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Purchased Loans
 9 Months Ended
Sep. 30, 2019
Receivables [Abstract]  
Purchased Loans Non Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 4, all references to “loans” mean non purchased loans excluding loans held for sale.

The following is a summary of non purchased loans and leases as of the dates presented:
 
 
September 30,
2019
 
December 31, 2018
Commercial, financial, agricultural
$
988,867

 
$
875,649

Lease financing
73,617

 
64,992

Real estate – construction
764,589

 
635,519

Real estate – 1-4 family mortgage
2,235,908

 
2,087,890

Real estate – commercial mortgage
2,809,470

 
2,628,365

Installment loans to individuals
163,031

 
100,424

Gross loans
7,035,482

 
6,392,839

Unearned income
(3,664
)
 
(3,127
)
Loans, net of unearned income
$
7,031,818

 
$
6,389,712



Past Due and Nonaccrual Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, the recognition of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer and other retail loans are typically charged-off no later than the time the loan is 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. All interest accrued for the current year, but not collected, for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The following table provides an aging of past due accruing and nonaccruing loans, segregated by class, as of the dates presented:
 
 
Accruing Loans
 
Nonaccruing Loans
 
 
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
Total
Loans
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
931

 
$
917

 
$
981,535

 
$
983,383

 
$
—

 
$
5,301

 
$
183

 
$
5,484

 
$
988,867

Lease financing
676

 
404

 
72,537

 
73,617

 
—

 
—

 
—

 
—

 
73,617

Real estate – construction
139

 
128

 
764,068

 
764,335

 
—

 
—

 
254

 
254

 
764,589

Real estate – 1-4 family mortgage
9,420

 
4,373

 
2,216,947

 
2,230,740

 
613

 
2,961

 
1,594

 
5,168

 
2,235,908

Real estate – commercial mortgage
799

 
1,435

 
2,802,517

 
2,804,751

 
420

 
2,927

 
1,372

 
4,719

 
2,809,470

Installment loans to individuals
837

 
68

 
162,018

 
162,923

 
—

 
39

 
69

 
108

 
163,031

Unearned income
—

 
—

 
(3,664
)
 
(3,664
)
 
—

 
—

 
—

 
—

 
(3,664
)
Total
$
12,802

 
$
7,325

 
$
6,995,958

 
$
7,016,085

 
$
1,033

 
$
11,228

 
$
3,472

 
$
15,733

 
$
7,031,818

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
3,397

 
$
267

 
$
870,457

 
$
874,121

 
$
—

 
$
1,356

 
$
172

 
$
1,528

 
$
875,649

Lease financing
607

 
89

 
64,296

 
64,992

 
—

 
—

 
—

 
—

 
64,992

Real estate – construction
887

 
—

 
634,632

 
635,519

 
—

 
—

 
—

 
—

 
635,519

Real estate – 1-4 family mortgage
10,378

 
2,151

 
2,071,401

 
2,083,930

 
238

 
2,676

 
1,046

 
3,960

 
2,087,890

Real estate – commercial mortgage
1,880

 
13

 
2,621,902

 
2,623,795

 
—

 
2,974

 
1,596

 
4,570

 
2,628,365

Installment loans to individuals
368

 
165

 
99,731

 
100,264

 
3

 
157

 
—

 
160

 
100,424

Unearned income
—

 
—

 
(3,127
)
 
(3,127
)
 
