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Loans and Leases and the Allowance for Loan and Lease Losses
 9 Months Ended
Sep. 30, 2019
Loans and Leases and Allowance for Loan and Lease Losses [Abstract]  
Loans and Leases and the Allowance for Loan and Lease Losses Loans and Leases and the Allowance for Loan and Lease Losses

Loans and Leases

The Company’s loan and lease portfolio was comprised of the following as of September 30, 2019 and December 31, 2018:

(dollars in thousands)
September 30,
2019

 
December 31,
2018

Commercial
 

 
 

Commercial and Industrial
$
1,361,011

 
$
1,331,149

Commercial Mortgage
2,477,296

 
2,302,356

Construction
154,754

 
170,061

Lease Financing
163,672

 
176,226

Total Commercial
4,156,733

 
3,979,792

Consumer
 

 
 

Residential Mortgage
3,846,511

 
3,673,796

Home Equity
1,681,951

 
1,681,442

Automobile
713,424

 
658,133

Other 1
482,679

 
455,611

Total Consumer
6,724,565

 
6,468,982

Total Loans and Leases
$
10,881,298

 
$
10,448,774

1 
Comprised of other revolving credit, installment, and lease financing.
The majority of the Company’s lending activity is with customers located in the State of Hawaii. A substantial portion of the Company’s real estate loans are secured by real estate in Hawaii.

Net gains related to sales of residential mortgage loans, recorded as a component of mortgage banking income were $2.5 million and $0.4 million for the three months ended September 30, 2019 and 2018, respectively, and $4.1 million and $1.1 million for the nine months ended September 30, 2019 and 2018, respectively.

Allowance for Loan and Lease Losses (the “Allowance”)

The following presents by portfolio segment, the activity in the Allowance for the three and nine months ended September 30, 2019 and 2018.  The following also presents by portfolio segment, the balance in the Allowance disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans and leases as of September 30, 2019 and 2018.

(dollars in thousands)
Commercial

 
Consumer

 
Total

Three Months Ended September 30, 2019
 

 
 

 
 

Allowance for Loan and Lease Losses:
 

 
 

 
 

Balance at Beginning of Period
$
69,268

 
$
38,404

 
$
107,672

Loans and Leases Charged-Off
(239
)
 
(5,516
)
 
(5,755
)
Recoveries on Loans and Leases Previously Charged-Off
318

 
2,451

 
2,769

Net Loans and Leases Recovered (Charged-Off)
79

 
(3,065
)
 
(2,986
)
Provision for Credit Losses
1,023

 
3,227

 
4,250

Balance at End of Period
$
70,370

 
$
38,566

 
$
108,936

Nine Months Ended September 30, 2019
 

 
 

 
 

Allowance for Loan and Lease Losses:
 

 
 

 
 

Balance at Beginning of Period
$
66,874

 
$
39,819

 
$
106,693

Loans and Leases Charged-Off
(2,431
)
 
(15,281
)
 
(17,712
)
Recoveries on Loans and Leases Previously Charged-Off
1,220

 
7,485

 
8,705

Net Loans and Leases Recovered (Charged-Off)
(1,211
)
 
(7,796
)
 
(9,007
)
Provision for Credit Losses
4,707

 
6,543

 
11,250

Balance at End of Period
$
70,370

 
$
38,566

 
$
108,936

As of September 30, 2019
 

 
 

 
 

Allowance for Loan and Lease Losses:
 

 
 

 
 

Individually Evaluated for Impairment
$
115

 
$
3,266

 
$
3,381

Collectively Evaluated for Impairment
70,255

 
35,300

 
105,555

Total
$
70,370

 
$
38,566

 
$
108,936

Recorded Investment in Loans and Leases:
 

 
 

 
 

Individually Evaluated for Impairment
$
19,324

 
$
40,665

 
$
59,989

Collectively Evaluated for Impairment
4,137,409

 
6,683,900

 
10,821,309

Total
$
4,156,733

 
$
6,724,565

 
$
10,881,298

 
 
 
 
 
 
Three Months Ended September 30, 2018
 

 
 

 
 

