Allowance for Loan Losses and Credit Quality Information | ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY INFORMATION Allowance for Loan Losses We maintain an allowance for loan losses which represents our best estimate of probable losses within our loan portfolio. As losses are realized, they are charged to this allowance. We established our allowance in accordance with guidance provided in the SEC’s Staff Accounting Bulletin 102 (SAB 102), Selected Loan Loss Allowance Methodology and Documentation Issues, ASC 450, Contingencies and ASC 310, Receivables . When we have reason to believe it is probable that we will not be able to collect all contractually due amounts of principal and interest, loans are evaluated for impairment on an individual basis and a specific allocation of the allowance is assigned in accordance with ASC 310-10. We also maintain an allowance for loan losses on acquired loans when: (i) for loans accounted for under ASC 310-30, there is deterioration in credit quality subsequent to acquisition and (ii) for loans accounted for under ASC 310-20, the inherent losses in the loans exceed the remaining credit discount recorded at the time of acquisition. The determination of the allowance for loan losses requires significant judgment reflecting our best estimate of impairment related to specifically identified impaired loans as well as probable loan losses in the remaining loan portfolio. Our evaluation is based on a continuing review of these portfolios. The following are included in our allowance for loan losses: • Specific reserves for impaired loans • An allowance for each pool of homogenous loans based on historical loss experience • Adjustments for qualitative and environmental factors allocated to pools of homogenous loans When it is probable that the Bank will be unable to collect all amounts due (interest and principal) in accordance with the contractual terms of the loan agreement, it assigns a specific reserve to that loan, if necessary. Unless loans are well-secured and collection is imminent, loans greater than 90 days past due are deemed impaired and their respective reserves are generally charged-off once the loss has been confirmed. Estimated specific reserves are based on collateral values, estimates of future cash flows or market valuations. We charge loans off when they are deemed to be uncollectible. During the nine months ended September 30, 2017 and 2016 , net charge-offs totaled $6.5 million or 0.19% of average loans annualized, and $5.9 million , or 0.20% of average loans annualized, respectively. Allowances for pooled homogeneous loans, that are not deemed impaired, are based on historical net loss experience. Estimated losses for pooled portfolios are determined differently for commercial loan pools and retail loan pools. Commercial loans are pooled as follows: commercial, owner-occupied commercial, commercial mortgages and construction. Each pool is further segmented by internally assessed risk ratings. Loan losses for commercial loans are estimated by determining the probability of default and expected loss severity upon default. The probability of default is calculated based on the historical rate of migration to impaired status during the last 27 quarters. During the nine months ended September 30, 2017 , we increased the look-back period to 27 quarters from the 24 quarters used at December 31, 2016 . This increase in the look-back period allows us to continue to anchor to the fourth quarter of 2010 to ensure that the core reserves calculated by the ALLL model are adequately considering the losses within a full credit cycle. Loss severity upon default is calculated as the actual loan losses (net of recoveries) on impaired loans in their respective pool during the same time frame. Retail loans are pooled into the following segments: residential mortgage, consumer secured and consumer unsecured loans. Pooled reserves for retail loans are calculated based solely on average net loss rates over the same 27 quarter look-back period. Qualitative adjustment factors consider various current internal and external conditions which are allocated among loan types and take into consideration: • Current underwriting policies, staff, and portfolio mix, • Internal trends of delinquency, nonaccrual and criticized loans by segment, • Risk rating accuracy, control and regulatory