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Loans
 6 Months Ended
Jun. 30, 2019
Receivables [Abstract]  
Loans Loans
 
Information pertaining to portfolio loans, purchased credit impaired (“PCI”) loans, and purchased unimpaired loans (“PUL”) is as follows:
 
 
June 30, 2019
(In thousands)
Portfolio Loans
 
PCI Loans
 
PULs
 
Total
Construction and land development
$
300,182

 
$
155

 
$
79,654

 
$
379,991

Commercial real estate
1,552,024

 
10,324

 
627,937

 
2,190,285

Residential real estate
1,153,951

 
2,468

 
243,765

 
1,400,184

Commercial and financial
605,237

 
634

 
95,876

 
701,747

Consumer
205,964

 
—

 
9,968

 
215,932

   Totals1
$
3,817,358

 
$
13,581

 
$
1,057,200

 
$
4,888,139

 
 
December 31, 2018
(In thousands)
Portfolio Loans
 
PCI Loans
 
PULs
 
Total
Construction and land development
$
301,473

 
$
151

 
$
141,944

 
$
443,568

Commercial real estate
1,437,989

 
10,828

 
683,249

 
2,132,066

Residential real estate
1,055,525

 
2,718

 
266,134

 
1,324,377

Commercial and financial
603,057

 
737

 
118,528

 
722,322

Consumer
190,207

 
—

 
12,674

 
202,881

   Totals1
$
3,588,251

 
$
14,434

 
$
1,222,529

 
$
4,825,214

1Net loan balances as of June 30, 2019 and December 31, 2018 include deferred costs of $18.2 million and $16.9 million for each period, respectively.
 
 The following tables present the contractual delinquency of the recorded investment by class of loans as of:
 
 
June 30, 2019
(In thousands)
Current
 
Accruing
30-59 Days
Past Due
 
Accruing
60-89 Days
Past Due
 
Accruing
Greater
Than
90 Days
 
Nonaccrual
 
Total
Financing
Receivables
Portfolio Loans
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
$
295,828

 
$
—

 
$
4,328

 
$
—

 
$
26

 
$
300,182

Commercial real estate
1,543,584

 
1,098

 
1,423

 
—

 
5,919

 
1,552,024

Residential real estate
1,143,397

 
2,686

 
121

 
—

 
7,747

 
1,153,951

Commercial and financial
597,048

 
5,764

 
221

 
172

 
2,032

 
605,237

Consumer
205,157

 
374

 
306

 
41

 
86

 
205,964

 Total Portfolio Loans
3,785,014

 
9,922

 
6,399

 
213

 
15,810

 
3,817,358

 
 
 
 
 
 
 
 
 
 
 
 
Purchased Unimpaired Loans
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
78,693

 
387

 
—

 
—

 
574

 
79,654

Commercial real estate
625,472

 
166

 
326

 
—

 
1,973

 
627,937

Residential real estate
242,698

 
—

 
131

 
—

 
936

 
243,765

Commercial and financial
95,311

 
—

 
—

 
—

 
565

 
95,876

Consumer
9,938

 
—

 
—

 
—

 
30

 
9,968

 Total PULs
1,052,112

 
553

 
457

 
—

 
4,078

 
1,057,200

 
 
 
 
 
 
 
 
 
 
 
 
Purchased Credit Impaired Loans
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
141

 
—

 
—

 
—

 
14

 
155

Commercial real estate
9,353

 
—

 
—

 
—

 
971

 
10,324

Residential real estate
562

 
—

 
—

 
—

 
1,906

 
2,468

Commercial and financial
617

 
—

 
—

 
—

 
17

 
634

Consumer
—

 
—

 
—

 
—

 
—

 
—

 Total PCI Loans
10,673

 
—

 
—

 
—

 
2,908

 
13,581

 
 
 
 
 
 
 
 
 
 
 
 
   Total Loans
$
4,847,799

 
$
10,475

 
$
6,856

 
$
213

 
$
22,796

 
$
4,888,139

 
 
December 31, 2018
(In thousands)
Current
 
Accruing
30-59 Days
Past Due
 
Accruing
60-89 Days
Past Due
 
Accruing
Greater
Than
90 Days
 
Nonaccrual
 
Total
Financing
Receivables
Portfolio Loans
 

 
 

 
 
 
 

 
 

 
 

Construction and land development
$
301,348

 
$
97

 
$
—

 
$
—

 
$
28

 
$
301,473

Commercial real estate
1,427,413

 
3,852

 
97

 
141

 
6,486

 
1,437,989

Residential real estate
1,044,375

 
2,524

 
525

 
295

 
7,806

 
1,055,525

Commercial and financial
594,930

 
5,186

 
1,661

 
—

 
1,280

 
603,057

Consumer
189,061

 
637

 
326

 
—

 
183

 
190,207

 Total Portfolio Loans
3,557,127

 
12,296

 
2,609

 
436

 
15,783

 
3,588,251

 
 
