Allowance for Loan Losses | Note 5 – Allowance for Loan Losses The following tables summarize the activity in the allowance for loan losses, and ending balance of loans, net of unearned fees for the periods indicated. Allowance for Loan Losses – Three Months Ended June 30, 2018 (in thousands) Beginning Charge-offs Recoveries Provision Ending Mortgage loans on real estate: Residential 1-4 $ 2,170 $ (51 ) $ — $ (128 ) $ 1,991 Commercial 11,495 (15 ) 21 106 11,607 Total mortgage loans on real estate 13,665 (66 ) 21 (22 ) 13,598 Consumer: Home equity lines of credit 5,412 (24 ) 317 (657 ) 5,048 Home equity loans 1,736 — 23 (227 ) 1,532 Other 570 (174 ) 66 95 557 Total consumer loans 7,718 (198 ) 406 (789 ) 7,137 Commercial 6,392 (54 ) 80 (40 ) 6,378 Construction: Residential 1,351 — — 83 1,434 Commercial 847 — — 130 977 Total construction 2,198 — — 213 2,411 Total $ 29,973 $ (318 ) $ 507 $ (638 ) $ 29,524 Allowance for Loan Losses – Six Months Ended June 30, 2018 (in thousands) Beginning Charge-offs Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 2,317 $ (52 ) $ — $ (274 ) $ 1,991 Commercial 11,441 (15 ) 36 145 11,607 Total mortgage loans on real estate 13,758 (67 ) 36 (129 ) 13,598 Consumer: Home equity lines of credit 5,800 (104 ) 526 (1,174 ) 5,048 Home equity loans 1,841 — 37 (346 ) 1,532 Other 586 (368 ) 144 195 557 Total consumer loans 8,227 (472 ) 707 (1,325 ) 7,137 Commercial 6,512 (259 ) 130 (5 ) 6,378 Construction: Residential 1,184 — — 250 1,434 Commercial 642 — — 335 977 Total construction 1,826 — — 585 2,411 Total $ 30,323 $ (798 ) $ 873 $ (874 ) $ 29,524 Allowance for Loan Losses – As of June 30, 2018 (in thousands) Individually Loans pooled Loans acquired Total allowance Mortgage loans on real estate: Residential 1-4 $ 147 $ 1,794 $ 50 $ 1,991 Commercial 82 11,466 59 11,607 Total mortgage loans on real estate 229 13,260 109 13,598 Consumer: Home equity lines of credit 287 4,754 7 5,048 Home equity loans 192 1,340 — 1,532 Other 54 503 — 557 Total consumer loans 533 6,597 7 7,137 Commercial 2,127 4,228 23 6,378 Construction: Residential — 1,434 — 1,434 Commercial — 977 — 977 Total construction — 2,411 — 2,411 Total $ 2,889 $ 26,496 $ 139 $ 29,524 Loans, Net of Unearned fees – As of June 30, 2018 (in thousands) Individually Loans pooled Loans acquired Total loans, net Mortgage loans on real estate: Residential 1-4 $ 6,344 $ 376,628 $ 1,720 $ 384,692 Commercial 11,162 1,997,591 7,595 2,016,348 Total mortgage loans on real estate 17,506 2,374,219 9,315 2,401,040 Consumer: Home equity lines of credit 2,250 282,611 1,575 286,436 Home equity loans 2,457 38,074 455 40,986 Other 247 23,213 43 23,503 Total consumer loans 4,954 343,898 2,073 350,925 Commercial 4,751 230,395 2,473 237,619 Construction: Residential — 73,578 — 73,578 Commercial — 83,151 — 83,151 Total construction — 156,729 — 156,729 Total $ 27,211 $ 3,105,241 $ 13,861 $ 3,146,313 Allowance for Loan Losses – Year Ended December 31, 2017 (in thousands) Beginning Charge-offs Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 2,748 $ (60 ) $ — $ (371 ) $ 2,317 Commercial 11,517 (186 ) 397 (287 ) 11,441 Total mortgage loans on real estate 14,265 (246 ) 397 (658 ) 13,758 Consumer: Home equity lines of credit 7,044 (98 ) 698 (1,844 ) 5,800 Home equity loans 2,644 (332 ) 242 (713 ) 1,841 Other 622 (1,186 ) 375 775 586 Total consumer loans 10,310 (1,616 ) 1,315 (1,782 ) 8,227 Commercial 5,831 (1,444 ) 428 1,697 6,512 Construction: Residential 1,417 (1,104 ) — 871 1,184 Commercial 680 — 1 (39 ) 642 Total construction 2,097 (1,104 ) 1 832 1,826 Total $ 32,503 $ (4,410 ) $ 2,141 $ 89 $ 30,323 Allowance for Loan Losses – As of December 31, 2017 (in thousands) Individually Loans