assessments/environment, • General economic conditions - locally and nationally, • Market trends impacting collateral values, and • The competitive environment, as it could impact loan structure and underwriting. The above factors are based on their relative standing compared to the period in which historic losses are used in core reserve estimates and current directional trends. Qualitative factors in our model can add to or subtract from core reserves. The allowance methodology uses a loss emergence period (LEP), which is the period of time between an event that triggers the probability of a loss and the confirmation of the loss. We estimate the commercial LEP to be approximately 9 quarters as of September 30, 2017 . Our residential mortgage and consumer LEP remained at 4 quarters as of September 30, 2017 . We evaluate LEP quarterly for reasonableness and complete a detailed historical analysis of our LEP annually for our commercial portfolio and review the current 4 quarter LEP for the retail portfolio to determine the continued reasonableness of this assumption. In prior periods, we had a component of the allowance for model estimation and complexity risk reserve. During the second quarter of 2016 as a result of continued refinement of the model and normal review of the factors, we removed the model estimation and complexity risk reserve from our calculation of the allowance for loan losses. Our loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with individual problem loans. In addition, various regulatory agencies periodically review our loan ratings and allowance for loan losses and the Bank’s internal loan review department performs loan reviews. The following tables provide the activity of our allowance for loan losses and loan balances for the three and nine months ended September 30, 2017 : (Dollars in thousands) Commercial Owner-occupied Commercial Commercial Mortgages Construction Residential (1) Consumer Total Three months ended September 30, 2017 Allowance for loan losses Beginning balance $ 14,224 $ 5,816 $ 7,335 $ 3,432 $ 2,050 $ 7,148 $ 40,005 Charge-offs (1,603 ) (104 ) (1,196 ) (215 ) (59 ) (575 ) (3,752 ) Recoveries 417 12 16 301 11 295 1,052 Provision (credit) 2,128 (96 ) (231 ) 427 (49 ) 644 2,823 Provision for acquired loans (7 ) 104 (5 ) (28 ) 9 — 73 Ending balance $ 15,159 $ 5,732 $ 5,919 $ 3,917 $ 1,962 $ 7,512 $ 40,201 Nine months ended September 30, 2017 Allowance for loan losses Beginning balance $ 13,339 $ 6,588 $ 8,915 $ 2,838 $ 2,059 $ 6,012 $ 39,751 Charge-offs (3,787 ) (296 ) (1,702 ) (346 ) (112 ) (2,606 ) (8,849 ) Recoveries 820 120 69 305 141 943 2,398 Provision (credit) 4,597 (802 ) (1,602 ) 1,056 (146 ) 3,177 6,280 Provision for acquired loans 190 122 239 64 20 (14 ) 621 Ending balance $ 15,159 $ 5,732 $ 5,919 $ 3,917 $ 1,962 $ 7,512 $ 40,201 Period-end allowance allocated to: Loans individually evaluated for impairment $ 1,220 $ — $ 131 $ — $ 858 $ 198 $ 2,407 Loans collectively evaluated for impairment 13,646 5,699 5,638 3,881 1,078 7,310 37,252 Acquired loans evaluated for impairment 293 33 150 36 26 4 542 Ending balance $ 15,159 $ 5,732 $ 5,919 $ 3,917 $ 1,962 $ 7,512 $ 40,201 Period-end loan balances evaluated for: Loans individually evaluated for impairment (2) $ 12,845 $ 3,346 $ 9,012 $ 1,839 $ 14,060 $ 7,409 $ 48,511 Loans collectively evaluated for impairment 1,249,027 941,296 943,699 271,447 148,715 472,488 4,026,672 Acquired nonimpaired loans 120,987 144,710 194,394 19,085 77,154 40,136 596,466 Acquired impaired loans 5,235 7,401 9,969 946 788 243 24,582 Ending balance (3) $ 1,388,094 $ 1,096,753 $ 1,157,074 $ 293,317 $ 240,717 $ 520,276 $ 4,696,231 (1) Period-end loan balance excludes reverse mortgages, at fair value of $21.4 million . (2) The difference between this amount and nonaccruing loans represents accruing troubled debt restructured loans of $14.9 million for the period ending September 30, 2017 . Accruing troubled debt restructured loans are considered impaired loans. (3) Ending loan balances do not include net deferred fees. The following table provides the activity of the allowance for loan losses and loan balances for the three and nine months ended September 30, 2016 : (Dollars in thousands) Commercial Owner - occupied Commercial Commercial Mortgages Construction Residential (1) Consumer Complexity Risk (2) Total Three months ended September 30, 