Loans and Allowance for Loan Losses | LOANS AND ALLOWANCE FOR LOAN LOSSES Major categories of loans are presented below: June 30, 2015 December 31, 2014 Originated Acquired (1) Total Originated Acquired (1) Total (Dollars in thousands) Commercial real estate $ 1,357,148 $ 364,195 $ 1,721,343 $ 1,181,492 $ 403,672 $ 1,585,164 Commercial construction 305,416 39,434 344,850 265,968 48,668 314,636 Commercial and industrial 187,850 31,740 219,590 154,132 38,200 192,332 Leases 24,490 — 24,490 21,100 — 21,100 Total commercial 1,874,904 435,369 2,310,273 1,622,692 490,540 2,113,232 Residential construction 55,611 28,566 84,177 43,298 29,854 73,152 Residential mortgage 452,152 389,874 842,026 439,600 432,818 872,418 Consumer and other 11,803 4,728 16,531 10,851 5,445 16,296 Total portfolio loans $ 2,394,470 $ 858,537 $ 3,253,007 $ 2,116,441 $ 958,657 $ 3,075,098 (1) Amount includes $122.2 million and $137.5 million of acquired loans covered under FDIC loss-share agreements at June 30, 2015 and December 31, 2014, respectively. The unpaid principal balance for acquired loans covered under FDIC loss-share agreements was $123.8 million and $140.4 million at June 30, 2015 and December 31, 2014, respectively. On July 1, 2015, the Company’s loss-share agreement related to the non-single family residential mortgage loans acquired from Beach First National Bank (“Beach First”) expired. Accordingly, the Company will bear all future losses on this portfolio of loans. Immediately prior to the expiration of the loss-sharing arrangement, the loans in this portfolio had a carrying value of $74.4 million . A portion of the fair value discount on acquired covered loans has an accretable yield associated with those loans that is accreted into interest income over the estimated remaining life of the loans. The remaining non-accretable difference represents cash flows not expected to be collected. The following table details changes in the carrying amount of covered acquired loans and accretable yield for loans receivable for the six months ended June 30, 2015 and the year ended December 31, 2014: 2015 2014 Accretable Yield Carrying Value Accretable Yield Carrying Value (Dollars in thousands) Balance at beginning of period $ (2,213 ) $ 137,459 $ (6,058 ) $ 187,661 Reductions from payments and foreclosures, net — (15,935 ) — (54,489 ) Reclass from non-accretable to accretable yield 599 (598 ) (221 ) 221 Accretion 1,273 1,273 4,066 4,066 Balance at end of period $ (341 ) $ 122,199 $ (2,213 ) $ 137,459 The Company evaluates loans acquired with evidence of credit deterioration in accordance with the provisions of ASC Topic 310-30: Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). Credit-impaired loans are those loans showing evidence of credit deterioration since origination and it is probable, at the date of acquisition, the Company will not collect all contractually required principal and interest payments. Generally, the acquired loans that meet the Company’s definition for substandard status fall within the definition of credit-impaired covered loans. The Company has the ability to borrow funds from the Federal Home Loan Bank (“FHLB”) and from the Federal Reserve Bank. At June 30, 2015 and December 31, 2014, real estate loans with carrying values of $1.15 billion and $1.10 billion , respectively, were pledged to secure borrowing facilities from these institutions. A summary of the changes to the allowance for loan losses, by class of financing receivable, is presented below: For the three months ended June 30, 2015 Commercial real estate Commercial construction Commercial and industrial Leases Residential construction Residential mortgage Consumer and other Total (Dollars in thousands) Allowance for loan losses: Balance March 31, 2015 $ 12,802 $ 3,377 $ 3,116 $ 85 $ 411 $ 9,345 $ 215 $ 29,351 Charge-offs (14 ) (74 ) (24 ) — — (399 ) (210 ) (721 ) Recoveries 375 719 273 — 4 277 109 1,757 Provision (1) (228 ) 1,578 (72 ) 7 48 (1,107 ) 75 301 Change in FDIC indemnification asset (1) 5 (53 ) (38 ) — — 22 11 (53 ) Balance June 30, 2015 $ 12,940 $ 5,547 $ 3,255 $ 92 $ 463 $ 8,138 $ 200 $ 30,635 For the three months ended June 30, 2014 Commercial real estate Commercial construction Commercial and industrial Leases Residential construction Residential mortgage Consumer and other Total (Dollars in thousands) Allowance for loan losses: Balance March 31, 2014 $ 13,518 $ 5,667 $ 3,260 $ 74 $ 244 $ 7,818 $ 299 $ 30,880 Charge-offs (492 ) (1,564 ) (495 ) — — (1,374 ) (72 ) (3,997 ) Recoveries 372 767 309 — 3 506 13 1,970 Provision (2) (965 ) 498 390 (20 ) (87 ) 2,289 35 2,140 Change in FDIC indemnification asset (2) (346 ) (184 ) (133 ) — — (203 ) 2 (864 ) Balance June 30, 2014 $ 12,087 $ 5,184 $ 3,331 $ 54 $ 160 $ 9,036 $ 277 $ 30,129 For the six months ended June 30, 2015 Commercial real estate Commercial construction Commercial and industrial Leases Residential construction Residential mortgage Consumer and other Total (Dollars in thousands) Allowance for loan losses: Balance December 31, 2014 $ 12,685 $ 4,311 $ 3,226 $ 103 $ 570 $ 9,313 $ 191 $ 30,399 Charge-offs (1,560 ) (80 ) (109 ) — — (687 ) (266 ) (2,702 ) Recoveries 552 1,493 486 — 34 469 120 3,154 Provision (1) 1,345 264 (278 ) (11 ) (144 ) (912 ) 147 411 Change in FDIC indemnification asset (1) (82 ) (441 ) (70 ) — 3 (45 ) 8 (627 ) Balance June 30, 2015 $ 12,940 $ 5,547 $ 3,255 $ 92 $ 463 $ 8,138 $ 200 $ 30,635 For the six months ended June 30, 2014 Commercial real estate Commercial construction Commercial and industrial Leases Residential construction Residential mortgage Consumer and other Total (Dollars in thousands) Allowance for loan losses: Balance December 31, 2013 $ 14,752 $ 6,738 $ 3,137 $ 56 $ 213 $ 7,730 $ 249 $ 32,875 Charge-offs (2,078 ) (3,144 ) (1,749 ) — — (2,438 ) (164 ) (9,573 ) Recoveries 510 1,316 422 — 13 648 22 2,931 Provision (2) (898 ) 697 1,590 (2 ) (60 ) 3,238 136 4,701 Change in FDIC indemnification asset (2) (199 ) (423 ) (69 ) — (6 ) (142 ) 34 (805 ) Balance June 30, 2014 $ 12,087 $ 5,184 $ 3,331 $ 54 $ 160 $ 9,036 $ 277 $ 30,129 (1) The provision for loan losses includes the "net" provision on covered loans after coverage provided by FDIC loss-share agreements, which totaled $0 and $ (0.2) million for the three and six months ended June 30, 2015, respectively. This resulted in a decrease in the FDIC indemnification asset of $0.1 million and $0.6 million , which is the difference between the net provision on covered loans and the total reduction to the allowance for loan losses allocable to the covered loan portfolio of $(0.1) million and $(0.8) million for the three and six months ended June 30, 2015 , respectively. (2) The provision for loan losses includes the "net" provision on covered loans after coverage provided by FDIC loss-share agreements, which totaled $0 and $(0.3) million for the three and six months ended June 30, 2014 , respectively. This resulted in an increase in the FDIC indemnification asset of $0.9 million and $0.8 million , which is the difference between the net provision on covered loans and the total additions to the allowance for loan losses allocable to the covered loan portfolio of $(0.9) million and $(1.1) million for the three and six months ended June 30, 2014 , respectively. The following table provides a breakdown of the recorded investment in loans and the allowance for loan losses based on the method of determining the allowance: Commercial real estate Commercial construction Commercial and industrial Leases Residential construction Residential mortgage Consumer and other Total (Dollars in thousands) Balances at June 30, 2015: Specific reserves: Impaired loans $ 1,687 $ 119 $ 61 $ — $ 42 $ 745 $ 1 $ 2,655 Purchase credit impaired loans 1,751 190 108 — 14 1,441 — 3,504 Total specific reserves 3,438 309 169 — 56 2,186 1 6,159 General reserves 9,502 5,238 3,086 92 407 5,952 199 24,476 Total $ 12,940 $ 5,547 $ 3,255 $ 92 $ 463 $ 8,138 $ 200 $ 30,635 Loans: Individually evaluated for impairment $ 34,107 $ 3,591 $ 1,738 $ — $ 457 $ 15,507 $ 10 $ 55,410 Purchase credit impaired loans 74,511 10,067 3,852 — 541 44,506 833 134,310 Loans collectively evaluated for impairment 1,612,725 331,192 214,000 24,490 83,179 782,013 15,688 3,063,287 Total $ 1,721,343 $ 344,850 $ 219,590 $ 24,490 $ 84,177 $ 842,026 $ 16,531 $ 3,253,007 Balances at December 31, 2014: Specific reserves: Impaired loans $ 1,614 $ 118 $ 42 $ — $ 230 $ 972 $ 13 $ 2,989 Purchase credit impaired loans 1,727 424 152 — — 1,556 11 3,870 Total specific reserves 3,341 542 194 — 230 2,528 24 6,859 General reserves 9,344 3,769 3,032 103 340 6,785 167 23,540 Total $ 12,685 $ 4,311 $ 3,226 $ 103 $ 570 $ 9,313 $ 191 $ 30,399 Loans: Individually evaluated for impairment $ 27,578 $ 4,080 $ 1,264 $ — $ 657 $ 13,019 $ 126 $ 46,724 Purchase credit impaired loans 82,477 11,326 4,591 — 952 50,164 872 150,382 Loans collectively evaluated for impairment 1,475,109 299,230 186,477 21,100 71,543 809,235 15,298 2,877,992 Total $ 1,585,164 $ 314,636 $ 192,332 $ 21,100 $ 73,152 $ 872,418 $ 16,296 $ 3,075,098 The following tables present information related to impaired loans, excluding purchased impaired loans: Impaired Loans - With Allowance Impaired Loans - With No Allowance Recorded Investment Unpaid Principal Balance Allowances for Loan Losses Allocated Recorded Investment Unpaid Principal Balance June 30, 2015 (Dollars in thousands) Originated: Commercial real estate $ 11,895 $ 11,888 $ 1,648 $ 21,667 $ 21,621 Commercial construction 1,391 1,387 107 1,982 1,976 Commercial and industrial 1,275 1,259 47 332 334 Residential construction 346 345 42 — — Residential mortgage 4,920 4,903 503 6,219 6,202 Consumer and other 11 11 1 — — Total originated 19,838 19,793 2,348 30,200 30,133 Acquired: Commercial real estate 419 418 40 1,001 1,036 Commercial construction 130 127 12 288 288 Commercial and industrial 144 143 14 — 27 Residential construction — — — 112 112 Residential mortgage 410 449 242 7,781 8,262 Total acquired 1,103 1,137 308 9,182 9,725 Total loans $ 20,941 $ 20,930 $ 2,656 $ 39,382 $ 39,858 Impaired Loans - With Allowance Impaired Loans - With No Allowance Recorded Investment Unpaid Principal Balance Allowances for Loan Losses Allocated Recorded Investment Unpaid Principal Balance December 31, 2014 (Dollars in thousands) Originated: Commercial real estate $ 10,110 $ 10,089 $ 1,571 $ 17,095 $ 17,071 Commercial construction 1,734 1,728 105 2,227 2,218 Commercial and industrial 798 790 26 268 271 Residential construction 350 349 44 — — Residential mortgage 6,278 6,260 694 5,057 5,045 Consumer and other 127 126 13 — — Total originated 19,397 19,342 2,453 24,647 24,605 Acquired: Commercial real estate 429 428 43 796 824 Commercial construction 133 132 13 469 467 Commercial and industrial 204 203 16 1 28 Residential construction 308 308 185 114 114 Residential mortgage 1,574 1,614 279 7,266 7,744 Total acquired 2,648 2,685 536 8,646 9,177 Total loans $ 22,045 $ 22,027 $ 2,989 $ 33,293 $ 33,782 The following table presents information related to the average recorded investment and interest income recognized on impaired loans, excluding purchased impaired loans: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income (Dollars in thousands) Impaired loans with allowance: Commercial real estate $ 12,557 $ 112 $ 20,363 $ 194 $ 12,561 $ 193 $ 20,819 $ 399 Commercial construction 1,522 20 1,585 18 1,648 38 2,865 55 Commercial and industrial 1,447 17 661 6 1,440 29 1,103 16 Residential construction 347 4 353 3 375 7 359 6 Residential mortgage 5,390 44 4,442 27 7,335 59 6,022 71 Consumer and other 11 — 85 1 58 1 96 1 Total impaired loans with allowance $ 21,274 $ 197 $ 27,489 $ 249 $ 23,417 $ 327 $ 31,264 $ 548 Impaired loans with no allowance: Commercial real estate $ 22,370 $ 141 $ 13,167 $ 77 $ 20,839 $ 239 $ 13,067 $ 115 Commercial construction 2,627 15 8,290 45 2,608 30 7,708 82 Commercial and industrial 406 — 772 — 334 — 549 — Residential construction 112 — — — 113 — — — Residential mortgage 14,026 — 14,365 66 12,558 46 12,816 111 