Note 6 — Loans and Allowance for Loan Losses

The following is a summary of non-acquired loans:


	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	902,836	$	830,875	$	766,957
Commercial non-owner occupied		1,279,328		1,008,893		949,870
Total commercial non-owner occupied real estate		2,182,164		1,839,768		1,716,827
Consumer real estate:
Consumer owner occupied		1,844,203		1,530,260		1,454,758
Home equity loans		473,381		437,642		419,760
Total consumer real estate		2,317,584		1,967,902		1,874,518
Commercial owner occupied real estate		1,449,069		1,262,776		1,278,487
Commercial and industrial		991,842		815,187		781,757
Other income producing property		209,983		193,847		194,335
Consumer		438,789		378,985		371,758
Other loans		17,047		33,690		12,645
Total non-acquired loans		7,606,478		6,492,155		6,230,327
Less allowance for loan losses		(49,869)		(43,448)		(41,541)
Non-acquired loans, net	$	7,556,609	$	6,448,707	$	6,188,786

The following is a summary of acquired non-credit impaired loans accounted for under FASB ASC Topic 310-20, net of related discount:


	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
FASB ASC Topic 310-20 acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	222,562	$	403,357	$	76,886
Commercial non-owner occupied		684,793		817,166		199,704
Total commercial non-owner occupied real estate		907,355		1,220,523		276,590
Consumer real estate:
Consumer owner occupied		647,064		710,611		492,615
Home equity loans		259,558		320,591		164,291
Total consumer real estate		906,622		1,031,202		656,906
Commercial owner occupied real estate		455,803		521,818		207,572
Commercial and industrial		247,922		398,696		101,427
Other income producing property		150,371		196,669		76,924
Consumer		118,029		137,710		136,136
Other		—		1,289		—
Total FASB ASC Topic 310-20 acquired loans	$	2,786,102	$	3,507,907	$	1,455,555

The unamortized discount related to the acquired non-credit impaired loans totaled $37.1 million, $65.2 million, and $20.7 million at September 30, 2018, December 31, 2017, and September 30, 2017, respectively.

In accordance with FASB ASC Topic 310-30, the Company aggregated acquired loans that have common risk characteristics into pools of loan categories as described in the table below. The following is a summary of acquired credit impaired loans accounted for under FASB ASC Topic 310-30 (identified as credit impaired at the time of acquisition), net of related discount:


	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
FASB ASC Topic 310-30 acquired loans:
Commercial real estate	$	209,518	$	234,595	$	207,521
Commercial real estate—construction and development		34,312		49,649		46,248
Residential real estate		218,019		260,787		249,666
Consumer		44,081		51,453		53,302
Commercial and industrial		10,671		26,946		25,796
Total FASB ASC Topic 310-30 acquired loans		516,601		623,430		582,533
Less allowance for loan losses		(3,968)		(4,627)		(3,670)
FASB ASC Topic 310-30 acquired loans, net	$	512,633	$	618,803	$	578,863

The table below reflects refined contractual loan payments (principal and interest), estimates of the amounts not expected to be collected (non-accretable difference), accretable yield (interest income recognized over time), and the resulting fair values at the acquisition date for PSC (November 30, 2017) for loans accounted for using FASB ASC Topic 310-30. During the second quarter of 2018, the initial fair value of loans at acquisition were adjusted to reflect movement of loans between the ASC Topic 310-20 portfolio and the ASC Topic 310-30 portfolio and the movement in interest rates from the initial valuation.


	November 30, 2017
	Loans Impaired
(Dollars in thousands)	at Acquisition
Contractual principal and interest	$	113,584
Non-accretable difference		(27,248)
Cash flows expected to be collected		86,336
Accretable difference		(7,369)
Carrying value	$	78,967

The table above excludes $2.1 billion ($2.2 billion in contractual principal less a $46.5 million fair value adjustment) in acquired loans at fair value that were identified as either performing with no discount related to the credit or as revolving lines of credit (commercial or consumer) as of the acquisition date and will be accounted for under FASB ASC Topic 310-20.

The table below reflects refined contractual loan payments (principal and interest), estimates of the amounts not expected to be collected (non-accretable difference), accretable yield (interest income recognized over time), and the resulting fair values at the acquisition date for SBFC (January 3, 2017) for loans accounted for using FASB ASC Topic 310-30. During the third quarter of 2017, the initial fair values of the acquired loan portfolios were adjusted to reflect movement of loans between the ASC Topic 310-20 portfolio and the ASC Topic 310-30 portfolio


	January 3, 2017
	Loans Impaired
(Dollars in thousands)	at Acquisition
Contractual principal and interest	$	78,963
Non-accretable difference		(13,072)
Cash flows expected to be collected		65,891
Accretable difference		(4,910)
Carrying value	$	60,981

The table above excludes $986.5 million ($1.0 billion in contractual principal less a $18.8 million fair value adjustment) in acquired loans at fair value that were identified as either performing with no discount related to the credit or as revolving lines of credit (commercial or consumer) as of the acquisition date and will be accounted for under FASB ASC Topic 310-20.

Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting carrying values of acquired credit impaired loans as of September 30, 2018, December 31, 2017 and September 30, 2017 are as follows:


	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
Contractual principal and interest	$	670,008	$	795,850	$	741,268
Non-accretable difference		(38,422)		(39,324)		(26,160)
Cash flows expected to be collected		631,586		756,526		715,108
Accretable yield		(114,985)		(133,096)		(132,575)
Carrying value	$	516,601	$	623,430	$	582,533
Allowance for acquired loan losses	$	(3,968)	$	(4,627)	$	(3,670)

Income on acquired credit impaired loans that are not impaired at the acquisition date but is accounted for under FASB ASC Topic 310-30 is recognized in the same manner as loans impaired at the acquisition date. The remaining nonaccretable difference represents cash flows not expected to be collected.

