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 – Three Months Ended September 30, 2017
	RE Mortgage						Home Equity						Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	2,495		$	10,119		$	6,156		$	2,354		$	645		$	4,729		$	1,179		$	466		$	28,143
Charge-offs		(60	)		(20	)		(14	)		(94	)		(349	)		(291	)		(33	)		—			(861	)
Recoveries		—			238			189			121			91			61			—			—			700
(Benefit) provision		(217	)		1,033			(610	)		(390	)		203			303			284			159			765

Ending balance	$	2,218		$	11,370		$	5,721		$	1,991		$	590		$	4,802		$	1,430		$	625		$	28,747


	Allowance for Loan Losses – Nine Months Ended September 30, 2017
	RE Mortgage						Home Equity						Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	2,748		$	11,517		$	7,044		$	2,644		$	622		$	5,831		$	1,417		$	680		$	32,503
Charge-offs		(60	)		(170	)		(98	)		(331	)		(831	)		(1,188	)		(1,104	)		—			(3,782	)
Recoveries		—			365			487			146			300			315			—			1			1,614
(Benefit) provision		(470	)		(342	)		(1,712	)		(468	)		499			(156	)		1,117			(56	)		(1,588	)

Ending balance	$	2,218		$	11,370		$	5,721		$	1,991		$	590		$	4,802		$	1,430		$	625		$	28,747

Ending balance:
Individ. evaluated for impairment	$	240		$	73		$	363		$	111		$	77		$	1,276			—			—		$	2,140

Loans pooled for evaluation	$	1,978		$	11,022		$	5,347		$	1,879		$	513		$	3,526		$	1,430		$	625		$	26,320

Loans acquired with deteriorated credit quality		—		$	275		$	12			—			—			—			—			—		$	287


	Loans, net of unearned fees – As of September 30, 2017
	RE Mortgage						Home Equity						Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Consum.			C&I			Resid.			Comm.			Total
Ending balance:
Total loans	$	391,072		$	1,803,802		$	289,506		$	45,033		$	26,781		$	227,479		$	75,120		$	72,820		$	2,931,613

Individ. evaluated for impairment	$	5,027		$	19,788		$	2,219		$	1,842		$	267		$	2,938		$	144			—		$	32,225

Loans pooled for evaluation	$	384,640		$	1,775,843		$	284,335		$	42,454		$	26,470		$	221,846		$	74,976		$	72,820		$	2,883,384

Loans acquired with deteriorated credit quality	$	1,405		$	8,171		$	2,952		$	737		$	44		$	2,695			—			—		$	16,004


	Allowance for Loan Losses – Year Ended December 31, 2016
	RE Mortgage						Home Equity						Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	2,896		$	11,015		$	11,253		$	3,177		$	688		$	5,271		$	899		$	812		$	36,011
Charge-offs		(321	)		(827	)		(585	)		(219	)		(823	)		(455	)		—			—			(3,230	)
Recoveries		880			920			2,317			590			449			404			54			78			5,692
(Benefit) provision		(694	)		395			(5,940	)		(903	)		308			611			463			(210	)		(5,970	)

Ending balance	$	2,761		$	11,503		$	7,045		$	2,645		$	622		$	5,831		$	1,416		$	680		$	32,503

Ending balance:
Individ. evaluated for impairment	$	258		$	4		$	411		$	215		$	28		$	1,130			—			—		$	2,046

Loans pooled for evaluation	$	2,317		$	10,050		$	6,617		$	2,366		$	594		$	3,765		$	1,371		$	680		$	27,760

Loans acquired with deteriorated credit quality	$	186		$	1,449		$	17		$	64			—		$	936		$	45			—		$	2,697


	Loans, net of unearned fees – As of December 31, 2016
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
Ending balance:
Total loans	$	368,343	$	1,685,121	$	289,715	$	46,182	$	30,766	$	217,047	$	55,429	$	66,990	$	2,759,593

Individ. evaluated for impairment	$	4,094	$	15,081	$	3,196	$	1,508	$	154	$	4,096	$	11		—	$	28,140