Allowance for Loan and Lease Losses:
 

 
 

 
 

Balance at Beginning of Period
$
63,712

 
$
44,476

 
$
108,188

Loans and Leases Charged-Off
(449
)
 
(5,578
)
 
(6,027
)
Recoveries on Loans and Leases Previously Charged-Off
542

 
2,187

 
2,729

Net Loans and Leases Recovered (Charged-Off)
93

 
(3,391
)
 
(3,298
)
Provision for Credit Losses
1,274

 
2,526

 
3,800

Balance at End of Period
$
65,079

 
$
43,611

 
$
108,690

Nine Months Ended September 30, 2018
 

 
 

 
 

Allowance for Loan and Lease Losses:
 

 
 

 
 

Balance at Beginning of Period
$
65,822

 
$
41,524

 
$
107,346

Loans and Leases Charged-Off
(1,140
)
 
(16,536
)
 
(17,676
)
Recoveries on Loans and Leases Previously Charged-Off
1,236

 
6,359

 
7,595

Net Loans and Leases Recovered (Charged-Off)
96

 
(10,177
)
 
(10,081
)
Provision for Credit Losses
(839
)
 
12,264

 
11,425

Balance at End of Period
$
65,079

 
$
43,611

 
$
108,690

As of September 30, 2018
 

 
 

 
 

Allowance for Loan and Lease Losses:
 

 
 

 
 

Individually Evaluated for Impairment
$
135

 
$
3,810

 
$
3,945

Collectively Evaluated for Impairment
64,944

 
39,801

 
104,745

Total
$
65,079

 
$
43,611

 
$
108,690

Recorded Investment in Loans and Leases:
 

 
 

 
 

Individually Evaluated for Impairment
$
12,190

 
$
42,218

 
$
54,408

Collectively Evaluated for Impairment
3,888,118

 
6,288,536

 
10,176,654

Total
$
3,900,308

 
$
6,330,754

 
$
10,231,062


Credit Quality Indicators

The Company uses several credit quality indicators to manage credit risk in an ongoing manner.  The Company uses an internal credit risk rating system that categorizes loans and leases into pass, special mention, or classified categories.  Credit risk ratings are applied individually to those classes of loans and leases that have significant or unique credit characteristics that benefit from a case-by-case evaluation.  These are typically loans and leases to businesses or individuals in the classes which comprise the commercial portfolio segment.  Groups of loans and leases that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk-rated and monitored collectively.  These are typically loans and leases to individuals in the classes which comprise the consumer portfolio segment.

The following are the definitions of the Company’s credit quality indicators:

Pass:
Loans and leases in all classes within the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan or lease agreement. Management believes that there is a low likelihood of loss related to those loans and leases that are considered Pass.

Special Mention:
Loans and leases that have potential weaknesses that deserve management’s close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease. Management believes that there is a moderate likelihood of some loss related to those loans and leases that are considered Special Mention.

Classified:
Loans and leases in the classes within the commercial portfolio segment that are inadequately protected by the sound worth and paying capacity of the borrower or of the collateral pledged, if any. Classified loans and leases are also those in the classes within the consumer portfolio segment that are past due 90 days or more as to principal or interest. Residential mortgage loans that are past due 90 days or more as to principal or interest may be considered Pass if the Company is in the process of collection and the current loan-to-value ratio is 60% or less. Home equity loans that are past due 90 days or more as to principal or interest may be considered Pass if the Company is in the process of collection, the first mortgage is with the Company, and the current combined loan-to-value ratio is 60% or less. Residential mortgage and home equity loans may be current as to principal and interest, but may be considered Classified for a period of generally up to six months following a loan modification. Following a period of demonstrated performance in accordance with the modified contractual terms, the loan may be removed from Classified status. Management believes that there is a distinct possibility that the Company will sustain some loss if the deficiencies related to Classified loans and leases are not corrected in a timely manner.

The Company’s credit quality indicators are periodically updated on a case-by-case basis.  The following presents by class and by credit quality indicator, the recorded investment in the Company’s loans and leases as of September 30, 2019 and December 31, 2018.
 
