| Loans and Credit Quality |
Loans and Credit Quality The following table presents total portfolio loans by portfolio segment and class of financing receivable, based on the Company's asset quality rating ("AQR") criteria: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (In Thousands) | Commercial |
| Real estate construction one-to-four family |
| Real estate construction other |
| Real estate term owner occupied |
| Real estate term non-owner occupied |
| Real estate term other |
| Consumer secured by 1st deeds of trust |
| Consumer other |
| Total | September 30, 2018 | |
| |
| |
| |
| |
| |
| |
| |
| | AQR Pass |
| $301,757 |
|
|
| $36,119 |
|
|
| $61,857 |
|
|
| $120,902 |
|
|
| $322,051 |
|
|
| $40,889 |
|
|
| $19,525 |
|
|
| $22,495 |
|
|
| $925,595 |
| AQR Special Mention | 6,279 |
|
| — |
|
| — |
|
| 4,484 |
|
| 18,300 |
|
| — |
|
| 199 |
|
| 16 |
|
| 29,278 |
| AQR Substandard | 25,096 |
|
| — |
|
| — |
|
| 4,780 |
|
| 469 |
|
| 577 |
|
| 478 |
|
| 62 |
|
| 31,462 |
| AQR Doubtful | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 27 |
|
| — |
|
| — |
|
| 27 |
| Subtotal |
| $333,132 |
|
|
| $36,119 |
|
|
| $61,857 |
|
|
| $130,166 |
|
|
| $340,820 |
|
|
| $41,493 |
|
|
| $20,202 |
|
|
| $22,573 |
|
|
| $986,362 |
| Less: Unearned origination fees, net of origination costs |
| |
| |
| (4,355 | ) | Total loans | |
| |
| |
| |
| |
| |
| |
| |
|
| $982,007 |
| December 31, 2017 | |
| |
| |
| |
| |
| |
| |
| |
| | AQR Pass |
| $277,371 |
|
|
| $31,201 |
|
|
| $80,093 |
|
|
| $127,059 |
|
|
| $307,780 |
|
|
| $39,777 |
|
|
| $21,846 |
|
|
| $19,895 |
|
|
| $905,022 |
| AQR Special Mention | 4,921 |
|
| — |
|
| — |
|
| 2,095 |
|
| 11,051 |
|
| 634 |
|
| 3 |
|
| 22 |
|
| 18,726 |
| AQR Substandard | 31,222 |
|
| — |
|
| — |
|
| 2,888 |
|
| 482 |
|
| — |
|
| 767 |
|
| 2 |
|
| 35,361 |
| Subtotal |
| $313,514 |
|
|
| $31,201 |
|
|
| $80,093 |
|
|
| $132,042 |
|
|
| $319,313 |
|
|
| $40,411 |
|
|
| $22,616 |
|
|
| $19,919 |
|
|
| $959,109 |
| Less: Unearned origination fees, net of origination costs |
| |
| |
| (4,156 | ) | Total loans | |
| |
| |
| |
| |
| |
| |
| |
|
| $954,953 |
|
Loans are carried at their principal amount outstanding, net of charge-offs, unamortized fees and direct loan origination costs. Loan balances are charged-off to the Allowance when management believes that collection of principal is unlikely. Interest income on loans is accrued and recognized on the principal amount outstanding except for loans in a nonaccrual status. All classes of loans are placed on nonaccrual and considered impaired when management believes doubt exists as to the collectability of the interest or principal. Cash payments received on nonaccrual loans are directly applied to the principal balance. Generally, a loan may be returned to accrual status when the delinquent principal and interest is brought current in accordance with the terms of the loan agreement. Additionally, certain ongoing performance criteria, which generally includes a performance period of six months, must be met in order for a loan to be returned to accrual status. Loans are reported as past due when installment payments, interest payments, or maturity payments are past due based on contractual terms. Nonaccrual loans: Nonaccrual loans net of government guarantees totaled $16.4 million and $21.2 million at September 30, 2018 and December 31, 2017, respectively. Nonaccrual loans at the periods indicated are presented below by segment: | | | | | | | | | | | | | | | | | | | | | (In Thousands) | 30-59 Days
