Loans and Leases | Loans and Leases Summary of Major Loan and Lease Categories At June 30, 2016 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 559,364 $ 20,096 $ 579,460 Real estate-commercial 813,925 113,033 926,958 Real estate-construction 97,967 2,112 100,079 Real estate-residential secured for business purpose 122,373 107,849 230,222 Real estate-residential secured for personal purpose 200,746 3,085 203,831 Real estate-home equity secured for personal purpose 134,170 10,335 144,505 Loans to individuals 30,880 306 31,186 Lease financings 128,796 — 128,796 Total loans and leases held for investment, net of deferred income $ 2,088,221 $ 256,816 $ 2,345,037 Unearned lease income, included in the above table $ (14,539 ) $ — $ (14,539 ) Net deferred costs, included in the above table 4,987 — 4,987 Overdraft deposits included in the above table 72 — 72 At December 31, 2015 (Dollars in thousands) Originated Acquired Total Commercial, financial and agricultural $ 479,980 $ 24,535 $ 504,515 Real estate-commercial 759,342 126,550 885,892 Real estate-construction 91,904 4,637 96,541 Real estate-residential secured for business purpose 94,280 124,503 218,783 Real estate-residential secured for personal purpose 177,850 3,305 181,155 Real estate-home equity secured for personal purpose 125,361 11,594 136,955 Loans to individuals 29,406 326 29,732 Lease financings 125,440 — 125,440 Total loans and leases held for investment, net of deferred income $ 1,883,563 $ 295,450 $ 2,179,013 Unearned lease income, included in the above table $ (13,829 ) $ — $ (13,829 ) Net deferred costs, included in the above table 4,244 — 4,244 Overdraft deposits included in the above table 35 — 35 Overdraft deposits are re-classified as loans and are included in the total loans and leases on the balance sheet. The carrying amount of acquired loans at June 30, 2016 totaled $256.8 million , including $942 thousand of loans acquired with deteriorated credit quality, or acquired credit impaired loans from the Valley Green Bank acquisition. Acquired credit impaired loans are accounted for in accordance with Accounting Standards Codification (ASC) Topic 310-30. The outstanding principal balance and carrying amount for acquired credit impaired loans at June 30, 2016 and December 31, 2015 were as follows: (Dollars in thousands) At June 30, 2016 At December 31, 2015 Outstanding principal balance $ 1,814 $ 3,551 Carrying amount 942 1,253 Allowance for loan losses — 8 The following table presents the changes in accretable yield on acquired credit impaired loans: (Dollars in thousands) Six Months Ended June 30, 2016 Beginning of period $ 144 Reclassification from nonaccretable difference 133 Accretable yield amortized to interest income (184 ) Disposals (34 ) End of period $ 59 Age Analysis of Past Due Loans and Leases The following presents, by class of loans and leases, an aging of past due loans and leases, loans and leases which are current and the recorded investment in loans and leases 90 days or more past due which are accruing interest at June 30, 2016 and December 31, 2015 : (Dollars in thousands) 30-59 60-89 90 Days Total Current Acquired Credit Impaired Total Loans Recorded At June 30, 2016 Commercial, financial and agricultural $ 813 $ 19 $ 1,758 $ 2,590 $ 576,870 $ — $ 579,460 $ — Real estate—commercial real estate and construction: Commercial real estate 606 — 626 1,232 925,546 180 926,958 — Construction — — — — 100,079 — 100,079 — Real estate—residential and home equity: Residential secured for business purpose 2,414 1,025 582 4,021 225,439 762 230,222 — Residential secured for personal purpose 262 — 308 570 203,261 — 203,831 — Home equity secured for personal purpose 1,094 40 687 1,821 142,684 — 144,505 77 Loans to individuals 168 54 155 377 30,809 — 31,186 155 Lease financings 1,835 556 1,077 3,468 125,328 — 128,796 516 Total $ 7,192 $ 1,694 $ 5,193 $ 14,079 $ 2,330,016 $ 942 $ 2,345,037 $ 748 At December 31, 2015 Commercial, financial