Loans | Loans Loan portfolio segments are defined as the level at which an entity develops and documents a systematic methodology to determine its allowance. The Corporation has two loan portfolio segments (commercial loans and consumer loans) that it uses in determining the allowance. Both quantitative and qualitative factors are used by management at the loan portfolio segment level in determining the adequacy of the allowance for the Corporation. Classes of loans are a disaggregation of an entity’s loan portfolio segments. Classes of loans are defined as a group of loans which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. The Corporation has six classes of loans, which are set forth below. Commercial — Loans and lines of credit to varying types of businesses, including municipalities, school districts and nonprofit organizations, for the purpose of supporting working capital, operational needs and term financing of equipment. Repayment of such loans is generally provided through operating cash flows of the business. Commercial loans are predominately secured by equipment, inventory, accounts receivable, personal guarantees of the owner and other sources of repayment, although the Corporation may also secure commercial loans with real estate. Commercial real estate — Loans secured by real estate occupied by the borrower for ongoing operations (owner-occupied), non-owner occupied real estate leased to one or more tenants (non-owner occupied) and vacant land that has been acquired for investment or future land development (vacant land). Real estate construction and land development — Real estate construction loans represent secured loans for the construction of business properties. Real estate construction loans often convert to a commercial real estate loan at the completion of the construction period. Land development loans represent secured development loans made to borrowers for the purpose of infrastructure improvements to vacant land to create finished marketable residential and commercial lots/land. Most land development loans are originated with the intention that the loans will be paid through the sale of developed lots/land by the developers within twelve months of the completion date. Land development loans at September 30, 2018 and December 31, 2017 were primarily comprised of loans to develop residential properties. Residential mortgage — Loans secured by one - to four -family residential properties, generally with fixed interest rates for periods of fifteen years or less. The loan-to-value ratio at the time of origination is generally 80% or less. Residential mortgage loans with a loan-to-value ratio of more than 80% generally require private mortgage insurance. Consumer installment — Loans to consumers primarily for the purpose of acquiring automobiles, recreational vehicles and watercraft and comprised primarily of indirect loans purchased from dealers. These loans generally consist of relatively small amounts that are spread across many individual borrowers. Home equity — Loans and lines of credit whereby consumers utilize equity in their personal residence, generally through a second mortgage, as collateral to secure the loan. Loans held-for-sale, comprised of fixed-rate residential mortgage loans, were $93.7 million at September 30, 2018 and $52.1 million at December 31, 2017 . The Corporation sold loans totaling $177.2 million and $569.8 million during the three and nine months ended September 30, 2018 , respectively and $210.2 million and $601.7 million during the three and nine months ended September 30, 2017 , respectively. Commercial, commercial real estate, and real estate construction and land development loans are referred to as the Corporation’s commercial loan portfolio, while residential mortgage, consumer installment and home equity loans are referred to as the Corporation’s consumer loan portfolio. A summary of the Corporation's loans follows: (Dollars in