LOANS

Loans are summarized as follows:



Dollars in thousands	June 30, 2019		December 31, 2018
Commercial	$	204,138	$	194,315
Commercial real estate
Owner-occupied	262,901		257,256
Non-owner occupied	574,677		573,932
Construction and development
Land and land development	67,769		68,833
Construction	46,975		24,731
Residential real estate
Non-jumbo	360,752		336,977
Jumbo	70,171		73,599
Home equity	81,373		80,910
Mortgage warehouse lines	101,607		39,140
Consumer	36,715		32,460
Other	11,924		12,899
Total loans, net of unearned fees	1,819,002		1,695,052
Less allowance for loan losses	13,152		13,047
Loans, net	$	1,805,850	$	1,682,005

The outstanding balance and the recorded investment of acquired loans included in the consolidated balance sheet at June 30, 2019 and December 31, 2018 are as follows:



	Acquired Loans
	June 30, 2019						December 31, 2018
Dollars in thousands	Purchased Credit Impaired		Purchased Performing		Total		Purchased Credit Impaired		Purchased Performing		Total
Outstanding balance	$	4,282	$	154,564	$	158,846	$	4,275	$	138,167	$	142,442

Recorded investment
Commercial	$	—	$	4,056	$	4,056	$	—	$	3,934	$	3,934
Commercial real estate
Owner-occupied	—		19,729		19,729		—		16,133		16,133
Non-owner occupied	1,262		16,801		18,063		1,162		23,431		24,593
Construction and development
Land and land development	—		4,178		4,178		—		5,161		5,161
Construction	—		—		—		—		—		—
Residential real estate
Non-jumbo	1,293		96,352		97,645		1,374		77,894		79,268
Jumbo	962		3,144		4,106		975		2,577		3,552
Home equity	—		2,440		2,440		—		2,805		2,805
Consumer	—		5,854		5,854		—		4,630		4,630
Other	—		15		15		—		122		122
Total recorded investment	$	3,517	$	152,569	$	156,086	$	3,511	$	136,687	$	140,198

The following table presents a summary of the change in the accretable yield of the purchased credit impaired ("PCI") loan portfolio for the three and six months ended June 30, 2019 and 2018:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Dollars in thousands	2019			2018			2019			2018
Accretable yield	$	623		$	708		$	632		$	745
Accretion	(26		)	(32		)	(34		)	(69		)
Reclassification of nonaccretable difference due to improvement in expected cash flows	—			—			—			—
Other changes, net	—			—			(1		)	—
Accretable yield, June 30	$	597		$	676		$	597		$	676

The following table presents the contractual aging of the recorded investment in past due loans by class as of June 30, 2019 and December 31, 2018.



	At June 30, 2019
	Past Due										> 90 days and Accruing
Dollars in thousands	30-59 days		60-89 days		> 90 days		Total		Current		> 90 days and Accruing
Commercial	$	327	$	137	$	700	$	1,164	$	202,974	$	—
Commercial real estate
Owner-occupied	520		—		4,454		4,974		257,927		—
Non-owner occupied	—		1,205		1,463		2,668		572,009		—
Construction and development
Land and land development	258		—		43		301		67,468		—
Construction	—		—		—		—		46,975		—
Residential mortgage
Non-jumbo	5,686		806		2,564		9,056		351,696		119
Jumbo	642		—		—		642		69,529		—
Home equity	101		94		258		453		80,920		21
Mortgage warehouse lines	—		—		—		—		101,607		—
Consumer	230		63		109		402		36,313		68
Other	—		—		100		100		11,824		—
Total	$	7,764	$	2,305	$	9,691	$	19,760	$	1,799,242	$	208



	At December 31, 2018
	Past Due										> 90 days and Accruing
Dollars in thousands	30-59 days		60-89 days		> 90 days		Total		Current		> 90 days and Accruing
Commercial	$	254	$	51	$	483	$	788	$	193,527	$	—
Commercial real estate
Owner-occupied	—		—		612		612		256,644		—
Non-owner occupied	156		255		1,756		2,167		571,765		—
Construction and development
Land and land development	190		4		3,174		3,368		65,465		—
Construction	—		—		—		—		24,731		—
Residential mortgage
Non-jumbo	4,120		2,235		3,753		10,108		326,869		—
Jumbo	—		—		675		675		72,924		—
Home equity	754		261		181		1,196		79,714		—
Mortgage warehouse lines	—		—		—		—		39,140		—
Consumer	502		121		125		748		31,712		36
Other	31		—		—		31		12,868		—
Total	$	6,007	$	2,927	$	10,759	$	19,693	$	1,675,359	$	36

Nonaccrual loans: The following table presents the nonaccrual loans included in the net balance of loans at June 30, 2019 and December 31, 2018.



