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Loans
 12 Months Ended
Dec. 31, 2019
Receivables [Abstract]  
Loans
Loans
Loans, excluding loans held for sale, at December 31, 2019 and 2018 were comprised of the following (dollars in thousands):
 
December 31,
 
2019
 
2018
Commercial
$
339,077

 
$
285,972

Commercial real estate:
 

 
 

Construction and land development
137,920

 
97,240

Commercial real estate
899,199

 
655,800

Residential real estate:
 

 
 

Residential
324,315

 
209,438

Home equity
119,423

 
103,933

Consumer
10,881

 
5,093

Total loans, net of unearned income
$
1,830,815

 
$
1,357,476


Net deferred loan (fees) costs included in the above loan categories are $1,197,000 for 2019 and $720,000 for 2018.
Overdraft deposits were reclassified to consumer loans in the amount of $134,000 and $127,000 for 2019 and 2018, respectively.
Acquired Loans
The outstanding principal balance and the carrying amount of these loans, including ASC 310-30 loans, included in the consolidated balance sheets at December 31, 2019 and 2018 are as follows (dollars in thousands):
 
2019
 
2018
Outstanding principal balance
$
393,618

 
$
63,619

Carrying amount
377,130

 
58,886

The outstanding principal balance and related carrying amount of purchased credit impaired loans, for which the Company applies ASC 310-30 to account for interest earned, at December 31, 2019 and 2018 are as follows (dollars in thousands):
 
2019
 
2018
Outstanding principal balance
$
53,600

 
$
24,500

Carrying amount
43,028

 
20,611

                             
The following table presents changes in the accretable yield on purchased credit impaired loans, for which the Company applies ASC 310-30, for the years ended December 31, 2019, 2018, and 2017 (dollars in thousands):
 
2019
 
2018
 
2017
Balance at January 1
$
4,633

 
$
4,890

 
$
6,103

Additions from merger with HomeTown
4,410

 
—

 
—

Accretion
(3,304
)
 
(2,362
)
 
(3,117
)
Reclassification from nonaccretable difference
736

 
956

 
1,006

Other changes, net
1,418

 
1,149

 
898

Balance at December 31
$
7,893

 
$
4,633

 
$
4,890


Past Due Loans
The following table shows an analysis by portfolio segment of the Company's past due loans at December 31, 2019 (dollars in thousands):
 
30- 59 Days
Past Due
 
60-89 Days
Past Due
 
90 Days +
Past Due
and Still
Accruing
 
Non-
Accrual
Loans
 
Total
Past
Due
 
Current
 
Total
Loans
Commercial
$
325

 
$
163

 
$
52

 
$
857

 
$
1,397

 
$
337,680

 
$
339,077

Commercial real estate:
 

 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
58

 
—

 
—

 
11

 
69

 
137,851

 
137,920

Commercial real estate
217

 
434

 
—

 
274

 
925

 
898,274

 
899,199

Residential:
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential
639

 
260

 
282

 
685

 
1,866

 
322,449

 
324,315

Home equity
49

 
90

 
27

 
113

 
279

 
119,144

 
119,423

Consumer
73

 
13

 
—

 
4

 
90

 
10,791

 
10,881

Total
$
1,361

 
$
960

 
$
361

 
$
1,944

 
$
4,626

 
$
1,826,189

 
$
1,830,815

The following table shows an analysis by portfolio segment of the Company's past due loans at December 31, 2018 (dollars in thousands):
 
30- 59 Days
Past Due
 
60-89 Days
Past Due
 
90 Days +
Past Due
and Still
Accruing
 
Non-
Accrual
Loans
 
Total
Past
Due
 
Current
 
Total
Loans
Commercial
$
20

 
$
—

 
$
—

 
$
83

 
$
103

 
$
285,869

 
$
285,972

Commercial real estate:
 

 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
—

 
—

 
—

 
27

 
27

 
97,213

 
97,240

Commercial real estate
42

 
—

 
—

 
197

 
239

 
655,561

 
655,800

Residential:
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential
456

 
157

 
72

 
659

 
1,344

 
208,094

 
209,438

Home equity
126

 
—

 
—

 
124

 
250

 
103,683

 
103,933

Consumer
21

 
3

 
—

 
—

 
24

 
5,069

 
5,093

Total
$
665

 
$
160

 
$
72

 
$
1,090

 
$
1,987

 
$
1,355,489

 
$
1,357,476


Impaired Loans
The following table presents the Company's impaired loan balances by portfolio segment, excluding acquired impaired loans, at December 31, 2019 (dollars in thousands):
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial
$
49

 
$
49

 
$
—

 
$
16

 
$
5

Commercial real estate:
 

