Loans

The composition of the loan portfolio, by class of loan, as of June 30, 2013 and December 31, 2012 was as follows:



	June 30, 2013						December 31, 2012
(In thousands)	Loan balance		Accrued interest receivable		Recorded investment		Loan balance		Accrued interest receivable		Recorded investment
Commercial, financial and agricultural *	$	806,709	$	3,184	$	809,893	$	823,927	$	2,976	$	826,903
Commercial real estate *	1,113,251		3,689		1,116,940		1,092,164		3,839		1,096,003
Construction real estate:
SEPH commercial land and development *	10,217		21		10,238		15,105		37		15,142
Remaining commercial	113,443		281		113,724		115,473		331		115,804
Mortgage	24,570		75		24,645		26,373		81		26,454
Installment	7,638		28		7,666		8,577		33		8,610
Residential real estate:
Commercial	400,540		1,008		401,548		392,203		959		393,162
Mortgage	1,091,874		2,028		1,093,902		1,064,787		1,399		1,066,186
HELOC	209,902		841		210,743		212,905		892		213,797
Installment	38,446		144		38,590		43,750		176		43,926
Consumer	690,892		2,794		693,686		651,930		2,835		654,765
Leases	3,234		28		3,262		3,128		29		3,157
Total loans	$	4,510,716	$	14,121	$	4,524,837	$	4,450,322	$	13,587	$	4,463,909

* Included within commercial, financial and agricultural loans, commercial real estate loans, and SEPH commercial land and development loans is an immaterial amount of consumer loans that are not broken out by class.

Credit Quality

The following tables present the recorded investment in nonaccrual loans, accruing troubled debt restructurings, and loans past due 90 days or more and still accruing by class of loan as of June 30, 2013 and December 31, 2012:



	June 30, 2013
(In thousands)	Nonaccrual loans		Accruing troubled debt restructurings		Loans past due 90 days or more and accruing		Total nonperforming loans
Commercial, financial and agricultural	$	20,060	$	111	$	—	$	20,171
Commercial real estate	38,818		3,310		—		42,128
Construction real estate:
SEPH commercial land and development	9,103		—		—		9,103
Remaining commercial	15,682		2,853		—		18,535
Mortgage	61		98		—		159
Installment	41		169		—		210
Residential real estate:
Commercial	34,506		906		—		35,412
Mortgage	20,967		11,569		739		33,275
HELOC	1,732		754		—		2,486
Installment	979		927		—		1,906
Consumer	3,449		1,789		806		6,044
Total loans	$	145,398	$	22,486	$	1,545	$	169,429



	December 31, 2012
(In thousands)	Nonaccrual loans		Accruing troubled debt restructurings		Loans past due 90 days or more and accruing		Total nonperforming loans
Commercial, financial and agricultural	$	17,324	$	5,277	$	37	$	22,638
Commercial real estate	40,983		3,295		1,007		45,285
Construction real estate:
SEPH commercial land and development	13,939		—		—		13,939
Remaining commercial	14,977		6,597		—		21,574
Mortgage	158		100		—		258
Installment	149		175		—		324
Residential real estate:
Commercial	33,961		1,661		94		35,716
Mortgage	28,260		9,425		950		38,635
HELOC	1,689		736		—		2,425
Installment	1,670		780		54		2,504
Consumer	2,426		1,900		888		5,214
Total loans	$	155,536	$	29,946	$	3,030	$	188,512

The following table provides additional information regarding those nonaccrual and accruing troubled debt restructured loans that were individually evaluated for impairment and those collectively evaluated for impairment as of June 30, 2013 and December 31, 2012.