September 30, 2019
(dollars in thousands)
Commercial
and Industrial

 
Commercial
Mortgage

 
Construction

 
Lease
Financing

 
Total
Commercial

Pass
$
1,305,019

 
$
2,413,316

 
$
149,757

 
$
161,947

 
$
4,030,039

Special Mention
19,394

 
37,454

 
3,778

 
—

 
60,626

Classified
36,598

 
26,526

 
1,219

 
1,725

 
66,068

Total
$
1,361,011

 
$
2,477,296

 
$
154,754

 
$
163,672

 
$
4,156,733

 
 
 
 
 
 
 
 
 
 
(dollars in thousands)
Residential
Mortgage

 
Home
Equity

 
Automobile

 
Other 1

 
Total
Consumer

Pass
$
3,841,820

 
$
1,678,930

 
$
712,842

 
$
481,604

 
$
6,715,196

Classified
4,691

 
3,021

 
582

 
1,075

 
9,369

Total
$
3,846,511

 
$
1,681,951

 
$
713,424

 
$
482,679

 
$
6,724,565

Total Recorded Investment in Loans and Leases
 
 

 
 

 
 

 
$
10,881,298

 
December 31, 2018
(dollars in thousands)
Commercial
and Industrial

 
Commercial
Mortgage

 
Construction

 
Lease
Financing

 
Total
Commercial

Pass
$
1,302,278

 
$
2,256,128

 
$
168,740

 
$
175,223

 
$
3,902,369

Special Mention
17,688

 
30,468

 
—

 
5

 
48,161

Classified
11,183

 
15,760

 
1,321

 
998

 
29,262

Total
$
1,331,149

 
$
2,302,356

 
$
170,061

 
$
176,226

 
$
3,979,792

 
 
 
 
 
 
 
 
 
 
(dollars in thousands)
Residential
Mortgage

 
Home
Equity

 
Automobile

 
Other 1

 
Total
Consumer

Pass
$
3,668,475

 
$
1,677,193

 
$
657,620

 
$
454,697

 
$
6,457,985

Classified
5,321

 
4,249

 
513

 
914

 
10,997

Total
$
3,673,796

 
$
1,681,442

 
$
658,133

 
$
455,611

 
$
6,468,982

Total Recorded Investment in Loans and Leases
 
 

 
 

 
 

 
$
10,448,774

1 
Comprised of other revolving credit, installment, and lease financing.
Aging Analysis

The following presents by class, an aging analysis of the Company’s loan and lease portfolio as of September 30, 2019 and December 31, 2018.
(dollars in thousands)
30 - 59
Days
Past Due

 
60 - 89
Days
Past Due

 
Past Due
90 Days
or More

 
Non-Accrual

 
Total
Past Due and
Non-Accrual

 
Current

 
Total
Loans and
Leases

 
Non-Accrual
Loans and
Leases that
are Current 2

As of September 30, 2019
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and Industrial
$
826

 
$
131

 
$
81

 
$
573

 
$
1,611

 
$
1,359,400

 
$
1,361,011

 
$
448

Commercial Mortgage
750

 
—

 
—

 
11,088

 
11,838

 
2,465,458

 
2,477,296

 
11,088

Construction
—

 
—

 
—

 
—

 
—

 
154,754

 
154,754

 
—

Lease Financing
—

 
—

 
—

 
—

 
—

 
163,672

 
163,672

 
—

Total Commercial
1,576

 
131

 
81

 
11,661

 
13,449

 
4,143,284

 
4,156,733

 
11,536

Consumer
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential Mortgage
3,666

 
979

 
2,032

 
4,258

 
10,935

 
3,835,576

 
3,846,511

 
782

Home Equity
2,446

 
2,159

 
2,320

 
2,787

 
9,712

 
1,672,239

 
1,681,951

 
942

Automobile
13,809

 
1,681

 
582

 
—

 
16,072

 
697,352

 
713,424

 
—

Other 1
2,507

 
1,812

 
1,076

 
—

 
5,395

 
477,284

 
482,679

 
—

Total Consumer
22,428

 
6,631

 
6,010

 
7,045

 
42,114

 
6,682,451

 
6,724,565

 
1,724

Total
$
24,004

 
$
6,762

 
$
6,091

 
$
18,706

 
$
55,563

 
$
10,825,735

 
$
10,881,298

 
$
13,260

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2018
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and Industrial
$
3,653