Past Due | | 60-89 Days
Past Due | | Greater Than
90 Days Past Due | | Current | | Total | September 30, 2018 | | | | | | | | | | Commercial |
| $121 |
| |
| $600 |
| |
| $2,742 |
| |
| $11,271 |
| |
| $14,734 |
| Real estate term owner occupied | — |
| | — |
| | 1,694 |
| | — |
| | 1,694 |
| Real estate term other | — |
| | — |
| | 26 |
| | — |
| | 26 |
| Consumer secured by 1st deeds of trust | — |
| | — |
| | 226 |
| | — |
| | 226 |
| Consumer other | — |
| | — |
| | 40 |
| | 8 |
| | 48 |
| Total nonperforming loans | 121 |
| | 600 |
| | 4,728 |
| | 11,279 |
| | 16,728 |
| Government guarantees on nonaccrual loans | — |
| | — |
| | (62 | ) | | (217 | ) | | (279 | ) | Net nonaccrual loans |
| $121 |
| |
| $600 |
| |
| $4,666 |
| |
| $11,062 |
| |
| $16,449 |
| December 31, 2017 | | | | | | | | | | Commercial |
| $810 |
| |
| $— |
| |
| $2,652 |
| |
| $16,455 |
| |
| $19,917 |
| Real estate term owner occupied | — |
| | — |
| | — |
| | 1,331 |
| | 1,331 |
| Consumer secured by 1st deeds of trust | — |
| | — |
| | 378 |
| | — |
| | 378 |
| Total nonperforming loans | 810 |
| | — |
| | 3,030 |
| | 17,786 |
| | 21,626 |
| Government guarantees on nonaccrual loans | — |
| | — |
| | (94 | ) | | (373 | ) | | (467 | ) | Net nonaccrual loans |
| $810 |
| |
| $— |
| |
| $2,936 |
| |
| $17,413 |
| |
| $21,159 |
|
Past Due Loans: Past due loans and nonaccrual loans at the periods indicated are presented below by segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (In Thousands) | 30-59 Days Past Due Still Accruing |
| 60-89 Days Past Due Still Accruing |
| Greater Than 90 Days Still Accruing |
| Total Past Due | | Nonaccrual |
| Current |
| Total | September 30, 2018 | |
| |
| |
| | | |
| |
| | Commercial |
| $1,098 |
| |
| $— |
| |
| $— |
| |
| $1,098 |
| |
| $14,734 |
| |
| $317,300 |
| |
| $333,132 |
| Real estate construction one-to-four family | — |
| | — |
| | — |
| | — |
| | — |
| | 36,119 |
| | 36,119 |
| Real estate construction other | — |
| | — |
| | — |
| | — |
| | — |
| | 61,857 |
| | 61,857 |
| Real estate term owner occupied | 211 |
| | 738 |
| | — |
| | 949 |
| | 1,694 |
| | 127,523 |
| | 130,166 |
| Real estate term non-owner occupied | — |
| | — |
| | — |
| | — |
| | — |
| | 340,820 |
| | 340,820 |
| Real estate term other | — |
| | 577 |
| | — |
| | 577 |
| | 26 |
| | 40,890 |
| | 41,493 |
| Consumer secured by 1st deed of trust | — |
| | — |
| | 152 |
| | 152 |
| | 226 |
| | 19,824 |
| | 20,202 |
| Consumer other | 22 |
| | 10 |
| | — |
| | 32 |
| | 48 |
| | 22,493 |
| | 22,573 |
| Subtotal |
| $1,331 |
| |
| $1,325 |
| |
| $152 |
| |
| $2,808 |
| |
| $16,728 |
| |
| $966,826 |
| |
| $986,362 |
| Less: Unearned origination fees, net of origination costs |
| |
| | |
| |
|
| (4,355 | ) | Total | |
|
| |
|
| |
|
| |
| | |
|
| |
|
|
| $982,007 |
| December 31, 2017 | |
| |
| |
| | | |
| |
| | Commercial |
| $503 |
| |
| $— |
| |
| $240 |
| |
| $743 |
| |
| $19,917 |
| |
| $292,854 |
| |
| $313,514 |
| Real estate construction one-to-four family | — |
| | — |
| | — |
| | — |
| | — |
| | 31,201 |
| | 31,201 |
| Real estate construction other | 90 |
| | — |
| | — |
| | 90 |
| | — |
| | 80,003 |
| | 80,093 |
| Real estate term owner occupied | 966 |
| | — |
| | — |
| | 966 |
| | 1,331 |
| | 129,745 |
| | 132,042 |
| Real estate term non-owner occupied | — |
| | — |
| | — |
| | — |
| | — |
| | 319,313 |
| | 319,313 |
| Real estate term other | — |
| | — |
| | — |
| | — |
| | — |
| | 40,411 |
| | 40,411 |