thousands) Originated Acquired (1) Total Loans September 30, 2018 Commercial loan portfolio: Commercial $ 2,951,453 $ 768,469 $ 3,719,922 Commercial real estate: Owner-occupied 1,334,588 563,346 1,897,934 Non-owner occupied 1,875,155 864,545 2,739,700 Vacant land 46,463 27,524 73,987 Total commercial real estate 3,256,206 1,455,415 4,711,621 Real estate construction and land development 554,701 67,446 622,147 Subtotal 6,762,360 2,291,330 9,053,690 Consumer loan portfolio: Residential mortgage 2,285,611 1,106,376 3,391,987 Consumer installment 1,483,540 76,725 1,560,265 Home equity 613,931 176,379 790,310 Subtotal 4,383,082 1,359,480 5,742,562 Total loans (2) $ 11,145,442 $ 3,650,810 $ 14,796,252 December 31, 2017 Commercial loan portfolio: Commercial $ 2,407,606 $ 978,036 $ 3,385,642 Commercial real estate: Owner-occupied 1,185,614 627,948 1,813,562 Non-owner occupied 1,518,787 1,087,974 2,606,761 Vacant land 47,024 33,323 80,347 Total commercial real estate 2,751,425 1,749,245 4,500,670 Real estate construction and land development 498,155 76,060 574,215 Subtotal 5,657,186 2,803,341 8,460,527 Consumer loan portfolio: Residential mortgage 1,967,857 1,284,630 3,252,487 Consumer installment 1,510,540 102,468 1,613,008 Home equity 611,846 217,399 829,245 Subtotal 4,090,243 1,604,497 5,694,740 Total loans (2) $ 9,747,429 $ 4,407,838 $ 14,155,267 (1) Acquired loans are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30). (2) Reported net of deferred costs totaling $19.0 million and $26.1 million at September 30, 2018 and December 31, 2017 , respectively. The Corporation acquired loans at fair value as of the acquisition date, which includes loans acquired in the acquisitions of Talmer Bancorp, Inc. ("Talmer"), Lake Michigan Financial Corporation ("Lake Michigan"), Monarch Community Bancorp, Inc. ("Monarch"), Northwestern Bancorp, Inc. ("Northwestern") and O.A.K. Financial Corporation ("OAK"). Acquired loans are accounted for under ASC 310-30 which recognizes the expected shortfall of expected future cash flows, as compared to the contractual amount due, as nonaccretable discount. Any excess of the net present value of expected future cash flows over the acquisition date fair value is recognized as the accretable discount, or accretable yield. The accretable discount is recognized over the expected remaining life of the acquired loans on a pool basis. In the event an acquired loan is renewed or extended, the loan continues to be accounted for as an acquired loan on a pool basis in accordance with ASC 310-30. Activity for the accretable yield, which includes contractually due interest for acquired loans that have been renewed or extended since the date of acquisition and continue to be accounted for in loan pools in accordance with ASC 310-30, follows: (Dollars in thousands) Talmer Lake Michigan Monarch North-western OAK Total Three Months Ended September 30, 2018 Balance at beginning of period $ 616,168 $ 80,442 $ 20,131 $ 49,731 $ 14,292 $ 780,764 Accretion recognized in interest income (40,695 ) (5,980 ) (919 ) (4,341 ) (2,338 ) (54,273 ) Net reclassification (to) from nonaccretable difference (1) 20,250 3,108 (376 ) (765 ) (1,149 ) 21,068 Balance at end of period $ 595,723 $ 77,570 $ 18,836 $ 44,625 $ 10,805 $ 747,559 Three Months Ended September 30, 2017 Balance at beginning of period $ 801,369 $ 121,572 $ 24,270 $ 71,212 $ 19,796 $ 1,038,219 Accretion recognized in interest income (43,816 ) (7,201 ) (1,119 ) (5,263 ) (3,004 ) (60,403 ) Net reclassification (to) from nonaccretable difference (1) 11,861 (14,482 ) 168 (1,358 ) 1,999 (1,812 ) Balance at end of period $ 769,414 $ 99,889 $ 23,319 $ 64,591 $ 18,791 $ 976,004 Nine Months Ended September 30, 2018 Balance at beginning of period $ 731,353 $ 95,124 $ 22,496 $ 60,814 $ 17,110 $ 926,897 Accretion recognized in interest income (125,471 ) (19,040 ) (3,037 ) (13,863 ) (8,323 ) (169,734 ) Net reclassification (to) from nonaccretable difference (1) (10,159 ) 1,486 (623 ) (2,326 ) 2,018 (9,604 ) Balance at end of period $ 595,723 $ 77,570 $ 18,836 $ 44,625 $ 10,805 $ 747,559 Nine Months Ended September 30, 2017 Balance at beginning of period $ 798,210 $ 121,416 $ 27,182 $ 69,847 $ 23,316 $ 1,039,971 Accretion recognized in interest income (133,478 ) (22,050 ) (3,459 ) (15,222 ) (9,595 ) (183,804 ) Net reclassification (to) from nonaccretable difference (1) 104,682 523 (404 ) 9,966 5,070 119,837 Balance at end of period $ 769,414 $ 99,889 $ 23,319 $ 64,591 $ 18,791 $ 976,004 (1) The net reclassification results from changes in expected cash flows of the acquired loans which may include increases in the amount of contractual principal and interest expected to be collected due to improvement in credit quality, increases in balances outstanding from advances, renewals, extensions and interest rates; as well as reductions in contractual principal and interest expected to be collected due to credit deterioration, payoffs, and decreases in interest rates. Credit Quality Monitoring The Corporation maintains loan policies and credit underwriting standards as part of the process of managing credit risk. These standards include making loans generally only within the Corporation’s market areas. The Corporation’s lending markets generally consist of communities throughout Michigan and additional communities located within Northeast Ohio and Northern Indiana. The Corporation, through Chemical Bank, has a commercial loan portfolio approval process involving underwriting and individual and group loan approval authorities to consider credit quality and loss exposure at loan origination. The loans in the Corporation’s commercial loan portfolio are risk rated at origination based on the grading system set forth below. The approval authority of relationship managers is established based on experience levels, with credit decisions greater than $1.25 million requiring credit officer approval and credit decisions greater than $3.0 million requiring group loan authority approval, except for six executive and senior officers who have varying loan limits up to $8.0 million . With respect to the group loan authorities, Chemical Bank has various regional loan committees that meet weekly to consider loans ranging in amounts of $3.0 million to $7.0 million , and a senior loan committee, consisting of certain executive and senior officers, that meets weekly to consider loans ranging in amounts from $7.0 million up to Chemical Bank's internal lending limit, depending on risk rating and credit action required. Credit actions exceeding Chemical Bank's internal lending limit require the approval of the board of directors of Chemical Bank. The majority of the Corporation’s consumer loan portfolio is comprised of secured loans that are relatively small. The Corporation’s consumer loan portfolio has a centralized approval process which utilizes standardized underwriting criteria. The ongoing measurement of credit quality of the consumer loan portfolio is largely done on an exception basis. If payments are made on schedule, as agreed, then no further monitoring is performed. However, if delinquency occurs, the delinquent loans are turned over to the Corporation’s collection department for resolution, resulting in repossession or foreclosure if payments are not brought current. Credit quality for the entire consumer loan portfolio is measured by the periodic delinquency rate, nonaccrual amounts and actual losses incurred. Loans in the commercial loan portfolio tend to be larger and more complex than those in the consumer loan portfolio, and therefore, are subject to more intensive monitoring. All loans in the commercial loan portfolio have an assigned relationship manager, and most borrowers provide periodic financial and operating information that allows the relationship managers to stay abreast of credit quality during the life of the loans. The risk ratings of loans in