Portfolio Loans | LOANS The loan portfolio is comprised of loans originated by the Company and loans acquired in connection with the Company’s acquisitions. These loans are accounted for using the guidance in the Accounting Standards Codification (ASC) section 310-30 and 310-20. Loans accounted for using ASC 310-30 are sometimes referred to as purchased credit impaired ("PCI") loans. The table below shows the loan portfolio composition including carrying value categorized by loans accounted for at amortized cost, which includes our originated loans, and by loans accounted for as PCI. (in thousands) September 30, 2018 December 31, 2017 Loans accounted for at amortized cost $ 4,218,341 $ 4,022,896 Loans accounted for as PCI 49,089 74,154 Total loans $ 4,267,430 $ 4,097,050 The following tables refer to loans accounted for at amortized cost. Below is a summary of loans by category at September 30, 2018 and December 31, 2017 : (in thousands) September 30, 2018 December 31, 2017 Commercial and industrial $ 2,032,929 $ 1,918,720 Real estate: Commercial - investor owned 826,447 769,275 Commercial - owner occupied 589,045 554,589 Construction and land development 326,858 303,091 Residential 308,385 341,312 Total real estate loans 2,050,735 1,968,267 Consumer and other 136,025 137,234 Loans, before unearned loan fees 4,219,689 4,024,221 Unearned loan fees, net (1,348 ) (1,325 ) Loans, including unearned loan fees $ 4,218,341 $ 4,022,896 A summary of the activity in the allowance for loan losses and the recorded investment in loans by class and category based on impairment methodology through September 30, 2018 , and at December 31, 2017 , is as follows: (in thousands) Commercial and industrial CRE - investor owned CRE - owner occupied Construction and land development Residential real estate Consumer and other Total Allowance for loan losses: Balance at December 31, 2017 $ 26,406 $ 3,890 $ 3,308 $ 1,487 $ 2,237 $ 838 $ 38,166 Provision (provision reversal) for loan losses 780 648 190 35 259 (41 ) 1,871 Losses charged off (732 ) — — — (254 ) (49 ) (1,035 ) Recoveries 956 8 4 206 73 14 1,261 Balance at March 31, 2018 $ 27,410 $ 4,546 $ 3,502 $ 1,728 $ 2,315 $ 762 $ 40,263 Provision (provision reversal) for loan losses 2,852 5 340 (206 ) (573 ) (33 ) 2,385 Losses charged off (956 ) — — — (38 ) (33 ) (1,027 ) Recoveries 118 10 3 168 59 28 386 Balance at June 30, 2018 $ 29,424 $ 4,561 $ 3,845 $ 1,690 $ 1,763 $ 724 $ 42,007 Provision (provision reversal) for loan losses 2,569 3 (197 ) 154 (187 ) (10 ) 2,332 Losses charged off (2,405 ) — (22 ) — (122 ) (46 ) (2,595 ) Recoveries 2 8 4 21 88 25 148 Balance at September 30, 2018 $ 29,590 $ 4,572 $ 3,630 $ 1,865 $ 1,542 $ 693 $ 41,892 (in thousands) Commercial and industrial CRE - investor owned CRE - owner occupied Construction and land development Residential real estate Consumer and other Total Balance September 30, 2018 Allowance for loan losses - Ending balance: Individually evaluated for impairment $ 4,128 $ — $ 177 $ — $ 9 $ — $ 4,314 Collectively evaluated for impairment 25,462 4,572 3,453 1,865 1,533 693 37,578 Total $ 29,590 $ 4,572 $ 3,630 $ 1,865 $ 1,542 $ 693 $ 41,892 Loans - Ending balance: Individually evaluated for impairment $ 12,197 $ 770 $ 2,655 $ — $ 2,477 $ 312 $ 18,411 Collectively evaluated for impairment 2,020,732 825,677 586,390 326,858 305,908 134,365 4,199,930 Total $ 2,032,929 $ 826,447 $ 589,045 $ 326,858 $ 308,385 $ 134,677 $ 4,218,341 Balance December 31, 2017 Allowance for loan losses - Ending balance: Individually evaluated for impairment $ 2,508 $ — $ 71 $ — $ — $ — $ 2,579 Collectively evaluated for impairment 23,898 3,890 3,237 1,487 2,237 838 35,587 Total $ 26,406 $ 3,890 $ 3,308 $ 1,487 $ 2,237 $ 838 $ 38,166 Loans - Ending balance: Individually evaluated for impairment $ 12,665 $ 422 $ 1,975 $ 136 $ 1,602 $ 375 $ 17,175 Collectively evaluated for impairment 1,906,055 768,853 552,614 302,955 339,710 135,534 4,005,721 Total $ 1,918,720 $ 769,275 $ 554,589 $ 303,091 $ 341,312 $ 135,909 $ 4,022,896 A summary of nonperforming loans individually evaluated for impairment by category at September 30, 2018 and December 31, 2017 , and the income recognized on impaired loans is as follows: September 30, 2018 (in thousands) Unpaid Recorded Recorded Allowance Total Related Allowance Average Commercial and industrial $ 20,938 $ 3,266 $ 8,931 $ 12,197 $ 4,128 $ 10,414 Real estate: Commercial - investor owned 1,039 770 — 770 — 657 Commercial - owner occupied 1,328 826 462 1,288 177 1,074 Construction and land development — — — — — — Residential 2,600 2,008 469 2,477 9 2,410 Consumer and other 329 312 — 312 — 334 Total $ 26,234 $ 7,182 $ 9,862 $ 17,044 $ 4,314 $ 14,889 December 31, 2017 (in thousands) Unpaid Recorded Recorded Allowance Total Related Allowance Average Commercial and industrial $ 20,750 $ 2,321 $ 10,344 $ 12,665 $ 2,508 $ 16,270 Real estate: Commercial - investor owned 560 422 — 422 — 521 Commercial - owner occupied 487 — 487 487 71 490 Construction and land development 441 136 — 136 — 331 Residential 1,730 1,602 — 1,602 — 1,735 Consumer and other 375 375 — 375 — 375 Total $ 24,343 $ 4,856 $ 10,831 $ 15,687 $ 2,579 $ 19,722 Three months ended September 30, Nine months ended September 30, (in thousands) 2018 2017 2018 2017 Total interest income that would have been recognized under original terms $ 614 $ 306 $ 1,615 $ 961 Total cash received and recognized as interest income on non-accrual loans 68 117 157 156 Total interest income recognized on accruing, impaired loans 110 8 133 55 The recorded investment in nonperforming loans by category at September 30, 2018 and December 31, 2017 , is as follows: September 30, 2018 (in thousands) Non-accrual Restructured, not on non-accrual Loans over 90 days past due and still accruing interest Total Commercial and industrial $ 10,088 $ 820 $ 1,289 $ 12,197 Real estate: Commercial - investor owned 770 — — 770 Commercial - owner occupied 1,288 — — 1,288 Construction and land development — — — — Residential 2,477 — — 2,477 Consumer and other 312 — — 312 Total $ 14,935 $ 820 $ 1,289 $ 17,044 December 31, 2017 (in thousands) Non-accrual Restructured, not on non-accrual Total Commercial and industrial $ 11,946 $ 719 $ 12,665 Real estate: Commercial - investor owned 422 — 422 Commercial - owner occupied 487 — 487 Construction and land development 136 — 136 Residential 1,602 — 1,602 Consumer and other 375 — 375 Total $ 14,968 $ 719 $ 15,687 There were no loans over 90 days past due and still accruing interest at December 31, 2017 . The recorded investment by category for the portfolio loans that have been restructured during the three and nine months ended September 30, 2018 and 2017 , is as follows: Three months ended September 30, 2018 Three months ended September 30, 2017 (in thousands, except for number of loans) Number of loans Pre-Modification Outstanding Recorded Balance Post-Modification Outstanding Recorded Balance Number of loans Pre-Modification Outstanding Recorded Balance Post-Modification Outstanding Recorded Balance Commercial and industrial 1 $ 187 $ 187 — $ — $ — Total 1 $ 187 $ 187 — $ — $ — Nine months