Loans Receivable, Net and Allowance for Loan Losses | 6. Loans Receivable, Net and Allowance for Loan Losses Loans receivable consist of the following (in thousands): March 31, 2018 September 30, 2017 Real estate loans: Residential $ 583,926 $ 586,708 Construction 4,072 3,097 Commercial 383,561 318,323 Commercial 49,273 44,129 Obligations of states and political subdivisions 55,615 58,079 Home equity loans and lines of credit 44,247 46,219 Auto Loans 178,420 186,646 Other 2,658 2,845 1,301,772 1,246,046 Less allowance for loan losses 10,510 9,365 Net loans $ 1,291,262 $ 1,236,681 Purchased loans acquired in a business combination are recorded at fair value on their purchase date without a carryover of the related allowance for loan losses. Changes in the accretable yield for purchased credit-impaired loans were as follows, since acquisition, for the three and six months ended March 31, 2018 and 2017 (in thousands): For the Three Months Ended March 31, 2018 2017 Balance at beginning of period $ 755 $ 453 Reclassification, new additions and other 85 82 Accretion (266 ) (75 ) Balance at end of period $ 574 $ 460 For the Six Months Ended March 31, 2018 2017 Balance at beginning of period $ 471 $ 478 Reclassification, new additions and other 681 118 Accretion (578 ) (136 ) Balance at end of period $ 574 $ 460 The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands): March 31, 2018 September 30, 2017 Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30) Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30) Outstanding balance $ 4,852 $ 5,490 Carrying amount $ 4,480 $ 4,388 The following tables show the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated (in thousands): Total Loans Individually Evaluated for Impairment Loans Acquired with Deteriorated Credit Quality Collectively Evaluated for Impairment March 31, 2018 Real estate loans: Residential $ 583,926 $ 5,190 $ — $ 578,736 Construction 4,072 — — 4,072 Commercial 383,561 6,803 3,900 372,858 Commercial 49,273 1,142 252 47,879 Obligations of states and political subdivisions 55,615 — — 55,615 Home equity loans and lines of credit 44,247 198 328 43,721 Auto loans 178,420 558 — 177,862 Other 2,658 27 — 2,631 Total $ 1,301,772 $ 13,918 $ 4,480 $ 1,283,374 Total Loans Individually Evaluated for Impairment Loans Acquired with Deteriorated Credit Quality Collectively Evaluated for Impairment September 30, 2017 Real estate loans: Residential $ 586,708 $ 6,202 $ — $ 580,506 Construction 3,097 — — 3,097 Commercial 318,323 7,211 3,775 307,337 Commercial 44,129 1,385 283 42,461 Obligations of states and political sub divisions 58,079 — — 58,079 Home equity loans and lines of credit 46,219 176 330 45,713 Auto loans 186,646 572 — 186,074 Other 2,845 30 — 2,815 Total $ 1,246,046 $ 15,576 $ 4,388 $ 1,226,082 The Company maintains a loan review system that allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified losses based on a review of such information. A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. The Company does not aggregate such loans for evaluation purposes. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures, unless such loans are part of a larger relationship that is impaired, or are classified as a troubled debt restructuring. A loan is considered to be a troubled debt restructuring (“TDR”) loan when the Company grants a concession to the borrower that it would not otherwise consider because of the borrower’s financial condition. Such concessions include the reduction of interest rates, forgiveness of principal or interest, or other modifications of interest rates that are less than the current market rate for new obligations with similar risk. TDR loans that are in compliance with their modified terms and that yield a market rate at the time of modification may be removed from TDR status after one year of performance. The following tables include the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount at the dates indicated, if applicable (in thousands): Recorded Investment Unpaid Principal Balance Associated Allowance March 31, 2018 With no specific allowance recorded: Real estate loans Residential $ 3,879 $ 5,193 $ — Construction — — — Commercial 6,785 8,729 — Commercial 1,142 1,397 — Obligations of states and political subdivisions — — — Home equity loans and lines of credit 172 186 — Auto loans 214 420 — Other 27 34 — Total 12,219 15,959 — With an allowance recorded: Real estate loans Residential 1,311 1,561 160 Construction — — — Commercial 18 22 12 Commercial — — — Obligations of states and political subdivisions — — — Home