Allowance for Loan Losses and Credit Quality of Loans | 4. Allowance for Loan Losses and Credit Quality of Loans Allowance for Loan Losses The allowance for loan losses is maintained at a level estimated by management to provide adequately for probable incurred losses inherent in the current loan portfolio. The appropriateness of the allowance for loan losses is continuously monitored. It is assessed for appropriateness using a methodology designed to ensure the level of the allowance reasonably reflects the loan portfolio’s risk profile and can absorb all reasonably estimable credit losses inherent in the current loan portfolio. To develop and document a systematic methodology for determining the allowance for loan losses, the Company has divided the loan portfolio into three segments, each with different risk characteristics and methodologies for assessing risk. Those segments are further segregated between our loans accounted for under the amortized cost method (referred to as “originated” loans) and loans acquired in a business combination (referred to as “acquired” loans). Each portfolio segment is broken down into class segments where appropriate. Class segments contain unique measurement attributes, risk characteristics and methods for monitoring and assessing risk that are necessary to develop the allowance for loan losses. Unique characteristics such as borrower type, loan type, collateral type and risk characteristics define each class segment. The following table illustrates the portfolio and class segments for the Company’s loan portfolio: Portfolio Class Commercial Loans Commercial and Industrial Commercial Real Estate Business Banking Consumer Loans Dealer Finance Specialty Lending Direct Residential Real Estate Commercial Loans The Company offers a variety of Commercial loan products. The Company’s underwriting analysis for commercial loans typically includes credit verification, independent appraisals, a review of the borrower’s financial condition and a detailed analysis of the borrower’s underlying cash flows. Commercial and Industrial (“C&I”) – Commercial Real Estate (“CRE”) – Business Banking - Consumer Loans The Company offers a variety of Consumer loan products including Dealer Finance, Specialty Lending and Direct loans. Dealer Finance – Specialty Lending – Direct – Residential Real Estate Residential real estate loans consist primarily of loans secured by a first or second mortgage on primary residences. We originate adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a mortgage. These loans are collateralized by owner-occupied properties located in the Company’s market area. When market conditions are favorable, for longer term, fixed-rate residential real estate mortgages without escrow, the Company retains the servicing, but sells the right to receive principal and interest to Government-sponsored enterprises. This practice allows the Company to manage interest rate risk, liquidity risk and credit risk. Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 85% of the purchase price or appraised value (whichever is lower) or have private mortgage insurance. Mortgage title insurance and hazard insurance are normally required. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. Allowance for Loan Loss Calculation For purposes of evaluating the adequacy of the allowance, the Company considers a number of significant factors that affect the collectability of the portfolio. For individually impaired loans, these include estimates of impairment, if any, which reflect the facts and circumstances that affect the likelihood of repayment of such loans as of the evaluation date. For homogeneous pools of loans, estimates of the Company’s exposure to credit loss reflect a current assessment of a number of factors, which could affect collectability. These factors include: past loss experience, size, trend, composition and nature of loans; changes in lending policies and procedures, including underwriting standards and collection, charge-offs and recoveries; trends experienced in nonperforming and delinquent loans; current economic conditions in the Company’s market; portfolio concentrations that may affect loss experienced across one or more components of the portfolio; the effect of external factors such as competition, legal and regulatory requirements; and the experience, ability and depth of lending management and staff. In