| 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, health care, 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 appropriate amortization methods. The accrual of interest on commercial and agricultural loans, as well as residential real estate loans, is discontinued at the time a loan is 90 days or more past due unless the credit is well-secured and in the process of short-term collection. Upon transferring a loan 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 a charge-off is necessary. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on the contractual term of the loan. In all cases, a loan is placed in nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. When a loan is placed in 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 and achievement of current payment status. Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to 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 may be 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, property, or equipment. Personal guarantees are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we may 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 pay off 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 consolidated balance sheet. Under the participation agreement, we committed to a maximum outstanding aggregate amount of $40,000 . The difference between our outstanding balance 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, our liquidity needs, 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 100% of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees. Underwriting criteria for originated residential real estate loans generally 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 40% of income. • Verification of acceptable credit reports. • Verification of employment, income, and financial information. Appraisals are performed by independent appraisers and reviewed for appropriateness. Generally, mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system; loans in excess of $1,000 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 15 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 probable. Subsequent recoveries, if any, are credited to the ALLL . The ALLL is evaluated on a regular basis for appropriateness. Our periodic review of the collectability of a loan considers 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, or the fair value of the collateral, less costs to sell, if the loan is collateral dependent. 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. 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, 2019 Commercial Agricultural Residential Real Estate Consumer Unallocated Total April 1, 2019 $ 2,248 $ 775 $ 2,305 $ 891 $ 2,179 $ 8,398 Charge-offs (164 ) — (94 ) (75 ) — (333 ) Recoveries 22 — 91 38 — 151 Provision for loan losses (26 ) (163 ) (420 ) 73 357 (179 ) June 30, 2019 $ 2,080 $ 612 $ 1,882 $ 927 $ 2,536 $ 8,037 Allowance for Loan Losses Six Months Ended June 30, 2019 Commercial Agricultural Residential Real Estate Consumer Unallocated Total January 1, 2019 $ 2,563 $ 775 $ 1,992 $ 857 $ 2,188 $ 8,375 Charge-offs (172 ) — (96 ) (203 ) — (471 ) Recoveries 74 — 118 86 — 278 Provision for loan losses (385 ) (163 ) (132 ) 187 348 (145 ) June 30, 2019 $ 2,080 $ 612 $ 1,882 $ 927 $ 2,536 $ 8,037 Allowance for Loan Losses and Recorded Investment in Loans June 30, 2019 Commercial Agricultural Residential Real Estate Consumer Unallocated Total ALLL Individually evaluated for impairment $ 58 $ 123 $ 1,298 $ — $ — $ 1,479 Collectively evaluated for impairment 2,022 489 584 927 2,536 6,558 Total $ 2,080 $ 612 $ 1,882 $ 927 $ 2,536 $ 8,037 Loans Individually evaluated for impairment $ 9,029 $ 13,472 $ 6,389 $ 7 $ 28,897 Collectively evaluated for impairment 692,925 106,891 276,896 71,013 1,147,725 Total $ 701,954 $ 120,363 $ 283,285 $ 71,020 $ 1,176,622 Allowance for Loan Losses Three Months Ended June 30, 2018 Commercial Agricultural Residential Real Estate Consumer Unallocated