2016 Allowance for loan losses Beginning balance $ 11,402 $ 6,723 $ 8,135 $ 3,308 $ 2,352 $ 5,826 $ — $ 37,746 Charge-offs (3,737 ) (1,415 ) (1 ) (30 ) (43 ) (518 ) — (5,744 ) Recoveries 223 15 197 440 33 290 — 1,198 Provision (credit) 3,714 1,437 1,089 (824 ) (179 ) 401 — 5,638 Provision for acquired loans 117 185 (48 ) (76 ) 12 — — 190 Ending balance $ 11,719 $ 6,945 $ 9,372 $ 2,818 $ 2,175 $ 5,999 $ — $ 39,028 Nine months ended September 30, 2016 Allowance for loan losses Beginning balance $ 11,156 $ 6,670 $ 6,487 $ 3,521 $ 2,281 $ 5,964 $ 1,010 $ 37,089 Charge-offs (4,643 ) (1,556 ) (79 ) (59 ) (72 ) (1,967 ) — (8,376 ) Recoveries 557 66 310 486 112 922 — 2,453 Provision (credit) 4,551 1,564 2,650 (1,104 ) (177 ) 1,118 (1,010 ) 7,592 Provision for acquired loans 98 201 4 (26 ) 31 (38 ) — 270 Ending balance $ 11,719 $ 6,945 $ 9,372 $ 2,818 $ 2,175 $ 5,999 $ — $ 39,028 Period-end allowance allocated to: Loans individually evaluated for impairment $ 692 $ — $ 1,264 $ 215 $ 989 $ 201 $ — $ 3,361 Loans collectively evaluated for impairment 10,974 6,923 7,982 2,549 1,167 5,798 — 35,393 Acquired loans evaluated for impairment 53 22 126 54 19 — — 274 Ending balance $ 11,719 $ 6,945 $ 9,372 $ 2,818 $ 2,175 $ 5,999 $ — $ 39,028 Period-end loan balances: Loans individually evaluated for impairment (3) $ 4,198 $ 2,510 $ 7,165 $ 1,419 $ 13,957 $ 8,105 $ — $ 37,354 Loans collectively evaluated for impairment 1,077,258 869,051 904,328 182,338 150,318 368,428 — 3,551,721 Acquired nonimpaired loans 175,570 175,411 229,530 21,627 103,537 61,257 — 766,932 Acquired impaired loans 9,691 10,673 12,880 3,592 899 368 — 38,103 Ending balance (4) $ 1,266,717 $ 1,057,645 $ 1,153,903 $ 208,976 $ 268,711 $ 438,158 $ — $ 4,394,110 (1) Period-end loan balance excludes reverse mortgages, at fair value of $23.1 million . (2) Represents the portion of the allowance for loan losses established to capture factors not already included in other components in our allowance for loan losses methodology. (3) The difference between this amount and nonaccruing loans represents accruing troubled debt restructured loans of $14.2 million for the period ending September 30, 2016 . Accruing troubled debt restructured loans are considered impaired loans. (4) Ending loan balances do not include net deferred fees. Nonaccrual and Past Due Loans Nonaccruing loans are those on which the accrual of interest has ceased. Typically, we discontinue accrual of interest on originated loans after payments become more than 90 days past due or earlier if we do not expect the full collection of principal or interest in accordance with the terms of the loan agreement. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed and charged against interest income. In addition, the accretion of net deferred loan fees and amortization of net deferred loan costs is suspended when a loan is placed on nonaccrual status. Subsequent cash receipts are applied either to the outstanding principal balance or recorded as interest income, depending on our assessment of the ultimate collectability of principal and interest. Loans greater than 90 days past due and still accruing are defined as loans contractually past due 90 days or more as to principal or interest payments, but which remain in accrual status because they are considered well secured and are in the process of collection. The following tables show our nonaccrual and past due loans at the dates indicated: September 30, 2017 (Dollars in thousands) 30–59 Days Past Due and Still Accruing 60–89 Days Past Due and Still Accruing Greater Than 90 Days Past Due and Still Accruing Total Past Due And Still Accruing Accruing Current Balances Acquired Impaired Loans Nonaccrual Loans Total Loans Commercial $ 673 $ 136 $ 685 $ 1,494 $ 1,368,660 $ 5,235 $ 12,705 $ 1,388,094 Owner-occupied commercial 998 — — 998 1,085,008 7,401 3,346 1,096,753 Commercial mortgages 1,320 — — 1,320 1,136,982 9,969 8,803 1,157,074 Construction 1,033 — — 1,033 289,499 946 1,839 293,317 Residential (1) 1,708 364 557 2,629 232,567 788 4,733 240,717 Consumer 593 771 96 1,460 516,463 243 2,110 520,276 Total (2) $ 6,325 $ 1,271 $ 1,338 $ 8,934 $ 4,629,179 $ 24,582 $ 33,536 $ 4,696,231 % of Total Loans 0.13 % 0.03 % 0.03 % 0.19 % 98.58 % 0.52 % 0.71 % 100 % (1) Residential accruing current balances excludes reverse mortgages at fair value of $21.4 million . (2) The balances