LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

12 Months Ended

Dec. 31, 2014

Loans, Allowance for Loan Losses and Credit Quality [Abstract]

LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

Allowance for Loan Losses

The following table summarizes changes in the allowance for loan losses by loan category and bifurcates the amount of allowance allocated to each loan category based on collective impairment analysis and loans evaluated individually for impairment:

	December 31, 2014
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
	(Dollars in thousands)
Allowance for loan losses
Beginning balance	$	15,622		$	24,541		$	3,371		$	1,215		$	2,760		$	5,036		$	694		$	53,239
Charge-offs	(2,097		)	(5,454		)	—			(605		)	(826		)	(750		)	(1,215		)	(10,947		)
Recoveries	462			404			—			275			424			249			591			2,405
Provision	1,586			6,382			574			286			476			421			678			10,403
Ending balance	$	15,573		$	25,873		$	3,945		$	1,171		$	2,834		$	4,956		$	748		$	55,100
Ending balance: individually evaluated for impairment	$	412		$	197		$	—		$	7		$	1,500		$	262		$	38		$	2,416
Ending balance: collectively evaluated for impairment	$	15,161		$	25,676		$	3,945		$	1,164		$	1,334		$	4,694		$	710		$	52,684
Financing receivables ending balance:
Individually evaluated for impairment	$	4,654		$	30,729		$	311		$	1,088		$	15,055		$	5,330		$	868		$	58,035
Collectively evaluated for impairment	856,185			2,304,099			265,501			84,159			505,799			858,305			16,335			4,890,383
Purchase credit impaired loans	—			12,495			182			—			9,405			228			5			22,315
Total loans by group	$	860,839		$	2,347,323		$	265,994		$	85,247		$	530,259		$	863,863		$	17,208		$	4,970,733		(1)
	December 31, 2013
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
	(Dollars in thousands)
Allowance for loan losses
Beginning balance	$	13,461		$	22,598		$	2,811		$	1,524		$	2,930		$	7,703		$	807		$	51,834
Charge-offs	(2,683		)	(3,587		)	(308		)	(773		)	(622		)	(1,370		)	(1,175		)	(10,518		)
Recoveries	272			206			100			279			143			135			588			1,723
Provision	$	4,572		$	5,324		$	768		$	185		$	309		$	(1,432	)	$	474		$	10,200
Ending balance	$	15,622		$	24,541		$	3,371		$	1,215		$	2,760		$	5,036		$	694		$	53,239
Ending balance: individually evaluated for impairment	$	1,150		$	765		$	—		$	109		$	1,564		$	116		$	70		$	3,774
Ending balance: collectively evaluated for impairment	$	14,472		$	23,776		$	3,371		$	1,106		$	1,196		$	4,920		$	624		$	49,465
Financing receivables ending balance:
Individually evaluated for impairment	$	9,148		$	39,516		$	100		$	1,903		$	15,200		$	4,890		$	1,298		$	72,055
Collectively evaluated for impairment	775,053			2,191,132			223,562			75,337			515,854			816,925			18,845			4,616,708
Purchase credit impaired loans	1			18,612			197			—			10,389			326			19			29,544
Total loans by group	$	784,202		$	2,249,260		$	223,859		$	77,240		$	541,443		$	822,141		$	20,162		$	4,718,307		(1)

	December 31, 2012
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
	(Dollars in thousands)
Allowance for loan losses
Beginning balance	$	11,682		$	23,514		$	2,076	$	1,896		$	3,113		$	4,597		$	1,382		$	48,260
Charge-offs	(6,191		)	(4,348		)	—		(616		)	(1,094		)	(3,178		)	(1,165		)	(16,592		)
Recoveries	963			188			—		134			151			93			581			2,110
Provision	7,007			3,244			735		110			760			6,191			9			18,056
Ending balance	$	13,461		$	22,598		$	2,811	$	1,524		$	2,930		$	7,703		$	807		$	51,834
Ending balance: individually evaluated for impairment	$	1,084		$	516		$	—	$	353		$	1,302		$	35		$	130		$	3,420
Ending balance: collectively evaluated for impairment	$	12,377		$	22,082		$	2,811	$	1,171		$	1,628		$	7,668		$	677		$	48,414
Financing receivables ending balance:
Individually evaluated for impairment	$	8,575		$	33,868		$	—	$	2,279		$	15,373		$	4,435		$	2,129		$	66,659
Collectively evaluated for impairment	678,936			2,066,432			188,768		76,315			587,687			797,334			24,826			4,420,298
Purchase credit impaired loans	—			21,853			—		—			9,821			380			—			32,054
Total loans by group	$	687,511		$	2,122,153		$	188,768	$	78,594		$	612,881		$	802,149		$	26,955		$	4,519,011		(1)