ended September 30, 2018 Nine months ended September 30, 2017 (in thousands, except for number of loans) Number of loans Pre-Modification Outstanding Recorded Balance Post-Modification Outstanding Recorded Balance Number of loans Pre-Modification Outstanding Recorded Balance Post-Modification Outstanding Recorded Balance Commercial and industrial 1 $ 187 $ 187 1 $ 676 $ 676 Total 1 $ 187 $ 187 1 $ 676 $ 676 As of September 30, 2018 , the Company had $2.6 million in specific reserves allocated to $8.0 million of loans that have been restructured. During the three and nine months ended September 30, 2018 and 2017, there were no portfolio loans that subsequently defaulted. The aging of the recorded investment in past due loans by portfolio class and category at September 30, 2018 and December 31, 2017 , is shown below. September 30, 2018 (in thousands) 30-89 Days Past Due 90 or More Past Due Total Past Due Current Total Commercial and industrial $ 11,213 $ 6,020 $ 17,233 $ 2,015,696 $ 2,032,929 Real estate: Commercial - investor owned 1,362 129 1,491 824,956 826,447 Commercial - owner occupied 258 808 1,066 587,979 589,045 Construction and land development — — — 326,858 326,858 Residential 864 1,156 2,020 306,365 308,385 Consumer and other — — — 134,677 134,677 Total $ 13,697 $ 8,113 $ 21,810 $ 4,196,531 $ 4,218,341 December 31, 2017 (in thousands) 30-89 Days Past Due 90 or More Past Due Total Past Due Current Total Commercial and industrial $ 7,882 $ 1,770 $ 9,652 $ 1,909,068 $ 1,918,720 Real estate: Commercial - investor owned 934 — 934 768,341 769,275 Commercial - owner occupied — — — 554,589 554,589 Construction and land development 76 — 76 303,015 303,091 Residential 1,529 945 2,474 338,838 341,312 Consumer and other 407 — 407 135,502 135,909 Total $ 10,828 $ 2,715 $ 13,543 $ 4,009,353 $ 4,022,896 The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: • Grades 1 , 2 , and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry. • Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow. • Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow. • Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7 , 8 , or 9 rating. • Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated, due to strong collateral and/or guarantor support. • Grade 8 – Substandard credits include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted. • Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on non-accrual. The recorded investment by risk category of the loans by portfolio class and category at September 30, 2018 , which is based upon the most recent analysis performed, and December 31, 2017 , is as follows: September 30, 2018 (in thousands) Pass (1-6) Watch (7) Classified (8 & 9) Total Commercial and industrial $ 1,835,230 $ 142,768 $ 54,931 $ 2,032,929 Real estate: Commercial - investor owned 798,116 22,275 6,056 826,447 Commercial - owner occupied 540,961 43,399 4,685 589,045 Construction and land development 315,022 11,775 61 326,858 Residential 298,076 3,058 7,251 308,385 Consumer and other 134,359 7 311 134,677 Total $ 3,921,764 $ 223,282 $ 73,295 $ 4,218,341 December 31, 2017 (in thousands) Pass (1-6) Watch (7) Classified (8 & 9) Total Commercial and industrial $ 1,769,102 $ 94,002 $ 55,616 $ 1,918,720 Real estate: Commercial - investor owned 754,010 10,840 4,425 769,275 Commercial - owner occupied 514,616 34,440 5,533 554,589 Construction and land development 292,766 9,983 342 303,091 Residential 329,742 3,648 7,922 341,312 Consumer and other 134,704 10 1,195 135,909 Total $ 3,794,940 $ 152,923 $ 75,033 $ 4,022,896 |