Total April 1, 2018 $ 1,840 $ 1,224 $ 2,482 $ 795 $ 1,859 $ 8,200 Charge-offs (489 ) — (29 ) (48 ) — (566 ) Recoveries 101 — 69 68 — 238 Provision for loan losses 745 (242 ) (355 ) 67 113 328 June 30, 2018 $ 2,197 $ 982 $ 2,167 $ 882 $ 1,972 $ 8,200 Allowance for Loan Losses Six Months Ended June 30, 2018 Commercial Agricultural Residential Real Estate Consumer Unallocated Total January 1, 2018 $ 1,706 $ 611 $ 2,563 $ 900 $ 1,920 $ 7,700 Charge-offs (494 ) — (39 ) (136 ) — (669 ) Recoveries 204 — 125 128 — 457 Provision for loan losses 781 371 (482 ) (10 ) 52 712 June 30, 2018 $ 2,197 $ 982 $ 2,167 $ 882 $ 1,972 $ 8,200 Allowance for Loan Losses and Recorded Investment in Loans December 31, 2018 Commercial Agricultural Residential Real Estate Consumer Unallocated Total ALLL Individually evaluated for impairment $ 443 $ 132 $ 1,363 $ — $ — $ 1,938 Collectively evaluated for impairment 2,120 643 629 857 2,188 6,437 Total $ 2,563 $ 775 $ 1,992 $ 857 $ 2,188 $ 8,375 Loans Individually evaluated for impairment $ 9,899 $ 14,298 $ 6,893 $ 9 $ 31,099 Collectively evaluated for impairment 649,630 112,863 268,450 66,665 1,097,608 Total $ 659,529 $ 127,161 $ 275,343 $ 66,674 $ 1,128,707 The following tables display the credit quality indicators for commercial and agricultural credit exposures based on internally assigned credit risk ratings as of: June 30, 2019 Commercial Agricultural Real Estate Other Advances to Mortgage Brokers Total Real Estate Other Total Total Rating 1 - Excellent $ — $ 19 $ — $ 19 $ — $ — $ — $ 19 2 - High quality 3,324 14,853 — 18,177 2,333 405 2,738 20,915 3 - High satisfactory 121,222 46,845 37,966 206,033 17,632 5,814 23,446 229,479 4 - Low satisfactory 359,329 88,910 — 448,239 44,106 19,816 63,922 512,161 5 - Special mention 16,631 5,768 — 22,399 10,060 5,065 15,125 37,524 6 - Substandard 4,803 592 — 5,395 6,013 3,587 9,600 14,995 7 - Vulnerable 450 1,242 — 1,692 3,593 1,939 5,532 7,224 8 - Doubtful — — — — — — — — 9 - Loss — — — — — — — — Total $ 505,759 $ 158,229 $ 37,966 $ 701,954 $ 83,737 $ 36,626 $ 120,363 $ 822,317 December 31, 2018 Commercial Agricultural Real Estate Other Advances to Mortgage Brokers Total Real Estate Other Total Total Rating 1 - Excellent $ 21 $ 31 $ — $ 52 $ 51 $ 28 $ 79 $ 131 2 - High quality 4,564 13,473 — 18,037 2,729 613 3,342 21,379 3 - High satisfactory 127,573 43,199 11,793 182,565 18,325 7,039 25,364 207,929 4 - Low satisfactory 344,920 84,634 — 429,554 46,636 19,344 65,980 495,534 5 - Special mention 12,847 5,287 — 18,134 10,520 5,624 16,144 34,278 6 - Substandard 7,428 2,002 — 9,430 6,343 4,960 11,303 20,733 7 - Vulnerable 334 1,423 — 1,757 2,716 2,233 4,949 6,706 8 - Doubtful — — — — — — — — 9 - Loss — — — — — — — — Total $ 497,687 $ 150,049 $ 11,793 $ 659,529 $ 87,320 $ 39,841 $ 127,161 $ 786,690 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. 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 constitutes 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. • Loan may need to be restructured to improve collateral position or reduce payments. • Collateral or guaranty offers limited protection. • Negative debt service coverage, however the credit is well collateralized and payments are current. 6. SUBSTANDARD – Classified Credit is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. There is a distinct possibility we will implement collection procedures if the loan deficiencies are not corrected. Any commercial loan placed in nonaccrual status will be rated “7” or worse. 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. • Interest non-accrual may be warranted. • 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 in 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 . 9. LOSS – Charge-off Credit is considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification is for charged-off loans but does not mean that the asset has absolutely no recovery or salvage value. These loans are further characterized by: • Liquidation or reorganization under Bankruptcy, with poor prospects of collection. • Fraudulently overstated assets and/or earnings. • Collateral has marginal or no value. • Debtor cannot be located. • Over 120 days delinquent. 