| Consumer secured by 1st deed of trust | 363 |
| | — |
| | — |
| | 363 |
| | 378 |
| | 21,875 |
| | 22,616 |
| Consumer other | 161 |
| | 53 |
| | 12 |
| | 226 |
| | — |
| | 19,693 |
| | 19,919 |
| Subtotal |
| $2,083 |
| |
| $53 |
| |
| $252 |
| |
| $2,388 |
| |
| $21,626 |
| |
| $935,095 |
| |
| $959,109 |
| Less: Unearned origination fees, net of origination costs |
| |
| | |
| |
|
| (4,156 | ) | Total | |
|
| |
|
| |
|
| |
| | |
|
| |
|
|
| $954,953 |
|
Impaired Loans: The Company considers a loan to be impaired when it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. Once a loan is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate, except that if the loan is collateral dependent, the impairment is measured by using the fair value of the loan’s collateral. Nonperforming loans with an outstanding balance of $50,000 or greater are individually evaluated for impairment based upon the borrower’s overall financial condition, resources, and payment record, and the prospects for support from any financially responsible guarantors. At September 30, 2018 and December 31, 2017, the recorded investment in loans that are considered to be impaired was $35.4 million and $32.0 million, respectively. The following table presents information about impaired loans by class as of the periods indicated: | | | | | | | | | | | | | (In Thousands) | Recorded Investment |
| Unpaid Principal Balance |
| Related Allowance | September 30, 2018 | |
| |
| | With no related allowance recorded | |
| |
| | Commercial - AQR special mention |
| $2,105 |
|
|
| $2,105 |
|
|
| $— |
| Commercial - AQR substandard | 23,608 |
|
| 25,148 |
|
| — |
| Real estate term owner occupied- AQR special mention | 1,008 |
|
| 1,008 |
|
| — |
| Real estate term owner occupied- AQR substandard | 4,781 |
|
| 4,781 |
|
| — |
| Real estate term non-owner occupied- AQR pass | 319 |
|
| 319 |
|
| — |
| Real estate term non-owner occupied- AQR substandard | 469 |
|
| 469 |
|
| — |
| Real estate term other - AQR pass | 504 |
|
| 504 |
|
| — |
| Real estate term other - AQR substandard | 577 |
|
| 577 |
|
| — |
| Consumer secured by 1st deeds of trust - AQR pass | 131 |
| | 131 |
| | — |
| Consumer secured by 1st deeds of trust - AQR substandard | 252 |
|
| 252 |
|
| — |
| Subtotal |
| $33,754 |
|
|
| $35,294 |
|
|
| $— |
|
| | | | | | | | | | | | | With an allowance recorded | |
| |
| | Commercial - AQR substandard |
| $1,454 |
|
|
| $1,958 |
|
|
| $323 |
| Consumer secured by 1st deeds of trust - AQR substandard | 226 |
|
| 226 |
|
| 49 |
| Subtotal |
| $1,680 |
|
|
| $2,184 |
|
|
| $372 |
|
| | | | | | | | | | | | | Total | | | | | | Commercial - AQR special mention |
| $2,105 |
|
|
| $2,105 |
|
|
| $— |
| Commercial - AQR substandard | 25,062 |
|
| 27,106 |
|
| 323 |
| Real estate term owner-occupied - AQR special mention | 1,008 |
|
| 1,008 |
|
| — |
| Real estate term owner-occupied - AQR substandard | 4,781 |
|
| 4,781 |
|
| — |
| Real estate term non-owner occupied - AQR pass | 319 |
|
| 319 |
|
| — |
| Real estate term non-owner occupied - AQR substandard | 469 |
|
| 469 |
|
| — |
| Real estate term other - AQR pass | 504 |
|
| 504 |
|
| — |
| Real estate term other - AQR substandard | 577 |
|
| 577 |
|
| — |
| Consumer secured by 1st deeds of trust - AQR pass | 131 |
| | 131 |
| | — |
| Consumer secured by 1st deeds of trust - AQR substandard | 478 |
|
| 478 |
|
| 49 |
| Total |
| $35,434 |
|
|
| $37,478 |
|
|
| $372 |
|
| | | | | | | | | | | | | (In Thousands) | Recorded Investment | | Unpaid Principal Balance | | Related Allowance | December 31, 2017 | |
