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 December 31, 2017
	RE Mortgage						Home Equity						Auto		Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect		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	)		(186	)		(98	)		(332	)		—		(1,186	)		(1,444	)		(1,104	)		—			(4,410	)
Recoveries		—			397			698			242			—		375			428			—			1			2,141
(Benefit) provision		(371	)		(287	)		(1,844	)		(713	)		—		775			1,697			871			(39	)		89

Ending balance	$	2,317		$	11,441		$	5,800		$	1,841			—	$	586		$	6,512		$	1,184		$	642		$	30,323

Ending balance:
Individ. evaluated for impairment	$	230		$	30		$	427		$	107			—	$	57		$	1,848			—			—		$	2,699

Loans pooled for evaluation	$	1,932		$	11,351		$	5,356		$	1,734			—	$	529		$	4,624		$	1,184		$	642		$	27,352

Loans acquired with deteriorated credit quality	$	155		$	60		$	17			—			—		—		$	40			—			—		$	272


	Loans, net of unearned fees – As of December 31, 2017
	RE Mortgage						Home Equity						Auto		Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect		Consum.			C&I			Resid.			Comm.			Total
Ending balance:
Total loans	$	385,426		$	1,914,896		$	288,688		$	43,031			—	$	25,155		$	220,412		$	67,930		$	69,627		$	3,015,165

Individ. evaluated for impairment	$	5,298		$	13,911		$	2,688		$	1,470			—	$	257		$	4,470		$	140			—		$	28,234

Loans pooled for evaluation	$	378,743		$	1,892,422		$	283,502		$	41,076			—	$	24,853		$	213,358		$	67,790		$	69,627		$	2,971,371

Loans acquired with deteriorated credit quality	$	1,385		$	8,563		$	2,498		$	485			—	$	45		$	2,584			—			—		$	15,560


	Allowance for Loan Losses - Year Ended December 31, 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		(321	)		(827	)		(585	)		(219	)		—		(823	)		(455	)		—			—			(3,230	)
Recoveries		880			920			2,317			590			—		449			404			54			78			5,692
(Benefit) provision		(707	)		409			(5,941	)		(904	)		—		308			611			464			(210	)		(5,970	)

Ending balance	$	2,748		$	11,517		$	7,044		$	2,644			—	$	622		$	5,831		$	1,417		$	680		$	32,503

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

Loans pooled for evaluation	$	2,304		$	10,064		$	6,616		$	2,365			—	$	594		$	3,765		$	1,372		$	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						Auto		Other						Construction
(in thousands)	Resid.			Comm.			Lines			Loans			Indirect		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 - Year Ended December 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		(224	)		—		(694	)		(242	)		(4	)		(972	)		(680	)		—			—		(2,816	)
Recoveries		204			243		666			252			42			500			677			1,728			140		4,452
(Benefit) provision		(170	)		1,545		(4,395	)		1,370			(47	)		441			1,048			(2,263	)		261		(2,210	)

Ending balance	$	2,896		$	11,015	$	11,253		$	3,177			—		$	688		$	5,271		$	899		$	812	$	36,011

Ending balance:
Individ. evaluated for impairment	$	335		$	396	$	605		$	294			—		$	74		$	1,187			—			—	$	2,891

Loans pooled for evaluation	$	2,501		$	9,167	$	10,423		$	2,883			—		$	614		$	2,983		$	844		$	812	$	30,227

Loans acquired with deteriorated credit quality	$	60		$	1,452	$	225			—			—			—		$	1,101		$	55			—	$	2,893


	Loans, net of unearned fees – As of December 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	$	314,265		$	1,497,567	$	322,492		$	40,362			—		$	32,429		$	194,913		$	46,135		$	74,774	$	2,522,937

Individ. evaluated for impairment	$	6,767		$	32,407	$	5,747		$	1,731			—		$	288		$	2,671		$	4		$	490	$	50,105

Loans pooled for evaluation	$	305,353		$	1,442,100	$	309,007		$	37,004			—		$	32,077		$	187,393		$	45,410		$	74,284	$	2,432,628

Loans acquired with deteriorated credit quality	$	2,145		$	23,060	$	7,738		$	1,627			—		$	64		$	4,849		$	721			—	$	40,204

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 December 31, 2017
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
Originated loans:
Pass	$	315,120	$	1,649,333	$	265,345	$	37,428		—	$	22,432	$	195,208	$	67,813	$	64,492	$	2,617,171
Special mention		2,234		18,434		2,558		800		—		272		9,492		—		4,872		38,662
Substandard		3,168		22,743		2,039		1,620		—		155		4,737		107		—		34,569
Loss		—		—		—		—		—		—		—		—		—		—

