Loans and Allowance for Loan Losses | LOANS AND ALLOWANCE FOR LOAN LOSSES Major categories of loans are presented below: June 30, 2016 December 31, 2015 Originated Acquired (1) Total Originated Acquired (1) Total (Dollars in thousands) Commercial real estate $ 1,812,009 $ 687,337 $ 2,499,346 $ 1,575,555 $ 670,460 $ 2,246,015 Commercial construction 366,856 85,984 452,840 281,591 83,418 365,009 Commercial and industrial 333,995 120,487 454,482 279,495 139,621 419,116 Leases 29,463 — 29,463 26,773 — 26,773 Total commercial 2,542,323 893,808 3,436,131 2,163,414 893,499 3,056,913 Residential construction 79,977 18,055 98,032 59,937 16,084 76,021 Residential mortgage 526,556 731,295 1,257,851 484,895 563,563 1,048,458 Consumer and other 14,501 6,170 20,671 12,970 5,509 18,479 Total portfolio loans $ 3,163,357 $ 1,649,328 $ 4,812,685 $ 2,721,216 $ 1,478,655 $ 4,199,871 (1) Amount includes $0 and $40.9 million of acquired loans covered under FDIC loss-share agreements at June 30, 2016 and December 31, 2015, respectively. The unpaid principal balance for acquired loans covered under FDIC loss-share agreements was $0 and $41.4 million at June 30, 2016 and December 31, 2015, respectively. On May 2, 2016, the Bank entered into an agreement with the FDIC to terminate all existing loss-share agreements with the FDIC. All rights and obligations of the Bank and the FDIC under the FDIC loss share agreements, including the clawback provisions and the settlement of loss share and expense reimbursement claims, have been resolved and terminated under such agreement. The Company evaluates loans acquired with evidence of credit deterioration in accordance with the provisions of 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 six months ended June 30, 2016, at acquisition date, accounted for under ASC 310-30: (Dollars in thousands) Contractually required payments receivable $ 17,168 Contractual cash flows not expected to be collected (non-accretable) (2,072 ) Expected cash flows 15,096 Interest component of expected cash flows (811 ) Fair value of loans acquired $ 14,285 The acquisition date unpaid balance of loans acquired during the six months ended June 30, 2016 that did not have credit deterioration was $348.1 million with an estimated fair value of $341.7 million . The discount will be amortized on a level-yield basis over the economic life of the loans. The following table presents a summary of the activity of the Company's loans accounted for under ASC 310-30: Six Months Ended June 30, 2016 2015 (Dollars in thousands) Balance at beginning of period $ 142,671 $ 150,382 Purchased loans acquired 14,285 — Accretion 2,223 2,975 Transfer to other real estate owned (2,695 ) (944 ) Net payments received (19,397 ) (15,369 ) Net charge-offs (937 ) (725 ) Other activity, net 900 (2,009 ) Balance at end of period $ 137,050 $ 134,310 The following table presents a summary of changes in accretable difference on purchased loans accounted for under ASC 310-30: Six Months Ended June 30, 2016 2015 (Dollars in thousands) Balance at beginning of period $ 2,853 $ 4,418 Accretion (2,223 ) (2,975 ) Accretable difference acquired 811 — Adjustments to accretable difference due to changes in expected future cash flows 1,433 1,867 Balance at end of period $ 2,874 $ 3,310 The Company has the ability to borrow funds from the FHLB and from the Federal Reserve Bank. At June 30, 2016 and December 31, 2015, real estate loans with carrying values of $2.03 billion and $1.68 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, 2016 Commercial real estate Commercial construction Commercial and industrial Leases Residential construction Residential mortgage Consumer and other Total (Dollars in thousands) Balance March 31, 2016 $ 13,921 $ 5,214 $ 4,468 $ 107 $ 552 $ 8,020 $ 266 $ 32,548 Charge-offs (386 ) — (51 ) — — (407 ) (10 ) (854 ) Recoveries 128 385 131 — 6 790 9 1,449 Provision (1) 784 (357 ) 662 2 (21 ) (382 ) 10 698 Balance June 30, 2016 $ 14,447 $ 5,242 $ 5,210 $ 109 $ 537 $ 8,021 $ 275 $ 33,841 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) 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 (2) (228 ) 1,578 (72 ) 7 48 (1,107 ) 75 301 Change in FDIC indemnification asset (2) 