Consumer and other 81 — — — 81 — 28 — Total impaired loans with no allowance $ 39,622 $ 156 $ 36,594 $ 188 $ 36,533 $ 315 $ 34,168 $ 308 For the three and six months ended June 30, 2015 and 2014 , the amount of interest income recognized within the period that the loans were impaired was primarily related to loans modified in a troubled debt restructuring (“TDR”) that remained on accrual status. The amount of interest income recognized using a cash-basis method of accounting during the period that the loans were impaired was not material. At June 30, 2015 and December 31, 2014, the Company had $1.4 million and $2.5 million , respectively, of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings were in progress. The following tables present an aging analysis of the recorded investment in the Company's loans: 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due Non-Accrual Total Past Due Current Total Loans June 30, 2015 (Dollars in thousands) Originated: Commercial real estate $ 166 $ 602 $ — $ 8,441 $ 9,209 $ 1,347,939 $ 1,357,148 Commercial construction 83 10 — 626 719 304,697 305,416 Commercial and industrial 115 74 — 332 521 187,329 187,850 Leases 48 — — — 48 24,442 24,490 Residential construction 334 — — — 334 55,277 55,611 Residential mortgage 147 286 — 3,599 4,032 448,120 452,152 Consumer and other 3 12 — — 15 11,788 11,803 Total originated 896 984 — 12,998 14,878 2,379,592 2,394,470 Acquired: Commercial real estate 1,212 647 — 3,658 5,517 358,678 364,195 Commercial construction 108 25 — 510 643 38,791 39,434 Commercial and industrial 46 50 — 124 220 31,520 31,740 Residential construction — — — 112 112 28,454 28,566 Residential mortgage 249 1,599 — 7,957 9,805 380,069 389,874 Consumer and other 94 — 14 30 138 4,590 4,728 Total acquired 1,709 2,321 14 12,391 16,435 842,102 858,537 Total loans $ 2,605 $ 3,305 $ 14 $ 25,389 $ 31,313 $ 3,221,694 $ 3,253,007 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due Non-Accrual Total Past Due Current Total Loans December 31, 2014 (Dollars in thousands) Originated: Commercial real estate $ 1,974 $ — $ — $ 3,476 $ 5,450 $ 1,176,042 $ 1,181,492 Commercial construction 12 — — 1,084 1,096 264,872 265,968 Commercial and industrial 102 24 — 417 543 153,589 154,132 Leases — — — — — 21,100 21,100 Residential construction 200 — — — 200 43,098 43,298 Residential mortgage 1,508 1,268 — 3,498 6,274 433,326 439,600 Consumer and other 6 — — — 6 10,845 10,851 Total originated 3,802 1,292 — 8,475 13,569 2,102,872 2,116,441 Acquired: Commercial real estate 880 155 — 4,508 5,543 398,129 403,672 Commercial construction 230 67 — 779 1,076 47,592 48,668 Commercial and industrial 121 27 — 197 345 37,855 38,200 Residential construction — — — 422 422 29,432 29,854 Residential mortgage 2,200 848 — 10,312 13,360 419,458 432,818 Consumer and other 92 2 — 30 124 5,321 5,445 Total acquired 3,523 1,099 — 16,248 20,870 937,787 958,657 Total loans $ 7,325 $ 2,391 $ — $ 24,723 $ 34,439 $ 3,040,659 $ 3,075,098 Credit Quality Indicators The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company's primary credit quality indicators use an internal credit risk rating system that categorizes loans and leases into pass, special mention, or classified categories. Credit risk ratings are applied individually to those classes of loans and leases that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans and leases to businesses or individuals in the classes which comprise the commercial portfolio segment. Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics are typically risk rated and monitored collectively. These are typically loans and leases to individuals in the classes which comprise the consumer portfolio segment. The Company uses the following definitions for risk ratings: Pass - Loans classified as pass are considered to be a satisfactory credit risk and generally considered to be collectible in full. Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard - Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss - Loans classified as loss are considered uncollectable and are in the process of being charged-off, as soon as practicable, once so classified. The following tables present the recorded investment in the Company’s loans by credit quality indicator: Pass Special Mention Substandard Doubtful Loss Total June 30, 2015 (Dollars in thousands) Originated: Commercial real estate $ 1,279,018 $ 42,693 $ 35,437 $ — $ — $ 1,357,148 Commercial construction 292,654 9,907 2,855 — — 305,416 Commercial and industrial 178,041 4,942 4,867 — — 187,850 Leases 24,490 — — — — 24,490 Residential construction 55,266 — 345 — — 55,611 Residential mortgage 420,116 20,810 11,226 — — 452,152 Consumer and other 11,223 570 10 — — 11,803 Total originated 2,260,808 78,922 54,740 — — 2,394,470 Acquired: Commercial real estate 305,001 32,549 26,645 — — 364,195 Commercial construction 27,738 6,149 5,547 — — 39,434 Commercial and industrial 29,135 1,643 955 7 — 31,740 Residential construction 27,424 387 755 — — 28,566 Residential mortgage 333,813 35,853 19,652 556 — 389,874 Consumer and other 4,554 144 30 — — 4,728 Total acquired 727,665 76,725 53,584 563 — 858,537 Total loans $ 2,988,473 $ 155,647 $ 108,324 $ 563 $ — $ 3,253,007 Pass Special Mention Substandard Doubtful Loss Total December 31, 2014 (Dollars in thousands) Originated: Commercial real estate $ 1,100,361 $ 46,935 $ 34,196 $ — $ — $ 1,181,492 Commercial construction 256,987 5,530 3,451 — — 265,968 Commercial and industrial 145,722 3,980 4,430 — — 154,132 Leases 21,100 — — — — 21,100 Residential construction 42,806 143 349 — — 43,298 Residential mortgage 407,319 20,946 11,335 — — 439,600 Consumer and other 10,331 428 92 — — 10,851 Total originated 1,984,626 77,962 53,853 — — 2,116,441 Acquired: Commercial real estate 342,240 35,816 25,531 85 — 403,672 Commercial construction 36,346 5,910 6,320 92 — 48,668 Commercial and industrial 36,039 644 1,482 35 — 38,200 Residential construction 28,833 — 1,021 — — 29,854 Residential mortgage 370,523 36,098 24,616 1,581 — 432,818 Consumer and other 5,256 159 30 — — 5,445 Total acquired 819,237 78,627 59,000 1,793 — 958,657 Total loans $ 2,803,863 $ 156,589 $ 112,853 $ 1,793 $ — $ 3,075,098 Modifications A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company offers various types of concessions when modifying a loan; however, forgiveness of principal is rarely granted. Commercial and industrial loans modified in a TDR often involve temporary or extended interest-only payments and term extensions outside of normal underwriting guidelines. Additional collateral, a co-borrower, or a guarantor is often requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. Residential mortgage loans modified in a TDR are primarily comprised of loans where monthly payments are lowered to accommodate the borrowers’ financial needs for a period of time. After the lowered monthly payment period ends, the borrower reverts back to paying principal and interest per the original terms with the maturity date adjusted accordingly. Land loans are also included in the class of residential mortgage loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loans modified in a TDR typically involve extending the balloon payment by one to three years, or changing the monthly payments from interest-only to principal and interest. Home equity modifications are made infrequently and are not offered if the Company also holds the first mortgage. Home equity modifications are uniquely designed to meet the specific needs of each borrower. Occasionally, the terms will be modified to a standalone second lien mortgage, thereby changing their loan class from home equity to residential mortgage. Loans modified in a TDR are, in many cases, already on nonaccrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR for the Company may have the financial effect of increasing the specific allowance associated with the loan. An allowance for impaired consumer and commercial loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. Once we classify a