Total originated	$	320,522	$	1,690,510	$	269,942	$	39,848		—	$	22,859	$	209,437	$	67,920	$	69,364	$	2,690,402

PNCI loans:
Pass	$	61,411	$	203,751	$	14,866	$	2,433		—	$	2,207	$	8,390	$	10	$	263	$	293,331
Special mention		218		11,513		450		188		—		38		1		—		—		12,408
Substandard		1,890		559		932		77		—		6		—		—		—		3,464
Loss		—		—		—		—		—		—		—		—		—		—

Total PNCI	$	63,519	$	215,823	$	16,248	$	2,698		—	$	2,251	$	8,391	$	10	$	263	$	309,203

PCI loans	$	1,385	$	8,563	$	2,498	$	485		—	$	45	$	2,584		—		—	$	15,560

Total loans	$	385,426	$	1,914,896	$	288,688	$	43,031		—		25,155	$	220,412	$	67,930	$	69,627	$	3,015,165


	Credit Quality Indicators – As of December 31, 2016
	RE Mortgage				Home Equity				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		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 December 31, 2017
	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	$	1,740	$	158	$	528	$	511	—	$	56	$	956	$	34		—	$	3,983
60-89 Days		510		987		48		107	—		36		738		—		—		2,426
> 90 Days		243		—		372		373	—		3		1,527		—		—		2,518

Total past due	$	2,493	$	1,145	$	948	$	991	—	$	95	$	3,221	$	34		—	$	8,927
Current		318,029		1,689,365		268,994		38,857	—		22,764		206,216		67,886	$	69,364		2,681,475

Total orig. loans	$	320,522	$	1,690,510	$	269,942	$	39,848	—	$	22,859	$	209,437	$	67,920	$	69,364	$	2,690,402

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

Nonaccrual loans	$	1,725	$	8,144	$	811	$	1,106	—	$	7	$	3,669		—		—	$	15,462

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, 2017
	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	$	1,495	$	70	$	298	$	30		—	$	6		—		—		—	$	1,899
60-89 Days		90		—		228		—		—		26		—		—		—		344
> 90 Days		109		—		330		—		—		—		—		—		—		439

Total past due	$	1,694	$	70	$	856	$	30		—	$	32		—		—		—	$	2,682
Current		61,825		215,753		15,392		2,668		—		2,219	$	8,391	$	10	$	263		306,521

Total PNCI loans	$	63,519	$	215,823	$	16,248	$	2,698		—	$	2,251	$	8,391	$	10	$	263	$	309,203

> 90 Days and still accruing	$	81		—	$	200		—		—		—		—		—		—	$	281

Nonaccrual loans	$	1,012		—	$	402	$	44		—	$	5		—		—		—	$	1,463

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				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		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				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		Consum.		C&I		Resid.		Comm.		Total
PNCI loan balance:
Past due:
30-59 Days	$	1,510	$	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 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 December 31, 2017
	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	$	2,058	$	13,101	$	1,093	$	1,107		—	$	4	$	575	$	140		—	$	18,078

Unpaid principal	$	2,109	$	13,360	$	1,175	$	1,429		—	$	52	$	585	$	140		—	$	18,850

Average recorded Investment	$	1,875	$	13,123	$	1,287	$	852		—	$	10	$	668	$	76		—	$	17,891

Interest income Recognized	$	85	$	609	$	39	$	14		—		—	$	18	$	9		—	$	774

With an allowance recorded:
Recorded investment	$	1,881	$	810	$	401	$	198		—	$	3	$	3,895		—		—	$	7,188

Unpaid principal	$	1,914	$	826	$	406	$	198		—	$	3	$	3,981		—		—	$	7,328

Related allowance	$	230	$	30	$	111	$	10		—	$	3	$	1,848		—		—	$	2,232

Average recorded Investment	$	1,626	$	728	$	415	$	341		—	$	10	$	3,615		—		—	$	6,735

Interest income Recognized	$	58	$	36	$	8	$	10		—		—	$	166		—		—	$	278


	Impaired PNCI Loans – As of December 31, 2017
	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	$	1,359		—	$	591	$	44		—		—		—		—		—	$	1,994