	June 30, 2013						December 31, 2012
(In thousands)	Nonaccrual and accruing troubled debt restructured loans		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Nonaccrual and accruing troubled debt restructured loans		Loans individually evaluated for impairment		Loans collectively evaluated for impairment
Commercial, financial and agricultural	$	20,171	$	20,154	$	17	$	22,601	$	22,587	$	14
Commercial real estate	42,128		42,128		—		44,278		44,278		—
Construction real estate:
SEPH commercial land and development	9,103		9,074		29		13,939		13,260		679
Remaining commercial	18,535		18,535		—		21,574		21,574		—
Mortgage	159		—		159		258		—		258
Installment	210		—		210		324		—		324
Residential real estate:
Commercial	35,412		35,412		—		35,622		35,622		—
Mortgage	32,536		—		32,536		37,685		—		37,685
HELOC	2,486		—		2,486		2,425		—		2,425
Installment	1,906		—		1,906		2,450		—		2,450
Consumer	5,238		799		4,439		4,326		18		4,308
Total loans	$	167,884	$	126,102	$	41,782	$	185,482	$	137,339	$	48,143

All of the loans individually evaluated for impairment were evaluated using the fair value of the collateral or present value of expected future cash flows as the measurement method.

The following table presents loans individually evaluated for impairment by class of loan as of June 30, 2013 and December 31, 2012.



	June 30, 2013						December 31, 2012
(In thousands)	Unpaid principal balance		Recorded investment		Allowance for loan losses allocated		Unpaid principal balance		Recorded investment		Allowance for loan losses allocated
With no related allowance recorded:
Commercial, financial and agricultural	$	20,857	$	12,175	$	—	$	23,782	$	14,683	$	—
Commercial real estate	62,272		39,013		—		56,258		35,097		—
Construction real estate:
SEPH commercial land and development	47,400		9,074		—		56,075		12,740		—
Remaining commercial	21,621		9,356		—		29,328		14,093		—
Residential real estate:
Commercial	30,014		31,455		—		39,918		31,957		—
Consumer	799		799		—		18		18		—

With an allowance recorded:
Commercial, financial and agricultural	12,672		7,979		3,210		12,268		7,904		3,180
Commercial real estate	3,433		3,115		703		11,412		9,181		1,540
Construction real estate:
SEPH commercial land and development	—		—		—		1,271		520		—
Remaining commercial	10,824		9,179		2,580		8,071		7,481		2,277
Residential real estate:
Commercial	4,979		3,957		973		3,944		3,665		1,279
Consumer	—		—		—		—		—		—
Total	$	214,871	$	126,102	$	7,466	$	242,345	$	137,339	$	8,276

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. At June 30, 2013 and December 31, 2012, there were $89.1 million and $96.9 million, respectively, of partial charge-offs on loans individually evaluated for impairment with no related allowance recorded and $7.7 million and $8.2 million, respectively, of partial charge-offs on loans individually evaluated for impairment that also had a specific reserve allocated.

The allowance for loan losses included specific reserves related to loans individually evaluated for impairment at June 30, 2013 and December 31, 2012 of $7.5 million and $8.3 million, respectively. These loans with specific reserves had a recorded investment of $24.2 million and $28.8 million as of June 30, 2013 and December 31, 2012, respectively.

Interest income on loans individually evaluated for impairment is recognized on a cash basis. The following table presents the average recorded investment and interest income recognized on loans individually evaluated for impairment as of and for the three and six months ended June 30, 2013 and June 30, 2012:



	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
(In thousands)	Recorded investment as of June 30, 2013		Average recorded investment		Interest income recognized		Recorded investment as of June 30, 2012		Average recorded investment		Interest income recognized
Commercial, financial and agricultural	$	20,154	$	21,148	$	82	$	41,591	$	42,056	$	205
Commercial real estate	42,128		40,047		259		43,969		42,689		287
Construction real estate:
SEPH commercial land and development	9,074		9,532		—		17,272		18,412		—
Remaining commercial	18,535		19,390		192		29,562		31,428		199
Residential real estate:
Commercial	35,412		36,141		112		37,277		40,359		125
Consumer	799		799		—		19		19		1
Total	$	126,102	$	127,057	$	645	$	169,690	$	174,963	$	817