and agricultural $ 864 $ 298 $ 4,279 $ 5,441 $ 498,757 $ 317 $ 504,515 $ — Real estate—commercial real estate and construction: Commercial real estate 12,103 — 1,102 13,205 872,174 513 885,892 — Construction — — — — 96,541 — 96,541 — Real estate—residential and home equity: Residential secured for business purpose 1,406 2,356 727 4,489 213,871 423 218,783 — Residential secured for personal purpose 990 69 309 1,368 179,787 — 181,155 — Home equity secured for personal purpose 777 52 174 1,003 135,952 — 136,955 — Loans to individuals 198 97 173 468 29,264 — 29,732 173 Lease financings 1,294 652 646 2,592 122,848 — 125,440 206 Total $ 17,632 $ 3,524 $ 7,410 $ 28,566 $ 2,149,194 $ 1,253 $ 2,179,013 $ 379 Non-Performing Loans and Leases The following presents, by class of loans and leases, non-performing loans and leases at June 30, 2016 and December 31, 2015 : At June 30, 2016 At December 31, 2015 (Dollars in thousands) Nonaccrual Accruing Loans and Total Non- Nonaccrual Accruing Loans and Total Non- Commercial, financial and agricultural $ 5,463 $ 1,425 $ — $ 6,888 $ 6,915 $ 1,602 $ — $ 8,517 Real estate—commercial real estate and construction: Commercial real estate 3,960 2,173 — 6,133 4,314 2,449 — 6,763 Real estate—residential and home equity: Residential secured for business purpose 2,251 815 — 3,066 1,863 763 — 2,626 Residential secured for personal purpose 409 — — 409 376 421 — 797 Home equity secured for personal purpose 620 — 77 697 275 — — 275 Loans to individuals — — 155 155 — — 173 173 Lease financings 562 — 516 1,078 440 10 206 656 Total $ 13,265 $ 4,413 $ 748 $ 18,426 $ 14,183 $ 5,245 $ 379 $ 19,807 * Includes nonaccrual troubled debt restructured loans and lease modifications of $1.4 million and $93 thousand at June 30, 2016 and December 31, 2015 , respectively. Credit Quality Indicators The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at June 30, 2016 and December 31, 2015 . The Corporation employs a ten (10) grade risk rating system related to the credit quality of commercial loans and residential real estate loans secured for a business purpose of which the first six categories are pass categories (credits not adversely rated). The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating. Loans with risk ratings of one through five are reviewed based on the relationship dollar amount with the borrower: loans with a relationship total of $2.5 million or greater are reviewed quarterly; loans with a relationship balance of less than $2.5 million but greater than $500 thousand are reviewed annually based on the borrower’s fiscal year; loans with a relationship balance of less than $500 thousand are reviewed only if the loan becomes 60 days or more past due. Loans with a risk rating of six are also reviewed based on the relationship dollar amount with the borrower: loans with a relationship balance of $2.0 million or greater are reviewed quarterly; loans with a relationship balance of less than $2.0 million but greater than $500 thousand are reviewed annually; loans with a relationship balance of less than $500 thousand are reviewed only if the loan becomes 60 days or more past due. Loans with a risk rating of seven are reviewed at least quarterly, and as often as monthly, at management’s discretion. Loans with risk ratings of eight through ten are reviewed monthly. 1. Cash Secured—No credit risk 2. Fully Secured—Negligible credit risk 3. Strong—Minimal credit risk 4. Satisfactory—Nominal credit risk 5. Acceptable—Moderate credit risk 6. Pre-Watch—Marginal, but stable credit risk 7. Special Mention—Potential weakness 8. Substandard—Well-defined weakness 9. Doubtful—Collection in-full improbable 10. Loss—Considered uncollectible Commercial Credit Exposure Credit Risk by Internally Assigned Grades The following table presents classifications for originated loans: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Total At June 30, 2016 Grade: 1. Cash secured/ 2. Fully secured $ 421 $ — $ 