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Loans and Asset Quality Information
 6 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Loans and Asset Quality Information Loans and Asset Quality Information

The following is a summary of the major categories of total loans outstanding:
($ in thousands)
June 30, 2020
 
December 31, 2019
 
Amount
 
Percentage
 
Amount
 
Percentage
All  loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
723,053

 
15
%
 
$
504,271

 
11
%
Real estate – construction, land development & other land loans
648,590

 
14
%
 
530,866

 
12
%
Real estate – mortgage – residential (1-4 family) first mortgages
1,076,411

 
22
%
 
1,105,014

 
25
%
Real estate – mortgage – home equity loans / lines of credit
318,618

 
7
%
 
337,922

 
8
%
Real estate – mortgage – commercial and other
1,959,078

 
41
%
 
1,917,280

 
43
%
Consumer loans
51,161

 
1
%
 
56,172

 
1
%
Subtotal
4,776,911

 
100
%
 
4,451,525

 
100
%
Unamortized net deferred loan costs (fees)
(6,848
)
 
 
 
1,941

 
 
Total loans
$
4,770,063

 
 
 
$
4,453,466

 
 


Included in the table above are PPP loans totaling $244.9 million that are in the line item "Commercial, financial and agricultural." PPP loans are fully guaranteed by the SBA. Included in unamortized net deferred loan fees are $8.8 million in unamortized net deferred loan fees associated with PPP loans. These fees are being amortized under the effective interest method over the terms of the loans. Accelerated amortization will be recorded in the periods in which principal amounts are forgiven in accordance with the terms of the program.

Also included in the table above are various non-PPP SBA loans, with additional information on these loans presented in the table below.

($ in thousands)
June 30, 2020
 
December 31, 2019
Guaranteed portions of non-PPP SBA loans included in table above
$
31,630

 
54,400

Unguaranteed portions of SBA Loans included in table above
123,125

 
110,782

Total non-PPP SBA loans included in the table above
$
154,755

 
165,182

 


 


Sold portions of SBA with servicing retained - not included in tables above
$
347,376

 
316,730


At June 30, 2020 and December 31, 2019, there was a remaining unaccreted discount on the retained portion of sold SBA loans amounting to $6.8 million and $7.1 million, respectively.
The Company has several acquired loan portfolios as a result of merger and acquisition transactions. In these transactions, the Company recorded loans at their fair value as required by applicable accounting guidance. Included in these loan portfolios were purchased credit impaired (“PCI”) loans, which are loans for which it is probable at acquisition date that all contractually required payments will not be collected. The remaining loans were considered to be purchased non-impaired loans and their related fair value discount or premium is being recognized as an adjustment to yield over the remaining life of each loan.
As of June 30, 2020 and December 31, 2019, there was a remaining accretable discount of $9.5 million and $11.1 million, respectively, related to purchased non-impaired loans. The discounts are amortized as yield adjustments over the respective lives of the loans, so long as the loans perform.
The following table presents changes in the carrying value of PCI loans.
PCI loans
For the Six Months Ended June 30, 2020
 
For the Six Months Ended June 30, 2019
Balance at beginning of period
$
12,664

 
17,393

Change due to payments received and accretion
(2,939
)
 
(3,273
)
Change due to loan charge-offs
(10
)
 
(11
)
Transfers to foreclosed real estate
—

 
—

Other
27

 
66

Balance at end of period
$
9,742

 
14,175


The following table presents changes in the accretable yield for PCI loans.
Accretable Yield for PCI loans
For the Six Months Ended June 30, 2020
 
For the Six Months Ended June 30, 2019
Balance at beginning of period
$
4,149

 
4,750

Accretion
(742
)
 
(811
)
Reclassification from (to) nonaccretable difference
366

 
502

Other, net
(510
)
 
(89
)
Balance at end of period
$
3,263

 
4,352


During the first six months of 2020, the Company received $414,000 in payments that exceeded the carrying amount of the related PCI loans, of which $341,000 was recognized as loan discount accretion income, $59,000 was recorded as additional loan interest income, and $14,000 was recorded as a recovery. During the first six months of 2019, the Company received $290,000 in payments that exceeded the carrying amount of the related PCI loans, of which $263,000 was recognized as loan discount accretion income and $27,000 was recorded as additional loan interest income.
Nonperforming assets are defined as nonaccrual loans, restructured loans, loans past due 90 or more days and still accruing interest, and foreclosed real estate. Nonperforming assets are summarized as follows.
($ in thousands)
June 30,
2020

