| Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses | Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses Loan and lease receivables consist of the following: March 31, December 31, (In Thousands) Commercial real estate Commercial real estate — owner occupied $ 174,286 $ 176,322 Commercial real estate — non-owner occupied 441,539 436,901 Construction and land development 179,778 160,404 Multi-family 84,004 80,254 1-4 family (1) 52,620 51,607 Total commercial real estate 932,227 905,488 Commercial and industrial (2) 461,573 473,592 Direct financing leases, net 31,617 31,093 Consumer and other Home equity and second mortgages 7,366 8,237 Other 18,510 16,319 Total consumer and other 25,876 24,556 Total gross loans and leases receivable 1,451,293 1,434,729 Less: Allowance for loan and lease losses 16,684 16,316 Deferred loan fees 1,010 1,062 Loans and leases receivable, net $ 1,433,599 $ 1,417,351 (1) Includes residential real estate loans held for sale totaling $1.7 million as of March 31, 2016 and $1.3 million as of December 31, 2015. (2) Includes guaranteed portion of SBA loans held for sale totaling $1.4 million as of December 31, 2015. No guaranteed portion of SBA loans were held for sale as of March 31, 2016. Loans transferred to third parties consist of the guaranteed portion of SBA loans as well as participation interests in other originated loans. The total principal amount of loans transferred during the three months ended March 31, 2016 and 2015 was $18.1 million and $15.8 million , respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, including the requirements specific to loan participations, and therefore all of the loans transferred during the three months ended March 31, 2016 and December 31, 2015 have been derecognized in the unaudited Consolidated Financial Statements. The Corporation has a continuing involvement in each of the agreements by way of relationship management and servicing the loans; however, there are no further obligations to the third-party participant required of the Corporation, other than standard representations and warranties related to sold amounts, that would preclude the application of sale accounting treatment. The guaranteed portion of SBA loans were transferred at their fair value and the related gain was recognized upon the transfer as non-interest income in the unaudited Consolidated Financial Statements. No gain or loss was recognized on participation interests in other originated loans as they were transferred at or near the date of loan origination and the payments received for servicing the portion of the loans participated represents adequate compensation. The total amount of loan participations purchased on the Corporation’s Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 was $463,000 and $467,000 , respectively. The total amount of outstanding loans transferred to third parties as loan participations sold at March 31, 2016 and December 31, 2015 was $181.6 million and $169.2 million , respectively, all of which was treated as a sale and derecognized under the applicable accounting guidance at the time of the transfers of the financial assets. The Corporation’s continuing involvement with these loans is by way of partial ownership, relationship management and all servicing responsibilities; however, there are no further obligations of the Corporation, other than standard representations and warranties to the sold amount, that would preclude the application of sale accounting treatment. As of March 31, 2016 and December 31, 2015 , the total amount of the Corporation’s partial ownership of loans on the Corporation’s Consolidated Balance Sheets was $139.6 million and $136.8 million , respectively. As of March 31, 2016 , $1.6 million loans in this participation sold portfolio were considered impaired as compared to $1.8 million as of December 31, 2015 . The Corporation does not share in the participant’s portion of the charge-offs. The Corporation sells residential real estate loans, servicing released, in the secondary market. The total principal amount of residential real estate loans sold during the three months ended March 31, 2016 and March 31, 2015 was $7.2 million and $9.1 million , respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three months ended March 31, 2016 have been derecognized in the unaudited Consolidated Financial Statements. The Corporation has a continuing involvement in each of the transactions, including by way of relationship management and standard representations and warranties