Loans and Credit Quality | Loans and Credit Quality The following table presents total portfolio loans by portfolio segment and class of financing receivable, based on the Company's asset quality rating ("AQR") criteria: (In Thousands) Commercial Real estate construction one-to-four family Real estate construction other Real estate term owner occupied Real estate term non-owner occupied Real estate term other Consumer secured by 1st deeds of trust Consumer other Total March 31, 2019 AQR Pass $323,263 $34,061 $72,920 $120,469 $297,268 $42,682 $18,259 $24,075 $932,997 AQR Special Mention 3,467 — — 3,886 17,963 — — — 25,316 AQR Substandard 17,434 2,423 — 5,786 930 1,228 457 69 28,327 AQR Doubtful — — — — — — — 1 1 Subtotal $344,164 $36,484 $72,920 $130,141 $316,161 $43,910 $18,716 $24,145 $986,641 Less: Unearned origination fees, net of origination costs (4,300 ) Total loans $982,341 December 31, 2018 AQR Pass $315,112 $33,729 $72,256 $117,174 $307,126 $40,792 $18,768 $23,595 $928,552 AQR Special Mention 5,116 3,382 — 3,987 18,129 670 140 2 31,426 AQR Substandard 22,192 — — 5,253 465 577 320 47 28,854 AQR Doubtful — — — — — — — 1 1 Subtotal $342,420 $37,111 $72,256 $126,414 $325,720 $42,039 $19,228 $23,645 $988,833 Less: Unearned origination fees, net of origination costs (4,487 ) Total loans $984,346 Loans are carried at their principal amount outstanding, net of charge-offs, unamortized fees and direct loan origination costs. Loan balances are charged-off to the Allowance when management believes that collection of principal is unlikely. Interest income on loans is accrued and recognized on the principal amount outstanding except for loans in a nonaccrual status. All classes of loans are placed on nonaccrual and considered impaired when management believes doubt exists as to the collectability of the interest or principal. Cash payments received on nonaccrual loans are directly applied to the principal balance. Generally, a loan may be returned to accrual status when the delinquent principal and interest is brought current in accordance with the terms of the loan agreement. Additionally, certain ongoing performance criteria, which generally includes a performance period of six months, must be met in order for a loan to be returned to accrual status. Loans are reported as past due when installment payments, interest payments, or maturity payments are past due based on contractual terms. Nonaccrual loans: Nonaccrual loans net of government guarantees totaled $18.5 million and $14.7 million at March 31, 2019 and December 31, 2018 , respectively. Nonaccrual loans at the periods indicated are presented below by segment: (In Thousands) 30-59 Days 60-89 Days Greater Than Current Total March 31, 2019 Commercial $261 $1,337 $2,559 $7,529 $11,686 Real estate construction one-to-four family — — — 2,423 2,423 Real estate term owner occupied 393 — 2,418 963 3,774 Real estate term other — — 577 650 1,227 Consumer secured by 1st deeds of trust — — — 360 360 Consumer other — — 39 7 46 Total nonperforming loans 654 1,337 5,593 11,932 19,516 Government guarantees on nonaccrual loans — (269 ) — (769 ) (1,038 ) Net nonaccrual loans $654 $1,068 $5,593 $11,163 $18,478 December 31, 2018 Commercial $1,329 $324 $1,287 $9,731 $12,671 Real estate term owner occupied — — 1,694 — 1,694 Real estate term other — — 577 — 577 Consumer secured by 1st deeds of trust — — — 220 220 Consumer other — — 39 9 48 Total nonperforming loans 1,329 324 3,597 9,960 15,210 Government guarantees on nonaccrual loans (269 ) — — (247 ) (516 ) Net nonaccrual loans $1,060 $324 $3,597 $9,713 $14,694 Past Due Loans: Past due loans and nonaccrual loans at the periods indicated are presented below by segment: (In Thousands) 30-59 Days Past Due Still Accruing 60-89 Days Past Due Still Accruing Greater Than 90 Days Still Accruing Total Past Due Nonaccrual Current Total March 31, 2019 Commercial $809 $534 $— $1,343 $11,686 $331,135 $344,164 Real estate construction one-to-four family — — — — 2,423 34,061 36,484 Real estate construction other 268 — — 268 — 72,652 72,920 Real estate term owner occupied 265 1,141 — 1,406 3,774 124,961 130,141 Real estate term non-owner occupied — — — — — 316,161 316,161 Real estate term other — — — — 1,227 42,683 43,910 Consumer secured by 1st deed of trust 388 — — 388 360 17,968 18,716 Consumer other 220 — — 220 46 23,879 24,145 Subtotal $1,950 $1,675 $— $3,625 $19,516 $963,500 $986,641 Less: Unearned origination fees, net of origination costs (4,300 ) Total $982,341 December 31, 2018 Commercial $872 $857 $— $1,729 $12,671 $328,020 $342,420 Real estate construction one-to-four family — — — — — 37,111 37,111 Real estate construction other — — — — — 72,256 72,256 Real estate term owner occupied 1,197 — — 1,197 1,694 123,523 126,414 Real estate term non-owner occupied — — — — — 325,720 325,720 Real estate term other — — — — 577 41,462 42,039 Consumer