829 $21,710 $2,904 $486 $110,966 
Commercial
Pass$848,660 $135,269 $48,573 $41,531 $6,013 $5,548 $405,676 $11,396 $1,502,666 
Classified7,186 7,357 4,725 1,445 731 348 12,445 — 34,237 
Total commercial$855,846 $142,626 $53,298 $42,976 $6,744 $5,896 $418,121 $11,396 $1,536,903 
Factored receivables
Pass$995,046 $— $— $— $— $— $— $— $995,046 
Classified21,291 — — — — — — — 21,291 
Total factored receivables$1,016,337 $— $— $— $— $— $— $— $1,016,337 
Consumer
Pass$3,820 $2,617 $1,614 $4,694 $3,088 $875 $73 $— $16,781 
Classified— 18 7 94 162 44 — — 325 
Total consumer$3,820 $2,635 $1,621 $4,788 $3,250 $919 $73 $— $17,106 
Mortgage warehouse
Pass$— $— $— $— $— $— $999,771 $— $999,771 
Classified— — — — — — — — — 
Total mortgage warehouse$— $— $— $— $— $— $999,771 $— $999,771 
Total loans
Pass$2,420,288 $282,712 $233,522 $179,183 $70,547 $112,614 $1,453,456 $18,610 $4,770,932 
Classified45,077 9,143 6,602 2,320 2,104 3,407 13,326 — 81,979 
Total loans$2,465,365 $291,855 $240,124 $181,503 $72,651 $116,021 $1,466,782 $18,610 $4,852,911 
(Dollars in thousands)
December 31, 2019PassClassifiedPCITotal
Commercial real estate$1,030,358 $7,536 $9,067 $1,046,961 
Construction, land development, land155,985 2,138 2,446 160,569 
1-4 family residential177,177 1,740 508 179,425 
Farmland144,777 10,094 104 154,975 
Commercial1,313,042 29,091 550 1,342,683 
Factored receivables604,774 15,212 — 619,986 
Consumer21,594 331 — 21,925 
Mortgage warehouse667,988 — — 667,988 
$4,115,695 $66,142 $12,675 $4,194,512 
Troubled Debt Restructurings and Loan Modifications
The Company had troubled debt restructurings with an amortized cost of $18,326,000 and $5,221,000 as of September 30, 2020 and December 31, 2019, respectively. The Company had allocated $2,030,000 and $718,000 of allowance for those loans at September 30, 2020 and December 31, 2019, respectively, and had not committed to lend additional amounts.
The following table presents the pre- and post-modification recorded investment of loans modified as troubled debt restructurings during the three and nine months ended September 30, 2020 and 2019. The Company did not grant principal reductions on any restructured loans.
(Dollars in thousands)Extended
Amortization
Period		Payment
Deferrals		AB Note
Restructure		Interest Rate
Reduction		Total
Modifications		Number of
Loans
Nine months ended September 30, 2020
Commercial real estate$— $246 $— $— $246 2 
Construction, land development, land8 — — — 8 1 
Farmland3,486 — — — 3,486 1 
Commercial4,714 9,296 — — 14,010 19 
$8,208 $9,542 $— $— $17,750 23 
Three months ended September 30, 2020
Commercial123 3,503 — — 3,626 14 
$123 $3,503 $— $— $3,626 14 
Nine months ended September 30, 2019
Commercial real estate$— $— $4,597 $— $4,597 1 
Commercial1,649 84 — 593 2,326 6 
$1,649 $84 $4,597 $593 $6,923 7 
Three months ended September 30, 2019
Commercial real estate$— $— $— $— $— — 
Commercial554 — — — 554 1 
$554 $— $— $— $554 1 
During the nine months ended September 30, 2020, the Company had two loans modified as troubled debt restructurings with a recorded investment of $18,000 for which there were payment defaults within twelve months following the modification. During the nine months ended September 30, 2019, the Company had two loans modified as troubled debt restructurings with a recorded investment of $240,000 for which there were payment defaults within twelve months following the modification. Default is determined at 90 or more days past due, charge-off, or foreclosure.
During the three and nine months ended September 30, 2020, the Company modified $12,625,000 and $617,976,000, respectively, in loans for borrowers impacted by the COVID-19 pandemic. These modifications primarily consisted of short-term payment deferrals generally no more than six months in duration to assist customers. As these modifications related to the COVID-19 pandemic and qualify under the provisions of either Section 4013 of the CARES act or Interagency Guidance, they are not considered troubled debt restructurings. The following table summarized the amortized cost of loans with payments currently in deferral and the accrued interest related to the loans with payments currently in deferral at September 30, 2020:
(Dollars in thousands)Total
Loans		Balance of
Loans Currently
in Deferral		Percentage
of Portfolio		Accrued
Interest
Receivable
September 30, 2020
Commercial real estate$762,531 $77,419 10.2 %$464 
Construction, land development, land244,512 116 — %1 
1-4 family residential164,785 8,560 5.2 %127 
Farmland110,966 — — %— 
Commercial1,536,903 16,787 1.1 %99 
Factored receivables1,016,337 — — %— 
Consumer17,106 105 0.6 %4 
Mortgage warehouse999,771 — — %— 
Total$4,852,911 $102,987 2.1 %$695 
Residential Real Estate Loans In Process of Foreclosure
At September 30, 2020 and December 31, 2019, the Company had $208,000 and $87,000, respectively, in 1-4 family residential real estate loans for which formal foreclosure proceedings were in process.
Purchased Credit Impaired Loans (Prior to the Adoption of ASU 2016-13)
The following table summarizes information pertaining to loans that were identified as purchased credit impaired prior to the adoption of ASU 2016-13:
December 31,
2019
Contractually required principal and interest:
Real estate loans$14,015 
Commercial loans677 
Outstanding contractually required principal and interest$14,692 
Gross carrying amount included in loans receivable$12,675 
The changes in accretable yield related to loans that were identified as purchased credit impaired prior to the adoption of ASU 2016-13 were as follows:
Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2019
Accretable yield, beginning balance$4,793 $5,711 
Additions— — 
Accretion(460)(1,228)
Reclassification from nonaccretable to accretable yield50 64 
Disposals(54)(218)
Accretable yield, ending balance$4,329 $4,329