Loans and Allowance for Loan Losses | LOANS AND ALLOWANCE FOR LOAN LOSSES Major categories of loans are presented below: September 30, 2015 December 31, 2014 Originated Acquired (1) Total Originated Acquired (1) Total (Dollars in thousands) Commercial real estate $ 1,510,589 $ 622,130 $ 2,132,719 $ 1,181,492 $ 403,672 $ 1,585,164 Commercial construction 277,251 63,698 340,949 265,968 48,668 314,636 Commercial and industrial 235,879 104,332 340,211 154,132 38,200 192,332 Leases 25,593 — 25,593 21,100 — 21,100 Total commercial 2,049,312 790,160 2,839,472 1,622,692 490,540 2,113,232 Residential construction 57,349 34,213 91,562 43,298 29,854 73,152 Residential mortgage 468,141 560,835 1,028,976 439,600 432,818 872,418 Consumer and other 12,770 5,853 18,623 10,851 5,445 16,296 Total portfolio loans $ 2,587,572 $ 1,391,061 $ 3,978,633 $ 2,116,441 $ 958,657 $ 3,075,098 (1) Amount includes $45.5 million and $137.5 million of acquired loans covered under FDIC loss-share agreements at September 30, 2015 and December 31, 2014, respectively. The unpaid principal balance for acquired loans covered under FDIC loss-share agreements was $46.0 million and $140.4 million at September 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 nine months ended September 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 Reduction from payments and foreclosures, net — (19,337 ) — (54,489 ) Reduction from expiration of loss-share coverage 480 (74,400 ) — — Reclass from non-accretable to accretable yield (113 ) 113 (221 ) 221 Accretion 1,662 1,662 4,066 4,066 Balance at end of period $ (184 ) $ 45,497 $ (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 following table presents loans acquired during the nine months ended September 30, 2015, at acquisition date, accounted for under ASC 310-30: Contractually required payments receivable $ 35,772 Contractual cash flows not expected to be collected (non-accretable) (6,368 ) Expected cash flows 29,404 Interest component of expected cash flows (480 ) Fair value of loans acquired $ 28,924 The acquisition date unpaid balance of loans acquired during the nine months ended September 30, 2015 that did not have credit deterioration was $588.4 million with an estimated fair value of $575.7 million . The discount will be amortized on a level-yield basis over the economic life of the loans. The Company has the ability to borrow funds from the Federal Home Loan Bank (“FHLB”) and from the Federal Reserve Bank. At September 30, 2015 and December 31, 2014, real estate loans with carrying values of $1.51 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 September 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 June 30, 2015 $ 12,940 $ 5,547 $ 3,255 $ 92 $ 463 $ 8,138 $ 200 $ 30,635 Charge-offs (593 ) — (42 ) — — (536 ) (36 ) (1,207 ) Recoveries 403 113 689 — 5 313 10 1,533 Provision (1) 271 (842 ) 78 (4 ) 57 581 57 198 Change in FDIC indemnification asset (1) 1 157 (100 ) — — (386 ) 2 (326 ) Balance September 30, 2015 $ 13,022 $ 4,975 $ 3,880 $ 88 $ 525 $ 8,110 $ 233 $ 30,833 For the three months ended September 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 June 30, 2014 $ 12,087 $ 5,184 $ 3,331 $ 54 $ 160 $ 9,036 $ 277 $ 30,129 Charge-offs (878 ) (324 ) (379 ) — — (1,267 ) (18 ) (2,866 ) Recoveries 680 377 383 — 3 1,002 96 2,541 Provision (2) 2,299 760 (509 ) (28 ) 334 (1,391 ) (161 ) 1,304 Change in FDIC indemnification asset (2) 35 (265 ) (150 ) — — (1 ) (5 ) (386 ) Balance September 30, 2014 $ 14,223 $ 5,732 $ 2,676 $ 26 $ 497 $ 7,379 $ 189 $ 30,722 For the nine months ended September 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 (2,153 ) (80 ) (151 ) — — (1,223 ) (302 ) (3,909 ) Recoveries 955 1,606 1,175 — 39 782 130 4,687 Provision (1) 1,616 (578 ) (200 ) (15 ) (87 ) (331 ) 204 609 Change in FDIC indemnification asset (1) (81 ) (284 ) (170 ) — 3 (431 ) 10 (953 ) Balance September 30, 2015 $ 13,022 $ 4,975 $ 3,880 $ 88 $ 525 $ 8,110 $ 233 $ 30,833 For the nine months ended September 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 (2,956 ) (3,468 ) (2,128 ) — — (3,705 ) (182 ) (12,439 ) Recoveries 1,190 1,693 805 — 16 1,650 118 5,472 Provision (2) 1,401 1,457 1,081 (30 ) 274 1,847 (25 ) 6,005 Change in FDIC indemnification asset (2) (164 ) (688 ) (219 ) — (6 ) (143 ) 29 (1,191 ) Balance September 30, 2014 $ 14,223 $ 5,732 $ 2,676 $ 26 $ 497 $ 7,379 $ 189 $ 30,722 (1) The provision for loan losses includes the "net" provision on covered loans after coverage provided by FDIC loss-share agreements, which totaled $0.1 million and $(0.1) million for the three and nine months ended September 30, 2015 , respectively. This resulted in a decrease in the FDIC indemnification asset of $0.3 million and $1.0 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 $(0.5) million and $(1.3) million for the three and nine months ended September 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 $(0.1) million and $(0.3) million for the three and nine months ended September 30, 2014 , respectively. This resulted in a decrease in the FDIC indemnification asset of $0.4 million and $1.2 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 $(0.5) million and $(1.5) million for the three and nine months ended September 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 September 30, 2015: Specific reserves: Impaired loans $ 1,817 $ 165 $ 617 $ — $ 53 $ 1,637 $ 1 $ 4,290 Purchase credit impaired loans 1,327 406 59 — 16 1,208 4 3,020 Total specific reserves 3,144 571 676 — 69 2,845 5 7,310 General reserves 9,878 4,404 3,204 88 456 5,265 228 23,523 Total $ 13,022 $ 4,975 $ 3,880 $ 88 $ 525 $ 8,110 $ 233 $ 30,833 Loans: Individually evaluated for impairment $ 25,528 $ 3,480 $ 1,642 $ — $ 478 $ 15,995 $ 10 $ 47,133 Purchase credit impaired loans 92,669 15,728 3,080 — 1,252 44,393 219 157,341 Loans collectively evaluated for impairment 2,014,522 321,741 335,489 25,593 89,832 968,588 18,394 3,774,159 Total $ 2,132,719 $ 340,949 $ 340,211 $ 25,593 $ 91,562 $ 1,028,976 $ 18,623 $ 3,978,633 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 September 30, 2015 (Dollars in thousands) Originated: Commercial real estate $ 10,477 $ 10,446 $ 1,737 $ 14,136 $ 14,099 Commercial construction 1,595 1,591 142 1,714 1,707 Commercial and industrial 1,425 1,417 572 — — Residential construction 345 344 41 — — Residential mortgage 7,504 7,480 819 3,278 3,266 Consumer and other 10 10 1 — — Total originated 21,356 21,288 3,312 19,128 19,072 Acquired: Commercial real estate 660 673 80 1,103 1,125 Commercial construction 182 181 23 181 181 Commercial and industrial 223 227 45 — 27 Residential construction 111 111 12 24 588 Residential mortgage 4,214 4,627 819 4,877 5,029 Total acquired 5,390 5,819 979 6,185 6,950 Total impaired loans $ 26,746 $ 27,107 $ 4,291 $ 25,313 $ 26,022 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 impaired 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 September 30, Nine Months Ended September 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 $ 11,238 $ 109 $ 13,364 $ 121 $ 12,120 $ 302 $ 27,158 $ 311 Commercial construction 1,620 15 1,411 12 1,638 53 5,905 72 Commercial and industrial 1,487 17 941 5 1,456 46 603 10 Residential construction 382 4 352 3 378 11 433 4 Residential mortgage 7,318 46 6,902 32 7,329 105 11,299 129 Consumer and other 10 — 179 3 42 1 21 — Total impaired loans with allowance $ 22,055 $ 191 $ 23,149 $ 176 $ 22,963 $ 518 $ 45,419 $ 526 Impaired loans with no allowance: Commercial real estate $ 17,621 $ 147 $ 13,901 $ 143 $ 19,766 $ 386 $ 9,146 $ 149 Commercial construction 2,001 14 7,145 41 2,406 44 6,667 166 Commercial and industrial 281 1 21 — 316 1 481 6 Residential construction 82 — — — 101 — — — Residential mortgage 12,646 43 11,985 73 12,588 89 11,389 164 Consumer and other — — 12 — 81 — 41 — Total impaired loans with no allowance $ 32,631 $ 205 $ 33,064 $ 257 $ 35,258 $ 520 $ 27,724 $ 485 For the three and nine months ended September 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 September 30, 2015 and December 31, 2014, the Company had $1.6 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 September 30, 2015 (Dollars in thousands) Originated: Commercial real estate $ 743 $ 741 $ — $ 1,984 $ 3,468 $ 1,507,121 $ 1,510,589 Commercial construction — 83 — 594 677 276,574 277,251 Commercial and industrial 372 129 — 169 670 235,209 235,879 Leases — — — — — 25,593 25,593 Residential construction — — — — — 57,349 57,349 Residential mortgage 1,067 310 — 3,167 4,544 463,597 468,141 Consumer and other 52 — — — 52 12,718 12,770 Total originated 2,234 1,263 — 5,914 9,411 2,578,161 2,587,572 Acquired: Commercial real estate — 658 — 4,847 5,505 616,625 622,130 Commercial construction 41 — — 443 484 63,214 63,698 Commercial