secured by 1st deed of trust 224 100 — 324 220 18,684 19,228 Consumer other 190 — — 190 48 23,407 23,645 Subtotal $2,483 $957 $— $3,440 $15,210 $970,183 $988,833 Less: Unearned origination fees, net of origination costs (4,487 ) Total $984,346 Impaired Loans: The Company considers a loan to be impaired when it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. Once a loan is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate, except that if the loan is collateral dependent, the impairment is measured by using the fair value of the loan’s collateral. Nonperforming loans with an outstanding balance of $50,000 or greater are individually evaluated for impairment based upon the borrower’s overall financial condition, resources, and payment record, and the prospects for support from any financially responsible guarantors. At March 31, 2019 and December 31, 2018 , the recorded investment in loans that are considered to be impaired was $31.1 million and $31.7 million , respectively. The following table presents information about impaired loans by class as of the periods indicated: (In Thousands) Recorded Investment Unpaid Principal Balance Related Allowance March 31, 2019 With no related allowance recorded Commercial - AQR pass $2,076 $2,076 $— Commercial - AQR substandard 16,467 17,539 — Real estate construction one-to-four family - AQR substandard 2,423 2,423 — Real estate term owner occupied- AQR substandard 5,786 5,786 — Real estate term non-owner occupied- AQR pass 284 284 — Real estate term non-owner occupied- AQR substandard 929 929 — Real estate term other - AQR pass 467 467 — Real estate term other - AQR substandard 578 578 — Consumer secured by 1st deeds of trust - AQR pass 128 128 — Consumer secured by 1st deeds of trust - AQR substandard 241 241 — Subtotal $29,379 $30,451 $— With an allowance recorded Commercial - AQR substandard $840 $1,343 $212 Real estate term other - AQR substandard 650 650 54 Consumer secured by 1st deeds of trust - AQR substandard 216 216 39 Subtotal $1,706 $2,209 $305 Total Commercial - AQR pass $2,076 $2,076 $— Commercial - AQR substandard 17,307 18,882 212 Real estate construction one-to-four family - AQR substandard 2,423 2,423 — Real estate term owner-occupied - AQR substandard 5,786 5,786 — Real estate term non-owner occupied - AQR pass 284 284 — Real estate term non-owner occupied - AQR substandard 929 929 — Real estate term other - AQR pass 467 467 — Real estate term other - AQR substandard 1,228 1,228 54 Consumer secured by 1st deeds of trust - AQR pass 128 128 — Consumer secured by 1st deeds of trust - AQR substandard 457 457 39 Total $31,085 $32,660 $305 (In Thousands) Recorded Investment Unpaid Principal Balance Related Allowance December 31, 2018 With no related allowance recorded Commercial - AQR pass $80 $80 $— Commercial - AQR special mention 2,009 2,009 — Commercial - AQR substandard 21,252 22,303 — Real estate term owner occupied - AQR substandard 5,253 5,253 — Real estate term non-owner occupied - AQR pass 295 295 — Real estate term non-owner occupied - AQR substandard 465 465 — Real estate term other - AQR pass 486 486 — Real estate term other - AQR substandard 577 577 — Consumer secured by 1st deeds of trust - AQR pass 129 129 — Consumer secured by 1st deeds of trust - AQR substandard 320 320 — Subtotal $30,866 $31,917 $— With an allowance recorded Commercial - AQR substandard $848 $1,352 $14 Subtotal $848 $1,352 $14 Total Commercial - AQR pass $80 $80 $— Commercial - AQR special mention 2,009 2,009 — Commercial - AQR substandard 22,100 23,655 14 Real estate term owner occupied - AQR substandard 5,253 5,253 — Real estate term non-owner occupied - AQR pass 295 295 — Real estate term non-owner occupied - AQR substandard 465 465 — Real estate term other - AQR pass 486 486 — Real estate term other - AQR special mention 577 577 — Consumer secured by 1st deeds of trust - AQR pass 129 129 — Consumer secured by 1st deeds of trust - AQR substandard 320 320 — Total $31,714 $33,269 $14 The unpaid principal balance included in the tables above represents the recorded investment at the dates indicated, plus amounts charged off for book purposes. The following tables summarize our average recorded investment and interest income recognized on impaired loans for the three-month periods ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 2018 (In Thousands) Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded Commercial - AQR pass $2,082 $33 $— $— Commercial - AQR special mention — — 2,242 31 Commercial - AQR substandard 16,796 91 18,549 85 Real estate construction one-to-four family - AQR substandard 2,903 — — — Real estate term owner occupied- AQR substandard 5,914 34 4,592 24 Real estate term non-owner occupied- AQR pass 289 5 299 5 Real estate term non-owner occupied- AQR special mention — — 89 1 Real estate term non-owner occupied- AQR substandard 931 — 480 7 Real