related to the sold amount; however, there are no further obligations of the Corporation that would would preclude the application of sale accounting treatment. The loans were transferred at their fair value and the related gain was recognized as non-interest income upon the transfer in the unaudited Consolidated Financial Statements. According to ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer , purchased credit-impaired loans exhibit evidence of deterioration in credit quality since origination for which it is probable at acquisition that the Corporation will be unable to collect all contractually required payments. Purchased credit-impaired loans are initially recorded at fair value, which is estimated by discounting the cash flows expected to be collected at the acquisition date. Because the estimate of expected cash flows reflects an estimate of future credit losses expected to be incurred over the life of the loans, an allowance for credit losses is not recorded at the acquisition date. The excess of cash flows expected at acquisition over the estimated fair value, referred to as the accretable yield, is recognized in interest income over the remaining life of the loan on a level-yield basis, contingent on the subsequent evaluation of future expected cash flows. The difference between the contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. A subsequent decrease in the estimate of cash flows expected to be received on purchased credit-impaired loans generally results in the recognition of an allowance for credit losses. Subsequent increases in cash flows result in reversal of any nonaccretable difference (or allowance for loan and lease losses to the extent any has been recorded) with a positive impact on interest income recognized. The measurement of cash flows involves assumptions and judgments for interest rates, prepayments, default rates, loss severity, and collateral values. All of these factors are inherently subjective and significant changes in the cash flow estimates over the life of the loan can result. The following table reflects the contractually required payments receivable and fair value of the Corporation’s purchased credit impaired loans as of March 31, 2016 and December 31, 2015 : March 31, December 31, (In Thousands) Contractually required payments $ 5,166 $ 5,291 Fair value of purchased credit impaired loans $ 3,160 $ 3,250 The following table presents a rollforward of the Corporation’s accretable yield as of March 31, 2016 and December 31, 2015 : As of and for the Three Months Ended March 31, 2016 As of and for the Year Ended December 31, 2015 (In Thousands) Accretable yield, beginning of period $ 414 $ 676 Accretion recognized in earnings (33 ) (50 ) Reclassification to nonaccretable difference for loans with changing cash flows (1) (9 ) (60 ) Changes in accretable yield for non-credit related changes in expected cash flows (2) 9 (152 ) Accretable yield, end of period $ 381 $ 414 (1) Represents changes in accretable yield for those loans that are driven primarily by credit performance. (2) Represents changes in accretable yield for those loans that are driven primarily by changes in actual and estimated payments. The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of March 31, 2016 and December 31, 2015 : Category As of March 31, 2016 I II III IV Total (Dollars in Thousands) Commercial real estate: Commercial real estate — owner occupied $ 144,146 $ 14,184 $ 13,070 $ 2,886 $ 174,286 Commercial real estate — non-owner occupied 406,493 28,185 5,962 899 441,539 Construction and land development 165,735 6,215 3,127 4,701 179,778 Multi-family 83,487 517 — — 84,004 1-4 family (1) 43,432 4,104 1,786 3,298 52,620 Total commercial real estate 843,293 53,205 23,945 11,784 932,227 Commercial and industrial 384,103 27,028 43,721 6,721 461,573 Direct financing leases, net 30,195 964 458 — 31,617 Consumer and other: Home equity and second mortgages 6,118 766 139 343 7,366 Other 17,846 23 — 641 18,510 Total consumer and other 23,964 789 139 984 25,876 Total gross loans and leases receivable $ 1,281,555 $ 81,986 $ 68,263 $ 19,489 $ 1,451,293 Category as a % of total portfolio 88.31 % 5.65 % 4.70 % 1.34 % 100.00 % (1) Includes residential real estate loans held for sale totaling $1.7 million in Category I. Category As of December 31, 2015 I II III IV Total (Dollars in Thousands) Commercial real estate: Commercial real estate — owner occupied $ 156,379 $ 7,654 $ 9,311 $ 2,978 $ 176,322 Commercial real estate — non-owner occupied 410,517 20,662 