6,335 $ — $ 6,756 3. Strong 17,282 2,781 — — 20,063 4. Satisfactory 31,286 37,333 450 256 69,325 5. Acceptable 410,312 578,714 82,780 107,227 1,179,033 6. Pre-watch 67,282 129,351 8,188 10,435 215,256 7. Special Mention 6,297 19,031 — 161 25,489 8. Substandard 26,484 46,715 214 4,294 77,707 9. Doubtful — — — — — 10.Loss — — — — — Total $ 559,364 $ 813,925 $ 97,967 $ 122,373 $ 1,593,629 At December 31, 2015 Grade: 1. Cash secured/ 2. Fully secured $ 968 $ — $ 5,417 $ — $ 6,385 3. Strong 17,328 10,877 — — 28,205 4. Satisfactory 36,697 36,023 450 9 73,179 5. Acceptable 328,140 530,766 72,630 78,659 1,010,195 6. Pre-watch 61,098 119,117 13,262 7,161 200,638 7. Special Mention 6,074 20,286 — 2,347 28,707 8. Substandard 29,675 42,273 145 6,104 78,197 9. Doubtful — — — — — 10.Loss — — — — — Total $ 479,980 $ 759,342 $ 91,904 $ 94,280 $ 1,425,506 The following table presents classifications for acquired loans: (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Total At June 30, 2016 Grade: 1. Cash secured/ 2. Fully secured $ 1,398 $ — $ — $ — $ 1,398 3. Strong — — — — — 4. Satisfactory 1,146 2,162 — — 3,308 5. Acceptable 14,604 88,291 2,112 94,424 199,431 6. Pre-watch 2,067 13,839 — 7,711 23,617 7. Special Mention — 7,716 — 3,440 11,156 8. Substandard 881 1,025 — 2,274 4,180 9. Doubtful — — — — — 10.Loss — — — — — Total $ 20,096 $ 113,033 $ 2,112 $ 107,849 $ 243,090 December 31, 2015 Grade: 1. Cash secured/ 2. Fully secured $ 1,411 $ — $ — $ — $ 1,411 3. Strong — — — — — 4. Satisfactory 1,181 3,561 — 608 5,350 5. Acceptable 18,446 102,122 4,637 113,002 238,207 6. Pre-watch 2,273 10,365 — 8,153 20,791 7. Special Mention 417 8,853 — 367 9,637 8. Substandard 807 1,649 — 2,373 4,829 9. Doubtful — — — — — 10.Loss — — — — — Total $ 24,535 $ 126,550 $ 4,637 $ 124,503 $ 280,225 Credit Exposure—Real Estate—Residential Secured for Personal Purpose, Real Estate—Home Equity Secured for Personal Purpose, Loans to individuals, Lease Financing Credit Risk Profile by Payment Activity The Corporation monitors the credit risk profile by payment activity for the following classifications of loans and leases: residential real estate loans secured for a personal purpose, home equity loans secured for a personal purpose, loans to individuals and lease financings. Nonperforming loans and leases are loans past due 90 days or more, loans and leases on nonaccrual of interest and troubled debt restructured loans and lease modifications. Performing loans and leases are reviewed only if the loan becomes 60 days or more past due. Nonperforming loans and leases are reviewed monthly. Performing loans and leases have a nominal to moderate risk of loss. Nonperforming loans and leases are loans or leases with a well-defined weakness and where collection in-full is unlikely. The following table presents classifications for originated loans: (Dollars in thousands) Real Estate— Real Estate— Loans to Lease Total At June 30, 2016 Performing $ 200,337 $ 133,473 $ 30,725 $ 127,718 $ 492,253 Nonperforming 409 697 155 1,078 2,339 Total $ 200,746 $ 134,170 $ 30,880 $ 128,796 $ 494,592 At December 31, 2015 Performing $ 177,053 $ 125,086 $ 29,233 $ 124,784 $ 456,156 Nonperforming 797 275 173 656 1,901 Total $ 177,850 $ 125,361 $ 29,406 $ 125,440 $ 458,057 The following table presents classifications for acquired loans: (Dollars in thousands) Real Estate— Real Estate— Loans to Lease Total At June 30, 2016 Performing $ 3,085 $ 10,335 $ 306 $ — $ 13,726 Nonperforming — — — — — Total $ 3,085 $ 10,335 $ 306 $ — $ 13,726 At December 31, 2015 Performing $ 3,305 $ 11,594 $ 326 $ — $ 15,225 Nonperforming — — — — — Total $ 3,305 $ 11,594 $ 326 $ — $ 15,225 Risks associated with lending activities include, among other things, the impact of changes in interest rates and economic conditions, which may adversely impact the ability of borrowers to repay outstanding loans, and impact the value of the associated collateral. Commercial, financial and agricultural loans, commercial real estate loans, construction loans and residential real estate loans with a business purpose are generally perceived as having more risk of default than residential real estate loans with a personal purpose and consumer loans. These types of loans involve larger loan balances to a single borrower or groups of related borrowers. Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties and factors affecting residential real estate borrowers. Commercial, financial and agricultural business loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses. These loans may involve greater risk because the availability of funds to repay each loan depends substantially on the success of the business. In addition, the collateral securing the loans often depreciates over time, is difficult to appraise and liquidate and fluctuates in value based on the success of the business. Risk of loss on a construction loan depends largely upon whether our initial estimate of the property’s value at completion of construction equals or exceeds the cost of the property construction (including interest). During the construction phase, a number of factors can result in delays and cost overruns. If estimates of value are inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed through a permanent loan or by seizure of collateral. Included in real estate-construction is track development financing. Risk factors related to track development financing include the demand for residential housing and the real estate valuation market. When projects move slower than anticipated, the properties may have significantly lower values than when the original underwriting was completed, resulting in lower collateral values to support the loan. Extended time frames also cause the interest carrying cost for a project to be higher than the builder projected, negatively impacting the builder’s profit and cash flow and, therefore, their ability to make principal and interest payments. Commercial real estate loans and residential real estate loans with a business purpose secured by owner-occupied properties are dependent upon the successful operation of the borrower’s business. If the operating company suffers difficulties in terms of sales volume and/or profitability, the borrower’s ability to repay the loan may be impaired. Loans secured by properties where repayment is dependent upon payment of rent by third party tenants or the sale of the property may be impacted by loss of tenants, lower lease rates needed to attract new tenants or the inability to sell a completed project in a timely fashion and at a profit. Commercial, financial and agricultural loans, commercial real estate loans, construction loans and residential real estate loans secured for a business purpose are more susceptible to a risk of loss during a downturn in the business cycle. While the Corporation has strict underwriting, review, and monitoring procedures in place, these procedures cannot eliminate all of the risks related to these loans. The Corporation focuses on both assessing the borrower’s capacity and willingness to repay and on obtaining sufficient collateral. Commercial, financial and agricultural loans are generally secured by the borrower’s assets and by personal guarantees. Commercial real estate and residential real estate loans secured for a business purpose are originated primarily within the Southeastern Pennsylvania market area at conservative loan-to-value ratios and often with a guarantee of the borrowers. Management closely monitors the composition and quality of the total commercial loan portfolio to ensure that any credit concentrations by borrower or industry are closely monitored. The Corporation originates fixed-rate and adjustable-rate real estate-residential mortgage loans that are secured by the underlying 1-to-4 family residential properties for personal purposes. Credit risk exposure in this area of lending is minimized by the evaluation of the credit worthiness of the borrower, including debt-to-equity ratios, credit scores and adherence to underwriting policies that emphasize conservative loan-to-value ratios of generally no more than 80% . Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion are generally insured by private mortgage insurance. In the real estate-home equity loan portfolio secured for a personal purpose, credit exposure is minimized by the evaluation of the creditworthiness of the borrower, including debt-to-equity ratios, credit scores and adherence to the Corporation’s underwriting policies. Combined loan-to-value ratios are generally limited to 80% , but increased to 85% for the Corporation’s strongest profile borrower. Other credit considerations and compensating factors may support higher combined loan-to-value ratios. Credit risk for consumer loans is controlled by strict adherence to underwriting standards that consider debt-to-income levels and the creditworthiness of the borrower and, if secured, collateral values. These loans are included within the portfolio of loans to individuals. The primary risks that are involved with lease financing receivables are credit underwriting and borrower industry concentrations. The Corporation has strict underwriting, review, and monitoring procedures in place to mitigate this risk. Risk also lies in the residual value of the underlying equipment. Residual values are subject to judgments as to the value of the underlying equipment that can be affected by changes in economic and market conditions and the financial viability of the residual guarantors and insurers. To the extent not guaranteed or assumed by a third party, or otherwise insured against, the Corporation bears the risk of ownership of the leased assets. This includes the risk that the actual value of the leased assets at the end of the lease term will be less than the residual value. The Corporation greatly reduces this risk primarily by using $1.00 buyout leases, in which the entire cost of the leased equipment is included in the contractual payments, leaving no residual payment at the end of the lease term. Reserve for Loan and Lease Losses and Recorded Investment in Loans and Leases The following presents, by portfolio segment, a summary of the activity in the reserve for loan and lease losses, the balance in the reserve for loan and lease losses disaggregated on the basis of impairment method and the recorded investment in loans and leases disaggregated on the basis of impairment method for the three and six months ended June 30, 2016 and 2015 : (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total Three Months Ended June 30, 2016 Reserve for loan and lease losses: Beginning balance $ 5,630 $ 6,471 $ 747 $ 1,312 $ 356 $ 922 $ 1,014 $ 16,452 Charge-offs (346 ) (179 ) (27 ) (10 ) (108 ) (160 ) N/A (830 ) Recoveries 515 9 34 34 30 79 N/A 701 (Recovery of provision) provision (11 ) 1,070 (698 ) (34 ) 133 280 (87 ) 653 Provision (recovery of provision) for acquired credit impaired loans — 178 — (1 ) — — — 177 Ending balance $ 5,788 $ 7,549 $ 56 $ 1,301 $ 411 $ 1,121 $ 927 $ 17,153 Three Months Ended June 30, 2015 Reserve for loan and lease losses: Beginning balance $ 6,712 $ 9,648 $ 668 $ 1,128 $ 365 $ 1,013 $ 1,400 $ 20,934 Charge-offs* (1,038 ) (1,348 ) (24 ) (107 ) (64 ) (189 ) N/A (2,770 ) Recoveries 115 91 7 — 41 43 N/A 297 Provision (recovery of provision) 1,058 (590 ) (35 ) 167 47 258 236 1,141 Ending balance $ 6,847 $ 7,801 $ 616 $ 1,188 $ 389 $ 1,125 $ 1,636 $ 19,602 Six Months Ended June 30, 2016 Reserve for loan and lease losses: Beginning balance $ 6,418 $ 6,572 $ 763 $ 1,575 $ 346 $ 1,042 $ 912 $ 17,628 Charge-offs (1,827 ) (205 ) (265 ) (56 ) (184 ) (365 ) N/A (2,902 ) Recoveries 965 16 53 51 63 123 N/A 1,271 Provision (recovery of provision) 232 988 (495 ) (267 ) 186 321 15 980 Provision (recovery of provision) for acquired credit impaired loans — 178 — (2 ) — — — 176 Ending balance $ 5,788 $ 7,549 $ 56 $ 1,301 $ 411 $ 1,121 $ 927 $ 17,153 Six Months Ended June 30, 2015 Reserve for loan and lease losses: Beginning balance $ 6,920 $ 8,943 $ 763 $ 1,124 $ 360 $ 985 $ 1,567 $ 20,662 Charge-offs* (1,338 ) (1,696 ) (24 ) (138 ) (248 ) (419 ) N/A (3,863 ) Recoveries 225 156 13 1 89 104 N/A 588 Provision (recovery of provision) 1,040 398 (136 ) 201 188 455 69 2,215 Ending balance $ 6,847 $ 7,801 $ 616 $ 1,188 $ 389 $ 1,125 $ 1,636 $ 19,602 N/A – Not applicable *Includes charge-offs of $1.3 million on two real estate construction loans for one borrower which were subsequently transferred to loans held for sale in the second quarter of 2015. (Dollars in thousands) Commercial, Real Estate— Real Estate— Real Estate— Loans to Lease Unallocated Total At June 30, 2016 Reserve for loan and lease losses: Ending balance: individually evaluated for impairment $ 390 $ 4 $ 16 $ — $ — $ — N/A $ 410 Ending balance: collectively evaluated for impairment 5,398 7,545 40 1,301 411 1,121 927 16,743 Total ending balance $ 5,788 $ 7,549 $ 56 $ 1,301 $ 411 $ 1,121 $ 927 $ 17,153 Loans and leases held for investment: Ending balance: individually evaluated for impairment $ 12,472 $ 26,761 $ 3,772 $ 1,029 $ — $ — $ 44,034 Ending balance: collectively evaluated for impairment 546,892 885,131 118,601 333,887 30,880 128,796 2,044,187 Acquired non-credit impaired loans 20,096 114,965 107,087 13,420 306 — 255,874 Acquired credit impaired loans — 180 762 — — — 942 Total ending balance $ 579,460 $ 1,027,037 $ 230,222 $ 348,336 $ 31,186 $ 128,796 $ 2,345,037 At June 30, 2015 Reserve for loan and lease losses: Ending balance: individually evaluated for impairment $ 444 $ — $ — $ — $ — $ — N/A $ 444 Ending balance: collectively evaluated for impairment 6,403 7,801 616 1,188 389 1,125 1,636 19,158 Total ending balance $ 6,847 $ 7,801 $ 616 $ 1,188 $ 389 $ 1,125 $ 1,636 $ 19,602 Loans and leases held for investment: Ending balance: individually evaluated for impairment $ 15,409 $ 18,956 $ 3,633 $ 949 $ — $ — $ 38,947 Ending balance: collectively evaluated for impairment 469,367 758,024 48,290 288,263 28,070 120,597 1,712,611 Acquired non-credit impaired loans 26,880 175,583 135,480 16,135 345 — 354,423 Acquired credit impaired loans 304 1,021 491 60 — — 1,876 Total ending balance $ 511,960 $ 953,584 $ 187,894 $ 305,407 $ 28,415 $ 120,597 $ 2,107,857 N/A – Not applicable Subsequent to the acquisition date, the methods utilized to estimate the required allowance for loan losses for acquired non-impaired loans is similar to originated loans, however, the Corporation records a provision for loan loss only when the required allowance exceeds the remaining unamortized credit mark. The present value of any decreases in expected cash flows after the acquisition date of purchased impaired loans will generally result in an impairment charge recorded as a provision for loan loss, resulting in an increase to the allowance. Impaired Loans The following presents, by class of loans, the recorded investment and unpaid principal balance of impaired loans , the amounts of the impaired loans for which there is not an allowance for credit losses and the amounts for which there is an allowance for credit losses at June 30, 2016 and December 31, 2015 . The impaired loans exclude loans acquired with deteriorated credit quality. At June 30, 2016 At December 31, 2015 (Dollars in thousands) Recorded Unpaid Related Recorded Unpaid Related Impaired loans with no related allowance recorded: Commercial, financial and agricultural $ 11,439 $ 13,260 $ 10,337 $ 13,318 Real estate—commercial real estate 26,497 27,395 30,088 30,996 Real estate—residential secured for business purpose 3,612 3,903 4,597 4,717 Real estate—residential secured for personal purpose 409 434 545 554 Real estate—home equity secured for personal purpose 620 620 170 170 Total impaired loans with no allowance recorded $ 42,577 $ 45,612 $ 45,737 $ 49,755 Impaired loans with an allowance recorded: Commercial, financial