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 for the entire loan portfolio as of: June 30, 2019 Accruing Interest Total Past Due and Nonaccrual 30-59 60-89 90 Days Nonaccrual Current Total Commercial Commercial real estate $ 47 $ — $ — $ 450 $ 497 $ 505,262 $ 505,759 Commercial other 484 20 — 1,242 1,746 156,483 158,229 Advances to mortgage brokers — — — — — 37,966 37,966 Total commercial 531 20 — 1,692 2,243 699,711 701,954 Agricultural Agricultural real estate 609 280 — 3,593 4,482 79,255 83,737 Agricultural other 251 — — 1,939 2,190 34,436 36,626 Total agricultural 860 280 — 5,532 6,672 113,691 120,363 Residential real estate Senior liens 334 133 110 883 1,460 241,243 242,703 Junior liens 6 — — — 6 6,378 6,384 Home equity lines of credit 224 — — — 224 33,974 34,198 Total residential real estate 564 133 110 883 1,690 281,595 283,285 Consumer Secured 38 50 — — 88 67,256 67,344 Unsecured 4 2 — — 6 3,670 3,676 Total consumer 42 52 — — 94 70,926 71,020 Total $ 1,997 $ 485 $ 110 $ 8,107 $ 10,699 $ 1,165,923 $ 1,176,622 December 31, 2018 Accruing Interest Total Past Due and Nonaccrual 30-59 60-89 90 Days Nonaccrual Current Total Commercial Commercial real estate $ 60 $ — $ — $ 334 $ 394 $ 497,293 $ 497,687 Commercial other 277 628 — 1,423 2,328 147,721 150,049 Advances to mortgage brokers — — — — — 11,793 11,793 Total commercial 337 628 — 1,757 2,722 656,807 659,529 Agricultural Agricultural real estate 428 — — 2,716 3,144 84,176 87,320 Agricultural other — — — 2,233 2,233 37,608 39,841 Total agricultural 428 — — 4,949 5,377 121,784 127,161 Residential real estate Senior liens 2,254 203 113 554 3,124 233,438 236,562 Junior liens 2 6 — — 8 6,001 6,009 Home equity lines of credit 76 — — — 76 32,696 32,772 Total residential real estate 2,332 209 113 554 3,208 272,135 275,343 Consumer Secured 95 — — — 95 62,721 62,816 Unsecured 10 — — — 10 3,848 3,858 Total consumer 105 — — — 105 66,569 66,674 Total $ 3,202 $ 837 $ 113 $ 7,260 $ 11,412 $ 1,117,295 $ 1,128,707 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, or the fair value of the collateral, less costs to sell, if the loan is collateral dependent. Large groups of smaller-balance, homogeneous residential real estate and consumer loans are collectively evaluated for impairment 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, 2019 December 31, 2018 Recorded Balance Unpaid Principal Balance Valuation Allowance Recorded Balance Unpaid Principal Balance Valuation Allowance Impaired loans with a valuation allowance Commercial real estate $ 2,144 $ 2,385 $ 53 $ 3,969 $ 4,211 $ 437 Commercial other 11 11 5 12 12 6 Agricultural real estate 1,513 1,513 97 392 392 112 Agricultural other 1,237 1,237 26 44 44 20 Residential real estate senior liens 6,347 6,818 1,296 6,834 7,289 1,361 Residential real estate junior liens 12 12 2 12 12 2 Total impaired loans with a valuation allowance 11,264 11,976 1,479 11,263 11,960 1,938 Impaired loans without a valuation allowance Commercial real estate 4,189 4,328 2,794 2,947 Commercial other 2,685 2,685 3,124 3,231 Agricultural real estate 6,985 6,985 7,618 7,618 Agricultural other 3,737 3,737 6,244 6,287 Home equity lines of credit 30 330 47 347 Consumer secured 7 7 9 9 Total impaired loans without a valuation allowance 17,633 18,072 19,836 20,439 Impaired loans Commercial 9,029 9,409 58 9,899 10,401 443 Agricultural 13,472 13,472 123 14,298 14,341 132 Residential real estate 6,389 7,160 1,298 6,893 7,648 1,363 Consumer 7 7 — 9 9 — Total impaired loans $ 28,897 $ 30,048 $ 1,479 $ 31,099 $ 32,399 $ 1,938 The following is a summary of information pertaining to impaired loans for the: Three Months Ended June 30 2019 2018 Average Recorded Balance Interest Income Recognized Average Recorded Balance Interest Income