equity loans and lines of credit 26 27 2 Auto loans 344 355 130 Other — — — Total 1,699 1,965 304 Total: Real estate loans Residential 5,190 6,754 160 Construction — — — Commercial 6,803 8,751 12 Commercial 1,142 1,397 — Obligations of states and political subdivisions — — — Home equity loans and lines of credit 198 213 2 Auto loans 558 775 130 Other 27 34 — Total Impaired Loans $ 13,918 $ 17,924 $ 304 Recorded Investment Unpaid Principal Balance Associated Allowance September 30, 2017 With no specific allowance recorded: Real Estate Loans Residential $ 4,392 $ 5,730 $ — Construction — — — Commercial 7,191 9,396 — Commercial 1,385 1,575 — Obligations of states and political subdivisions — — — Home equity loans and lines of credit 176 258 — Auto Loans 123 237 — Other 30 36 — Total 13,297 17,232 — With an allowance recorded: Real Estate Loans Residential 1,810 2,264 154 Construction — — — Commercial 20 1,193 19 Commercial — — — Obligations of states and political subdivisions — — — Home equity loans and lines of credit — — — Auto Loans 449 468 172 Other — — — Total 2,279 3,925 345 Total: Real Estate Loans Residential 6,202 7,994 154 Construction — — — Commercial 7,211 10,589 19 Commercial 1,385 1,575 — Obligations of states and political subdivisions — — — Home equity loans and lines of credit 176 258 — Auto Loans 572 705 172 Other 30 36 — Total Impaired Loans $ 15,576 $ 21,157 $ 345 The following tables represent the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired (in thousands): For the Three Months Ended March 31, 2018 2017 2018 2017 Average Recorded Investment Average Recorded Investment Interest Income Recognized Interest Income Recognized With no specific allowance recorded: Real estate loans Residential $ 4,180 $ 5,573 $ 6 $ 9 Construction — — — — Commercial 6,789 9,218 69 67 Commercial 1,178 1,637 24 29 Obligations of states and political subdivisions — — — — Home equity loans and lines of credit 203 202 — — Auto loans 208 102 — — Other 28 8 — — Total 12,586 16,740 99 105 With an allowance recorded: Real estate loans Residential 1,256 1,985 — — Construction — — — — Commercial 19 341 — — Commercial — 100 — — Obligations of states and political subdivisions — — — — Home equity loans and lines of credit 12 5 — — Auto loans 231 291 — 2 Other — — — — Total 1,518 2,722 — 2 Total: Real estate loans Residential 5,436 7,558 6 9 Construction — — — — Commercial 6,808 9,559 69 67 Commercial 1,178 1,737 24 29 Obligations of states and political subdivisions — — — — Home equity loans and lines of credit 215 207 — — Auto loans 439 393 — 2 Other 28 8 — — Total Impaired Loans $ 14,104 $ 19,462 $ 99 $ 107 For the Six Months Ended March 31, 2018 2017 2018 2017 Average Recorded Investment Average Recorded Investment Interest Income Recognized Interest Income Recognized With no specific allowance recorded: Real estate loans Residential $ 4,305 $ 6,049 $ 16 $ 21 Construction — — — — Commercial 6,897 9,890 141 172 Commercial 1,233 1,665 51 62 Obligations of states and political subdivisions — — — — Home equity loans and lines of credit 205 260 1 — Auto loans 172 119 1 — Other 29 8 — — Total 12,841 17,991 210 255 With an allowance recorded: Real estate loans Residential 1,392 2,025 — — Construction — — — — Commercial 19 345 — — Commercial — 59 — — Obligations of states and political subdivisions — — — — Home equity loans and lines of credit 7 4 — — Auto loans 247 253 — 6 Other — — — — Total 1,665 2,686 — 6 Total: Real estate loans Residential 5,697 8,074 16 21 Construction — — — — Commercial 6,916 10,235 141 172 Commercial 1,233 1,724 51 62 Obligations of states and political subdivisions — — — — Home equity loans and lines of credit 212 264 1 — Auto loans 419 372 1 6 Other 29 8 — — Total Impaired Loans $ 14,506 $ 20,677 $ 210 $ 261 The Company uses a ten-point internal risk-rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized and are aggregated as Pass-rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are fundamentally sound yet exhibit potentially unacceptable credit risk or deteriorating trends or characteristics which, if left uncorrected, may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans more than 90 days past due are considered Substandard. Loans in the Doubtful category have all the weaknesses inherent in loans classified as Substandard with the added characteristic that their weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans in the Loss category are considered uncollectible and of little value that their continuance as bankable assets is not warranted. Certain residential real