(1) The amount of net deferred fees included in the ending balance was $2.8 million, $2.3 million, and $3.1 million at December 31, 2014, 2013, and 2012, respectively.

For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the portfolio segments detailed in the above tables.  Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment.  Some of the risk characteristics unique to each loan category include:

Commercial Portfolio

• Commercial and Industrial: Loans in this category consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment.  Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant and equipment, or real estate, if applicable. Repayment sources consist of: primarily, operating cash flow, and secondarily, liquidation of assets.

• Commercial Real Estate: Loans in this category consist of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.  Loans are typically written with amortizing payment structures.  Collateral values are determined based upon third party appraisals and evaluations.  Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources consist of: primarily, cash flow from operating leases and rents, and secondarily, liquidation of assets.

• Commercial Construction: Loans in this category consist of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property.  Project types include: residential 1-4 family condominium and multi-family homes, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.  Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project.  Collateral values are determined based upon third party appraisals and evaluations.  Loan to value ratios at origination are governed by established policy and regulatory guidelines.  Repayment sources vary depending upon the type of project and may consist of: sale or lease of units, operating cash flows or liquidation of other assets.

• Small Business: Loans in this category consist of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment.  Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant and equipment, or real estate if applicable.  Repayment sources consist of: primarily, operating cash flows, and secondarily, liquidation of assets.

For the commercial portfolio it is the Bank’s policy to obtain personal guarantees for payment from individuals holding material ownership interests of the borrowing entities.

Consumer Portfolio

• Residential Real Estate: Residential mortgage loans held in the Bank’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral.  Collateral consists of mortgage liens on 1-4 family residential properties.  The Company does not originate or purchase sub-prime loans.

• Home Equity: Home equity loans and lines are made to qualified individuals and are secured by senior or junior mortgage liens on owner-occupied 1-4 family homes, condominiums or vacation homes or on nonowner occupied 1-4 family homes with more restrictive loan to value requirements. The home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest. The home equity line of credit has a variable rate and is billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Additionally, the Bank has the option of renewing the line of credit for additional draw periods.  Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines.

• Other Consumer: Other consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection.  Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines.  These loans may be secured or unsecured.

Credit Quality

The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring (“TDR”).

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point commercial risk-rating system, which assigns a risk-grade to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-ratings categories are defined as follows:

• 1- 6 Rating — Pass: Risk-rating grades “1” through “6” comprise those loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average or below average asset quality, margins and market share. Collateral coverage is protective.

• 7 Rating — Potential Weakness: Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Bank’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

• 8 Rating — Definite Weakness, Loss Unlikely: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loan may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

• 9 Rating — Partial Loss Probable: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

• 10 Rating — Definite Loss: Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Bank is not warranted.

The credit quality of the commercial loan portfolio is actively monitored and any changes in credit quality are reflected in risk-rating changes. Risk-ratings are assigned or reviewed for all new loans, when advancing significant additions to existing relationships (over $50,000), at least quarterly for all actively managed loans, and any time a significant event occurs, including at renewal of the loan.

The Company utilizes a comprehensive strategy for monitoring commercial credit quality. Borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in financial condition. Larger loan relationships are subject to a full annual credit review by an experienced credit analysis group. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves a significant review of the commercial loan portfolio exposure and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis.