 
$
118

 
$
10

 
$
542

 
$
4,323

 
$
1,326,826

 
$
1,331,149

 
$
515

Commercial Mortgage
561

 
—

 
—

 
2,040

 
2,601

 
2,299,755

 
2,302,356

 
2,040

Construction
—

 
—

 
—

 
—

 
—

 
170,061

 
170,061

 
—

Lease Financing
—

 
—

 
—

 
—

 
—

 
176,226

 
176,226

 
—

Total Commercial
4,214


118


10

 
2,582

 
6,924

 
3,972,868

 
3,979,792

 
2,555

Consumer
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential Mortgage
5,319

 
638

 
2,446

 
5,321

 
13,724

 
3,660,072

 
3,673,796

 
1,203

Home Equity
3,323

 
1,581

 
2,684

 
3,671

 
11,259

 
1,670,183

 
1,681,442

 
765

Automobile
12,372

 
2,240

 
513

 
—

 
15,125

 
643,008

 
658,133

 
—

Other 1
2,913

 
1,245

 
914

 
—

 
5,072

 
450,539

 
455,611

 
—

Total Consumer
23,927

 
5,704

 
6,557

 
8,992

 
45,180

 
6,423,802

 
6,468,982

 
1,968

Total
$
28,141

 
$
5,822

 
$
6,567

 
$
11,574

 
$
52,104

 
$
10,396,670

 
$
10,448,774

 
$
4,523

1 
Comprised of other revolving credit, installment, and lease financing.
2 
Represents non-accrual loans that are not past due 30 days or more; however, full payment of principal and interest is still not expected.
Impaired Loans

The following presents by class, information related to impaired loans as of September 30, 2019 and December 31, 2018.

(dollars in thousands)
Recorded
 Investment

 
Unpaid
 Principal
 Balance

 
Related 
Allowance for 
Loan Losses

September 30, 2019
 

 
 

 
 

Impaired Loans with No Related Allowance Recorded:
 

 
 

 
 

Commercial
 

 
 

 
 

Commercial and Industrial
$
4,439

 
$
4,439

 
$
—

Commercial Mortgage
10,997

 
16,114

 
—

Construction
1,219

 
1,219

 
—

Total Commercial
16,655

 
21,772

 
—

Total Impaired Loans with No Related Allowance Recorded
$
16,655

 
$
21,772

 
$
—

 
 
 
 
 
 
Impaired Loans with an Allowance Recorded:
 

 
 

 
 

Commercial
 

 
 

 
 

Commercial and Industrial
$
942

 
$
1,225

 
$
84

Commercial Mortgage
1,727

 
1,727

 
31

Total Commercial
2,669

 
2,952

 
115

Consumer
 

 
 

 
 

Residential Mortgage
18,129

 
21,721

 
2,632

Home Equity
3,228

 
3,228

 
346

Automobile
17,621

 
17,621

 
244

Other 1
1,687

 
1,687

 
44

Total Consumer
40,665

 
44,257

 
3,266

Total Impaired Loans with an Allowance Recorded
$
43,334

 
$
47,209

 
$
3,381

 
 
 
 
 
 
Impaired Loans:
 
 
 
 
 
Commercial
$
19,324

 
$
24,724

 
$
115

Consumer
40,665

 
44,257

 
3,266

Total Impaired Loans
$
59,989

 
$
68,981

 
$
3,381

 
 
 
 
 
 
December 31, 2018
 

 
 

 
 

Impaired Loans with No Related Allowance Recorded:
 

 
 

 
 

Commercial
 

 
 

 
 

Commercial and Industrial
$
4,587

 
$
4,587

 
$
—

Commercial Mortgage
2,712

 
6,212

 
—

Construction
1,321

 
1,321

 
—

Total Commercial
8,620

 
12,120

 
—

Total Impaired Loans with No Related Allowance Recorded
$
8,620

 
$
12,120

 
$
—

 
 