	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
(In thousands)	Recorded investment as of June 30, 2013		Average recorded investment		Interest income recognized		Recorded investment as of June 30, 2012		Average recorded investment		Interest income recognized
Commercial, financial and agricultural	$	20,154	$	21,252	$	210	$	41,591	$	41,218	$	310
Commercial real estate	42,128		41,840		515		43,969		45,758		494
Construction real estate:
SEPH commercial land and development	9,074		10,854		—		17,272		20,302		—
Remaining commercial	18,535		20,103		412		29,562		28,899		450
Residential real estate:
Commercial	35,412		35,897		242		37,277		41,541		165
Consumer	799		459		—		19		20		1
Total	$	126,102	$	130,405	$	1,379	$	169,690	$	177,738	$	1,420

The following tables present the aging of the recorded investment in past due loans as of June 30, 2013 and December 31, 2012 by class of loan.



	June 30, 2013
(In thousands)	Accruing loans past due 30-89 days		Past due nonaccrual loans and loans past due 90 days or more and accruing*		Total past due		Total current		Total recorded investment
Commercial, financial and agricultural	$	852	$	15,335	$	16,187	$	793,706	$	809,893
Commercial real estate	2,982		14,095		17,077		1,099,863		1,116,940
Construction real estate:
SEPH commercial land and development	—		7,477		7,477		2,761		10,238
Remaining commercial	—		3,941		3,941		109,783		113,724
Mortgage	223		61		284		24,361		24,645
Installment	73		—		73		7,593		7,666
Residential real estate:
Commercial	1,064		5,730		6,794		394,754		401,548
Mortgage	12,267		13,548		25,815		1,068,087		1,093,902
HELOC	442		604		1,046		209,697		210,743
Installment	427		314		741		37,849		38,590
Consumer	10,468		3,647		14,115		679,571		693,686
Leases	—		—		—		3,262		3,262
Total loans	$	28,798	$	64,752	$	93,550	$	4,431,287	$	4,524,837

* Includes $1.5 million of loans past due 90 days or more and accruing. The remaining are past due, nonaccrual loans and accruing troubled debt restructurings.



	December 31, 2012
(in thousands)	Accruing loans past due 30-89 days		Past due nonaccrual loans and loans past due 90 days or more and accruing*		Total past due		Total current		Total recorded investment
Commercial, financial and agricultural	$	6,251	$	11,811	$	18,062	$	808,841	$	826,903
Commercial real estate	2,212		26,355		28,567		1,067,436		1,096,003
Construction real estate:
SEPH commercial land and development	686		11,314		12,000		3,142		15,142
Remaining commercial	3,652		5,838		9,490		106,314		115,804
Mortgage	171		85		256		26,198		26,454
Installment	135		40		175		8,435		8,610
Residential real estate:
Commercial	1,163		5,917		7,080		386,082		393,162
Mortgage	11,948		17,370		29,318		1,036,868		1,066,186
HELOC	620		309		929		212,868		213,797
Installment	563		787		1,350		42,576		43,926
Consumer	12,924		2,688		15,612		639,153		654,765
Leases	—		—		—		3,157		3,157
Total loans	$	40,325	$	82,514	$	122,839	$	4,341,070	$	4,463,909

* Includes $3.0 million of loans past due 90 days or more and accruing. The remaining are past due, nonaccrual loans and accruing troubled debt restructurings.