The following are changes in the carrying value of acquired credit impaired loans:


	Nine Months Ended September 30,
(Dollars in thousands)	2018		2017
Balance at beginning of period	$	618,803	$	602,546
Fair value of acquired loans		—		55,850
Net reductions for payments, foreclosures, and accretion		(106,829)		(79,258)
Change in the allowance for loan losses on acquired loans		659		(275)
Balance at end of period, net of allowance for loan losses on acquired loans	$	512,633	$	578,863

The table below reflects refined accretable yield balance for acquired credit impaired loans:


	Nine Months Ended September 30,
(Dollars in thousands)	2018		2017
Balance at beginning of period	$	133,096	$	155,379
Addition from the SBFC acquisition		—		4,603
PSC acquisition Day 1 adjustment		(1,460)		—
Accretion		(36,918)		(43,873)
Reclass of nonaccretable difference due to improvement in expected cash flows		20,538		16,772
Other changes, net		(271)		(306)
Balance at end of period	$	114,985	$	132,575

In the third quarter of 2018, the accretable yield balance declined by $6.8 million as loan accretion (income) of $11.7 million was recognized. This was partially offset by improved expected cash flows of $5.0 million during the third quarter of 2018.

Our loan loss policy adheres to GAAP as well as interagency guidance. The ALLL is based upon estimates made by management. We maintain an ALLL at a level that we believe is appropriate to cover estimated credit losses on individually evaluated loans that are determined to be impaired as well as estimated credit losses inherent in the remainder of our loan portfolio. Arriving at the allowance involves a high degree of management judgment and results in a range of estimated losses. We regularly evaluate the adequacy of the allowance through our internal risk rating system, outside credit review, and regulatory agency examinations to assess the quality of the loan portfolio and identify problem loans. The evaluation process also includes our analysis of current economic conditions, composition of the loan portfolio, past due and nonaccrual loans, concentrations of credit, lending policies and procedures, and historical loan loss experience. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on, among other factors, changes in economic conditions in our markets. In addition, as noted above, regulatory agencies, as an integral part of their examination process, periodically review our allowances for losses on loans. These agencies may require management to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these and other factors, it is possible that the allowances for losses on loans may change. The provision for loan losses is charged to expense in an amount necessary to maintain the allowance at an appropriate level.

The ALLL on non‑acquired loans consists of general and specific reserves. The general reserves are determined by applying loss percentages to the portfolio that are based on historical loss experience for each class of loans and management’s evaluation and “risk grading” of the loan portfolio. Additionally, the general economic and business conditions affecting key lending areas, credit quality trends, collateral values, loan volumes and concentrations, seasoning of the loan portfolio, the findings of internal and external credit reviews and results from external bank regulatory examinations are included in this evaluation. Currently, these adjustments are applied to the non‑acquired loan portfolio when estimating the level of reserve required. The specific reserves are determined on a loan‑by‑loan basis based on management’s evaluation of our exposure for each credit, given the current payment status of the loan and the value of any underlying collateral. These are loans classified by management as doubtful or substandard. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. Generally, the need for specific reserve is evaluated on impaired loans, and once a specific reserve is established for a loan, a charge-off of that amount occurs in the quarter subsequent to the establishment of the specific reserve. Loans that are determined to be impaired are provided a specific reserve, if necessary, and are excluded from the calculation of the general reserves.

Beginning with the First Financial Holdings, Inc. acquisition in 2013, the Company segregates the acquired loan portfolio into performing loans (“non‑credit impaired) and purchased credit impaired loans. The performing loans and revolving type loans are accounted for under FASB ASC 310‑20, with each loan being accounted for individually. The ALLL on these loans will be measured and recorded consistent with non‑acquired loans. The acquired credit impaired loans will follow the description in the next paragraph.

In determining the acquisition date fair value of purchased loans, and in subsequent accounting, the Company generally aggregates purchased loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows of the pool is reasonably estimable. Subsequent to the acquisition date, increases in cash flows over those expected at the acquisition date are reclassified from the non‑accretable difference to accretable yield and recognized as interest income prospectively. Decreases in expected cash flows after the acquisition date are recognized by recording an ALLL. Management analyzes the acquired loan pools using various assessments of risk to determine an expected loss. The expected loss is derived based upon a loss given default based upon the collateral type and/or detailed review by loan officers and the probability of default that is determined based upon historical data at the loan level. All acquired loans managed by Special Asset Management are reviewed quarterly and assigned a loss given default. Acquired loans not managed by Special Asset Management are reviewed twice a year in a similar method to the Company’s originated portfolio of loans which follow review thresholds based on risk rating categories. In the fourth quarter of 2015, the Company modified its methodology to a more granular approach in determining loss given default on substandard loans with a net book balance between $100,000 and $500,000 by adjusting the loss given default to 90% of the most current collateral valuation based on appraised value. Substandard loans greater than $500,000 were individually assigned loss given defaults each quarter. Trends are reviewed in terms of accrual status, past due status, and weighted‑average grade of the loans within each of the accounting pools. In addition, the relationship between the change in the unpaid principal balance and change in the mark is assessed to correlate the directional consistency of the expected loss for each pool.