3,408 2,314 436,901 Construction and land development 151,508 3,092 874 4,930 160,404 Multi-family 79,368 884 — 2 80,254 1-4 family (1) 42,389 3,985 1,865 3,368 51,607 Total commercial real estate 840,161 36,277 15,458 13,592 905,488 Commercial and industrial (2) 431,598 7,139 25,706 9,149 473,592 Direct financing leases, net 29,514 1,013 528 38 31,093 Consumer and other: Home equity and second mortgages 7,497 — 141 599 8,237 Other 15,616 48 — 655 16,319 Total consumer and other 23,113 48 141 1,254 24,556 Total gross loans and leases receivable $ 1,324,386 $ 44,477 $ 41,833 $ 24,033 $ 1,434,729 Category as a % of total portfolio 92.30 % 3.10 % 2.92 % 1.68 % 100.00 % (1) Includes residential real estate loans held for sale totaling $1.3 million in Category I. (2) Includes guaranteed portion of SBA loans held for sale totaling $1.4 million in Category I. Credit underwriting through a committee process is a key component of the Corporation’s operating philosophy. Business development officers have relatively low individual lending authority limits, and thus a significant portion of the Corporation’s new credit extensions require approval from a loan approval committee regardless of the type of loan or lease, asset quality grade of the credit, amount of the credit, or the related complexities of each proposal. Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from the Corporation’s borrowers, or as other circumstances dictate. The Corporation uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition, and are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. In addition to its nine grade risk rating system, the Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management. Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrower’s management team or the industry in which the borrower operates. Loans and leases in this category are not subject to additional monitoring procedures above and beyond what is required at the origination or renewal of the loan or lease. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of its personal relationships with such borrowers and continued review of such borrowers’ compliance with the terms of their respective agreements. Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends and collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by subcommittees of the Banks’ loan committees. Category III — Loans and leases in this category are identified by management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Banks. Category III loans and leases generally exhibit undesirable characteristics such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all contractual principal and interest in accordance with the original terms of the contracts relating to the loans and leases in this category, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored by management and loan committees of the Banks on a monthly basis and the Banks’ Boards of Directors at each of their regularly scheduled meetings. Category IV — Loans and leases in this category are considered to be impaired. Impaired loans and leases have been placed on non-accrual as management has determined that it is unlikely that the Banks will receive the contractual principal and interest in accordance with the contractual terms of the agreement. Impaired loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually for impaired loans and leases. External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded to reflect the magnitude of the impairment. Loans and leases in this category are monitored by management and loan committees of the Banks on a monthly basis and the Banks’ Boards of Directors at each of their regularly scheduled meetings. Utilizing regulatory classification terminology, the Corporation identified $33.9 million and $26.8 million of loans and leases as Substandard as of March 31, 2016 and December 31, 2015 , respectively. No loans were considered Special Mention, Doubtful or Loss as of either March 31, 2016 or December 31, 2015 . The population of Substandard loans are a subset of Category III and Category IV loans. The delinquency aging of the loan and lease portfolio by class of receivable as of March 31, 2016 and December 31, 2015 is as follows: As of March 31, 2016 30-59 60-89 Greater Total past due Current Total loans (Dollars in Thousands) Accruing loans and leases Commercial real estate: Owner occupied $ — $ — $ — $ — $ 171,469 $ 171,469 Non-owner occupied 234 354 — 588 440,689 441,277 Construction and land development 312 1,063 — 1,375 173,901 175,276 