Mortgage Loans

6 Months Ended

Jun. 30, 2019

y, commercial mortgage loans are secured by first liens on income-producing real estate. American National attempts to maintain a diversified portfolio by considering the location of the underlying collateral. The distribution based on carrying amount of mortgage loans by location is as follows:



	June 30, 2019		December 31, 2018
East North Central	12.5	%	13.9	%
East South Central	2.6		2.8
Mountain	21.6		20.0
Pacific	17.3		16.2
South Atlantic	12.5		12.1
West South Central	26.0		27.2
Other	7.5		7.8
Total	100.0	%	100.0	%

During the six months ended June 30, 2019, American National foreclosed on one loan with a total recorded investment of $7,363,000 and one loan with a total recorded investment of $8,644,000 was in the process of foreclosure. For the year ended December 31, 2018, American National foreclosed on four loans with a total recorded investment of $22,608,000, and one loan with a total recorded investment of $7,363,000 was in the process of foreclosure. American National did not sell any loans during the six months ended June 30, 2019 or during the year ended December 31, 2018.

The age analysis of past due loans is shown below (in thousands):



	30-59 Days		60-89 Days		More Than						Total
June 30, 2019	Past Due		Past Due		90 Days		Total		Current		Amount			Percent
Industrial	$	—	$	—	$	—	$	—	$	571,320	$	571,320		11.3	%
Office	—		—		8,644		8,644		1,660,163		1,668,807			33.1
Retail	—		—		—		—		875,078		875,078			17.4
Other	—		—		—		—		1,920,927		1,920,927			38.2
Total	$	—	$	—	$	8,644	$	8,644	$	5,027,488	$	5,036,132		100.0	%
Allowance for loan losses											(21,422		)
Total, net of allowance											$	5,014,710
December 31, 2018
Industrial	$	—	$	—	$	—	$	—	$	761,294	$	761,294		14.8	%
Office	—		—		—		—		1,747,926		1,747,926			34.0
Retail	—		—		—		—		896,429		896,429			17.4
Other	—		4,000		18,888		22,888		1,717,503		1,740,391			33.8
Total	$	—	$	4,000	$	18,888	$	22,888	$	5,123,152	$	5,146,040		100.0	%
Allowance for loan losses											(21,333		)
Total, net of allowance											$	5,124,707

There were no unamortized purchase discounts as of June 30, 2019 or during the year ended December 31, 2018. Total mortgage loans were net of unamortized origination fees of $29,356,000 and $31,586,000 at June 30, 2019 and December 31, 2018, respectively. No unearned income is included in these amounts.

Allowance for Credit Losses

A loan is considered impaired when it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. Mortgage loans with temporary difficulties are not considered impaired when the borrower has the financial capacity to fund revenue shortfalls from the properties for the foreseeable future. Individual valuation allowances are established for impaired loans to reduce the carrying value to the fair value of the collateral. Loans not evaluated individually for collectability are segregated by property-type and location, and allowance factors are applied. These factors are developed based on historical loss experience adjusted for the expected trend in the rate of foreclosure losses. Allowance factors are higher for loans of certain property types and in certain regions based on loss experience or a blended historical loss factor.

The change in allowance for credit losses in mortgage loans is shown below (in thousands, except number of loans):



	Collectively Evaluated for Impairment								Individually Impaired						Total
	Number of Loans		Recorded Investment			Valuation Allowance			Number of Loans	Recorded Investment			Valuation Allowance		Number of Loans		Recorded Investment			Valuation Allowance
Beginning balance at January 1, 2019	449		$	5,128,417		$	18,607		2	$	17,623		$	2,726	451		$	5,146,040		$	21,333
Change in allowance	—		—			(179		)	—	—			268		—		—			89
Net change in recorded investment	(9	)	(101,423		)	—			—	(8,485		)	—		(9	)	(109,908		)	—
Ending balance at June 30, 2019	440		$	5,026,994		$	18,428		2	$	9,138		$	2,994	442		$	5,036,132		$	21,422

Troubled Debt Restructurings

American National has granted concessions which are classified as troubled debt restructurings to certain mortgage loan borrowers. Concessions are generally one of, or a combination of, a delay in payment of principal or interest, a reduction of the contractual interest rate or an extension of the maturity date. American National considers the amount, timing and extent of concessions in determining any impairment or changes in the specific allowance for loan losses recorded in connection with a troubled debt restructuring. The carrying value after specific allowance, before and after modification in a troubled debt restructuring, may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.

Troubled debt restructuring mortgage loan information is as follows (in thousands, except number of loans):



	Six months ended June 30,
	2019					2018
	Number of Loans	Recorded Investment Pre-Modification		Recorded Investment Post Modification		Number of Loans	Recorded Investment Pre-Modification		Recorded Investment Post Modification
Office	1	$	9,331	$	9,331	—	$	—	$	—
Retail	2	40,249		40,249		—	—		—
Industrial	4	20,595		20,595		—	—		—
Total	7	$	70,175	$	70,175	—	$	—	$	—

There were seven loans determined to be a troubled debt restructuring for the six months ended June 30, 2019. There are commitments of $4,042,000 to lend additional funds to two debtors whose loans have been modified in a troubled debt restructuring during the periods presented.