Credit Quality Indicators

Management utilizes past due information as a credit quality indicator across the loan portfolio. Past due information as of June 30, 2013 and December 31, 2012 is included in the tables above. The past due information is the primary credit quality indicator within the following classes of loans: (1) mortgage loans and installment loans in the construction real estate segment; (2) mortgage loans, HELOC and installment loans in the residential real estate segment; and (3) consumer loans. The primary credit indicator for commercial loans is based on an internal grading system that grades all commercial loans from 1 to 8. Credit grades are continuously monitored by the respective loan officer and adjustments are made when appropriate. A grade of 1 indicates little or no credit risk and a grade of 8 is considered a loss. Commercial loans with grades of 1 to 4.5 (pass-rated) are considered to be of acceptable credit risk. Commercial loans graded a 5 (special mention) are considered to be watch list credits and a higher loan loss reserve percentage is allocated to these loans. Loans classified as special mention have potential weaknesses that require management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Commercial loans graded 6 (substandard), also considered watch list credits, are considered to represent higher credit risk and, as a result, a higher loan loss reserve percentage is allocated to these loans. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Park will sustain some loss if the deficiencies are not corrected. Commercial loans that are graded a 7 (doubtful) are shown as nonaccrual and Park generally charges these loans down to their fair value by taking a partial charge-off or recording a specific reserve. Loans classified as doubtful have all the weaknesses inherent in those classified as 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. Certain 6-rated loans and all 7-rated loans are included within the impaired category. A loan is deemed impaired when management determines the borrower's ability to perform in accordance with the contractual loan agreement is in doubt. Any commercial loan graded an 8 (loss) is completely charged off.

The tables below present the recorded investment by loan grade at June 30, 2013 and December 31, 2012 for all commercial loans:



	June 30, 2013
(In thousands)	5 Rated		6 Rated		Impaired		Pass Rated		Recorded Investment
Commercial, financial and agricultural *	$	11,210	$	9,614	$	20,171	$	768,898	$	809,893
Commercial real estate *	20,586		2,373		42,128		1,051,853		1,116,940
Construction real estate:
SEPH commercial land and development *	385		—		9,103		750		10,238
Remaining commercial	5,736		—		18,535		89,453		113,724
Residential real estate:
Commercial	8,312		1,259		35,412		356,565		401,548
Leases	—		—		—		3,262		3,262
Total Commercial Loans	$	46,229	$	13,246	$	125,349	$	2,270,781	$	2,455,605



	December 31, 2012
(In thousands)	5 Rated		6 Rated		Impaired		Pass Rated		Recorded Investment
Commercial, financial and agricultural *	$	9,537	$	10,874	$	22,601	$	783,891	$	826,903
Commercial real estate *	25,616		3,960		44,278		1,022,149		1,096,003
Construction real estate:
SEPH commercial land and development *	411		—		13,939		792		15,142
Remaining commercial	6,734		—		21,574		87,496		115,804
Residential real estate:
Commercial	8,994		2,053		35,622		346,493		393,162
Leases	—		—		—		3,157		3,157
Total Commercial Loans	$	51,292	$	16,887	$	138,014	$	2,243,978	$	2,450,171

Troubled Debt Restructurings (TDRs)

Management classifies loans as TDRs when a borrower is experiencing financial difficulties and Park has granted a concession to the borrower as part of a modification or in the loan renewal process. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of the borrower's debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. Management’s policy is to modify loans by extending the term or by granting a temporary or permanent contractual interest rate below the market rate, not by forgiving debt. Certain loans which were modified during the period ended June 30, 2013 did not meet the definition of a TDR as the modification was a delay in a payment that was considered to be insignificant. Management considers a forbearance period of up to three months or a delay in payment of up to 30 days to be insignificant. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note. Management reviews all accruing TDRs quarterly to ensure payments continue to be made in accordance with the modified terms.

Management reviews renewals/modifications of loans previously identified as TDRs to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification does not contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate, the TDR classification is removed as the borrower has complied with the terms of the loan at the date of the renewal/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the renewal/modification. The majority of these TDRs were originally considered restructurings in a prior year as a result of a modification with an interest rate that was not commensurate with the risk of the underlying loan. During both the three-month and six-month periods ended June 30, 2013, Park removed the TDR classification on $2.9 million of loans that met the requirements discussed above.

