CHFC 2018 Annual Report

been acquired for investment or future land development (vacant land). Commercial real estate loans were $4.91 billion at December 31, 2018, an increase of $411.4 million, or 9.1%, compared to $4.50 billion at December 31, 2017. Loans secured by owner occupied properties, non-owner occupied properties and vacant land comprised 41.9%, 56.7% and 1.4%, respectively, of our commercial real estate loans outstanding at December 31, 2018. Commercial real estate loans increased $527.5 million, or 13.3%, during 2017, compared to $3.97 billion at December 31, 2016. Commercial real estate loans represented 32.2% of our loan portfolio at December 31, 2018, compared to 31.8% and 30.6% at December 31, 2017 and 2016, respectively. Commercial and commercial real estate lending are generally considered to involve a higher degree of risk than residential mortgage, consumer installment and home equity lending as they typically involve larger loan balances concentrated in a single borrower. In addition, the payment experience on loans secured by income-producing properties and vacant land loans is typically dependent on the success of the operation of the related project and is typically affected by adverse conditions in the real estate market and in the economy. We generally attempt to mitigate the risks associated with commercial and commercial real estate lending by, among other things, lending primarily in our market areas, lending across industry lines, not developing a concentration in any one line of business and using prudent loan-to-value ratios in the underwriting process. It is management's belief that our commercial and commercial real estate loan portfolios are generally well-secured. Real estate construction loans are primarily originated for construction of commercial properties and often convert to a commercial real estate loan at the completion of the construction period. Land development loans include loans made to developers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Amajority of our land development loans consist of loans to develop residential real estate. Land development loans are generally originated as interest only with the intention that the loan principal balance will be repaid through the sale of finished properties by the developers within twelve months of the completion date. Real estate construction and land development loans were $597.2 million at December 31, 2018, an increase of $23.0 million, or 4.0%, compared to $574.2 million at December 31, 2017. Real estate construction and land development loans increased $170.4 million, or 42.2%, during 2017, compared to $403.8 million at December 31, 2016. Real estate construction and land development loans represented 3.9% of our loan portfolio at December 31, 2018, compared to 4.1% and 3.1% at December 31, 2017 and 2016, respectively. Real estate construction and land development lending involves a higher degree of risk than commercial real estate lending and residential mortgage lending because of the uncertainties of construction, including the possibility of costs exceeding the initial estimates, the need to obtain a tenant or purchaser of the property if it will not be owner-occupied or the need to sell developed properties. We generally attempt to mitigate the risks associated with real estate construction and land development lending by, among other things, lending primarily in our market areas, using prudent underwriting guidelines and closely monitoring the construction process. At December 31, 2018, $0.2 million, or 0.04%, of our $597.2 million of real estate construction and land development loans were considered impaired, whereby we determined it was probable that the full amount of principal and interest would not be collected on these loans in accordance with their original contractual terms. At December 31, 2017, $0.3 million, or 0.1% of our $574.2 million of real estate construction and land development loans were considered impaired. Consumer Loan Portfolio Our consumer loan portfolio is comprised of residential mortgage loans, consumer installment loans and home equity loans and lines of credit. Residential mortgage loans consist primarily of one- to four-family residential loans, generally with fixed interest rates of 15 years or less, with amortization periods generally from 15 to 30 years. The loan-to-value ratio at the time of origination is generally 80% or less. Loans with more than an 80% loan-to-value ratio generally require private mortgage insurance. Residential mortgage loans were $3.46 billion at December 31, 2018, an increase of $206.2 million, or 6.3%, compared to $3.25 billion at December 31, 2017. Residential mortgage loans increased $166.0million during 2017 from residential mortgage loans of $3.09 billion at December 31, 2016. Residential mortgage loans historically involve the least amount of credit risk in our loan portfolio. Residential mortgage loans also include loans to consumers for the construction of single family residences that are secured by these properties. Residential mortgage construction loans to consumers were $249.4 million at December 31, 2018, compared to $272.3 million at December 31, 2017 and $169.5 million at December 31, 2016. Residential mortgage loans represented 22.7% of our loan portfolio at December 31, 2018, compared to 23.0% and 23.8% at December 31, 2017 and 2016, respectively. We had residential mortgage loans with maturities beyond five years and that were at fixed interest rates totaling $929.5 million at December 31, 2018, compared to $495.8 million at December 31, 2017. Our consumer installment loans consist of relatively small loan amounts to consumers to finance personal items (primarily automobiles, recreational vehicles and marine vehicles) with the majority comprised of indirect loans generated from dealerships. Consumer installment loans were $1.52 billion at December 31, 2018, a decrease of $91.9 million, or 5.7%, compared to $1.61 56