Note 5 – Allowance for Loan Losses

The following tables summarize the activity in the allowance for loan losses, and ending balance of loans, net of unearned fees for the periods indicated.


	Allowance for Loan Losses – Year Ended March 31, 2015
	RE Mortgage						Home Equity						Auto			Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect			Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	3,086		$	9,227		$	15,676		$	1,797		$	9		$	719		$	4,226		$	1,434		$	411		$	36,585
Charge-offs		(81	)		—			(341	)		(11	)		—			(268	)		(534	)		—			—			(1,235	)
Recoveries		1			96			119			3			20			152			87			11			19			508
(Benefit) provision		(241	)		1,128			(221	)		191			(23	)		41			197			(695	)		(180	)		197

Ending balance	$	2,765		$	10,451		$	15,233		$	1,980		$	6		$	644		$	3,976		$	750		$	250		$	36,055

Ending balance:
Individ. evaluated for impairment	$	988		$	799		$	1,857		$	337		$	1		$	92		$	559		$	59			—		$	4,692

Loans pooled for evaluation	$	1,709		$	8,464		$	12,932		$	1,643		$	5		$	552		$	2,205		$	505		$	250		$	28,265

Loans acquired with deteriorated credit quality	$	69		$	1,188		$	443			—			—			—		$	1,212		$	186			—		$	3,098


	Loans, net of unearned fees – As of March 31, 2015
	RE Mortgage						Home Equity						Auto			Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect			Consum.			C&I			Resid.			Comm.			Total
Ending balance:
Total loans	$	282,383		$	1,364,480		$	345,210		$	32,486		$	32		$	32,999		$	177,540		$	40,105		$	45,648		$	2,320,883

Individ. evaluated for impairment	$	7,786		$	44,523		$	6,290		$	1,359		$	14		$	338		$	1,967		$	2,655		$	94		$	65,026

Loans pooled for evaluation	$	270,571		$	1,292,006		$	329,961		$	30,374		$	18		$	32,591		$	168,517		$	36,714		$	45,554		$	2,206,306

Loans acquired with deteriorated credit quality	$	4,026		$	27,951		$	8,959		$	753			—		$	70		$	7,056		$	736			—		$	49,551


	Allowance for Loan Losses – Year Ended December 31, 2014
	RE Mortgage						Home Equity						Auto			Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect			Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	3,154		$	9,700		$	16,375		$	1,208		$	66		$	589		$	4,331		$	1,559		$	1,263		$	38,245
Charge-offs		(171	)		(110	)		(1,094	)		(29	)		(3	)		(599	)		(479	)		(4	)		(69	)		(2,558	)
Recoveries		2			540			960			34			86			495			1,268			1,377			181			4,943
(Benefit) provision		101			(903	)		(565	)		584			(140	)		234			(894	)		(1,498	)		(964	)		(4,045	)

Ending balance	$	3,086		$	9,227		$	15,676		$	1,797		$	9		$	719		$	4,226		$	1,434		$	411		$	36,585

Ending balance:
Individ. evaluated for impairment	$	974		$	410		$	1,974		$	284			—		$	142		$	423		$	60			—		$	4,267

Loans pooled for evaluation	$	1,915		$	8,408		$	13,251		$	1,513		$	9		$	572		$	2,569		$	332		$	322		$	28,891

Loans acquired with deteriorated credit quality	$	197		$	409		$	451			—			—		$	5		$	1,234		$	1,042		$	89		$	3,427


	Loans, net of unearned fees – As of December 31, 2014
	RE Mortgage						Home Equity						Auto			Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect			Consum.			C&I			Resid.			Comm.			Total
Ending balance:
Total loans	$	279,420		$	1,335,939		$	352,584		$	31,314		$	112		$	33,074		$	174,945		$	38,618		$	35,518		$	2,282,524

Individ. evaluated for impairment	$	7,188		$	41,932		$	6,968		$	1,278		$	18		$	323		$	1,757		$	2,683		$	99		$	62,246

Loans pooled for evaluation	$	268,227		$	1,263,090		$	336,595		$	29,266		$	94		$	32,677		$	165,753		$	35,260		$	36,419		$	2,167,381