Multi-family — — — — 84,004 84,004 1-4 family — — — — 49,989 49,989 Commercial and industrial — — — — 454,855 454,855 Direct financing leases, net — — — — 31,617 31,617 Consumer and other: Home equity and second mortgages — — — — 7,076 7,076 Other — — — — 17,869 17,869 Total 546 1,417 — 1,963 1,431,469 1,433,432 Non-accruing loans and leases Commercial real estate: Owner occupied $ 465 $ — $ — $ 465 $ 2,352 $ 2,817 Non-owner occupied — — — — 262 262 Construction and land development — — 391 391 4,111 4,502 Multi-family — — — — — — 1-4 family — 741 945 1,686 945 2,631 Commercial and industrial — — 792 792 5,926 6,718 Direct financing leases, net — — — — — — Consumer and other: Home equity and second mortgages — — — — 290 290 Other — — 641 641 — 641 Total 465 741 2,769 3,975 13,886 17,861 Total loans and leases Commercial real estate: Owner occupied $ 465 $ — $ — $ 465 $ 173,821 $ 174,286 Non-owner occupied 234 354 — 588 440,951 441,539 Construction and land development 312 1,063 391 1,766 178,012 179,778 Multi-family — — — — 84,004 84,004 1-4 family — 741 945 1,686 50,934 52,620 Commercial and industrial — — 792 792 460,781 461,573 Direct financing leases, net — — — — 31,617 31,617 Consumer and other: Home equity and second mortgages — — — — 7,366 7,366 Other — — 641 641 17,869 18,510 Total $ 1,011 $ 2,158 $ 2,769 $ 5,938 $ 1,445,355 $ 1,451,293 Percent of portfolio 0.07 % 0.15 % 0.19 % 0.41 % 99.59 % 100.00 % As of December 31, 2015 30-59 60-89 Greater Total past due Current Total loans (Dollars in Thousands) Accruing loans and leases Commercial real estate: Owner occupied $ — $ — $ — $ — $ 173,416 $ 173,416 Non-owner occupied — — — — 435,222 435,222 Construction and land development — — — — 155,675 155,675 Multi-family — — — — 80,252 80,252 1-4 family 78 — — 78 48,918 48,996 Commercial and industrial — — — — 464,456 464,456 Direct financing leases, net — — — — 31,055 31,055 Consumer and other: Home equity and second mortgages — — — — 7,695 7,695 Other — — — — 15,664 15,664 Total 78 — — 78 1,412,353 1,412,431 Non-accruing loans and leases Commercial real estate: Owner occupied $ — $ 473 $ — $ 473 $ 2,434 $ 2,907 Non-owner occupied — — — — 1,678 1,678 Construction and land development 397 — — 397 4,332 4,729 Multi-family — — — — 2 2 1-4 family 430 34 895 1,359 1,252 2,611 Commercial and industrial 2,077 — 564 2,641 6,495 9,136 Direct financing leases, net — — — — 38 38 Consumer and other: Home equity and second mortgages — — 250 250 292 542 Other — — 655 655 — 655 Total 2,904 507 2,364 5,775 16,523 22,298 Total loans and leases Commercial real estate: Owner occupied $ — $ 473 $ — $ 473 $ 175,850 $ 176,323 Non-owner occupied — — — — 436,900 436,900 Construction and land development 397 — — 397 160,007 160,404 Multi-family — — — — 80,254 80,254 1-4 family 508 34 895 1,437 50,170 51,607 Commercial and industrial 2,077 — 564 2,641 470,951 473,592 Direct financing leases, net — — — — 31,093 31,093 Consumer and other: Home equity and second mortgages — — 250 250 7,987 8,237 Other — — 655 655 15,664 16,319 Total $ 2,982 $ 507 $ 2,364 $ 5,853 $ 1,428,876 $ 1,434,729 Percent of portfolio 0.21 % 0.04 % 0.16 % 0.41 % 99.59 % 100.00 % The Corporation’s total impaired assets consisted of the following at March 31, 2016 and December 31, 2015 , respectively. March 31, December 31, (Dollars in Thousands) Non-accrual loans and leases Commercial real estate: Commercial real estate — owner occupied $ 2,817 $ 2,907 Commercial real estate — non-owner occupied 262 1,678 Construction and land development 4,502 4,729 Multi-family — 2 1-4 family 2,631 2,611 Total non-accrual commercial real estate 10,212 11,927 Commercial and industrial 6,718 9,136 Direct financing leases, net — 38 Consumer and other: Home equity and second mortgages 290 542 Other 641 655 Total non-accrual consumer and other loans 931 1,197 Total non-accrual loans and leases 17,861 22,298 Foreclosed properties, net 1,677 1,677 Total non-performing assets 19,538 23,975 Performing troubled debt restructurings 1,628 1,735 Total impaired assets $ 21,166 $ 25,710 March 31, December 31, Total non-accrual loans and leases to gross loans and leases 1.23 % 1.55 % Total non-performing assets to total gross loans and leases plus foreclosed properties, net 1.34 1.67 Total non-performing assets to total assets 1.09 1.35 Allowance for loan and lease losses to gross loans and leases 1.15 1.14 Allowance for loan and lease losses to non-accrual loans and leases 93.41 73.17 As of March 31, 2016 and December 31, 2015 , $14.0 million and $16.2 million