and agricultural $ 1,033 $ 1,033 $ 390 $ 2,544 $ 2,544 $ 208 Real estate—commercial real estate 264 264 4 — — — Real estate—residential secured for business purpose 160 165 16 295 295 45 Real estate—residential secured for personal purpose — — — 252 252 16 Real estate—home equity secured for personal purpose — — — 105 105 53 Total impaired loans with an allowance recorded $ 1,457 $ 1,462 $ 410 $ 3,196 $ 3,196 $ 322 At June 30, 2016 At December 31, 2015 (Dollars in thousands) Recorded Unpaid Related Recorded Unpaid Related Total impaired loans: Commercial, financial and agricultural $ 12,472 $ 14,293 $ 390 $ 12,881 $ 15,862 $ 208 Real estate—commercial real estate 26,761 27,659 4 30,088 30,996 — Real estate—residential secured for business purpose 3,772 4,068 16 4,892 5,012 45 Real estate—residential secured for personal purpose 409 434 — 797 806 16 Real estate—home equity secured for personal purpose 620 620 — 275 275 53 Total impaired loans $ 44,034 $ 47,074 $ 410 $ 48,933 $ 52,951 $ 322 Impaired loans include nonaccrual loans, accruing troubled debt restructured loans and other accruing impaired loans for which it is probable that not all principal and interest payments due will be collectible in accordance with the contractual terms. These loans are individually measured to determine the amount of potential impairment. The loans are reviewed for impairment based on the fair value of the collateral for collateral dependent loans and for certain loans based on discounted cash flows using the loans’ initial effective interest rates. Impaired loans include other accruing impaired loans of $26.9 million and $30.0 million at June 30, 2016 and December 31, 2015 , respectively. Specific reserves on other accruing impaired loans were $171 thousand and $186 thousand at June 30, 2016 and December 31, 2015 , respectively. The following presents by class of loans, the average recorded investment in impaired loans and an analysis of interest on impaired loans. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Therefore, interest income on accruing impaired loans is recognized using the accrual method. Three Months Ended June 30, 2016 Three Months Ended June 30, 2015 (Dollars in thousands) Average Interest Additional Average Interest Additional Loans held for sale $ — $ — $ — $ 83 $ — $ 1 Loans held for investment: Commercial, financial and agricultural 13,387 74 78 15,669 116 99 Real estate—commercial real estate 27,691 281 58 26,093 306 82 Real estate—construction — — — 5,621 — 76 Real estate—residential secured for business purpose 3,740 9 60 3,385 39 38 Real estate—residential secured for personal purpose 392 — 5 796 — 11 Real estate—home equity secured for personal purpose 431 — 9 175 — 3 Total $ 45,641 $ 364 $ 210 $ 51,822 $ 461 $ 310 * Includes interest income recognized on a cash basis for nonaccrual loans of $0 thousand and $18 thousand for the three months ended June 30, 2016 and 2015 , respectively and interest income recognized on the accrual method for accruing impaired loans of $364 thousand and $443 thousand for the three months ended June 30, 2016 and 2015 , respectively. Six Months Ended June 30, 2016 Six Months Ended June 30, 2015 (Dollars in thousands) Average Interest Additional Average Interest Additional Loans held for sale $ — $ — $ — $ 47 $ — $ 1 Loans held for investment: Commercial, financial and agricultural 13,421 142 173 15,990 258 186 Real estate—commercial real estate 28,389 586 128 27,450 626 165 Real estate—construction — — — 5,688 — 153 Real estate—residential secured for business purpose 4,120 36 107 3,291 68 54 Real estate—residential secured for personal purpose 496 2 9 674 — 24 Real estate—home equity secured for personal purpose 329 — 11 179 — 6 Total $ 46,755 $ 766 $ 428 $ 53,319 $ 952 $ 589 * Includes interest income recognized on a cash basis for nonaccrual loans of $7 thousand and $22 thousand for the six months ended June 30, 2016 and 2015 , respectively and interest income