| Loans Held for Investment and Allowance for Loan Losses | Loans Held for Investment and Allowance for Loan Losses Loan Portfolio Segments The following describes the risk characteristics relevant to each of the portfolio segments. Each loan category is assigned a risk grade during the origination and closing process based on criteria described later in this section. Commercial and Industrial Commercial and industrial loans (C&I) receive similar underwriting treatment as commercial real estate loans in that the repayment source is analyzed to determine its ability to meet cash flow coverage requirements as set forth by Bank policies. Repayment of the Bank’s C&I loans generally comes from the generation of cash flow as the result of the borrower’s business operations. This business cycle itself brings a certain level of risk to the portfolio. In some instances, these loans may carry a higher degree of risk due to a variety of reasons – illiquid collateral, specialized equipment, highly depreciable assets, uncollectable accounts receivable, revolving balances, or simply being unsecured. As a result of these characteristics, the SBA guarantee on these loans is an important factor in mitigating risk. Construction and Development Construction and development loans are for the purpose of acquisition and development of land to be improved through the construction of commercial buildings. Such loans are usually paid off through the conversion to permanent financing for the long-term benefit of the borrower’s ongoing operations. At the completion of the project, if the loan is converted to permanent financing or if scheduled loan amortization begins, it is then reclassified to the “Commercial Real Estate” segment. Underwriting of construction and development loans typically includes analysis of not only the borrower’s financial condition and ability to meet the required debt obligations, but also the general market conditions associated with the area and type of project being funded. Commercial Real Estate Commercial real estate loans are extensions of credit secured by owner occupied and non-owner occupied collateral. Underwriting generally involves intensive analysis of the financial strength of the borrower and guarantor, liquidation value of the subject collateral, the associated unguaranteed exposure, and any available secondary sources of repayment, with the greatest emphasis given to a borrower’s capacity to meet cash flow coverage requirements as set forth by Bank policies. Such repayment of commercial real estate loans is commonly derived from the successful ongoing operations of the business occupying the property. These typically include small businesses and professional practices. Commercial Land Commercial land loans are extensions of credit secured by farmland. Such loans are often for land improvements related to agricultural endeavors that may include construction of new specialized facilities. These loans are usually repaid through the conversion to permanent financing, or if scheduled loan amortization begins, for the long-term benefit of the borrower’s ongoing operations. Underwriting generally involves intensive analysis of the financial strength of the borrower and guarantor, liquidation value of the subject collateral, the associated unguaranteed exposure, and any available secondary sources of repayment, with the greatest emphasis given to a borrower’s capacity to meet cash flow coverage requirements as set forth by Bank policies. Each of the loan types referenced in the sections above is further segmented into verticals in which the Bank chooses to operate. The Bank chooses to finance businesses operating in specific industries because of certain similarities. The similarities range from historical default and loss characteristics to business