addition, various regulatory agencies, as an integral component of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to make loan grade changes as well as recognize additions to the allowance based on their examinations. After a thorough consideration of the factors discussed above, any required additions or reductions to the allowance for loan losses are made periodically by charges or credits to the provision for loan losses. These charges are necessary to maintain the allowance at a level that management believes is reflective of overall level of incurred loss in the portfolio. While management uses available information to recognize losses on loans, additions and reductions of the allowance may fluctuate from one reporting period to another. These fluctuations are reflective of changes in risk associated with portfolio content or changes in management’s assessment of any or all of the determining factors discussed above. The following tables illustrate the changes in the allowance for loan losses by our portfolio segments: (In thousands) Commercial Loans Consumer Loans Residential Real Estate Total Balance as of March 31, 2019 $ 32,159 $ 36,804 $ 2,442 $ 71,405 Charge-offs (1,171 ) (6,927 ) (334 ) (8,432 ) Recoveries 118 1,742 55 1,915 Provision 2,046 4,915 316 7,277 Ending Balance as of June 30, 2019 $ 33,152 $ 36,534 $ 2,479 $ 72,165 Balance as of March 31, 2018 $ 28,190 $ 36,973 $ 5,037 $ 70,200 Charge-offs (907 ) (7,442 ) (208 ) (8,557 ) Recoveries 183 1,700 146 2,029 Provision 3,593 5,248 (63 ) 8,778 Ending Balance as of June 30, 2018 $ 31,059 $ 36,479 $ 4,912 $ 72,450 (In thousands) Commercial Loans Consumer Loans Residential Real Estate Total Balance as of December 31, 2018 $ 32,759 $ 37,178 $ 2,568 $ 72,505 Charge-offs (1,918 ) (14,360 ) (608 ) (16,886 ) Recoveries 212 3,141 109 3,462 Provision 2,099 10,575 410 13,084 Ending Balance as of June 30, 2019 $ 33,152 $ 36,534 $ 2,479 $ 72,165 Balance as of December 31, 2017 $ 27,606 $ 36,830 $ 5,064 $ 69,500 Charge-offs (1,712 ) (15,129 ) (390 ) (17,231 ) Recoveries 370 3,344 193 3,907 Provision 4,795 11,434 45 16,274 Ending Balance as of June 30, 2018 $ 31,059 $ 36,479 $ 4,912 $ 72,450 For acquired loans, to the extent that we experience deterioration in borrower credit quality resulting in a decrease in our expected cash flows subsequent to the acquisition of the loans, an allowance for loan losses is established based on our estimate of incurred losses at the balance sheet date. approximately The following tables illustrate the allowance for loan losses and the recorded investment by portfolio segments: (In thousands) Commercial Loans Consumer Loans Residential Real Estate Total As of June 30, 2019 Allowance for loan losses $ 33,152 $ 36,534 $ 2,479 $ 72,165 Allowance for loans individually evaluated for impairment 11 - - 11 Allowance for loans collectively evaluated for impairment $ 33,141 $ 36,534 $ 2,479 $ 72,154 Ending balance of loans $ 3,325,064 $ 2,234,130 $ 1,404,079 $ 6,963,273 Ending balance of originated loans individually evaluated for impairment 5,422 7,674 7,495 20,591 Ending balance of acquired loans collectively evaluated for impairment 139,710 27,582 137,622 304,914 Ending balance of originated loans collectively evaluated for impairment $ 3,179,932 $ 2,198,874 $ 1,258,962 $ 6,637,768 As of December 31, 2018 Allowance for loan losses $ 32,759 $ 37,178 $ 2,568 $ 72,505 Allowance for loans individually evaluated for impairment 25 - - 25 Allowance for loans collectively evaluated for impairment $ 32,734 $ 37,178 $ 2,568 $ 72,480 Ending balance of loans $ 3,222,310 $ 2,284,563 $ 1,380,836 $ 6,887,709 Ending balance of originated loans individually evaluated for impairment 5,786 7,887 6,905 20,578 Ending balance of acquired loans collectively evaluated for impairment 143,690 31,624 147,277 322,591 Ending balance of originated loans collectively evaluated for impairment $ 3,072,834 $ 2,245,052 $ 1,226,654 $ 6,544,540 Credit Quality of Loans For all loan classes within the Company’s loan portfolio, loans are placed on nonaccrual status when timely collection of principal and/or interest in accordance with contractual terms is in doubt. Loans are transferred to nonaccrual status generally when principal or interest payments become ninety days delinquent, unless the loan is well secured and in the process of collection or sooner when management concludes circumstances indicate that borrowers