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: September 30, December 31, (In Thousands) Commercial real estate: Commercial real estate — owner occupied $ 182,755 $ 176,459 Commercial real estate — non-owner occupied 461,586 473,158 Land development 41,499 56,638 Construction 115,660 101,206 Multi-family 125,080 92,762 1-4 family 40,173 45,651 Total commercial real estate 966,753 945,874 Commercial and industrial 447,223 450,298 Direct financing leases, net 28,868 30,951 Consumer and other: Home equity and second mortgages 7,776 8,412 Other 17,447 16,329 Total consumer and other 25,223 24,741 Total gross loans and leases receivable 1,468,067 1,451,864 Less: Allowance for loan and lease losses 19,923 20,912 Deferred loan fees 1,354 1,189 Loans and leases receivable, net $ 1,446,790 $ 1,429,763 As of September 30, 2017 and December 31, 2016 , the total amount of the Corporation’s ownership of SBA loans on the unaudited Consolidated Balance Sheets comprised of the following: September 30, December 31, (In Thousands) Retained, unguaranteed portion of sold SBA loans $ 30,632 $ 30,418 Other SBA loans (1) 25,684 31,728 Total SBA loans $ 56,316 $ 62,146 (1) Primarily consisted of SBA Express loans, partially funded 7(a) program loans, and impaired SBA loans that were repurchased from the secondary market, all of which were not saleable as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017 and December 31, 2016 , $11.9 million and $5.5 million of loans in this portfolio were considered impaired, respectively. Loans transferred to third parties consist of the guaranteed portion of SBA loans which the Corporation sold in the secondary market, participation interests in other originated loans and residential real estate loans. The total principal amount of the guaranteed portion of SBA loans sold during the three months ended September 30, 2017 and 2016 was $6.3 million and $3.3 million , respectively. The total principal amount of the guaranteed portion of SBA loans sold during the nine months ended September 30, 2017 and 2016 was $15.5 million and $36.4 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 and nine months ended September 30, 2017 and 2016 have been derecognized in the unaudited Consolidated Financial Statements. 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. The total outstanding balance of sold SBA loans at September 30, 2017 and December 31, 2016 was $103.3 million and $105.1 million , respectively. The total principal amount of transferred participation interests in other originated commercial loans during the three months ended September 30, 2017 and 2016 was $9.0 million and $7.9 million , respectively. The total principal amount of transferred participation interests in other originated commercial loans during the nine months ended September 30, 2017 and 2016 was $17.0 million and $17.7 million , respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer. 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 outstanding balance of these transferred loans at September 30, 2017 and December 31, 2016 was $91.7 million and $102.7 million , respectively. As of September 30, 2017 and December 31, 2016 , the total amount of the Corporation’s partial ownership of these transferred loans on the unaudited Consolidated Balance Sheets was $146.2 million and $106.1 million , respectively. No loans in this participation portfolio were considered impaired as of September 30, 2017 and December 31, 2016 . The Corporation does not share in the participant’s portion of any potential charge-offs. The total amount of loan participations purchased on the unaudited Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 was $669,000 and $1.2 million , respectively. The Corporation also previously sold residential real estate loans, servicing released, in the secondary market. No residential real estate loans were sold during the three months ended September 30, 2017 and $8.0 million were sold during the three months ended September 30, 2016 . The total principal amount of residential real estate loans sold during the nine months ended September 30, 2017 and 2016 was $1.6 million and $15.2 million , respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred have been derecognized in the unaudited Consolidated Financial Statements. 