December 31,
2019
Nonperforming assets
 


 

Nonaccrual loans
$
34,922


24,866

Restructured loans - accruing
9,867


9,053

Accruing loans > 90 days past due
—


—

Total nonperforming loans
44,789


33,919

Foreclosed real estate
2,987


3,873

Total nonperforming assets
$
47,776


37,792







Purchased credit impaired loans not included above (1)
$
9,742


12,664







(1) In the March 3, 2017 acquisition of Carolina Bank, and the October 1, 2017 acquisition of Asheville Savings Bank, the Company acquired $19.3 million and $9.9 million, respectively, in PCI loans in accordance with ASC 310-30 accounting guidance. These loans are excluded from nonperforming loans, including $0.8 million and $0.8 million in PCI loans at June 30, 2020 and December 31, 2019, respectively, that were contractually past due 90 days or more.
At June 30, 2020 and December 31, 2019, the Company had $2.0 million and $0.6 million in residential mortgage loans in process of foreclosure, respectively.

The following is a summary of the Company’s nonaccrual loans by major categories.
($ in thousands)
June 30,
2020
 
December 31,
2019
Commercial, financial, and agricultural
$
8,239

 
5,518

Real estate – construction, land development & other land loans
1,038

 
1,067

Real estate – mortgage – residential (1-4 family) first mortgages
7,327

 
7,552

Real estate – mortgage – home equity loans / lines of credit
1,903

 
1,797

Real estate – mortgage – commercial and other
16,229

 
8,820

Consumer loans
186

 
112

Total
$
34,922

 
24,866



The following table presents an analysis of the payment status of the Company’s loans as of June 30, 2020. Due to the onset of the COVID-19 pandemic not occurring until late in the first quarter of 2020, as well as the Company's COVID-19 deferral program and the SBA's relief program, whereby the SBA is making six months of principal and interest payments on most SBA loans held in the Company's portfolio, the past due amounts below were not negatively impacted by the pandemic and were likely favorably impacted.
($ in thousands)
Accruing
30-59
Days Past
Due
 
Accruing
60-89
Days
Past
Due
 
Accruing
90 Days
or More
Past
Due
 
Nonaccrual
Loans
 
Accruing
Current
 
Total Loans
Receivable
Commercial, financial, and agricultural
$
1,133

 
95

 
—

 
8,239

 
713,401

 
722,868

Real estate – construction, land development & other land loans
133

 
751

 
—

 
1,038

 
643,790

 
645,712

Real estate – mortgage – residential (1-4 family) first mortgages
624

 
1,279

 
—

 
7,327

 
1,061,983

 
1,071,213

Real estate – mortgage – home equity loans / lines of credit
593

 
203

 
—

 
1,903

 
315,824

 
318,523

Real estate – mortgage – commercial and other
1,055

 
278

 
—

 
16,229

 
1,940,194

 
1,957,756

Consumer loans
136

 
35

 
—

 
186

 
50,740

 
51,097

Purchased credit impaired
11

 
13

 
800

 
—

 
8,918

 
9,742

Total
$
3,685

 
2,654

 
800

 
34,922

 
4,734,850

 
4,776,911

Unamortized net deferred loan costs (fees)
 
 
 
 
 
 
 
 
 
 
(6,848
)
Total loans
 
 
 
 
 
 
 
 
 
 
$
4,770,063

The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2019.
($ in thousands)
Accruing
30-59
Days
Past
Due
 
Accruing
60-89
Days
Past
Due
 
Accruing
90 Days
or More
Past
Due
 
Nonaccrual
Loans
 
Accruing
Current
 
Total Loans
Receivable
Commercial, financial, and agricultural
$
752

 
—

 
—

 
5,518

 
497,788

 
504,058

Real estate – construction, land development & other land loans
37

 
152

 
—

 
1,067

 
529,444

 
530,700

Real estate – mortgage – residential (1-4 family) first mortgages
10,858

 
5,056

 
—

 
7,552

 
1,076,205

 
1,099,671

Real estate – mortgage – home equity loans / lines of credit
770

 
300

 
—

 
1,797

 
334,832

 
337,699

Real estate – mortgage – commercial and other
4,257

 
—

 
—

 
8,820

 
1,897,573

 
1,910,650

Consumer loans
344

 
137

 
—

 
112

 
55,490

 
56,083

Purchased credit impaired
218

 
38

 
762

 
—

 
11,646

 
12,664

Total
$
17,236

 
5,683

 
762

 
24,866

 
4,402,978

 
4,451,525

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
 
 
1,941

Total loans
 
 
 