may be unable to meet contractual principal or interest payments. When a loan is transferred to a nonaccrual status, all interest previously accrued in the current period but not collected is reversed against interest income in that period. Interest accrued in a prior period and not collected is charged-off against the allowance for loan losses. If ultimate repayment of a nonaccrual loan is expected, any payments received are applied in accordance with contractual terms. If ultimate repayment of principal is not expected, any payment received on a nonaccrual loan is applied to principal until ultimate repayment becomes expected. For all loan classes within the Company’s loan portfolio, nonaccrual loans are returned to accrual status when they become current as to principal and interest and demonstrate a period of performance under the contractual terms and, in the opinion of management, are fully collectible as to principal and interest. For loans in all portfolios, the principal amount is charged off in full or in part as soon as management determines, based on available facts, that the collection of principal in full or in part is improbable. For Commercial loans, management considers specific facts and circumstances relative to individual credits in making such a determination. For Consumer and Residential Real Estate loan classes, management uses specific guidance and thresholds from the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification and Account Management Policy. The following tables set forth information with regard to past due and nonperforming loans by loan class: (In thousands) 31-60 Days Past Due Accruing 61-90 Days Past Due Accruing Greater Than 90 Days Past Due Accruing Total Past Due Accruing Nonaccrual Current Recorded Total Loans As of June 30, 2019 Originated Commercial Loans: C&I $ 43 $ 1,100 $ - $ 1,143 $ 952 $ 867,661 $ 869,756 CRE 4,791 370 - 5,161 4,596 1,822,746 1,832,503 Business Banking 1,537 295 - 1,832 6,314 474,949 483,095 Total Commercial Loans $ 6,371 $ 1,765 $ - $ 8,136 $ 11,862 $ 3,165,356 $ 3,185,354 Consumer Loans: Dealer Finance $ 11,710 $ 1,842 $ 741 $ 14,293 $ 1,737 $ 1,173,640 $ 1,189,670 Specialty Lending 3,452 1,880 1,481 6,813 - 513,161 519,974 Direct 2,554 631 145 3,330 2,650 490,924 496,904 Total Consumer Loans $ 17,716 $ 4,353 $ 2,367 $ 24,436 $ 4,387 $ 2,177,725 $ 2,206,548 Residential Real Estate $ 1,225 $ 830 $ - $ 2,055 $ 6,470 $ 1,257,932 $ 1,266,457 Total Originated Loans $ 25,312 $ 6,948 $ 2,367 $ 34,627 $ 22,719 $ 6,601,013 $ 6,658,359 Acquired Commercial Loans: C&I $ - $ - $ - $ - $ 38 $ 33,001 $ 33,039 CRE - - - - - 76,362 76,362 Business Banking 441 3 - 444 466 29,399 30,309 Total Commercial Loans $ 441 $ 3 $ - $ 444 $ 504 $ 138,762 $ 139,710 Consumer Loans: Direct $ 217 $ 22 $ 20 $ 259 $ 96 $ 27,227 $ 27,582 Total Consumer Loans $ 217 $ 22 $ 20 $ 259 $ 96 $ 27,227 $ 27,582 Residential Real Estate $ 648 $ 488 $ - $ 1,136 $ 1,350 $ 135,136 $ 137,622 Total Acquired Loans $ 1,306 $ 513 $ 20 $ 1,839 $ 1,950 $ 301,125 $ 304,914 Total Loans $ 26,618 $ 7,461 $ 2,387 $ 36,466 $ 24,669 $ 6,902,138 $ 6,963,273 (In thousands) 31-60 Days Past Due Accruing 61-90 Days Past Due Accruing Greater Than 90 Days Past Due Accruing Total Past Due Accruing Nonaccrual Current Recorded Total Loans As of December 31, 2018 Originated Commercial Loans: C&I $ 909 $ - $ - $ 909 $ 1,062 $ 846,148 $ 848,119 CRE 1,089 - 588 1,677 4,995 1,734,558 1,741,230 Business Banking 1,092 302 - 1,394 5,974 481,903 489,271 Total Commercial Loans $ 3,090 $ 302 $ 588 $ 3,980 $ 12,031 $ 3,062,609 $ 3,078,620 Consumer Loans: Dealer Finance $ 14,519 $ 2,300 $ 1,186 $ 18,005 $ 1,971 $ 1,196,136 $ 1,216,112 Specialty Lending 3,479 1,773 1,562 6,814 - 518,114 524,928 Direct 2,962 1,437 552 4,951 2,592 504,356 511,899 Total Consumer Loans $ 20,960 $ 5,510 $ 3,300 $ 29,770 $ 4,563 $ 2,218,606 $ 2,252,939 Residential Real Estate $ 1,426 $ 157 $ 1,182 $ 2,765 $ 6,778 $ 1,224,016 $ 1,233,559 Total Originated Loans $ 25,476 $ 5,969 $ 5,070 $ 36,515 $ 23,372 $ 6,505,231 $ 6,565,118 Acquired Commercial Loans: C&I $ - $ - $ - $ - $ - $ 26,124 $ 26,124 CRE - - - - - 84,492 84,492 Business Banking 466 288 - 754 390 31,930 33,074 Total Commercial Loans $ 466 $ 288 $ - $ 754 $ 390 $ 142,546 $ 143,690 Consumer Loans: Dealer Finance $ 1 $ 1 $ - $ 2 $ - $ 30 $ 32 Direct 152 41 15 208 227 31,157 31,592 Total Consumer Loans $ 153 $ 42 $ 15 $ 210 $ 227 $ 31,187 $ 31,624 Residential Real Estate $ 546 $ 42 $ - $ 588 $ 1,498 $ 145,191 $ 147,277 Total Acquired Loans $ 1,165 $ 372 $ 15 $ 1,552 $ 2,115 $ 318,924 $ 322,591 Total Loans $ 26,641 $ 6,341 $ 5,085 $ 38,067 $ 25,487 $ 6,824,155 $ 6,887,709 There were no material commitments to extend further credit to borrowers with nonperforming loans as of June 30, 2019 and December 31, 2018. Impaired Loans The methodology used to establish the allowance for loan losses on impaired loans incorporates specific allocations on loans analyzed individually. Classified loans, including all troubled debt restructured loans (“TDRs”) and nonaccrual Commercial loans that are graded Substandard, Doubtful or Loss, with outstanding balances of $750 thousand or more are evaluated for impairment through the Company’s quarterly status review process. The Company considers Commercial loans less than $750 thousand to be homogeneous loans. In determining that we will be unable to collect all principal and/or interest payments due in accordance with the contractual terms of the loan agreements, we consider factors such as payment history and changes in the financial condition of individual borrowers, local economic conditions, historical loss experience and the conditions of the various markets in which the collateral may be liquidated. For loans that are identified as impaired, impairment is measured by one of three methods: 1) the fair value of collateral less cost to sell, 2) present value of expected future cash flows or 3) the loan’s observable market price. These impaired loans are reviewed on a quarterly basis for changes in the level of impairment. Impaired amounts are charged off immediately if such amounts are determined by management to be uncollectable. Any change to the previously recognized impairment loss is recognized as a component of the provision for loan losses. The following table provides information on loans specifically evaluated for impairment: June 30, 2019 December 31, 2018 (In thousands) Recorded Investment Balance (Book) Unpaid Principal Balance (Legal) Related Allowance Recorded Investment Balance (Book) Unpaid Principal Balance (Legal) Related Allowance Originated With no related allowance recorded: Commercial Loans: C&I $ 119 $ 363 $ $ 228 $ 497 $ CRE 4,181 6,195 4,312 6,330 Business Banking 1,011 1,961 1,013 2,001 Total Commercial Loans $ 5,311 $ 8,519 $ 5,553 $ 8,828 Consumer Loans: Dealer Finance $ 232 $ 327 $ 143 $ 241 Direct 7,442 9,547 7,744 9,831 Total Consumer Loans $ 7,674 $ 9,874 $ 7,887 $ 10,072 Residential Real Estate $ 7,495 $ 10,190 $ 6,905 $ 9,414 Total $ 20,480 $ 28,583 $ 20,345 $ 28,314 With an allowance recorded: Commercial Loans: C&I $ 111 $ 118 $ 11 $ 233 $ 238 $ 25 Total Commercial Loans $ 111 $ 118 $ 11 $ 233 $ 238 $ 25 Total Loans $ 20,591 $ 28,701 $ 11 $ 20,578 $ 28,552 $ 25 There were no acquired impaired loans specifically evaluated for impairment as of June 30, 2019 or December 31, 2018. The following tables summarize the average recorded investments on loans specifically evaluated for impairment and the interest income recognized: For the Three Months Ended June 30, 2019 June 30, 2018 (In thousands) Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Originated Commercial Loans: C&I $ 326 $ - $ 447 $ 1 CRE 4,212 31 3,882 32 Business Banking 1,090 5 1,044 3 Total Commercial Loans $ 5,628 $ 36 $ 5,373 $ 36 Consumer Loans: Dealer Finance $ 221 $ 4 $ 194 $ 1 Direct 7,553 98 7,952 106 Total Consumer Loans $ 7,774 $ 102 $ 8,146 $ 107 Residential Real Estate $ 7,455 $ 82 $ 6,738 $ 71 Total Originated $ 20,857 $ 220 $ 20,257 $ 214 Total Loans $ 20,857 $ 220 $ 20,257 $ 214 For the Six Months Ended June 30, 2019 June 30, 2018 (In thousands) Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Originated Commercial Loans: C&I $ 383 $ 1 $ 457 $ 1 CRE 4,248 61 4,154 64 Business Banking 1,159 11 988 8 Total Commercial Loans $ 5,790 $ 73 $ 5,599 $ 73 Consumer Loans: Dealer Finance $ 198 $ 6 $ 188 $ 4 Direct 7,636 196 8,066 215 Total Consumer Loans $ 7,834 $ 202 $ 8,254 $ 219 Residential Real Estate $ 7,323 $ 159 $ 6,815 $ 144 Total Originated $ 20,947 $ 434 $ 20,668 $ 436 Total Loans $ 20,947 $ 434 $ 20,668 $ 436 Credit Quality Indicators The Company has developed an internal loan grading system to evaluate and quantify the Company’s loan portfolio with respect to quality and risk. The system focuses on, among other things, financial