| |
| | With no related allowance recorded | |
| |
| | Commercial - AQR special mention |
| $2,153 |
|
|
| $2,153 |
|
|
| $— |
| Commercial - AQR substandard | 16,671 |
|
| 17,742 |
|
| — |
| Real estate term owner occupied - AQR substandard | 2,862 |
|
| 2,862 |
|
| — |
| Real estate term non-owner occupied - AQR pass | 303 |
| | 303 |
| | — |
| Real estate term non-owner occupied - AQR special mention | 89 |
| | 89 |
| | — |
| Real estate term non-owner occupied - AQR substandard | 482 |
|
| 482 |
|
| — |
| Real estate term other - AQR pass | 559 |
|
| 559 |
|
| — |
| Consumer secured by 1st deeds of trust - AQR pass | 136 |
|
| 136 |
|
| — |
| Consumer secured by 1st deeds of trust - AQR substandard | 724 |
|
| 809 |
|
| — |
| Subtotal |
| $23,979 |
|
|
| $25,135 |
|
|
| $— |
|
| | | | | | | | | | | | | With an allowance recorded | |
| |
| | Commercial - AQR substandard |
| $7,988 |
|
|
| $7,988 |
|
|
| $966 |
| Subtotal |
| $7,988 |
|
|
| $7,988 |
|
|
| $966 |
|
| | | | | | | | | | | | | Total | | | | | | Commercial - AQR special mention |
| $2,153 |
|
|
| $2,153 |
|
|
| $— |
| Commercial - AQR substandard | 24,659 |
|
| 25,730 |
|
| 966 |
| Real estate term owner occupied - AQR substandard | 2,862 |
|
| 2,862 |
|
| — |
| Real estate term non-owner occupied - AQR pass | 303 |
| | 303 |
| | — |
| Real estate term non-owner occupied - AQR special mention | 89 |
| | 89 |
| | — |
| Real estate term non-owner occupied - AQR substandard | 482 |
|
| 482 |
|
| — |
| Real estate term other - AQR pass | 559 |
|
| 559 |
|
| — |
| Consumer secured by 1st deeds of trust - AQR pass | 136 |
|
| 136 |
|
| — |
| Consumer secured by 1st deeds of trust - AQR substandard | 724 |
|
| 809 |
|
| — |
| Total |
| $31,967 |
|
|
| $33,123 |
|
|
| $966 |
|
The unpaid principal balance included in the tables above represents the recorded investment at the dates indicated, plus amounts charged off for book purposes. The following tables summarize our average recorded investment and interest income recognized on impaired loans for the three and nine-month periods ended September 30, 2018 and 2017: | | | | | | | | | | | | | | | | | Three Months Ended September 30, | 2018 |
| 2017 | (In Thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | With no related allowance recorded |
|
|
|
|
|
|
| Commercial - AQR special mention |
| $2,113 |
|
|
| $31 |
|
|
| $97 |
|
|
| $— |
| Commercial - AQR substandard | 26,518 |
|
| 43 |
|
| 18,125 |
|
| 72 |
| Real estate term owner occupied- AQR special mention | 617 |
|
| — |
|
| — |
|
| — |
| Real estate term owner occupied- AQR substandard | 2,908 |
|
| 52 |
|
| 7,345 |
|
| 114 |
| Real estate term non-owner occupied- AQR pass | 206 |
|
| 7 |
|
| 346 |
|
| 6 |
| Real estate term non-owner occupied- AQR substandard | 287 |
|
| 8 |
|
| 580 |
|
| 9 |
| Real estate term other - AQR pass | 310 |
|
| 11 |
|
| 585 |
|
| 10 |
| Real estate term other - AQR substandard | 353 |
|
| — |
|
| 641 |
|
| 11 |
| Consumer secured by 1st deeds of trust - AQR pass | 132 |
|
| 2 |
|
| — |
|
| — |
| Consumer secured by 1st deeds of trust - AQR special mention | — |
|
| — |
|
| 139 |
|
| 3 |
| Consumer secured by 1st deeds of trust - AQR substandard | 154 |
|
| 2 |
|
| 771 |
|
| 5 |
| Subtotal |
| $33,598 |
|
|
| $156 |
|
|
| $28,629 |
|
|
| $230 |
|
| | | | | | | | | | | | | | | | | With an allowance recorded |
|
|
|
|
|
|
| Commercial - AQR special mention |
| $— |
|
|
| $— |
|
|
| $2,083 |
|
|
| $3 |