the commercial loan portfolio are reassessed at least annually, with loans below an acceptable risk rating reassessed more frequently and reviewed by various loan committees within the Corporation at least quarterly. The Corporation maintains a centralized independent loan review function that monitors the approval process and ongoing asset quality of the loan portfolio, including the accuracy of loan grades. The Corporation also maintains an independent appraisal review function that participates in the review of all appraisals obtained by the Corporation for loans in the commercial loan portfolio. Credit Quality Indicators Commercial Loan Portfolio Risk categories for the Corporation's commercial loan portfolio establish the credit quality of a borrower by measuring liquidity, debt capacity, coverage and payment behavior as shown in the borrower's financial statements. The risk categories also measure the quality of the borrower's management and the repayment support offered by any guarantors. Risk categories for the Corporation's commercial loan portfolio are described as follows: Pass: Includes all loans without weaknesses or potential weaknesses identified in the categories of special mention, substandard or doubtful. Special Mention: Loans with potential credit weakness or credit deficiency, which, if not corrected, pose an unwarranted financial risk that could weaken the loan by adversely impacting the future repayment ability of the borrower. Substandard: Loans with a well-defined weakness, or weaknesses, such as loans to borrowers who may be experiencing losses from operations or inadequate liquidity of a degree and duration that jeopardizes the orderly repayment of the loan. Substandard loans also are distinguished by the distinct possibility of loss in the future if these weaknesses are not corrected. Doubtful: Loans with all the characteristics of a loan classified as Substandard, with the added characteristic that credit weaknesses make collection in full highly questionable and improbable. The primary source of repayment is nonexistent and there is doubt as to the value of the secondary source of repayments. A doubtful asset has a high probability of total or substantial loss, but because of pending events that may strengthen the asset, its classification as loss is deferred. Loss: An asset classified as loss is considered uncollectible and of such little value that the continuance as a bankable asset is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even through partial recovery may occur in the future. The following schedule presents the recorded investment of loans in the commercial loan portfolio by credit risk categories at September 30, 2018 and December 31, 2017 : (Dollars in thousands) Pass Special Mention Substandard Doubtful Total September 30, 2018 Originated Portfolio: Commercial $ 2,840,100 $ 54,258 $ 57,095 $ — $ 2,951,453 Commercial real estate: Owner-occupied 1,265,111 33,290 36,168 19 1,334,588 Non-owner occupied 1,854,887 12,542 7,726 — 1,875,155 Vacant land 40,904 480 5,076 3 46,463 Total commercial real estate 3,160,902 46,312 48,970 22 3,256,206 Real estate construction and land development 517,561 5,100 32,040 — 554,701 Subtotal 6,518,563 105,670 138,105 22 6,762,360 Acquired Portfolio: Commercial 707,054 36,227 25,188 — 768,469 Commercial real estate: Owner-occupied 505,246 29,840 28,249 11 563,346 Non-owner occupied 805,466 31,647 27,432 — 864,545 Vacant land 27,311 213 — — 27,524 Total commercial real estate 1,338,023 61,700 55,681 11 1,455,415 Real estate construction and land development 66,294 138 1,014 — 67,446 Subtotal 2,111,371 98,065 81,883 11 2,291,330 Total $ 8,629,934 $ 203,735 $ 219,988 $ 33 $ 9,053,690 December 31, 2017 Originated Portfolio: Commercial $ 2,316,464 $ 41,059 $ 50,083 $ — $ 2,407,606 Commercial real estate: Owner-occupied 1,133,609 19,438 32,567 — 1,185,614 Non-owner occupied 1,504,195 4,728 9,864 — 1,518,787 Vacant land 39,775 