above include a total of $596.5 million of acquired nonimpaired loans. December 31, 2016 (Dollars in thousands) 30–59 Days Past Due and Still Accruing 60–89 Days Past Due and Still Accruing Greater Than 90 Days Past Due and Still Accruing Total Past Due And Still Accruing Accruing Current Balances Acquired Impaired Loans Nonaccrual Loans Total Loans Commercial $ 1,507 $ 278 $ — $ 1,785 $ 1,277,748 $ 6,183 $ 2,015 $ 1,287,731 Owner-occupied commercial 116 540 — 656 1,063,306 12,122 2,078 1,078,162 Commercial mortgages 167 — — 167 1,143,180 10,386 9,821 1,163,554 Construction 132 — — 132 218,886 3,694 — 222,712 Residential (1) 3,176 638 153 3,967 257,234 860 4,967 267,028 Consumer 392 346 285 1,023 444,642 369 3,995 450,029 Total (2) $ 5,490 $ 1,802 $ 438 $ 7,730 $ 4,404,996 $ 33,614 $ 22,876 $ 4,469,216 % of Total Loans 0.12 % 0.04 % 0.01 % 0.17 % 98.57 % 0.75 % 0.51 % 100 % (1) Residential accruing current balances excludes reverse mortgages, at fair value of $22.6 million . (2) The balances above include a total of $724.1 million of acquired nonimpaired loans. Impaired Loans Loans for which it is probable we will not collect all principal and interest due according to their contractual terms, which is assessed based on the credit characteristics of the loan and/or payment status, are measured for impairment in accordance with the provisions of SAB 102 and FASB ASC 310, Receivables (ASC 310). The amount of impairment is required to be measured using one of three methods: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the fair value of collateral, if the loan is collateral dependent or (3) the loan’s observable market price. If the measure of the impaired loan is less than the recorded investment in the loan, a related allowance is allocated for the impairment. The following tables provide an analysis of our impaired loans at September 30, 2017 and December 31, 2016 : September 30, 2017 (Dollars in thousands) Ending Loan Balances Loans with No Related Reserve (1) Loans with Related Reserve Related Reserve Contractual Principal Balances Average Loan Balances Commercial $ 14,814 $ 3,129 $ 11,685 $ 1,513 $ 16,967 $ 11,981 Owner-occupied commercial 4,669 3,346 1,323 33 4,984 5,583 Commercial mortgages 12,190 7,267 4,923 281 18,385 12,941 Construction 2,111 1,839 272 36 2,377 3,769 Residential 14,621 8,343 6,278 884 17,517 14,652 Consumer 7,447 5,914 1,533 202 9,283 8,216 Total (2) $ 55,852 $ 29,838 $ 26,014 $ 2,949 $ 69,513 $ 57,142 (1) Reflects loan balances at or written down to their remaining book balance. (2) The above includes acquired impaired loans totaling $7.3 million in the ending loan balance and $8.3 million in the contractual principal balance of the total acquired impaired loan portfolio of $24.6 million December 31, 2016 (Dollars in thousands) Ending Loan Balances Loans with No Related (1) Loans with Related Reserve Related Reserve Contractual Principal Balances Average Loan Balances Commercial $ 4,250 $ 1,395 $ 2,855 $ 505 $ 5,572 $ 5,053 Owner-occupied commercial 4,650 2,078 2,572 15 5,129 3,339 Commercial mortgages 15,065 4,348 10,717 1,433 20,716 7,323 Construction 3,662 — 3,662 303 3,972 2,376 Residential 14,256 7,122 7,134 934 17,298 15,083 Consumer 8,021 6,561 1,460 215 11,978 7,910 Total (2) $ 49,904 $ 21,504 $ 28,400 $ 3,405 $ 64,665 $ 41,084 (1) Reflects loan balances at or written down to their remaining book balance. (2) The above includes acquired impaired loans totaling $12.8 million in the ending loan balance and $15.0 million in the contractual principal balance of the total acquired impaired loan portfolio of $33.6 million . Interest income of $0.3 million and $1.0 million was recognized on impaired loans during the three and nine months ended September 30, 2017 , respectively. Interest income of $0.5 million and $0.8 million was recognized on impaired loans during the three and nine months ended September 30, 2016 , respectively. As of September 30, 2017 , there were 32 residential loans and 3 commercial loans in the process of foreclosure. The total outstanding balance on the loans was $3.3 million and $0.2 million , respectively. As of December 31, 2016 , there were 29 residential loans and 7 commercial loans in the process of foreclosure. The total outstanding balance on the loans was $3.7 million and $3.6 million , respectively. Reserves on Acquired Nonimpaired Loans In