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. The following tables illustrate 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 September 30, 2017 and December 31, 2016 : September 30, 2017 Category I II III IV Total (Dollars in Thousands) Commercial real estate: Commercial real estate — owner occupied $ 147,603 $ 19,324 $ 8,690 $ 7,138 $ 182,755 Commercial real estate — non-owner occupied 438,874 19,769 1,117 1,826 461,586 Land development 37,659 795 275 2,770 41,499 Construction 109,102 773 431 5,354 115,660 Multi-family 125,080 — — — 125,080 1-4 family 29,051 7,824 1,233 2,065 40,173 Total commercial real estate 887,369 48,485 11,746 19,153 966,753 Commercial and industrial 348,179 26,605 58,470 13,969 447,223 Direct financing leases, net 26,854 305 1,709 — 28,868 Consumer and other: Home equity and second mortgages 7,764 — 8 4 7,776 Other 17,066 — — 381 17,447 Total consumer and other 24,830 — 8 385 25,223 Total gross loans and leases receivable $ 1,287,232 $ 75,395 $ 71,933 $ 33,507 $ 1,468,067 Category as a % of total portfolio 87.68 % 5.14 % 4.90 % 2.28 % 100.00 % December 31, 2016 Category I II III IV Total (Dollars in Thousands) Commercial real estate: Commercial real estate — owner occupied $ 142,704 $ 20,294 $ 11,174 $ 2,287 $ 176,459 Commercial real estate — non-owner occupied 447,895 20,933 2,721 1,609 473,158 Land development 52,082 823 293 3,440 56,638 Construction 93,510 3,154 1,624 2,918 101,206 Multi-family 87,418 1,937 3,407 — 92,762 1-4 family 38,504 3,144 1,431 2,572 45,651 Total commercial real estate 862,113 50,285 20,650 12,826 945,874 Commercial and industrial 348,201 42,949 46,675 12,473 450,298 Direct financing leases, net 29,351 1,600 — — 30,951 Consumer and other: Home equity and second mortgages 8,271 121 12 8 8,412 Other 15,714 — 11 604 16,329 Total consumer and other 23,985 121 23 612 24,741 Total gross loans and leases receivable $ 1,263,650 $ 94,955 $ 67,348 $ 25,911 $ 1,451,864 Category as a % of total portfolio 87.04 % 6.54 % 4.64 % 1.78 % 100.00 % Credit underwriting through a committee process is a key component of the Corporation’s operating philosophy. Commercial lenders 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 borrowers’ management team or the industry in which the borrower operates. 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 or 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 Bank’s Loan Committee. 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 Bank. 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 the Bank’s Loan Committee on a monthly basis and the Bank’s Board 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 Bank will receive the contractual principal and interest in accordance with the original 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 the Bank’s Loan Committee on a monthly basis and the Bank’s Board of Directors at each of their regularly scheduled meetings. Utilizing regulatory classification terminology, the Corporation identified $36.7 million and $34.3 million of loans and leases as Substandard as of September 30, 2017 and December 31, 2016 , respectively. The Corporation identified $5.1 million of loans and leases as Doubtful as of September 30, 2017 . No loans and leases were considered Doubtful as of December 31, 2016 . Additionally, no loans were considered Special Mention, or Loss as of either September 30, 2017 or December 31, 2016 . The