operations. However, there are differences that create the necessity to underwrite these loans according to varying criteria and guidelines. When underwriting a loan, the Bank considers numerous factors such as cash flow coverage, the credit scores of the guarantors, revenue growth, practice ownership experience and debt service capacity. Minimum guidelines have been set with regard to these various factors and deviations from those guidelines require compensating strengths when considering a proposed loan. Loans consist of the following: June 30, December 31, Commercial & Industrial Agriculture $ 463 $ 30 Death Care Management 9,753 4,832 Healthcare 32,959 15,240 Independent Pharmacies 77,818 41,588 Registered Investment Advisors 54,091 18,358 Veterinary Industry 37,584 21,579 Other Industries 32,010 3,230 Total 244,678 104,857 Construction & Development Agriculture 35,041 11,351 Death Care Management 2,455 769 Healthcare 23,561 7,231 Independent Pharmacies 2,081 101 Registered Investment Advisors 703 378 Veterinary Industry 10,534 3,834 Other Industries 11,477 658 Total 85,852 24,322 Commercial Real Estate Agriculture 5,672 1,863 Death Care Management 45,162 20,327 Healthcare 95,146 37,684 Independent Pharmacies 13,650 7,298 Registered Investment Advisors 6,787 2,808 Veterinary Industry 96,162 59,999 Other Industries 23,739 4,752 Total 286,318 134,731 Commercial Land Agriculture 72,643 16,036 Total 72,643 16,036 Total Loans 1 689,491 279,946 Net Deferred Costs 6,902 3,056 Discount on SBA 7(a) Unguaranteed 2 (5,876 ) (3,033 ) Loans, Net of Unearned $ 690,517 $ 279,969 1 Total loans include $ 28.5 million and $ 17.2 million of U.S. government guaranteed loans as of June 30, 2016 and December 31, 2015 , respectively. 2 The Company measures the carrying value of the retained portion of loans sold at fair value under ASC Subtopic 825-10. The value of these retained loan balances is discounted based on the estimates derived from comparable unguaranteed loan sales. Credit Risk Profile The Bank uses internal loan reviews to assess the performance of individual loans by industry segment. An independent review of the loan portfolio is performed annually by an external firm. The goal of the Bank’s annual review of select borrowers' financial performance is to validate the adequacy of the risk grade assigned. The Bank uses a grading system to rank the quality of each loan. The grade is periodically evaluated and adjusted as performance dictates. Loan grades 1 through 4 are passing grades and grade 5 is special mention. Collectively, grades 6 through 8 represent classified loans in the Bank’s portfolio. The following guidelines govern the assignment of these risk grades: Exceptional Loans (1 Rated): These loans are of the highest quality, with strong, well-documented sources of repayment. Debt service coverage (“DSC”) is over 1.75 X based on historical results. Secondary source of repayment is strong, with a loan to value (“LTV”) of 65% or less if secured solely by commercial real estate (“CRE”). Discounted collateral coverage from all sources should exceed 125% . Guarantors have credit scores above 740 . Quality Loans (2 Rated): These loans are of good quality, with good, well-documented sources of repayment. DSC is over 1.25 X based on historical or pro-forma results. Secondary source of repayment is good, with a LTV of 75% or less if secured solely by CRE. Discounted collateral coverage should exceed 100% . Guarantors have credit scores above 700 . Acceptable Loans (3 rated): These loans are of acceptable quality, with acceptable sources of repayment. DSC of over 1.00 X based on historical or pro-forma results. Companies that do not meet these credit metrics must be evaluated to determine if they should be graded below this level. Acceptable Loans (4 rated): These loans are considered