strength of borrowers, experience and depth of borrower’s management, primary and secondary sources of repayment, payment history, nature of the business and outlook on particular industries. The internal grading system enables the Company to monitor the quality of the entire loan portfolio on a consistent basis and provides management with an early warning system, enabling recognition and response to problem loans and potential problem loans. Commercial Grading System For C&I and CRE loans, the Company uses a grading system that relies on quantifiable and measurable characteristics when available. This would include comparison of financial strength to available industry averages, comparison of transaction factors (loan terms and conditions) to loan policy and comparison of credit history to stated repayment terms and industry averages. Some grading factors are necessarily more subjective such as economic and industry factors, regulatory environment and management. C&I and CRE loans are graded Doubtful, Substandard, Special Mention and Pass. ● Doubtful A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as a loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital and lack the resources necessary to remain an operating entity. Pending events can include mergers, acquisitions, liquidations, capital injections, the perfection of liens on additional collateral, the valuation of collateral and refinancing. Generally, pending events should be resolved within a relatively short period and the ratings will be adjusted based on the new information. Nonaccrual treatment is required for Doubtful assets because of the high probability of loss. ● Substandard Substandard loans have a high probability of payment default or they have other well-defined weaknesses. They require more intensive supervision by bank management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. For some Substandard loans, the likelihood of full collection of interest and principal may be in doubt and those loans should be placed on nonaccrual. Although Substandard assets in the aggregate will have a distinct potential for loss, an individual asset’s loss potential does not have to be distinct for the asset to be rated Substandard. ● Special Mention Special Mention loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weakness does not yet justify a Substandard classification. Borrowers may be experiencing adverse operating trends (i.e., declining revenues or margins) or may be struggling with an ill-proportioned balance sheet (i.e., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a Special Mention rating. Although a Special Mention loan has a higher probability of default than a Pass asset, its default is not imminent. ● Pass Loans graded as Pass encompass all loans not graded as Doubtful, Substandard or Special Mention. Pass loans are in compliance with loan covenants and payments are generally made as agreed. Pass loans range from superior quality to fair quality. Business Banking Grading System Business Banking loans are graded as either Classified or Non-classified: ● Classified Classified loans are inadequately protected by the current worth and paying capacity of the obligor or, if applicable, the collateral pledged. These loans have a well-defined weakness or weaknesses, that jeopardize the liquidation of the debt or in some cases make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Classified loans have a high probability of payment default or total substantial loss. These loans require more intensive supervision by management and are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity or marginal capitalization. Repayment may depend on collateral or other credit risk mitigants. Classified loans where the full collection of interest and principal is in doubt are considered to have a nonaccrual status. In some cases, Classified loans are considered uncollectable and of such little value that their continuance as assets is not warranted. ● Non-classified Loans graded as Non-classified encompass all loans not graded as Classified. Payments on non-classified loans are generally made as agreed. Consumer and Residential Real Estate Grading System Consumer and Residential Real Estate loans are graded as either Nonperforming or Performing. ● Nonperforming Nonperforming loans are loans that are 1) over 90 days past due and interest is still accruing or 2) on nonaccrual