—

 
—

 
—

 
—

 
(3,127
)
Total
$
17,517

 
$
2,685

 
$
6,359,292

 
$
6,379,494

 
$
241

 
$
7,163

 
$
2,814

 
$
10,218

 
$
6,389,712


Impaired Loans
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan-by-loan basis for commercial, consumer and construction loans of $500 or more by, as applicable, the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are evaluated collectively for impairment. When the ultimate collectability of an impaired loan’s principal is in doubt, wholly or partially, the loan is placed on nonaccrual status and all cash receipts are applied to principal. Once the recorded balance has been reduced to zero, future cash receipts are applied to interest income, to the extent any interest has been foregone, and then they are recorded as recoveries of any amounts previously charged-off. For impaired loans, a specific reserve is established to adjust the carrying value of the loan to its estimated net realizable value.
Loans accounted for under FASB Accounting Standards Codification (“ASC”) 310-20, “Nonrefundable Fees and Other Cost” (“ASC 310-20”), and which are impaired loans recognized in conformity with ASC 310, “Receivables” (“ASC 310”), segregated by class, were as follows as of the dates presented:
 
 
Unpaid
Contractual
Principal
Balance
 
Recorded
Investment
With
Allowance
 
Recorded
Investment
With No
Allowance
 
Total
Recorded
Investment
 
Related
Allowance
September 30, 2019
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
5,993

 
$
5,609

 
$
—

 
$
5,609

 
$
1,100

Lease financing
—

 
—

 
—

 
—

 
—

Real estate – construction
12,128

 
3,573

 
8,551

 
12,124

 
22

Real estate – 1-4 family mortgage
12,406

 
12,067

 
—

 
12,067

 
163

Real estate – commercial mortgage
13,410

 
9,497

 
1,120

 
10,617

 
444

Installment loans to individuals
131

 
125

 
—

 
125

 
1

Total
$
44,068

 
$
30,871

 
$
9,671

 
$
40,542

 
$
1,730

December 31, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,280

 
$
1,834

 
$
—

 
$
1,834

 
$
163

Lease financing
—

 
—

 
—

 
—

 
—

Real estate – construction
9,467

 
7,302

 
2,165

 
9,467

 
63

Real estate – 1-4 family mortgage
9,767

 
9,077

 
—

 
9,077

 
61

Real estate – commercial mortgage
8,625

 
4,609

 
1,238

 
5,847

 
689

Installment loans to individuals
232

 
223

 
—

 
223

 
1

Totals
$
30,371

 
$
23,045

 
$
3,403

 
$
26,448

 
$
977



The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
September 30, 2019
 
September 30, 2018
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
5,705

 
$
5

 
$
1,979

 
$
11

Lease financing
—

 
—

 
—

 
—

Real estate – construction
12,128

 
111

 
9,725

 
42

Real estate – 1-4 family mortgage
12,203

 
50

 
8,136

 
51

Real estate – commercial mortgage
10,692

 
41

 
6,258

 
37

Installment loans to individuals
130

 
—

 
118

 
1

Total
$
40,858

 
$
207

 
$
26,216

 
$
142

 
Nine Months Ended
 
Nine Months Ended
 
September 30, 2019
 
September 30, 2018
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
5,656

 
$
23

 
$
2,204

 
$
31

Lease financing
—

 
—

 
—

 
—

Real estate – construction
11,756

 
321

 
9,621

 
109

Real estate – 1-4 family mortgage
12,323

 
153

 
8,388

 
174

Real estate – commercial mortgage
10,652

 
122

 
6,354

 
117

Installment loans to individuals
130

 
1

 
121

 
2

Total
$
40,517

 
$
620

 
$
26,688

 
$
433



Restructured Loans
Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and which are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest.
The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end. There were no newly restructured loans during the three months ended September 30, 2018.
 
 
 
 
 
 
 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Three months ended September 30, 2019
 
 
 
 
 
Real estate – 1-4 family mortgage
1

 
$
16

 
$
16

Total
1

 
$
16

 
$
16

 
 
 
 
 
 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Nine months ended September 30, 2019
 
 
 
 
 
Commercial, financial, agricultural
2

 
$
187

 
$
185

Real estate – 1-4 family mortgage
4

 
321

 
320

Total
6

 
$
508

 
$
505

Nine months ended September 30, 2018
 
 
 
 
 
Real estate – 1-4 family mortgage
4

 
$
625

 
$
625

Real estate – commercial mortgage
1

 
83

 
78

Total
5

 
$
708

 
$
703


With respect to loans that were restructured during the nine months ended September 30, 2019, $61 have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the nine months ended September 30, 2018, none subsequently defaulted within twelve months of the restructuring.