Recognized Impaired loans with a valuation allowance Commercial real estate $ 2,497 $ 7 $ 5,006 $ 13 Commercial other 11 — 1,463 15 Agricultural real estate 951 57 639 2 Agricultural other 641 9 — — Residential real estate senior liens 6,439 19 7,747 16 Residential real estate junior liens 12 — 30 — Total impaired loans with a valuation allowance 10,551 92 14,885 46 Impaired loans without a valuation allowance Commercial real estate 3,985 21 3,084 12 Commercial other 2,751 13 1,301 2 Agricultural real estate 7,307 58 7,610 237 Agricultural other 4,833 86 3,933 115 Home equity lines of credit 34 — 68 — Consumer secured 8 — 12 — Total impaired loans without a valuation allowance 18,918 178 16,008 366 Impaired loans Commercial 9,244 41 10,854 42 Agricultural 13,732 210 12,182 354 Residential real estate 6,485 19 7,845 16 Consumer 8 — 12 — Total impaired loans $ 29,469 $ 270 $ 30,893 $ 412 Six Months Ended June 30 2019 2018 Average Recorded Balance Interest Income Recognized Average Recorded Balance Interest Income Recognized Impaired loans with a valuation allowance Commercial real estate $ 2,952 $ 56 $ 5,012 $ 104 Commercial other 11 — 1,505 39 Agricultural real estate 671 63 540 6 Agricultural other 343 9 — — Residential real estate senior liens 6,561 87 7,785 90 Residential real estate junior liens 12 — 35 — Total impaired loans with a valuation allowance 10,550 215 14,877 239 Impaired loans without a valuation allowance Commercial real estate 3,636 74 2,606 47 Commercial other 2,861 34 1,248 19 Agricultural real estate 7,465 65 7,804 277 Agricultural other 5,460 156 3,264 151 Home equity lines of credit 38 6 72 5 Consumer secured 8 — 13 — Total impaired loans without a valuation allowance 19,468 335 15,007 499 Impaired loans Commercial 9,460 164 10,371 209 Agricultural 13,939 293 11,608 434 Residential real estate 6,611 93 7,892 95 Consumer 8 — 13 — Total impaired loans $ 30,018 $ 550 $ 29,884 $ 738 We had committed to advance $444 and $542 in connection with impaired loans, which includes TDRs , as of June 30, 2019 and December 31, 2018 , respectively. Troubled Debt Restructurings A loan modification is considered to be a TDR 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. • Agreeing to an interest only payment structure and delaying principal payments. • 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 is not granted. • The borrower’s cash flow is insufficient to service all of their debt if the concession is 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 2019 2018 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 $ 37 $ 37 1 $ 105 $ 105 Agricultural other 1 1,311 1,311 13 3,330 3,306 Residential real estate — — — 5 327 327 Total 2 $ 1,348 $ 1,348 19 $ 3,762 $ 3,738 Six Months Ended June 30 2019 2018 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Commercial other 2 $ 184 $ 184 4 $ 1,360 $ 1,360 Agricultural other 3 1,834 1,834 15 4,391 4,368 Residential real estate — — — 7 493 493 Total 5 $ 2,018 $ 2,018 26 $ 6,244 $ 6,221 The following is a summary of concessions we granted to borrowers in financial difficulty for the: Three Months Ended June 30 2019 2018 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 $ 37 — $ — 1 $ 105 Agricultural other — — 1 1,311 6 1,770 7 1,560 Residential real estate — — — — 1 56 4 271 Total — $ — 2 $ 1,348 7 $ 1,826 12 $ 1,936 Six Months Ended June 30 2019 2018 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 — $ — 2 $ 184 1 $ 174 3 $ 1,186 Agricultural other — — 3 1,834 7 1,868 8 2,523 Residential real estate — — — — 1 56 6 437 Total — $ — 5 $ 2,018 9 $ 2,098 17 $ 4,146 We did not restructure any loans by forgiving principal or accrued interest in the three and six month periods ended June 30, 2019 or 2018 . 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, 2019 and 2018 which were modified within 12 months prior to the default date. The following is a summary of TDR loan balances as of: June 30 December 31 TDRs $ 25,965 $ 26,951 |