 
 
 
 
 
 
 
$
4,453,466


The following table presents the activity in the allowance for loan losses for all loans for the three and six months ended June 30, 2020.
($ in thousands)
Commercial,
Financial,
and
Agricultural
 
Real Estate
–
Construction,
Land
Development
& Other Land
Loans
 
Real Estate
–
Residential
(1-4 Family)
First
Mortgages
 
Real Estate
– Mortgage
– Home
Equity
Lines of
Credit
 
Real Estate
– Mortgage
–
Commercial
and Other
 
Consumer Loans
 
Unallocated
 
Total
As of and for the three months ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
4,204

 
2,599

 
4,373

 
1,394

 
10,913

 
1,015

 
—

 
24,498

Charge-offs
(1,471
)
 
(5
)
 
(279
)
 
(313
)
 
(282
)
 
(110
)
 
—

 
(2,460
)
Recoveries
260

 
353

 
224

 
83

 
55

 
31

 
—

 
1,006

Provisions
2,996

 
2,730

 
4,021

 
1,195

 
8,069

 
287

 
—

 
19,298

Ending balance
$
5,989

 
5,677

 
8,339

 
2,359

 
18,755

 
1,223

 
—

 
42,342

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of and for the six months ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
4,553

 
1,976

 
3,832

 
1,127

 
8,938

 
972

 
—

 
21,398

Charge-offs
(3,931
)
 
(45
)
 
(474
)
 
(381
)
 
(545
)
 
(397
)
 
—

 
(5,773
)
Recoveries
477

 
643

 
315

 
166

 
102

 
126

 
—

 
1,829

Provisions
4,890

 
3,103

 
4,666

 
1,447

 
10,260

 
522

 
—

 
24,888

Ending balance
$
5,989

 
5,677

 
8,339

 
2,359

 
18,755

 
1,223

 
—

 
42,342

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance as of June 30, 2020: Allowance for loan losses
Individually evaluated for impairment
$
830

 
67

 
817

 
—

 
1,052

 
—

 
—

 
2,766

Collectively evaluated for impairment
$
5,117

 
5,610

 
7,412

 
2,359

 
17,699

 
1,215

 
—

 
39,412

Purchased credit impaired
$
42

 
—

 
110

 
—

 
4

 
8

 
—

 
164

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable as of June 30, 2020
Ending balance – total
$
723,053

 
648,590

 
1,076,411

 
318,618

 
1,959,078

 
51,161

 
—

 
4,776,911

Unamortized net deferred loan fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6,848
)
Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4,770,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of June 30, 2020: Loans
Individually evaluated for impairment
$
6,736

 
965

 
9,743

 
325

 
17,697

 
—

 
—

 
35,466

Collectively evaluated for impairment
$
716,132

 
644,747

 
1,061,470

 
318,198

 
1,940,059

 
51,097

 
—

 
4,731,703

Purchased credit impaired
$
185

 
2,878

 
5,198

 
95

 
1,322

 
64

 
—

 
9,742

The following table presents the activity in the allowance for loan losses for the year ended December 31, 2019.
($ in thousands)
Commercial,
Financial,
and
Agricultural
 
Real Estate
–
Construction,
Land
Development
& Other Land
Loans
 
Real Estate
–
Residential
(1-4 Family)
First
Mortgages
 
Real Estate
– Mortgage
– Home
Equity
Lines of
Credit
 
Real Estate
– Mortgage
–
Commercial
and Other
 
Consumer Loans
 
Unallocated
 
Total
As of and for the year ended December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,889

 
2,243

 
5,197

 
1,665

 
7,983

 
952

 
110

 
21,039

Charge-offs
(2,473
)
 
(553
)
 
(657
)
 
(307
)
 
(1,556
)
 
(757
)
 