An aggregated analysis of the changes in allowance for loan losses is as follows:


	Non-acquired		Acquired Non-Credit		Acquired Credit
(Dollars in thousands)	Loans		Impaired Loans		Impaired Loans		Total
Three Months Ended September 30, 2018:
Balance at beginning of period	$	47,874	$	—	$	4,426	$	52,300
Loans charged-off		(1,891)		(97)		—		(1,988)
Recoveries of loans previously charged off (1)		555		27		—		582
Net charge-offs		(1,336)		(70)		—		(1,406)
Provision for loan losses charged to operations		3,331		70		(284)		3,117
Reduction due to loan removals		—		—		(174)		(174)
Balance at end of period	$	49,869	$	—	$	3,968	$	53,837
Three Months Ended September 30, 2017:
Balance at beginning of period	$	40,149	$	—	$	3,741	$	43,890
Loans charged-off		(1,383)		(275)		—		(1,658)
Recoveries of loans previously charged off (1)		836		279		—		1,115
Net charge-offs		(547)		4		—		(543)
Provision for loan losses charged to operations		1,939		(4)		127		2,062
Reduction due to loan removals		—		—		(198)		(198)
Balance at end of period	$	41,541	$	—	$	3,670	$	45,211


	Non-acquired		Acquired Non-Credit		Acquired Credit
(Dollars in thousands)	Loans		Impaired Loans		Impaired Loans		Total
Nine Months Ended September 30, 2018:
Balance at beginning of period	$	43,448	$	—	$	4,627	$	48,075
Loans charged-off		(4,300)		(1,614)		—		(5,914)
Recoveries of loans previously charged off (1)		2,408		279		—		2,687
Net charge-offs		(1,892)		(1,335)		—		(3,227)
Provision for loan losses charged to operations		8,313		1,335		401		10,049
Reduction due to loan removals		—		—		(1,060)		(1,060)
Balance at end of period	$	49,869	$	—	$	3,968	$	53,837
Nine Months Ended September 30, 2017:
Balance at beginning of period	$	36,960	$	—	$	3,395	$	40,355
Loans charged-off		(3,972)		(1,165)		—		(5,137)
Recoveries of loans previously charged off (1)		2,041		414		—		2,455
Net charge-offs		(1,931)		(751)		—		(2,682)
Total provision for loan losses charged to operations		6,512		751		819		8,082
Reduction due to loan removals		—		—		(544)		(544)
Balance at end of period	$	41,541	$	—	$	3,670	$	45,211

(1)

– Recoveries related to acquired credit impaired loans are recorded through other noninterest income on the consolidated statement of income and do not run through the ALLL.

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for non-acquired loans:


	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing				Other
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Loans		Total
Three Months Ended September 30, 2018
Allowance for loan losses:
Balance, June 30, 2018	$	6,187	$	7,209	$	8,607	$	10,945	$	3,368	$	6,711	$	1,413	$	3,071	$	363	$	47,874
Charge-offs		—		—		(578)		(76)		(40)		(34)		—		(1,163)		—		(1,891)
Recoveries		178		2		105		43		11		27		3		186		—		555
Provision (benefit)		(352)		774		943		468		102		219		(6)		1,089		94		3,331
Balance, September 30, 2018	$	6,013	$	7,985	$	9,077	$	11,380	$	3,441	$	6,923	$	1,410	$	3,183	$	457	$	49,869
Loans individually evaluated for impairment	$	723	$	81	$	40	$	28	$	171	$	475	$	133	$	6	$	—	$	1,657
Loans collectively evaluated for impairment	$	5,290	$	7,904	$	9,037	$	11,352	$	3,270	$	6,448	$	1,277	$	3,177	$	457	$	48,212
Loans:
Loans individually evaluated for impairment	$	35,776	$	1,315	$	4,551	$	5,420	$	3,026	$	1,409	$	2,930	$	213	$	—	$	54,640
Loans collectively evaluated for impairment		867,060		1,278,013		1,444,518		1,838,783		470,355		990,433		207,053		438,576		17,047		7,551,838
Total non-acquired loans	$	902,836	$	1,279,328	$	1,449,069	$	1,844,203	$	473,381	$	991,842	$	209,983	$	438,789	$	17,047	$	7,606,478
Three Months Ended September 30, 2017
Allowance for loan losses:
Balance, June 30, 2017	$	5,746	$	6,164	$	7,539	$	8,569	$	3,247	$	5,143	$	1,379	$	2,532	$	(170)	$	40,149
Charge-offs		(19)		—		—		—		(17)		(440)		(10)		(897)		—		(1,383)
Recoveries		333		80		92		65		38		31		29		168		—		836
Provision (benefit)		(88)		(7)		479		492		(171)		469		(10)		889		(114)		1,939
Balance, September 30, 2017	$	5,972	$	6,237	$	8,110	$	9,126	$	3,097	$	5,203	$	1,388	$	2,692	$	(284)	$	41,541
Loans individually evaluated for impairment	$	1,266	$	133	$	64	$	47	$	116	$	18	$	211	$	7	$	—	$	1,862
Loans collectively evaluated for impairment	$	4,706	$	6,104	$	8,046	$	9,079	$	2,981	$	5,185	$	1,177	$	2,685	$	(284)	$	39,679
Loans:
Loans individually evaluated for impairment	$	42,638	$	716	$	5,874	$	4,455	$	2,623	$	627	$	3,605	$	254	$	—	$	60,792
Loans collectively evaluated for impairment		724,319		949,154		1,272,613		1,450,303		417,137		781,130		190,730		371,504		12,645		6,169,535
Total non-acquired loans	$	766,957	$	949,870	$	1,278,487	$	1,454,758	$	419,760	$	781,757	$	194,335	$	371,758	$	12,645	$	6,230,327