Loans pooled for evaluation	$	362,780	$	1,657,238	$	282,159	$	42,992	$	30,547	$	208,960	$	54,743	$	66,990	$	2,706,409

Loans acquired with deteriorated credit quality	$	1,469	$	12,802	$	4,360	$	1,682	$	65	$	3,991	$	675		—	$	25,044


	Allowance for Loan Losses – Three Months Ended September 30, 2016
	RE Mortgage						Home Equity						Auto		Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect		Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	3,081		$	11,934		$	9,203		$	3,057			—	$	696		$	5,265		$	1,321		$	952		$	35,509
Charge-offs		(50	)		—			(122	)		(25	)		—		(160	)		(307	)		—			—			(664	)
Recoveries		391			20			1,580			429			—		107			85			—			—			2,612
(Benefit) provision		(653	)		(378	)		(2,261	)		(360	)		—		24			199			(16	)		(528	)		(3,973	)

Ending balance	$	2,769		$	11,576		$	8,400		$	3,101			—	$	667		$	5,242		$	1,305		$	424		$	33,484


	Allowance for Loan Losses – Nine Months Ended September 30, 2016
	RE Mortgage						Home Equity						Auto		Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect		Consum.			C&I			Resid.			Comm.			Total
Beginning balance	$	2,896		$	11,015		$	11,253		$	3,177			—	$	688		$	5,271		$	899		$	812		$	36,011
Charge-offs		(212	)		(793	)		(450	)		(118	)		—		(600	)		(421	)		—			—			(2,594	)
Recoveries		618			902			1,921			501			—		338			323			—			1			4,604
(Benefit) provision		(533	)		452			(4,324	)		(459	)		—		241			69			406			(389	)		(4,537	)

Ending balance	$	2,769		$	11,576		$	8,400		$	3,101			—	$	667		$	5,242		$	1,305		$	424		$	33,484

Ending balance:
Individ. evaluated for impairment	$	418		$	644		$	511		$	311			—	$	72		$	822			—			—		$	2,778

Loans pooled for evaluation	$	2,157		$	9,493		$	7,864		$	2,730			—	$	595		$	3,426		$	1,257		$	424		$	27,946

Loans acquired with deteriorated credit quality	$	181		$	1,453		$	25		$	59			—		—		$	994		$	48			—		$	2,760


	Loans, net of unearned fees – As of September 30, 2016
	RE Mortgage						Home Equity						Auto		Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect		Consum.			C&I			Resid.			Comm.			Total
Ending balance:
Total loans	$	368,223		$	1,625,897		$	301,884		$	48,314			—	$	31,611		$	217,110		$	57,892		$	61,295		$	2,712,226

Individ. evaluated for impairment	$	5,414		$	14,706		$	3,820		$	2,650			—	$	278		$	2,397		$	11			—		$	29,276

Loans pooled for evaluation	$	361,336		$	1,597,876		$	292,833		$	43,552			—	$	31,272		$	210,565		$	57,338		$	61,295		$	2,656,067

Loans acquired with deteriorated credit quality	$	1,473		$	13,315		$	5,231		$	2,112			—	$	61		$	4,148		$	543			—		$	26,883

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 September 30, 2017
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
Originated loans:
Pass	$	317,577	$	1,553,178	$	266,066	$	38,885	$	23,978	$	209,215	$	75,000	$	60,921	$	2,544,820
Special mention		1,831		13,484		2,196		815		368		3,390		—		8,531		30,615
Substandard		2,444		22,128		1,208		1,786		89		3,341		108		—		31,104
Loss		—		—		—		—		—		—		—		—		—

Total originated	$	321,852	$	1,588,790	$	269,470	$	41,486	$	24,435	$	215,946	$	75,108	$	69,452	$	2,606,539

PNCI loans:
Pass	$	65,700	$	191,518	$	15,832	$	2,534	$	2,257	$	8,832	$	12	$	3,368	$	290,053
Special mention		223		13,155		452		209		39		—		—		—		14,078
Substandard		1,892		2,168		800		67		6		6		—		—		4,939
Loss		—		—		—		—		—		—		—		—		—