very weak pass. These loans are riskier than a 3-rated credit, but due to various mitigating factors are not considered a Special mention or worse. The mitigating factors must clearly be identified to offset further downgrade. Examples of loans that may be put in this category include start-up loans and loans with less than 1 :1 cash flow coverage with other sources of repayment. Special mention (5 rated): These loans are considered as emerging problems, with potentially unsatisfactory characteristics. These loans require greater management attention. A loan may be put into this category if the Bank is unable to obtain financial reporting from a company to fully evaluate its position. Substandard (6 rated): Loans graded Substandard are inadequately protected by current sound net worth, paying capacity of the borrower, or pledged collateral. They typically have unsatisfactory characteristics causing more than acceptable levels of risk, and have one or more well-defined weaknesses that could jeopardize the repayment of the debt. Doubtful (7 rated): Loans graded Doubtful have inherent weaknesses that make collection or liquidation in full questionable. Loans graded Doubtful must be placed on non-accrual status. Loss (8 rated): Loss rated loans are considered uncollectible and of such little value that their continuance as an active Bank asset is not warranted. The asset should be charged off, even though partial recovery may be possible in the future. The following tables summarize the risk grades of each category: Risk Grades 1 - 4 Risk Grade 5 Risk Grades 6 - 8 Total June 30, 2016 Commercial & Industrial Agriculture $ 406 $ 57 $ — $ 463 Death Care Management 9,518 226 9 9,753 Healthcare 25,201 3,362 4,396 32,959 Independent Pharmacies 72,619 3,620 1,579 77,818 Registered Investment Advisors 52,617 1,101 373 54,091 Veterinary Industry 33,504 1,883 2,197 37,584 Other Industries 32,010 — — 32,010 Total 225,875 10,249 8,554 244,678 Construction & Development Agriculture 35,041 — — 35,041 Death Care Management 2,049 406 — 2,455 Healthcare 21,340 2,221 — 23,561 Independent Pharmacies 2,081 — — 2,081 Registered Investment Advisors 703 — — 703 Veterinary Industry 9,341 1,193 — 10,534 Other Industries 11,477 — — 11,477 Total 82,032 3,820 — 85,852 Commercial Real Estate Agriculture 5,672 — — 5,672 Death Care Management 41,173 2,405 1,584 45,162 Healthcare 88,389 5,724 1,033 95,146 Independent Pharmacies 12,053 1,597 — 13,650 Registered Investment Advisors 6,787 — — 6,787 Veterinary Industry 81,384 4,096 10,682 96,162 Other Industries 23,739 — — 23,739 Total 259,197 13,822 13,299 286,318 Commercial Land Agriculture 70,636 1,890 117 72,643 Total 70,636 1,890 117 72,643 Total 1 $ 637,740 $ 29,781 $ 21,970 $ 689,491 Risk Grades 1 - 4 Risk Grade 5 Risk Grades 6 - 8 Total December 31, 2015 Commercial & Industrial Agriculture $ 30 $ — $ — $ 30 Death Care Management 4,728 104 — 4,832 Healthcare 8,334 2,160 4,746 15,240 Independent Pharmacies 36,704 3,430 1,454 41,588 Registered Investment Advisors 17,508 850 — 18,358 Veterinary Industry 16,800 1,817 2,962 21,579 Other Industries 3,089 141 — 3,230 Total 87,193 8,502 9,162 104,857 Construction & Development Agriculture 11,194 157 — 11,351 Death Care Management 769 — — 769 Healthcare 7,231 — — 7,231 Independent Pharmacies 101 — — 101 Registered Investment Advisors 378 — — 378 Veterinary Industry 2,581 1,253 — 3,834 Other Industries 658 — — 658 Total 22,912 1,410 — 24,322 Commercial Real Estate Agriculture 1,863 — — 1,863 Death Care Management 18,223 425 1,679 20,327 Healthcare 33,529 2,930 1,225 37,684 Independent Pharmacies 6,210 1,088 — 7,298 Registered Investment Advisors 2,808 — — 2,808 Veterinary Industry 45,453 3,171 11,375 59,999 Other Industries 4,752 — — 4,752 Total 112,838 7,614 14,279 134,731 Commercial Land Agriculture 16,036 — — 16,036 Total 16,036 — — 16,036 Total 1 $ 238,979 $ 17,526 $ 23,441 $ 279,946 1 Total loans include $ 28.5 million of U.S. government guaranteed loans as of June 30, 2016 , segregated by risk grade as follows: Risk Grades 1 – 4 = $ 7.7 million, Risk Grade 5 = $ 7.6 million , Risk Grades 6 – 8 = $ 13.2 million . As of December 31, 2015 , total loans include $ 17.2 million of U.S. government guaranteed loans, segregated by risk grade as follows: Risk Grades 1 – 4 = $ 0 , Risk Grade 5 = $ 2.6 million , Risk Grades 6 – 8 = $ 14.6 million . Past Due Loans Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans less than 30 days past due and accruing are included within current loans shown below. The following tables show an age analysis of past due loans as of the dates presented. Less Than 30 Days Past Due & Not Accruing 30-89 Days Past Due & Accruing 30-89 Days Past Due & Not Accruing Greater Than 90 Days Past Due Total Not Accruing & Past Due Loans Current Loans Total Loans Loans 90 Days or More Past Due & Still Accruing June 30, 2016 Commercial & Industrial Agriculture $ — $ — $ — $ — $ — $ 463 $ 463 $ — Death Care Management — — — — — 9,753 9,753 — Healthcare — 576 487 2,219 3,282 29,677 32,959 — Independent Pharmacies 294 415 156 270 1,135 76,683 77,818 — Registered Investment Advisors — — — — — 54,091 54,091 — Veterinary Industry 90 — 690 1,054 1,834 35,750 37,584 — Other Industries — — — — — 32,010 32,010 — Total 384 991 1,333 3,543 6,251 238,427 244,678 — Construction & Development Agriculture — — — — — 35,041 35,041 — Death Care Management — — — — — 2,455 2,455 — Healthcare — — — — — 23,561 23,561 — Independent Pharmacies — — — — — 2,081 2,081 — Registered Investment Advisors — — — — — 703 703 — Veterinary Industry — — — — — 10,534 10,534 — Other Industries — — — — — 11,477 11,477 — Total — — — — — 85,852 85,852 — Commercial Real Estate Agriculture — — — — — 5,672 5,672 — Death Care Management — 221 — 1,423 1,644 43,518 45,162 — Healthcare 350 258 — 209 817 94,329 95,146 — Independent Pharmacies — — — — — 13,650 13,650 — Registered Investment Advisors — — — — — 6,787 6,787 — Veterinary Industry 2,224 4,284 — 3,319 9,827 86,335 96,162 — Other Industries — — — — — 23,739 23,739 — Total 2,574 4,763 — 4,951 12,288 274,030 286,318 — Commercial Land Agriculture 117 — — — 117 72,526 72,643 — Total 117 — — — 117 72,526 72,643 — Total 1 $ 3,075 $ 5,754 $ 1,333 $ 8,494 $ 18,656 $ 670,835 $ 689,491 $ — Less Than 30 Days Past Due & Not Accruing 30-89 Days Past Due & Accruing 30-89 Days Past Due & Not Accruing Greater Than 90 Days Past Due Total Not Accruing & Past Due Loans Current Loans Total Loans Loans 90 Days or More Past Due & Still Accruing December 31, 2015 Commercial & Industrial Agriculture $ — $ — $ — $ — $ — $ 30 $ 30 $ — Death Care Management — — — — — 4,832 4,832 — Healthcare — 1,854 30 2,337 4,221 11,019 15,240 — Independent Pharmacies 314 603 — — 917 40,671 41,588 — Registered Investment Advisors — — — — — 18,358 18,358 — Veterinary Industry 208 466 1,131 394 2,199 19,380 21,579 — Other Industries — — — — — 3,230 3,230 — Total 522 2,923 1,161 2,731 7,337 97,520 104,857 — Construction & Development Agriculture — — — — — 11,351 11,351 — Death Care Management — — — — — 769 769 — Healthcare — — — — — 7,231 7,231 — Independent Pharmacies — — — — — 101 101 — Registered Investment Advisors — — — — — 378 378 — Veterinary Industry — — — — — 3,834 3,834 — Other Industries — — — — — 658 658 — Total — — — — — 24,322 24,322 — Commercial Real Estate Agriculture — — — — — 1,863 1,863 — Death Care Management 1,456 223 — — 1,679 18,648 20,327 — Healthcare — 240 135 831 1,206 36,478 37,684 — Independent Pharmacies — — — — — 7,298 7,298 — Registered Investment Advisors — — — — — 2,808 2,808 — Veterinary Industry 311 5,079 2,048 3,172 10,610 49,389 59,999 — Other Industries — — — — — 4,752 4,752 — Total 1,767 5,542 2,183 4,003 13,495 121,236 134,731 — Commercial Land Agriculture — — — — — 16,036 16,036 — Total — — — — — 16,036 16,036 — Total 1 $ 2,289 $ 8,465 $ 3,344 $ 6,734 $ 20,832 $ 259,114 $ 279,946 $ — 1 Total loans include $ 28.5 million of U.S. government guaranteed loans as of June 30, 2016 , of which $ 7.4 million is greater than 90 days past due, $ 3.5 million is 30-89 days past due and $ 17.6 million is included in current loans as presented above. As of December 31, 2015 , total loans include $ 17.2 million of U.S. government guaranteed loans, of which $ 5.9 million is greater than 90 days past due, $ 6.7 million is 30-89 days past due and $ 4.6 million is included in current loans as presented above. Nonaccrual Loans Loans that become 90 days delinquent, or in cases where there is evidence that the borrower’s ability to make the required payments is impaired, are placed in nonaccrual status and interest accrual is discontinued. If interest on nonaccrual loans had been accrued in accordance with the original terms, interest income would have increased by approximately $ 162 thousand and $ 102 thousand for the three months ended June 30, 2016 and 2015 , respectively and for the six months ended June 30, 2016 and 2015 interest income would have increased approximately $ 301 thousand and $ 261 thousand , respectively. All nonaccrual loans are included in the held for investment portfolio. Nonaccrual loans as of June 30, 2016 and December 31, 2015 are as follows: June 30, 2016 Loan Balance Guaranteed Balance Unguaranteed Exposure Commercial & Industrial Healthcare $ 2,706 $ 2,463 $ 243 Independent Pharmacies 720 558 162 Veterinary Industry 1,834 1,688 146 Total 5,260 4,709 551 Commercial Real Estate Death Care Management 1,423 1,264 159 Healthcare 559 306 253 Veterinary Industry 5,543 4,332 1,211 Total 7,525 5,902 1,623 Commercial Land Agriculture 117 117 — Total 117 117 — Total $ 12,902 $ 10,728 $ 2,174 December 31, 2015 Loan Balance Guaranteed Balance Unguaranteed Exposure Commercial & Industrial Healthcare $ 2,367 $ 2,188 $ 179 Independent Pharmacies 314 308 6 Veterinary Industry 1,733 1,572 161 Total 4,414 4,068 346 Commercial Real Estate Death Care Management 1,456 1,290 166 Healthcare 966 798 168 Veterinary Industry 5,531 4,174 1,357 Total 7,953 6,262 1,691 Total $ 12,367 $ 10,330 $ 2,037 Allowance for Loan Loss Methodology The methodology and the estimation process for calculating the Allowance for Loan Losses (“ALL”) is described below: Estimated credit losses should meet the criteria for accrual of a loss contingency, i.e., a provision to the ALL, set forth in GAAP. The Company’s methodology for determining the ALL is based on the requirements of GAAP, the Interagency Policy Statement on the Allowance for Loan and Lease Losses and other regulatory and accounting pronouncements. The ALL is determined by the sum of three separate components: (i) the impaired loan component, which addresses specific reserves for impaired loans; (ii) the general reserve component, which addresses reserves for pools of homogeneous loans; and (iii) an unallocated reserve component (if any) based on management’s judgment and experience. The loan pools and impaired loans are mutually exclusive; any loan that is impaired is excluded from its homogenous pool for purposes of that pool’s reserve calculation, regardless of the level of impairment. The ALL policy for pooled loans is governed in accordance with banking regulatory guidance for homogenous pools of non-impaired loans that have similar risk characteristics. The Company follows a consistent and structured approach for assessing the need for reserves within each individual loan pool. Loans are considered impaired when, based on current information and events, it is probable that the creditor will