	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing				Other
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Loans		Total
Nine Months Ended September 30, 2018
Allowance for loan losses:
Balance, December 31, 2017	$	5,921	$	6,525	$	8,128	$	9,668	$	3,250	$	5,488	$	1,375	$	2,788	$	305	$	43,448
Charge-offs		(35)		—		(659)		(80)		(111)		(178)		—		(3,237)		—		(4,300)
Recoveries		1,167		6		76		169		139		241		14		596		—		2,408
Provision (benefit)		(1,040)		1,454		1,532		1,623		163		1,372		21		3,036		152		8,313
Balance, September 30, 2018	$	6,013	$	7,985	$	9,077	$	11,380	$	3,441	$	6,923	$	1,410	$	3,183	$	457	$	49,869
Nine Months Ended September 30, 2017
Allowance for loan losses:
Balance, December 31, 2016	$	4,091	$	4,980	$	8,022	$	7,820	$	3,211	$	4,842	$	1,542	$	2,350	$	102	$	36,960
Charge-offs		(493)		—		—		(185)		(241)		(629)		(17)		(2,407)		—		(3,972)
Recoveries		555		128		197		141		133		264		77		546		—		2,041
Provision (benefit)		1,819		1,129		(109)		1,350		(6)		726		(214)		2,203		(386)		6,512
Balance, September 30, 2017	$	5,972	$	6,237	$	8,110	$	9,126	$	3,097	$	5,203	$	1,388	$	2,692	$	(284)	$	41,541

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired non-credit impaired loans:


	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Total
Three Months Ended September 30, 2018
Allowance for loan losses:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		—		—		—		—		(4)		(30)		—		(63)		(97)
Recoveries		1		—		—		1		6		5		—		14		27
Provision (benefit)		(1)		—		—		(1)		(2)		25		—		49		70
Balance, September 30, 2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		222,562		684,793		455,803		647,064		259,558		247,922		150,371		118,029		2,786,102
Total acquired non-credit impaired loans	$	222,562	$	684,793	$	455,803	$	647,064	$	259,558	$	247,922	$	150,371	$	118,029	$	2,786,102

Three Months Ended September 30, 2017
Allowance for loan losses:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		—		—		—		(80)		(71)		(1)		—		(123)		(275)
Recoveries		1		—		1		—		274		1		—		2		279
Provision (benefit)		(1)		—		(1)		80		(203)		—		—		121		(4)
Balance, September 30, 2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		76,886		199,704		207,572		492,615		164,291		101,427		76,924		136,136		1,455,555
Total acquired non-credit impaired loans	$	76,886	$	199,704	$	207,572	$	492,615	$	164,291	$	101,427	$	76,924	$	136,136	$	1,455,555


	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Total
Nine Months Ended September 30, 2018
Allowance for loan losses:
Balance, December 31, 2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		(106)		—		(28)		(70)		(244)		(838)		—		(328)		(1,614)
Recoveries		8		—		—		63		85		60		—		63		279
Provision (benefit)		98		—		28		7		159		778		—		265		1,335
Balance, September 30, 2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Nine Months Ended September 30, 2017
Allowance for loan losses:
Balance, December 31, 2016	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		—		—		—		(89)		(736)		(3)		—		(337)		(1,165)
Recoveries		3		—		1		42		343		3		1		21		414
Provision (benefit)		(3)		—		(1)		47		393		—		(1)		316		751
Balance, September 30, 2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired credit impaired loans:


			Commercial
			Real Estate-
	Commercial		Construction and		Residential				Commercial
(Dollars in thousands)	Real Estate		Development		Real Estate		Consumer		and Industrial		Total
Three Months Ended September 30, 2018
Allowance for loan losses:
Balance, June 30, 2018	$	636	$	576	$	2,514	$	572	$	128	$	4,426
Provision (benefit) for loan losses		62		(205)		(87)		(26)		(28)		(284)
Reduction due to loan removals		(6)		(31)		(116)		—		(21)		(174)
Balance, September 30, 2018	$	692	$	340	$	2,311	$	546	$	79	$	3,968
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	692	$	340	$	2,311	$	546	$	79	$	3,968
Loans:*
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		209,518		34,312		218,019		44,081		10,671		516,601
Total acquired credit impaired loans	$	209,518	$	34,312	$	218,019	$	44,081	$	10,671	$	516,601

Three Months Ended September 30, 2017
Allowance for loan losses:
Balance , June 30, 2017	$	40	$	92	$	2,741	$	548	$	320	$	3,741
Provision (benefit) for loan losses		(40)		133		184		(85)		(65)		127
Reduction due to loan removals		—		(36)		(149)		(1)		(12)		(198)
Balance, September 30, 2017	$	—	$	189	$	2,776	$	462	$	243	$	3,670
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	189	$	2,776	$	462	$	243	$	3,670
Loans:*
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		207,521		46,248		249,666		53,302		25,796		582,533
Total acquired credit impaired loans	$	207,521	$	46,248	$	249,666	$	53,302	$	25,796	$	582,533


