NOTE 3: Loans

Major classifications of loans are summarized as follows:


	September 30,		December 31,
(Dollars in thousands)	2019		2018
Real estate – residential mortgage	$	179,960	$	184,901
Real estate – construction 1		62,554		54,461
Commercial, financial and agricultural 2		466,349		455,935
Equity lines		52,411		55,660
Consumer		13,521		15,009
Consumer finance		313,743		296,154
		1,088,538		1,062,120
Less allowance for loan losses		(33,218)		(34,023)
Loans, net	$	1,055,320	$	1,028,097

Includes the Corporation’s real estate construction lending and consumer real estate lot lending.

Includes the Corporation’s commercial real estate lending, land acquisition and development lending, builder line lending and commercial business lending.

Consumer loans included $255,000 and $275,000 of demand deposit overdrafts at September 30, 2019 and December 31, 2018, respectively.

The outstanding principal balance and the carrying amount of loans acquired pursuant to the Corporation's acquisition of Central Virginia Bank (CVB) on October 1, 2013 that were recorded at fair value at the acquisition date in the Consolidated Balance Sheets are as follows:


	September 30, 2019						December 31, 2018
	Acquired Loans -		Acquired Loans -				Acquired Loans -		Acquired Loans -
	Purchased		Purchased		Acquired Loans -		Purchased		Purchased		Acquired Loans -
(Dollars in thousands)	Credit Impaired		Performing		Total		Credit Impaired		Performing		Total
Outstanding principal balance	$	6,658	$	32,920	$	39,578	$	9,734	$	38,768	$	48,502
Carrying amount
Real estate – residential mortgage	$	110	$	7,216	$	7,326	$	284	$	8,823	$	9,107
Commercial, financial and agricultural1		433		15,588		16,021		1,461		18,982		20,443
Equity lines		35		8,520		8,555		90		9,063		9,153
Consumer		—		3		3		—		6		6
Total acquired loans	$	578	$	31,327	$	31,905	$	1,835	$	36,874	$	38,709

Includes acquired loans classified by the Corporation as commercial real estate lending and commercial business lending.

The following table presents a summary of the change in the accretable yield of loans classified as purchased credit impaired (PCI):


	Nine Months Ended September 30,
(Dollars in thousands)	2019		2018
Accretable yield, balance at beginning of period	$	5,987	$	7,304
Accretion		(2,745)		(2,892)
Reclassification of nonaccretable difference due to improvement in expected cash flows		1,286		1,410
Other changes, net		581		(324)
Accretable yield, balance at end of period	$	5,109	$	5,498

Loans on nonaccrual status were as follows:


	September 30,		December 31,
(Dollars in thousands)	2019		2018
Real estate – residential mortgage	$	563	$	594
Commercial, financial and agricultural:
Commercial business lending		—		24
Equity lines		302		883
Consumer		119		—
Consumer finance		527		712
Total loans on nonaccrual status	$	1,511	$	2,213

The past due status of loans as of September 30, 2019 was as follows:


															90+ Days
	30 - 59 Days		60 - 89 Days		90+ Days		Total								Past Due and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		PCI		Current1		Total Loans		Accruing
Real estate – residential mortgage	$	1,120	$	163	$	352	$	1,635	$	110	$	178,215	$	179,960	$	318
Real estate – construction:
Construction lending		—		—		—		—		—		48,164		48,164		—
Consumer lot lending		—		—		—		—		—		14,390		14,390		—
Commercial, financial and agricultural:
Commercial real estate lending		1,331		1,233		315		2,879		433		309,072		312,384		315
Land acquisition and development lending		—		—		—		—		—		41,241		41,241		—
Builder line lending		—		—		—		—		—		29,606		29,606		—
Commercial business lending		125		120		—		245		—		82,873		83,118		—
Equity lines		73		97		397		567		35		51,809		52,411		92
Consumer		20		7		7		34		—		13,487		13,521		7
Consumer finance		8,841		1,558		527		10,926		—		302,817		313,743		—
Total	$	11,510	$	3,178	$	1,598	$	16,286	$	578	$	1,071,674	$	1,088,538	$	732

For the purposes of the table above, “Current” includes loans that are 1-29 days past due.

The table above includes nonaccrual loans that are current of $431,000, 30-59 days past due of $213,000 and 90+ days past due of $867,000.