Total PNCI	$	67,815	$	206,841	$	17,084	$	2,810	$	2,302	$	8,838	$	12	$	3,368	$	309,070

PCI loans	$	1,405	$	8,171	$	2,952	$	737	$	44	$	2,695		—		—	$	16,004

Total loans	$	391,072	$	1,803,802	$	289,506	$	45,033	$	26,781	$	227,479	$	75,120	$	72,820	$	2,931,613


	Credit Quality Indicators – As of December 31, 2016
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
Originated loans:
Pass	$	278,635	$	1,399,936	$	258,024	$	37,844	$	27,542	$	190,902	$	54,602	$	57,808	$	2,305,293
Special mention		2,992		14,341		2,518		891		385		6,133		—		311		27,571
Substandard		2,912		11,551		3,048		2,001		240		3,700		11		—		23,463
Loss		—		—		—		—		—		—		—		—		—

Total originated	$	284,539	$	1,425,828	$	263,590	$	40,736	$	28,167	$	200,735	$	54,613	$	58,119	$	2,356,327

PNCI loans:
Pass	$	79,000	$	233,326	$	20,442	$	3,506	$	2,437	$	12,320	$	141	$	8,871	$	360,043
Special mention		1,849		5,925		509		173		92		1		—		—		8,549
Substandard		1,486		7,240		814		85		5		—		—		—		9,630
Loss		—		—		—		—		—		—		—		—		—

Total PNCI	$	82,335	$	246,491	$	21,765	$	3,764	$	2,534	$	12,321	$	141	$	8,871	$	378,222

PCI loans	$	1,469	$	12,802	$	4,360	$	1,682	$	65	$	3,991	$	675		—	$	25,044

Total loans	$	368,343	$	1,685,121	$	289,715	$	46,182	$	30,766	$	217,047	$	55,429	$	66,990	$	2,759,593

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 September 30, 2017
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
Originated loan balance:
Past due:
30-59 Days	$	721	$	2,241	$	695	$	662	$	150	$	362		—		—	$	4,831
60-89 Days		403		793		299		—		83		1		—		—		1,579
> 90 Days		343		744		82		468		1		407		—		—		2,045

Total past due		1,467		3,778		1,076		1,130		234		770		—		—		8,455
Current		320,385		1,585,012		268,394		40,356		24,201		215,176		75,108		69,452		2,598,084

Total orig. loans	$	321,852	$	1,588,790	$	269,470	$	41,486	$	24,435	$	215,946	$	75,108	$	69,452	$	2,606,539

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

Nonaccrual loans	$	1,037	$	6,954	$	534	$	1,199	$	13	$	1,951		—		—	$	11,688

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 September 30, 2017
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
PNCI loan balance:
Past due:
30-59 Days	$	39		—	$	100	$	27	$	12		—		—		—	$	178
60-89 Days		159		1,599		129		18		5		1		—		—		1,911
> 90 Days		1,021		—		—		—		—		6		—		—	$	1,027

Total past due		1,219		1,599		229		45		17		7		—		—		3,116
Current		66,596		205,242		16,855		2,765		2,285		8,831		12		3,368		305,954

Total PNCI loans	$	67,815	$	206,841	$	17,084	$	2,810	$	2,302	$	8,838	$	12	$	3,368	$	309,070

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

Nonaccrual loans	$	1,089	$	1,599	$	276	$	50	$	6	$	6		—		—	$	3,026


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, 2016
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
Originated loan balance:
Past due:
30-59 Days	$	552	$	317	$	754	$	646	$	16	$	1,148	$	921		—	$	4,354
60-89 Days		269		1,387		—		395		30		84		—	$	421		2,586
> 90 Days		—		216		687		184		15		634		11		—		1,747

Total past due		821		1,920		1,441		1,225		61		1,866		932		421		8,687
Current		283,718		1,423,908		262,149		39,511		28,106		198,869		53,681		57,698		2,347,640