Loans acquired with deteriorated credit quality	$	4,005		$	30,917		$	9,021		$	770			—		$	74		$	7,435		$	675			—		$	52,897


	Allowance for Loan Losses – Three Months Ended March 31, 2014
	RE Mortgage						Home Equity					Auto			Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans		Indirect			Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	3,154		$	9,700		$	16,375		$	1,208	$	66		$	589		$	4,331		$	1,559		$	1,263		$	38,245
Charge-offs		(135	)		(13	)		(178	)		—		—			(127	)		(239	)		(4	)		(69	)		(765	)
Recoveries		—			172			329			2		12			183			873			511			115			2,197
(Benefit) provision		(39	)		16			(160	)		81		(33	)		(55	)		(829	)		(565	)		229			(1,355	)

Ending balance	$	2,980		$	9,875		$	16,366		$	1,291	$	45		$	590		$	4,136		$	1,501		$	1,538		$	38,322

Ending balance:
Individ. evaluated for impairment	$	666		$	968		$	1,394		$	178	$	1		$	4		$	626		$	104			—		$	3,941

Loans pooled for evaluation	$	1,962		$	8,129		$	14,489		$	1,113	$	44		$	586		$	2,194		$	769		$	1,033		$	30,319

Loans acquired with deteriorated credit quality	$	352		$	778		$	484			—		—			—		$	1,316		$	627		$	505		$	4,062


	Loans, net of unearned fees – As of March 31, 2014
	RE Mortgage						Home Equity					Auto			Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans		Indirect			Consum.			C&I			Resid.			Comm.			Total
Ending balance:
Total loans	$	195,826		$	930,472		$	337,802		$	15,776	$	575		$	27,633		$	119,418		$	37,394		$	22,156		$	1,687,052

Individ. evaluated for impairment	$	7,322		$	59,613		$	7,091		$	774	$	49		$	101		$	2,537		$	2,793		$	19		$	80,299

Loans pooled for evaluation	$	184,002		$	840,642		$	320,846		$	14,522	$	526		$	27,457		$	110,602		$	33,153		$	22,081		$	1,553,831

Loans acquired with deteriorated credit quality	$	4,502		$	30,217		$	9,865		$	480		—		$	75		$	6,279		$	1,448		$	56		$	52,922

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including, but not limited to, trends relating to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii) non-performing loans, and (iv) delinquency within the portfolio.

The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are graded on a scale ranging from Pass to Loss. A description of the general characteristics of the risk grades is as follows:

•

Pass – This grade represents loans ranging from acceptable to very little or no credit risk. These loans typically meet most if not all policy standards in regard to: loan amount as a percentage of collateral value, debt service coverage, profitability, leverage, and working capital.

•

Special Mention – This grade represents “Other Assets Especially Mentioned” in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Company’s position in the future. These loans warrant more than normal supervision and attention.

•

Substandard – This grade represents “Substandard” loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been written down to the point where this is true. There is a definite need for a well defined workout/rehabilitation program.

•

Doubtful – This grade represents “Doubtful” loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans.

•

Loss – This grade represents “Loss” loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan, even though some recovery may be affected in the future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified.

The following tables present ending loan balances by loan category and risk grade for the periods indicated:


	Credit Quality Indicators – As of March 31, 2015
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
Originated loans:
Pass	$	152,273	$	926,236	$	286,624	$	24,010		—	$	28,010	$	132,590	$	20,498	$	31,877	$	1,602,118
Special mention		1,315		11,795		3,641		891	$	6		487		757		793		584		20,269
Substandard		6,453		32,402		9,033		1,991		26		243		708		2,373		97		53,326
Loss		—		—		—		—		—		—		—		—		—		—

Total originated	$	160,041	$	970,433	$	299,298	$	26,892	$	32	$	28,740	$	134,055	$	23,664	$	32,558	$	1,675,713