estate loans, construction loans, home equity loans and lines of credit, auto loans and other consumer loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are normally risk rated and monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or non-performing. To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Bank’s Commercial Loan Officers are responsible for the timely and accurate risk rating recommendation for the loans in their portfolios at origination and on an ongoing basis. The Bank’s Commercial Loan Officers perform an annual review of all commercial relationships $750,000 or greater. Confirmation of the appropriate risk grade is included in the review on an ongoing basis. The Bank engages an external consultant to conduct loan reviews on at least a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $1,000,000 and/or all criticized relationships. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance. The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, and Doubtful or Loss within the internal risk rating system at March 31, 2018 and September 30, 2017 (in thousands): Pass Special Mention Substandard Doubtful or Loss Total March 31, 2018 Commercial real estate loans $ 364,292 $ 1,368 $ 17,901 $ — $ 383,561 Commercial 46,889 354 2,030 — 49,273 Obligations of states and political subdivisions 55,615 — — — 55,615 Total $ 466,796 $ 1,722 $ 19,931 $ — $ 488,449 Pass Special Mention Substandard Doubtful or Loss Total September 30, 2017 Commercial real estate loans $ 300,554 $ 3,376 $ 14,393 $ — $ 318,323 Commercial 40,996 32 3,101 — 44,129 Obligations of states and political subdivisions 58,079 — — — 58,079 Total $ 399,629 $ 3,408 $ 17,494 $ — $ 420,531 All other loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are normally risk rated and monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or non-performing. The following tables present the risk ratings in the consumer categories of performing and non-performing loans at March 31, 2018 and September 30, 2017 (in thousands): Performing Non- performing Purchased Credit Impaired Total March 31, 2018 Real estate loans: Residential $ 577,491 $ 6,435 $ — $ 583,926 Construction 4,072 — — 4,072 Home equity loans and lines of credit 43,615 304 328 44,247 Auto loans 177,698 722 — 178,420 Other 2,629 29 — 2,658 Total $ 805,505 $ 7,490 $ 328 $ 813,323 Performing Non- performing Purchased Impaired Credit Total September 30, 2017 Real estate loans: Residential $ 580,116 $ 6,592 $ — $ 586,708 Construction 3,097 — — 3,097 Home equity loans and lines of credit 45,576 313 330 46,219 Auto loans 185,910 736 — 186,646 Other 2,807 38 — 2,845 Total $ 817,506 $ 7,679 $ 330 $ 825,515 The Company further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of March 31, 2018 and September 30, 2017 (in thousands): 31-60 Days 61-90 Days Greater than 90 Days Past Due and Total Purchased Credit Impaired Total Current Past Due Past Due Accruing Nonaccrual Past Due Accruing Nonaccrual Loans March 31, 2018 Real estate loans: Residential $ 575,286 $ 1,120 $ 1,085 $ — $ 6,435 $ 8,640 $ — $ — $ 583,926 Construction 4,072 — — — — — — — $ 4,072 Commercial 377,531 38 — — 2,092 2,130 261 3,639 $ 383,561 Commercial 48,910 — — — 111 111 — 252 $ 49,273 Obligations of states and political subdivisions 55,615 — — — — — — — $ 55,615 Home equity loans and lines of credit 43,456 159 — — 304 463 — 328 $ 44,247 Auto loans 176,631 951 116 — 722 1,789 — — $ 178,420 Other 2,629 — — — 29 29 — — $ 2,658 Total $ 1,284,130 $ 2,268 $ 1,201 $ — $ 9,693 $ 13,162 $ 261 $ 4,219 $ 1,301,772 31-60 Days 61-90 Days Greater than 90 Days Past Due and Total Purchased Credit Impaired Total Current Past Due Past Due Accruing Nonaccrual Past Due Accruing Nonaccrual Loans September 30, 2017 Real estate loans: Residential $ 577,034 $ 2,661 $ 421 $ — $ 6,592 $ 9,674 $ — $ — $ 586,708 Construction 3,097 — — — — — — — 3,097 Commercial 312,098 172 — — 2,278 2,450 612 3,163 318,323 Commercial 43,298 18 — — 530 548 — 283 44,129 Obligations of states and political subdivisions 58,079 — — — — — — — 58,079 Home equity loans and lines of credit 45,460 101 15 — 313 429 — 330 46,219 Auto loans 185,247 631 32 — 736 1,399 — — 186,646 Other 2,789 14 4 — 38 56 — — 2,845 Total $ 1,227,102 $ 3,597 $ 472 $ — $ 10,487 $ 14,556 $ 612 $ 3,776 $ 1,246,046 The allowance for loan losses is maintained at a level necessary to absorb loan losses that are both probable and reasonably estimable. Management, in determining the allowance for loan losses, considers the losses inherent in its loan portfolio and changes in the nature and