38 7,211 — 47,024 Total commercial real estate 2,677,579 24,204 49,642 — 2,751,425 Real estate construction and land development 494,528 837 2,790 — 498,155 Subtotal 5,488,571 66,100 102,515 — 5,657,186 Acquired Portfolio: Commercial 873,861 68,418 35,539 218 978,036 Commercial real estate: Owner-occupied 580,127 23,998 23,036 787 627,948 Non-owner occupied 995,709 43,645 48,620 — 1,087,974 Vacant land 27,849 327 5,147 — 33,323 Total commercial real estate 1,603,685 67,970 76,803 787 1,749,245 Real estate construction and land development 72,346 2,218 1,496 — 76,060 Subtotal 2,549,892 138,606 113,838 1,005 2,803,341 Total $ 8,038,463 $ 204,706 $ 216,353 $ 1,005 $ 8,460,527 Consumer Loan Portfolio The Corporation evaluates the credit quality of loans in the consumer loan portfolio based on the performing or nonperforming status of the loan. Loans in the consumer loan portfolio that are performing in accordance with original contractual terms and are less than 90 days past due and accruing interest are considered to be in a performing status, while those that are in nonaccrual status, contractually past due 90 days or more as to interest or principal payments, are considered to be in a nonperforming status. Loans accounted for under ASC 310-30, "Acquired loans", that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans. The following schedule presents the recorded investment of loans in the consumer loan portfolio based on loans in a performing status and loans in a nonperforming status at September 30, 2018 and December 31, 2017 : (Dollars in thousands) Residential Mortgage Consumer Installment Home Equity Total Consumer September 30, 2018 Originated Loans: Performing $ 2,276,000 $ 1,482,190 $ 610,662 $ 4,368,852 Nonperforming 9,611 1,350 3,269 14,230 Subtotal 2,285,611 1,483,540 613,931 4,383,082 Acquired Loans 1,106,376 76,725 176,379 1,359,480 Total $ 3,391,987 $ 1,560,265 $ 790,310 $ 5,742,562 December 31, 2017 Originated Loans: Performing $ 1,959,222 $ 1,509,698 $ 607,541 $ 4,076,461 Nonperforming 8,635 842 4,305 13,782 Subtotal 1,967,857 1,510,540 611,846 4,090,243 Acquired Loans 1,284,630 102,468 217,399 1,604,497 Total $ 3,252,487 $ 1,613,008 $ 829,245 $ 5,694,740 Nonperforming Assets and Past Due Loans Nonperforming assets consist of loans for which the accrual of interest has been discounted, other real estate owned acquired through acquisitions, other real estate owned obtained through foreclosure and other repossessed assets. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payments. Loans outside of those accounted for under ASC 310-30 are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful. The accrual of interest is discontinued when a loan is placed in nonaccrual status and any payments received reduce the carrying value of the loan. A loan may be placed back on accrual status if all contractual payments have been received and collection of future principal and interest payments are no longer doubtful. Acquired loans that are not performing in accordance with contractual terms are not reported as nonperforming because these loans are recorded in pools at their net realizable value based on the principal and interest the Corporation expects to collect on these loans. A summary of nonperforming loans follows: (Dollars in thousands) September 30, December 31, Nonperforming assets Nonaccrual loans: Commercial $ 25,328 $ 19,691 Commercial real estate: Owner-occupied 14,936 19,070 Non-owner occupied 8,991 5,270 Vacant land 4,711 5,205 Total commercial real estate 28,638 29,545 Real estate construction and land development 28,477 77 Residential mortgage 9,611 8,635 Consumer installment 1,350 842 Home equity 3,269 4,305 Total nonaccrual loans 96,673 63,095 Other real estate owned and repossessed assets 6,584 8,807 Total nonperforming assets $ 103,257 $ 71,902 Accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30 Commercial $ 632 $ — Commercial real estate: Owner-occupied 