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 September 30, 2018 (in thousands) Beginning Charge-offs Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 1,991 $ (25 ) $ — $ 434 $ 2,400 Commercial 11,607 — 15 1,257 12,879 Total mortgage loans on real estate 13,598 (25 ) 15 1,691 15,279 Consumer: Home equity lines of credit 5,048 (172 ) 151 194 5,221 Home equity loans 1,532 (23 ) 139 (55 ) 1,593 Other 557 (229 ) 63 309 700 Total consumer loans 7,137 (424 ) 353 448 7,514 Commercial 6,378 (693 ) 202 337 6,224 Construction: Residential 1,434 — — 192 1,626 Commercial 977 — — (17 ) 960 Total construction 2,411 — — 175 2,586 Total $ 29,524 $ (1,142 ) $ 570 $ 2,651 $ 31,603 Allowance for Loan Losses – Nine Months Ended September 30, 2018 (in thousands) Beginning Charge-offs Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 2,317 $ (77 ) $ — $ 160 $ 2,400 Commercial 11,441 (15 ) 51 1,402 12,879 Total mortgage loans on real estate 13,758 (92 ) 51 1,562 15,279 Consumer: Home equity lines of credit 5,800 (276 ) 677 (980 ) 5,221 Home equity loans 1,841 (23 ) 176 (401 ) 1,593 Other 586 (597 ) 208 503 700 Total consumer loans 8,227 (896 ) 1,061 (878 ) 7,514 Commercial 6,512 (952 ) 331 333 6,224 Construction: Residential 1,184 — — 442 1,626 Commercial 642 — — 318 960 Total construction 1,826 — — 760 2,586 Total $ 30,323 $ (1,940 ) $ 1,443 $ 1,777 $ 31,603 Allowance for Loan Losses – As of September 30, 2018 (in thousands) Individually Loans pooled Loans acquired Total allowance Mortgage loans on real estate: Residential 1-4 $ 57 $ 2,313 $ 30 $ 2,400 Commercial 268 12,552 59 12,879 Total mortgage loans on real estate 325 14,865 89 15,279 Consumer: Home equity lines of credit 168 5,046 7 5,221 Home equity loans 175 1,418 — 1,593 Other 103 597 — 700 Total consumer loans 446 7,061 7 7,514 Commercial 1,857 4,353 14 6,224 Construction: Residential — 1,626 — 1,626 Commercial — 960 — 960 Total construction — 2,586 — 2,586 Total $ 2,628 $ 28,865 $ 110 $ 31,603 Loans, Net of Unearned fees – As of September 30, 2018 (in thousands) Individually Loans pooled Loans acquired Total loans, net Mortgage loans on real estate: Residential 1-4 $ 4,781 $ 517,935 $ 1,698 $ 524,414 Commercial 13,244 2,586,659 7,885 2,607,788 Total mortgage loans on real estate 18,025 3,104,594 9,583 3,132,202 Consumer: Home equity lines of credit 2,188 327,649 1,299 331,136 Home equity loans 2,406 37,840 447 40,693 Other 243 49,171 42 49,456 Total consumer loans 4,837 414,660 1,788 421,285 Commercial 4,632 282,588 2,427 289,647 Construction: Residential — 114,574 — 114,574 Commercial — 69,728 — 69,728 Total construction — 184,302 — 184,302 Total $ 27,494 $ 3,986,144 $ 13,798 $ 4,027,436 Allowance for Loan Losses – Year Ended December 31, 2017 (in thousands) Beginning Charge-offs Recoveries Provision Ending 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 September 30, 2017 (in thousands) Beginning Charge- Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 2,495 $ (60 ) $ — $ (217 ) $ 2,218 Commercial 10,119 (20 ) 238 1,033 11,370 Total mortgage loans on real estate 12,614 (80 ) 238 816 13,588 Consumer: Home equity lines of credit 6,156 (14 ) 189 (610 ) 5,721 Home equity loans 2,354 (94 ) 121 (390 ) 1,991 Other 645 (349 ) 91 203 590 Total consumer loans 9,155 (457 ) 401 (797 ) 8,302 Commercial 4,729 (291 ) 61 303 4,802 Construction: Residential 1,179 (33 ) — 284 1,430 Commercial 466 — — 159 625 Total construction 1,645 (33 ) — 443 2,055 Total $ 28,143 $ (861 ) $ $ 765 $ 28,747 Allowance for Loan Losses – Nine Months Ended September 30, 2017 (in thousands) Beginning Charge-offs Recoveries Provision Ending Balance Mortgage loans on real estate: Residential 1-4 $ 2,748 $ (60 ) $ $ (470 ) $ 2,218 Commercial 11,517 (170 ) 365 (342 ) 11,370 Total mortgage loans on real estate 14,265 (230 ) 365 (812 ) 13,588 Consumer: Home equity lines of credit 7,044 (98 ) 487 (1,712 ) 5,721 Home equity loans 2,644 (331 ) 146 (468 ) 1,991 Other 622 (831 ) 300 499 590 Total consumer loans 10,310 (1,260 ) 933 (1,681 ) 8,302 Commercial 5,831 (1,188 ) 315 (156 ) 4,802 Construction: Residential 1,417 (1,104 ) — 1,117 1,430 Commercial 680 — 1 (56 ) 625 Total construction 2,097 (1,104 ) 1 1,061 2,055 Total $ 32,503 $ (3,782 ) $ 1,614 $ (1,588 ) $ 28,747 Allowance for Loan Losses – As of September 30, 2017 (in thousands) Individually Loans pooled Loans acquired Total allowance Mortgage loans on real estate: Residential 1-4 $ 240 $ 1,978 $ — $ 2,218 Commercial 73 11,022 275 11,370 Total mortgage loans on real estate 313 13,000 275 13,588 Consumer: Home equity lines of credit 363 5,346 12 5,721 Home equity loans 111 1,880 — 1,991 Other 77 513 — 590 Total consumer loans 551 7,739 12 8,302 Commercial 1,276 3,526 — 4,802 Construction: Residential — 1,430 — 1,430 Commercial — 625 — 625 Total construction — 2,055 — 2,055 Total $ 2,140 $ 26,320 $ 287 $ 28,747 Loans, Net of Unearned fees – As of September 30, 2017 (in thousands) Individually Loans pooled Loans acquired Total Loans Mortgage loans on real estate: Residential 1-4 $ 5,027 $ 384,640 $ 1,405 $ 391,072 Commercial 19,788 1,775,843 8,171 1,803,802 Total mortgage loans on real estate 24,815 2,160,483 9,576 2,194,874 Consumer: Home equity lines of credit 2,219 284,335 2,952 289,506 Home equity loans 1,842 42,454 737 45,033 Other 267 26,470 44 26,781 Total consumer loans 4,328 353,259 3,733 361,320 Commercial 2,938 221,846 2,695 227,479 Construction: Residential 144 74,976 — 75,120 Commercial — 72,820 — 72,820 Total construction 144 147,796 — 147,940 Total $ 32,225 $ 2,883,384 $ 16,004 $ 2,931,613 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 September 30, 2018 (in thousands) Pass Special Substandard Doubtful / Loss Total Originated Mortgage loans on real estate: Residential 1-4 $ 334,902 $ 1,690 $ 3,923 $ — $ 340,515 Commercial 1,821,995 28,747 12,862 — 1,863,604 Total mortgage loans on real estate 2,156,897 30,437 16,785 — 2,204,119 Consumer: Home equity lines of credit 281,480 1,747 1,729 — 284,956 Home equity loans 32,242 1,006 2,308 — 35,556 Other 25,885 334 75 — 26,294 Total consumer loans 339,607 3,087 4,112 — 346,806 Commercial 220,328 9,942 4,471 — 234,741 Construction: Residential 81,235 32 266 — 81,533 Commercial 62,660 848 — — 63,508 Total construction 143,895 880 266 — 145,041 Total loans $ 2,860,727 $ 44,346 $ 25,634 $ — $ 2,930,707 Credit Quality Indicators PNCI Loans – As of September 30, 2018 (in thousands) Pass Special Substandard Doubtful / Loss Total PNCI Mortgage loans on real estate: Residential 1-4 $ 179,634 $ 880 $ 1,687 $ — $ 182,201 Commercial 729,261 3,478 3,560 — 736,299 Total mortgage loans on real estate 908,895 4,358 5,247 — 918,500 Consumer: Home equity lines of credit 43,406 826 649 — 44,881 Home equity loans 4,471 116 103 — 4,690 Other 23,083 32 5 — 23,120 Total consumer loans 70,960 974 757 — 72,691 Commercial 51,633 734 112 — 52,479 Construction: Residential 33,041 — — — 33,041 Commercial 6,220 — — — 6,220 Total construction 39,261 — — — 39,261 Total loans $ 1,070,749 $ 6,066 $ 6,116 $ — $ 1,082,931 Credit Quality Indicators Originated Loans – As of December 31, 2017 (in thousands) Pass Special Substandard Doubtful / 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 Doubtful / 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 and current performance 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. 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 commercial 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 or revaluations are obtained at initiation of the credit and periodically, but not less than every twelve months depending on collateral type, once repayment is questionable and the loan has been classified. 