Restructured loans not performing in accordance with their restructured terms that are either contractually 90 days or more past due or placed on nonaccrual status are reported as nonperforming loans. There was one restructured loan in the amount of $40 contractually 90 days past due or more and still accruing at September 30, 2019 and two restructured loans in the amount of $228
contractually 90 days past due or more and still accruing at September 30, 2018. The outstanding balance of restructured loans on nonaccrual status was $3,101 and $3,147 at September 30, 2019 and September 30, 2018, respectively.

Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2019
51

 
$
5,325

Additional advances or loans with concessions
6

 
522

Reclassified as performing restructured loan
2

 
78

Reductions due to:
 
 
 
Reclassified as nonperforming
(6
)
 
(505
)
Paid in full
(6
)
 
(416
)
Principal paydowns
—

 
(119
)
Totals at September 30, 2019
47

 
$
4,885



The allocated allowance for loan losses attributable to restructured loans was $30 and $33 at September 30, 2019 and September 30, 2018, respectively. The Company had $1 and $19 in remaining availability under commitments to lend additional funds on these restructured loans at September 30, 2019 and September 30, 2018, respectively.
Credit Quality
For commercial and commercial real estate loans, internal risk-rating grades are assigned by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the portfolio balances of these loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans within the “Pass” grade (historically, those with a risk rating between 1 and 4) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. Management has established more granular risk rating categories to better identify heightened credit risk as loans migrate downward in the risk rating system. The “Pass” grade is now reserved for loans with a risk rating between 1 and 4A, and the “Watch” grade (those with a risk rating of 4B and 4E) is utilized on a temporary basis for “Pass” grade loans where a significant adverse risk-modifying action is anticipated in the near term. Loans that migrate toward the “Substandard” grade (those with a risk rating between 5 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to the related loan balances. The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:
 
 
Pass
 
Watch
 
Substandard
 
Total
September 30, 2019
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
742,438

 
$
12,351

 
$
12,803

 
$
767,592

Real estate – construction
691,112

 
2,923

 
8,914

 
702,949

Real estate – 1-4 family mortgage
320,874

 
3,520

 
3,010

 
327,404

Real estate – commercial mortgage
2,419,230

 
34,179

 
25,801

 
2,479,210

Installment loans to individuals
28

 
—

 
—

 
28

Total
$
4,173,682

 
$
52,973

 
$
50,528

 
$
4,277,183

December 31, 2018
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
615,803

 
$
18,326

 
$
6,973

 
$
641,102

Real estate – construction
558,494

 
2,317

 
8,157

 
568,968

Real estate – 1-4 family mortgage
321,564

 
4,660

 
4,260

 
330,484

Real estate – commercial mortgage
2,210,100

 
54,579

 
24,144

 
2,288,823

Installment loans to individuals
—

 
—

 
—

 
—

Total
$
3,705,961

 
$
79,882

 
$
43,534

 
$
3,829,377



For portfolio balances of consumer, small balance consumer mortgage loans, such as 1-4 family mortgage loans, and certain other loans originated for other than commercial purposes, allowance factors are determined based on historical loss ratios by portfolio for the preceding eight quarters and may be adjusted by other qualitative criteria. The following table presents the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented:
 
 
Performing
 
Non-
Performing
 
Total
September 30, 2019
 
 
 
 
 
Commercial, financial, agricultural
$
219,469

 
$
1,806

 
$
221,275

Lease financing
69,549

 
404

 
69,953

Real estate – construction
61,258

 
382

 
61,640

Real estate – 1-4 family mortgage
1,899,433

 
9,071

 
1,908,504

Real estate – commercial mortgage
328,755

 
1,505

 
330,260

Installment loans to individuals
162,827

 
176

 
163,003

Total
$
2,741,291

 
$
13,344

 
$
2,754,635

December 31, 2018
 
 
 