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 six months ended June 30, 2016 Commercial real estate Commercial construction Commercial and industrial Leases Residential construction Residential mortgage Consumer and other Total (Dollars in thousands) Balance December 31, 2015 $ 13,471 $ 4,525 $ 4,586 $ 78 $ 466 $ 8,201 $ 320 $ 31,647 Charge-offs (574 ) — (54 ) — — (623 ) (19 ) (1,270 ) Recoveries 181 589 285 — 13 932 67 2,067 Provision (1) 1,373 234 424 31 58 (705 ) (70 ) 1,345 Change in FDIC indemnification asset (1) (4 ) (106 ) (31 ) — — 216 (23 ) 52 Balance June 30, 2016 $ 14,447 $ 5,242 $ 5,210 $ 109 $ 537 $ 8,021 $ 275 $ 33,841 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) 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 (2) 1,345 264 (278 ) (11 ) (144 ) (912 ) 147 411 Change in FDIC indemnification asset (2) (82 ) (441 ) (70 ) — 3 (45 ) 8 (627 ) Balance June 30, 2015 $ 12,940 $ 5,547 $ 3,255 $ 92 $ 463 $ 8,138 $ 200 $ 30,635 (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 $(0.4) million for the three and six months ended June 30, 2016, respectively. For the six months ended June 30, 2016, this resulted in an increase in the FDIC indemnification asset of $0.1 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 $0.3 million . (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 $(0.2) 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. 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 Balances at June 30, 2016: (Dollars in thousands) Specific reserves: Impaired loans $ 1,731 $ 132 $ 1,162 $ — $ — $ 1,268 $ 14 $ 4,307 Purchase credit impaired loans 916 256 61 — 1 976 2 2,212 Total specific reserves 2,647 388 1,223 — 1 2,244 16 6,519 General reserves 11,800 4,854 3,987 109 536 5,777 259 27,322 Total $ 14,447 $ 5,242 $ 5,210 $ 109 $ 537 $ 8,021 $ 275 $ 33,841 Loans: Individually evaluated for impairment $ 25,164 $ 3,212 $ 2,058 $ — $ — $ 17,865 $ 61 $ 48,360 Purchase credit impaired loans 81,009 12,603 2,280 — 167 40,853 138 137,050 Loans collectively evaluated for impairment 2,393,173 437,025 450,144 29,463 97,865 1,199,133 20,472 4,627,275 Total $ 2,499,346 $ 452,840 $ 454,482 $ 29,463 $ 98,032 $ 1,257,851 $ 20,671 $ 4,812,685 Balances at December 31, 2015: Specific reserves: Impaired loans $ 2,166 $ 182 $ 646 $ — $ 53 $ 1,562 $ 49 $ 4,658 Purchase credit impaired loans 1,176 354 47 — 5 971 6 2,559 Total specific reserves 3,342 536 693 — 58 2,533 55 7,217 General reserves 10,129 3,989 3,893 78 408 5,668 265 24,430 Total $ 13,471 $ 4,525 $ 4,586 $ 78 $ 466 $ 8,201 $ 320 $ 31,647 Loans: Individually evaluated for impairment $ 26,498 $ 3,223 $ 1,687 $ — $ 825 $ 18,158 $ 129 $ 50,520 Purchase credit impaired loans 85,213 12,497 2,717 — 709 41,336 199 142,671 Loans collectively evaluated for impairment 2,134,304 349,289 414,712 26,773 74,487 988,964 18,151 4,006,680 Total $ 2,246,015 $ 365,009 $ 419,116 $ 26,773 $ 76,021 $ 1,048,458 $ 18,479 $ 4,199,871 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, 2016 (Dollars in thousands) Originated: Commercial real estate $ 10,839 $ 10,789 $ 1,571 $ 12,609 $ 12,561 Commercial construction 1,300 1,297 95 1,315 1,308 Commercial and industrial 1,733 1,722 678 — — Residential mortgage 5,355 5,331 455 4,239 4,232 Consumer and other 29 29 9 — — Total originated 19,256 19,168 2,808 18,163 18,101 Acquired: Commercial real estate 1,237 1,256 160 578 580 Commercial construction 266 263 36 343 343 Commercial and industrial 331 715 485 1 — Residential mortgage 5,502 5,957 813 2,798 2,819 Consumer and other 31 35 5 — — Total acquired 7,367 8,226 1,499 3,720 3,742 Total impaired loans $ 26,623 $ 27,394 $ 4,307 $ 21,883 $ 21,843 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, 2015 (Dollars in thousands) Originated: Commercial real estate $ 11,750 $ 11,736 $ 1,990 $ 13,099 $ 13,068 Commercial construction 1,537 1,533 123 1,325 1,320 Commercial and industrial 1,459 1,451 575 — — Residential construction 343 342 42 306 306 Residential mortgage 8,159 8,141 860 2,154 2,145 Consumer and other 10 10 1 — — Total originated 23,258 23,213 3,591 16,884 16,839 Acquired: Commercial real estate 1,374 1,390 175 330 331 Commercial construction 369 370 59 — — Commercial and industrial 232 304 71 — — Residential construction 109 109 11 68 588 Residential mortgage 5,302 5,632 702 2,572 2,597 Consumer and other 119 119 49 — — Total acquired 7,505 7,924 1,067 2,970 3,516 Total impaired loans $ 30,763 $ 31,137 $ 4,658 $ 19,854 $ 20,355 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, 2016 2015 2016 2015 Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income Average Recorded Investment Interest Income Impaired loans with allowance: (Dollars in thousands) Commercial real estate $ 12,020 $ 103 $ 12,557 $ 112 $ 12,465 $ 206 $ 12,561 $ 193 Commercial construction 1,388 15 1,522 20 1,529 29 1,648 38 Commercial and industrial 1,705 34 1,447 17 1,680 61 1,440 29 Residential construction 343 4 347 4 369 5 375 7 Residential mortgage 12,200 61 5,390 44 12,723 133 7,335 59 Consumer and other 42 — 11 — 37 — 58 1 Total impaired loans with allowance $ 27,698 $ 217 $ 21,274 $ 197 $ 28,803 $ 434 $ 23,417 $ 327 Impaired loans with no allowance: Commercial real estate $ 13,434 $ 129 $ 22,370 $ 141 $ 13,619 $ 259 $ 20,839 $ 239 Commercial construction 1,893 355 2,627 15 1,815 543 2,608 30 Commercial and industrial 146 1 406 — 136 — 334 — Residential construction — — 112 — 68 — 113 — Residential mortgage 5,941 20 14,026 — 5,794 43 12,558 46 Consumer and other 20 — 81 — 20 — 81 — Total impaired loans with no allowance $ 21,434 $ 505 $ 39,622 $ 156 $ 21,452 $ 845 $ 36,533 $ 315 For the three and six months ended June 30, 2016 and 2015 , the amount of interest income recognized within the period that the loans were impaired was primarily related to loans modified as 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, 2016 and December 31, 2015, respectively, the Company had $0.6 million and $2.5 million 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: Current 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due Non-Accrual Total Loans June 30, 2016 (Dollars in thousands) Originated: Commercial real estate $ 1,807,314 $ 2,919 $ — $ — $ 1,776 $ 1,812,009 Commercial construction 366,574 85 80 — 117 366,856 Commercial and industrial 333,463 220 188 — 124 333,995 Leases 29,453 — — 10 — 29,463 Residential construction 79,977 — — — — 79,977 Residential mortgage 522,443 690 53 — 3,370 526,556 Consumer and other 14,431 50 — — 20 14,501 Total originated 3,153,655 3,964 321 10 5,407 3,163,357 Acquired: Commercial real estate 681,672 433 1,556 — 3,676 687,337 Commercial construction 85,138 42 200 — 604 85,984 Commercial and industrial 119,817 244 165 — 261 120,487 Residential construction 18,055 — — — — 18,055 Residential mortgage 722,527 944 653 — 7,171 731,295 Consumer and other 6,086 23 17 — 44 6,170 Total acquired 1,633,295 1,686 2,591 — 11,756 1,649,328 Total loans $ 4,786,950 $ 5,650 $ 2,912 $ 10 $ 17,163 $ 4,812,685 Current 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due Non-Accrual Total Loans December 31, 2015 (Dollars in thousands) Originated: Commercial real estate $ 1,571,034 $ 800 $ 564 $ — $ 3,157 $ 1,575,555 Commercial construction 281,345 82 — — 164 281,591 Commercial and industrial 279,116 89 21 — 269 279,495 Leases 26,773 — — — — 26,773 Residential construction 59,631 — — — 306 59,937 Residential mortgage 480,251 1,714 203 — 2,727 484,895 Consumer and other 12,958 12 — — — 12,970 Total originated 2,711,108 2,697 788 — 6,623 2,721,216 Acquired: Commercial real estate 664,153 893 1,139 — 4,275 670,460 Commercial construction 82,994 10 20 — 394 83,418 Commercial and industrial 139,130 69 250 3 169 139,621 Residential construction 15,891 — 16 — 177 16,084 Residential mortgage 552,348 3,266 1,010 — 6,939 563,563 Consumer and other 5,295 77 5 — 132 5,509 Total acquired 1,459,811 4,315 2,440 3 12,086 1,478,655 Total loans $ 4,170,919 $ 7,012 $ 3,228 $ 3 $ 18,709 $ 4,199,871 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, 2016 (Dollars in thousands) Originated: Commercial real estate $ 1,743,190 $ 38,483 $ 30,336 $ — $ — $ 1,812,009 Commercial construction 358,028 5,813 3,015 — — 366,856 Commercial and industrial 324,462 4,391 5,142 — — 333,995 Leases 29,463 — — — — 29,463 Residential construction 79,107 870 — — — 79,977 Residential mortgage 495,854 20,598 10,104 — — 526,556 Consumer and other 14,123 349 29 — — 14,501 Total originated 