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 September 30, 2018 ³ (in thousands) 30-59 days 60-89 days > 90 days Total Past Current Total Mortgage loans on real estate: Residential 1-4 $ 275 $ 749 $ 738 $ 1,762 $ 338,753 $ 340,515 $ — Commercial 499 150 117 766 1,862,838 1,863,604 — Total mortgage loans on real estate 774 899 855 2,528 2,201,591 2,204,119 — Consumer: Home equity lines of credit 1,450 97 112 1,659 283,297 284,956 — Home equity loans 527 293 411 1,231 34,325 35,556 — Other 262 24 — 286 26,008 26,294 — Total consumer loans 2,239 414 523 3,176 343,630 346,806 — Commercial 1,010 134 1,309 2,453 232,288 234,741 — Construction: Residential 488 — — 488 81,045 81,533 — Commercial — — — — 63,508 63,508 — Total construction 488 — — 488 144,553 145,041 — Total originated loans $ 4,511 $ 1,447 $ 2,687 $ 8,645 $ 2,922,062 $ 2,930,707 $ — 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 September 30, 2018 ³ (in thousands) 30-59 days 60-89 days > 90 days Total Past Current Total Mortgage loans on real estate: Residential 1-4 $ $ 397 $ 163 $ 560 $ 181,641 $ 182,201 $ — Commercial 992 18 949 1,959 734,340 736,299 949 Total mortgage loans on real estate 992 415 1,112 2,519 915,981 918,500 949 Consumer: Home equity lines of credit 613 192 227 1,032 43,849 44,881 99 Home equity loans 262 — 16 278 4,412 4,690 — Other 242 — — 242 22,878 23,120 — Total consumer loans 1,117 192 243 1,552 71,139 72,691 99 Commercial 30 472 — 502 51,977 52,479 — Construction: Residential — — — — 33,041 33,041 — Commercial — — — — 6,220 6,220 — Total construction — — — — 39,261 39,261 — Total PNCI loans $ 2,139 $ 1,079 $ 1,355 $ 4,573 $ 1,078,358 $ 1,082,931 $ 1,048 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 ³ (in thousands) 30-59 days 60-89 days > 90 days Total Past Current Total Mortgage loans on real estate: Residential 1-4 $ 1,740 $ 510 $ 243 $ 2,493 $ 318,029 $ 320,522 $ — Commercial 158 987 — 1,145 1,689,365 1,690,510 — Total mortgage loans on real estate 1,898 1,497 243 3,638 2,007,394 2,011,032 — Consumer: Home equity lines of credit 528 48 372 948 268,994 269,942 — Home equity loans 511 107 373 991 38,857 39,848 — Other 56 36 3 95 22,764 22,859 — Total consumer loans 1,095 191 748 2,034 330,615 332,649 — Commercial 956 738 1,527 3,221 206,216 209,437 — Construction: Residential 34 — — 34 67,886 67,920 — Commercial — — — — 69,364 69,364 — Total construction 34 — — 34 137,250 137,284 — Total loans $ 3,983 $ 2,426 $ 2,518 $ 8,927 $ 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 > 90 Days (in thousands) 30-59 days 60-89 days > 90 days Total Past Current Total Mortgage loans on real estate: Residential 1-4 family $ 1,495 $ 90 $ 109 $ 1,694 $ 61,825 $ 63,519 $ 81 Commercial 70 — — 70 215,753 215,823 — Total mortgage loans on real estate 1,565 90 109 1,764 277,578 279,342 81 Consumer: Home equity lines of credit 298 228 330 856 15,392 16,248 200 Home equity loans 30 — — 30 2,668 2,698 — Other 6 26 — 32 2,219 2,251 — Total consumer loans 334 254 330 918 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 $ 2,682 $ 306,521 $ 309,203 $ 281 Interest income on originated nonaccrual loans that would have been recognized during the three months ended September 30, 2018 and 2017, if all such loans had been current in accordance with their original terms, totaled $338,000 and $244,000, respectively. Interest income actually recognized on these originated loans during the three months ended September 30, 2018 and 2017 was $59,000 and $33,000, respectively. Interest income on PNCI nonaccrual loans that would have been recognized during the three months ended September 30, 2018 and 2017, if all such loans had been current in accordance with their original terms, totaled $39,000 and $90,000, respectively. Interest income actually recognized on these PNCI loans during the three months ended September 30, 2018 and 2017 was $12,000 and $2,000. Interest income on originated nonaccrual loans that would have been recognized during the nine months ended September 30, 2018 and 2017, if all such loans had been current in accordance