47 — Non-owner occupied — 13 Total commercial real estate 47 13 Real estate construction and land development 38 — Home equity 475 1,364 Total accruing loans contractually past due 90 days or more as to interest or principal payments, excluding acquired loans accounted for under ASC 310-30 $ 1,192 $ 1,377 The Corporation’s nonaccrual loans at September 30, 2018 and December 31, 2017 included $28.1 million and $29.1 million , respectively, of nonaccrual TDRs. The Corporation had $5.4 million of residential mortgage loans that were in the process of foreclosure at September 30, 2018 , compared to $4.2 million at December 31, 2017 . Loan delinquency, excluding acquired loans accounted for under ASC 310-30, was as follows: (Dollars in thousands) 30-59 days past due 60-89 days past due 90 days or more past due Total past due Current Total loans 90 days or more past due and still accruing September 30, 2018 Originated Portfolio: Commercial $ 9,280 $ 8,770 $ 12,855 $ 30,905 $ 2,920,548 $ 2,951,453 $ 632 Commercial real estate: Owner-occupied 8,052 2,440 8,458 18,950 1,315,638 1,334,588 47 Non-owner occupied 1,993 762 2,054 4,809 1,870,346 1,875,155 — Vacant land 277 1,399 2,460 4,136 42,327 46,463 — Total commercial real estate 10,322 4,601 12,972 27,895 3,228,311 3,256,206 47 Real estate construction and land development 1,244 13,238 15,277 29,759 524,942 554,701 38 Residential mortgage 3,889 1,576 4,752 10,217 2,275,394 2,285,611 — Consumer installment 3,555 657 617 4,829 1,478,711 1,483,540 — Home equity 5,185 1,123 1,704 8,012 605,919 613,931 475 Total $ 33,475 $ 29,965 $ 48,177 $ 111,617 $ 11,033,825 $ 11,145,442 $ 1,192 December 31, 2017 Originated Portfolio: Commercial $ 13,906 $ 3,766 $ 9,494 $ 27,166 $ 2,380,440 $ 2,407,606 $ — Commercial real estate: Owner-occupied 7,644 1,306 5,027 13,977 1,171,637 1,185,614 — Non-owner occupied 1,653 228 693 2,574 1,516,213 1,518,787 13 Vacant land 83 28 153 264 46,760 47,024 — Total commercial real estate 9,380 1,562 5,873 16,815 2,734,610 2,751,425 13 Real estate construction and land development — — — — 498,155 498,155 — Residential mortgage 2,795 1,415 858 5,068 1,962,789 1,967,857 — Consumer installment 3,324 442 226 3,992 1,506,548 1,510,540 — Home equity 2,319 1,301 2,196 5,816 606,030 611,846 1,364 Total $ 31,724 $ 8,486 $ 18,647 $ 58,857 $ 9,688,572 $ 9,747,429 $ 1,377 Impaired Loans A loan is impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans include nonperforming loans and all TDRs. Impaired loans are accounted for at the lower of the present value of expected cash flows or the estimated fair value of the collateral. When the present value of expected cash flows or the fair value of the collateral of an impaired loan not accounted for under ASC 310-30 is less than the amount of unpaid principal outstanding on the loan, the recorded principal balance of the loan is reduced to its carrying value through either a specific allowance for loan loss or a partial charge-off of the loan balance. The following schedules present impaired loans by classes of loans at September 30, 2018 and December 31, 2017 : (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Valuation Allowance September 30, 2018 Impaired loans with a valuation allowance: Commercial $ 13,394 $ 16,109 $ 1,110 Commercial real estate: Owner-occupied 13,278 15,607 1,281 Non-owner occupied 3,187 4,595 142 Vacant land 2,130 2,130 373 Total commercial real estate 18,595 22,332 1,796 Real estate construction and land development 28,575 28,575 650 Residential mortgage 12,879 12,879 1,146 Consumer installment 1,071 1,071 117 Home equity 3,697 3,697 255 Subtotal 78,211 84,663 5,074 Impaired loans with no related valuation allowance: Commercial 25,021 26,427 — Commercial real estate: Owner-occupied 10,852 11,490 — Non-owner occupied 12,161 13,099 — Vacant land 2,859 3,945 — Total commercial real estate 25,872 28,534 — Real estate construction and land development 140 207 — Residential mortgage 