Total orig. loans	$	284,539	$	1,425,828	$	263,590	$	40,736	$	28,167	$	200,735	$	54,613	$	58,119	$	2,356,327

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

Nonaccrual loans	$	255	$	7,651	$	1,211	$	803	$	33	$	2,930	$	11		—	$	12,894


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, 2016
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
PNCI loan balance:
Past due:
30-59 Days	$	1,510	$	73	$	274	$	39		—		—		—		—	$	1,896
60-89 Days		—		—		—		—		—		—		—		—		—
> 90 Days		21		81		589		13		—		—		—		—		704

Total past due		1,531		154		863		52		—		—		—		—		2,600
Current		80,804		246,337		20,902		3,712	$	2,534	$	12,321	$	141	$	8,871		375,622

Total PNCI loans	$	82,335	$	246,491	$	21,765	$	3,764	$	2,534	$	12,321	$	141	$	8,871	$	378,222

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

Nonaccrual loans	$	194	$	1,826	$	742	$	67	$	5		—		—		—	$	2,834

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 original 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 Nine Months Ended, September 30, 2017
	RE Mortgage				Home Equity				Other					Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.			C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	1,777	$	17,039	$	1,108	$	1,470	$	3		$	884	$	144		—	$	22,425
Unpaid principal	$	1,819	$	17,493	$	1,209	$	1,892	$	47		$	1,139	$	144		—	$	23,743

Average recorded Investment	$	1,734	$	15,092	$	1,294	$	1,034	$	9		$	823	$	78		—	$	20,064

Interest income Recognized	$	51	$	474	$	25	$	25	($	25	)	$	16	$	7		—	$	573

With an allowance recorded:
Recorded investment	$	1,644	$	1,150	$	110	$	199	$	11		$	2,048		—		—	$	5,162

Unpaid principal	$	1,670	$	1,150	$	115	$	199	$	12		$	2,123		—		—	$	5,269

Related allowance	$	167	$	73	$	33	$	13	$	7		$	1,270		—		—	$	1,563

Average recorded Investment	$	1,508	$	898	$	270	$	342	$	14		$	2,691		—		—	$	5,723

Interest income Recognized	$	39	$	40		—	$	7		—		$	53		—		—	$	139


	Impaired PNCI Loans – As of, or for the Nine Months Ended, September 30, 2017
	RE Mortgage				Home Equity				Other					Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.			C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	1,356	$	1,599	$	394	$	50		—			—		—		—	$	3,399

Unpaid principal	$	1,384	$	1,869	$	413	$	62		—			—		—		—	$	3,728

Average recorded Investment	$	910	$	1,712	$	564	$	59	$	2			—		—		—	$	3,247

Interest income Recognized	$	17		—	$	8		—		—			—		—		—	$	25

With an allowance recorded:
Recorded investment	$	250		—	$	607	$	123	$	253		$	6		—		—	$	1,239

Unpaid principal	$	250		—	$	607	$	123	$	253		$	6		—		—	$	1,239

Related allowance	$	73		—	$	328	$	99	$	71		$	6		—		—	$	577

Average recorded Investment	$	255	$	66	$	579	$	62	$	185		$	3		—		—	$	1,150

Interest income Recognized	$	7		—	$	20	$	5	$	8			—		—		—	$	40


	Impaired Originated Loans – As of December 31, 2016
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	1,821	$	12,897	$	1,480	$	715	$	15	$	762	$	11		—	$	17,701

Unpaid principal	$	1,829	$	13,145	$	1,561	$	1,135	$	29	$	926	$	16		—	$	18,641

Average recorded Investment	$	2,853	$	20,003	$	2,221	$	831	$	17	$	669	$	7		—	$	26,601

Interest income Recognized	$	92	$	570	$	40	$	6	$	1	$	48		—		—	$	757
With an allowance recorded:
Recorded investment	$	1,551	$	357	$	430	$	594	$	19	$	3,334		—		—	$	6,285