 
 
 
 
Impaired Loans with an Allowance Recorded:
 

 
 

 
 

Commercial
 

 
 

 
 

Commercial and Industrial
$
1,856

 
$
2,099

 
$
130

Commercial Mortgage
1,822

 
1,822

 
92

Total Commercial
3,678

 
3,921

 
222

Consumer
 

 
 

 
 

Residential Mortgage
19,753

 
23,635

 
3,051

Home Equity
3,359

 
3,359

 
350

Automobile
17,117

 
17,117

 
296

Other 1
2,098

 
2,098

 
57

Total Consumer
42,327

 
46,209

 
3,754

Total Impaired Loans with an Allowance Recorded
$
46,005

 
$
50,130

 
$
3,976

 
 
 
 
 
 
Impaired Loans:
 

 
 

 
 

Commercial
$
12,298

 
$
16,041

 
$
222

Consumer
42,327

 
46,209

 
3,754

Total Impaired Loans
$
54,625

 
$
62,250

 
$
3,976

1 Comprised of other revolving credit and installment financing.
The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2019 and 2018.

 
Three Months Ended
September 30, 2019
 
Three Months Ended
September 30, 2018
(dollars in thousands)
Average Recorded
Investment

 
Interest Income
Recognized

 
Average Recorded
Investment

 
Interest Income
Recognized

Impaired Loans with No Related Allowance Recorded:
 
 
 

 
 

 
 

Commercial
 

 
 

 
 

 
 

Commercial and Industrial
$
4,642

 
$
70

 
$
5,900

 
$
48

Commercial Mortgage
8,359

 
15

 
3,179

 
15

Construction
1,243

 
20

 
1,361

 
2

Total Commercial
14,244

 
105

 
10,440

 
65

Total Impaired Loans with No Related Allowance Recorded
$
14,244

 
$
105

 
$
10,440

 
$
65

 
 
 
 
 
 
 
 
Impaired Loans with an Allowance Recorded:
 

 
 

 
 

 
 

Commercial
 

 
 

 
 

 
 

Commercial and Industrial
$
1,312

 
$
7

 
$
1,537

 
$
55

Commercial Mortgage
4,502

 
2

 
211

 
17

Total Commercial
5,814

 
9

 
1,748

 
72

Consumer
 

 
 

 
 

 
 

Residential Mortgage
18,587

 
190

 
20,571

 
456

Home Equity
3,362

 
40

 
2,695

 
35

Automobile
17,624

 
297

 
16,008

 
293

Other 1
1,746

 
37

 
2,826

 
62

Total Consumer
41,319

 
564

 
42,100

 
846

Total Impaired Loans with an Allowance Recorded
$
47,133

 
$
573

 
$
43,848

 
$
918

 
 
 
 
 
 
 
 
Impaired Loans:
 

 
 

 
 

 
 

Commercial
$
20,058

 
$
114

 
$
12,188

 
$
137

Consumer
41,319

 
564

 
42,100

 
846

Total Impaired Loans
$
61,377

 
$
678

 
$
54,288

 
$
983

 
 
 
 
 
 
 
 
 
Nine Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2018
(dollars in thousands)
Average Recorded
Investment

 
Interest Income
Recognized

 
Average Recorded
Investment

 
Interest Income
Recognized

Impaired Loans with No Related Allowance Recorded:
 
 
 

 
 

 
 

Commercial
 

 
 

 
 

 
 

Commercial and Industrial
$
4,760

 
$
233

 
$
6,927

 
$
244

Commercial Mortgage
6,322

 
47

 
5,285

 
132

Construction
1,275

 
62

 
1,373

 
47

Total Commercial
12,357

 
342

 
13,585

 
423

Total Impaired Loans with No Related Allowance Recorded
$
12,357

 
$
342

 
$
13,585

 
$
423

 
 
 
 
 
 
 
 
Impaired Loans with an Allowance Recorded:
 
 
 

 
 

 
 

Commercial
 

 
 

 
 

 
 