—

 
(6,303
)
Recoveries
980

 
1,275

 
705

 
629

 
575

 
235

 
—

 
4,399

Provisions
3,157

 
(989
)
 
(1,413
)
 
(860
)
 
1,936

 
542

 
(110
)
 
2,263

Ending balance
$
4,553

 
1,976

 
3,832

 
1,127

 
8,938

 
972

 
—

 
21,398

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2019: Allowance for loan losses
Individually evaluated for impairment
$
1,791

 
50

 
750

 
—

 
983

 
—

 
—

 
3,574

Collectively evaluated for impairment
$
2,720

 
1,926

 
2,976

 
1,127

 
7,931

 
961

 
—

 
17,641

Purchased credit impaired
$
42

 
—

 
106

 
—

 
24

 
11

 
—

 
183

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable as of December 31, 2019:
Ending balance – total
$
504,271

 
530,866

 
1,105,014

 
337,922

 
1,917,280

 
56,172

 
—

 
4,451,525

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,941

Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4,453,466

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of December 31, 2019: Loans
Individually evaluated for impairment
$
4,957

 
796

 
9,546

 
333

 
9,570

 
—

 
—

 
25,202

Collectively evaluated for impairment
$
499,101

 
529,904

 
1,090,125

 
337,366

 
1,901,080

 
56,083

 
—

 
4,413,659

Purchased credit impaired
$
213

 
166

 
5,343

 
223

 
6,630

 
89

 
—

 
12,664

The following table presents the activity in the allowance for loan losses for all loans for the three and six months ended June 30, 2019.
($ in thousands)
Commercial,
Financial,
and
Agricultural
 
Real Estate
–
Construction,
Land
Development
& Other Land
Loans
 
Real Estate
–
Residential
(1-4 Family)
First
Mortgages
 
Real Estate
– Mortgage
– Home
Equity
Lines of
Credit
 
Real Estate
– Mortgage
–
Commercial
and Other
 
Consumer Loans
 
Unallocated
 
Total
As of and for the three months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
3,709

 
2,284

 
4,510

 
1,374

 
8,120

 
1,006

 
92

 
21,095

Charge-offs
(690
)
 
(29
)
 
(155
)
 
(66
)
 
(2
)
 
(155
)
 
—

 
(1,097
)
Recoveries
191

 
202

 
222

 
327

 
103

 
54

 
—

 
1,099

Provisions
8

 
(642
)
 
(454
)
 
(364
)
 
631

 
306

 
207

 
(308
)
Ending balance
$
3,218


1,815


4,123


1,271


8,852


1,211


299


20,789

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of and for the six months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,889

 
2,243

 
5,197

 
1,665

 
7,983

 
952

 
110

 
21,039

Charge-offs
(936
)
 
(293
)
 
(185
)
 
(146
)
 
(838
)
 
(436
)
 
—

 
(2,834
)
Recoveries
605

 
489

 
382

 
455

 
374

 
87

 
—

 
2,392

Provisions
660

 
(624
)
 
(1,271
)
 
(703
)
 
1,333

 
608

 
189

 
192

Ending balance
$
3,218

 
1,815

 
4,123

 
1,271

 
8,852

 
1,211

 
299

 
20,789

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance as of June 30, 2019: Allowance for loan losses
Individually evaluated for impairment
$
435

 
44

 
770

 
—

 
783

 
—

 
—

 
2,032

Collectively evaluated for impairment
$
2,776

 
1,771

 
3,289

 
1,271

 
8,013

 
1,195

 
299

 
18,614

Purchased credit impaired
$
7

 
—

 
64

 
—

 
56

 
16

 
—

 
143

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable as of June 30, 2019
Ending balance – total
$
471,188

 
456,781

 
1,090,601

 
349,355

 
1,900,188

 
69,600

 
—

 
4,337,713

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,784

Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4,339,497

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balances as of June 30, 2019: Loans
Individually evaluated for impairment
$
992

 
1,020

 
10,334

 
21

 
7,451

 
—

 
—

 
19,818

Collectively evaluated for impairment
$
469,932

 
455,589

 
1,074,325

 
349,124

 
1,885,294

 
69,456

 
—

 
4,303,720

Purchased credit impaired
$
264

 
172

 
5,942

 
210

 
7,443

 
144

 
—

 
14,175



The following table presents loans individually evaluated for impairment by class of loans, excluding PCI loans, as of June 30, 2020.
($ in thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
13