 
 
Commercial, financial, agricultural
$
233,046

 
$
1,501

 
$
234,547

Lease financing
61,776

 
89

 
61,865

Real estate – construction
66,551

 
—

 
66,551

Real estate – 1-4 family mortgage
1,751,994

 
5,412

 
1,757,406

Real estate – commercial mortgage
338,367

 
1,175

 
339,542

Installment loans to individuals
100,099

 
325

 
100,424

Total
$
2,551,833

 
$
8,502

 
$
2,560,335


Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 5, all references to “loans” mean purchased loans excluding loans held for sale.

The following is a summary of purchased loans as of the dates presented:
 
 
September 30,
2019
 
December 31, 2018
Commercial, financial, agricultural
$
339,693

 
$
420,263

Real estate – construction
52,106

 
105,149

Real estate – 1-4 family mortgage
561,725

 
707,453

Real estate – commercial mortgage
1,212,905

 
1,423,144

Installment loans to individuals
115,537

 
37,408

Gross loans
2,281,966

 
2,693,417

Unearned income
—

 
—

Loans, net of unearned income
$
2,281,966

 
$
2,693,417



Past Due and Nonaccrual Loans
The Company’s policies with respect to placing loans on nonaccrual status or charging off loans, and its accounting for interest on any such loans, are described above in Note 4, “Non Purchased Loans.”
The following table provides an aging of past due accruing and nonaccruing loans, segregated by class, as of the dates presented:
 
 
Accruing Loans
 
Nonaccruing Loans
 
 
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
Total
Loans
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,133

 
$
1,676

 
$
334,410

 
$
338,219

 
$
—

 
$
1,184

 
$
290

 
$
1,474

 
$
339,693

Real estate – construction
375

 
—

 
51,731

 
52,106

 
—

 
—

 
—

 
—

 
52,106

Real estate – 1-4 family mortgage
5,829

 
2,943

 
549,220

 
557,992

 
333

 
1,852

 
1,548

 
3,733

 
561,725

Real estate – commercial mortgage
3,674

 
2,345

 
1,206,299

 
1,212,318

 
—

 
254

 
333

 
587

 
1,212,905

Installment loans to individuals
4,458

 
70

 
110,680

 
115,208

 
24

 
41

 
264

 
329

 
115,537

Total
$
16,469

 
$
7,034

 
$
2,252,340

 
$
2,275,843

 
$
357

 
$
3,331

 
$
2,435

 
$
6,123

 
$
2,281,966

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
1,811

 
$
97

 
$
417,786

 
$
419,694

 
$
—

 
$
477

 
$
92

 
$
569

 
$
420,263

Real estate – construction
1,235

 
68

 
103,846

 
105,149

 
—

 
—

 
—

 
—

 
105,149

Real estate – 1-4 family mortgage
8,981

 
4,455

 
690,697

 
704,133

 
202

 
1,881

 
1,237

 
3,320

 
707,453

Real estate – commercial mortgage
5,711

 
2,410

 
1,413,346

 
1,421,467

 
—

 
1,401

 
276

 
1,677

 
1,423,144

Installment loans to individuals
1,342

 
202

 
35,594

 
37,138

 
2

 
24

 
244

 
270

 
37,408

Total
$
19,080

 
$
7,232

 
$
2,661,269

 
$
2,687,581

 
$
204

 
$
3,783

 
$
1,849

 
$
5,836

 
$
2,693,417


Impaired Loans
The Company’s policies with respect to the determination of whether a loan is impaired and the treatment of such loans are described above in Note 4, “Non Purchased Loans.”
Loans accounted for under ASC 310-20, and which are impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates presented:
 