PNCI loans:
Pass	$	116,888	$	348,541	$	34,903	$	4,662		—	$	3,914	$	36,128	$	15,705	$	13,090	$	573,831
Special mention		680		12,874		935		105		—		123		5		—		—		14,722
Substandard		748		4,681		1,115		74		—		152		296		—		—		7,066
Loss		—		—		—		—		—		—		—		—		—		—

Total PNCI	$	118,316	$	366,096	$	36,953	$	4,841		—	$	4,189	$	36,429	$	15,705	$	13,090	$	595,619

PCI loans	$	4,026	$	27,951	$	8,959	$	753		—	$	70	$	7,056	$	736		—	$	49,551

Total loans	$	282,383		1,364,480	$	345,210	$	32,486	$	32	$	32,999	$	177,540	$	40,105	$	45,648	$	2,320,883


	Credit Quality Indicators – As of December 31, 2014
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
Originated loans:
Pass	$	146,949	$	883,102	$	292,244	$	20,976	$	66	$	27,396	$	124,707	$	18,112	$	24,436	$	1,537,988
Special mention		1,122		11,521		3,590		743		11		591		636		622		—		18,836
Substandard		6,523		34,174		9,332		1,840		35		243		1,268		2,401		109		55,925
Loss		—		—		—		—		—		—		—		—		—		—

Total originated	$	154,594	$	928,797	$	305,166	$	23,559	$	112	$	28,230	$	126,611	$	21,135	$	24,545	$	1,612,749

PNCI loans:
Pass	$	119,643	$	359,537	$	36,531	$	6,813		—	$	4,399	$	40,628	$	16,808	$	11,973	$	596,332
Special mention		547		12,979		936		147		—		230		268		—		—		15,107
Substandard		631		3,709		930		25		—		141		3		—		—		5,439
Loss		—		—		—		—		—		—		—		—		—		—

Total PNCI	$	120,821	$	376,225	$	38,397	$	6,985		—	$	4,770	$	40,899	$	16,808	$	11,973	$	616,878

PCI loans	$	4,005	$	30,917	$	9,021	$	770		—	$	74	$	7,435	$	675		—	$	52,897

Total loans	$	279,420	$	1,335,939	$	352,584	$	31,314	$	112	$	33,074	$	174,945	$	38,618	$	36,518	$	2,282,524

Consumer loans, whether unsecured or secured by real estate, automobiles, or other personal property, are susceptible to three primary risks; non-payment due to income loss, over-extension of credit and, when the borrower is unable to pay, shortfall in collateral value. Typically non-payment is due to loss of job and will follow general economic trends in the marketplace driven primarily by rises in the unemployment rate. Loss of collateral value can be due to market demand shifts, damage to collateral itself or a combination of the two.

Problem consumer loans are generally identified by payment history of the borrower (delinquency). The Bank manages its consumer loan portfolios by monitoring delinquency and contacting borrowers to encourage repayment, suggest modifications if appropriate, and, when continued scheduled payments become unrealistic, initiate repossession or foreclosure through appropriate channels. Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the credit and periodically (every 3-12 months depending on collateral type) once repayment is questionable and the loan has been classified.

Commercial real estate loans generally fall into two categories, owner-occupied and non-owner occupied. Loans secured by owner occupied real estate are primarily susceptible to changes in the business conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual fortunes of the business owner, and general economic conditions and changes in business cycles. These same risks apply to commercial loans whether secured by equipment or other personal property or unsecured. Losses on loans secured by owner occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related shifts in lease rates, rental rates or room rates. Most often these shifts are a result of changes in general economic or market conditions or overbuilding and resultant over-supply. Losses are dependent on value of underlying collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs.

Construction loans, whether owner occupied or non-owner occupied commercial real estate loans or residential development loans, are not only susceptible to the related risks described above but the added risks of construction itself including cost over-runs, mismanagement of the project, or lack of demand or market changes experienced at time of completion. Again, losses are primarily related to underlying collateral value and changes therein as described above.

Problem C&I loans are generally identified by periodic review of financial information which may include financial statements, tax returns, rent rolls and payment history of the borrower (delinquency). Based on this information the Bank may decide to take any of several courses of action including demand for repayment, additional collateral or guarantors, and, when repayment becomes unlikely through borrower’s income and cash flow, repossession or foreclosure of the underlying collateral.

Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the credit and periodically (every 3-12 months depending on collateral type) once repayment is questionable and the loan has been classified.

Once a loan becomes delinquent and repayment becomes questionable, a Bank collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss, using a recent valuation as appropriate to the underlying collateral less estimated costs of sale, and charge the loan down to the estimated net realizable amount. Depending on the length of time until ultimate collection, the Bank may revalue the underlying collateral and take additional charge-offs as warranted. Revaluations may occur as often as every 3-12 months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when collateral is liquidated and actual loss is known. Unpaid balances on loans after or during collection and liquidation may also be pursued through lawsuit and attachment of wages or judgment liens on borrower’s other assets.

The following table shows the ending balance of current, past due, and nonaccrual originated loans by loan category as of the date indicated:


	Analysis of Past Due and Nonaccrual Originated Loans – As of March 31, 2015
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
Originated loan balance:
Past due:
30-59 Days	$	1,225	$	545	$	1,689	$	140	$	2	$	5	$	318		—		—	$	3,924
60-89 Days		—		714		285		276		—		5		35		—		—		1,315
> 90 Days		629		1,028		565		390		14		59		24		—		—		2,709

Total past due	$	1,854	$	2,287	$	2,539	$	806	$	16	$	69	$	377		—		—	$	7,948
Current		158,187		968,146		296,759		26,086		16		28,671		133,678		23,664		32,558		1,667,765

Total orig. loans	$	160,041	$	970,433	$	299,298	$	26,892	$	32	$	28,740	$	134,055	$	23,664	$	32,558	$	1,675,713

> 90 Days and still accruing	$	328		—		—		—		—		—		—		—		—	$	328

Nonaccrual loans	$	4,111	$	22,486	$	3,700	$	1,217	$	14	$	62	$	191	$	2,373	$	94	$	34,248


The following table shows the ending balance of current, past due, and nonaccrual PNCI loans by loan category as of the date indicated:

	Analysis of Past Due and Nonaccrual PNCI Loans – As of March 31, 2015
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
PNCI loan balance:
Past due:
30-59 Days	$	1,401	$	560	$	69		—		—	$	28		—		—		—	$	2,058
60-89 Days		—		75		395		43		—		1		—		—		—		514
> 90 Days		121		—		38		25		—		31		—		—		—		215

Total past due	$	1,522	$	635	$	502	$	68		—	$	60		—		—		—	$	2,787
Current		116,832		365,461		36,220		4,966		—		4,129		36,429		15,705		13,090		592,832

Total PNCI loans	$	118,354	$	366,096	$	36,722	$	5,034		—	$	4,189	$	36,429	$	15,705	$	13,090	$	595,619

> 90 Days and still accruing		—		—		—		—		—		—		—		—		—		—

Nonaccrual loans	$	728	$	1,003	$	414	$	25		—	$	66		—		—		—	$	2,236

The following table shows the ending balance of current, past due, and nonaccrual originated loans by loan category as of the date indicated:


	Analysis of Past Due and Nonaccrual Originated Loans – As of December 31, 2014
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
Originated loan balance:
Past due:
30-59 Days	$	1,296	$	735	$	2,066	$	615	$	4	$	64	$	739		—		—	$	5,519
60-89 Days		919		—		296		192		—		24		99		—		—		1,530
> 90 Days		100		900		754		202		17		46		61		—		—		2,080

Total past due	$	2,315	$	1,635	$	3,116	$	1,009	$	21	$	134	$	899		—		—	$	9,129
Current		152,279		927,162		302,050		22,550		91		28,096		125,712		21,135		24,545		1,603,620

Total orig. loans	$	154,594	$	928,797	$	305,166	$	23,559	$	112	$	28,230	$	126,611	$	21,135	$	24,545	$	1,612,749

> 90 Days and still accruing		—		—		—		—		—		—		—		—		—		—

Nonaccrual loans	$	3,430	$	20,736	$	4,336	$	1,197	$	18	$	66	$	246	$	2,401	$	99	$	32,529