accordance with FASB ASC 310, loans acquired by the Bank through its mergers with First National Bank of Wyoming, Alliance Bankcorp, Inc. (Alliance) and Penn Liberty are required to be reflected on the balance sheet at their fair values on the date of acquisition as opposed to their contractual values. Therefore, on the date of acquisition establishing an allowance for acquired loans is prohibited. After the acquisition date the Bank performs a separate allowance analysis on a quarterly basis to determine if an allowance for loan loss is necessary. Should the credit risk calculated exceed the purchased loan portfolio’s remaining credit mark, additional reserves will be added to the Bank’s allowance. When a purchased loan becomes impaired after its acquisition, it is evaluated as part of the Bank’s reserve analysis and a specific reserve is established to be included in the Bank’s allowance. Credit Quality Indicators Below is a description of each of our risk ratings for all commercial loans: • Pass . These borrowers currently show no indication of deterioration or potential problems and their loans are considered fully collectible • Special Mention. Borrowers have potential weaknesses that deserve management’s close attention. Borrowers in this category may be experiencing adverse operating trends, for example, declining revenues or margins, high leverage, tight liquidity, or increasing inventory without increasing sales. These adverse trends can have a potential negative effect on the borrower’s repayment capacity. These assets are not adversely classified and do not expose the Bank to significant risk that would warrant a more severe rating. Borrowers in this category may also be experiencing significant management problems, pending litigation, or other structural credit weaknesses. • Substandard . Borrowers have well-defined weaknesses that require extensive oversight by management. Borrowers in this category may exhibit one or more of the following: inadequate debt service coverage, unprofitable operations, insufficient liquidity, high leverage, and weak or inadequate capitalization. Relationships in this category are not adequately protected by the sound financial worth and paying capacity of the obligor or the collateral pledged on the loan, if any. A distinct possibility exists that the Bank will sustain some loss if the deficiencies are not corrected. • Doubtful . Borrowers have well-defined weaknesses inherent in the Substandard category with the added characteristic that the possibility of loss is extremely high. Current circumstances in the credit relationship make collection or liquidation in full highly questionable. A doubtful asset has some pending event that may strengthen the asset that defers the loss classification. Such impending events include: perfecting liens on additional collateral, obtaining collateral valuations, an acquisition or liquidation preceding, proposed merger, or refinancing plan. • Loss . Borrowers are uncollectible or of such negligible value that continuance as a bankable asset is not supportable. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical to defer writing off this asset even though partial recovery may be recognized sometime in the future. Residential and Consumer Loans The residential and consumer loan portfolios are monitored on an ongoing basis using delinquency information and loan type as credit quality indicators. These credit quality indicators are assessed in the aggregate in these relatively homogeneous portfolios. Loans that are greater than 90 days past due are generally considered nonperforming and placed on nonaccrual status. The following tables provide an analysis of loans by portfolio segment based on the credit quality indicators used to determine the Allowance for Loan Loss. Commercial Credit Exposure September 30, 2017 (Dollars in thousands) Commercial Owner-occupied Commercial Commercial Mortgages Construction Total Commercial (1) Amount % Risk Rating: Special mention $ 12,474 $ 2,858 $ — $ 3,644 $ 18,976 Substandard: Accrual 52,237 25,083 64 754 78,138 Nonaccrual 11,485 3,346 8,672 1,839 25,342 Doubtful 1,220 — 131 — 1,351 Total Special Mention and Substandard 77,416 31,287 8,867 6,237 123,807 3 % Acquired impaired 5,235 7,401 9,969 946 23,551 1 % Pass 1,305,443 1,058,065 1,138,238 286,134 3,787,880 96 % Total $ 1,388,094 $ 1,096,753 $ 