At June 30, 2013 and December 31, 2012, there were $81.9 million and $84.7 million, respectively, of TDRs included in nonaccrual loan totals. At June 30, 2013 and December 31, 2012, $59.0 million and $52.6 million of these nonaccrual TDRs were performing in accordance with the terms of the restructured note. As of June 30, 2013 and December 31, 2012, there were $22.5 million and $29.9 million, respectively, of TDRs included in accruing loan totals. Management will continue to review the restructured loans and may determine it appropriate to move certain of the loans back to accrual status in the future. At June 30, 2013 and December 31, 2012, Park had commitments to lend $5.1 million and $5.0 million, respectively, of additional funds to borrowers whose terms had been modified in a TDR.

The specific reserve related to TDRs at June 30, 2013 and December 31, 2012 was $5.0 million and $5.6 million, respectively. Modifications made in 2012 and 2013 were largely the result of renewals, extending the maturity date of the loan, at terms consistent with the original note. These modifications were deemed to be TDRs primarily due to Park’s conclusion that the borrower would likely not have qualified for similar terms through another lender. Many of the modifications deemed to be TDRs were previously identified as impaired loans, and thus were also previously evaluated for impairment under ASC 310. Additional specific reserves of $33,000 and $271,000 were recorded during the three-month and six-month periods ending June 30, 2013, respectively, as a result of TDRs identified in the 2013 year. Additional specific reserves of $818,000 and $1.1 million were recorded during the three-month and six-month periods ending June 30, 2012, respectively, as a result of TDRs identified in the 2012 year.

The terms of certain other loans were modified during the six-month period ended June 30, 2013 and June 30, 2012 that did not meet the definition of a TDR. Modified substandard commercial loans which did not meet the definition of a TDR had a total recorded investment as of June 30, 2013 and June 30, 2012 of $1.0 million and $1.2 million, respectively. The modification of these loans: (1) involved a modification of the terms of a loan to a borrower who was not experiencing financial difficulties, (2) resulted in a delay in a payment that was considered to be insignificant, or (3) resulted in Park obtaining additional collateral or guarantees that improved the likelihood of the ultimate collection of the loan such that the modification was deemed to be at market terms. Modified consumer loans which did not meet the definition of a TDR had a total recorded investment as of June 30, 2013 and June 30, 2012 of $12.0 million and $16.0 million, respectively. Many of these loans were to borrowers who were not experiencing financial difficulties but who were looking to reduce their cost of funds.

The following tables detail the number of contracts modified as TDRs during the three-month and six-month periods ended June 30, 2013 and June 30, 2012, as well as the recorded investment of these contracts at June 30, 2013 and June 30, 2012. The recorded investment pre- and post-modification is generally the same due to the fact that Park does not typically provide for forgiveness of principle.

During the second half of 2012, general guidance was issued by the Office of the Comptroller of the Currency ("OCC") clarifying the requirement to identify as a TDR loans whereby the borrower's obligation to PNB had been discharged in bankruptcy and the borrower has not reaffirmed the debt. These TDRs are included in the current year modified totals below, within the residential real estate and consumer segments.



	Three Months Ended June 30, 2013
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	7	$	106	$	156	$	262
Commercial real estate	5	—		1,502		1,502
Construction real estate:
SEPH commercial land and development	—	—		—		—
Remaining commercial	1	180		—		180
Mortgage	—	—		—		—
Installment	—	—		—		—
Residential real estate:
Commercial	8	—		1,007		1,007
Mortgage	21	582		1,032		1,614
HELOC	3	28		—		28
Installment	3	24		35		59
Consumer	103	378		212		590
Total loans	151	$	1,298	$	3,944	$	5,242



	Three Months Ended June 30, 2012
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	11	$	175	$	2,692	$	2,867
Commercial real estate	4	—		1,739		1,739
Construction real estate:
SEPH commercial land and development	—	—		—		—
Remaining commercial	1	—		258		258
Mortgage	—	—		—		—
Installment	—	—		—		—
Residential real estate:
Commercial	2	—		675		675
Mortgage	6	—		1,338		1,338
HELOC	—	—		—		—
Installment	3	—		169		169
Consumer	—	—		—		—
Total loans	27	$	175	$	6,871	$	7,046

Of those loans listed in the tables above which were modified during the three-month period ended June 30, 2013, $3.0 million were on nonaccrual status as of December 31, 2012, but were not classified as TDRs. Of those loans which were modified during the three-month period ended June 30, 2012, $2.2 million were on nonaccrual status as of December 31, 2011, but were not classified as TDRs.



