| Loans and ALLL | Loans and ALLL We grant commercial, agricultural, residential real estate, and consumer loans to customers situated primarily in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of the borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, manufacturing, retail, gaming, tourism, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees. A portion of loans are unsecured. Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs , the ALLL , and any deferred fees or costs. Interest income is accrued over the term of the loan based on the principal amount outstanding. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the level yield method. The accrual of interest on commercial, agricultural, and residential real estate loans is discontinued at the time the loan is 90 days or more past due unless the credit is well-secured and in the process of collection. Upon transferring the loans to nonaccrual status, we perform an evaluation to determine the net realizable value of the underlying collateral. This evaluation is used to help determine if any charge-offs are necessary. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. For loans that are placed on nonaccrual status or charged-off , all interest accrued in the current calendar year, but not collected, is reversed against interest income while interest accrued in prior calendar years, but not collected, is charged against the ALLL . Loans may be returned to accrual status after six months of continuous performance. Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $15,000 . Borrowers with direct credit needs of more than $15,000 are serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, and property and equipment. Personal guarantees are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we require annual financial statements, prepare cash flow analyses, and review credit reports. We entered into a mortgage purchase program in 2016 with a financial institution where we participate in advances to mortgage brokers ("advances"). The mortgage brokers originate residential mortgage loans with the intent to sell them on the secondary market. We participate in the advance to the mortgage broker, which is secured by the underlying mortgage loan, until it is ultimately sold on the secondary market. As such, the average life of each participated advance is approximately 20 - 30 days. Funds from the sale of the loan are used to payoff our participation in the advance to the mortgage broker. We classify these advances as commercial loans and include the outstanding balance in commercial loans on our balance sheet. Under the participation agreement, we committed to a maximum outstanding aggregate amount of $30,000 . The difference between our outstanding balances and the maximum outstanding aggregate amount is classified as “ Unfunded commitments under lines of credit ” in the “ Contractual Obligations and Loan Commitments ” section of the Management's Discussion and Analysis of Financial Condition and Results of Operations of this report. We offer adjustable rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac . Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 97% of the lower of the appraised value of the property or the purchase price, with the condition that private mortgage insurance is required on loans with loan-to-value ratios in excess of 80% . Underwriting criteria for originated residential real estate loans include: • Evaluation of the borrower’s ability to make monthly payments. • Evaluation of the value of the property securing the loan. • Ensuring the payment of principal, interest, taxes, and hazard insurance does not exceed 28% of a borrower’s gross income. • Ensuring all debt servicing does not exceed 36% of income. • Verification of acceptable credit reports. • Verification of employment, income, and financial information. Appraisals are performed by independent appraisers and reviewed for appropriateness. All originated mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system; loans in excess of $500 require the approval of our Internal Loan Committee, the Executive Loan Committee, the Board of Directors’ Loan Committee, or the Board of Directors. Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 12 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market. The ALLL is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the ALLL when we believe the uncollectability of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALLL . The appropriateness of the ALLL is evaluated on a quarterly basis and is based upon a periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The primary factors behind the determination of the level of the ALLL are specific allocations for impaired loans, historical loss percentages, as well as unallocated components. Specific allocations for impaired loans are primarily determined based on the difference between the loan’s outstanding balance and the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less cost to sell. Historical loss allocations are calculated at the loan class and segment levels based on a migration analysis of the loan portfolio, with the exception of advances to mortgage brokers, over the preceding five years. With no historical losses on advances to mortgage brokers, there is no allocation in the commercial segment displayed in the following tables based on historical loss factors. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. A summary of changes in the ALLL and the recorded investment in loans by segments follows: Allowance for Loan Losses Three Months Ended June 30, 2017 Commercial Agricultural Residential Real Estate Consumer Unallocated Total April 1, 2017 $ 1,771 $ 527 $ 3,098 $ 671 $ 1,433 $ 7,500 Charge-offs (25 ) — — (44 ) — (69 ) Recoveries 55 — 63 42 — 160 Provision for loan losses 177 (52 ) (563 ) (86 ) 533 9 June 30, 2017 $ 1,978 $ 475 $ 2,598 $ 583 $ 1,966 $ 7,600 Allowance for Loan Losses Six Months Ended June 30, 2017 Commercial Agricultural Residential Real Estate Consumer Unallocated Total January 1, 2017 $ 1,814 $ 884 $ 2,664 $ 624 $ 1,414 $ 7,400 Charge-offs (52 ) — (43 ) (118 ) — (213 ) Recoveries 188 — 99 90 — 377 Provision for loan losses 28 (409 ) (122 ) (13 ) 552 36 June 30, 2017 $ 1,978 $ 475 $ 2,598 $ 583 $ 1,966 $ 7,600 Allowance for Loan Losses and Recorded Investment in Loans June 30, 2017 Commercial Agricultural Residential Real Estate Consumer Unallocated Total ALLL Individually evaluated for impairment $ 783 $ — $ 1,672 $ — $ — $ 2,455 Collectively evaluated for impairment 1,195 475 926 583 1,966 5,145 Total $ 1,978 $ 475 $ 2,598 $ 583 $ 1,966 $ 7,600 Loans Individually evaluated for impairment $ 7,362 $ 11,125 $ 8,628 $ 20 $ 27,135 Collectively evaluated for impairment 593,222 119,829 261,579 46,732 1,021,362 Total $ 600,584 $ 130,954 $ 270,207 $ 46,752 $ 1,048,497 Allowance for Loan Losses Three Months Ended June 30, 2016 Commercial Agricultural Residential Real Estate Consumer Unallocated Total April 1, 2016 $ 2,421 $ 336 $ 3,130 $ 540 $ 1,073 $ 7,500 Charge-offs (32 ) — (128 ) (48 ) — (208 ) Recoveries 189 — 45 62 — 296 Provision for loan losses (459 ) 198 83 (13 ) 203 12 June 30, 2016 $ 2,119 $ 534 $ 3,130 $ 541 $ 1,276 $ 7,600 Allowance for Loan Losses Six Months Ended June 30, 2016 Commercial Agricultural Residential Real Estate Consumer Unallocated Total January 1, 2016 $ 2,171 $ 329 $ 3,330 $ 522 $ 1,048 $ 7,400 Charge-offs (48 ) — (369 ) (132 ) — (549 ) Recoveries 278 92 95 116 — 581 Provision for loan losses (282 ) 113 74 35 228 168 June 30, 2016 $ 2,119 $ 534 $ 3,130 $ 541 $ 1,276 $ 7,600 Allowance for Loan Losses and Recorded Investment in Loans December 31, 2016 Commercial Agricultural Residential Real Estate Consumer Unallocated Total ALLL Individually evaluated for impairment $ 741 $ 1 $ 1,629 $ — $ — $ 2,371 Collectively evaluated for impairment 1,073 883 1,035 624 1,414 5,029 Total $ 1,814 $ 884 $ 2,664 $ 624 $ 1,414 $ 7,400 Loans Individually evaluated for impairment $ 7,859 $ 5,545 $ 8,638 $ 26 $ 22,068 Collectively evaluated for impairment 567,805 120,947 257,412 42,383 988,547 Total $ 575,664 $ 126,492 $ 266,050 $ 42,409 $ 1,010,615 The following table displays the credit quality indicators for commercial and agricultural credit exposures based on internally assigned credit risk ratings as of: June 30, 2017 Commercial Agricultural Real Estate Other Advances to Mortgage Brokers Total Real Estate Other Total Total Rating 1 - Excellent $ 26 $ 232 $ — $ 258 $ — $ — $ — $ 258 2 - High quality 7,479 15,878 — 23,357 3,088 1,006 4,094 27,451 3 - High satisfactory 103,672 45,853 19,914 169,439 21,435 9,306 30,741 200,180 4 - Low satisfactory 320,610 71,958 — 392,568 48,109 20,740 68,849 461,417 5 - Special mention 4,253 1,899 — 6,152 11,015 9,054 20,069 26,221 6 - Substandard 6,343 2,450 — 8,793 4,379 1,830 6,209 15,002 7 - Vulnerable 17 — — 17 466 526 992 1,009 8 - Doubtful — — — — — — — — Total $ 442,400 $ 138,270 $ 19,914 $ 600,584 $ 88,492 $ 42,462 $ 130,954 $ 731,538 December 31, 2016 Commercial Agricultural Real Estate Other Advances to Mortgage Brokers Total Real Estate Other Total Total Rating 1 - Excellent $ 28 $ 438 $ — $ 466 $ — $ — $ — $ 466 2 - High quality 11,821 12,091 19,688 43,600 3,566 1,426 4,992 48,592 3 - High satisfactory 103,529 41,982 — 145,511 21,657 11,388 33,045 178,556 4 - Low satisfactory 299,317 74,432 — 373,749 48,955 22,715 71,670 445,419 5 - Special mention 3,781 1,178 — 4,959 6,009 3,085 9,094 14,053 6 - Substandard 5,901 1,474 — 7,375 3,650 3,508 7,158 14,533 7 - Vulnerable 4 — — 4 — 533 533 537 8 - Doubtful — — — — — — — — Total $ 424,381 $ 131,595 $ 19,688 $ 575,664 $ 83,837 $ 42,655 $ 126,492 $ 702,156 Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are as follows: 1. EXCELLENT – Substantially Risk Free Credit has strong financial condition and solid earnings history, characterized by: • High liquidity, strong cash flow, low leverage. • Unquestioned ability to meet all obligations when due. • Experienced management, with management succession in place. • Secured by cash. 2. HIGH QUALITY – Limited Risk Credit with sound financial condition and a positive trend in earnings supplemented by: • Favorable liquidity and leverage ratios. • Ability to meet all obligations when due. • Management with successful track record. • Steady and satisfactory earnings history. • If loan is secured, collateral is of high quality and readily marketable. • Access to alternative financing. • Well defined primary and secondary source of repayment. • If supported by guaranty, the financial strength and liquidity of the guarantor(s) are clearly evident. 3. HIGH SATISFACTORY – Reasonable Risk Credit with satisfactory financial condition and further characterized by: • Working capital adequate to support operations. • Cash flow sufficient to pay debts as scheduled. • Management experience and depth appear favorable. • Loan performing according to terms. • If loan is secured, collateral is acceptable and loan is fully protected. 4. LOW SATISFACTORY – Acceptable Risk Credit with bankable risks, although some signs of weaknesses are shown: • Would include most start-up businesses. • Occasional instances of trade slowness or repayment delinquency – may have been 10 - 30 days slow within the past year. • Management’s abilities are apparent, yet unproven. • Weakness in primary source of repayment with adequate secondary source of repayment. • Loan structure generally in accordance with policy. • If secured, loan collateral coverage is marginal. • Adequate cash flow to service debt, but coverage is low. To be classified as less than satisfactory, only one of the following criteria must be met. 5. SPECIAL MENTION – Criticized Credit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances surrounding a specific loan: • Downward trend in sales, profit levels, and margins. • Impaired working capital position. • Cash flow is strained in order to meet debt repayment. • Loan delinquency ( 30 - 60 days) and overdrafts may occur. • Shrinking equity cushion. • Diminishing primary source of repayment and questionable secondary source. • Management abilities are questionable. • Weak industry conditions. • Litigation pending against the borrower. • Collateral or guaranty offers limited protection. • Negative debt service coverage, however the credit is well collateralized and payments are current. 