of the non-accrual loans were considered troubled debt restructurings, respectively. As of March 31, 2016 , there were no unfunded commitments associated with troubled debt restructured loans and leases. As of March 31, 2016 As of December 31, 2015 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment (Dollars in Thousands) Troubled debt restructurings: Commercial real estate Commercial real estate — owner occupied 3 $ 1,209 $ 1,163 3 $ 1,209 $ 1,188 Commercial real estate — non-owner occupied 5 1,150 899 5 1,150 904 Construction and land development 3 6,034 4,351 3 6,034 4,593 Multi-family — — — 1 184 2 1-4 family 15 2,035 1,840 15 2,035 1,869 Commercial and industrial 11 7,973 6,392 10 7,572 8,330 Consumer and other: Home equity and second mortgages 4 461 343 4 461 349 Other 1 2,076 641 1 2,076 655 Total 42 $ 20,938 $ 15,629 42 $ 20,721 $ 17,890 All loans and leases modified as a troubled debt restructuring are evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a default, is considered in the determination of an appropriate level of the allowance for loan and lease losses. As of March 31, 2016 and December 31, 2015 , the Corporation’s troubled debt restructurings grouped by type of concession were as follows: As of March 31, 2016 As of December 31, 2015 Number of Loans Recorded Investment Number of Loans Recorded Investment (Dollars in Thousands) Commercial real estate Extension of term 1 $ 20 1 $ 24 Interest rate concession 1 54 1 55 Combination of extension and interest rate concession 24 8,179 25 8,477 Commercial and industrial Combination of extension and interest rate concession 11 6,392 10 8,330 Consumer and other Extension of term 1 641 1 655 Combination of extension and interest rate concession 4 343 4 349 Total 42 $ 15,629 42 $ 17,890 There were no loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the three months ended March 31, 2016 . The following represents additional information regarding the Corporation’s impaired loans and leases by class: Impaired Loans and Leases As of and for the Three Months Ended March 31, 2016 Recorded investment Unpaid principal balance Impairment reserve Average recorded investment (1) Foregone interest income Interest income recognized Net foregone interest income (In Thousands) With no impairment reserve recorded: Commercial real estate: Owner occupied $ 2,255 $ 2,255 $ — $ 2,140 $ 35 $ — $ 35 Non-owner occupied 899 939 — 1,843 6 — 6 Construction and land development 4,701 7,372 — 4,935 34 — 34 Multi-family — — — 1 1 134 (133 ) 1-4 family 2,442 2,504 — 2,658 30 — 30 Commercial and industrial 481 481 — 106 22 18 4 Direct financing leases, net — — — 23 — — — Consumer and other: Home equity and second mortgages 244 244 — 493 2 — 2 Other 641 1,307 — 649 20 — 20 Total 11,663 15,102 — 12,848 150 152 (2 ) With impairment reserve recorded: Commercial real estate: Owner occupied $ 631 $ 631 $ 18 $ 628 $ 9 $ — $ 9 Non-owner occupied — — — — — — — Construction and land development — — — — — — — Multi-family — — — — — — — 1-4 family 856 862 126 851 7 — 7 Commercial and industrial 6,240 6,240 730 6,224 143 — 143 Direct financing leases, net — — — — — — — Consumer and other: Home equity and second mortgages 99 99 23 98 2 — 2 Other — — — — — — — Total 7,826 7,832 897 7,801 161 — 161 Total: Commercial real estate: Owner occupied $ 2,886 $ 2,886 $ 18 $ 2,768 $ 44 $ — $ 44 Non-owner occupied 899 939 — 1,843 6 — 6 Construction and land development 4,701 7,372 — 4,935 34 — 34 Multi-family — — — 1 1 134 (133 ) 1-4 family 3,298 3,366 126 3,509 37 — 37 Commercial and industrial 6,721 6,721 730 6,330 165 18 147 Direct financing leases, net — — — 23 — — — Consumer and other: Home equity and second mortgages 343 343 23 591 4 — 4 Other 641 1,307 — 649 20 — 20 Grand total $ 19,489 $ 22,934 $ 897 $ 20,649 $ 311 $ 152 $ 159 (1) Average recorded investment is calculated primarily using daily average balances. Impaired Loans and Leases As of and for the Year Ended December 31, 2015 Recorded Unpaid Impairment Average (1) Foregone Interest Net (In Thousands) With no impairment reserve recorded: Commercial real estate: Owner occupied $ 2,164 $ 2,164 $ — $ 712 $ 53 $ 12 $ 41 Non-owner occupied 2,314 2,355 — 962 25 — 25 Construction and land development 4,533 7,203 — 4,807 133 — 133 Multi-family 2 369 — 10 27 — 27 1-4 family 2,423 2,486 — 1,604 82 4 78 Commercial and industrial 2,546 2,590 — 544 172 6 166 Direct financing leases, net 38 38 — 4 — — — Consumer and other: Home equity and second mortgages 500 500 — 390 23 63 (40 ) Other 655 1,321 — 688 82 — 