Unpaid principal	$	1,404		—	$	612	$	57		—		—		—		—		—	$	2,073

Average recorded Investment	$	911	$	913	$	663	$	56		—	$	2		—		—		—	$	2,545

Interest income Recognized	$	24		—	$	22		—		—		—		—		—		—	$	46

With an allowance recorded:
Recorded investment		—		—	$	603	$	121		—	$	250		—		—		—	$	974

Unpaid principal		—		—	$	604	$	121		—	$	250		—		—		—	$	975

Related allowance		—		—	$	316	$	97		—	$	54		—		—		—	$	467

Average recorded Investment	$	130	$	66	$	577	$	61		—	$	184		—		—		—	$	1,018

Interest income Recognized		—		—	$	26	$	6		—	$	11		—		—		—	$	43


	Impaired Originated Loans – As of December 31, 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	$	1,820	$	12,898	$	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	$	1	$	16	$	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	$	358	$	440	$	595		—	$	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				Auto		Other				Construction
(in thousands)	Resid.		Comm.		Lines		Loans		Indirect		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

At December 31, 2017, $12,517,000 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 December 31, 2017. At December 31, 2017, $1,352,000 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, 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 December 31, 2015, $29,269,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to lend $35,000 of additional funds on these TDRs as of December 31, 2015. At December 31, 2015, $1,396,000 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, 2015.

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


	TDR Information for the Year Ended December 31, 2017
	RE Mortgage					Home Equity						Auto		Other				Construction
(dollars in thousands)	Resid.		Comm.			Lines			Loans			Indirect		Consum.		C&I		Resid.		Comm.		Total
Number		1		8			3			1			—		1		11		1		—		26
Pre-mod outstanding principal balance	$	939	$	3,721		$	187		$	252			—	$	14	$	1,854	$	144		—	$	7,111
Post-mod outstanding principal balance	$	939	$	3,695		$	187		$	252			—	$	14	$	1,747	$	144		—	$	6,978
Financial impact due to
TDR taken as additional provision	$	169	$	(111	)	$	27			—			—	$	11	$	37		—		—	$	133
Number that defaulted during the period		2		1			1			1			—		—		—		—		—		5
Recorded investment of TDRs that subsequently defaulted during the 12 month period after modification	$	223	$	219		$	127		$	55			—		—		—		—		—	$	624
Financial impact due to the default of previous
TDR taken as charge-offs or additional provisions		—		—		$	(5	)		—			—		—		—		—		—	$	(5	)

	TDR Information for the Year Ended December 31, 2016
	RE Mortgage					Home Equity						Auto		Other				Construction
(dollars in thousands)	Resid.		Comm.			Lines			Loans			Indirect		Consum.		C&I		Resid.		Comm.		Total
Number		3		5			9			1			—		2		4		—		—		24
Pre-mod outstanding principal balance	$	650	$	423		$	707		$	105			—	$	27	$	77		—		—	$	1,989
Post-mod outstanding principal balance	$	656	$	461		$	709		$	105			—	$	27	$	77		—		—	$	2,035
Financial impact due to
TDR taken as additional provision	$	50	$	46		$	205			—			—	$	2	$	23		—		—	$	326
Number that defaulted during the period		2		—			1			—			—		—		—		—		—		3
Recorded investment of TDRs that subsequently defaulted during the 12 month period after modification	$	101		—		$	229			—			—		—		—		—		—	$	330
Financial impact due to the default of previous
TDR taken as charge-offs or additional provisions		—		—			—			—			—		—		—		—		—		—

	TDR Information for the Year Ended December 31, 2015
	RE Mortgage					Home Equity						Auto		Other				Construction
(dollars in thousands)	Resid.		Comm.			Lines			Loans			Indirect		Consum.		C&I		Resid.		Comm.		Total
Number		4		5			2			2			—		2		8		—		—		23
Pre-mod outstanding principal balance	$	800	$	1,518		$	301		$	315			—	$	89	$	956		—		—	$	3,979
Post-mod outstanding principal balance	$	801	$	1,517		$	301		$	321			—	$	89	$	944		—		—	$	3,973
Financial impact due to TDR taken as additional provision	$	8	$	(5	)		—		$	38				$	5	$	405		—		—	$	451
Number that defaulted during the period		4		2			3			1			—		—		—		—		—		10
Recorded investment of TDRs that subsequently defaulted during the 12 month period after modification	$	221	$	280		$	182		$	53			—		—		—		—		—	$	736
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions		—		—			—		$	(9	)		—		—		—		—		—	$	(9	)

Modifications classified as Troubled Debt Restructurings 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 Troubled Debt Restructurings, 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.