Mortgage Loans

12 Months Ended

Dec. 31, 2019

Generally, 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:



	December 31,
	2019		2018
East North Central	13.1	%	13.9	%
East South Central	2.8		2.8
Mountain	23.6		20.0
Pacific	16.7		16.2
South Atlantic	12.2		12.1
West South Central	25.0		27.2
Other	6.6		7.8
Total	100.0	%	100.0	%

During 2019, American National foreclosed on two loans with a total recorded investment of $16,008,000, and two loans with a recorded investment of $13,345,000 were in the process of foreclosure at December 31, 2019. 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 2019 or 2018.

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



	30-59 Days		60-89 Days		More Than						Total
December 31, 2019	Past Due		Past Due		90 Days		Total		Current		Amount			Percent
Hotel	$	—	$	—	$	—	$	—	$	901,044	$	901,044		17.6	%
Industrial	—		13,076		4,091		17,167		589,722		606,889			11.9
Office	22,870		—		—		22,870		1,587,591		1,610,461			31.5
Retail	—		—		4,122		4,122		843,466		847,588			16.5
Other	11,759		—		—		11,759		1,138,436		1,150,195			22.5
Total	$	34,629	$	13,076	$	8,213	$	55,918	$	5,060,259	$	5,116,177		100.0	%
Allowance for loan losses											(19,160		)
Total, net of allowance											$	5,097,017
December 31, 2018
Hotel	$	—	$	4,000	$	18,888	$	22,888	$	806,878	$	829,766		16.1	%
Industrial	—		—		—		—		761,294		761,294			14.8
Office	—		—		—		—		1,747,926		1,747,926			34.0
Retail	—		—		—		—		896,429		896,429			17.4
Other	—		—		—		—		910,625		910,625			17.7
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 December 31, 2019 or 2018. Total mortgage loans were net of unamortized origination fees of $29,294,000 and $31,586,000 at December 31, 2019 and 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 estimated 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
Balance at December 31, 2017	451		$	4,762,315		$	16,041	3		$	6,550		$	2,825		454		$	4,768,865		$	18,866
Change in allowance	—		—			2,566		—		—			(99		)	—		—			2,467
Net change in recorded investment	(2	)	366,102			—		(1	)	11,073			—			(3	)	377,175			—
Balance at December 31, 2018	449		5,128,417			18,607		2		17,623			2,726			451		5,146,040			21,333
Change in allowance	—		—			60		—		—			(2,233		)	—		—			(2,173		)
Net change in recorded investment	(28	)	(12,733		)	—		(1	)	(17,130		)	—			(29	)	(29,863		)	—
Balance at December 31, 2019	421		$	5,115,684		$	18,667	1		$	493		$	493		422		$	5,116,177		$	19,160

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):



	Years ended December 31,
	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	2	$	21,211	$	21,211	1	$	5,164	$	5,164
Retail	1	38,248		38,248		1	42,448		42,448
Other (hotel/motel)	—	—		—		1	8,203		8,203
Total	3	$	59,459	$	59,459	3	$	55,815	$	55,815

There were three loans determined to be a troubled debt restructuring for the year ended December 31, 2019. There are no commitments to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring during the periods presented.