 
 
 
 
 
 
 
 
 
 
Purchased Unimpaired Loans
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
140,013

 
1,931

 
—

 
—

 
—

 
141,944

Commercial real estate
680,060

 
1,846

 
—

 
—

 
1,343

 
683,249

Residential real estate
260,781

 
1,523

 
—

 
90

 
3,740

 
266,134

Commercial and financial
116,173

 
342

 
—

 
—

 
2,013

 
118,528

Consumer
12,643

 
—

 
31

 
—

 
—

 
12,674

 Total PULs
1,209,670

 
5,642

 
31

 
90

 
7,096

 
1,222,529

 
 
 
 
 
 
 
 
 
 
 
 
Purchased Credit Impaired Loans
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
135

 
—

 
—

 
—

 
16

 
151

Commercial real estate
8,403

 
1,034

 
—

 
—

 
1,391

 
10,828

Residential real estate
556

 
—

 
—

 
—

 
2,162

 
2,718

Commercial and financial
74

 
635

 
—

 
—

 
28

 
737

Consumer
—

 
—

 
—

 
—

 
—

 
—

 Total PCI Loans
9,168

 
1,669

 
—

 
—

 
3,597

 
14,434

 
 
 
 
 
 
 
 
 
 
 
 
   Total Loans
$
4,775,965

 
$
19,607

 
$
2,640

 
$
526

 
$
26,476

 
$
4,825,214


 
The Company's Credit Risk Management also utilizes an internal asset classification system as a means of identifying problem and potential problem loans. The following classifications are used to categorize loans under the internal classification system:

•
Pass: Loans that are not problem loans or potential problem loans are considered to be pass-rated.
•
Special Mention: Loans that do not currently expose the Company to sufficient risk to warrant classification in the Substandard or Doubtful categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention.
•
Substandard: Loans with the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
•
Doubtful: Loans that have all the weaknesses inherent in those classified Substandard with the added characteristic that the weakness present makes collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are likely to be charged off.

Risk ratings on commercial lending facilities are re-evaluated during the annual review process at a minimum, based on the size of the aggregate exposure, and/or when there is a credit action of the existing credit exposure. The following tables present the risk category of loans by class based on the most recent analysis performed as of:
 
 
June 30, 2019
(In thousands)
Pass
 
Special
Mention
 
Substandard
 
Doubtful
 
Total
Construction and land development
$
372,287

 
$
2,534

 
$
5,170

 
$
—

 
$
379,991

Commercial real estate
2,123,840

 
39,942

 
26,503

 
—

 
2,190,285

Residential real estate
1,375,087

 
5,148

 
19,949

 
—

 
1,400,184

Commercial and financial
684,628

 
10,806

 
6,019

 
294

 
701,747

Consumer
212,444

 
2,421

 
1,067

 
—

 
215,932

   Totals
$
4,768,286

 
$
60,851

 
$
58,708

 
$
294

 
$
4,888,139

 
 
December 31, 2018
(In thousands)
Pass
 
Special
Mention
 
Substandard
 
Doubtful
 
Total
Construction and land development
$
428,044

 
$
10,429

 
$
5,095

 
$
—

 
$
443,568

Commercial real estate
2,063,589

 
41,429

 
27,048

 
—

 
2,132,066

Residential real estate
1,296,634

 
3,654

 
24,089

 
—

 
1,324,377

Commercial and financial
707,663

 
8,387

 
6,247

 
25

 
722,322

Consumer
198,367

 
3,397

 
1,117

 
—

 
202,881

   Totals
$
4,694,297

 
$
67,296

 
$
63,596

 
$
25

 
$
4,825,214


 
PCI Loans
 
PCI loans are accounted for pursuant to ASC Topic 310-30. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference.
 
The table below summarizes the changes in accretable yield on PCI loans for the periods ended:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
2019
 
2018
 
2019
 
2018
Beginning balance
$
2,608

 
$
3,552

 
$
2,924

 
$
3,699

Additions
—

 
—

 
—

 
—

Deletions
—

 
—

 
—

 
(43
)
Accretion
(273
)
 
(262
)
 
(1,049
)
 
(705
)
Reclassification from non-accretable difference
9

 
(101
)
 
469

 
238

Ending balance
$
2,344

 
$
3,189

 
$
2,344

 
$
3,189


 
Troubled Debt Restructured Loans
 
The Company’s Troubled Debt Restructuring (“TDR”) concessions granted to certain borrowers generally do not include forgiveness of principal balances, but may include interest rate reductions, an extension of the amortization period and/or converting the loan to interest only for a limited period of time. Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructured agreements. Most loans prior to modification were classified as impaired and the allowance for loan losses is determined in accordance with Company policy.