The following table details the internal risk-rating categories for the Company’s commercial portfolio:

		December 31, 2014
Category	Risk Rating	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	801,578	$	2,196,109	$	248,696	$	81,255	$	3,327,638
Potential weakness	7	37,802		82,372		15,464		2,932		138,570
Definite weakness	8	20,241		67,571		1,834		949		90,595
Partial loss probable	9	1,218		1,271		—		111		2,600
Definite loss	10	—		—		—		—		—
Total		$	860,839	$	2,347,323	$	265,994	$	85,247	$	3,559,403
		December 31, 2013
Category	Risk Rating	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	736,996	$	2,068,995	$	210,372	$	71,514	$	3,087,877
Potential weakness	7	21,841		91,984		8,608		3,031		125,464
Definite weakness	8	24,409		85,767		4,779		2,552		117,507
Partial loss probable	9	956		2,514		100		143		3,713
Definite loss	10	—		—		—		—		—
Total		$	784,202	$	2,249,260	$	223,859	$	77,240	$	3,334,561

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a quarterly basis. In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios, periodically. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios as of the periods indicated below:

	December 31
	2014		2013
Residential portfolio
FICO score (re-scored)(1)	739		738
LTV (re-valued)(2)	67.1	%	67.0	%
Home equity portfolio
FICO score (re-scored)(1)	764		763
LTV (re-valued)(2)	53.6	%	53.0	%

(1) The average FICO scores above are based upon rescores available from November and origination score data for loans booked between December 1 and December 31, for the years indicated.

(2) The combined LTV ratios for December 31, 2014 and 2013 are based upon updated automated valuations as of February 28, 2013 and actual score data for loans booked from March 1, 2013 through December 31, 2014. For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.

The Bank’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of seasoned collection specialists and the Bank seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame.  As a general rule, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans. As permitted by banking regulations, certain consumer loans past due 90 days or more may continue to accrue interest. The Company also may use discretion regarding other loans over 90 days delinquent if the loan is well secured and in process of collection. Set forth is information regarding the Company’s nonperforming loans at the period shown:

The following table shows nonaccrual loans at the dates indicated:

	December 31
	2014		2013
	(Dollars in thousands)
Commercial and industrial	$	2,822	$	4,178
Commercial real estate	7,279		11,734
Commercial construction	311		100
Small business	246		633
Residential real estate	8,697		10,329
Home equity	8,038		7,068
Other consumer	—		92
Total nonaccrual loans(1)	$	27,393	$	34,134

(1) Included in these amounts were $5.2 million and $7.5 million nonaccruing TDRs at December 31, 2014 and 2013, respectively.

The following table shows the age analysis of past due financing receivables as of the dates indicated:

	December 31, 2014
	30-59 days			60-89 days			90 days or more			Total Past Due			Current		Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance
	(Dollars in thousands)
Commercial and industrial	18	$	3,192	10	$	1,007	19	$	2,320	47	$	6,519	$	854,320	$	860,839	$	—
Commercial real estate	19	13,428		6	1,480		16	4,225		41	19,133		2,328,190		2,347,323		—
Commercial construction	1	506		—	—		1	311		2	817		265,177		265,994		—
Small business	7	21		8	113		7	173		22	307		84,940		85,247		—
Residential real estate	13	1,670		10	1,798		36	4,826		59	8,294		521,965		530,259		106
Home equity	20	1,559		7	307		23	2,402		50	4,268		859,595		863,863		—
Other consumer	34	233		6	20		8	13		48	266		16,942		17,208		13
Total	112	$	20,609	47	$	4,725	110	$	14,270	269	$	39,604	$	4,931,129	$	4,970,733	$	119

	December 31, 2013
	30-59 days			60-89 days			90 days or more			Total Past Due			Current		Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance
	(Dollars in thousands)
Commercial and industrial	9	$	743	6	$	327	20	$	3,763	35	$	4,833	$	779,369	$	784,202	$	—
Commercial real estate	21	8,643		2	356		30	8,155		53	17,154		2,232,106		2,249,260		—
Commercial construction	1	847		—	—		1	100		2	947		222,912		223,859		—
Small business	18	353		6	227		14	247		38	827		76,413		77,240		—
Residential real estate	23	2,903		8	1,630		39	6,648		70	11,181		530,262		541,443		462
Home equity	27	1,922		8	852		23	2,055		58	4,829		817,312		822,141		—
Other consumer	110	514		30	106		34	148		174	768		19,394		20,162		63
Total	209	$	15,925	60	$	3,498	161	$	21,116	430	$	40,539	$	4,677,768	$	4,718,307	$	525