be unable to collect all interest and principal payments due according to the originally contracted, or reasonably modified, terms of the loan agreement. The Company has determined that loans that meet the criteria defined below must be reviewed quarterly to determine if they are impaired. • All commercial loans classified substandard or worse. • Any other delinquent loan that is in a nonaccrual status, or any loan that is delinquent more than 89 days and still accruing interest. • Any loan which has been modified such that it meets the definition of a Troubled Debt Restructuring (TDR). Prior to December 31, 2015, all loans subject to impairment recognition were individually evaluated for impairment. Effective December 31, 2015, the Company’s policy for impaired loan accounting subjects all loans to impairment recognition; however, loan relationships with unguaranteed credit exposure of less than $100,000 are generally not evaluated on an individual basis for impairment and instead are evaluated collectively using a methodology based on historical specific reserves on similar sized loans. Any loan not meeting the above criteria and determined to be impaired is subjected to an impairment analysis, which is a calculation of the probable loss on the loan. This portion is the loan’s “impairment,” and is established as a specific reserve against the loan, or charged against the ALL. This revision to the allowance methodology did not have a material impact on the allowance recorded at December 31, 2015. Individual specific reserve amounts imply probability of loss and may not be carried in the reserve indefinitely. When the amount of the actual loss becomes reasonably quantifiable, the amount of the loss is charged off against the ALL, whether or not all liquidation and recovery efforts have been completed. If the total amount of the individual specific reserve that will eventually be charged off cannot yet be sufficiently quantified but some portion of the impairment can be viewed as a confirmed loss, then the confirmed loss portion should be charged off against the ALL and the individual specific reserve reduced by a corresponding amount. For impaired loans, the reserve amount is calculated on a loan-specific basis. The Company utilizes two methods of analyzing impaired loans not guaranteed by the SBA: • The Fair Market Value of Collateral method utilizes the value at which the collateral could be sold considering the appraised value, appraisal discount rate, prior liens and selling costs. The amount of the reserve is the deficit of the estimated collateral value compared to the loan balance. • The Present Value of Future Cash Flows method takes into account the amount and timing of cash flows and the effective interest rate used to discount the cash flows. The following table details activity in the allowance for loan losses by portfolio segment allowance for the periods presented: Three months ended: Construction & Development Commercial Real Estate Commercial & Industrial Commercial Land Total June 30, 2016 Beginning Balance $ 1,163 $ 2,575 $ 3,345 $ 1,533 $ 8,616 Charge offs — — (100 ) (63 ) (163 ) Recoveries — 3 400 — 403 Provision 45 1,501 1,956 (49 ) 3,453 Ending Balance $ 1,208 $ 4,079 $ 5,601 $ 1,421 $ 12,309 June 30, 2015 Beginning Balance $ 755 $ 2,062 $ 2,063 $ 354 $ 5,234 Charge offs — (42 ) (186 ) — (228 ) Recoveries — 87 40 — 127 Provision 89 239 (264 ) (14 ) 50 Ending Balance $ 844 $ 2,346 $ 1,653 $ 340 $ 5,183 Six months ended: Construction & Commercial Commercial Commercial Total June 30, 2016 Beginning Balance $ 1,064 $ 2,486 $ 2,766 $ 1,099 $ 7,415 Charge offs — (7 ) (368 ) (63 ) (438 ) Recoveries — 3 443 — 446 Provision 144 1,597 2,760 385 4,886 Ending Balance $ 1,208 $ 4,079 $ 5,601 $ 1,421 $ 12,309 June 30, 2015 Beginning Balance $ 586 $ 2,291 $ 