 
Unpaid
Contractual
Principal
Balance
 
Recorded
Investment
With
Allowance
 
Recorded
Investment
With No
Allowance
 
Total
Recorded
Investment
 
Related
Allowance
September 30, 2019
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,565

 
$
2,495

 
$
20

 
$
2,515

 
$
282

Real estate – construction
256

 
256

 
—

 
256

 
2

Real estate – 1-4 family mortgage
5,982

 
2,983

 
2,282

 
5,265

 
23

Real estate – commercial mortgage
1,172

 
930

 
208

 
1,138

 
6

Installment loans to individuals
354

 
247

 
83

 
330

 
2

Total
$
10,329

 
$
6,911

 
$
2,593

 
$
9,504

 
$
315

December 31, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
671

 
$
600

 
$
11

 
$
611

 
$
173

Real estate – construction
576

 
576

 
—

 
576

 
5

Real estate – 1-4 family mortgage
5,787

 
1,381

 
3,780

 
5,161

 
18

Real estate – commercial mortgage
2,266

 
2,066

 
146

 
2,212

 
338

Installment loans to individuals
280

 
246

 
24

 
270

 
3

Totals
$
9,580

 
$
4,869

 
$
3,961

 
$
8,830

 
$
537



The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
September 30, 2019
 
September 30, 2018
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
2,533

 
$
2

 
$
331

 
$
3

Real estate – construction
256

 
—

 
520

 
1

Real estate – 1-4 family mortgage
5,364

 
30

 
4,817

 
33

Real estate – commercial mortgage
1,150

 
11

 
1,511

 
12

Installment loans to individuals
333

 
—

 
244

 
—

Total
$
9,636

 
$
43

 
$
7,423

 
$
49

 
 
 
 
 
 
 
 
 
Nine Months Ended
 
Nine Months Ended
 
September 30, 2019
 
September 30, 2018
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
2,312

 
$
6

 
$
334

 
$
8

Real estate – construction
256

 
3

 
520

 
2

Real estate – 1-4 family mortgage
5,468

 
96

 
4,907

 
107

Real estate – commercial mortgage
1,185

 
36

 
1,545

 
43

Installment loans to individuals
340

 
—

 
244

 
—

Total
$
9,561

 
$
141

 
$
7,550

 
$
160



Loans accounted for under ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”), and which are impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates presented:
 
 
Unpaid
Contractual
Principal
Balance
 
Recorded
Investment
With
Allowance
 
Recorded
Investment
With No
Allowance
 
Total
Recorded
Investment
 
Related
Allowance
September 30, 2019
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
54,354

 
$
3,417

 
$
27,693

 
$
31,110

 
$
128

Real estate – construction
624

 
—

 
605

 
605

 
—

Real estate – 1-4 family mortgage
45,511

 
11,203

 
26,421

 
37,624

 
350

Real estate – commercial mortgage
136,472

 
58,068

 
57,714

 
115,782

 
2,068

Installment loans to individuals
6,013

 
646

 
2,347

 
2,993

 
2

Total
$
242,974

 
$
73,334

 
$
114,780

 
$
188,114

 
$
2,548

December 31, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
44,403

 
$
3,779

 
$
25,364

 
$
29,143

 
$
161

Real estate – 1-4 family mortgage
53,823

 
12,169

 
36,074

 
48,243

 
488

Real estate – commercial mortgage
165,700

 
62,003

 
78,435

 
140,438

 
1,901

Installment loans to individuals
8,290

 
660

 
3,770

 
4,430

 
2

Totals
$
272,216

 
$
78,611

 
$
143,643

 
$
222,254

 
$
2,552



The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-30 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
September 30, 2019
 
