Loans | (3) Loans The composition of the Company’s loan portfolio, excluding loans held for sale, was the following for the periods presented below: At June 30, At December 31, (in thousands) 2017 2016 Real estate mortgage loans: Commercial $ 70,708 $ 65,805 Residential and home equity 94,100 88,883 Construction 27,275 19,991 Total real estate mortgage loans 192,083 174,679 Commercial loans 47,698 46,340 Consumer and other loans 4,936 4,275 Total loans 244,717 225,294 Add (deduct): Net deferred loan costs 460 350 Allowance for loan losses (3,028 ) (2,876 ) Loans, net $ 242,149 $ 222,768 An analysis of the change in allowance for loan losses follows: Real Estate Mortgage Loans (in thousands) Commercial Residential Construction Commercial Consumer Total Three-Month Period Ended June 30, 2017 Beginning balance $ 767 $ 1,086 $ 293 $ 704 $ 58 $ 2,908 Provision for loan losses 44 22 45 6 3 120 Net (charge-offs) recoveries — — — 2 (2 ) — Ending balance $ 811 $ 1,108 $ 338 $ 712 $ 59 $ 3,028 Three-Month Period Ended June 30, 2016 Beginning balance $ 701 $ 908 $ 248 $ 690 $ 58 $ 2,605 Provision (credit) for loan losses 63 109 (5 ) (4 ) 7 170 Net (charge-offs) recoveries — — — — — — Ending balance $ 764 $ 1,017 $ 243 $ 686 $ 65 $ 2,775 Six-Month Beginning balance $ 775 $ 1,074 $ 258 $ 714 $ 55 $ 2,876 Provision (credit) for loan losses 36 34 80 (4 ) 9 155 Net (charge-offs) recoveries — — — 2 (5 ) (3 ) Ending balance $ 811 $ 1,108 $ 338 $ 712 $ 59 $ 3,028 Six-Month Beginning balance $ 707 $ 868 $ 246 $ 596 $ 56 $ 2,473 Provision (credit) for loan losses 57 149 (3 ) 90 11 304 Net (charge-offs) recoveries — — — — (2 ) (2 ) Ending balance $ 764 $ 1,017 $ 243 $ 686 $ 65 $ 2,775 At June 30, 2017 Individually evaluated for impairment: Recorded investment $ — $ — $ 74 $ 63 $ — $ 137 Balance in allowance for loan losses $ — $ — $ — $ 63 $ — $ 63 Collectively evaluated for impairment: Recorded investment $ 70,708 $ 94,100 $ 27,201 $ 47,635 $ 4,936 $ 244,580 Balance in allowance for loan losses $ 811 $ 1,108 $ 338 $ 649 $ 59 $ 2,965 At December 31, 2016 Individually evaluated for impairment: Recorded investment $ — $ 662 $ 73 $ 76 $ — $ 811 Balance in allowance for loan losses $ — $ — $ — $ 76 $ — $ 76 Collectively evaluated for impairment: Recorded investment $ 65,805 $ 88,221 $ 19,918 $ 46,264 $ 4,275 $ 224,483 Balance in allowance for loan losses $ 775 $ 1,074 $ 258 $ 638 $ 55 $ 2,800 The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Loans classified as substandard or special mention are reviewed quarterly by the Company for further deterioration or improvement to determine if they are appropriately classified and whether there is any impairment. All loans are graded upon initial issuance. Furthermore, construction loans, non-owner Loans excluded from the review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the client contacts the Company for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard or even charged-off. Pass Special Mention Substandard Doubtful Loss At June 30, 2017, there were two nonaccrual loans, totaling $137,000. Age analysis of past-due Accruing Loans 30-59 Days 60-89 Days Greater Than Past Due Total Past Current Nonaccrual Total (in thousands) At June 30, 2017: Real estate mortgage loans: Commercial $ — $ — $ — $ — $ 70,708 $ — $ 70,708 Residential and home equity — — — — 94,100 — 94,100 Construction — — — — 27,201 74 27,275 Commercial loans — — — — 47,635 63 47,698 Consumer and other loans — — — — 4,936 — 4,936 Total $ — $ — $ — $ — $ 244,580 $ 137 $ 244,717 At December 31, 2016: Real estate mortgage loans: Commercial $ — $ — $ — $ — $ 65,805 $ — $ 65,805 Residential and home equity 371 — — 371 87,850 662 88,883 Construction — — — — 19,918 73 19,991 Commercial loans — — — — 46,264 76 46,340 Consumer and other loans — — — — 4,275 — 4,275 Total $ 371 $ — $ — $ 371 $ 224,112 $ 811 $ 225,294 The following summarizes the amount of impaired loans: With No Related With an Allowance Recorded Total (in thousands) Recorded Unpaid Recorded Unpaid Related Recorded Unpaid Related At June 30, 2017: Construction loans 74 74 — — — 74 74 — Commercial loans — — 63 63 63 63 63 63 Total $ 74 $ 74 $ 63 $ 63 $ 63 $ 137 $ 137 $ 63 At December 31, 2016: Residential and home equity $ 662 $ 662 $ — $ — $ — $ 662 $ 662 $ — Construction loans 73 73 — — — 73 73 — Commercial loans — — 76 76 76 76 76 76 Total $ 735 $ 735 $ 76 $ 76 $ 76 $ 811 $ 811 $ 76 The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows: Three Months Ended June 30, 2017 2016 (in thousands) Average Interest Interest Average Interest Interest Residential and home equity $ 481 $ 22 $ 27 $ 4 $ — $ — Construction 74 — — — — — Commercial loans 67 — 1 111 2 2 Consumer — — — 7 — — Total $ 622 $ 22 $ 28 $ 122 $ 2 $ 2 Six Months Ended June 30, 2017 2016 (in thousands) Average Interest Interest Average Interest Interest Residential and home equity $ 562 $ 22 $ 28 $ 2 $ — $ — Construction 74 — — — — — Commercial loans 69 — 1 128 2 3 Consumer — — — 7 — — Total $ 705 $ 22 $ 29 $ 137 $ 2 $ 3 There were no collateral dependent loans measured at fair value on a nonrecurring basis at June 30, 2017 or June 30, 2016. The following is a summary of loans determined to be troubled debt restructurings (“TDR”) during the six months ended June 30, 2017 and June 30, 2016. Six Months Ended June 30, 2017 2016 Number Pre- Modification Outstanding Post- Number Pre- Post- (dollars in thousands) Troubled Debt Restructurings - Residential and home equity: Modified interest rate and amortization 1 $ 167 $ 167 $ — $ — $ — Total 1 $ 167 $ 167 $ — $ — $ — |