Commercial and Industrial
$
1,499

 
$
50

 
$
1,347

 
$
75

Commercial Mortgage
3,155

 
6

 
223

 
23

Total Commercial
4,654

 
56

 
1,570

 
98

Consumer
 

 
 

 
 

 
 

Residential Mortgage
19,060

 
585

 
20,514

 
883

Home Equity
3,341

 
120

 
2,448

 
86

Automobile
17,537

 
890

 
15,881

 
832

Other 1
1,895

 
118

 
2,800

 
170

Total Consumer
41,833

 
1,713

 
41,643

 
1,971

Total Impaired Loans with an Allowance Recorded
$
46,487

 
$
1,769

 
$
43,213

 
$
2,069

 
 
 
 
 
 
 
 
Impaired Loans:
 

 
 

 
 

 
 

Commercial
$
17,011

 
$
398

 
$
15,155

 
$
521

Consumer
41,833

 
1,713

 
41,643

 
1,971

Total Impaired Loans
$
58,844

 
$
2,111

 
$
56,798

 
$
2,492

1 
Comprised of other revolving credit and installment financing.

For the three and nine months ended September 30, 2019 and 2018, the amounts of interest income recognized by the Company within the periods that the loans were impaired were primarily related to loans modified in a troubled debt restructuring (“TDR”) that remained on accrual status. For the three and nine months ended September 30, 2019 and 2018, the amount of interest income recognized using a cash-basis method of accounting during the periods that the loans were impaired was not material.

Modifications

A modification of a loan constitutes a TDR when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider.  Loans modified in a TDR were $54.0 million as of September 30, 2019 and December 31, 2018.  There were $0.1 million and $0.2 million commitments to lend additional funds on loans modified in a TDR as of September 30, 2019 and December 31, 2018, respectively.

The Company offers various types of concessions when modifying a loan or lease. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a co-borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. Residential mortgage loans modified in a TDR generally include a lower interest rate and the loan being fully amortized for up to 40 years from the modification effective date. In some cases, the Company may forbear a portion of the unpaid principal balance with a balloon payment due upon maturity or pay-off of the loan. Land loans are also included in the class of residential mortgage loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loan modifications usually involve extending the interest-only monthly payments up to an additional five years with a balloon payment due at maturity, or re-amortizing the remaining balance over a period up to 360 months. Interest rates are not changed for land loan modifications. Home equity modifications are made infrequently and uniquely designed to meet the specific needs of each borrower. Automobile loans modified in a TDR are primarily comprised of loans where the Company has lowered monthly payments by extending the term.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance.  As a result, loans modified in a TDR may have the financial effect of increasing the specific Allowance associated with the loan.  An Allowance for impaired commercial and consumer loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent.  Management exercises significant judgment in developing these estimates.

The following presents by class, information related to loans modified in a TDR during the three and nine months ended September 30, 2019 and 2018.
 
Loans Modified as a TDR for the
Three Months Ended September 30, 2019
 
Loans Modified as a TDR for the
Three Months Ended September 30, 2018
 
 

 
Recorded

 
Increase in

 
 

 
Recorded

 
Increase in

Troubled Debt Restructurings
Number of

 
Investment

 
Allowance

 
Number of

 
Investment

 
Allowance

(dollars in thousands)
Contracts

(as of period end)1
 
(as of period end)
 
 
Contracts

(as of period end)1
 
(as of period end)
 
Commercial
 

 
 

 
 

 
 

 
 

 
 

Commercial and Industrial
1

 
$
45

 
$
—

 
1

 
$
233

 
$
—

Total Commercial
1

 
45

 
—

 
1

 
233

 
—

Consumer
 

 
 

 
 

 
 

 
 

 
 

Residential Mortgage
—

 
—

 
—

 
2

 
296

 
5

Home Equity
—

 
—

 
—

 
2

 
434

 
69

Automobile
86

 
1,665

 
23

 
87

 
1,700

 
33

Other 2
14

 
117

 
3

 
49

 
326

 
9

Total Consumer
100

 
1,782

 
26

 
140

 
2,756

 
116

Total
101

 
$
1,827

 
$
26

 
141

 
$
2,989

 
$
116

 
 
 
 