recognized on the accrual method for accruing impaired loans of $759 thousand and $930 thousand for the six months ended June 30, 2016 and 2015 , respectively. Troubled Debt Restructured Loans The following presents, by class of loans, information regarding accruing and nonaccrual loans that were restructured: Three Months Ended June 30, 2016 Three Months Ended June 30, 2015 (Dollars in thousands) Number Pre- Post- Related Number Pre- Post- Related Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — $ — $ — 2 $ 947 $ 947 $ — Real estate—commercial real estate — — — — 1 405 405 — Real estate—residential secured for business purpose 1 415 415 — — — — — Total 1 $ 415 $ 415 $ — 3 $ 1,352 $ 1,352 $ — Nonaccrual Troubled Debt Restructured Loans: Total — $ — $ — $ — — $ — $ — $ — Six Months Ended June 30, 2016 Six Months Ended June 30, 2015 (Dollars in thousands) Number Pre- Post- Related Number Pre- Post- Related Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural 1 $ 1,545 $ 1,545 $ — 3 $ 1,090 $ 1,090 $ 71 Real estate—commercial real estate — — — — 1 405 405 — Real estate—residential secured for business purpose 1 415 415 — 1 353 353 — Total 2 $ 1,960 $ 1,960 $ — 5 $ 1,848 $ 1,848 $ 71 Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — $ — $ — 1 $ 122 $ 122 $ 42 Total — $ — $ — $ — 1 $ 122 $ 122 $ 42 The Corporation grants concessions primarily related to extensions of interest-only payment periods and an occasional payment modification. These modifications typically are for a short-term basis up to one year . The goal when restructuring a credit is to establish a reasonable period of time to provide cash flow relief to customers experiencing cash flow difficulties. Accruing troubled debt restructured loans are primarily comprised of loans on which interest is being accrued under the restructured terms, and the loans are current or less than ninety days past due . The following presents, by class of loans, information regarding the types of concessions granted on accruing and nonaccrual loans that were restructured during the three and six months ended June 30, 2016 and 2015 . Interest Only Term Temporary Payment Maturity Date Amortization Period Extension Total Concessions (Dollars in thousands) No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount Three Months Ended June 30, 2016 Accruing Troubled Debt Restructured Loans: Real estate—residential secured for business purpose 1 $ 415 — $ — — $ — — $ — 1 $ 415 Total 1 $ 415 — $ — — $ — — $ — 1 $ 415 Nonaccrual Troubled Debt Restructured Loans: Total — $ — — $ — — $ — — $ — — $ — Three Months Ended June 30, 2015 Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — — $ — 1 $ 500 1 $ 447 2 $ 947 Real estate—commercial real estate — — — — — — 1 405 1 405 Total — $ — — $ — 1 $ 500 2 $ 852 3 $ 1,352 Nonaccrual Troubled Debt Restructured Loans: Total — $ — — $ — — $ — — $ — — $ — Six Months Ended June 30, 2016 Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — — $ — — $ — 1 $ 1,545 1 $ 1,545 Real estate—residential secured for business purpose 1 415 — — — — — — 1 415 Total 1 $ 415 — $ — — $ — 1 $ 1,545 2 $ 1,960 Nonaccrual Troubled Debt Restructured Loans: Total — $ — — $ — — $ — — $ — — $ — Six Months Ended June 30, 2015 Accruing Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — 1 $ 143 1 $ 500 1 $ 447 3 $ 1,090 Real estate—commercial real estate — — — — — — 1 405 1 405 Real estate—residential secured for business purpose — — 1 353 — — — — 1 353 Total — $ — 2 $ 496 1 $ 500 2 $ 852 5 $ 1,848 Nonaccrual Troubled Debt Restructured Loans: Commercial, financial and agricultural — $ — 1 $ 122 — $ — — $ — 1 $ 122 Total — $ — 1 $ 122 — $ — — $ — 1 $ 122 The following presents, by class of loans, information regarding accruing and nonaccrual troubled debt restructured loans, for which there were payment defaults within twelve months of the restructuring date: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (Dollars in thousands) Number Recorded Nu |