In the course of resolving nonperforming loans, the Bank may choose to restructure the contractual terms of certain loans. The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions. Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

	December 31
	2014		2013
	(Dollars in thousands)
TDRs on accrual status	$	38,382	$	38,410
TDRs on nonaccrual status	5,248		7,454
Total TDRs	$	43,630	$	45,864
Amount of specific reserves included in the allowance for loan loss associated with TDRs:	$	2,004	$	2,474
Additional commitments to lend to a borrower who has been a party to a TDR:	$	1,400	$	1,877

The Bank’s policy is to have any restructured loan which is on nonaccrual status prior to being modified remain on nonaccrual status for six months, subsequent to being modified, before management considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession. For all residential loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized.

The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

	Years Ended December 31
	2014
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment(1)
	(Dollars in thousands)
Commercial & industrial	12	$	681	$	681
Commercial real estate	13	4,329		4,329
Small business	5	133		133
Residential real estate	9	1,535		1,568
Home equity	11	923		926
Other consumer	1	8		8
Total	51	$	7,609	$	7,645
	2013
Commercial & industrial	11	$	732	$	732
Commercial real estate	9	8,100		8,100
Small business	12	556		556
Residential real estate	9	2,401		2,427
Home equity	17	1,347		1,347
Other consumer	9	27		27
Total	67	$	13,163	$	13,189
	2012
Commercial & industrial	18	$	3,372	$	3,372
Commercial real estate	15	7,121		7,121
Small business	14	621		621
Residential real estate	20	3,495		3,499
Home equity	20	1,195		1,198
Other consumer	33	328		329
Total	120	$	16,132	$	16,140

(1) The post-modification balances represent the balance of the loan on the date of modification. These amounts may show an increase when modifications include a capitalization of interest.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated:

	Years Ended December 31
	2014		2013		2012
	(Dollars in thousands)
Extended maturity	$	3,441	$	3,582	$	5,867
Adjusted interest rate	727		—		2,182
Combination rate & maturity	2,640		8,917		5,007
Court ordered concession	837		690		3,084
Total	$	7,645	$	13,189	$	16,140

For purposes of this table the Company considers a loan to have defaulted when it reaches 90 days past due. The following table shows the loans that have been modified during the past twelve months which have subsequently defaulted during the periods indicated:

	Years Ended December 31
	2014			2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	2	$	196	—	$	—	1	$	231
Commercial real estate	—	—		1	176		3	696
Residential real estate	3	214		—	—		1	238
Other consumer	—	—		1	1		—	—
Total	5	$	410	2	$	177	5	$	1,165

All TDR loans are considered impaired and therefore are subject to a specific review for impairment. The impairment analysis appropriately discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification. The amount of impairment, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans (commercial and industrial, commercial construction, commercial real estate and small business loans), residential loans, and home equity loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In such an instance, any shortfall between the value of the collateral and the carrying value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less estimated costs to sell. The Bank charges off the amount of any confirmed loan loss in the period when the loans, or portion of loans, are deemed uncollectible. Smaller balance consumer TDR loans are reviewed for performance to determine when a charge-off is appropriate.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The table below sets forth information regarding the Company’s impaired loans as of the dates indicated:

	Years Ended December 31
	2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	3,005	$	3,278	$	—	$	4,557	$	258
Commercial real estate	15,982		17,164		—		16,703		1,025
Commercial construction	311		311		—		311		13
Small business	692		718		—		772		45
Residential real estate	2,439		2,502		—		2,493		102
Home equity	4,169		4,221		—		4,264		198
Other consumer	338		341		—		364		24
Subtotal	26,936		28,535		—		29,464		1,665
With an allowance recorded
Commercial & industrial	$	1,649	$	1,859	$	412	$	2,032	$	98
Commercial real estate	14,747		15,514		197		15,650		842
Commercial construction	—		—		—		—		—
Small business	396		458		7		456		32
Residential real estate	12,616		13,727		1,500		12,817		537
Home equity	1,161		1,264		262		1,203		46
Other consumer	530		530		38		580		22
Subtotal	31,099		33,352		2,416		32,738		1,577
Total	$	58,035	$	61,887	$	2,416	$	62,202	$	3,242
	2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	7,147	$	7,288	$	—	$	7,338	$	338
Commercial real estate	14,283		15,891		—		15,728		1,075
Commercial construction	100		408		—		1,105		43
Small business	1,474		1,805		—		1,854		121
Residential real estate	1,972		2,026		—		2,021		95
Home equity	4,263		4,322		—		4,335		202
Other consumer	446		446		—		515		41
Subtotal	29,685		32,186		—		32,896		1,915
With an allowance recorded
Commercial & industrial	$	2,001	$	2,045	$	1,150	$	2,572	$	125
Commercial real estate	25,233		25,377		765		25,595		1,326
Commercial construction	—		—		—		—		—
Small business	429		462		109		459		28
Residential real estate	13,228		14,197		1,564		13,405		515
Home equity	627		694		116		642		26
Other consumer	852		856		70		954		33
Subtotal	42,370		43,631		3,774		43,627		2,053
Total	$	72,055	$	75,817	$	3,774	$	76,523	$	3,968