loan as a TDR, the loan is only removed from TDR classification under three circumstances: (1) the loan is paid off, (2) the loan is charged off or (3) if, at the beginning of the current fiscal year, the loan has performed in accordance with the modified terms for a minimum of six consecutive months and at the time of modification the loan’s interest rate represented a then current market interest rate for a loan of similar risk. The following tables provide a summary of loans modified as TDRs: Accrual Nonaccrual Total TDRs Allowance for Loan Losses Allocated June 30, 2015 (Dollars in thousands) Commercial real estate $ 5,380 $ — $ 5,380 $ 235 Commercial construction 894 49 943 12 Commercial and industrial 1,230 — 1,230 44 Residential mortgage 6,586 15 6,601 409 Consumer and other 10 — 10 1 Total modifications $ 14,100 $ 64 $ 14,164 $ 701 Number of contracts 34 2 36 Accrual Nonaccrual Total TDRs Allowance for Loan Losses Allocated December 31, 2014 (Dollars in thousands) Commercial real estate $ 3,835 $ — $ 3,835 $ 165 Commercial construction 1,341 50 1,391 16 Commercial and industrial 651 — 651 25 Residential mortgage 7,625 16 7,641 592 Consumer and other 126 — 126 13 Total modifications $ 13,578 $ 66 $ 13,644 $ 811 Number of contracts 33 2 35 At June 30, 2015 and December 31, 2014, the Company had no available commitments outstanding on TDRs. The Company offers a variety of modifications to borrowers. The modification categories offered 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. Interest only modification – A modification in which the loan is converted to interest only payments for a period of time. Payment modification – A modification in which the principal and interest payment are lowered from the original contractual terms. Combination modification – Any other type of modification, including the use of multiple categories above. The following tables present new TDRs by modification category. All balances represent the recorded investment at the end of the period in which the modification was made. Three Months Ended June 30, 2015 Term Modification Interest Only Modification Total Modifications (Dollars in thousands) Commercial real estate $ — $ 358 $ 358 Commercial and industrial 93 231 324 Total modifications $ 93 $ 589 $ 682 Three Months Ended June 30, 2014 Interest Only Modification Total Modifications (Dollars in thousands) Residential construction $ 479 $ 479 Six Months Ended June 30, 2015 Term Modification Payment Modification Interest Only Modification Combination Modification Total Modifications (Dollars in thousands) Commercial real estate $ 417 $ — $ 358 $ 863 $ 1,638 Commercial and industrial 93 419 231 — 743 Total modifications $ 510 $ 419 $ 589 $ 863 $ 2,381 Six Months Ended June 30, 2014 Interest Only Modification Payment Modification Total Modifications (Dollars in thousands) Commercial real estate $ — $ 1,338 $ 1,338 Residential construction 479 — 479 Total modifications $ 479 $ 1,338 $ 1,817 The following tables summarize the period-end balance for loans modified and classified as TDRs in the previous 12 months for which a payment default has occurred. The Company defines payment default as movement of the restructuring to nonaccrual status, foreclosure or charge-off, whichever occurs first. Three Months Ended June 30, 2015 2014 (Dollars in thousands) Commercial real estate $ — $ 1,210 Commercial construction — 1,245 Residential mortgage — 19 Six Months Ended June 30, 2015 2014 (Dollars in thousands) Commercial real estate $ — $ 1,210 Commercial construction — 1,245 Residential mortgage — 129 Consumer and other 34 — Loans held for sale The Company originates certain single family, residential first mortgage loans for sale on a presold basis. Loan sale activity is summarized below: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (Dollars in thousands) Loans held for sale $ 36,315 $ 23,714 $ 36,315 $ 23,714 Proceeds from sales of loans held for sale 81,515 67,191 175,971 136,603 Mortgage fees 2,777 1,954 5,276 3,512 |