			Commercial
			Real Estate-
	Commercial		Construction and		Residential				Commercial
(Dollars in thousands)	Real Estate		Development		Real Estate		Consumer		and Industrial		Total
Nine Months Ended September 30, 2018
Allowance for loan losses:
Balance, December 31, 2017	$	288	$	180	$	3,553	$	461	$	145	$	4,627
Provision (benefit) for loan losses		423		273		(894)		88		511		401
Reduction due to loan removals		(19)		(113)		(348)		(3)		(577)		(1,060)
Balance, September 30, 2018	$	692	$	340	$	2,311	$	546	$	79	$	3,968
Nine Months Ended September 30, 2017
Allowance for loan losses:
Balance, December 31, 2016	$	41	$	139	$	2,419	$	558	$	238	$	3,395
Provision (benefit) for loan losses		(40)		130		743		(85)		71		819
Reduction due to loan removals		(1)		(80)		(386)		(11)		(66)		(544)
Balance, September 30, 2017	$	—	$	189	$	2,776	$	462	$	243	$	3,670

*— The carrying value of acquired credit impaired loans includes a non-accretable difference which is primarily associated with the assessment of credit quality of acquired loans.

As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators, including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below), and (iv) the general economic conditions of the markets that we serve.

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of the risk grades is as follows:

Pass—These loans range from minimal credit risk to average, however, still acceptable credit risk.

Special mention—A special mention loan has 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 the institution’s credit position at some future date.

Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

The following table presents the credit risk profile by risk grade of commercial loans for non-acquired loans:


	Construction & Development						Commercial Non-owner Occupied						Commercial Owner Occupied
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	889,818	$	818,240	$	755,633	$	1,270,557	$	999,049	$	939,125	$	1,421,090	$	1,232,927	$	1,247,881
Special mention		9,906		8,758		7,445		7,027		7,864		8,475		18,337		23,575		24,277
Substandard		3,112		3,877		3,879		1,744		1,980		2,270		9,642		6,274		6,329
Doubtful		—		—		—		—		—		—		—		—		—
	$	902,836	$	830,875	$	766,957	$	1,279,328	$	1,008,893	$	949,870	$	1,449,069	$	1,262,776	$	1,278,487


	Commercial & Industrial						Other Income Producing Property						Commercial Total
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	970,586	$	801,885	$	770,975	$	203,844	$	186,158	$	186,639	$	4,755,895	$	4,038,259	$	3,900,253
Special mention		12,997		11,130		8,894		4,671		6,034		6,090		52,938		57,361		55,181
Substandard		8,259		2,172		1,888		1,468		1,655		1,606		24,225		15,958		15,972
Doubtful		—		—		—		—		—		—		—		—		—
	$	991,842	$	815,187	$	781,757	$	209,983	$	193,847	$	194,335	$	4,833,058	$	4,111,578	$	3,971,406

The following table presents the credit risk profile by risk grade of consumer loans for non-acquired loans:


	Consumer Owner Occupied						Home Equity						Consumer
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	1,816,735	$	1,502,016	$	1,427,278	$	460,720	$	424,369	$	405,945	$	437,043	$	377,425	$	370,258
Special mention		11,614		13,902		14,914		6,037		6,749		7,346		517		313		316
Substandard		15,854		14,342		12,566		6,624		6,524		6,469		1,229		1,247		1,184
Doubtful		—		—		—		—		—		—		—		—		—
	$	1,844,203	$	1,530,260	$	1,454,758	$	473,381	$	437,642	$	419,760	$	438,789	$	378,985	$	371,758


	Other						Consumer Total
	September 30, 2018		December 31, 2017		September 30, 2017		September 30, 2018		December 31, 2017		September 30, 2017
Pass	$	17,047	$	33,690	$	12,645	$	2,731,545	$	2,337,500	$	2,216,126
Special mention		—		—		—		18,168		20,964		22,576
Substandard		—		—		—		23,707		22,113		20,219
Doubtful		—		—		—		—		—		—
	$	17,047	$	33,690	$	12,645	$	2,773,420	$	2,380,577	$	2,258,921

The following table presents the credit risk profile by risk grade of total non-acquired loans:


	Total Non-acquired Loans
	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
Pass	$	7,487,440	$	6,375,759	$	6,116,379
Special mention		71,106		78,325		77,757
Substandard		47,932		38,071		36,191
Doubtful		—		—		—
	$	7,606,478	$	6,492,155	$	6,230,327

The following table presents the credit risk profile by risk grade of commercial loans for acquired non-credit impaired loans:


							Commercial Non-owner
	Construction & Development						Occupied						Commercial Owner Occupied
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	221,034	$	394,139	$	74,665	$	670,176	$	809,241	$	195,808	$	447,877	$	513,861	$	201,498
Special mention		921		4,602		1,403		14,612		7,913		3,806		6,933		7,740		4,048
Substandard		607		4,616		818		5		12		90		993		217		2,026
Doubtful		—		—		—		—		—		—		—		—		—
	$	222,562	$	403,357	$	76,886	$	684,793	$	817,166	$	199,704	$	455,803	$	521,818	$	207,572


							Other Income Producing
	Commercial & Industrial						Property						Commercial Total
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	239,906	$	388,342	$	95,523	$	143,349	$	191,229	$	74,994	$	1,722,342	$	2,296,812	$	642,488
Special mention		7,634		9,883		5,385		6,208		4,547		1,208		36,308		34,685		15,850
Substandard		382		471		519		814		893		722		2,801		6,209		4,175
Doubtful		—		—		—		—		—		—		—		—		—
	$	247,922	$	398,696	$	101,427	$	150,371	$	196,669	$	76,924	$	1,761,451	$	2,337,706	$	662,513

The following table presents the credit risk profile by risk grade of consumer loans for acquired non-credit impaired loans:


	Consumer Owner Occupied						Home Equity						Consumer
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	635,443	$	703,557	$	487,393	$	244,017	$	301,842	$	154,461	$	115,154	$	134,530	$	132,962
Special mention		7,412		4,165		2,502		8,089		10,477		5,077		619		541		1,141
Substandard		4,209		2,889		2,720		7,452		8,272		4,753		2,256		2,639		2,033
Doubtful		—		—		—		—		—		—		—		—		—
	$	647,064	$	710,611	$	492,615	$	259,558	$	320,591	$	164,291	$	118,029	$	137,710	$	136,136


	Other						Consumer Total
	September 30,		December 31,		September 30,			September 30,		December 31,		September 30,
	2018		2017		2017			2018		2017		2017
Pass	$	—	$	1,289	$	—		$	994,614	$	1,141,218	$	774,816
Special mention		—		—		—			16,120		15,183		8,720
Substandard		—		—		—			13,917		13,800		9,506
Doubtful		—		—		—			—		—		—
	$	—	$	1,289	$	—		$	1,024,651	$	1,170,201	$	793,042

The following table presents the credit risk profile by risk grade of total acquired non-credit impaired loans:


	Total Acquired
	Non-credit Impaired Loans
	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
Pass	$	2,716,956	$	3,438,030	$	1,417,304
Special mention		52,428		49,868		24,570
Substandard		16,718		20,009		13,681
Doubtful		—		—		—
	$	2,786,102	$	3,507,907	$	1,455,555

The following table presents the credit risk profile by risk grade of acquired credit impaired loans (identified as credit-impaired at the time of acquisition), net of the related discount (this table should be read in conjunction with the allowance for acquired credit impaired loan losses table found on page 29):


							Commercial Real Estate—
							Construction and
	Commercial Real Estate						Development
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017
Pass	$	164,435	$	177,231	$	160,425	$	20,796	$	29,620	$	26,666
Special mention		22,629		28,708		22,638		3,165		5,132		6,455
Substandard		22,454		28,656		24,458		10,351		14,897		13,127
Doubtful		—		—		—		—		—		—
	$	209,518	$	234,595	$	207,521	$	34,312	$	49,649	$	46,248


	Residential Real Estate								Consumer									Commercial & Industrial
	September 30,		December 31,			September 30,			September 30,			December 31,			September 30,			September 30,			December 31,			September 30,
	2018		2017			2017			2018			2017			2017			2018			2017			2017
Pass	$	109,004		$	135,974		$	133,969		$	5,927		$	8,001		$	8,261		$	5,514		$	18,522		$	15,755
Special mention		42,834			54,500			50,488			14,795			17,214			17,733			584			1,169			1,397
Substandard		66,181			70,313			65,209			23,359			26,238			27,308			4,573			7,255			8,644
Doubtful		—			—			—			—			—			—			—			—			—
	$	218,019		$	260,787		$	249,666		$	44,081		$	51,453		$	53,302		$	10,671		$	26,946		$	25,796


	Total Acquired
	Credit Impaired Loans
	September 30,		December 31,		September 30,
	2018		2017		2017
Pass	$	305,676	$	369,348	$	345,076
Special mention		84,007		106,723		98,711
Substandard		126,918		147,359		138,746
Doubtful		—		—		—
	$	516,601	$	623,430	$	582,533

The risk grading of acquired credit impaired loans is determined utilizing a loan’s contractual balance, while the amount recorded in the financial statements and reflected above is the carrying value.

The following table presents an aging analysis of past due loans (includes nonaccrual loans), segregated by class for non-acquired loans:


	30 - 59 Days		60 - 89 Days		90+ Days		Total				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans
September 30, 2018
Commercial real estate:
Construction and land development	$	535	$	537	$	77	$	1,149	$	901,687	$	902,836
Commercial non-owner occupied		466		—		676		1,142		1,278,186		1,279,328
Commercial owner occupied		2,562		1,249		871		4,682		1,444,387		1,449,069
Consumer real estate:
Consumer owner occupied		866		264		920		2,050		1,842,153		1,844,203
Home equity loans		1,667		296		749		2,712		470,669		473,381
Commercial and industrial		716		297		905		1,918		989,924		991,842
Other income producing property		1,163		—		249		1,412		208,571		209,983
Consumer		702		171		686		1,559		437,230		438,789
Other loans		—		—		—		—		17,047		17,047
	$	8,677	$	2,814	$	5,133	$	16,624	$	7,589,854	$	7,606,478
December 31, 2017
Commercial real estate:
Construction and land development	$	391	$	63	$	401	$	855	$	830,020	$	830,875
Commercial non-owner occupied		297		398		51		746		1,008,147		1,008,893
Commercial owner occupied		2,227		382		1,721		4,330		1,258,446		1,262,776
Consumer real estate:
Consumer owner occupied		1,291		140		1,943		3,374		1,526,886		1,530,260
Home equity loans		1,209		372		1,684		3,265		434,377		437,642
Commercial and industrial		477		57		915		1,449		813,738		815,187
Other income producing property		223		255		198		676		193,171		193,847
Consumer		525		196		623		1,344		377,641		378,985
Other loans		—		—		—		—		33,690		33,690
	$	6,640	$	1,863	$	7,536	$	16,039	$	6,476,116	$	6,492,155
September 30, 2017
Commercial real estate:
Construction and land development	$	728	$	76	$	483	$	1,287	$	765,670	$	766,957
Commercial non-owner occupied		26		567		85		678		949,192		949,870
Commercial owner occupied		2,382		300		1,824		4,506		1,273,981		1,278,487
Consumer real estate:
Consumer owner occupied		2,587		1,514		1,073		5,174		1,449,584		1,454,758
Home equity loans		841		416		1,361		2,618		417,142		419,760
Commercial and industrial		772		1,162		92		2,026		779,731		781,757
Other income producing property		76		100		252		428		193,907		194,335
Consumer		541		110		441		1,092		370,666		371,758
Other loans		—		—		—		—		12,645		12,645
	$	7,953	$	4,245	$	5,611	$	17,809	$	6,212,518	$	6,230,327