The following table shows the ending balance of current, past due, and nonaccrual PNCI loans by loan category as of the date indicated:

	Analysis of Past Due and Nonaccrual PNCI Loans – As of December 31, 2014
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
PNCI loan balance:
Past due:
30-59 Days	$	2,041	$	260	$	275		—		—	$	25	$	67		—		—	$	2,668
60-89 Days		24		—		118		—		—		3		—		—		—		145
> 90 Days		239		—		73		25		—		76		—		—		—		413

Total past due	$	2,304	$	260	$	466	$	25		—	$	104	$	67		—		—	$	3,226
Current		118,517		375,965		37,931		6,960		—		4,666		40,832		16,808		11,973	$	613,652

Total PNCI loans	$	120,821	$	376,225	$	38,397	$	6,985		—	$	4,770	$	40,899	$	16,808	$	11,973	$	616,878

> 90 Days and still accruing		—		—		—		—		—		—		—		—		—		—

Nonaccrual loans	$	799	$	366	$	346	$	25		—	$	110		—		—		—	$	1,646


Impaired originated loans are those where management has concluded that it is probable that the borrower will be unable to pay all amounts due under the contractual terms. The following tables show the recorded investment (financial statement balance), unpaid principal balance, average recorded investment, and interest income recognized for impaired Originated and PNCI loans, segregated by those with no related allowance recorded and those with an allowance recorded for the periods indicated.

	Impaired Originated Loans – As of, or for the Three Months Ended, March 31, 2015
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	3,360	$	40,094	$	2,631	$	870	$	10	$	19	$	748	$	2,373	$	94	$	50,199

Unpaid principal	$	5,330	$	43,898	$	5,791	$	1,335	$	30	$	23	$	776	$	6,585	$	186	$	63,954

Average recorded Investment	$	3,323	$	39,286	$	2,816	$	810	$	12	$	22	$	580	$	2,387	$	96	$	49,332

Interest income Recognized	$	8	$	283		—		—		—		—	$	11		—		—	$	302

With an allowance recorded:
Recorded investment	$	3,402	$	3,281	$	2,808	$	464	$	4	$	43	$	1,214	$	282		—	$	11,498

Unpaid principal	$	3,570	$	3,432	$	3,077	$	566	$	6	$	53	$	1,316	$	282		—	$	12,302

Related allowance	$	915	$	598	$	1,636	$	337	$	1	$	17	$	559	$	59		—	$	4,122

Average recorded Investment	$	3,063	$	3,112	$	2,997	$	484	$	4	$	42	$	1,276	$	282		—	$	11,260

Interest income Recognized	$	22	$	40	$	12	$	1		—		—	$	15	$	4		—	$	94


	Impaired PNCI Loans – As of, or for the Three Months Ended, March 31, 2015
	RE Mortgage				Home Equity					Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines			Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	389	$	313	$	414		$	25		—	$	59	$	5		—		—	$	1,205

Unpaid principal	$	488	$	2,601	$	450		$	25		—	$	78	$	5		—		—	$	3,647

Average recorded Investment	$	366	$	339	$	380		$	25		—	$	48	$	6		—		—	$	1,164

Interest income Recognized	$	1		—		—			—		—		—		—		—		—	$	1

With an allowance recorded:
Recorded investment	$	635	$	835	$	437			—		—	$	217		—		—		—	$	2,124

Unpaid principal	$	644	$	838	$	437			—		—	$	217		—		—		—	$	2,136

Related allowance	$	73	$	201	$	221			—		—	$	75		—		—		—	$	570

Average recorded Investment	$	734	$	490	$	436			—		—	$	219		—		—		—	$	1,879

Interest income Recognized	$	2	$	10	$	4			—		—	$	2		—		—		—	$	18


	Impaired Originated Loans – As of December 31, 2014
	RE Mortgage				Home Equity					Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines			Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	3,287	$	38,477	$	3,001		$	750	$	14	$	25	$	412	$	2,401	$	99	$	48,466

Unpaid principal	$	5,138	$	41,949	$	6,094		$	1,187	$	49	$	32	$	433	$	6,588	$	190	$	61,660