 
 

 
 

 
 

 
 

Construction and land development
—

 
—

 
—

 
—

 
—

Commercial real estate
502

 
500

 
—

 
424

 
39

Residential:
 

 
 

 
 

 
 

 
 

Residential
611

 
612

 
—

 
652

 
38

Home equity
41

 
41

 
—

 
45

 
6

Consumer
—

 
—

 
—

 
—

 
—

 
$
1,203

 
$
1,202

 
$
—

 
$
1,137

 
$
88

With a related allowance recorded:
 

 
 

 
 

 
 

 
 

Commercial
$
735

 
$
730

 
$
204

 
$
191

 
$
41

Commercial real estate:
 

 
 

 
 

 
 

 
 

Construction and land development
—

 
—

 
—

 
—

 
—

Commercial real estate
—

 
—

 
—

 
—

 
—

Residential
 

 
 

 
 

 
 

 
 

Residential
254

 
254

 
26

 
225

 
16

Home equity
—

 
—

 
—

 
—

 
—

Consumer
—

 
—

 
—

 
—

 
—

 
$
989

 
$
984

 
$
230

 
$
416

 
$
57

Total:
 

 
 

 
 

 
 

 
 

Commercial
$
784

 
$
779

 
$
204

 
$
207

 
$
46

Commercial real estate:
 

 
 

 
 

 
 

 
 

Construction and land development
—

 
—

 
—

 
—

 
—

Commercial real estate
502

 
500

 
—

 
424

 
39

Residential:
 

 
 

 
 

 
 

 
 

Residential
865

 
866

 
26

 
877

 
54

Home equity
41

 
41

 
—

 
45

 
6

Consumer
—

 
—

 
—

 
—

 
—

 
$
2,192

 
$
2,186

 
$
230

 
$
1,553

 
$
145

In the table above, recorded investment may exceed unpaid principal balance due to acquired loans with a premium and loans with unearned costs that exceed unearned fees.
The following table presents the Company's impaired loan balances by portfolio segment, excluding acquired impaired loans, at December 31, 2018 (dollars in thousands):
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial
$
28

 
$
28

 
$
—

 
$
44

 
$
14

Commercial real estate:
 

 
 

 
 

 
 

 
 

Construction and land development
—

 
—

 
—

 
—

 
—

Commercial real estate
376

 
373

 
—

 
542

 
36

Residential:
 

 
 

 
 

 
 

 
 

Residential
646

 
646

 
—

 
875

 
29

Home equity
49

 
49

 
—

 
108

 
10

Consumer
—

 
—

 
—

 
2

 
—

 
$
1,099

 
$
1,096

 
$
—

 
$
1,571

 
$
89

With a related allowance recorded:
 

 
 

 
 

 
 

 
 

Commercial
$
62

 
$
58

 
$
55

 
$
354

 
$
40

Commercial real estate:
 

 
 

 
 

 
 

 
 

Construction and land development
—

 
—

 
—

 
21

 
—

Commercial real estate
—

 
—

 
—

 
18

 
—

Residential:
 

 
 

 
 

 
 

 
 

Residential
173

 
173

 
9

 
342

 
9

Home equity
—

 
—

 
—

 
128

 
1

Consumer
—

 
—

 
—

 
—

 
—

 
$
235

 
$
231

 
$
64

 
$
863

 
$
50

Total:
 

 
 

 
 

 
 

 
 

Commercial
$
90

 
$
86

 
$
55

 
$
398

 
$
54

Commercial real estate:
 

 
 

 
 

 
 

 
 

Construction and land development
—

 
—

 
—

 
21

 
—

Commercial real estate
376

 
373

 
—

 
560

 
36

Residential:
 

 
 

 
 

 
 

 
 

Residential
819

 
819

 
9

 
1,217

 
38

Home equity
49

 
49

 
—

 
236

 
11

Consumer
—

 
—

 
—

 
2

 
—

 
$
1,334

 
$
1,327

 
$
64

 
$
2,434

 
$
139


In the table above, recorded investment may exceed unpaid principal balance due to acquired loans with a premium and loans with unearned costs that exceed unearned fees.
The following table shows the detail of loans modified as TDRs during the year ended December 31, 2019, 2018, and 2017, included in the impaired loan balances (dollars in thousands):
 