The following table presents an aging analysis of past due loans (includes nonaccrual loans), segregated by class for acquired non-credit impaired loans:


	30 - 59 Days		60 - 89 Days		90+ Days		Total				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans
September 30, 2018
Commercial real estate:
Construction and land development	$	6	$	199	$	373	$	578	$	221,984	$	222,562
Commercial non-owner occupied		3,931		48		—		3,979		680,814		684,793
Commercial owner occupied		564		198		711		1,473		454,330		455,803
Consumer real estate:
Consumer owner occupied		552		405		575		1,532		645,532		647,064
Home equity loans		1,295		527		2,421		4,243		255,315		259,558
Commercial and industrial		116		589		264		969		246,953		247,922
Other income producing property		804		343		129		1,276		149,095		150,371
Consumer		541		298		465		1,304		116,725		118,029
	$	7,809	$	2,607	$	4,938	$	15,354	$	2,770,748	$	2,786,102
December 31, 2017
Commercial real estate:
Construction and land development	$	675	$	113	$	101	$	889	$	402,468	$	403,357
Commercial non-owner occupied		12		321		—		333		816,833		817,166
Commercial owner occupied		642		—		189		831		520,987		521,818
Consumer real estate:
Consumer owner occupied		673		204		867		1,744		708,867		710,611
Home equity loans		3,639		609		1,704		5,952		314,639		320,591
Commercial and industrial		5,996		1,278		143		7,417		391,279		398,696
Other income producing property		327		—		250		577		196,092		196,669
Consumer		400		114		1,351		1,865		135,845		137,710
Other		—		—		—		—		1,289		1,289
	$	12,364	$	2,639	$	4,605	$	19,608	$	3,488,299	$	3,507,907
September 30, 2017
Commercial real estate:
Construction and land development	$	117	$	199	$	225	$	541	$	76,345	$	76,886
Commercial non-owner occupied		618		—		—		618		199,086		199,704
Commercial owner occupied		330		97		893		1,320		206,252		207,572
Consumer real estate:
Consumer owner occupied		1,404		535		761		2,700		489,915		492,615
Home equity loans		1,240		455		999		2,694		161,597		164,291
Commercial and industrial		749		464		98		1,311		100,116		101,427
Other income producing property		164		64		37		265		76,659		76,924
Consumer		364		814		620		1,798		134,338		136,136
	$	4,986	$	2,628	$	3,633	$	11,247	$	1,444,308	$	1,455,555

The following table presents an aging analysis of past due loans (includes nonaccrual loans), segregated by class for acquired credit impaired loans:


	30 - 59 Days		60 - 89 Days		90+ Days		Total				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans
September 30, 2018
Commercial real estate	$	1,517	$	375	$	5,608	$	7,500	$	202,018	$	209,518
Commercial real estate—construction and development		768		309		2,905		3,982		30,330		34,312
Residential real estate		6,506		1,392		8,371		16,269		201,750		218,019
Consumer		671		168		891		1,730		42,351		44,081
Commercial and industrial		2,625		83		88		2,796		7,875		10,671
	$	12,087	$	2,327	$	17,863	$	32,277	$	484,324	$	516,601
December 31, 2017
Commercial real estate	$	2,519	$	3,669	$	2,825	$	9,013	$	225,582	$	234,595
Commercial real estate—construction and development		811		427		3,761		4,999		44,650		49,649
Residential real estate		5,895		4,283		8,824		19,002		241,785		260,787
Consumer		989		452		889		2,330		49,123		51,453
Commercial and industrial		596		167		406		1,169		25,777		26,946
	$	10,810	$	8,998	$	16,705	$	36,513	$	586,917	$	623,430
September 30, 2017
Commercial real estate	$	2,018	$	404	$	1,427	$	3,849	$	203,672	$	207,521
Commercial real estate—construction and development		22		234		3,239		3,495		42,753		46,248
Residential real estate		3,608		2,750		7,148		13,506		236,160		249,666
Consumer		670		259		943		1,872		51,430		53,302
Commercial and industrial		314		571		361		1,246		24,550		25,796
	$	6,632	$	4,218	$	13,118	$	23,968	$	558,565	$	582,533

The following is a summary of certain information pertaining to impaired non-acquired loans:


	Unpaid		Recorded		Gross
	Contractual		Investment		Recorded		Total
	Principal		With No		Investment		Recorded		Related
(Dollars in thousands)	Balance		Allowance		With Allowance		Investment		Allowance
September 30, 2018
Commercial real estate:
Construction and land development	$	36,203	$	1,029	$	34,747	$	35,776	$	723
Commercial non-owner occupied		1,480		812		503		1,315		81
Commercial owner occupied		5,507		2,668		1,883		4,551		40
Consumer real estate:
Consumer owner occupied		5,914		4,478		942		5,420		28
Home equity loans		3,141		1,135		1,891		3,026		171
Commercial and industrial		1,462		467		942		1,409		475
Other income producing property		3,165		158		2,772		2,930		133
Consumer		284		—		213		213		6
Total	$	57,156	$	10,747	$	43,893	$	54,640	$	1,657
December 31, 2017
Commercial real estate:
Construction and land development	$	47,553	$	649	$	42,581	$	43,230	$	1,063
Commercial non-owner occupied		3,106		860		515		1,375		125
Commercial owner occupied		9,212		3,553		2,089		5,642		64
Consumer real estate:
Consumer owner occupied		7,382		4,392		1,240		5,632		37
Home equity loans		3,602		896		2,115		3,011		135
Commercial and industrial		2,246		635		521		1,156		15
Other income producing property		3,893		—		3,138		3,138		178
Consumer		654		—		239		239		7
Total	$	77,648	$	10,985	$	52,438	$	63,423	$	1,624
September 30, 2017
Commercial real estate:
Construction and land development	$	46,664	$	954	$	41,684	$	42,638	$	1,266
Commercial non-owner occupied		2,361		207		509		716		133
Commercial owner occupied		9,504		3,936		1,938		5,874		64
Consumer real estate:
Consumer owner occupied		5,986		1,369		3,086		4,455		47
Home equity loans		3,184		716		1,907		2,623		116
Commercial and industrial		1,753		—		627		627		18
Other income producing property		4,334		—		3,605		3,605		211
Consumer		623		—		254		254		7
Total	$	74,409	$	7,182	$	53,610	$	60,792	$	1,862

Acquired credit impaired loans are accounted for in pools as shown on page 23 rather than being individually evaluated for impairment; therefore, the table above excludes acquired credit impaired loans.

The following summarizes the average investment in impaired non-acquired loans, and interest income recognized on these loans:


	Three Months Ended September 30,
	2018				2017
	Average				Average
	Investment in		Interest Income		Investment in		Interest Income
(Dollars in thousands)	Impaired Loans		Recognized		Impaired Loans		Recognized
Commercial real estate:
Construction and land development	$	39,084	$	158	$	36,337	$	486
Commercial non-owner occupied		1,332		5		735		3
Commercial owner occupied		4,650		81		5,964		63
Consumer real estate:
Consumer owner occupied		5,524		32		4,515		36
Home equity loans		3,085		30		2,624		29
Commercial and industrial		1,622		8		912		8
Other income producing property		3,085		32		3,623		50
Consumer		235		—		245		2
Total Impaired Loans	$	58,617	$	346	$	54,955	$	677


	Nine Months Ended September 30,
	2018				2017
	Average				Average
	Investment in		Interest Income		Investment in		Interest Income
(Dollars in thousands)	Impaired Loans		Recognized		Impaired Loans		Recognized
Commercial real estate:
Construction and land development	$	39,503	$	968	$	22,835	$	800
Commercial non-owner occupied		1,345		19		761		15
Commercial owner occupied		5,096		228		6,060		208
Consumer real estate:
Consumer owner occupied		5,527		120		5,064		110
Home equity loans		3,019		95		2,148		75
Commercial and industrial		1,282		43		945		30
Other income producing property		3,034		120		2,989		153
Consumer		226		—		200		5
Other loans		—		—		—		—
Total Impaired Loans	$	59,032	$	1,593	$	41,002	$	1,396

The following is a summary of information pertaining to non-acquired nonaccrual loans by class, including restructured loans:


	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
Commercial non-owner occupied real estate:
Construction and land development	$	404	$	251	$	57
Commercial non-owner occupied		1,110		2,635		2,755
Total commercial non-owner occupied real estate		1,514		2,886		2,812
Consumer real estate:
Consumer owner occupied		6,406		4,888		3,674
Home equity loans		2,623		269		308
Total consumer real estate		9,029		5,157		3,982
Commercial owner occupied real estate		1,063		1,144		557
Commercial and industrial		957		1,662		1,952
Other income producing property		474		764		1,083
Consumer		1,177		1,802		1,123
Restructured loans		1,065		925		858
Total loans on nonaccrual status	$	15,279	$	14,340	$	12,367

The following is a summary of information pertaining to acquired non-credit impaired nonaccrual loans by class, including restructured loans:


	September 30,		December 31,		September 30,
(Dollars in thousands)	2018		2017		2017
Commercial non-owner occupied real estate:
Construction and land development	$	402	$	108	$	233
Commercial non-owner occupied		—		—		—
Total commercial non-owner occupied real estate		402		108		233
Consumer real estate:
Consumer owner occupied		2,408		2,156		1,891
Home equity loans		4,901		4,589		1,813
Total consumer real estate		7,309		6,745		3,704
Commercial owner occupied real estate		904		189		—
Commercial and industrial		354		133		114
Other income producing property		249		316		107
Consumer		1,580		1,906		1,299
Total loans on nonaccrual status	$	10,798	$	9,397	$	5,457

In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. Any loans that are modified are reviewed by the Bank to determine if a troubled debt restructuring (“TDR” or “restructured loan”) has occurred. The Bank designates loan modifications as TDRs when it grants a concession to a borrower that it would not otherwise consider due to the borrower experiencing financial difficulty (FASB ASC Topic 310-40). The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation.

Loans on nonaccrual status at the date of modification are initially classified as nonaccrual TDRs. Loans on accruing status at the date of concession are initially classified as accruing TDRs if the note is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the concession date if reasonable doubt exists as to the collection of interest or principal under the restructuring agreement. Nonaccrual TDRs are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower’s financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months). For the nine months ended September 30, 2018 and 2017, the Company’s TDRs were not material.