Average recorded Investment	$	3,826	$	45,915	$	3,355		$	651	$	35	$	21	$	1,030	$	2,437	$	84	$	57,354

Interest income Recognized	$	38	$	995	$	26		$	6		—	$	1	$	26		—	$	3	$	1,095

With an allowance recorded:
Recorded investment	$	2,724	$	2,943	$	3,185		$	504	$	4	$	41	$	1,338	$	282		—	$	11,021

Unpaid principal	$	2,865	$	3,101	$	3,533		$	597	$	6	$	41	$	1,438	$	282		—	$	11,863

Related allowance	$	797	$	302	$	1,769		$	284		—	$	11	$	423	$	60		—	$	3,646

Average recorded Investment	$	2,677	$	4,119	$	2,982		$	365	$	4	$	25	$	1,428	$	283	$	55	$	11,938

Interest income Recognized	$	91	$	144	$	71		$	13		—		—	$	71	$	19		—	$	409


	Impaired PNCI Loans – As of December 31, 2014
	RE Mortgage				Home Equity					Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines			Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	343	$	366	$	346		$	25		—	$	37	$	7		—		—	$	1,124

Unpaid principal	$	353	$	2,620	$	374		$	25		—	$	54	$	7		—		—	$	3,433

Average recorded Investment	$	246	$	753	$	287		$	12		—	$	36	$	10		—		—	$	1,344

Interest income Recognized	$	14		—	$	(1	)		—		—		—	$	1		—		—	$	14

With an allowance recorded:
Recorded investment	$	834	$	146	$	436			—		—	$	220		—		—		—	$	1,636

Unpaid principal	$	852	$	146	$	436			—		—	$	220		—		—		—	$	1,654

Related allowance	$	177	$	108	$	205			—		—	$	131		—		—		—	$	621

Average recorded Investment	$	516	$	148	$	319			—		—	$	124		—		—		—	$	1,107

Interest income Recognized	$	8	$	8	$	20			—		—	$	12		—		—		—	$	48


	Impaired Originated Loans – As of, or for the Three Months Ended, March 31, 2014
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	4,349	$	53,996	$	3,386	$	541	$	45	$	32	$	1,105	$	87	$	19	$	63,560

Unpaid principal	$	6,532	$	59,159	$	6,833	$	921	$	82	$	37	$	1,120	$	225	$	101	$	75,010

Average recorded Investment	$	4,206	$	57,403	$	3,972	$	483	$	66	$	21	$	1,370	$	1,415	$	39	$	68,975

Interest income Recognized	$	14	$	340	$	2		—		—		—	$	15		—		—	$	371

With an allowance recorded:
Recorded investment	$	2,457	$	4,599	$	3,214	$	234	$	4	$	5	$	1,421	$	2,707		—	$	14,641

Unpaid principal	$	2,528	$	5,240	$	3,449	$	300	$	5	$	6	$	1,509	$	6,773		—	$	19,810

Related allowance	$	502	$	855	$	1,228	$	178	$	1	$	1	$	626	$	104		—	$	3,495

Average recorded Investment	$	2,353	$	5,773	$	3,057	$	170	$	7	$	7	$	1,766	$	1,497	$	151	$	14,781

Interest income Recognized	$	13	$	25	$	14	$	1		—		—	$	13	$	5		—	$	71


	Impaired PNCI Loans – As of, or for the Three Months Ended, March 31, 2014
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	84	$	870	$	326		—		—	$	34	$	11		—		—	$	1,325

Unpaid principal	$	84	$	3,044	$	336		—		—	$	45	$	11		—		—	$	3,520

Average recorded Investment	$	58	$	905	$	339		—		—	$	37	$	9		—		—	$	1,348

Interest income Recognized	$	2		—	$	6		—		—		—		—		—		—	$	8

With an allowance recorded:
Recorded investment	$	432	$	148	$	166		—		—	$	28		—		—		—	$	774

Unpaid principal	$	443	$	149	$	172		—		—	$	28		—		—		—	$	792

Related allowance	$	164	$	113	$	166		—		—	$	3		—		—		—	$	446

Average recorded Investment	$	334	$	157	$	195		—		—	$	28		—		—		—	$	714

Interest income Recognized	$	2	$	2		—		—		—		—		—		—		—	$	4

At March 31, 2015, $45,641,000 of originated loans were TDR and classified as impaired. The Company had obligations to lend $4,000 of additional funds on these TDR as of March 31, 2015. At March 31, 2015, $1,231,000 of PNCI loans were TDR and classified as impaired. The Company had no obligations to lend additional funds on these TDR as of March 31, 2015.