 
17

 
—

 
16

Real estate – mortgage – construction, land development & other land loans
331

 
500

 
—

 
223

Real estate – mortgage – residential (1-4 family) first mortgages
4,584

 
4,874

 
—

 
4,595

Real estate – mortgage –home equity loans / lines of credit
325

 
357

 
—

 
329

Real estate – mortgage –commercial and other
14,293

 
16,311

 
—

 
7,469

Consumer loans
—

 
—

 
—

 
—

Total impaired loans with no allowance
$
19,546

 
22,059

 
—

 
12,632

 
 
 
 
 
 
 
 
Impaired loans with an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
6,723

 
7,533

 
830

 
4,898

Real estate – mortgage – construction, land development & other land loans
634

 
643

 
67

 
616

Real estate – mortgage – residential (1-4 family) first mortgages
5,159

 
5,383

 
817

 
5,140

Real estate – mortgage –home equity loans / lines of credit
—

 
—

 
—

 
34

Real estate – mortgage –commercial and other
3,404

 
3,427

 
1,052

 
5,574

Consumer loans
—

 
—

 
—

 
—

Total impaired loans with allowance
$
15,920

 
16,986

 
2,766

 
16,262

Interest income recorded on impaired loans during the six months ended June 30, 2020 was insignificant.
The following table presents loans individually evaluated for impairment by class of loans, excluding PCI loans, as of December 31, 2019.
($ in thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
16

 
19

 
—

 
74

Real estate – mortgage – construction, land development & other land loans
221

 
263

 
—

 
366

Real estate – mortgage – residential (1-4 family) first mortgages
4,300

 
4,539

 
—

 
4,415

Real estate – mortgage –home equity loans / lines of credit
333

 
357

 
—

 
147

Real estate – mortgage –commercial and other
2,643

 
3,328

 
—

 
3,240

Consumer loans
—

 
—

 
—

 
—

Total impaired loans with no allowance
$
7,513

 
8,506

 
—

 
8,242

 
 
 
 
 
 
 
 
Impaired loans with an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
$
4,941

 
4,995

 
1,791

 
1,681

Real estate – mortgage – construction, land development & other land loans
575

 
575

 
50

 
586

Real estate – mortgage – residential (1-4 family) first mortgages
5,246

 
5,469

 
750

 
6,206

Real estate – mortgage –home equity loans / lines of credit
—

 
—

 
—

 
55

Real estate – mortgage –commercial and other
6,927

 
7,914

 
983

 
5,136

Consumer loans
—

 
—

 
—

 
—

Total impaired loans with allowance
$
17,689

 
18,953

 
3,574

 
13,664


Interest income recorded on impaired loans during the year ended December 31, 2019 was $1.3 million, and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status and interest income recorded on accruing restructured loans.
The Company tracks credit quality based on its internal risk ratings. Upon origination, a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower’s credit score, the loan-to-value ratio, the debt-to-income ratio, etc. Loans that are risk-graded as substandard during the origination process are declined. After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management’s evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type.
The following describes the Company’s internal risk grades in ascending order of likelihood of loss:
 
Risk Grade
Description
Pass:
 
 
 
1
Loans with virtually no risk, including cash secured loans.
 
2
Loans with documented significant overall financial strength.  These loans have minimum chance of loss due to the presence of multiple sources of repayment – each clearly sufficient to satisfy the obligation.
 
3
Loans with documented satisfactory overall financial strength.  These loans have a low loss potential due to presence of at least two clearly identified sources of repayment – each of which is sufficient to satisfy the obligation under the present circumstances.
 
4
Loans to borrowers with acceptable financial condition.  These loans could have signs of minor operational weaknesses, lack of adequate financial information, or loans supported by collateral with questionable value or marketability.  
 
5
Loans that represent above average risk due to minor weaknesses and warrant closer scrutiny by management.  Collateral is generally required and felt to provide reasonable coverage with realizable liquidation values in normal circumstances.  Repayment performance is satisfactory.
 