estate term other - AQR pass 477 8 550 10 Real estate term other - AQR substandard 578 — — — Consumer secured by 1st deeds of trust - AQR pass 128 3 136 4 Consumer secured by 1st deeds of trust - AQR substandard 246 2 248 4 Subtotal $30,344 $176 $27,185 $171 With an allowance recorded Commercial - AQR substandard $844 $— $7,205 $— Commercial - AQR doubtful — — 55 — Real estate term other - AQR substandard 660 — — — Consumer secured by 1st deeds of trust - AQR substandard 217 — 242 — Subtotal $1,721 $— $7,502 $— Total Commercial - AQR pass $2,082 $33 $— $— Commercial - AQR special mention — — 2,242 31 Commercial - AQR substandard 17,640 91 25,754 85 Commercial - AQR doubtful — — 55 — Real estate construction one-to-four family - AQR substandard 2,903 — — — Real estate term owner-occupied - AQR substandard 5,914 34 4,592 24 Real estate term non-owner occupied - AQR pass 289 5 299 5 Real estate term non-owner occupied - AQR special mention — — 89 1 Real estate term non-owner occupied - AQR substandard 931 — 480 7 Real estate term other - AQR pass 477 8 550 10 Real estate term other - AQR substandard 1,238 — — — Consumer secured by 1st deeds of trust - AQR pass 128 3 136 4 Consumer secured by 1st deeds of trust - AQR substandard 463 2 490 4 Total Impaired Loans $32,065 $176 $34,687 $171 Troubled Debt Restructurings: Loans classified as troubled debt restructurings (“TDR”) totaled $13.2 million and $14.8 million at March 31, 2019 and December 31, 2018 , respectively. A TDR is a loan to a borrower that is experiencing financial difficulty that has been modified from its original terms and conditions in such a way that the Company is granting the borrower a concession that it would not grant otherwise. The Company has granted a variety of concessions to borrowers in the form of loan modifications. The modifications granted can generally be described in the following categories: Rate Modification : A modification in which the interest rate is changed. Term Modification : A modification in which the maturity date, timing of payments, or frequency of payments is changed. Payment Modification : A modification in which the dollar amount of the payment is changed, or in which a loan is converted to interest only payments for a period of time is included in this category. Combination Modification : Any other type of modification, including the use of multiple categories above. AQR pass graded loans included above in the impaired loan data are loans classified as TDRs. By definition, TDRs are considered impaired loans. All of the Company's TDRs are included in impaired loans. The following table presents the breakout between newly restructured loans that occurred during the three months ended March 31, 2019 and restructured loans that occurred prior to 2019 that are still included in portfolio loans: Accrual Status Nonaccrual Status Total Modifications (In Thousands) New Troubled Debt Restructurings Subtotal $— $— $— Existing Troubled Debt Restructurings $3,368 $9,799 $13,167 Total $3,368 $9,799 $13,167 There were no newly restructured loans that occurred during the three months ended March 31, 2019 . The following table presents newly restructured loans that occurred during the three months ended March 31, 2018, by concession (terms modified): March 31, 2018 Number of Contracts Rate Modification Term Modification Payment Modification Combination Modification Total Modifications (In Thousands) Pre-Modification Outstanding Recorded Investment: Commercial - AQR substandard 4 $— $— $2,704 $— $2,704 Real estate term owner occupied- AQR substandard 2 — — 1,694 — 1,694 Total 6 $— $— $4,398 $— $4,398 Post-Modification Outstanding Recorded Investment: Commercial - AQR substandard 4 $— $— $1,738 $— $1,738 Real estate term owner occupied- AQR substandard 2 — — 1,694 — 1,694 Total 6 $— $— $3,432 $— $3,432 The Company had no commitments to extend additional credit to borrowers whose terms have been modified in TDRs. There were no charge-offs in the three months ended March 31, 2019 on loans that were newly classified as TDRs during the same period. All TDRs are also classified as impaired loans and are included in the loans individually evaluated for impairment in the calculation of the Allowance. There was one TDR with specific impairment at March 31, 2019 and one at December 31, 2018 . The Company had no TDRs that subsequently defaulted within the first twelve months of restructure, during the twelve-month period ending March 31, 2018 . The following table presents TDRs that occurred during the twelve-month period ending March 31, 2019 that subsequently defaulted during the three months ended March 31, 2019 : March 31, 2019 Number of Contracts Recorded Investment (In Thousands) Troubled Debt Restructurings that Subsequently Defaulted: Commercial - AQR substandard 3 $1,146 Real estate term owner occupied - AQR substandard 2 1,694 Total 5 $2,840 |