	2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	5,849	$	7,343	$	—	$	6,993	$	391
Commercial real estate	12,999		13,698		—		13,984		952
Commercial construction	—		—		—		—		—
Small business	1,085		1,147		—		1,217		80
Residential real estate	2,545		2,630		—		2,589		118
Home equity	4,119		4,166		—		4,190		195
Other consumer	700		705		—		858		72
Subtotal	27,297		29,689		—		29,831		1,808
With an allowance recorded
Commercial & industrial	$	2,726	$	2,851	$	1,084	$	2,883	$	143
Commercial real estate	20,869		21,438		516		21,678		1,340
Commercial construction	—		—		—		—		—
Small business	1,194		1,228		353		1,255		77
Residential real estate	12,828		13,601		1,302		13,014		560
Home equity	316		389		35		324		23
Other consumer	1,429		1,453		130		1,610		60
Subtotal	39,362		40,960		3,420		40,764		2,203
Total	$	66,659	$	70,649	$	3,420	$	70,595	$	4,011

Certain loans acquired by the Company may have shown evidence of deterioration of credit quality since origination and it was therefore deemed unlikely that the Bank would be able to collect all contractually required payments. As such, these loans were deemed to be Purchase Credit Impaired (“PCI”) loans and the carrying value and prospective income recognition are predicated upon future cash flows expected to be collected. The following tables display certain information pertaining to purchased credit impaired loans at the dates indicated:

		Mayflower Acquisition		Central Acquisition
		November 15, 2013		November 9, 2012
		(Dollars in thousands)
Contractually required principal and interest payments receivable	(1)	$	4,440	$	47,548
Less: expected cash flows	(1)	3,144		38,815
Initial nonaccretable difference		$	1,296	$	8,733
Expected cash flows	(1)	$	3,144	$	38,815
Less: fair value (initial carrying amount)		2,758		35,720
Accretable Yield		$	386	$	3,095

(1) Reflective of anticipated prepayments.

	December 31
	2014		2013
	(Dollars in thousands)
Outstanding balance	$	25,279	$	33,555
Carrying amount	$	22,315	$	29,544

The following table summarizes activity in the accretable yield for the PCI loan portfolio:

	2014			2013
	(Dollars in thousands)
Beginning balance	$	2,514		$	2,464
Acquisition	—			386
Accretion	(2,299		)	(1,812		)
Other change in expected cash flows (1)	2,565			1,142
Reclassification from nonaccretable difference for loans which have paid off (2)	194			334
Ending balance	$	2,974		$	2,514

(1) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).

(2) Results in increased income during the period when a loan pays off at amount greater than originally expected.

Loans to Insiders

The Bank has granted loans to principal officers, directors (and their affiliates) and principal security holders. All such loans were made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collectability or present other unfavorable features. Annual activity consists of the following at the periods indicated:

	2014			2013
	(Dollars in thousands)
Principal balance of loans outstanding at beginning of year	$	52,510		$	47,859
Loan advances	21,310			107,461
Loan payments/payoffs	(21,913		)	(102,810		)
Reduction for former directors (1)	(25,913		)	—
Principal balance of loans outstanding at end of year	$	25,994		$	52,510

(1) Amounts relate to loans to individuals who are no longer current directors of the Company and therefore are not deemed to be an insider.