7,988 7,988 — Consumer installment 475 475 — Home equity 1,743 1,743 — Subtotal 61,239 65,374 — Total impaired loans: Commercial 38,415 42,536 1,110 Commercial real estate: Owner-occupied 24,130 27,097 1,281 Non-owner occupied 15,348 17,694 142 Vacant land 4,989 6,075 373 Total commercial real estate 44,467 50,866 1,796 Real estate construction and land development 28,715 28,782 650 Residential mortgage 20,867 20,867 1,146 Consumer installment 1,546 1,546 117 Home equity 5,440 5,440 255 Total $ 139,450 $ 150,037 $ 5,074 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Valuation Allowance December 31, 2017 Impaired loans with a valuation allowance: Commercial $ 28,897 $ 31,655 $ 2,296 Commercial real estate: Owner-occupied 17,774 21,588 2,317 Non-owner occupied 5,307 7,870 316 Vacant land 4,922 5,122 594 Total commercial real estate 28,003 34,580 3,227 Real estate construction and land development 313 313 14 Residential mortgage 15,872 15,872 1,487 Consumer installment 966 966 120 Home equity 4,570 4,570 858 Subtotal 78,621 87,956 8,002 Impaired loans with no related valuation allowance: Commercial 8,504 9,291 — Commercial real estate: Owner-occupied 11,351 12,631 — Non-owner occupied 5,977 6,438 — Vacant land 752 792 — Total commercial real estate 18,080 19,861 — Residential mortgage 4,902 4,902 — Home equity 1,770 1,770 — Subtotal 33,256 35,824 — Total impaired loans: Commercial 37,401 40,946 2,296 Commercial real estate: Owner-occupied 29,125 34,219 2,317 Non-owner occupied 11,284 14,308 316 Vacant land 5,674 5,914 594 Total commercial real estate 46,083 54,441 3,227 Real estate construction and land development 313 313 14 Residential mortgage 20,774 20,774 1,487 Consumer installment 966 966 120 Home equity 6,340 6,340 858 Total $ 111,877 $ 123,780 $ 8,002 The following schedule presents additional information regarding impaired loans by classes of loans segregated by those requiring a valuation allowance and those not requiring a valuation allowance for the three and nine months ended September 30, 2018 and 2017 , and the respective interest income amounts recognized: Three Months Ended September 30, 2018 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 (Dollars in thousands) Average recorded investment Interest income recognized while on impaired status Average recorded investment Interest income recognized while on impaired status Average Interest income Average Interest income Impaired loans with a valuation allowance: Commercial $ 13,945 $ 67 $ 25,628 $ 222 $ 17,495 $ 343 $ 25,278 $ 647 Commercial real estate: Owner-occupied 11,977 94 13,401 155 12,999 257 14,083 459 Non-owner occupied 3,697 13 2,457 17 3,271 34 2,939 68 Vacant land 1,589 7 2,442 25 2,198 39 2,098 75 Total commercial real estate 17,263 114 18,300 197 18,468 330 19,120 602 Real estate construction and land development 9,647 2 175 3 3,372 6 159 8 Residential mortgage 11,620 117 15,945 144 12,662 349 16,529 446 Consumer installment 911 3 748 1 961 6 737 3 Home equity 3,022 20 4,369 21 3,176 58 4,154 58 Subtotal $ 56,408 $ 323 $ 65,165 $ 588 $ 56,134 $ 1,092 $ 65,977 $ 1,764 Impaired loans with no related valuation allowance: Commercial $ 24,114 $ 123 $ 10,120 $ 14 $ 20,773 $ 365 $ 10,142 $ 92 Commercial real estate: Owner-occupied 13,831 68 13,009 1 14,588 205 10,862 13 Non-owner occupied 12,776 81 8,942 88 9,825 184 9,487 255 Vacant land 2,874 — 3,484 12 2,694 — 4,348 36 Total commercial real estate 29,481 149 25,435 101 27,107 389 24,697 304 Real estate construction and land development 3,857 2 71 — 1,986 5 86 — Residential mortgage 8,605 31 5,144 8 7,272 79 4,511 25 Consumer installment 537 — 244 — 240 — 201 — Home equity 2,191 8 1,639 — 2,241 17 1,227 6 Subtotal $ 68,785 $ 313 $ 42,653 $ 123 $ 59,619 $ 855 $ 40,864 $ 427 Total impaired loans: Commercial $ 38,059 $ 190 $ 35,748 $ 236 $ 38,268 $ 708 $ 35,420 $ 739 Commercial real estate: Owner-occupied 25,808 162 26,410 156 27,587 462 24,945 472 Non-owner