volume of loan activities, along with the general economic and real estate market conditions. The allowance for loan losses consists of two elements: (1) an allocated allowance, which comprises allowances established on specific loans and class allowances based on historical loss experience and current trends, and (2) an allocated allowance based on general economic conditions and other risk factors in our markets and portfolios. We maintain a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan loss experience, composition of the loan portfolio, current economic conditions, management’s judgment and losses which are probable and reasonably estimable. The allowance is increased through provisions charged against current earnings and recoveries of previously charged-off loans. Loans that are determined to be uncollectible are charged against the allowance. While management uses available information to recognize probable and reasonably estimable loan losses, future loss provisions may be necessary, based on changing economic conditions. Payments received on impaired loans generally are either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. The allowance for loan losses as of March 31, 2018 was maintained at a level that represents management’s best estimate of losses inherent in the loan portfolio, and such losses were both probable and reasonably estimable. In addition, the FDIC and the Pennsylvania Department of Banking and Securities, as an integral part of their examination process, have periodically reviewed our allowance for loan losses. The banking regulators may require that we recognize additions to the allowance based on its analysis and review of information available to it at the time of its examination. Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for loan losses (“ALL”). When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL. The following table summarizes changes in the primary segments of the ALL for the three and six month periods ended March 31, 2018 and 2017 (in thousands): Home Obligations of Equity States and Loans and Real Estate Loans Commercial Political Lines of Other Residential Construction Commercial Loans Subdivisions Credit Auto Loans Loans Unallocated Total ALL balance at December 31, 2017 $ 3,769 $ 33 $ 2,319 $ 1,054 $ 213 $ 449 $ 1,962 $ 21 $ 13 $ 9,833 Charge-offs (52 ) — (14 ) (5 ) — (6 ) (550 ) (15 ) — (642 ) Recoveries 3 — — — — 3 211 2 — 219 Provision 35 — 516 170 56 (45 ) 281 13 74 1,100 ALL balance at March 31, 2018 $ 3,755 $ 33 $ 2,821 $ 1,219 $ 269 $ 401 $ 1,904 $ 21 $ 87 $ 10,510 ALL balance at December 31, 2016 $ 4,450 $ 23 $ 795 $ 965 $ 234 $ 441 $ 2,062 $ 25 $ 347 $ 9,342 Charge-offs (290 ) — (128 ) (1 ) — (6 ) (544 ) — — (969 ) Recoveries 5 — — — — 2 232 4 — 243 Provision (35 ) 7 371 (13 ) 10 8 158 (5 ) 249 750 ALL balance at March 31, 2017 $ 4,130 $ 30 $ 1,038 $ 951 $ 244 $ 445 $ 1,908 $ 24 $ 596 $ 9,366 ALL balance at September 30, 2017 $ 3,878 $ 23 $ 1,758 $ 987 $ 248 $ 470 $ 1,836 $ 21 $ 144 $ 9,365 Charge-offs (95 ) — (15 ) (137 ) — (6 ) (1,087 ) (21 ) — (1,361 ) Recoveries 6 — 2 10 — 5 381 2 — 406 Provision (34 ) 10 1,076 359 21 (68 ) 774 19 (57 ) 2,100 ALL balance at March 31, 2018 $ 3,755 $ 33 $ 2,821 $ 1,219 $ 269 $ 401 $ 1,904 $ 21 $ 87 $ 10,510 ALL balance at September 30, 2016 $ 4,426 $ 13 $ 852 $ 882 $ 215 $ 455 $ 1,880 $ 25 $ 308 $ 9,056 Charge-offs (366 ) — (218 ) (20 ) — (6 ) (1,061 ) (4 ) — (1,675 ) Recoveries 6 — 10 — — 3 460 6 — 485 Provision 64 17 394 89 29 (7 ) 629 (3 ) 288 1,500 ALL balance at March 31, 2017 $ 4,130 $ 30 $ 1,038 $ 951 $ 244 $ 445 $ 1,908 $ 24 $ 596 $ 9,366 Acquired loans are recorded at fair value on their purchase date without a carryover of the related allowance for loan losses. The Company allocated increased provisions to commercial real estate loans due primarily to increased loan balances for the three month period ended March 31, 2018. The Company allocated increased provisions to commercial loans due primarily to increase loan balances and charge off activity for the three month period ended March 31, 2018. The Company allocated increased provisions to commercial real estate loans for the three month period ended March 31, 2017 due to charge off activity. The Company allocated increased provisions to auto loans for the three and six month periods ended March 31, 2018 and 2017 due to increased charge offs, net of recoveries. The following table summarizes the primary segments of the ALL, segregated into two categories, the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of March 31, 2018 and September 