pooled Loans acquired Total allowance Mortgage loans on real estate: Residential 1-4 $ 230 $ 1,932 $ 155 $ 2,317 Commercial 30 11,351 60 11,441 Total mortgage loans on real estate 260 13,283 215 13,758 Consumer: Home equity lines of credit 427 5,356 17 5,800 Home equity loans 107 1,734 — 1,841 Other 57 529 — 586 Total consumer loans 591 7,619 17 8,227 Commercial 1,848 4,624 40 6,512 Construction: Residential — 1,184 — 1,184 Commercial — 642 — 642 Total construction — 1,826 — 1,826 Total $ 2,699 $ 27,352 $ 272 $ 30,323 Loans, Net of Unearned fees – As of December 31, 2017 (in thousands) Individually Loans pooled Loans acquired Total loans, net Mortgage loans on real estate: Residential 1-4 $ 5,298 $ 378,743 $ 1,385 $ 385,426 Commercial 13,911 1,892,422 8,563 1,914,896 Total mortgage loans on real estate 19,209 2,271,165 9,948 2,300,322 Consumer: Home equity lines of credit 2,688 283,502 2,498 288,688 Home equity loans 1,470 41,076 485 43,031 Other 257 24,853 45 25,155 Total consumer loans 4,415 349,431 3,028 356,874 Commercial 4,470 213,358 2,584 220,412 Construction: Residential 140 67,790 — 67,930 Commercial — 69,627 — 69,627 Total construction 140 137,417 — 137,557 Total $ 28,234 $ 2,971,371 $ 15,560 $ 3,015,165 Allowance for Loan Losses – Three Months Ended June 30, 2017 (in thousands) Beginning Charge-offs Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 2,662 $ — $ — $ (151 ) $ 2,511 Commercial 11,542 (150 ) 17 (1,307 ) 10,102 Total mortgage loans on real estate 14,204 (150 ) 17 (1,458 ) 12,613 Consumer: Home equity lines of credit 6,530 (13 ) 252 (613 ) 6,156 Home equity loans 2,451 (206 ) 13 98 2,356 Other 595 (308 ) 68 290 645 Total consumer loans 9,576 (527 ) 333 (225 ) 9,157 Commercial 5,326 (764 ) 84 83 4,729 Construction: Residential 1,339 (1,071 ) — 910 1,178 Commercial 572 — — (106 ) 466 Total construction 1,911 (1,071 ) — 804 1,644 Total $ 31,017 $ (2,512 ) $ 434 $ (796 ) $ 28,143 Allowance for Loan Losses – Six Months Ended June 30, 2017 (in thousands) Beginning Charge-offs Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 2,748 $ — $ $ (237 ) $ 2,511 Commercial 11,517 (150 ) 127 (1,392 ) 10,102 Total mortgage loans on real estate 14,265 (150 ) 127 (1,629 ) 12,613 Consumer: Home equity lines of credit 7,044 (84 ) 298 (1,102 ) 6,156 Home equity loans 2,644 (237 ) 25 (76 ) 2,356 Other 622 (482 ) 209 296 645 Total consumer loans 10,310 (803 ) 532 (882 ) 9,157 Commercial 5,831 (897 ) 254 (459 ) 4,729 Construction: Residential 1,417 (1,071 ) — 832 1,178 Commercial 680 — 1 (215 ) 466 Total construction 2,097 (1,071 ) 1 617 1,644 Total $ 32,503 $ (2,921 ) $ 914 $ (2,353 ) $ 28,143 Allowance for Loan Losses – As of June 30, 2017 (in thousands) Individually Loans pooled Loans acquired Total allowance Mortgage loans on real estate: Residential 1-4 $ 249 $ 2,037 $ 225 $ 2,511 Commercial 124 8,531 1,447 10,102 Total mortgage loans on real estate 373 10,568 1,672 12,613 Consumer: Home equity lines of credit 400 5,748 8 6,156 Home equity loans 57 2,233 66 2,356 Other 31 614 — 645 Total consumer loans 488 8,595 74 9,157 Commercial 811 3,276 642 4,729 Construction: Residential 14 1,121 43 1,178 Commercial — 466 — 466 Total construction 14 1,587 43 1,644 Total $ 1,686 $ 24,026 $ 2,431 $ 28,143 Loans, Net of Unearned fees – As of June 30, 2017 (in thousands) Individually Loans pooled Loans acquired Total Loans Mortgage loans on real estate: Residential 1-4 $ 4,726 $ 375,217 $ 1,362 $ 381,305 Commercial 14,524 1,700,046 10,692 1,725,262 Total mortgage loans on real estate 19,250 2,075,263 12,054 2,106,567 Consumer: Home equity lines of credit 2,633 280,672 3,171 286,476 Home equity loans 1,285 43,515 1,136 45,936 Other 323 27,981 66 28,370 