population of Substandard loans is a subset of Category III and Category IV loans. The delinquency aging of the loan and lease portfolio by class of receivable as of September 30, 2017 and December 31, 2016 was as follows: September 30, 2017 30-59 60-89 Greater Total Past Due Current Total Loans and Leases (Dollars in Thousands) Accruing loans and leases Commercial real estate: Owner occupied $ — $ — $ — $ — $ 175,675 $ 175,675 Non-owner occupied — — — — 459,760 459,760 Land development — — — — 38,729 38,729 Construction 392 — — 392 109,914 110,306 Multi-family — — — — 125,080 125,080 1-4 family — — — — 38,309 38,309 Commercial and industrial 2,257 470 — 2,727 430,539 433,266 Direct financing leases, net — — — — 28,868 28,868 Consumer and other: Home equity and second mortgages 229 — — 229 7,547 7,776 Other — — — — 17,066 17,066 Total 2,878 470 — 3,348 1,431,487 1,434,835 Non-accruing loans and leases Commercial real estate: Owner occupied — — 4,825 4,825 2,255 7,080 Non-owner occupied — — 1,791 1,791 35 1,826 Land development — — — — 2,770 2,770 Construction — — 5,353 5,353 1 5,354 Multi-family — — — — — — 1-4 family 529 10 1,041 1,580 284 1,864 Commercial and industrial 207 497 11,005 11,709 2,248 13,957 Direct financing leases, net — — — — — — Consumer and other: Home equity and second mortgages — — — — — — Other — — 358 358 23 381 Total 736 507 24,373 25,616 7,616 — 33,232 Total loans and leases Commercial real estate: Owner occupied — — 4,825 4,825 177,930 182,755 Non-owner occupied — — 1,791 1,791 459,795 461,586 Land development — — — — 41,499 41,499 Construction 392 — 5,353 5,745 109,915 115,660 Multi-family — — — — 125,080 125,080 1-4 family 529 10 1,041 1,580 38,593 40,173 Commercial and industrial 2,464 967 11,005 14,436 432,787 447,223 Direct financing leases, net — — — — 28,868 28,868 Consumer and other: Home equity and second mortgages 229 — — 229 7,547 7,776 Other — — 358 358 17,089 17,447 Total $ 3,614 $ 977 $ 24,373 $ 28,964 $ 1,439,103 $ 1,468,067 Percent of portfolio 0.24 % 0.07 % 1.66 % 1.97 % 98.03 % 100.00 % December 31, 2016 30-59 60-89 Greater Total Past Due Current Total Loans and Leases (Dollars in Thousands) Accruing loans and leases Commercial real estate: Owner occupied $ — $ — $ — $ — $ 174,236 $ 174,236 Non-owner occupied — — — — 471,549 471,549 Land development — — — — 53,198 53,198 Construction — — — — 98,288 98,288 Multi-family — — — — 92,762 92,762 1-4 family 75 — — 75 43,639 43,714 Commercial and industrial 55 468 — 523 437,312 437,835 Direct financing leases, net — — — — 30,951 30,951 Consumer and other: Home equity and second mortgages — — — — 8,412 8,412 Other — — — — 15,725 15,725 Total 130 468 — 598 1,426,072 1,426,670 Non-accruing loans and leases Commercial real estate: Owner occupied — — 1,183 1,183 1,040 2,223 Non-owner occupied — — — — 1,609 1,609 Land development — — — — 3,440 3,440 Construction 2,482 — 436 2,918 — 2,918 Multi-family — — — — — — 1-4 family — — 1,240 1,240 697 1,937 Commercial and industrial 3,345 168 6,740 10,253 2,210 12,463 Direct financing leases, net — — — — — — Consumer and other: Home equity and second mortgages — — — — — — Other 186 — 378 564 40 604 Total 6,013 168 9,977 16,158 9,036 25,194 Total loans and leases Commercial real estate: Owner occupied — — 1,183 1,183 175,276 176,459 Non-owner occupied — — — — 473,158 473,158 Land development — — — — 56,638 56,638 Construction 2,482 — 436 2,918 98,288 101,206 Multi-family — — — — 92,762 92,762 1-4 family 75 — 1,240 1,315 44,336 45,651 Commercial and industrial 3,400 636 6,740 10,776 439,522 450,298 Direct financing leases, net — — — — 30,951 30,951 Consumer and other: Home equity and second mortgages — — — — 8,412 8,412 Other 186 — 378 564 15,765 16,329 Total $ 6,143 $ 636 $ 9,977 $ 16,756 $ 1,435,108 $ 1,451,864 Percent of portfolio 0.42 % 0.04 % 0.69 % 1.15 % 98.85 % 100.00 % The