| Commercial - AQR substandard | 1,081 |
|
| 10 |
|
| 10,056 |
|
| 4 |
| Consumer secured by 1st deeds of trust - AQR substandard | 136 |
|
| — |
|
| — |
|
| — |
| Subtotal |
| $1,217 |
|
|
| $10 |
|
|
| $12,139 |
|
|
| $7 |
|
| | | | | | | | | | | | | | | | | Total |
|
|
|
|
| |
| Commercial - AQR special mention |
| $2,113 |
|
|
| $31 |
|
|
| $2,180 |
| |
| $3 |
| Commercial - AQR substandard | 27,599 |
|
| 53 |
|
| 28,181 |
| | 76 |
| Real estate term owner-occupied - AQR special mention | 617 |
|
| — |
|
| — |
| | — |
| Real estate term owner-occupied - AQR substandard | 2,908 |
|
| 52 |
|
| 7,345 |
| | 114 |
| Real estate term non-owner occupied - AQR pass | 206 |
|
| 7 |
|
| 346 |
| | 6 |
| Real estate term non-owner occupied - AQR substandard | 287 |
|
| 8 |
|
| 580 |
| | 9 |
| Real estate term other - AQR pass | 310 |
|
| 11 |
|
| 585 |
| | 10 |
| Real estate term other - AQR substandard | 353 |
|
| — |
|
| 641 |
| | 11 |
| Consumer secured by 1st deeds of trust - AQR pass | 132 |
|
| 2 |
|
| — |
| | — |
| Consumer secured by 1st deeds of trust - AQR special mention | — |
|
| — |
|
| 139 |
| | 3 |
| Consumer secured by 1st deeds of trust - AQR substandard | 290 |
|
| 2 |
|
| 771 |
| | 5 |
| Total Impaired Loans |
| $34,815 |
|
|
| $166 |
|
|
| $40,768 |
| |
| $237 |
|
| | | | | | | | | | | | | | | | | Nine Months Ended September 30, | 2018 |
| 2017 | (In Thousands) | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | With no related allowance recorded |
|
|
|
|
|
|
| Commercial - AQR special mention |
| $2,192 |
|
|
| $96 |
|
|
| $49 |
|
|
| $1 |
| Commercial - AQR substandard | 25,271 |
|
| 300 |
|
| 20,363 |
|
| 405 |
| Real estate term owner occupied- AQR pass | — |
|
| — |
|
| 82 |
|
| 5 |
| Real estate term owner occupied- AQR special mention | 208 |
|
| — |
|
| — |
|
| — |
| Real estate term owner occupied- AQR substandard | 4,019 |
|
| 129 |
|
| 6,257 |
|
| 260 |
| Real estate term non-owner occupied- AQR pass | 294 |
|
| 18 |
|
| 367 |
|
| 38 |
| Real estate term non-owner occupied- AQR special mention | 29 |
|
| 2 |
|
| — |
|
| — |
| Real estate term non-owner occupied- AQR substandard | 413 |
|
| 22 |
|
| 654 |
|
| 38 |
| Real estate term other - AQR pass | 462 |
|
| 28 |
|
| 604 |
|
| 32 |
| Real estate term other - AQR substandard | 119 |
|
| — |
|
| 652 |
|
| 34 |
| Consumer secured by 1st deeds of trust - AQR pass | 136 |
|
| 10 |
|
| — |
|
| — |
| Consumer secured by 1st deeds of trust - AQR special mention | — |
|
| — |
|
| 141 |
|
| 10 |
| Consumer secured by 1st deeds of trust - AQR substandard | 168 |
|
| 8 |
|
| 506 |
|
| 13 |
| Consumer other - AQR substandard | — |
|
| — |
|
| 17 |
|
| 1 |
| Subtotal |
| $33,311 |
|
|
| $613 |
|
|
| $29,692 |
|
|
| $837 |
|
| | | | | | | | | | | | | | | | | With an allowance recorded |
|
|
|
|
|
|
| Commercial - AQR special mention |
| $— |
| |
| $— |
| |
| $702 |
| |
| $3 |
| Commercial - AQR substandard | 2,866 |
| | 17 |
| | 7,979 |
| | 4 |
| Commercial - AQR doubtful | 18 |
| | — |
| | — |
| | — |
| Consumer secured by 1st deeds of trust - AQR substandard | 126 |
| | — |
| | — |
| | — |
| Subtotal |
| $3,010 |
| |
| $17 |
| |
| $8,681 |
| |
| $7 |
|
| | | | | | | | | | | | | | | | | Total |
|
|
|
|
| |
| Commercial - AQR special mention |
| $2,192 |
| |
| $96 |
| |
| $751 |
| |
| $4 |
| Commercial - AQR substandard | 28,137 |
| | 317 |
| | 28,342 |
| | 409 |
| Commercial - AQR doubtful | 18 |
| | — |
| | — |
| | — |
| Real estate term owner-occupied - AQR pass | — |
| | — |
| | 82 |