Unpaid principal	$	1,552	$	357	$	440	$	596	$	19	$	3,385		—		—	$	6,349

Related allowance	$	180	$	4	$	110	$	107	$	13	$	1,130		—		—	$	1,544

Average recorded Investment	$	1,779	$	888	$	1,076	$	634	$	9	$	2,714		—		—	$	7,100

Interest income Recognized	$	65	$	22	$	9	$	31	$	2	$	77		—		—	$	206


	Impaired PNCI Loans – As of December 31, 2016
	RE Mortgage				Home Equity				Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Consum.		C&I		Resid.		Comm.		Total
With no related allowance recorded:
Recorded investment	$	463	$	1,826	$	735	$	67	$	3		—		—		—	$	3,094

Unpaid principal	$	486	$	2,031	$	746	$	74	$	4		—		—		—	$	3,341

Average recorded Investment	$	669	$	1,479	$	594	$	69	$	18	$	1		—	$	245	$	3,075

Interest income Recognized	$	7		—	$	9	$	1		—		—		—		—	$	17

With an allowance recorded:
Recorded investment	$	259		—	$	551	$	132	$	118		—		—		—	$	1,060

Unpaid principal	$	259		—	$	551	$	132	$	118		—		—		—	$	1,060

Related allowance	$	79		—	$	300	$	108	$	15		—		—		—	$	502

Average recorded Investment	$	130	$	1,374	$	579	$	85	$	176		—		—		—	$	2,344

Interest income Recognized	$	10		—	$	27	$	7	$	5		—		—		—	$	49


	Impaired Originated Loans – As of, or for the Nine Months Ended, September 30, 2016
	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	$	2,392	$	7,011	$	1,888	$	1,360		—	$	7	$	574	$	11		—	$	13,243

Unpaid principal	$	3,083	$	7,286	$	2,318	$	1,979		—	$	11	$	749	$	16		—	$	15,442

Average recorded Investment	$	3,139	$	17,059	$	2,425	$	1154	$	1	$	12	$	575	$	7		—	$	24,372

Interest income Recognized	$	63	$	232	$	26	$	9		—		—	$	26		—		—	$	356

With an allowance recorded:
Recorded investment	$	2,613	$	5,820	$	923	$	1,059		—	$	8	$	1,823		—		—	$	12,246
Unpaid principal	$	2,701	$	5,843	$	931	$	1,115		—	$	8	$	1,869		—		—	$	12,467

Related allowance	$	381	$	644	$	263	$	201		—	$	3	$	822		—		—	$	2,314

Average recorded Investment	$	2,309	$	3,620	$	1,324	$	866		—	$	4	$	1,959		—		—	$	10,082

Interest income Recognized	$	68	$	216	$	16	$	36		—		—	$	55		—		—	$	391


	Impaired PNCI Loans – As of, or for the Nine Months Ended, September 30, 2016
	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	$	474	$	1,874	$	502	$	97		—	$	6		—		—		—	$	2,953
Unpaid principal	$	492	$	2,048	$	573	$	103		—	$	7		—		—		—	$	3,223
Average recorded Investment	$	674	$	1,503	$	478	$	84		—	$	19	$	1		—	$	245	$	3,004
Interest income Recognized	$	7		—	$	2	$	1		—		—		—		—		—	$	10
With an allowance recorded:
Recorded investment	$	263		—	$	507	$	134		—	$	257		—		—		—	$	1,161
Unpaid principal	$	263		—	$	507	$	134		—	$	257		—		—		—	$	1,161
Related allowance	$	81		—	$	248	$	109		—	$	69		—		—		—	$	507
Average recorded Investment	$	131	$	1,374	$	557	$	86		—	$	246		—		—		—	$	2,394
Interest income Recognized	$	7		—	$	16	$	5		—	$	8		—		—		—	$	36

At September 30, 2017, $13,352,000 of originated loans were TDR and classified as impaired. The Company had obligations to lend additional $209,000 on these TDR as of September 30, 2017. At September 30, 2017, $1,611,000 of PNCI loans were TDR and classified as impaired. The Company had obligations to lend $3,000 of additional funds on these TDR as of September 30, 2017.