Total consumer loans 4,241 352,168 4,373 360,782 Commercial 2,744 219,658 3,341 225,743 Construction: Residential — 62,626 524 63,150 Commercial — 70,151 — 70,151 Total construction — 132,777 524 133,301 Total $ 26,235 $ 2,779,866 $ 20,292 $ 2,826,393 As part of the on-going (iii) non-performing The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are graded on a scale ranging from Pass to Loss. A description of the general characteristics of the risk grades is as follows: • Pass • Special Mention • Substandard • Doubtful • Loss The following tables present ending loan balances by loan category and risk grade for the periods indicated: Credit Quality Indicators Originated Loans– As of June 30, 2018 (in thousands) Pass Special Substandard Loss Total Originated Mortgage loans on real estate: Residential 1-4 $ 323,576 $ 292 $ 2,281 $ — $ 326,149 Commercial 1,760,898 27,717 17,215 — 1,805,830 Total mortgage loans on real estate 2,084,474 28,009 19,496 — 2,131,979 Consumer: Home equity lines of credit 265,724 1,828 2,731 — 270,283 Home equity loans 37,441 163 478 — 38,082 Other 21,083 158 180 — 21,421 Total consumer loans 324,248 2,149 3,389 — 329,786 Commercial 221,108 3,568 2,915 — 227,591 Construction: Residential 70,471 2,953 146 — 73,570 Commercial 82,912 — — — 82,912 Total construction 153,383 2,953 146 — 156,482 Total loans $ 2,783,213 $ 36,679 $ 25,946 $ — $ 2,845,838 Credit Quality Indicators PNCI Loans – As of June 30, 2018 (in thousands) Pass Special Substandard Loss Total PNCI Mortgage loans on real estate: Residential 1-4 $ 55,039 $ — $ 1,784 $ — $ 56,823 Commercial 198,353 2,935 1,635 — 202,923 Total mortgage loans on real estate 253,392 2,935 3,419 — 259,746 Consumer: Home equity lines of credit 13,675 903 — 14,578 Home equity loans 2,220 161 68 — 2,449 Other 2,030 4 5 — 2,039 Total consumer loans 17,925 165 976 — 19,066 Commercial 7,555 — — 7,555 Construction: Residential 8 — — — 8 Commercial 239 — — — 239 Total construction 247 — — — 247 Total loans $ 279,119 $ 3,100 $ 4,395 $ — $ 286,614 Credit Quality Indicators Originated Loans – As of December 31, 2017 (in thousands) Pass Special Substandard Loss Total Originated Mortgage loans on real estate: Residential 1-4 $ 315,120 $ 2,234 $ 3,168 $ — $ 320,522 Commercial 1,649,333 18,434 22,743 — 1,690,510 Total mortgage loans on real estate 1,964,453 20,668 25,911 — 2,011,032 Consumer: Home equity lines of credit 265,345 2,558 2,039 — 269,942 Home equity loans 37,428 800 1,620 — 39,848 Other 22,432 272 155 — 22,859 Total consumer loans 325,205 3,630 3,814 — 332,649 Commercial 195,208 9,492 4,737 — 209,437 Construction: Residential 67,813 — 107 — 67,920 Commercial 64,492 4,872 — — 69,364 Total construction 132,305 4,872 107 — 137,284 Total loans $ 2,617,171 $ 38,662 $ 34,569 $ — $ 2,690,402 Credit Quality Indicators PNCI Loans – As of December 31, 2017 (in thousands) Pass Special Substandard Loss Total PNCI Mortgage loans on real estate: Residential 1-4 $ 61,411 $ 218 $ 1,890 $ — $ 63,519 Commercial 203,751 11,513 559 — 215,823 Total mortgage loans on real estate 265,162 11,731 2,449 — 279,342 Consumer: Home equity lines of credit 14,866 450 932 — 16,248 Home equity loans 2,433 188 77 — 2,698 Other 2,207 38 6 — 2,251 Total consumer loans 19,506 676 1,015 — 21,197 Commercial 8,390 1 — — 8,391 Construction: Residential 10 — — — 10 Commercial 263 — — — 263 Total construction 273 — — — 273 Total $ 293,331 $ 12,408 $ 3,464 $ — $ 309,203 Consumer loans, whether unsecured or secured by real estate, automobiles, or other personal property, are susceptible to three primary risks; non-payment non-payment Problem consumer loans are generally identified by payment history of the borrower (delinquency). The Bank manages its consumer loan portfolios by monitoring delinquency and contacting borrowers to encourage repayment, suggest modifications if appropriate, and, when continued scheduled payments become unrealistic, initiate repossession or foreclosure through appropriate channels. Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the credit and periodically (every 3-12 Commercial real estate loans generally fall into two categories, owner-occupied and non-owner non-owner Construction loans, whether owner occupied or non-owner Problem C&I loans are generally identified by periodic review of financial information which may include financial statements, tax returns, rent rolls and payment history of the borrower (delinquency). Based on this information the Bank may decide to take any of several courses of action including demand for repayment, additional collateral or guarantors, and, when repayment becomes unlikely through borrower’s income and cash flow, repossession or foreclosure of the underlying collateral. Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the credit and periodically (every 3-12 Once a loan becomes delinquent and repayment becomes questionable, a Bank collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss, using a recent valuation as appropriate to the underlying collateral less estimated costs of sale, and charge the loan down to the estimated net realizable amount. Depending on the length of time until ultimate collection, the Bank may revalue the underlying collateral and take additional charge-offs as warranted. Revaluations may occur as often as every 3-12 The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated: Analysis of Originated Past Due Loans - As of June 30, 2018 (in thousands) 30-59 days 60-89 days > 90 days Current Total > 90 Days and Mortgage loans on real estate: Residential 1-4 $ 271 $ 64 $ 1,219 $ 324,595 $ 326,149 $ — Commercial 1,281 577 792 1,803,180 1,805,830 — Total mortgage loans on real estate 1,552 641 2,011 2,127,775 2,131,979 — Consumer: Home equity lines of credit 158 37 47 270,041 270,283 — Home equity loans 358 150 486 37,088 38,082 — Other 33 26 — 21,362 21,421 — Total consumer loans 549 213 533 328,491 329,786 — Commercial 506 766 1,778 224,541 227,591 — Construction: Residential — — — 73,570 73,570 — Commercial 1,249 831 — 80,832 82,912 — Total construction 1,249 831 — 154,402 156,482 — Total originated loans $ 3,856 $ 2,451 $ 4,322 $ 2,835,209 $ 2,845,838 $ — The following table shows the ending balance of current and past due PNCI loans by loan category as of the date indicated: Analysis of PNCI Past Due Loans - As of June 30, 2018 (in thousands) 30-59 days 60-89 days > 90 days Current Total > 90 Days and Mortgage loans on real estate: Residential 1-4 $ 59 $ 78 $ 36 $ 56,650 $ 56,823 $ — Commercial 356 164 — 202,403 202,923 — Total mortgage loans on real estate 415 242 36 259,053 259,746 — Consumer: Home equity lines of credit 182 — 77 14,319 14,578 — Home equity loans — 43 — 2,406 2,449 — Other 2 — — 2,037 2,039 — Total consumer loans 184 43 77 18,762 19,066 — Commercial — — — 7,555 7,555 — Construction: Residential — — — 8 8 — Commercial — — — 239 239 — Total construction — — — 247 247 — Total PNCI loans $ 599 $ 285 $ 113 $ 285,617 $ 286,614 $ — The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated: Analysis of Originated Past Due Loans - As of December 31, 2017 (in thousands) 30-59 days 60-89 days > 90 days Current Total > 90 Days and Mortgage loans on real estate: Residential 1-4 $ 1,740 $ 510 $ 243 $ 318,029 $ 320,522 $ — Commercial 158 987 — 1,689,365 1,690,510 — Total mortgage loans on real estate 1,898 1,497 243 2,007,394 2,011,032 — Consumer: Home equity lines of credit 528 48 372 268,994 269,942 — Home equity loans 511 107 373 38,857 39,848 — Other 56 36 3 22,764 22,859 — Total consumer loans 1,095 191 748 330,615 332,649 — Commercial 956 738 1,527 206,216 209,437 — Construction: Residential 34 — — 67,886 67,920 — Commercial — — — 69,364 69,364 — Total construction 34 — — 137,250 137,284 — Total loans $ 3,983 $ 2,426 $ 2,518 $ 2,681,475 $ 2,690,402 $ — The following table shows the ending balance of current and past due PNCI loans by loan category as of the date indicated: Analysis of PNCI Past Due Loans - As of December 31, 2017 (in thousands) 30-59 days 60-89 days > 90 days Current Total > 90 Days and Mortgage loans on real estate: Residential 1-4 $ 1,495 $ 90 $ 109 $ 61,825 $ 63,519 $ 81 Commercial 70 — — 215,753 215,823 — Total mortgage loans on real estate 1,565 90 109 277,578 279,342 81 Consumer: Home equity lines of credit 298 228 330 15,392 16,248 200 Home equity loans 30 — — 2,668 2,698 — Other 6 26 — 2,219 2,251 — Total consumer loans 334 254 330 20,279 21,197 200 Commercial — — — 8,391 8,391 — Construction: Residential — — — 10 10 — Commercial — — — 263 263 — Total construction — — — 273 273 — Total loans $ 1,899 $ 344 $ 439 $ 306,521 $ 309,203 $ 281 The following table shows the ending balance of nonaccrual originated and PNCI loans by loan category as of the date indicated: Non Accrual Loans As of June 30, 2018 As of December 31, 2017 (in thousands) Originated PNCI Total Originated PNCI Total Mortgage loans on real estate: Residential 1-4 $ 3,027 $ 1,082 $ 4,109 $ 1,725 $ 1,012 $ 2,737 Commercial 5,494 323 5,817 8,144 — 8,144 Total mortgage loans on real estate 8,521 1,405 9,926 9,869 1,012 10,881 Consumer: Home equity lines of credit 1,457 574 2,031 811 402 1,213 Home equity loans 4,419 36 4,455 1,106 44 1,150 Other 341 5 346 7 5 12 Total consumer loans 6,217 615 6,832 1,924 451 2,375 Commercial 2,339 — 2,339 3,669 — 3,669 Construction: Residential — — — — — — Commercial — — — — — — Total construction — — — — Total non accrual loans $ 17,077 $ 2,020 $ 19,097 $ 15,462 $ 1,463 $ 16,925 Impaired originated loans are those where management has concluded that it is probable that the borrower will be unable to pay all amounts due under the original contractual terms. The following tables show the recorded investment (financial statement balance), unpaid principal balance, average recorded investment, and interest income recognized for impaired Originated and PNCI loans, segregated by those with no related allowance recorded and those with an allowance recorded for the periods indicated. Impaired Originated Loans – As of, or for the Six Months Ended, June 30, 2018 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 5,656 $ 3,947 $ 1,050 $ 4,997 $ 147 $ 4,600 $ 76 Commercial 11,280 9,763 1,076 10,839 82 10,975 107 Total mortgage loans on real estate 16,936 13,710 2,126 15,836 229 15,575 183 Consumer: Home equity lines of credit 1,244 1,108 106 1,214 29 1,315 19 Home equity loans 2,558 1,828 351 2,179 38 1,784 20 Other 3 — 3 3 3 3 — Total consumer loans 3,805 2,936 460 3,396 70 3,102 39 Commercial 4,952 809 3,942 4,751 2,127 4,686 48 Construction: Residential — — — — — 68 — Commercial — — — — — — — Total construction — — — — — 68 — Total $ 25,693 $ 17,455 $ 6,528 $ 23,983 $ 2,426 $ 23,431 $ 270 Impaired PNCI Loans – As of, or for the Six Months Ended, June 30, 2018 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 family $ 1,417 $ 1,348 $ — $ 1,348 $ — $ 1,339 $ 10 Commercial 323 323 — 323 — 161 14 Total mortgage loans on real estate 1,740 1,671 — 1,671 — 1,500 24 Consumer: Home equity lines of credit 1,098 529 506 1,035 258 1,035 13 Home equity loans 293 36 242 