	June 30,		December 31,
Dollars in thousands	2019		2018
Commercial	$	948	$	935
Commercial real estate
Owner-occupied	4,624		1,028
Non-owner occupied	1,920		2,210
Construction and development
Land & land development	66		3,198
Construction	—		—
Residential mortgage
Non-jumbo	4,561		6,532
Jumbo	642		675
Home equity	314		299
Mortgage warehouse lines	—		—
Consumer	92		112
Other	100		—
Total	$	13,267	$	14,989

Impaired loans: Impaired loans include the following:

▪

Loans which we risk-rate (loan relationships having aggregate balances in excess of $2.5 million, or loans exceeding $500,000 and exhibiting credit weakness) through our normal loan review procedures and which, based on current information and events, it is probable that we will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement. Risk-rated loans with insignificant delays or insignificant short falls in the amount of payments expected to be collected are not considered to be impaired.


▪	Loans that have been modified in a troubled debt restructuring.

Both commercial and consumer loans are deemed impaired upon being contractually modified in a troubled debt restructuring. Troubled debt restructurings typically result from our loss mitigation activities and occur when we grant a concession to a borrower who is experiencing financial difficulty in order to minimize our economic loss and to avoid foreclosure or repossession of collateral. Once restructured, a loan is generally considered impaired until its maturity, regardless of whether the borrower performs under the modified terms. Although such a loan may be returned to accrual status if the criteria set forth in accounting principles generally accepted in the United States are met, the loan would continue to be evaluated for an asset-specific allowance for loan losses and we would continue to report the loan in the impaired loan table below.

The following tables present loans individually evaluated for impairment at June 30, 2019 and December 31, 2018.



	June 30, 2019
Dollars in thousands	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Impaired Balance		Interest Income Recognized while impaired

Without a related allowance
Commercial	$	5,215	$	5,216	$	—	$	5,371	$	334
Commercial real estate
Owner-occupied	8,867		8,872		—		8,822		207
Non-owner occupied	10,814		10,821		—		9,967		504
Construction and development
Land & land development	1,088		1,088		—		1,129		68
Construction	—		—		—		—		—
Residential real estate
Non-jumbo	3,705		3,711		—		3,698		198
Jumbo	4,022		4,021		—		4,044		190
Home equity	523		523		—		523		32
Mortgage warehouse lines	—		—		—		—		—
Consumer	15		15		—		10		1
Total without a related allowance	$	34,249	$	34,267	$	—	$	33,564	$	1,534

With a related allowance
Commercial	$	269	$	269	$	30	$	184	$	1
Commercial real estate
Owner-occupied	2,915		2,914		444		2,924		114
Non-owner occupied	—		—		—		—		—
Construction and development
Land & land development	1,035		1,036		521		1,041		57
Construction	—		—		—		—		—
Residential real estate
Non-jumbo	2,371		2,370		678		2,341		74
Jumbo	—		—		—		—		—
Home equity	—		—		—		—		—
Mortgage warehouse lines	—		—		—		—		—
Consumer	—		—		—		—		—
Total with a related allowance	$	6,590	$	6,589	$	1,673	$	6,490	$	246

Total
Commercial	$	30,203	$	30,216	$	995	$	29,438	$	1,285
Residential real estate	10,621		10,625		678		10,606		494
Consumer	15		15		—		10		1
Total	$	40,839	$	40,856	$	1,673	$	40,054	$	1,780

The table above does not include PCI loans.



	December 31, 2018
Dollars in thousands	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Impaired Balance		Interest Income Recognized while impaired

Without a related allowance
Commercial	$	1,019	$	1,253	$	—	$	321	$	16
Commercial real estate
Owner-occupied	8,600		8,605		—		7,730		318
Non-owner occupied	9,666		9,673		—		9,753		493
Construction and development
Land & land development	4,767		4,767		—		4,947		102
Construction	—		—		—		—		—
Residential real estate
Non-jumbo	3,279		3,284		—		3,401		180
Jumbo	4,132		4,130		—		3,517		166
Home equity	523		523		—		523		30
Mortgage warehouse lines	—		—		—		—		—
Consumer	9		10		—		13		1
Total without a related allowance	$	31,995	$	32,245	$	—	$	30,205	$	1,306