P
(Pass)
Consumer loans (<$500,000) that are of satisfactory credit quality with borrowers who exhibit good personal credit history, average personal financial strength and moderate debt levels.  These loans generally conform to Bank policy, but may include approved mitigated exceptions to the guidelines.  
Special Mention:
 
 
 
6
Existing loans with defined weaknesses in primary source of repayment that, if not corrected, could cause a loss to the Bank.
Classified:
 
 
 
7
An existing loan inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged, if any.  These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
 
8
Loans that have a well-defined weakness that make the collection or liquidation in full highly questionable and improbable.  Loss appears imminent, but the exact amount and timing is uncertain.
 
9
Loans that are considered uncollectible and are in the process of being charged-off.  This grade is a temporary grade assigned for administrative purposes until the charge-off is completed.
 
F
(Fail)
Consumer loans (<$500,000) with a well-defined weakness, such as exceptions of any kind with no mitigating factors, history of paying outside the terms of the note, insufficient income to support the current level of debt, etc.
The following table presents the Company’s recorded investment in loans by credit quality indicators as of June 30, 2020.
($ in thousands)
Pass
 
Special
Mention Loans
 
Classified
Accruing Loans
 
Classified
Nonaccrual
Loans
 
Total
Commercial, financial, and agricultural
$
708,073

 
5,910

 
646

 
8,239

 
722,868

Real estate – construction, land development & other land loans
638,421

 
4,722

 
1,531

 
1,038

 
645,712

Real estate – mortgage – residential (1-4 family) first mortgages
1,042,495

 
8,132

 
13,259

 
7,327

 
1,071,213

Real estate – mortgage – home equity loans / lines of credit
309,614

 
1,183

 
5,823

 
1,903

 
318,523

Real estate – mortgage – commercial and other
1,915,982

 
21,647

 
3,898

 
16,229

 
1,957,756

Consumer loans
50,504

 
209

 
198

 
186

 
51,097

Purchased credit impaired
7,933

 
86

 
1,723

 
—

 
9,742

Total
$
4,673,022

 
41,889

 
27,078

 
34,922

 
4,776,911

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
(6,848
)
Total loans
 
 
 
 
 
 
 
 
4,770,063

The following table presents the Company’s recorded investment in loans by credit quality indicators as of December 31, 2019.
($ in thousands)
Pass
 
Special
Mention Loans
 
Classified
Accruing Loans
 
Classified
Nonaccrual
Loans
 
Total
Commercial, financial, and agricultural
$
486,081

 
7,998

 
4,461

 
5,518

 
504,058

Real estate – construction, land development & other land loans
522,767

 
4,075

 
2,791

 
1,067

 
530,700

Real estate – mortgage – residential (1-4 family) first mortgages
1,063,735

 
13,187

 
15,197

 
7,552

 
1,099,671

Real estate – mortgage – home equity loans / lines of credit
328,903

 
1,258

 
5,741

 
1,797

 
337,699

Real estate – mortgage – commercial and other
1,873,594

 
20,800

 
7,436

 
8,820

 
1,910,650

Consumer loans
55,203

 
413

 
355

 
112

 
56,083

Purchased credit impaired
8,098

 
2,590

 
1,976

 
—

 
12,664

Total
$
4,338,381

 
50,321

 
37,957

 
24,866

 
4,451,525

Unamortized net deferred loan costs
 
 
 
 
 
 
 
 
1,941

Total loans
 
 
 
 
 
 
 
 
4,453,466


Troubled Debt Restructurings
The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extension of terms and other actions intended to minimize potential losses. As previously noted, under the CARES Act and banking regulator guidance, which the Company has applied, modifications deemed to be COVID-19-related are not considered a troubled debt restructuring if the loan was not more than 30 days past due as of December 31, 2019 and the deferral was executed between March 1, 2020 and the earlier of 60 days after the date of termination of the COVID-19 national emergency or December 31, 2020. Under these terms, as of June 30, 2020, the Company had processed payment deferrals for 1,483 loans with an aggregate loan balance of $774 million. These deferrals were generally no more than 90 days in duration and are not included in the troubled debt restructurings disclosed in this report. As the initial 90 day deferrals expire, the Company is approving second deferral requests based on the circumstances of each borrower. Thus a portion of the deferrals at June 30, 2020 represent grants of second deferrals for those borrowers whose initial deferrals were on or prior to April 1, 2020. The Company continues to accrue interest on these loans during the deferral period.
The vast majority of the Company’s troubled debt restructurings modified during the periods ended June 30, 2020 and June 30, 2019 related to interest rate reductions combined with extension of terms. The Company does not generally grant principal forgiveness.
All loans classified as troubled debt restructurings are considered to be impaired and are evaluated as such for determination of the allowance for loan losses. The Company’s troubled debt restructurings can be classified as either nonaccrual or accruing based on the loan’s payment status. The troubled debt restructurings that are nonaccrual are reported within the nonaccrual loan totals presented previously.
The following table presents information related to loans modified in a troubled debt restructuring during the three months ended June 30, 2020 and 2019.
($ in thousands)
For the three months ended
June 30, 2020
 