| | 5 |
| Real estate term owner-occupied - AQR special mention | 208 |
| | — |
| | — |
| | — |
| Real estate term owner-occupied - AQR substandard | 4,019 |
| | 129 |
| | 6,257 |
| | 260 |
| Real estate term non-owner occupied - AQR pass | 294 |
| | 18 |
| | 367 |
| | 38 |
| Real estate term non-owner occupied - AQR special mention | 29 |
| | 2 |
| | — |
| | — |
| Real estate term non-owner occupied - AQR substandard | 413 |
| | 22 |
| | 654 |
| | 38 |
| Real estate term other - AQR pass | 462 |
| | 28 |
| | 604 |
| | 32 |
| Real estate term other - AQR substandard | 119 |
| | — |
| | 652 |
| | 34 |
| Consumer secured by 1st deeds of trust - AQR pass | 136 |
| | 10 |
| | — |
| | — |
| Consumer secured by 1st deeds of trust - AQR special mention | — |
| | — |
| | 141 |
| | 10 |
| Consumer secured by 1st deeds of trust - AQR substandard | 294 |
| | 8 |
| | 506 |
| | 13 |
| Consumer other - AQR substandard | — |
| | — |
| | 17 |
| | 1 |
| Total Impaired Loans |
| $36,321 |
| |
| $630 |
| |
| $38,373 |
| |
| $844 |
|
Purchased Credit Impaired Loans: The Company acquired 18 purchased credit impaired loans in connection with its acquisition of Alaska Pacific Bancshares, Inc. on April 1, 2014 subject to the requirements of FASB ASC 310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality. This group of loans consists primarily of commercial and commercial real estate loans, and unlike a pool of consumer mortgages, it is not practicable for the Company to analyze the accretable yield of these loans. As such, the Company has elected the cost recovery method of income recognition for these loans, and thus no accretable yield has been identified for these loans. At the acquisition date, April 1, 2014, the fair value of this group of loans was $3.9 million. The carrying value of these loans as of September 30, 2018 was $792,000. Troubled Debt Restructurings: Loans classified as troubled debt restructurings (“TDR”) totaled $17.9 million and $23.8 million at September 30, 2018 and December 31, 2017, respectively. A TDR is a loan to a borrower that is experiencing financial difficulty that has been modified from its original terms and conditions in such a way that the Company is granting the borrower a concession that it would not grant otherwise. The Company has granted a variety of concessions to borrowers in the form of loan modifications. The modifications granted can generally be described in the following categories: Rate Modification: A modification in which the interest rate is changed. Term Modification: A modification in which the maturity date, timing of payments, or frequency of payments is changed. Payment Modification: A modification in which the dollar amount of the payment is changed, or in which a loan is converted to interest only payments for a period of time is included in this category. Combination Modification: Any other type of modification, including the use of multiple categories above. AQR pass graded loans included above in the impaired loan data are loans classified as TDRs. By definition, TDRs are considered impaired loans. All of the Company's TDRs are included in impaired loans. The following table presents the breakout between newly restructured loans that occurred during the nine months ended September 30, 2018 and restructured loans that occurred prior to 2018 that are still included in portfolio loans: | | | | | | | | | | | | | | Accrual Status | | Nonaccrual Status | | Total Modifications | (In Thousands) | | | New Troubled Debt Restructurings | | | | | | Commercial - AQR substandard |