Corporation’s total impaired assets consisted of the following at September 30, 2017 and December 31, 2016 , respectively. September 30, December 31, (Dollars in Thousands) Non-accrual loans and leases Commercial real estate: Commercial real estate — owner occupied $ 7,080 $ 2,223 Commercial real estate — non-owner occupied 1,826 1,609 Land development 2,770 3,440 Construction 5,354 2,918 Multi-family — — 1-4 family 1,864 1,937 Total non-accrual commercial real estate 18,894 12,127 Commercial and industrial 13,957 12,463 Direct financing leases, net — — Consumer and other: Home equity and second mortgages — — Other 381 604 Total non-accrual consumer and other loans 381 604 Total non-accrual loans and leases 33,232 25,194 Foreclosed properties, net 2,585 1,472 Total non-performing assets 35,817 26,666 Performing troubled debt restructurings 275 717 Total impaired assets $ 36,092 $ 27,383 September 30, December 31, Total non-accrual loans and leases to gross loans and leases 2.26 % 1.74 % Total non-performing assets to total gross loans and leases plus foreclosed properties, net 2.44 1.83 Total non-performing assets to total assets 2.01 1.50 Allowance for loan and lease losses to gross loans and leases 1.36 1.44 Allowance for loan and lease losses to non-accrual loans and leases 59.95 83.00 As of September 30, 2017 and December 31, 2016 , $10.9 million and $12.8 million of the non-accrual loans and leases were considered troubled debt restructurings, respectively. There were no unfunded commitments associated with troubled debt restructured loans and leases as of September 30, 2017 . The following table provides the number of loans modified in a troubled debt restructuring and the pre- and post-modification recorded investment by class of receivable as of September 30, 2017 and December 31, 2016 . As of September 30, 2017 As of December 31, 2016 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) Commercial real estate: Commercial real estate — owner occupied 3 $ 1,065 $ 888 3 $ 1,065 $ 930 Commercial real estate — non-owner occupied 1 158 35 1 158 39 Land development 1 5,745 2,770 1 5,745 3,440 Construction — — — 2 331 314 Multi-family — — — — — — 1-4 family 10 1,287 1,353 11 1,391 1,393 Commercial and industrial 11 8,944 5,759 10 8,094 7,058 Consumer and other: Home equity and second mortgage 1 37 4 1 37 8 Other 2 2,094 359 1 2,076 378 Total 29 $ 19,330 $ 11,168 30 $ 18,897 $ 13,560 All loans and leases modified as a troubled debt restructuring are measured 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 September 30, 2017 and December 31, 2016 , the Corporation’s troubled debt restructurings grouped by type of concession were as follows: As of September 30, 2017 As of December 31, 2016 Number of Loans Recorded Investment Number of Loans Recorded Investment (Dollars in Thousands) Commercial real estate: Extension of term — $ — 1 $ 8 Interest rate concession 1 49 1 52 Combination of extension of term and interest rate concession 14 4,997 16 6,056 Commercial and industrial: Combination of extension of term and interest rate concession 11 5,759 10 7,058 Consumer and other: Extension of term 1 342 1 378 Combination of extension of term and interest rate concession 2 21 1 8 Total 29 $ 11,168 30 $ 13,560 During the three months ended September 30, 2017 , two commercial and industrial loans totaling $800,000 were modified to a troubled debt restructuring. During the nine months ended September 30, 2017 , four commercial and industrial loans and one consumer loan totaling $4.4 million and $17,000 , respectively, were modified to a troubled debt restructuring. No loans were modified to a troubled debt restructuring during the three and nine months ended September 30, 2016. There were five loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the three and nine months ended September 30, 2017 . The