With a related allowance
Commercial	$	3,343	$	3,342	$	682	$	705	$	39
Commercial real estate
Owner-occupied	2,969		2,969		462		2,397		117
Non-owner occupied	189		191		9		226		16
Construction and development
Land & land development	1,057		1,057		298		1,073		56
Construction	—		—		—		—		—
Residential real estate
Non-jumbo	2,982		2,981		585		2,539		98
Jumbo	821		822		106		827		48
Home equity	—		—		—		—		—
Mortgage warehouse lines	—		—		—		—		—
Consumer	—		—		—		—		—
Total with a related allowance	$	11,361	$	11,362	$	2,142	$	7,767	$	374

Total
Commercial	$	31,610	$	31,857	$	1,451	$	27,152	$	1,157
Residential real estate	11,737		11,740		691		10,807		522
Consumer	9		10		—		13		1
Total	$	43,356	$	43,607	$	2,142	$	37,972	$	1,680

The table above does not include PCI loans.

Included in impaired loans are TDRs of $26.2 million, of which $23.2 million were current with respect to restructured contractual payments at June 30, 2019, and $27 million, of which $26.6 million were current with respect to restructured contractual payments at December 31, 2018. There were no commitments to lend additional funds under these restructurings at either balance sheet date.

The following tables present by class the TDRs that were restructured during the three and six months ended June 30, 2019 and June 30, 2018 . Generally, the modifications were extensions of term, modifying the payment terms from principal and interest to interest only for an extended period, or reduction in interest rate. All TDRs are evaluated individually for allowance for loan loss purposes.



	For the Three Months Ended June 30, 2019					For the Three Months Ended June 30, 2018
Dollars in thousands	Number of Modifications	Pre-modification Recorded Investment		Post-modification Recorded Investment		Number of Modifications	Pre-modification Recorded Investment		Post-modification Recorded Investment
Commercial	—	$	—	$	—	2	$	157	$	157
Residential real estate
Non-jumbo	—	—		—		5	741		741
Total	—	$	—	$	—	7	$	898	$	898



	For the Six Months Ended June 30, 2019					For the Six Months Ended June 30, 2018
Dollars in thousands	Number of Modifications	Pre-modification Recorded Investment		Post-modification Recorded Investment		Number of Modifications	Pre-modification Recorded Investment		Post-modification Recorded Investment
Commercial	—	$	—	$	—	2	$	157	$	157
Commercial real estate
Owner-occupied	1	325		325		—	—		—
Non-owner occupied	4	324		324		—	—		—
Residential real estate
Non-jumbo	7	410		410		6	805		805
Consumer	1	16		16		—	—		—
Total	13	$	1,075	$	1,075	8	$	962	$	962

The following tables present defaults during the stated period of TDRs that were restructured during the past twelve months. For purposes of these tables, a default is considered as either the loan was past due 30 days or more at any time during the period, or the loan was fully or partially charged off during the period.



	For the Three Months Ended June 30, 2019			For the Three Months Ended June 30, 2018
Dollars in thousands	Number of Defaults	Recorded Investment at Default Date		Number of Defaults	Recorded Investment at Default Date
Commercial	—	$	—	2	$	157
Commercial real estate
Owner-occupied	—	—		1	2,302
Non-owner occupied	1	126		1	341
Construction and development
Land & land development	—	—		1	438
Residential real estate
Non-jumbo	4	193		2	506
Total	5	$	319	7	$	3,744



	For the Six Months Ended June 30, 2019			For the Six Months Ended June 30, 2018
Dollars in thousands	Number of Defaults	Recorded Investment at Default Date		Number of Defaults	Recorded Investment at Default Date
Commercial	—	$	—	2	$	157
Commercial real estate
Owner-occupied	—	—		1	2,302
Non-owner occupied	1	126		1	341
Construction and development
Land & land development	—	—		1	438
Residential real estate
Non-jumbo	4	193		3	712
Total	5	$	319	8	$	3,950

The following tables detail the activity regarding TDRs by loan type, net of fees, for the three and six months ended June 30, 2019, and the related allowance on TDRs.