and industrial 57 314 — 120 491 103,841 104,332 Residential construction — 52 — 134 186 34,027 34,213 Residential mortgage 588 348 — 8,749 9,685 551,150 560,835 Consumer and other 23 12 — 29 64 5,789 5,853 Total acquired 709 1,384 — 14,322 16,415 1,374,646 1,391,061 Total loans $ 2,943 $ 2,647 $ — $ 20,236 $ 25,826 $ 3,952,807 $ 3,978,633 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 September 30, 2015 (Dollars in thousands) Originated: Commercial real estate $ 1,440,104 $ 42,584 $ 27,901 $ — $ — $ 1,510,589 Commercial construction 264,222 6,356 6,673 — — 277,251 Commercial and industrial 225,869 5,578 4,432 — — 235,879 Leases 25,593 — — — — 25,593 Residential construction 56,981 24 344 — — 57,349 Residential mortgage 436,247 21,059 10,835 — — 468,141 Consumer and other 12,177 583 10 — — 12,770 Total originated 2,461,193 76,184 50,195 — — 2,587,572 Acquired: Commercial real estate 542,028 33,484 46,618 — — 622,130 Commercial construction 46,501 5,520 11,541 136 — 63,698 Commercial and industrial 94,400 429 9,503 — — 104,332 Residential construction 31,643 1,065 1,505 — — 34,213 Residential mortgage 499,997 37,466 22,580 792 — 560,835 Consumer and other 5,693 131 28 1 — 5,853 Total acquired 1,220,262 78,095 91,775 929 — 1,391,061 Total loans $ 3,681,455 $ 154,279 $ 141,970 $ 929 $ — $ 3,978,633 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 Loan modifications are considered troubled debt restructurings ("TDR") if concessions have been granted to borrowers that are experiencing financial difficulty. The concessions granted generally involve the modification of terms of the loan, such as changes in payment schedule or interest rate, which generally would not otherwise be considered. Restructured loans can involve loans remaining on nonaccrual, moving to nonaccrual, or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Nonaccrual restructured loans are included and treated with all other nonaccrual loans. In addition, all accruing restructured loans are reported as troubled debt restructurings, which are considered and accounted for as impaired loans. Generally, restructured loans remain on nonaccrual until the customer has attained a sustained period of repayment performance under the modified loan terms (generally a minimum of six months). However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can meet the new terms and whether the loan should be returned to or maintained on accrual status. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan remains on nonaccrual status. 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 September 30, 2015 (Dollars in thousands) Commercial real estate $ 6,724 $ — $ 6,724 $ 238 Commercial construction 894 48 942 15 Commercial and industrial 1,219 — 1,219 510 Residential mortgage 6,715 14 6,729 424 Consumer and other 10 — 10 1 Total modifications $ 15,562 $ 62 $ 15,624 $ 1,188 Number of contracts 36 2 38 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 September 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 September 30, 2015 Nine Months Ended September 30, 2015 Term Total Term Payment Interest Only Combination Total (Dollars in thousands) Commercial real estate $ 1,403 $ 1,403 $ 1,820 $ — $ 358 $ 863 $ 3,041 Commercial and industrial — — 93 419 231 — 743 Residential mortgage 149 149 149 — — — 149 Total modifications $ 1,552 $ 1,552 $ 2,062 $ 419 $ 589 $ 863 $ 3,933 Three Months Ended September 30, 2014 Nine Months Ended September 30, 2014 Term Payment Combination Total Term Interest Only Payment Combination Total (Dollars in thousands) Commercial real estate $ — $ — $ — $ — $ — $ — $ 1,338 $ — $ 1,338 Commercial and industrial — — 158 158 — — — 158 158 Residential construction — — — — — 479 — — 479 Residential mortgage 755 — — 755 755 — — — 755 Consumer and other — 11 — 11 — — 11 — 11 Total modifications $ 755 $ 11 $ 158 $ 924 $ 755 $ 479 $ 1,349 $ 158 $ 2,741 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. No TDRs defaulted during the three months ended September 30, 2015 and 2014, respectively. Nine Months Ended September 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 September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (Dollars in thousands) Loans held for sale $ 37,437 $ 20,906 $ 37,437 $ 20,906 Proceeds from sales of loans held for sale 105,373 76,206 281,344 212,809 Mortgage fees 3,031 2,128 8,307 5,640 |