following represents additional information regarding the Corporation’s impaired loans and leases, including performing troubled debt restructurings, by class: As of and for the Nine Months Ended September 30, 2017 Recorded Unpaid Impairment Average (1) Foregone Interest Net (In Thousands) With no impairment reserve recorded: Commercial real estate: Owner occupied $ 6,727 $ 6,727 $ — $ 4,898 $ 394 $ — $ 394 Non-owner occupied 1,826 1,866 — 1,932 99 — 99 Land development 2,770 5,441 — 3,218 65 — 65 Construction 2,482 2,482 — 611 208 — 208 Multi-family — — — 1 — — — 1-4 family 2,065 2,319 — 2,387 69 — 69 Commercial and industrial 1,740 2,103 — 6,782 509 — 509 Direct financing leases, net — — — — — — — Consumer and other: Home equity and second mortgages 4 4 — 6 — — — Other 358 1,025 — 397 45 — 45 Total 17,972 21,967 — 20,232 1,389 — 1,389 With impairment reserve recorded: Commercial real estate: Owner occupied 411 411 15 424 19 — 19 Non-owner occupied — — — — — — — Land development — — — — — — — — — — Construction 2,872 2,872 — 94 4,091 — 108 — — 108 Multi-family — — — — — — — 1-4 family — — — — — — — Commercial and industrial 12,229 12,702 5,658 10,114 453 — 453 Direct financing leases, net — — — — — — — Consumer and other: Home equity and second mortgages — — — — — — — Other 23 23 23 10 — — — Total 15,535 16,008 5,790 14,639 580 — 580 Total: Commercial real estate: Owner occupied 7,138 7,138 15 5,322 413 — 413 Non-owner occupied 1,826 1,866 — 1,932 99 — 99 Land development 2,770 5,441 — 3,218 65 — 65 Construction 5,354 5,354 94 4,702 316 — 316 Multi-family — — — 1 — — — 1-4 family 2,065 2,319 — 2,387 69 — 69 Commercial and industrial 13,969 14,805 5,658 16,896 962 — 962 Direct financing leases, net — — — — — — — Consumer and other: Home equity and second mortgages 4 4 — 6 — — — Other 381 1,048 23 407 45 — 45 Grand total $ 33,507 $ 37,975 $ 5,790 $ 34,871 $ 1,969 $ — $ 1,969 (1) Average recorded investment is calculated primarily using daily average balances. As of and for the Year Ended December 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 $ 1,788 $ 1,788 $ — $ 3,577 $ 328 $ 118 $ 210 Non-owner occupied 1,609 1,647 — 1,318 91 79 12 Land development 3,440 6,111 — 3,898 107 — 107 Construction 436 438 — 291 20 — 20 Multi-family — — — — 1 134 (133 ) 1-4 family 2,379 2,379 — 2,755 125 94 31 Commercial and industrial 1,307 1,307 — 709 79 62 17 Direct financing leases, net — — — 6 — — — Consumer and other: Home equity and second mortgages 8 8 — 307 16 127 (111 ) Other 378 1,044 — 510 71 — 71 Total 11,345 14,722 — 13,371 838 614 224 With impairment reserve recorded: Commercial real estate: Owner occupied 499 499 70 111 28 — 28 Non-owner occupied — — — — — — — Land development — — — — — — — Construction 2,482 2,482 1,790 834 45 — 45 Multi-family — — — — — — — 1-4 family 193 199 39 203 5 — 5 Commercial and industrial 11,166 11,166 3,700 8,448 701 — 701 Direct financing leases, net — — — — — — — Consumer and other: Home equity and second mortgages — — — — — — — Other 226 226 — 19 — — — Total 14,566 14,572 5,599 9,615 779 — 779 Total: Commercial real estate: Owner occupied 2,287 2,287 70 3,688 356 118 238 Non-owner occupied 1,609 1,647 — 1,318 91 79 12 Land development 3,440 6,111 — 3,898 107 — 107 Construction 2,918 2,920 1,790 1,125 65 — 65 Multi-family — — — — 1 134 (133 ) 1-4 family 2,572 2,578 39 2,958 130 94 36 Commercial and industrial 12,473 12,473 3,700 9,157 780 62 718 Direct financing leases, net — — — 6 — — — Consumer and other: Home equity and second mortgages 8 8 — 307 16 127 (111 ) Other 604 1,270 — 529 71 — 71 Grand total $ 25,911 $ 29,294 $ 5,599 $ 22,986 $ 1,617 $ 614 $ 1,003 (1) Average recorded investment is calculated primarily using daily average balances. The difference between the recorded investment of loans and leases and the unpaid principal balance of $4.5 million and $3.4 million