At December 31, 2016, $12,371,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to lend $25,000 of additional funds on these TDRs as of December 31, 2016. At December 31, 2016, $1,324,000 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, 2016.

At September 30, 2016, $14,882,000 of originated loans were TDR and classified as impaired. The Company had obligations to lend $65,000 of additional funds on these TDR as of September 30, 2016. At September 30, 2016, $1,476,000 of PNCI loans were TDR and classified as impaired. The Company had no obligations to lend additional funds on these TDR as of September 30, 2016.

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


	TDR Information for the Three Months Ended September 30, 2017
	RE Mortgage					Home Equity				Other				Construction
($ in thousands)	Resid.		Comm.			Lines		Loans		Consum.		C&I		Resid.		Comm.	Total
Number		1		4			—		1		—		8		1	—		15
Pre-mod outstanding principal balance	$	939	$	2,886			—	$	252		—	$	1,109	$	144	—	$	5,330
Post-mod outstanding principal balance	$	939	$	2,886			—	$	252		—	$	1,109	$	144	—	$	5,330
Financial impact due to TDR taken as additional provision	$	169	$	14			—		—		—	$	28		—	—	$	211
Number that defaulted during the period		1		1			—		—		—		—		—	—		2
Recorded investment of TDRs that defaulted during the period	$	99	$	219			—		—		—		—		—	—	$	318
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions		—		—			—		—		—		—		—	—		—

	TDR Information for the Nine Months Ended September 30, 2017
	RE Mortgage					Home Equity				Other				Construction
($ in thousands)	Resid.		Comm.			Lines		Loans		Consum.		C&I		Resid.		Comm.	Total
Number		1		7			3		1		1		11		1	—		25
Pre-mod outstanding principal balance	$	939	$	3,509		$	187	$	252	$	14	$	1,854	$	144	—	$	6,898
Post-mod outstanding principal balance	$	939	$	3,482		$	187	$	252	$	14	$	1,748	$	144	—	$	6,765
Financial impact due to TDR taken as additional provision	$	169	$	(111	)	$	27		—	$	11	$	37		—	—	$	133
Number that defaulted during the period		2		1			—		—		—		—		—	—		3
Recorded investment of TDRs that defaulted during the period	$	223	$	219			—		—		—		—		—	—	$	442
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions		—		—			—		—		—		—		—	—		—


	TDR Information for the Three Months Ended September 30, 2016
	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		3		—	—		10
Pre-mod outstanding principal balance	$	318	$	170	$	113		—		—	$	8	$	65		—	—	$	674
Post-mod outstanding principal balance	$	324	$	170	$	114		—		—	$	8	$	66		—	—	$	682
Financial impact due to TDR taken as additional provision	$	6		—		—		—		—		—	$	15		—	—	$	21
Number that defaulted during the period		1		—		1		—		—		—		—		—	—		2
Recorded investment of TDRs that defaulted during the period	$	14		—	$	229		—		—		—		—		—	—	$	243
Financial impact due to 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 Nine Months Ended September 30, 2016
	RE Mortgage				Home Equity				Auto		Other				Construction
($ in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
Number		3		3		9		3		—		2		4		—		—		24
Pre-mod outstanding principal balance	$	650	$	248	$	707	$	280		—	$	27	$	77		—		—	$	1,989
Post-mod outstanding principal balance	$	656	$	249	$	709	$	317		—	$	27	$	77		—		—	$	2,035
Financial impact due to TDR taken as additional provision	$	50		—	$	205	$	46		—	$	2	$	23		—		—	$	326
Number that defaulted during the period		2		—		1		—		—		—		—		—		—		3
Recorded investment of TDRs that defaulted during the period	$	101		—	$	229		—		—		—		—		—		—	$	330
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions		—		—		—		—		—		—		—		—		—		—

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.