278 154 281 6 Other 244 — 244 244 51 259 5 Total consumer loans 1,635 565 992 1,557 463 1,575 24 Commercial — — — — — — Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — Total $ 3,375 $ 2,236 $ 992 $ 3,228 $ 463 $ 3,075 $ 48 Impaired Originated Loans – As of, or for the Twelve Months Ended, December 31, 2017 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 4,023 $ 2,058 $ 1,881 $ 3,939 $ 230 $ 3,501 $ 143 Commercial 14,186 13,101 810 13,911 30 13,851 645 Total mortgage loans on real estate 18,209 15,159 2,691 17,850 260 17,352 788 Consumer: Home equity lines of credit 1,581 1,093 401 1,494 111 1,702 47 Home equity loans 1,627 1,107 198 1,305 10 1,193 24 Other 52 4 3 7 3 20 — Total consumer loans 3,260 2,204 602 2,806 124 2,915 71 Commercial 4,566 575 3,895 4,470 1,848 4,283 184 Construction: Residential 140 140 — 140 — 76 9 Commercial — — — — — — — Total construction 140 140 — 140 — 76 9 Total $ 26,175 $ 18,078 $ 7,188 $ 25,266 $ 2,232 $ 24,626 $ 1,052 Impaired PNCI Loans – As of, or for the Twelve Months Ended, December 31, 2017 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 1,404 $ 1,359 $ — $ 1,359 $ $ 1,041 $ 24 Commercial — — — — 979 — Total mortgage loans on real estate 1,404 1,359 — 1,359 — 2,020 24 Consumer: Home equity lines of credit 1,216 591 603 1,194 316 1,240 48 Home equity loans 178 44 121 165 97 117 6 Other 250 — 250 250 54 186 11 Total consumer loans 1,644 635 974 1,609 467 1,543 65 Commercial — — — — — Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — Total $ 3,048 $ 1,994 $ 974 $ 2,968 $ 467 $ 3,563 $ 89 Impaired Originated Loans – As of, or for the Six Months Ended, June 30, 2017 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 3,108 $ 1,623 $ 1,463 $ 3,086 $ 179 $ 1,417 $ 23 Commercial 13,203 11,864 803 12,667 45 724 18 Total mortgage loans on real estate 16,311 13,487 2,266 15,753 224 2,141 41 Consumer: Home equity lines of credit 1,746 1,305 331 1,636 66 380 — Home equity loans 1,633 836 395 1,231 68 440 10 Other 73 22 50 72 23 34 1 Total consumer loans 3,452 2,163 776 2,939 157 854 11 Commercial 3,053 1,007 1,737 2,744 863 2,536 27 Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — Total $ 22,816 $ 16,657 $ 4,779 $ 21,436 $ 1,244 $ 5,531 $ 79 Impaired PNCI Loans – As of, or for the Six Months Ended, June 30, 2017 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 1,665 $ 1,387 $ 253 $ 1,640 $ 75 $ 256 $ 5 Commercial 2,121 1,728 129 1,857 104 131 3 Total mortgage loans on real estate 3,786 3,115 382 3,497 179 387 8 Consumer: Home equity lines of credit 1,012 387 610 997 332 580 13 Home equity loans 64 54 — 54 — — — Other 251 — 251 251 68 185 5 Total consumer loans 1,327 441 861 1,302 400 765 18 Commercial — — — — — — — Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — Total $ 5,113 $ 3,556 $ 1,243 $ 4,799 $ 579 $ 1,152 $ 26 At June 30, 2018, $9,450,000 of originated loans were TDR and classified as impaired. The Company had no obligations to lend additional funds on these TDR as of June 30, 2018. At June 30, 2018, $1,459,000 of PNCI loans were TDR and classified as impaired. The Company had no obligations to lend additional funds on these TDR as of June 30, 2018. At December 31, 2017, $12,517,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to lend $1,000 of additional funds on these TDRs as of December 31, 2017. At December 31, 2017, $1,352,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of December 31, 2017. At June 30, 2017, $12,802,000 of originated loans were TDR and classified as impaired. The Company had no obligations to lend additional funds on these TDR as of June 30, 2017. At June 30, 2017, $1,627,000 of PNCI loans were TDR and classified as impaired. The Company