1,369 $ 161 $ 4,407 Charge offs — (121 ) (358 ) — (479 ) Recoveries — 88 40 — 128 Provision 258 88 602 179 1,127 Ending Balance $ 844 $ 2,346 $ 1,653 $ 340 $ 5,183 The following tables detail the recorded allowance for loan losses and the investment in loans related to each portfolio segment, disaggregated on the basis of impairment evaluation methodology: June 30, 2016 Construction & Development Commercial Real Estate Commercial & Industrial Commercial Land Total Allowance for Loan Losses: Loans individually evaluated for impairment $ — $ 874 $ 996 $ — $ 1,870 Loans collectively evaluated for impairment 2 1,208 3,205 4,605 1,421 10,439 Total allowance for loan losses $ 1,208 $ 4,079 $ 5,601 $ 1,421 $ 12,309 Loans receivable 1 : Loans individually evaluated for impairment $ — $ 11,536 $ 3,320 $ — $ 14,856 Loans collectively evaluated for impairment 2 85,852 274,782 241,358 72,643 674,635 Total loans receivable $ 85,852 $ 286,318 $ 244,678 $ 72,643 $ 689,491 December 31, 2015 Construction & Development Commercial Real Estate Commercial & Industrial Commercial Land Total Allowance for Loan Losses: Loans individually evaluated for impairment $ — $ 1,090 $ 672 $ — $ 1,762 Loans collectively evaluated for impairment 2 1,064 1,396 2,094 1,099 5,653 Total allowance for loan losses $ 1,064 $ 2,486 $ 2,766 $ 1,099 $ 7,415 Loans receivable 1 : Loans individually evaluated for impairment $ — $ 9,821 $ 3,226 $ — $ 13,047 Loans collectively evaluated for impairment 2 24,322 124,910 101,631 16,036 266,899 Total loans receivable $ 24,322 $ 134,731 $ 104,857 $ 16,036 $ 279,946 1 Loans receivable includes $ 28.5 million of U.S. government guaranteed loans as of June 30, 2016 , of which $ 13.3 million are impaired. As of December 31, 2015 , loans receivable includes $ 17.2 million of U.S. government guaranteed loans, of which $ 14.1 million are considered impaired. 2 Included in loans collectively evaluated for impairment are impaired loans with individual unguaranteed exposure of less than $100 thousand. As of June 30, 2016 , these balances totaled $ 9.3 million , of which $ 7.4 million are guaranteed by the U.S. government and $ 1.9 million are unguaranteed. As of December 31, 2015 , these balances totaled $ 8.6 million , of which $ 7.5 million are guaranteed by the U.S. government and $ 1.1 million are unguaranteed. The allowance for loan losses associated with these loans totaled $ 589 thousand and $ 352 thousand as of June 30, 2016 and December 31, 2015 , respectively. Loans classified as impaired as of the dates presented are summarized in the following tables. June 30, 2016 Recorded Investment Guaranteed Balance Unguaranteed Exposure Commercial & Industrial Death Care Management $ 9 $ — $ 9 Healthcare 4,405 2,463 1,942 Independent Pharmacies 1,918 870 1,048 Registered Investment Advisors 376 — 376 Veterinary Industry 2,553 1,829 724 Total 9,261 5,162 4,099 Commercial Real Estate Death Care Management 1,582 1,264 318 Healthcare 1,032 306 726 Veterinary Industry 12,130 6,480 5,650 Total 14,744 8,050 6,694 Commercial Land Agriculture 117 117 — Total 117 117 — Total $ 24,122 $ 13,329 $ 10,793 December 31, 2015 Recorded Investment Guaranteed Balance Unguaranteed Exposure Commercial & Industrial Healthcare $ 4,442 $ 3,341 $ 1,101 Independent Pharmacies 1,546 637 909 Veterinary Industry 2,256 1,731 525 Total 8,244 5,709 2,535 Commercial Real Estate Death Care Management 1,454 1,290 164 Healthcare 965 799 166 Veterinary Industry 11,003 6,349 4,654 Total 13,422 8,438 4,984 Total $ 21,666 $ 14,147 $ 7,519 The following table presents evaluated balances of loans classified as impaired at the dates presented that carried an associated reserve as compared to those with no reserve. The recorded investment includes accrued interest and net deferred loan fees or costs. June 30, 2016 Recorded