30, 2017 (in thousands): Home Obligations of Equity States and Loans and Real Estate Loans Commercial Political Lines of Other Residential Construction Commercial Loans Subdivisions Credit Auto Loans Loans Unallocated Total Individually evaluated for impairment $ 160 $ — $ 12 $ — $ — $ 2 $ 130 $ — $ — $ 304 Collectively evaluated for impairment 3,595 33 2,809 1,219 269 399 1,774 21 87 10,206 ALL balance at March 31, 2018 $ 3,755 $ 33 $ 2,821 $ 1,219 $ 269 $ 401 $ 1,904 $ 21 $ 87 $ 10,510 Individually evaluated for impairment $ 154 $ — $ 19 $ — $ — $ — $ 172 $ — $ — $ 345 Collectively evaluated for impairment 3,724 23 1,739 987 248 470 1,664 21 144 9,020 ALL balance at September 30, 2017 $ 3,878 $ 23 $ 1,758 $ 987 $ 248 $ 470 $ 1,836 $ 21 $ 144 $ 9,365 The allowance for loan losses is based on estimates, and actual losses will vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date. Despite the above allocations, the allowance for loan losses is general in nature and is available to absorb losses from any loan segment. The following is a summary of troubled debt restructuring granted during the three and six months ended March 31, 2018 and 2017 (dollars in thousands): For the Three Months Ended March 31, 2018 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Real estate loans: Residential — — — Construction — — — Commercial 1 107 107 Commercial — — — Obligations of states and political subdivisions — — — Home equity loans and lines of credit — — — Auto loans 1 15 15 Other — — — Total 2 $ 122 $ 122 For the Three Months Ended March 31, 2017 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Real estate loans: Residential 1 $ 135 $ 135 Construction — — — Commercial 1 132 132 Commercial — — — Obligations of states and political subdivisions — — — Home equity loans and lines of credit — — — Auto loans — — — Other 1 24 24 Total 3 $ 291 $ 291 For the Six Months Ended March 31, 2018 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Real estate loans: Residential 2 $ 243 $ 235 Construction — — — Commercial 1 107 107 Commercial — — — Obligations of states and political subdivisions — — — Home equity loans and lines of credit — — — Auto loans 1 15 15 Other — — — Total 4 $ 365 $ 357 For the Six Months Ended March 31, 2017 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Troubled Debt Restructurings Real estate loans: Residential 3 $ 379 $ 379 Construction — — — Commercial 1 132 132 Commercial — — — Obligations of states and political subdivisions — — — Home equity loans and lines of credit — — — Auto loans — — — Other 1 24 24 Total 5 $ 535 $ 535 For the three months ended March 31, 2018, one loan for $107,000 was granted terms concessions and one loan for $15,000 was granted terms and rate concessions. Of the three new troubled debt restructurings granted for the three months ended March 31, 2017, one loan for $135,000 was granted terms concessions, one loan for $132,000 was granted terms and rate concessions, and one loan for $24,000 was granted interest rate concessions. For the six months ended March 31, 2018, three loans totaling $250,000 were granted terms and rate concessions and one loan for $107,000 was granted terms concessions. Of the five new troubled debt restructurings granted for the six months ended March 31, 2017, one loan totaling $135,000 was granted terms concessions, one loan totaling $24,000 was granted interest rate concessions, and three loans totaling $376,000 were granted terms and rate concessions. For the three months ended March 31, 2018, one loan totaling $72,000 defaulted on a restructuring agreement within one year of modification. For the six months ended March 31, 2018, two loan totaling $95,000 defaulted on a restructuring agreement within one year of modification. For the three months ended March 31, 2017 no loans defaulted on a restructuring agreement within one year of modification. For the six months ended March 31, 2017 one loan totaling $107,000 defaulted on a restricting agreement within one year of modification. Foreclosed assets acquired in settlement of loans are carried at fair value, less estimated costs to sell, and are included in the Consolidated Balance Sheet. As of March 31, 2018, included within the foreclosed assets is $790,000 of consumer residential mortgages that were foreclosed on or received via a deed in lieu of foreclosure transaction prior to the period end. As of March 31, 2018, the Company has initiated formal foreclosure proceedings on $2.6 million of consumer residential mortgages which have not yet been transferred into foreclosed assets. |