82 Total 15,175 19,026 — 9,721 597 85 512 With impairment reserve recorded: Commercial real estate: Owner occupied $ 814 $ 814 $ 20 $ 215 $ 7 $ 2 $ 5 Non-owner occupied — — — — — — — Construction and land development 397 397 48 34 — — — Multi-family — — — — — — — 1-4 family 945 950 173 605 34 — 34 Commercial and industrial 6,603 6,603 847 810 102 — 102 Direct financing leases, net — — — — — — — Consumer and other: Home equity and second mortgages 99 99 25 58 10 — 10 Other — — — — — — — Total 8,858 8,863 1,113 1,722 153 2 151 Total: Commercial real estate: Owner occupied $ 2,978 $ 2,978 $ 20 $ 927 $ 60 $ 14 $ 46 Non-owner occupied 2,314 2,355 — 962 25 — 25 Construction and land development 4,930 7,600 48 4,841 133 — 133 Multi-family 2 369 — 10 27 — 27 1-4 family 3,368 3,436 173 2,209 116 4 112 Commercial and industrial 9,149 9,193 847 1,354 274 6 268 Direct financing leases, net 38 38 — 4 — — — Consumer and other: Home equity and second mortgages 599 599 25 448 33 63 (30 ) Other 655 1,321 — 688 82 — 82 Grand total $ 24,033 $ 27,889 $ 1,113 $ 11,443 $ 750 $ 87 $ 663 (1) Average recorded investment is calculated primarily using daily average balances. The difference between the loans and leases recorded investment and the unpaid principal balance of $3.4 million and $3.9 million as of March 31, 2016 and December 31, 2015 represents partial charge-offs resulting from confirmed losses due to the value of the collateral securing the loans and leases being below the carrying values of the loans and leases. Impaired loans and leases also included $1.6 million and $1.7 million of loans as of March 31, 2016 and December 31, 2015 that were performing troubled debt restructurings, and thus, while not on non-accrual, were reported as impaired, due to the concession in terms. When a loan is placed on non-accrual, interest accrual is discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to principal. Foregone interest represents the interest that was contractually due on the note but not received or recorded. To the extent the amount of principal on a non-accrual note is fully collected and additional cash is received, the Corporation will recognize interest income. To determine the level and composition of the allowance for loan and lease losses, the Corporation breaks out the portfolio by segments and risk ratings. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance. A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows: As of and for the Three Months Ended March 31, 2016 Commercial real estate Commercial and industrial loans and leases Consumer and other Total (Dollars in Thousands) Allowance for credit losses: Beginning balance $ 11,220 $ 4,387 $ 709 $ 16,316 Charge-offs (41 ) (196 ) (7 ) (244 ) Recoveries 84 — 3 87 Provision 217 297 11 525 Ending balance $ 11,480 $ 4,488 $ 716 $ 16,684 Ending balance: individually evaluated for impairment $ 144 $ 730 $ 23 $ 897 Ending balance: collectively evaluated for impairment $ 11,336 $ 3,758 $ 693 $ 15,787 Ending balance: loans acquired with deteriorated credit quality $ — $ — $ — $ — Loans and lease receivables: Ending balance, gross $ 932,227 $ 493,190 $ 25,876 $ 1,451,293 Ending balance: individually evaluated for impairment $ 9,106 $ 6,481 $ 793 $ 16,380 Ending balance: collectively evaluated for impairment $ 920,443 $ 486,468 $ 24,892 $ 1,431,803 Ending balance: loans acquired with deteriorated credit quality $ 2,678 $ 241 $ 191 $ 3,110 Allowance as % of gross loans 1.23 % 0.91 % 2.77 % 1.15 % As of and for the Year Ended December 31, 2015 Commercial real estate Commercial and industrial loans and leases Consumer and other Total (Dollars in Thousands) Allowance for credit losses: Beginning balance $ 8,619 $ 5,492 $ 218 $ 14,329 Charge-offs (793 ) (711 ) (9 ) (1,513 ) Recoveries 104 6 4 114 Provision 3,290 (400 ) 496 3,386 Ending balance $ 11,220 $ 4,387 $ 709 $ 16,316 Ending balance: individually evaluated for impairment $ 240 $ 847 $ 26 $ 1,113 Ending balance: collectively evaluated for impairment $ 10,980 $ 3,540 $ 683 $ 15,203 Ending balance: loans acquired with deteriorated credit quality $ — $ — $ — $ — Loans and lease receivables: Ending balance, gross $ 905,488 $ 504,685 $ 24,556 $ 1,434,729 Ending balance: individually evaluated for impairment $ 10,849 $ 8,942 $ 1,061 $ 20,852 Ending balance: collectively evaluated for impairment $ 891,897 $ 495,497 $ 23,495 $ 1,410,889 Ending balance: loans acquired with deteriorated credit quality $ 2,742 $ 246 $ 193 $ 3,181 Allowance as % of gross loans 1.24 % 0.87 % 2.89 % 1.14 % |