During the three and six months ended June 30, 2019, there were two loans totaling $0.4 million and four loans totaling $2.4 million, respectively, modified in a TDR. There were no defaults on loans modified in a TDR within the twelve months preceding June 30, 2019. During the three and six months ended June 30, 2018 there was one loan totaling $0.1 million modified in a TDR. There was one loan that defaulted which had been modified in a TDR of $0.1 million during the twelve months preceding June 30, 2018. The Company considers a loan to have defaulted when it becomes 90 days or more delinquent under the modified terms, has
been transferred to nonaccrual status, or has been transferred to other real estate owned. A defaulted TDR is generally placed on nonaccrual and a specific allowance for loan loss is assigned in accordance with the Company’s policy.
 
Impaired Loans
 
Loans are considered impaired if they are 90 days or more past due, in nonaccrual status, or are TDRs. As of June 30, 2019 and December 31, 2018, the Company’s recorded investment in impaired loans, excluding PCI loans, the unpaid principal balance and related valuation allowance was as follows:
 
 
June 30, 2019
(In thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Valuation
Allowance
Impaired Loans with No Related Allowance Recorded:
 

 
 

 
 

Construction and land development
$
588

 
$
791

 
$
—

Commercial real estate
5,651

 
6,965

 
—

Residential real estate
9,939

 
14,462

 
—

Commercial and financial
1,679

 
1,938

 
—

Consumer
147

 
160

 
—

Impaired Loans with an Allowance Recorded:
 
 
 
 
 
Construction and land development
169

 
184

 
19

Commercial real estate
9,591

 
12,758

 
338

Residential real estate
5,336

 
5,478

 
543

Commercial and financial
1,294

 
1,444

 
1,179

Consumer
294

 
308

 
119

Total Impaired Loans
 
 
 
 
 
Construction and land development
757

 
975

 
19

Commercial real estate
15,242

 
19,723

 
338

Residential real estate
15,275

 
19,940

 
543

Commercial and financial
2,973

 
3,382

 
1,179

Consumer
441

 
468

 
119

       Totals
$
34,688

 
$
44,488

 
$
2,198

 
 
December 31, 2018
(In thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Valuation
Allowance
Impaired Loans with No Related Allowance Recorded:
 

 
 

 
 

Construction and land development
$
15

 
$
229

 
$
—

Commercial real estate
3,852

 
5,138

 
—

Residential real estate
13,510

 
18,111

 
—

Commercial and financial
1,191

 
1,414

 
—

Consumer
280

 
291

 
—

Impaired Loans with an Allowance Recorded:
 
 
 
 
 
Construction and land development
196

 
211

 
22

Commercial real estate
9,786

 
12,967

 
369

Residential real estate
5,537

 
5,664

 
805

Commercial and financial
2,131

 
2,309

 
1,498

Consumer
202

 
211

 
34

Total Impaired Loans
 
 
 
 
 
Construction and land development
211

 
440

 
22

Commercial real estate
13,638

 
18,105

 
369

Residential real estate
19,047

 
23,775

 
805

Commercial and financial
3,322

 
3,723

 
1,498

Consumer
482

 
502

 
34

       Totals
$
36,700

 
$
46,545

 
$
2,728


 
Impaired loans also include TDRs where concessions have been granted to borrowers who have experienced financial difficulty. At June 30, 2019 and at December 31, 2018, accruing TDRs totaled $14.5 million and $13.3 million, respectively.
 
Average impaired loans for the three months ended June 30, 2019 and 2018 were $35.2 million and $34.4 million, respectively. The impaired loans were measured for impairment based on the value of underlying collateral or the present value of expected future cash flows discounted at the loan’s effective interest rate. The valuation allowance is included in the allowance for loan losses.
 
Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful, at which time payments received are recorded as reductions in principal. For the three months ended June 30, 2019, and 2018, the Company recorded interest income on impaired loans of $0.4 million and $0.6 million, respectively. For the six months ended June 30, 2019, and 2018, the Company recorded interest income on impaired loans of $0.8 million and $0.9 million, respectively.
 
For impaired loans whose impairment is measured based on the present value of expected future cash flows, interest income represents the change in present value attributable to the passage of time, and totaled $27,000 and $33,000, respectively, for the three months ended June 30, 2019 and 2018, and $62,000 and $121,000, respectively, for the six months ended June 30, 2019 and 2018