For the three months ended
June 30, 2019
 
Number of
Contracts
 
Pre-
Modification
Restructured
Balances
 
Post-
Modification
Restructured
Balances
 
Number of
Contracts
 
Pre-
Modification
Restructured
Balances
 
Post-
Modification
Restructured
Balances
TDRs – Accruing
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
—

 
$
—

 
$
—

 
1

 
$
143

 
$
143

Real estate – construction, land development & other land loans
1

 
67

 
67

 
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
2

 
75

 
78

 
1

 
136

 
136

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

 
1

 
965

 
965

Consumer loans
—

 
—

 
—

 
—

 
—

 
—

TDRs – Nonaccrual
 
 
 
 
 
 
 
 


 
 
Commercial, financial, and agricultural
—

 
—

 
—

 
—

 
—

 
—

Real estate – construction, land development & other land loans
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

 
—

 
—

 
—

Consumer loans
—

 
—

 
—

 
—

 
—

 
—

Total TDRs arising during period
3

 
$
142

 
$
145

 
3

 
$
1,244

 
$
1,244



The following table presents information related to loans modified in a troubled debt restructuring during the six months ended June 30, 2020 and 2019.
($ in thousands)
For the six months ended
June 30, 2020
 
For the six months ended
June 30, 2019
 
Number of
Contracts
 
Pre-
Modification
Restructured
Balances
 
Post-
Modification
Restructured
Balances
 
Number of
Contracts
 
Pre-
Modification
Restructured
Balances
 
Post-
Modification
Restructured
Balances
TDRs – Accruing
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
2

 
$
143

 
$
143

 
1

 
$
143

 
$
143

Real estate – construction, land development & other land loans
1

 
67

 
67

 
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
2

 
75

 
78

 
3

 
390

 
394

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

 
1

 
965

 
965

Consumer loans
—

 
—

 
—

 
—

 
—

 
—

TDRs – Nonaccrual
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
—

 
—

 
—

 
—

 
—

 
—

Real estate – construction, land development & other land loans
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – residential (1-4 family) first mortgages
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – home equity loans / lines of credit
—

 
—

 
—

 
—

 
—

 
—

Real estate – mortgage – commercial and other
—

 
—

 
—

 
—

 
—

 
—

Consumer loans
—

 
—

 
—

 
—

 
—

 
—

Total TDRs arising during period
5

 
$
285

 
$
288

 
5

 
$
1,498

 
$
1,502


Accruing restructured loans that were modified in the previous twelve months and that defaulted during the three months ended June 30, 2020 and 2019 are presented in the table below. The Company considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to foreclosed real estate.
($ in thousands)
For the Three Months Ended June 30, 2020
 
For the Three Months Ended June 30, 2019
 
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
Accruing TDRs that subsequently defaulted
 
 
 
 
 
 
 
Real estate – mortgage – residential (1-4 family first mortgages)
—

 
$
—

 
1

 
$
93

Real estate – mortgage – commercial and other
1

 
274

 
—

 
—

Total accruing TDRs that subsequently defaulted
1

 
$
274

 
1

 
$
93



Accruing restructured loans that were modified in the previous twelve months and that defaulted during the six months ended June 30, 2020 and 2019 are presented in the table below.
($ in thousands)
For the Six Months Ended June 30, 2020
 
For the Six Months Ended June 30, 2019
 
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
Accruing TDRs that subsequently defaulted
 
 
 
 
 
 
 
Real estate – mortgage – residential (1-4 family first mortgages)
—

 
$
—

 
1

 
$
93

Real estate – mortgage – commercial and other
1

 
274

 
—

 
—

Total accruing TDRs that subsequently defaulted
1

 
$
274

 
1

 
$
93