September 30, 2018
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
32,150

 
$
283

 
$
11,705

 
$
162

Real estate – construction
558

 
8

 
—

 
—

Real estate – 1-4 family mortgage
38,031

 
538

 
51,957

 
621

Real estate – commercial mortgage
117,179

 
1,541

 
141,780

 
1,705

Installment loans to individuals
3,192

 
86

 
1,608

 
18

Total
$
191,110

 
$
2,456

 
$
207,050

 
$
2,506


 
 
 
 
 
 
 
 
 
Nine Months Ended
 
Nine Months Ended
 
September 30, 2019
 
September 30, 2018
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
35,304

 
$
1,145

 
$
12,117

 
$
579

Real estate – construction
560

 
8

 
—

 
—

Real estate – 1-4 family mortgage
38,682

 
1,699

 
53,093

 
1,941

Real estate – commercial mortgage
119,327

 
5,015

 
144,530

 
5,610

Installment loans to individuals
3,576

 
287

 
1,616

 
54

Total
$
197,449

 
$
8,154

 
$
211,356

 
$
8,184



Restructured Loans
An explanation of what constitutes a “restructured loan,” and management’s analysis in determining whether to restructure a loan, are described above in Note 4, “Non Purchased Loans.”
The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end. There were no newly restructured loans during the three months ended September 30, 2018.

 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Three months ended September 30, 2019
 
 
 
 
 
Commercial, financial, agricultural
1

 
$
258

 
$
258

Real estate – 1-4 family mortgage
1

 
$
34

 
$
34

Total
2

 
$
292

 
$
292




 
 
 
 
 
 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Nine months ended September 30, 2019
 
 
 
 
 
Commercial, financial, agricultural
2

 
$
2,778

 
$
2,778

Real estate – 1-4 family mortgage
1

 
$
34

 
$
34

Real estate – commercial mortgage
1

 
80

 
76

Total
4

 
$
2,892

 
$
2,888

Nine months ended September 30, 2018
 
 
 
 
 
Commercial, financial, agricultural
1

 
$
48

 
$
44

Real estate – 1-4 family mortgage
1

 
$
18

 
$
17

Real estate – commercial mortgage
1

 
8

 
7

Total
3

 
$
74

 
$
68



With respect to loans that were restructured during the nine months ended September 30, 2019, none have subsequently defaulted as of the date of this report. With respect to loans that were restructured during the nine months ended September 30, 2018, $5 have subsequently defaulted within twelve months of the restructuring.

There were two restructured loans in the amount of $272 contractually 90 days past due or more and still accruing at September 30, 2019 and three restructured loans in the amount of $503 contractually 90 days past due or more and still accruing at September 30, 2018. The outstanding balance of restructured loans on nonaccrual status was $707 and $493 at September 30, 2019 and September 30, 2018, respectively.

Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2019
54

 
$
7,495

Additional advances or loans with concessions
4

 
3,128

Reclassified as performing restructured loan
13

 
1,788

Reductions due to:
 
 
 
Reclassified to nonperforming loans
(9
)
 
(746
)
Paid in full
(7
)
 
(370
)
Measurement period adjustment on recently acquired loans
—

 
(2,376
)
Principal paydowns
—

 
(375
)
Totals at September 30, 2019
55

 
$
8,544



The allocated allowance for loan losses attributable to restructured loans was $91 and $62 at September 30, 2019 and September 30, 2018, respectively. The Company had $5 and $2 in remaining availability under commitments to lend additional funds on these restructured loans at September 30, 2019 and September 30, 2018, respectively.
Credit Quality
A discussion of the Company’s policies regarding internal risk-rating of loans is discussed above in Note 4, “Non Purchased Loans.” The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:

 
Pass
 
Watch
 
Substandard
 
Total
September 30, 2019
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
281,746