3,044,227 70,504 48,626 — — 3,163,357 Acquired: Commercial real estate 622,257 29,075 35,793 211 1 687,337 Commercial construction 70,828 6,361 8,677 118 — 85,984 Commercial and industrial 111,798 3,659 5,030 — — 120,487 Residential construction 17,805 — 250 — — 18,055 Residential mortgage 675,179 35,060 20,823 233 — 731,295 Consumer and other 6,019 99 52 — — 6,170 Total acquired 1,503,886 74,254 70,625 562 1 1,649,328 Total loans $ 4,548,113 $ 144,758 $ 119,251 $ 562 $ 1 $ 4,812,685 Pass Special Mention Substandard Doubtful Loss Total December 31, 2015 (Dollars in thousands) Originated: Commercial real estate $ 1,499,554 $ 48,775 $ 27,226 $ — $ — $ 1,575,555 Commercial construction 272,960 6,434 2,197 — — 281,591 Commercial and industrial 270,116 4,855 4,524 — — 279,495 Leases 26,773 — — — — 26,773 Residential construction 59,265 24 648 — — 59,937 Residential mortgage 453,544 20,440 10,911 — — 484,895 Consumer and other 12,566 394 10 — — 12,970 Total originated 2,594,778 80,922 45,516 — — 2,721,216 Acquired: Commercial real estate 596,973 31,318 42,169 — — 670,460 Commercial construction 69,473 5,655 8,163 127 — 83,418 Commercial and industrial 127,911 3,273 8,437 — — 139,621 Residential construction 14,541 470 1,073 — — 16,084 Residential mortgage 504,836 38,763 19,716 248 — 563,563 Consumer and other 5,244 133 132 — — 5,509 Total acquired 1,318,978 79,612 79,690 375 — 1,478,655 Total loans $ 3,913,756 $ 160,534 $ 125,206 $ 375 $ — $ 4,199,871 Modifications Loan modifications are considered a 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 TDRs, 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 June 30, 2016 (Dollars in thousands) Commercial real estate $ 1,673 $ 434 $ 2,107 $ 172 Commercial construction 811 — 811 4 Commercial and industrial 1,127 — 1,127 615 Residential mortgage 6,218 271 6,489 391 Consumer and other 10 — 10 1 Total modifications $ 9,839 $ 705 $ 10,544 $ 1,183 Number of contracts 26 6 32 Accrual Nonaccrual Total TDRs Allowance for Loan Losses Allocated December 31, 2015 (Dollars in thousands) Commercial real estate $ 5,938 $ 720 $ 6,658 $ 331 Commercial construction 893 46 939 16 Commercial and industrial 1,186 — 1,186 484 Residential mortgage 6,691 14 6,705 1 Consumer and other 10 — 10 564 Total modifications $ 14,718 $ 780 $ 15,498 $ 1,396 Number of contracts 35 3 38 At June 30, 2016 and December 31, 2015, 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. Payment modification – A modification in which the principal and interest payment are lowered from the original contractual terms. Interest only modification – A modification in which the loan is converted to interest only payments for a period of time. 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, 2016 Three Months Ended June 30, 2015 Term Interest Only Total Term Interest Only Total (Dollars in thousands) Commercial real estate $ — $ 261 $ 261 $ — $ 358 $ 358 Commercial and industrial 433 — 433 93 231 324 Residential mortgage — 271 271 — — — Total modifications $ 433 $ 532 $ 965 $ 93 $ 589 $ 682 Six Months Ended June 30, 2016 Six Months Ended June 30, 2015 Term Payment Interest Only Total Term Payment Interest Only Combination Total (Dollars in thousands) Commercial real estate $ — $ 314 $ 261 $ 575 $ 417 $ — $ 358 $ 863 $ 1,638 Commercial and industrial 433 — — 433 93 419 231 — 743 Residential mortgage — — 271 271 — — — — — Total modifications $ 433 $ 314 $ 532 $ 1,279 $ 510 $ 419 $ 589 $ 863 $ 2,381 No loans modified and classified as TDRs in the previous twelve months defaulted during the three and six months ended June 30, 2016, while loans modified and classified as TDRs in the previous twelve months and defaulted during the three and six months ended June 30, 2015 were immaterial. The Company defines payment default as movement of the restructuring to nonaccrual status, foreclosure or charge-off, whichever occurs first. 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, 2016 2015 2016 2015 (Dollars in thousands) Loans held for sale at period end $ 41,703 $ 36,315 $ 41,703 $ 36,315 Proceeds from sales of mortgage loans originated for sale 91,357 86,049 175,445 175,971 Gain on sales of mortgage loans originated for sale 2,444 2,562 4,987 4,930 |