6. SUBSTANDARD – Classified Credit where the borrower’s current net worth, paying capacity, and value of the collateral pledged is inadequate. There is a distinct possibility that we will implement collection procedures if the loan deficiencies are not corrected. In addition, the following characteristics may apply: • Sustained losses have severely eroded the equity and cash flow. • Deteriorating liquidity. • Serious management problems or internal fraud. • Original repayment terms liberalized. • Likelihood of bankruptcy. • Inability to access other funding sources. • Reliance on secondary source of repayment. • Litigation filed against borrower. • Collateral provides little or no value. • Requires excessive attention of the loan officer. • Borrower is uncooperative with loan officer. 7. VULNERABLE – Classified Credit is considered “Substandard” and warrants placing on nonaccrual status. Risk of loss is being evaluated and exit strategy options are under review. Other characteristics that may apply: • Insufficient cash flow to service debt. • Minimal or no payments being received. • Limited options available to avoid the collection process. • Transition status, expect action will take place to collect loan without immediate progress being made. 8. DOUBTFUL – Workout Credit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending. The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable. Other characteristics that may apply: • Normal operations are severely diminished or have ceased. • Seriously impaired cash flow. • Original repayment terms materially altered. • Secondary source of repayment is inadequate. • Survivability as a “going concern” is impossible. • Collection process has begun. • Bankruptcy petition has been filed. • Judgments have been filed. • Portion of the loan balance has been charged-off . Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due aging. The following tables summarize the past due and current loans as of: June 30, 2017 Accruing Interest Total Past Due and Nonaccrual 30-59 60-89 90 Days Nonaccrual Current Total Commercial Commercial real estate $ 1,301 $ — $ 55 $ 17 $ 1,373 $ 441,027 $ 442,400 Commercial other 981 103 — — 1,084 137,186 138,270 Advances to mortgage brokers — — — — — 19,914 19,914 Total commercial 2,282 103 55 17 2,457 598,127 600,584 Agricultural Agricultural real estate 343 — 1,099 466 1,908 86,584 88,492 Agricultural other 29 — — 526 555 41,907 42,462 Total agricultural 372 — 1,099 992 2,463 128,491 130,954 Residential real estate Senior liens 1,033 426 49 460 1,968 221,433 223,401 Junior liens — — — 24 24 7,746 7,770 Home equity lines of credit 123 173 — 70 366 38,670 39,036 Total residential real estate 1,156 599 49 554 2,358 267,849 270,207 Consumer Secured 63 — — — 63 43,109 43,172 Unsecured 1 — — — 1 3,579 3,580 Total consumer 64 — — — 64 46,688 46,752 Total $ 3,874 $ 702 $ 1,203 $ 1,563 $ 7,342 $ 1,041,155 $ 1,048,497 December 31, 2016 Accruing Interest Total Past Due and Nonaccrual 30-59 60-89 90 Days Nonaccrual Current Total Commercial Commercial real estate $ 1,580 $ — $ 35 $ 4 $ 1,619 $ 422,762 $ 424,381 Commercial other 1,693 35 — — 1,728 129,867 131,595 Advances to mortgage brokers — — — — — 19,688 19,688 Total commercial 3,273 35 35 4 3,347 572,317 575,664 Agricultural Agricultural real estate 191 — 508 — 699 83,138 83,837 Agricultural other 19 — — 533 552 42,103 42,655 Total agricultural 210 — 508 533 1,251 125,241 126,492 Residential real estate Senior liens 1,638 174 22 498 2,332 216,681 219,013 Junior liens 15 — — 25 40 8,317 8,357 Home equity lines of credit 270 6 68 — 344 38,336 38,680 Total residential real estate 1,923 180 90 523 2,716 263,334 266,050 Consumer Secured 110 — — — 110 38,582 38,692 Unsecured 5 — — — 5 3,712 3,717 Total consumer 115 — — — 115 42,294 42,409 Total $ 5,521 $ 215 $ 633 $ 1,060 $ 7,429 $ 1,003,186 $ 1,010,615 Impaired Loans Loans may be classified as impaired if they meet one or more of the following criteria: 1. There has been a charge-off of its principal balance (in whole or in part); 2. The loan has been classified as a TDR ; or 3. The loan is in nonaccrual status. Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by comparing the loan’s outstanding balance to the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less cost to sell, if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Impairment is measured on a loan-by-loan basis for residential real estate and consumer loans by comparing the loan’s unpaid principal balance to the present value of expected future cash flows discounted at the loan’s effective interest rate. We do not recognize interest income on impaired loans in nonaccrual status. For impaired loans not classified as nonaccrual , interest income is recognized daily, as earned, according to the terms of the loan agreement and the principal amount outstanding. The following is a summary of information pertaining to impaired loans as of: June 30, 2017 December 31, 2016 Recorded Balance Unpaid Principal Balance Valuation Allowance Recorded Balance Unpaid Principal Balance Valuation Allowance Impaired loans with a valuation allowance Commercial real estate $ 5,063 $ 5,183 $ 733 $ 5,811 $ 5,992 $ 716 Commercial other 1,099 1,099 50 1,358 1,358 25 Agricultural real estate — — — — — — Agricultural other — — — 134 134 1 Residential real estate senior liens 8,393 8,977 1,649 8,464 9,049 1,615 Residential real estate junior liens 76 76 15 72 82 14 Home equity lines of credit 70 70 8 — — — Consumer secured — — — — — — Total impaired loans with a valuation allowance 14,701 15,405 2,455 15,839 16,615 2,371 Impaired loans without a valuation allowance Commercial real estate 1,104 1,191 604 617 Commercial other 96 96 86 97 Agricultural real estate 7,826 7,826 4,037 4,037 Agricultural other 3,299 3,299 1,374 1,374 Home equity lines of credit 89 389 102 402 Consumer secured 20 20 26 26 Total impaired loans without a valuation allowance 12,434 12,821 6,229 6,553 Impaired loans Commercial 7,362 7,569 783 7,859 8,064 741 Agricultural 11,125 11,125 — 5,545 5,545 1 Residential real estate 8,628 9,512 1,672 8,638 9,533 1,629 Consumer 20 20 — 26 26 — Total impaired loans $ 27,135 $ 28,226 $ 2,455 $ 22,068 $ 23,168 $ 2,371 The following is a summary of information pertaining to impaired loans for the: Three Months Ended June 30 2017 2016 Average Recorded Balance Interest Income Recognized Average Recorded Balance Interest Income Recognized Impaired loans with a valuation allowance Commercial real estate $ 4,641 $ 84 $ 5,793 $ 85 Commercial other 1,146 23 95 2 Agricultural real estate — — 91 2 Agricultural other — — — — Residential real estate senior liens 8,385 83 9,508 93 Residential real estate junior liens 77 1 134 1 Home equity lines of credit 35 — — — Consumer secured — — — — Total impaired loans with a valuation allowance 14,284 191 15,621 183 Impaired loans without a valuation allowance Commercial real estate 1,576 19 814 28 Commercial other 119 2 77 2 Agricultural real estate 5,937 58 3,454 43 Agricultural other 2,401 33 603 10 Home equity lines of credit 126 5 118 4 Consumer secured 22 — 33 1 Total impaired loans without a valuation allowance 10,181 117 5,099 88 Impaired loans Commercial 7,482 128 6,779 117 Agricultural 8,338 91 4,148 55 Residential real estate 8,623 89 9,760 98 Consumer 22 — 33 1 Total impaired loans $ 24,465 $ 308 $ 20,720 $ 271 Six Months Ended June 30 2017 2016 Average Recorded Balance Interest Income Recognized Average Recorded Balance Interest Income Recognized Impaired loans with a valuation allowance Commercial real estate $ 4,825 $ 157 $ 5,773 $ 169 Commercial other 1,211 47 74 3 Agricultural real estate — — 46 2 Agricultural other 34 — 84 — Residential real estate senior liens 8,403 166 9,711 193 Residential real estate junior liens 76 1 137 2 Home equity lines of credit 18 — — — Consumer secured — — — — Total impaired loans with a valuation allowance 14,567 371 15,825 369 Impaired loans without a valuation allowance Commercial real estate 