Loans Modified as TDRs for the Year Ended December 31, 2019
 
Number of
Contracts
 
Pre-Modification
Outstanding Recorded
Investment
 
Post-Modification
Outstanding Recorded
Investment
Commercial
—

 
$
—

 
$
—

Commercial real estate
—

 
—

 
—

Home equity
—

 
—

 
—

Residential real estate
1

 
207

 
207

Consumer
—

 
—

 
—

Total
1

 
$
207

 
$
207

 
Loans Modified as TDRs for the Year Ended December 31, 2018
 
Number of
Contracts
 
Pre-Modification
Outstanding Recorded
Investment
 
Post-Modification
Outstanding Recorded
Investment
Commercial
—

 
$
—

 
$
—

Commercial real estate
—

 
—

 
—

Home equity
—

 
—

 
—

Residential real estate
1

 
11

 
11

Consumer
—

 
—

 
—

Total
1

 
$
11

 
$
11

 
Loans Modified as TDRs for the Year Ended December 31, 2017
 
Number of
Contracts
 
Pre-Modification
Outstanding Recorded
Investment
 
Post-Modification
Outstanding Recorded
Investment
Commercial
5

 
$
212

 
$
212

Commercial real estate
—

 
—

 
—

Home equity
2

 
57

 
57

Residential real estate
1

 
36

 
36

Consumer
—

 
—

 
—

Total
8

 
$
305

 
$
305


All loans modified as TDRs during the years ended December 31, 2019, 2018, and 2017 were structure modifications. The impact on the allowance for loan losses for the residential real estate loan modified as a TDR in 2019 was $24,000. There was no impact on the allowance for loan losses for the residential real estate loans modified as TDRs in 2018 and 2017. In 2017, the impact on the allowance for loan losses for loans modified as TDRs in the commercial and home equity segments was $137,000 and $1,000, respectively.
During the years ended December 31, 2019 and 2018, the Company had no loans that subsequently defaulted within twelve months of modification. During the year ended December 31, 2017, there were three commercial loans with a total recorded investment of $109,000 and one residential real estate loan with a recorded investment of $143,000 that defaulted within twelve months of modification. The Company defines default as one or more payments that occur more than 90 days past the due date, charge-off or foreclosure subsequent to modification. Any charge-offs resulting in default were adjusted through the allowance for loan losses.
 

The Company had $161,000 and $112,000 in residential real estate loans in the process of foreclosure and $285,000 and $719,000 in residential OREO at December 31, 2019 and December 31, 2018, respectively.
Risk Ratings
The following table shows the Company's loan portfolio broken down by internal risk grading as of December 31, 2019 (dollars in thousands):
Commercial and Consumer Credit Exposure
Credit Risk Profile by Internally Assigned Grade
 
Commercial
 
Construction and Land Development
 
Commercial Real Estate
 
Residential Real Estate
 
Home Equity
Pass
$
328,488

 
$
130,694

 
$
860,615

 
$
316,454

 
$
118,960

Special Mention
8,710

 
4,133

 
22,117

 
4,370

 
—

Substandard
1,879

 
3,093

 
16,467

 
3,491

 
463

Doubtful
—

 
—

 
—

 
—

 
—

Total
$
339,077

 
$
137,920

 
$
899,199

 
$
324,315

 
$
119,423

Consumer Credit Exposure
Credit Risk Profile Based on Payment Activity
 
Consumer
Performing
$
10,877

Nonperforming
4

Total
$
10,881


Loans classified in the Pass category typically are fundamentally sound and risk factors are reasonable and acceptable.
Loans classified in the Special Mention category typically have been criticized internally, by loan review or the loan officer, or by external regulators under the current credit policy regarding risk grades.
Loans classified in the Substandard category typically have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are typically characterized by the possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Loans classified in the Doubtful category typically have all the weaknesses inherent in loans classified as substandard, plus the added characteristic the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. However, these loans are not yet rated as loss because certain events may occur that may salvage the debt.
Consumer loans are classified as performing or nonperforming.  A loan is nonperforming when payments of interest and principal are past due 90 days or more.
The following table shows the Company's loan portfolio broken down by internal risk grading as of December 31, 2018 (dollars in thousands):
Commercial and Consumer Credit Exposure
Credit Risk Profile by Internally Assigned Grade
 
Commercial
 
Construction and Land Development
 
Commercial
Real Estate
 
Residential Real Estate
 
Home
Equity
Pass
$
285,092

 
$
93,000

 
$
647,519

 
$
204,261

 
$
103,541

Special Mention
154

 
1,840

 
4,403

 
1,685

 
—

Substandard
726

 
2,400

 
3,878

 
3,492

 
392

Doubtful
—

 
—

 
—

 
—

 
—

Total
$
285,972

 
$
97,240

 
$
655,800

 
$
209,438

 
$
103,933

Consumer Credit Exposure
Credit Risk Profile Based on Payment Activity
 
Consumer
Performing
$
5,093

Nonperforming
—

Total
$
5,093