LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY | LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY Allowance for Loan Losses The following table summarizes changes in the allowance for loan losses by loan category and bifurcates the amount of allowance allocated to each loan category based on collective impairment analysis and loans evaluated individually for impairment: December 31, 2018 Commercial Commercial Commercial Small Residential Home Other Consumer Total (Dollars in thousands) Allowance for loan losses Beginning balance $ 13,256 $ 31,453 $ 5,698 $ 1,577 $ 2,822 $ 5,390 $ 447 $ 60,643 Charge-offs (355 ) (82 ) — (372 ) (148 ) (293 ) (1,347 ) (2,597 ) Recoveries 182 188 — 46 12 156 888 1,472 Provision (benefit) 2,677 811 (540 ) 505 533 355 434 4,775 Ending balance $ 15,760 $ 32,370 $ 5,158 $ 1,756 $ 3,219 $ 5,608 $ 422 $ 64,293 Ending balance: collectively evaluated for impairment $ 15,753 $ 32,333 $ 5,158 $ 1,755 $ 2,357 $ 5,444 $ 414 $ 63,214 Ending balance: individually evaluated for impairment $ 7 $ 37 $ — $ 1 $ 862 $ 164 $ 8 $ 1,079 Financing receivables ending balance: Collectively evaluated for impairment $ 1,064,800 $ 3,235,418 $ 365,165 $ 164,135 $ 906,959 $ 1,085,961 $ 15,901 $ 6,838,339 Individually evaluated for impairment 28,829 10,839 — 541 12,706 5,948 197 59,060 Purchased credit impaired loans — 4,991 — — 3,629 175 — 8,795 Total loans by group $ 1,093,629 $ 3,251,248 $ 365,165 $ 164,676 $ 923,294 $ 1,092,084 $ 16,098 $ 6,906,194 (1) December 31, 2017 Commercial Commercial Commercial Small Residential Home Other Consumer Total (Dollars in thousands) Allowance for loan losses Beginning balance $ 16,921 $ 30,369 $ 4,522 $ 1,502 $ 2,621 $ 5,238 $ 393 $ 61,566 Charge-offs (3,891 ) (39 ) — (302 ) (207 ) (276 ) (1,494 ) (6,209 ) Recoveries 615 385 — 114 31 198 993 2,336 Provision (benefit) (389 ) 738 1,176 263 377 230 555 2,950 Ending balance $ 13,256 $ 31,453 $ 5,698 $ 1,577 $ 2,822 $ 5,390 $ 447 $ 60,643 Ending balance: collectively evaluated for impairment $ 13,246 $ 31,411 $ 5,698 $ 1,576 $ 1,815 $ 5,125 $ 430 $ 59,301 Ending balance: individually evaluated for impairment $ 10 $ 42 $ — $ 1 $ 1,007 $ 265 $ 17 $ 1,342 Financing receivables ending balance: Collectively evaluated for impairment $ 853,885 $ 3,093,945 $ 401,797 $ 131,667 $ 733,809 $ 1,045,053 $ 9,573 $ 6,269,729 Individually evaluated for impairment 34,643 16,638 — 703 13,684 6,826 307 72,801 Purchased credit impaired loans — 5,978 — — 6,836 209 — 13,023 Total loans by group $ 888,528 $ 3,116,561 $ 401,797 $ 132,370 $ 754,329 $ 1,052,088 $ 9,880 $ 6,355,553 (1) December 31, 2016 Commercial Commercial Commercial Small Residential Other Consumer Total (Dollars in thousands) Allowance for loan losses Beginning balance $ 13,802 $ 27,327 $ 5,366 $ 1,264 $ 2,590 $ 4,889 $ 587 $ 55,825 Charge-offs (593 ) (414 ) — (228 ) (28 ) (602 ) (1,607 ) (3,472 ) Recoveries 859 564 — 195 299 141 1,080 3,138 Provision (benefit) 2,853 2,892 (844 ) 271 (240 ) 810 333 6,075 Ending balance $ 16,921 $ 30,369 $ 4,522 $ 1,502 $ 2,621 $ 5,238 $ 393 $ 61,566 Ending balance: collectively evaluated for impairment $ 13,260 $ 30,173 $ 4,522 $ 1,494 $ 1,535 $ 4,996 $ 372 $ 56,352 Ending balance: individually evaluated for impairment $ 3,661 $ 196 $ — $ 8 $ 1,086 $ 242 $ 21 $ 5,214 Financing receivables ending balance: Collectively evaluated for impairment $ 862,875 $ 2,983,642 $ 320,391 $ 121,855 $ 622,392 $ 982,095 $ 10,666 $ 5,903,916 Individually evaluated for impairment 39,178 16,813 — 871 14,175 5,863 397 77,297 Purchase credit impaired loans — 10,343 — — 7,859 189 1 18,392 Total loans by group $ 902,053 $ 3,010,798 $ 320,391 $ 122,726 $ 644,426 $ 988,147 $ 11,064 $ 5,999,605 (1) (1) The amount of net deferred costs on originated loans included in the ending balance was $7.1 million , $6.1 million and $5.1 million at December 31, 2018 , 2017 and 2016 , respectively. Net unamortized discounts on acquired loans not deemed to be PCI included in the ending balance were $15.2 million , $9.4 million and $8.6 million at December 31, 2018 , 2017 and 2016 , respectively. For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the portfolio segments detailed in the above tables. Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment. Some of the risk characteristics unique to each loan category include: Commercial Portfolio • Commercial and Industrial : Loans in this category consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant and equipment, or real estate, if applicable. Repayment sources consist of primarily, operating cash flow, and secondarily, liquidation of assets. • Commercial Real Estate : Loans in this category consist of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties. Loans are typically written with amortizing payment structures. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources consist of, primarily, cash flow from operating leases and rents and, secondarily, liquidation of assets. • Commercial Construction : Loans in this category consist of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property. Project types include residential 1-4 family, condominium and multi-family homes, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties. Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources vary depending upon the type of project and may consist of sale or lease of units, operating cash flows or liquidation of other assets. • Small Business: Loans in this category consist of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, or real estate if applicable. Repayment sources consist primarily of operating cash flows and, secondarily, liquidation of assets. For the commercial portfolio it is the Company’s practice to obtain personal guarantees for payment from individuals holding material ownership interests of the borrowing entities. Consumer Portfolio • Residential Real Estate : Residential mortgage loans held in the Company’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral. Collateral consists of mortgage liens on 1-4 family residential properties. Residential mortgage loans also include loans to construct owner-occupied 1-4 family residential properties. • Home Equity : Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on owner-occupied 1-4 family homes, condominiums or vacation homes. Each home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest. Each home equity line of credit has a variable rate and is billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the then outstanding principal balance plus all accrued interest over a predetermined repayment period, as set forth in the note. Additionally, the Company has the option of renewing each line of credit for additional draw periods. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines. • Other Consumer: Other consumer loan products include personal lines of credit, investor management secured lines of credit and amortizing loans made to qualified individuals for various purposes such as debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines. These loans may be secured or unsecured. Credit Quality The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as adversely risk-rated, delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring (“TDR”). The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point credit risk-rating system, which assigns a risk-grade to each loan obligation based on a number of quantitative and qualitative factors associated with a commercial or small business loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-ratings categories are defined as follows: • 1- 6 Rating — Pass: Risk-rating grades “1” through “6” comprise those loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share. Collateral coverage is protective. • 7 Rating — Potential Weakness: Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Company’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned. • 8 Rating — Definite Weakness Loss Unlikely: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loan may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation. • 9 Rating — Partial Loss Probable: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely. • 10 Rating — Definite Loss: Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Company is not warranted. The credit quality of the commercial loan portfolio is actively monitored and any changes in credit quality are reflected in risk-rating changes. Risk-ratings are assigned or reviewed for all new loans, when advancing significant additions to existing relationships (over $50,000 ), at least quarterly for all actively managed loans, and any time a significant event occurs, including at renewal of the loan. The Company utilizes a comprehensive strategy for monitoring commercial credit quality. Actively managed commercial borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by an experienced credit analysis group, while continuous portfolio monitoring techniques are employed to evaluate changes in credit quality for smaller loan relationships. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis. The following table details the amount of outstanding principal balances relative to each of the risk-rating categories for the Company’s commercial portfolio: December 31, 2018 Category Risk Commercial and Commercial Real Commercial Small Business Total (Dollars in thousands) Pass 1 - 6 $ 1,014,370 $ 3,156,989 $ 361,884 $ 161,851 $ 4,695,094 Potential weakness 7 16,860 56,840 298 888 74,886 Definite weakness - loss unlikely 8 58,909 37,419 2,983 1,937 101,248 Partial loss probable 9 3,490 — — — 3,490 Definite loss 10 — — — — — Total $ 1,093,629 $ 3,251,248 $ 365,165 $ 164,676 $ 4,874,718 December 31, 2017 Category Risk Commercial and Commercial Real Commercial Small Business Total (Dollars in thousands) Pass 1 - 6 $ 806,331 $ 3,007,672 $ 400,964 $ 130,265 $ 4,345,232 Potential weakness 7 16,563 69,788 — 1,471 87,822 Definite weakness - loss unlikely 8 59,415 38,637 833 631 99,516 Partial loss probable 9 6,219 464 — 3 6,686 Definite loss 10 — — — — — Total $ 888,528 $ 3,116,561 $ 401,797 $ 132,370 $ 4,539,256 For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) scores and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a regular basis. In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios, periodically. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios as of the periods indicated below: December 31 2018 2017 Residential portfolio FICO score (re-scored)(1) 749 745 LTV (re-valued)(2) 58.6 % 59.2 % Home equity portfolio FICO score (re-scored)(1) 767 766 LTV (re-valued)(2)(3) 49.3 % 50.1 % (1) The average FICO scores at December 31, 2018 are based upon rescores available from November 2018 and origination score data for loans booked in December 2018. The average FICO scores at December 31, 2017 are based upon rescores available from August 2017 and origination score data for loans booked between September and December 2017. (2) The combined LTV ratios for December 31, 2018 are based upon updated automated valuations as of November 2018, when available, and/or the most current valuation data available. The combined LTV ratios for December 31, 2017 are based upon updated automated valuations as of August 2017, when available, and /or the most current valuation data available. The updated automated valuations provide new information on loans that may be available since the previous valuation was obtained. If no new information is available, the valuation will default to the previously obtained data or most recent appraisal. (3) For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines. Asset Quality The Bank’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of seasoned collection specialists and the Company seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame. As a general rule, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans. The Company also may use discretion regarding the accrual status of other loans over 90 days delinquent if the loan is well secured and in process of collection. The following table shows the carrying value of nonaccrual loans at the dates indicated: December 31 2018 2017 (Dollars in thousands) Commercial and industrial $ 26,310 $ 32,055 Commercial real estate 3,015 3,123 Commercial construction 311 — Small business 235 230 Residential real estate 8,251 8,129 Home equity 7,278 6,022 Other consumer 13 71 Total nonaccrual loans (1) $ 45,413 $ 49,630 (1) Included in these amounts were $29.3 million and $6.1 million of nonaccruing TDRs at December 31, 2018 and 2017 , respectively. During the fourth quarter of 2018 nonaccrual loans associated with a large commercial loan customer that had previously declared bankruptcy were modified when a court confirmed the customer's bankruptcy reorganization plan. That revision to loan terms required the Company to deem loans associated with the customer as troubled debt restructures as of December 31, 2018 which amounted to $25.9 million. The following table shows information regarding foreclosed residential real estate property at the date indicated: December 31, 2018 December 31, 2017 (Dollars in thousands) Foreclosed residential real estate property held by the creditor $ — $ 612 Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure $ 3,174 $ 2,971 The following table shows the age analysis of past due financing receivables as of the dates indicated: December 31, 2018 30-59 days 60-89 days 90 days or more Total Past Due Current Total Recorded Number Principal Number Principal Number Principal Number Principal (Dollars in thousands) Commercial and industrial — $ — 4 $ 382 11 $ 26,311 15 $ 26,693 $ 1,066,936 $ 1,093,629 $ — Commercial real estate 9 1,627 — — 8 2,250 17 3,877 3,247,371 3,251,248 — Commercial construction 1 1,271 — — 1 311 2 1,582 363,583 365,165 — Small business 15 506 19 87 24 162 58 755 163,921 164,676 — Residential real estate 23 3,486 6 521 25 4,382 54 8,389 914,905 923,294 — Home equity 22 1,331 12 855 29 2,663 63 4,849 1,087,235 1,092,084 — Other consumer (1) 330 181 15 9 12 13 357 203 15,895 16,098 5 Total 400 $ 8,402 56 $ 1,854 110 $ 36,092 566 $ 46,348 $ 6,859,846 $ 6,906,194 $ 5 December 31, 2017 30-59 days 60-89 days 90 days or more Total Past Due Current Total Recorded Number Principal Number Principal Number Principal Number Principal (Dollars in thousands) Commercial and industrial 2 $ 195 2 $ 370 14 $ 32,007 18 $ 32,572 $ 855,956 $ 888,528 $ — Commercial real estate 7 3,060 — — 9 1,793 16 4,853 3,111,708 3,116,561 — Commercial construction — — — — — — — — 401,797 401,797 — Small business 17 339 11 144 10 57 38 540 131,830 132,370 — Residential real estate 6 870 13 2,385 22 3,471 41 6,726 747,603 754,329 — Home equity 22 1,310 6 451 20 2,025 48 3,786 1,048,302 1,052,088 — Other consumer (1) 265 197 16 27 17 45 298 269 9,611 9,880 8 Total 319 $ 5,971 48 $ 3,377 92 $ 39,398 459 $ 48,746 $ 6,306,807 $ 6,355,553 $ 8 (1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances. Troubled Debt Restructurings In the course of resolving nonperforming loans, the Bank may choose to restructure the contractual terms of certain loans. The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions. Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated: December 31 2018 2017 (Dollars in thousands) TDRs on accrual status $ 23,849 $ 25,852 TDRs on nonaccrual status 29,348 (1) 6,067 Total TDRs $ 53,197 $ 31,919 Amount of specific reserves included in the allowance for loan loss associated with TDRs: $ 1,079 $ 1,342 Additional commitments to lend to a borrower who has been a party to a TDR: $ 982 $ 487 (1) During the fourth quarter of 2018 nonaccrual loans associated with a large commercial loan customer that had previously declared bankruptcy were modified when a court confirmed the customer's bankruptcy reorganization plan. That revision to loan terms required the Company to deem loans associated with the customer as troubled debt restructures as of December 31, 2018 which amounted to $25.9 million. The Company’s policy is to have any restructured loan which is on nonaccrual status prior to being modified remain on nonaccrual status for six months subsequent to being modified before management considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession. For all residential loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized. The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring: Years Ended December 31 2018 Number Pre-Modification Post-Modification (Dollars in thousands) Troubled debt restructurings Commercial and industrial (1) 12 $ 35,688 $ 39,224 Commercial real estate 3 1,600 1,600 Residential real estate 5 1,048 1,071 Home equity 9 562 562 Total 29 $ 38,898 $ 42,457 2017 Troubled debt restructurings Commercial and industrial 12 $ 1,787 $ 1,787 Commercial real estate 6 2,705 2,705 Small business 9 369 369 Residential real estate 10 1,284 1,326 Home equity 17 1,985 1,988 Total 54 $ 8,130 $ 8,175 2016 Troubled debt restructurings Commercial and industrial 10 $ 1,623 $ 1,623 Commercial real estate 10 2,959 2,959 Small business 3 188 188 Residential real estate 8 1,808 1,850 Home equity 13 932 932 Other consumer 6 153 153 Total 50 $ 7,663 $ 7,705 (1) The pre-modification and post-modification balances represent the legal principal balance of the loan. These amounts may show an increase when modifications include a capitalization of interest and/or professional fees. The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated: Years Ended December 31 2018 2017 2016 (Dollars in thousands) Extended maturity $ 2,878 $ 5,881 $ 5,044 Adjusted interest rate 57 — 92 Combination rate and maturity 38,812 568 1,035 Court ordered concession 710 1,726 1,534 Total $ 42,457 $ 8,175 $ 7,705 The Company considers a loan to have defaulted when it reaches 90 days past due. As of December 31, 2018, there were no loans modified during the past twelve months that subsequently defaulted. There was one commercial and industrial loan modified during the proceeding twelve month period that ended December 31, 2017 with a recorded investment of $122,000 , which subsequently defaulted. During the twelve months ended December 31, 2016 there was one commercial real estate loan that was modified during the proceeding twelve month period, with a recorded investment of $249,000 , which subsequently defaulted. All TDR loans are considered impaired and therefore are subject to a specific review for credit losses. The impairment analysis appropriately discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification. The amount of impairment, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans (commercial and industrial, commercial construction, commercial real estate and small business loans), residential loans, and home equity loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In such an instance, any shortfall between the value of the collateral and the carrying value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell. The Company charges off the amount of any confirmed loan loss in the period when the loans, or portion of loans, are deemed uncollectible. Smaller balance consumer TDR loans are reviewed for performance to determine when a charge-off is appropriate. Impaired Loans A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The tables below set forth information regarding the Company’s impaired loans. The information for average recorded investment and interest income recognized is reflective of the full period being presented and does not take into account the date at which a loan was deemed to be impaired. See information below as of the dates indicated: As of and For the Years Ended December 31 2018 Recorded Unpaid Related Average Interest Income Recognized (Dollars in thousands) With no related allowance recorded Commercial and industrial $ 28,459 $ 35,913 $ — $ 31,117 $ 142 Commercial real estate 9,552 9,832 — 10,561 519 Small business 358 439 — 401 14 Residential real estate 4,518 4,686 — 4,597 212 Home equity 4,957 5,199 — 5,230 220 Other consumer 56 56 — 64 4 Subtotal 47,900 56,125 — 51,970 1,111 With an allowance recorded Commercial and industrial 370 370 7 385 19 Commercial real estate 1,287 1,287 37 1,311 74 Small business 183 223 1 225 13 Residential real estate 8,188 9,217 862 8,459 289 Home equity 991 1,149 164 1,018 43 Other consumer 141 143 8 154 5 Subtotal 11,160 12,389 1,079 11,552 443 Total $ 59,060 $ 68,514 $ 1,079 $ 63,522 $ 1,554 2017 Recorded Unpaid Related Average Interest (Dollars in thousands) With no related allowance recorded Commercial and industrial $ 34,267 $ 38,329 $ — $ 36,631 $ 446 Commercial real estate 13,245 14,374 — 13,683 559 Small business 556 619 — 569 21 Residential real estate 4,264 4,397 — 4,332 218 Home equity 4,950 5,056 — 5,063 198 Other consumer 91 92 — 102 7 Subtotal 57,373 62,867 — 60,380 1,449 With an allowance recorded Commercial and industrial 376 376 10 391 19 Commercial real estate 3,393 3,399 42 3,447 198 Small business 147 153 1 238 14 Residential real estate 9,420 10,154 1,007 9,575 284 Home equity 1,876 2,110 265 1,916 55 Other consumer 216 217 17 233 7 Subtotal 15,428 16,409 1,342 15,800 577 Total $ 72,801 $ 79,276 $ 1,342 $ 76,180 $ 2,026 2016 Recorded Unpaid Related Average Interest (Dollars in thousands) With no related allowance recorded Commercial and industrial $ 28,776 $ 29,772 $ — $ 26,472 $ 927 Commercial real estate 11,628 12,891 — 12,744 437 Commercial construction — — — — — Small business 494 569 — 534 20 Residential real estate 4,216 4,427 — 4,302 185 Home equity 4,485 4,572 — 4,602 184 Other consumer 146 146 — 160 11 Subtotal 49,745 52,377 — 48,814 1,764 With an allowance recorded Commercial and industrial 10,402 10,440 3,661 10,760 325 Commercial real estate 5,185 5,533 196 5,491 200 Small business 377 392 8 408 21 Residential real estate 9,959 10,530 1,086 10,065 332 Home equity 1,378 1,547 242 1,403 50 Other consumer 251 252 21 268 8 Subtotal 27,552 28,694 5,214 28,395 936 Total $ 77,297 $ 81,071 $ 5,214 $ 77,209 $ 2,700 Purchased Credit Impaired Loans Certain loans acquired by the Company may have shown evidence of deterioration of credit quality since origination and it was deemed unlikely that the Company would be able to collect all contractually required payments. As such, these loans were deemed to be PCI loans and the carrying value and prospective income recognition are predicated upon future cash flows expected to be collected. The following table displays certain information pertaining to PCI loans at the dates indicated: December 31 2018 2017 (Dollars in thousands) Outstanding balance $ 9,749 $ 14,485 Carrying amount $ 8,795 $ 13,023 The following table summarizes activity in the accretable yield for the PCI loan portfolio: 2018 2017 (Dollars in thousands) Beginning balance $ 1,791 $ 2,370 Accretion (1,135 ) (1,475 ) Other change in expected cash flows (1) 310 748 Reclassification from nonaccretable difference for loans which have paid off (2) 225 148 Ending balance $ 1,191 $ 1,791 (1) Represents changes in cash flows expected to be collected resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s). (2) |