1,157,074 $ 293,317 $ 3,935,238 100 % (1) Table includes $479.2 million of acquired nonimpaired loans as of September 30, 2017 . December 31, 2016 (Dollars in thousands) Commercial Owner-occupied Commercial Commercial Mortgages Construction Total Commercial (1) Amount % Risk Rating: Special mention $ 17,630 $ 11,419 $ 34,198 $ — $ 63,247 Substandard: Accrual 45,067 19,871 239 2,193 67,370 Nonaccrual 1,693 2,078 8,574 — 12,345 Doubtful 322 — 1,247 — 1,569 Total Special Mention and Substandard 64,712 33,368 44,258 2,193 144,531 4 % Acquired impaired 6,183 12,122 10,386 3,694 32,385 1 % Pass 1,216,836 1,032,672 1,108,910 216,825 3,575,243 95 % Total $ 1,287,731 $ 1,078,162 $ 1,163,554 $ 222,712 $ 3,752,159 100 % (1) Table includes $573.5 million of acquired nonimpaired loans as of December 31, 2016 . Residential and Consumer Credit Exposure (Dollars in thousands) Residential (2) Consumer Total Residential and Consumer (3) September 30, December 31, September 30, December 31, September 30, 2017 December 31, 2016 2017 2016 2017 2016 Amount Percent Amount Percent Nonperforming (1) $ 14,060 $ 13,547 $ 7,409 $ 7,863 $ 21,469 3 % $ 21,410 3 % Acquired impaired loans 788 860 243 369 1,031 — % 1,229 — % Performing 225,869 252,621 512,624 441,797 738,493 97 % 694,418 97 % Total $ 240,717 $ 267,028 $ 520,276 $ 450,029 $ 760,993 100 % $ 717,057 100 % (1) Includes $14.6 million as of September 30, 2017 and $12.4 million as of December 31, 2016 of troubled debt restructured mortgages and home equity installment loans that are performing in accordance with the loans’ modified terms and are accruing interest. (2) Residential performing loans excludes $21.4 million and $22.6 million of reverse mortgages at fair value as of September 30, 2017 and December 31, 2016 , respectively. (3) Total includes $117.3 million and $150.5 million in acquired nonimpaired loans as of September 30, 2017 and December 31, 2016 , respectively. Troubled Debt Restructurings (TDRs) TDRs are recorded in accordance with FASB ASC 310-40, Troubled Debt Restructuring by Creditors (ASC 310-40) . The following table presents the balance of TDRs as of the indicated dates: (Dollars in thousands) September 30, 2017 December 31, 2016 Performing TDRs $ 14,905 $ 14,336 Nonperforming TDRs 11,114 8,451 Total TDRs $ 26,019 $ 22,787 Approximately $1.1 million and $1.3 million in related reserves have been established for these loans at September 30, 2017 and December 31, 2016 , respectively. The following table presents information regarding the types of loan modifications made for the nine months ended September 30, 2017 : Contractual payment reduction and term extension Maturity Date Extension Discharged in bankruptcy Other (1) Total Commercial 1 1 — — 2 Owner-occupied commercial — 1 — — 1 Construction — 2 — 1 3 Residential 2 — 3 — 5 Consumer 1 — 11 6 18 Total 4 4 14 7 29 (1) Other includes underwriting exceptions. Principal balances are generally not forgiven when a loan is modified as a TDR. Nonaccruing restructured loans remain in nonaccrual status until there has been a period of sustained repayment performance, which is typically six months , and payment is reasonably assured. The following table presents loans identified as TDRs during the three and nine months ended September 30, 2017 and 2016 . Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (Dollars in thousands) Pre Modification Post Modification Pre Modification Post Modification Pre Modification Post Modification Pre Modification Post Modification Commercial $ — $ — $ — $ — $ 781 $ 781 $ 1,125 $ 1,125 Owner-occupied commercial — — — — 3,071 3,071 — — Commercial mortgages — — — — — — — — Construction — — — — 1,836 1,836 — — Residential 1,058 1,058 797 797 1,300 1,300 1,523 1,523 Consumer 609 609 278 278 1,867 1,867 733 733 Total $ 1,667 $ 1,667 $ 1,075 $ 1,075 $ 8,855 $ 8,855 $ 3,381 $ 3,381 During the nine months ended September 30, 2017 , the TDRs set forth in the table above resulted in no increase in our allowance for loan losses, and also resulted in no additional charge-offs. For the same period of 2016 , the TDRs set forth in the table above increased our allowance for loan losses by $0.1 million and resulted in charge-offs of $0.1 million . At September 30, 2017 , four TDRs defaulted that had received troubled debt modification during the past twelve months with a total loan amount of $3.7 million . |