For the Three Months Ended June 30, 2019
	Construction & Land Development								Commercial Real Estate						Residential Real Estate
Dollars in thousands	Land & Land Develop- ment			Construc- tion		Commer- cial			Owner Occupied			Non- Owner Occupied			Non- jumbo			Jumbo			Home Equity		Mortgage Warehouse Lines		Con- sumer			Other		Total
Troubled debt restructurings
Balance April 1, 2019	$	2,629		$	—	$	265		$	9,629		$	5,676		$	4,869		$	4,231		$	523	$	—	$	23		$	—	$	27,845
Additions	—			—		—			—			—			—			—			—		—		—			—		—
Charge-offs	—			—		—			—			—			—			—			—		—		—			—		—
Net (paydowns) advances	(506		)	—		(32		)	(41		)	(52		)	(174		)	(851		)	—		—		(8		)	—		(1,664		)
Transfer into foreclosed properties	—			—		—			—			—			—			—			—		—		—			—		—
Refinance out of TDR status	—			—		—			—			—			—			—			—		—		—			—		—
Balance, June 30, 2019	$	2,123		$	—	$	233		$	9,588		$	5,624		$	4,695		$	3,380		$	523	$	—	$	15		$	—	$	26,181

Allowance related to troubled debt restructurings	$	521		$	—	$	6		$	271		$	—		$	200		$	—		$	—	$	—	$	—		$	—	$	998



For the Six Months Ended June 30, 2019
	Construction & Land Development								Commercial Real Estate						Residential Real Estate
Dollars in thousands	Land & Land Develop- ment			Construc- tion		Commer- cial			Owner Occupied			Non- Owner Occupied			Non- jumbo			Jumbo			Home Equity		Mortgage Warehouse Lines		Con- sumer			Other		Total
Troubled debt restructurings
Balance January 1, 2019	$	2,654		$	—	$	273		$	9,365		$	5,404		$	4,490		$	4,278		$	523	$	—	$	10		$	—	$	26,997
Additions	—			—		—			325			324			410			—			—		—		16			—		1,075
Charge-offs	—			—		—			—			—			—			—			—		—		—			—		—
Net (paydowns) advances	(531		)	—		(40		)	(102		)	(104		)	(205		)	(898		)	—		—		(11		)	—		(1,891		)
Transfer into foreclosed properties	—			—		—			—			—			—			—			—		—		—			—		—
Refinance out of TDR status	—			—		—			—			—			—			—			—		—		—			—		—
Balance, June 30, 2019	$	2,123		$	—	$	233		$	9,588		$	5,624		$	4,695		$	3,380		$	523	$	—	$	15		$	—	$	26,181

Allowance related to troubled debt restructurings	$	521		$	—	$	6		$	271		$	—		$	200		$	—		$	—	$	—	$	—		$	—	$	998

The following table presents the recorded investment in construction and development, commercial, and commercial real estate loans which are generally evaluated based upon our internal risk ratings.



Loan Risk Profile by Internal Risk Rating
	Construction and Development												Commercial Real Estate
	Land and Land Development				Construction				Commercial				Owner Occupied				Non-Owner Occupied				Mortgage Warehouse Lines
Dollars in thousands	6/30/2019		12/31/2018		6/30/2019		12/31/2018		6/30/2019		12/31/2018		6/30/2019		12/31/2018		6/30/2019		12/31/2018		6/30/2019		12/31/2018
Pass	$	65,893	$	63,743	$	46,835	$	24,589	$	196,706	$	182,651	$	255,527	$	250,254	$	565,858	$	565,715	$	101,607	$	39,140
OLEM (Special Mention)	461		472		140		142		1,572		6,748		2,421		1,864		1,653		1,554		—		—
Substandard	1,415		4,618		—		—		5,860		4,916		4,953		5,138		7,166		6,663		—		—
Doubtful	—		—		—		—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—		—		—		—
Total	$	67,769	$	68,833	$	46,975	$	24,731	$	204,138	$	194,315	$	262,901	$	257,256	$	574,677	$	573,932	$	101,607	$	39,140

The following table presents the recorded investment and payment activity in consumer, residential real estate, and home equity loans, which are generally evaluated based on the aging status of the loans.



	Performing				Nonperforming
Dollars in thousands	6/30/2019		12/31/2018		6/30/2019		12/31/2018
Residential real estate
Non-jumbo	$	356,071	$	330,445	$	4,681	$	6,532
Jumbo	69,529		72,924		642		675
Home Equity	81,039		80,611		334		299
Consumer	36,555		32,312		160		148
Other	11,824		12,899		100		—
Total	$	555,018	$	529,191	$	5,917	$	7,654