 
 
 
 
 
 
 
 
 
Loans Modified as a TDR for the
Nine Months Ended September 30, 2019
 
Loans Modified as a TDR for the
Nine Months Ended September 30, 2018
 
 

 
Recorded

 
Increase in

 
 

 
Recorded

 
Increase in

Troubled Debt Restructurings
Number of

 
Investment

 
Allowance

 
Number of

 
Investment

 
Allowance

(dollars in thousands)
Contracts

(as of period end)1
 
(as of period end)
 
 
Contracts

(as of period end)1
 
(as of period end)
 
Commercial
 

 
 

 
 

 
 

 
 

 
 

Commercial and Industrial
5

 
$
244

 
$
14

 
8

 
$
1,450

 
$
47

Commercial Mortgage
1

 
3,766

 
—

 
—

 
—

 
—

Total Commercial
6

 
4,010

 
14

 
8

 
1,450

 
47

Consumer
 

 
 

 
 

 
 

 
 

 
 

Residential Mortgage
1

 
57

 
—

 
4

 
749

 
35

Home Equity
2

 
246

 
—

 
5

 
971

 
69

Automobile
271

 
5,011

 
69

 
254

 
5,196

 
100

Other 2
75

 
459

 
12

 
173

 
1,182

 
34

Total Consumer
349

 
5,773

 
81

 
436

 
8,098

 
238

Total
355

 
$
9,783

 
$
95

 
444

 
$
9,548

 
$
285

1 
The period end balances reflect all paydowns and charge-offs since the modification date.  TDRs fully paid-off, charged-off, or foreclosed upon by period end are not included.
2 
Comprised of other revolving credit and installment financing.
The following presents by class, all loans modified in a TDR that defaulted during the three and nine months ended September 30, 2019 and 2018, and within twelve months of their modification date.  A TDR is considered to be in default once it becomes 60 days or more past due following a modification.
 
Three Months Ended
September 30, 2019
 
Three Months Ended
September 30, 2018
TDRs that Defaulted During the Period,
 

 
Recorded

 
Recorded
 
Within Twelve Months of their Modification Date
Number of

 
Investment

 
Number of

 
Investment

(dollars in thousands)
Contracts

 
(as of period end)1

 
Contracts

 
(as of period end)1

Consumer
 
 
 

 
 

 
 

Residential Mortgage
1

 
$
133

 
—

 
$
—

Home Equity
1

 
195

 
—

 
—

Automobile
9

 
126

 
12

 
266

Other 2
9

 
72

 
28

 
174

Total Consumer
20

 
526


40

 
440

Total
20

 
$
526

 
40

 
$
440

 
 
 
 
 
 
 
 
 
Nine Months Ended
September 30, 2019
 
Nine Months Ended
September 30, 2018
TDRs that Defaulted During the Period,
 

 
Recorded

 
Recorded
 
Within Twelve Months of their Modification Date
Number of

 
Investment

 
Number of

 
Investment

(dollars in thousands)
Contracts

 
(as of period end)1

 
Contracts

 
(as of period end)1

Commercial
 
 
 
 
 
 
 
Commercial and Industrial
1

 
$
55

 
—

 
$
—

Total Commercial
1

 
55

 
—

 
—

 
 
 
 
 
 
 
 
Consumer
 

 
 

 
 

 
 

Residential Mortgage
1

 
133

 
—

 
—

Home Equity
1

 
195

 
—

 
—

Automobile
22

 
326

 
32

 
614

Other 2
24

 
144

 
56

 
382

Total Consumer
48

 
798

 
88

 
996

Total
49

 
$
853

 
88

 
$
996


1 
The period end balances reflect all paydowns and charge-offs since the modification date.  TDRs fully paid-off, charged-off, or foreclosed upon by period end are not included.
2 
Comprised of other revolving credit and installment financing.
Commercial and consumer loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default.  If loans modified in a TDR subsequently default, the Company evaluates the loan for possible further impairment.  The specific Allowance associated with the loan may be increased, adjustments may be made in the allocation of the Allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

Foreclosure Proceedings

Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $1.8 million as of September 30, 2019.