status. ● Performing The following tables illustrate the Company’s credit quality by loan class: (In thousands) As of June 30, 2019 Originated Commercial Credit Exposure By Internally Assigned Grade: C&I CRE Total Pass $ 799,988 $ 1,750,029 $ 2,550,017 Special Mention 30,012 33,912 63,924 Substandard 39,756 48,562 88,318 Total $ 869,756 $ 1,832,503 $ 2,702,259 Acquired Commercial Credit Exposure By Internally Assigned Grade: C&I CRE Total Pass $ 28,479 $ 75,768 $ 104,247 Special Mention 1,686 - 1,686 Substandard 2,874 594 3,468 Total $ 33,039 $ 76,362 $ 109,401 Consumer Credit Exposure By Payment Activity: Direct Total Performing $ 27,466 $ 27,466 Nonperforming 116 116 Total $ 27,582 $ 27,582 (In thousands) As of December 31, 2018 Originated Commercial Credit Exposure By Internally Assigned Grade: C&I CRE Total Pass $ 796,778 $ 1,681,330 $ 2,478,108 Special Mention 11,348 13,894 25,242 Substandard 39,993 46,006 85,999 Total $ 848,119 $ 1,741,230 $ 2,589,349 Acquired Commercial Credit Exposure By Internally Assigned Grade: C&I CRE Total Pass $ 23,283 $ 83,762 $ 107,045 Special Mention 2,831 92 2,923 Substandard 10 638 648 Total $ 26,124 $ 84,492 $ 110,616 Troubled Debt Restructured Loans When the Company modifies a loan in a troubled debt restructuring, such modifications generally include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; or change in scheduled payment amount. Residential Real Estate and Consumer TDRs occurring during 2019 and 2018 were due to the reduction in the interest rate or extension of the term. Commercial TDRs during 2019 and 2018 were both a reduction of the interest rate or change in terms. When the Company modifies a loan in a troubled debt restructuring, management measures for impairment, if any, based on the present value of the expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs. If management determines that the value of the modified loan is less than the recorded investment in the loan an impairment charge would be recognized. The following tables illustrate the recorded investment and number of modifications for modified loans, including the recorded investment in the loans prior to a modification and the recorded investment in the loans after restructuring: Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 (Dollars in thousands) Number of Contracts Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Number of Contracts Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Commercial Loans: Business Banking - $ - $ - 1 $ 6 $ 5 Total Commercial Loans - $ - $ - 1 $ 6 $ 5 Consumer Loans: Dealer Finance 4 $ 60 $ 60 1 $ 13 $ 13 Direct 2 68 77 - - - Total Consumer Loans 6 $ 128 $ 137 1 $ 13 $ 13 Residential Real Estate 2 $ 369 $ 381 - $ - $ - Total Troubled Debt Restructurings 8 $ 497 $ 518 2 $ 19 $ 18 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 (Dollars in thousands) Number of Contracts Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Number of Contracts Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Commercial Loans: C&I 1 $ 65 $ 65 - $ - $ - Business Banking 2 388 388 3 369 371 Total Commercial Loans 3 $ 453 $ 453 3 $ 369 $ 371 Consumer Loans: Dealer Finance 9 $ 134 $ 134 7 $ 95 $ 94 Direct 8 388 398 2 41 41 Total Consumer Loans 17 $ 522 $ 532 9 $ 136 $ 135 Residential Real Estate 8 $ 757 $ 786 5 $ 323 $ 323 Total Troubled Debt Restructurings 28 $ 1,732 $ 1,771 17 $ 828 $ 829 The following tables illustrate the recorded investment and number of modifications for TDRs where a concession has been made and subsequently defaulted during the period: Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 (Dollars in thousands) Number of Contracts Recorded Investment Number of Contracts Recorded Investment Commercial Loans: Business Banking - $ - 1 $ 58 Total Commercial Loans - $ - 1 $ 58 Consumer Loans: Direct 14 $ 496 13 $ 495 Total Consumer Loans 14 $ 496 13 $ 495 Residential Real Estate 8 $ 429 7 $ 599 Total Troubled Debt Restructurings 22 $ 925 21 $ 1,152 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 (Dollars in thousands) Number of Contracts Recorded Investment Number of Contracts Recorded Investment Commercial Loans: Business Banking - $ - 2 $ 258 Total Commercial Loans - $ - 2 $ 258 Consumer Loans: Dealer Finance 2 $ 17 - $ - Direct 19 958 25 1,260 Total Consumer Loans 21 $ 975 25 $ 1,260 Residential Real Estate 13 $ 644 13 $ 907 Total Troubled Debt Restructurings 34 $ 1,619 40 $ 2,425 |