The past due status of loans as of December 31, 2018 was as follows:


															90+ Days
	30 - 59 Days		60 - 89 Days		90+ Days		Total								Past Due and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		PCI		Current1		Total Loans		Accruing
Real estate – residential mortgage	$	1,221	$	—	$	37	$	1,258	$	284	$	183,359	$	184,901	$	9
Real estate – construction:
Construction lending		—		—		—		—		—		42,051		42,051		—
Consumer lot lending		—		—		—		—		—		12,410		12,410		—
Commercial, financial and agricultural:
Commercial real estate lending		—		—		315		315		1,461		309,057		310,833		315
Land acquisition and development lending		—		—		—		—		—		43,404		43,404		—
Builder line lending		—		—		—		—		—		31,201		31,201		—
Commercial business lending		163		19		24		206		—		70,291		70,497		—
Equity lines		46		584		325		955		90		54,615		55,660		—
Consumer		31		—		—		31		—		14,978		15,009		—
Consumer finance		11,419		1,965		712		14,096		—		282,058		296,154		—
Total	$	12,880	$	2,568	$	1,413	$	16,861	$	1,835	$	1,043,424	$	1,062,120	$	324

For the purposes of the table above, “Current” includes loans that are 1-29 days past due.

The table above includes nonaccrual loans that are current of $458,000, 30-59 days past due of $97,000, 60‑89 days past due of $560,000 and 90+ days past due of $1.10 million.

Loan modifications that were classified as troubled debt restructurings (TDRs) and the recorded investment in those loans at the time of their modification, during the three and nine months ended September 30, 2019 and 2018 were as follows:


	Three Months Ended September 30,
	2019			2018
	Number of	Recorded		Number of	Recorded
(Dollars in thousands)	Loans	Investment		Loans	Investment
Real estate – residential mortgage	2	$	95	—	$	—
Consumer	—		—	1		5
Total	2	$	95	1	$	5


	Nine Months Ended September 30,
	2019			2018
	Number of	Recorded		Number of	Recorded
(Dollars in thousands)	Loans	Investment		Loans	Investment
Real estate – residential mortgage	2	$	95	—	$	—
Consumer	1		121	1	$	5
Total	3	$	216	1	$	5

Both TDRs during the three months ended September 30, 2019 included a modification of the loan’s payment structure. One TDR during the nine months ended September 30, 2019 included a modification of the loan’s interest rate. One TDR during the three and nine months ended September 30, 2018 included a modification of the loan’s interest rate.

All TDRs are considered impaired loans and are individually evaluated in the determination of the allowance for loan losses. A TDR payment default occurs when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or a TDR becomes 90 days or more past due. The specific reserve associated with a TDR is reevaluated when a TDR payment default occurs. There were no TDR payment defaults during the nine months ended September 30, 2019 and 2018.

Impaired loans, which included TDRs of $4.53 million, and the related allowance at September 30, 2019 were as follows:



			Recorded		Recorded
			Investment		Investment				Average
	Unpaid		in Loans		in Loans				Balance-		Interest
	Principal		without		with		Related		Impaired		Income
(Dollars in thousands)	Balance		Specific Reserve		Specific Reserve		Allowance		Loans		Recognized
Real estate – residential mortgage	$	2,921	$	1,279	$	1,525	$	81	$	2,904	$	105
Commercial, financial and agricultural:
Commercial real estate lending		1,588		7		1,564		75		1,601		62
Equity lines		225		30		187		187		217		2
Consumer		131		—		123		119		124		—
Total	$	4,865	$	1,316	$	3,399	$	462	$	4,846	$	169

Impaired loans, which included TDRs of $5.45 million, and the related allowance at December 31, 2018 were as follows:



			Recorded		Recorded
			Investment		Investment				Average
	Unpaid		in Loans		in Loans				Balance-		Interest
	Principal		without		with		Related		Impaired		Income
(Dollars in thousands)	Balance		Specific Reserve		Specific Reserve		Allowance		Loans		Recognized
Real estate – residential mortgage	$	3,057	$	1,288	$	1,677	$	92	$	3,056	$	142
Commercial, financial and agricultural:
Commercial real estate lending		2,468		1,498		927		10		2,653		132
Commercial business lending		33		25		—		—		26		—
Equity lines		365		31		326		326		359		2
Consumer		5		—		5		—		5		—
Total	$	5,928	$	2,842	$	2,935	$	428	$	6,099	$	276