occupied 16,473 94 11,399 105 13,096 218 12,426 323 Vacant land 4,463 7 5,926 37 4,892 39 6,446 111 Total commercial real estate 46,744 263 43,735 298 45,575 719 43,817 906 Real estate construction and land development 13,504 4 246 3 5,358 11 245 8 Residential mortgage 20,225 148 21,089 152 19,934 428 21,040 471 Consumer installment 1,448 3 992 1 1,201 6 938 3 Home equity 5,213 28 6,008 21 5,417 75 5,381 64 Total $ 125,193 $ 636 $ 107,818 $ 711 $ 115,753 $ 1,947 $ 106,841 $ 2,191 The difference between an impaired loan’s recorded investment and the unpaid principal balance for originated loans represents a partial charge-off resulting from a confirmed loss due to the value of the collateral securing the loan being below the loan balance and management’s assessment that full collection of the loan balance is not likely. Impaired loans included $43.0 million and $48.8 million at September 30, 2018 and December 31, 2017 , respectively, of accruing TDRs. Loans Modified Under Troubled Debt Restructurings (TDRs) The following tables present the recorded investment of loans modified into TDRs during the three and nine months ended September 30, 2018 and 2017 by type of concession granted. In cases where more than one type of concession was granted, the loans were categorized based on the most significant concession. Concession type (Dollars in thousands) Principal Principal Interest Forbearance Total Pre-modification recorded investment Post-modification recorded investment For the three months ended September 30, 2018 Commercial loan portfolio: Commercial $ 2,104 $ — $ 165 $ 1 13 $ 2,277 $ 2,270 Commercial real estate: Owner-occupied 438 — — — 2 438 438 Non-owner occupied — 66 — — 1 69 66 Total commercial real estate 438 66 — — 3 507 504 Total Commercial 2,542 66 165 1 16 2,784 2,774 Consumer loan portfolio: Residential mortgage — 111 108 — 2 220 219 Consumer installment 48 74 44 — 11 172 166 Home equity 91 73 64 — 4 228 228 Total Consumer 139 258 216 — 17 620 613 Total loans $ 2,681 $ 324 $ 381 $ 1 33 $ 3,404 $ 3,387 For the nine months ended September 30, 2018 Commercial loan portfolio: Commercial $ 3,747 $ — $ 1,448 $ 262 44 $ 5,481 $ 5,457 Commercial real estate: Owner-occupied 808 — 888 513 10 2,221 2,209 Non-owner occupied 68 66 — — 2 143 134 Total commercial real estate 876 66 888 513 12 2,364 2,343 Total Commercial 4,623 66 2,336 775 56 7,845 7,800 Consumer loan portfolio: Residential mortgage 269 151 147 — 9 577 567 Consumer installment 134 141 82 — 36 372 357 Home equity 357 73 179 — 13 652 609 Total Consumer 760 365 408 — 58 1,601 1,533 Total loans $ 5,383 $ 431 $ 2,744 $ 775 114 $ 9,446 $ 9,333 Concession type (Dollars in thousands) Principal Interest Forbearance Total Pre-modification recorded investment Post-modification recorded investment For the three months ended September 30, 2017 Commercial loan portfolio: Commercial $ 506 $ 281 $ 1,332 14 $ 2,173 $ 2,119 Commercial real estate: Owner-occupied — 42 335 3 390 377 Non-owner occupied — 27 — 1 28 27 Total commercial real estate — 69 335 4 418 404 Real estate construction and land development 35 — — 1 36 35 Total Commercial 541 350 1,667 19 2,627 2,558 Consumer loan portfolio: Residential mortgage 76 122 — 3 262 198 Consumer installment 47 7 — 11 58 54 Home equity 116 — — 5 124 116 Total Consumer 239 129 — 19 444 368 Total loans $ 780 $ 479 $ 1,667 38 $ 3,071 $ 2,926 For the nine months ended September 30, 2017 Commercial loan portfolio: Commercial $ 841 $ 1,648 $ 1,911 26 $ 4,476 $ 4,400 Commercial real estate: Owner-occupied 447 182 457 9 1,106 1,086 Non-owner occupied — 27 — 1 28 27 Total commercial real estate 447 209 457 10 1,134 1,113 Real estate construction and land development 35 — — 1 36 35 Total Commercial 1,323 1,857 2,368 37 5,646 5,548 Consumer loan portfolio: Residential mortgage 211 383 — 9 676 594 Consumer installment 79 7 — 17 93 86 Home equity 380 — — 10 449 380 Total Consumer 670 390 — 36 1,218 1,060 Total loans $ 1,9 |