had obligations to lend $2,000 of additional funds on these TDR as of June 30, 2017. The following tables show certain information regarding Troubled Debt Restructurings (TDRs) that occurred during the periods indicated: TDR Information for the Three Months Ended June 30, 2018 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 — $ — $ — $ — — $ — $ — Commercial 1 34 34 34 — Total mortgage loans on real estate 1 34 34 34 — — — Consumer: Home equity lines of credit — — — — — — — Home equity loans — — — — — — — Other — — — — — — — Total consumer loans — — — — — — — Commercial 2 416 422 (2 ) 4 340 (2 ) Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — Total 3 $ 450 $ 456 $ 32 4 $ 340 $ (2 ) TDR Information for the Six Months Ended June 30, 2018 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 — $ $ — $ — $ $ Commercial 2 417 418 46 1 169 — Total mortgage loans on real estate 2 417 418 46 1 169 — Consumer: Home equity lines of credit 1 133 138 — — — — Home equity loans 1 121 121 — — — — Other — — — — — — — Total consumer loans 2 254 259 — — — — Commercial 2 416 422 (2 ) 4 340 (2 ) Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — Total 6 $ 1,087 $ 1,099 $ 44 5 $ 509 $ (2 ) The following tables show certain information regarding TDRs that occurred during the periods indicated: TDR Information for the Three Months Ended June 30, 2017 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 — $ $ — $ — — $ — $ — Commercial 3 623 596 (125 ) — — — Total mortgage loans on real estate 3 623 596 (125 ) — — — Consumer: Home equity lines of credit 2 167 167 27 — — — Home equity loans — — — — — — — Other — — — — — — — Total consumer loans 2 167 167 27 — — — Commercial 2 645 539 (84 ) — — Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — Total 7 $ 1,435 $ 1,302 $ (182 ) — $ — $ — TDR Information for the Six Months Ended June 30, 2017 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 — $ — $ — $ — — $ — $ — Commercial 3 623 596 (125 ) 1 124 — Total mortgage loans on real estate 3 623 596 (125 ) 1 124 — Consumer: Home equity lines of credit 3 187 187 27 — — — Home equity loans — — — — — — — Other 1 14 14 11 — — — Total consumer loans 4 201 201 38 — — — Commercial 3 745 639 10 — Construction: Residential — — — — — — — Commercial — — — — — — Total construction — — — — — — Total 10 $ 1,569 $ 1,436 $ (77 ) 1 $ 124 $ — Modifications classified as TDRs can include one or a combination of the following: rate modifications, term extensions, interest only modifications, either temporary or long-term, payment modifications, and collateral substitutions/additions. For all new TDRs, an impairment analysis is conducted. If the loan is determined to be collateral dependent, any additional amount of impairment will be calculated based on the difference between estimated collectible value and the current carrying balance of the loan. This difference could result in an increased provision and is typically charged off. If the asset is determined not to be collateral dependent, the impairment is measured on the net present value difference between the expected cash flows of the restructured loan and the cash flows which would have been received under the original terms. The effect of this could result in a requirement for additional provision to the reserve. The effect of these required provisions for the period are indicated above. Typically if a TDR defaults during the period, the loan is then considered collateral dependent and, if it was not already considered collateral dependent, an appropriate provision will be reserved or charge will be taken. The additional provisions required resulting from default of previously modified TDR’s are noted above. |