Investment With a Recorded Allowance With No Recorded Allowance Total Unpaid Principal Balance Related Allowance Recorded Commercial & Industrial Death Care Management $ 9 $ — $ 9 $ 9 $ 3 Healthcare 4,139 266 4,405 4,461 671 Independent Pharmacies 1,737 181 1,918 2,012 338 Registered Investment Advisors 376 — 376 373 44 Veterinary Industry 2,553 — 2,553 2,934 285 Total 8,814 447 9,261 9,789 1,341 Commercial Real Estate Death Care Management 1,582 — 1,582 1,718 54 Healthcare 903 129 1,032 1,033 142 Veterinary Industry 9,319 2,811 12,130 12,886 921 Total 11,804 2,940 14,744 15,637 1,117 Commercial Land Agriculture 117 — 117 180 1 Total 117 — 117 180 1 Total Impaired Loans $ 20,735 $ 3,387 $ 24,122 $ 25,606 $ 2,459 December 31, 2015 Recorded Investment With a Recorded Allowance With No Recorded Allowance Total Unpaid Principal Balance Related Allowance Recorded Commercial & Industrial Healthcare $ 4,242 $ 200 $ 4,442 $ 4,742 $ 478 Independent Pharmacies 1,199 347 1,546 2,041 287 Veterinary Industry 2,051 205 2,256 3,270 138 Total 7,492 752 8,244 10,053 903 Commercial Real Estate Death Care Management 1,454 — 1,454 1,591 9 Healthcare 965 — 965 1,096 96 Veterinary Industry 9,265 1,738 11,003 11,856 1,106 Total 11,684 1,738 13,422 14,543 1,211 Total Impaired Loans $ 19,176 $ 2,490 $ 21,666 $ 24,596 $ 2,114 Three months ended Three months ended Average Interest Average Interest Commercial & Industrial Death Care Management $ 9 $ — $ — $ — Healthcare 4,440 21 3,320 25 Independent Pharmacies 1,935 17 3,751 13 Registered Investment Advisors 379 5 — — Veterinary Industry 2,640 9 2,864 5 Total 9,403 52 9,935 43 Commercial Real Estate Death Care Management 1,582 2 1,418 — Healthcare 1,038 7 2,502 — Veterinary Industry 12,189 84 13,530 51 Total 14,809 93 17,450 51 Commercial Land Agriculture 335 — — — Total 335 — — — Total $ 24,547 $ 145 $ 27,385 $ 94 Six months ended Six months ended Average Interest Average Interest Commercial & Industrial Death Care Management $ 9 $ — $ — $ — Healthcare 4,721 32 3,534 48 Independent Pharmacies 1,907 33 2,784 25 Registered Investment Advisors 381 7 — — Veterinary Industry 2,675 16 3,334 8 Total 9,693 88 9,652 81 Commercial Real Estate Death Care Management 1,588 3 1,475 — Healthcare 1,055 9 2,319 — Veterinary Industry 12,319 159 12,668 90 Total 14,962 171 16,462 90 Commercial Land Agriculture 429 — — — Total 429 — — — Total $ 25,084 $ 259 $ 26,114 $ 171 There were no new TDRs made during the three months ended June 30, 2016 and 2015 . The following table present the types of TDRs that were made during the six months ended June 30, 2016 and 2015 : Six months ended June 30, 2016 Six months ended June 30, 2015 All Restructurings All Restructurings Number of Pre- Post- Number of Pre- Post- Interest Only Commercial & Industrial Healthcare — $ — $ — 3 $ 229 $ 133 Commercial Real Estate Healthcare — — — 1 41 24 Total Interest Only — — — 4 270 157 Payment Deferral Commercial & Industrial Veterinary Industry 1 420 420 — — — Total Payment Deferral 1 420 420 — — — Total 1 $ 420 $ 420 4 $ 270 $ 157 Concessions made to improve a loan’s performance have varying degrees of success. The following table presents loans that were modified as TDRs within the previous twelve months ending June 30, 2016 and 2015 for which there was a payment default: June 30, 2016 June 30, 2015 TDR Defaults TDR Defaults Number of Restructurings Recorded Investment Number of Restructurings Recorded Investment Interest Only Commercial & Industrial Healthcare — $ — 3 $ 133 Independent Pharmacies — — 1 139 Commercial Real Estate Healthcare — — 1 24 Veterinary Industry — — 1 — Total Interest Only — — 6 296 Payment Deferral Commercial & Industrial Veterinary Industry 1 313 — — Commercial Real Estate Deathcare Management — — 1 1,675 Total Payment Deferral 1 313 1 1,675 Total 1 $ 313 7 $ 1,971 |