 
$
7,323

 
$
5,208

 
$
294,277

Real estate – construction
49,431

 
—

 
—

 
49,431

Real estate – 1-4 family mortgage
80,714

 
3,874

 
5,448

 
90,036

Real estate – commercial mortgage
1,006,704

 
44,714

 
15,971

 
1,067,389

Installment loans to individuals
—

 
—

 
—

 
—

Total
$
1,418,595

 
$
55,911

 
$
26,627

 
$
1,501,133

December 31, 2018
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
333,147

 
$
33,857

 
$
2,744

 
$
369,748

Real estate – construction
101,122

 
—

 
842

 
101,964

Real estate – 1-4 family mortgage
113,874

 
7,347

 
7,585

 
128,806

Real estate – commercial mortgage
1,198,540

 
43,046

 
9,984

 
1,251,570

Installment loans to individuals
—

 
—

 
2

 
2

Total
$
1,746,683

 
$
84,250

 
$
21,157

 
$
1,852,090



The following table presents the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented:
 
 
Performing
 
Non-
Performing
 
Total
September 30, 2019
 
 
 
 
 
Commercial, financial, agricultural
$
14,012

 
$
294

 
$
14,306

Real estate – construction
2,070

 
—

 
2,070

Real estate – 1-4 family mortgage
430,549

 
3,516

 
434,065

Real estate – commercial mortgage
29,629

 
105

 
29,734

Installment loans to individuals
112,198

 
346

 
112,544

Total
$
588,458

 
$
4,261

 
$
592,719

December 31, 2018
 
 
 
 
 
Commercial, financial, agricultural
$
21,303

 
$
69

 
$
21,372

Real estate – construction
3,185


—

 
3,185

Real estate – 1-4 family mortgage
526,699

 
3,705

 
530,404

Real estate – commercial mortgage
30,951

 
185

 
31,136

Installment loans to individuals
32,676

 
300

 
32,976

Total
$
614,814

 
$
4,259

 
$
619,073



Loans Purchased with Deteriorated Credit Quality
Loans purchased in business combinations that exhibited, at the date of acquisition, evidence of deterioration of the credit quality since origination, such that it was probable that all contractually required payments would not be collected, were as follows as of the dates presented:
 
 
Total Purchased Credit Deteriorated Loans
September 30, 2019
 
Commercial, financial, agricultural
$
31,110

Real estate – construction
605

Real estate – 1-4 family mortgage
37,624

Real estate – commercial mortgage
115,782

Installment loans to individuals
2,993

Total
$
188,114

December 31, 2018
 
Commercial, financial, agricultural
$
29,143

Real estate – 1-4 family mortgage
48,243

Real estate – commercial mortgage
140,438

Installment loans to individuals
4,430

Total
$
222,254



The following table presents the fair value of loans that exhibited evidence of deteriorated credit quality at the time of acquisition at September 30, 2019:
 
 
Total Purchased Credit Deteriorated Loans
Contractually-required principal and interest
$
276,348

Nonaccretable difference(1)
(62,180
)
Cash flows expected to be collected
214,168

Accretable yield(2)
(26,054
)
Fair value
$
188,114

 
(1)
Represents contractual principal and interest cash flows of $52,839 and $9,341, respectively, not expected to be collected.
(2)
Represents contractual principal and interest cash flows of $1,625 and $24,429, respectively, expected to be collected.
Changes in the accretable yield of loans purchased with deteriorated credit quality were as follows as of September 30, 2019:
 
Total Purchased Credit Deteriorated Loans
Balance at January 1, 2019
$
(34,265
)
Measurement period adjustment on recently acquired loans
(3,712
)
Reclassification from nonaccretable difference
(6,056
)
Accretion
16,442

Charge-offs
1,537

Balance at September 30, 2019
$
(26,054
)


The following table presents the fair value of loans purchased from Brand as of the September 1, 2018 acquisition date.
At acquisition date:
 
September 1, 2018
  Contractually-required principal and interest
 
$
1,625,079

  Nonaccretable difference
 
(164,554
)
  Cash flows expected to be collected
 
1,460,525

  Accretable yield
 
(138,318
)
      Fair value
 
$
1,322,207