with their original terms, totaled $964,000 and $617,000, respectively. Interest income actually recognized on these originated loans during the nine months ended September 30, 2018 and 2017 was $133,000 and $49,000, respectively. Interest income on PNCI nonaccrual loans that would have been recognized during the nine months ended September 30, 2018 and 2017, if all such loans had been current in accordance with their original terms, totaled $93,000 and $188,000. Interest income actually recognized on these PNCI loans during the nine months ended September 30, 2018 and 2017 was $23,000 and $14,000. 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 September 30, 2018 As of December 31, 2017 (in thousands) Originated PNCI Total Originated PNCI Total Mortgage loans on real estate: Residential 1-4 family $ 2,813 $ 1,219 $ 4,032 $ 1,725 $ 1,012 $ 2,737 Commercial 7,876 305 8,181 8,144 — 8,144 Total mortgage loans on real estate 10,689 1,524 12,213 9,869 1,012 10,881 Consumer: Home equity lines of credit 725 568 1,293 811 402 1,213 Home equity loans 1,933 50 1,983 1,106 44 1,150 Other 3 5 8 7 5 12 Total consumer loans 2,661 623 3,284 1,924 451 2,375 Commercial 3,737 — 3,737 3,669 — 3,669 Construction: Residential — — — — — — Commercial — — — — — — Total construction — — — — — — Total non accrual loans $ 17,087 $ 2,147 $ 19,234 $ 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 in accordance with the original contractual terms of the loan agreement. 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. The average recorded investment and interest income recognized for the three month periods ended September 30, 2018 and 2017 has not been separately presented as the amounts are not considered significant for disclosure. Impaired Originated Loans – As of, or for the Nine Months Ended, September 30, 2018 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 4,185 $ 3,251 $ 311 $ 3,562 $ 57 $ 3,883 $ 67 Commercial 12,553 9,619 2,370 11,989 268 11,549 208 Total mortgage loans on real estate 16,738 12,870 2,681 15,551 325 15,432 275 Consumer: Home equity lines of credit 1,444 1,346 59 1,405 19 1,410 32 Home equity loans 2,554 1,960 157 2,117 30 1,753 24 Other 3 — 3 3 3 3 — Total consumer loans 4,001 3,306 219 3,525 52 3,166 56 Commercial 4,868 2,135 2,497 4,632 1,857 4,626 78 Construction: Residential — — — — — 68 — Commercial — — — — — — — Total construction — — — — — 68 — Total $ 25,607 $ 18,311 $ 5,397 $ 23,708 $ 2,234 $ 23,292 $ 409 Impaired PNCI Loans – As of, or for the Nine Months Ended, September 30, 2018 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 1,302 $ 1,219 $ — $ 1,219 $ — $ 1,275 $ — Commercial 1,255 1,255 — 1,255 — 627 58 Total mortgage loans on real estate 2,557 2,474 — 2,474 — 1,902 58 Consumer: Home equity lines of credit 852 625 158 783 149 909 13 Home equity loans 296 50 239 289 145 287 9 Other 240 — 240 240 100 257 7 Total consumer loans 1,388 675 637 1,312 394 1,453 29 Commercial — — — — — — — Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — — Total $ 3,945 $ 3,149 $ 637 $ 3,786 $ 394 $ 3,355 $ 87 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 Nine Months Ended, September 30, 2017 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 3,489 $ 1,777 $ 1,644 $ 3,421 $ 167 $ 3,242 $ 90 Commercial 18,643 17,039 1,150 18,189 73 15,990 514 Total mortgage loans on real estate 22,132 18,816 2,794 21,610 240 19,232 604 Consumer: Home equity lines of credit 1,324 1,108 110 1,218 33 1,564 25 Home equity loans 2,091 1,470 199 1,669 13 1,376 32 Other 59 3 11 14 7 23 (25 ) Total consumer loans 3,474 2,581 320 2,901 53 2,963 32 Commercial 3,262 884 2,048 2,932 1,270 3,514 69 Construction: Residential 144 144 — 144 — 78 7 Commercial — — — — — — — Total construction 144 144 — 144 — 78 7 Total $ 29,012 $ 22,425 $ 5,162 $ 27,587 $ 1,563 $ 25,787 $ 712 Impaired PNCI Loans – As of, or for the Nine Months Ended, September 30, 2017 (in