1,451 52 1,139 47 Commercial other 117 4 104 4 Agricultural real estate 4,990 120 3,501 88 Agricultural other 1,920 46 477 16 Home equity lines of credit 129 10 121 8 Consumer secured 23 — 34 2 Total impaired loans without a valuation allowance 8,630 232 5,376 165 Impaired loans Commercial 7,604 260 7,090 223 Agricultural 6,944 166 4,108 106 Residential real estate 8,626 177 9,969 203 Consumer 23 — 34 2 Total impaired loans $ 23,197 $ 603 $ 21,201 $ 534 We had committed to advance $124 and $117 in connection with impaired loans, which include TDRs , as of June 30, 2017 and December 31, 2016 , respectively. Troubled Debt Restructurings Loan modifications are considered to be TDRs when the modification includes terms outside of normal lending practices to a borrower who is experiencing financial difficulties. Typical concessions granted include, but are not limited to: • Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics. • Extending the amortization period beyond typical lending guidelines for loans with similar risk characteristics. • Forgiving principal. • Forgiving accrued interest. To determine if a borrower is experiencing financial difficulties, factors we consider include: • The borrower is currently in default on any of their debt. • The borrower would likely default on any of their debt if the concession was not granted. • The borrower’s cash flow was insufficient to service all of their debt if the concession was not granted. • The borrower has declared, or is in the process of declaring, bankruptcy. • The borrower is unlikely to continue as a going concern (if the entity is a business). The following is a summary of information pertaining to TDRs granted for the: Three Months Ended June 30 2017 2016 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Commercial other 1 $ 86 $ 86 — $ — $ — Agricultural other 7 5,445 5,445 3 201 201 Residential real estate Senior liens 3 255 255 — — — Junior liens — — — — — — Total residential real estate 3 255 255 — — — Consumer unsecured — — — — — — Total 11 $ 5,786 $ 5,786 3 $ 201 $ 201 Six Months Ended June 30 2017 2016 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Commercial other 3 $ 313 $ 313 — $ — $ — Agricultural other 7 5,445 5,445 3 201 201 Residential real estate Senior liens 3 255 255 2 26 26 Junior liens 1 8 8 — — — Total residential real estate 4 263 263 2 26 26 Consumer unsecured — — — 1 2 2 Total 14 $ 6,021 $ 6,021 6 $ 229 $ 229 The following tables summarize concessions we granted to borrowers in financial difficulty for the: Three Months Ended June 30 2017 2016 Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Commercial other — $ — 1 $ 86 — $ — — $ — Agricultural other 4 1,349 3 4,096 — — 3 201 Residential real estate Senior liens — — 3 255 — — — — Junior liens — — — — — — — — Total residential real estate — — 3 255 — — — — Consumer unsecured — — — — — — — — Total 4 $ 1,349 7 $ 4,437 — $ — 3 $ 201 Six Months Ended June 30 2017 2016 Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Commercial other — $ — 3 $ 313 — $ — — $ — Agricultural other 4 1,349 3 4,096 — — 3 201 Residential real estate Senior liens — — 3 255 2 26 — — Junior liens 1 8 — — — — — — Total residential real estate 1 8 3 255 2 26 — — Consumer unsecured — — — — — — 1 2 Total 5 $ 1,357 9 $ 4,664 2 $ 26 4 $ 203 We did not restructure any loans by forgiving principal or accrued interest in the three and six month periods ended June 30, 2017 or 2016 . Based on our historical loss experience, losses associated with TDRs are not significantly different than other impaired loans within the same loan segment. As such, TDRs , including TDRs that have been modified in the past 12 months that subsequently defaulted, are analyzed in the same manner as other impaired loans within their respective loan segment. We had no loans that defaulted in the three and six month periods ended June 30, 2017 and June 30, 2016 which were modified within 12 months prior to the default date. The following is a summary of TDR loan balances as of: June 30, 2017 December 31, 2016 TDRs $ 26,341 $ 21,382 |