At December 31, 2014, $45,676,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to lend $54,000 of additional funds on these TDRs as of December 31, 2014. At December 31, 2014, $1,307,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of December 31, 2014.

At March 31, 2014, $56,179,000 of originated loans were TDRs and classified as impaired. The Company had obligations to lend $1,000 of additional funds on these TDRs as of March 31, 2014. At March 31, 2014, $1,179,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of March 31, 2014.

The following tables show certain information regarding Troubled Debt Restructurings (TDRs) that occurred during the periods indicated:


	TDR Information for the Three Months Ended March 31, 2015
	RE Mortgage					Home Equity				Auto		Other					Construction
(in thousands)	Resid.		Comm.			Lines		Loans		Indirect		Consum.		C&I			Resid.		Comm.		Total
Number		1		1			—		—		—		2		1			—		—		5
Pre-mod outstanding principal balance	$	108	$	124			—		—		—	$	89	$	287			—		—	$	608
Post-mod outstanding principal balance	$	110	$	124			—		—		—	$	89	$	288			—		—	$	611
Financial impact due to TDR taken as additional provision	$	8	$	(5	)		—		—		—	$	5	$	164			—		—	$	172
Number that defaulted during the period		—		—			1		—		—		—		—			—		—		1
Recorded investment of TDRs that defaulted during the period		—		—		$	47		—		—		—		—			—		—	$	47
the default of previous
TDR taken as charge-offs or additional provisions		—		—			—		—		—		—		—			—		—		—

The following tables show certain information regarding TDRs that occurred during the periods indicated:

	TDR Information for the Three Months Ended March 31, 2014
	RE Mortgage					Home Equity				Auto		Other					Construction
(in thousands)	Resid.		Comm.			Lines		Loans		Indirect		Consum.		C&I			Resid.		Comm.		Total
Number		2		2			2		—		—		—		1			1		1		9
Pre-mod outstanding principal balance	$	695	$	256		$	279		—		—		—	$	38		$	102	$	118	$	1,488
Post-mod outstanding principal balance	$	695	$	259		$	279		—		—		—	$	38		$	85	$	100	$	1,456
Financial impact due to TDR taken as additional provision	$	37	$	9			—		—		—		—	$	18			—		—	$	64
Number that defaulted during the period		—		1			—		—		—		—		1			—		—		2
Recorded investment of TDRs that defaulted during the period		—	$	260			—		—		—		—	$	116			—		—	$	376
Financial impact due to the default of previous
TDR taken as charge-offs or additional provisions		—		—			—		—		—		—	$	(8	)		—		—	$	(8	)

Modifications classified as TDRs can include one or a combination of the following: rate modifications, term extensions, interest only modifications, either temporary or long-term, payment modifications, and collateral substitutions/additions.

For all new TDRs, an impairment analysis is conducted. If the loan is determined to be collateral dependent, any additional amount of impairment will be calculated based on the difference between estimated collectible value and the current carrying balance of the loan. This difference could result in an increased provision and is typically charged off. If the asset is determined not to be collateral dependent, the impairment is measured on the net present value difference between the expected cash flows of the restructured loan and the cash flows which would have been received under the original terms. The effect of this could result in a requirement for additional provision to the reserve. The effect of these required provisions for the period are indicated above.

Typically if a TDR defaults during the period, the loan is then considered collateral dependent and, if it was not already considered collateral dependent, an appropriate provision will be reserved or charge will be taken. The additional provisions required resulting from default of previously modified TDR’s are noted above.