thousands) Unpaid Recorded Recorded Total recorded Related Average Interest income Mortgage loans on real estate: Residential 1-4 $ 1,634 $ 1,356 $ 250 $ 1,606 $ 73 $ 1,165 $ 24 Commercial 1,869 1,599 — 1,599 — 1,778 — Total mortgage loans on real estate 3,503 2,955 250 3,205 73 2,943 24 Consumer: Home equity lines of credit 1,020 394 607 1,001 328 1,143 28 Home equity loans 185 50 123 173 99 121 5 Other 253 — 253 253 71 187 8 Total consumer loans 1,458 444 983 1,427 498 1,451 41 Commercial 6 — — — 6 3 — Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — — Total $ 4,967 $ 3,399 $ 1,233 $ 4,632 $ 577 $ 4,397 $ 65 At September 30, 2018, $8,845,000 of originated loans were Troubled Debt Restructurings (TDRs) and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of September 30, 2018. At September 30, 2018, $840,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of September 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 September 30, 2017, $13,352,000 of originated loans were TDRs and classified as impaired. The Company had obligations to lend $209,000 of additional funds on these TDRs as of September 30, 2017. At September 30, 2017, $1,611,000 of PNCI loans were TDRs and classified as impaired. The Company had obligations to lend $3,000 of additional funds on these TDRs as of September 30, 2017. The following tables show certain information regarding TDRs that occurred during the periods indicated: TDR Information for the Three Months Ended September 30, 2018 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 — $ — $ — $ — — $ — $ — Commercial 4 1,326 1,324 (308 ) — — — Total mortgage loans on real estate 4 1,326 1,324 (308 ) — — — Consumer: Home equity lines of credit — — — — 1 128 — Home equity loans 1 478 478 — — — — Other — — — — — — — Total consumer loans 1 478 478 — 1 128 — Commercial 2 203 203 — — — — Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — — Total 7 $ 2,007 $ 2,005 $ (308 ) 1 $ 128 $ — TDR Information for the Nine Months Ended September 30, 2018 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 — $ — $ — $ — — $ — $ — Commercial 6 1,743 1,741 (262 ) 1 169 — Total mortgage loans on real estate 6 1,743 1,741 (262 ) 1 169 — Consumer: Home equity lines of credit 1 133 138 — 1 128 — Home equity loans 2 599 599 — — — — Other — — — — — — — Total consumer loans 3 732 737 — 1 128 — Commercial 4 619 623 (3 ) 4 340 (2 ) Construction: Residential — — — — — — — Commercial — — — — — — — Total construction — — — — — — — Total 13 $ 3,094 $ 3,101 $ (265 ) 6 $ 637 $ (2 ) The following tables show certain information regarding TDRs that occurred during the periods indicated: TDR Information for the Three Months Ended September 30, 2017 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 1 $ 939 $ 939 $ 169 1 $ 99 $ — Commercial 4 2,886 2,886 14 1 219 — Total mortgage loans on real estate 5 3,825 3,825 183 2 318 — Consumer: Home equity lines of credit — — — — — — — Home equity loans 1 252 252 — — — — Other — — — — — — — Total consumer loans 1 252 252 — — — — Commercial 8 1,109 1,109 28 — Construction: Residential 1 144 144 — — — — Commercial — — — — — — — Total construction 1 144 144 — — — — Total 15 $ 5,330 $ 5,330 $ 211 2 $ 318 $ — TDR Information for the Nine Months Ended September 30, 2017 (dollars in thousands) Number Pre-mod Post-mod Financial Number that Recorded Financial Mortgage loans on real estate: Residential 1-4 1 $ 939 $ 939 $ 169 2 $ 223 $ — Commercial 7 3,509 3,482 (111 ) 1 219 — Total mortgage loans on real estate 8 4,448 4,421 58 3 442 — Consumer: Home equity lines of credit 3 187 187 27 — — — Home equity loans 1 252 252 — — — — Other 1 14 14 11 — — — Total consumer loans 5 453 453 38 — — — Commercial 11 1,854 1,748 37 — Construction: Residential 1 144 144 — — — — Commercial — — — — — — — Total construction 1 144 144 — — — — Total 25 $ 6,899 $ 6,766 $ 133 3 $ 442 $ — 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. |