| $— |
| |
| $1,738 |
| |
| $1,738 |
| Real estate term owner occupied- AQR substandard | — |
| | 1,694 |
| | 1,694 |
| Subtotal |
| $— |
| |
| $3,432 |
| |
| $3,432 |
| Existing Troubled Debt Restructurings |
| $3,252 |
| |
| $11,178 |
| |
| $14,430 |
| Total |
| $3,252 |
| |
| $14,610 |
| |
| $17,862 |
|
The following tables present newly restructured loans that occurred during the nine months ended September 30, 2018 and 2017, by concession (terms modified): | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2018 | | Number of Contracts | | Rate Modification | | Term Modification | | Payment Modification | | Combination Modification | | Total Modifications | (In Thousands) | | | | | | Pre-Modification Outstanding Recorded Investment: | | | | | | | | | | | | Commercial - AQR substandard | 4 | |
| $— |
| |
| $— |
| |
| $2,704 |
| |
| $— |
| |
| $2,704 |
| Real estate term owner occupied- AQR substandard | 2 | | — |
| | — |
| | 1,694 |
| | — |
| | 1,694 |
| Total | 6 | |
| $— |
| |
| $— |
| |
| $4,398 |
| |
| $— |
| |
| $4,398 |
| Post-Modification Outstanding Recorded Investment: | | | | | | | | | | | | Commercial - AQR substandard | 4 | |
| $— |
| |
| $— |
| |
| $1,738 |
| |
| $— |
| |
| $1,738 |
| Real estate term owner occupied- AQR substandard | 2 | | — |
| | — |
| | 1,694 |
| | — |
| | 1,694 |
| Total | 6 | |
| $— |
| |
| $— |
| |
| $3,432 |
| |
| $— |
| |
| $3,432 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2017 | | Number of Contracts | | Rate Modification | | Term Modification | | Payment Modification | | Combination Modification | | Total Modifications | (In Thousands) | | | | | | Pre-Modification Outstanding Recorded Investment: | | | | | | | | | | | | Commercial - AQR special mention | 1 | |
| $— |
| |
| $2,078 |
| |
| $— |
| |
| $— |
| |
| $2,078 |
| Commercial - AQR substandard | 2 | | — |
| | 10,665 |
| | 210 |
| | — |
| | 10,875 |
| Total | 3 | |
| $— |
| |
| $12,743 |
| |
| $210 |
| |
| $— |
| |
| $12,953 |
| Post-Modification Outstanding Recorded Investment: | | | | | | | | | | | | Commercial - AQR special mention | 1 | |
| $— |
| |
| $2,078 |
| |
| $— |
| |
| $— |
| |
| $2,078 |
| Commercial - AQR substandard | 2 | | — |
| | 9,099 |
| | 205 |
| | — |
| | 9,304 |
| Total | 3 | |
| $— |
| |
| $11,177 |
| |
| $205 |
| |
| $— |
| |
| $11,382 |
|
The Company had no commitments to extend additional credit to borrowers whose terms have been modified in TDRs. There were $965,000 of charge-offs in the nine months ended September 30, 2018 on loans that were newly classified as TDRs during the same period. All TDRs are also classified as impaired loans and are included in the loans individually evaluated for impairment in the calculation of the Allowance. There were two TDRs with specific impairment at September 30, 2018 and December 31, 2017. The Company had no TDRs that subsequently defaulted within the first twelve months of restructure, during the year ending December 31, 2017. The following table presents TDRs that occurred during the twelve-month period ending September 30, 2018 that subsequently defaulted during the nine months ended September 30, 2018:
| | | | | | | | | | September 30, 2018 | | Number of Contracts | | Recorded Investment | (In Thousands) | | Troubled Debt Restructurings that Subsequently Defaulted: | | | | Commercial - AQR substandard | 2 | |
| $559 |
| Real estate term owner occupied - AQR substandard | 1 | | 1,331 |
| Total | 3 | |
| $1,890 |
|
|