as of September 30, 2017 and December 31, 2016 , respectively, represents partial charge-offs of loans and leases resulting from losses due to the appraised 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 $275,000 and $717,000 of loans as of September 30, 2017 and December 31, 2016 , respectively, that were performing troubled debt restructurings, and although 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 such loan’s principal. Foregone interest represents the interest that was contractually due on the loan but not received or recorded. To the extent the amount of principal on a non-accrual loan 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 categorizes the portfolio into segments with similar risk characteristics. 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 September 30, 2017 Commercial Real Estate Commercial and Industrial Consumer and Other Total (Dollars in Thousands) Beginning balance $ 12,003 $ 9,090 $ 584 $ 21,677 Charge-offs (8 ) (3,217 ) (5 ) (3,230 ) Recoveries 2 2 1 5 Net charge-offs (6 ) (3,215 ) (4 ) (3,225 ) Provision for credit losses (2,462 ) 3,968 (35 ) 1,471 Ending balance $ 9,535 $ 9,843 $ 545 $ 19,923 As of and for the Three Months Ended September 30, 2016 Commercial Real Estate Commercial and Industrial Consumer and Other Total (Dollars in Thousands) Beginning balance $ 11,436 $ 6,017 $ 701 $ 18,154 Charge-offs (259 ) (1,396 ) (1 ) (1,656 ) Recoveries 31 — 1 32 Net charge-offs (228 ) (1,396 ) — (1,624 ) Provision for credit losses 1,607 2,051 (121 ) 3,537 Ending balance $ 12,815 $ 6,672 $ 580 $ 20,067 As of and for the Nine Months Ended September 30, 2017 Commercial Real Estate Commercial and Industrial Consumer and Other Total (Dollars in Thousands) Beginning balance $ 12,384 $ 7,970 $ 558 $ 20,912 Charge-offs (126 ) (6,978 ) (92 ) (7,196 ) Recoveries 152 314 42 508 Net recoveries (charge-offs) 26 (6,664 ) (50 ) (6,688 ) Provision for credit loss (2,875 ) 8,537 37 5,699 Ending balance $ 9,535 $ 9,843 $ 545 $ 19,923 As of and for the Nine Months Ended September 30, 2016 Commercial Real Estate Commercial and Industrial Consumer and Other Total (Dollars in Thousands) Beginning balance $ 11,220 $ 4,387 $ 709 $ 16,316 Charge-offs (1,194 ) (2,048 ) (8 ) (3,250 ) Recoveries 170 2 5 177 Net charge-offs (1,024 ) (2,046 ) (3 ) (3,073 ) Provision for credit loss 2,619 4,331 (126 ) 6,824 Ending balance $ 12,815 $ 6,672 $ 580 $ 20,067 The following tables provide information regarding the allowance for loan and lease losses and balances by type of allowance methodology. As of September 30, 2017 Commercial Real Estate Commercial and Industrial Consumer and Other Total (Dollars in Thousands) Allowance for loan and lease losses: Collectively evaluated for impairment $ 9,426 $ 4,185 $ 522 $ 14,133 Individually evaluated for impairment 109 5,658 23 5,790 Loans acquired with deteriorated credit quality — — — — Total $ 9,535 $ 9,843 $ 545 $ 19,923 Loans and lease receivables: Collectively evaluated for impairment $ 947,600 $ 462,122 $ 24,838 $ 1,434,560 Individually evaluated for impairment 18,535 13,962 385 32,882 Loans acquired with deteriorated credit quality 618 7 — 625 Total $ 966,753 $ 476,091 $ 25,223 $ 1,468,067 As of December 31, 2016 Commercial Real Estate Commercial and Industrial Consumer and Other Total (Dollars in Thousands) Allowance for loan and lease losses: Collectively evaluated for impairment $ 10,485 $ 4,270 $ 558 $ 15,313 Individually evaluated for impairment 1,899 3,700 — 5,599 Loans acquired with deteriorated credit quality — — — — Total $ 12,384 $ 7,970 $ 558 $ 20,912 Loans and lease receivables: Collectively evaluated for impairment $ 933,048 $ 468,776 $ 24,129 $ 1,425,953 Individually evaluated for impairment 11,222 12,452 612 24,286 Loans acquired with deteriorated credit quality 1,604 21 — 1,625 Total $ 945,874 $ 481,249 $ 24,741 $ 1,451,864 |