	Six Months Ended June 30, 2013
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	14	$	7	$	489	$	496
Commercial real estate	7	25		1,653		1,678
Construction real estate:
SEPH commercial land and development	—	—		—		—
Remaining commercial	2	217		—		217
Mortgage	—	—		—		—
Installment	2	—		25		25
Residential real estate:
Commercial	14	376		2,582		2,958
Mortgage	33	1,457		1,274		2,731
HELOC	7	91		—		91
Installment	7	70		35		105
Consumer	175	582		272		854
Total loans	261	$	2,825	$	6,330	$	9,155



	Six Months Ended June 30, 2012
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	16	$	1,862	$	3,428	$	5,290
Commercial real estate	20	1,836		4,677		6,513
Construction real estate:
SEPH commercial land and development	4	—		862		862
Remaining commercial	10	3,776		6,575		10,351
Mortgage	—	—		—		—
Installment	—	—		—		—
Residential real estate:
Commercial	5	—		814		814
Mortgage	15	222		2,379		2,601
HELOC	—	—		—		—
Installment	3	—		170		170
Consumer	1	—		91		91
Total loans	74	$	7,696	$	18,996	$	26,692

Of those loans listed in the tables above which were modified during the six-month period ended June 30, 2013, $3.3 million were on nonaccrual status as of December 31, 2012, but were not classified as TDRs. Of those loans which were modified during the six-month period ended June 30, 2012, $8.0 million were on nonaccrual status as of December 31, 2011, but were not classified as TDRs.

The following table presents the recorded investment in financing receivables which were modified as TDRs within the previous 12 months and for which there was a payment default during the three-month and six-month periods ended June 30, 2013 and June 30, 2012, respectively. For this table, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms. The additional allowance for loan loss resulting from the defaults on TDR loans was immaterial.



	Three Months Ended June 30, 2013			Three Months Ended June 30, 2012
(In thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial, financial and agricultural	11	$	726	6	$	6,546
Commercial real estate	2	187		7	1,820
Construction real estate:
SEPH commercial land and development	2	242		3	639
Remaining commercial	2	321		4	3,267
Mortgage	—	—		—	—
Installment	—	—		—	—
Residential real estate:
Commercial	9	2,200		6	1,626
Mortgage	26	2,038		9	830
HELOC	5	83		1	46
Installment	9	141		2	169
Consumer	100	559		—	—
Leases	—	—		—	—
Total loans	166	$	6,497	38	$	14,943

Of the $6.5 million in modified TDRs which defaulted during the three months ended June 30, 2013, $421,000 were accruing loans and $6.1 million were nonaccrual loans. Of the $14.9 million in modified TDRs which defaulted during the three months ended June 30, 2012, $110,000 were accruing loans and $14.8 million were nonaccrual loans.



	Six Months Ended June 30, 2013			Six Months Ended June 30, 2012
(In thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial, financial and agricultural	12	$	736	9	$	6,786
Commercial real estate	2	187		7	1,820
Construction real estate:
SEPH commercial land and development	3	257		3	639
Remaining commercial	2	321		7	4,699
Mortgage	—	—		—	—
Installment	1	12		—	—
Residential real estate:
Commercial	9	2,200		6	1,626
Mortgage	38	2,981		11	1,165
HELOC	6	120		1	46
Installment	10	162		2	169
Consumer	115	632		—	—
Leases	—	—		—	—
Total loans	198	$	7,608	46	$	16,950

Of the $7.6 million in modified TDRs which defaulted during the six months ended June 30, 2013, $1.1 million were accruing loans and $6.5 million were nonaccrual loans. Of the $17.0 million in modified TDRs which defaulted during the six months ended June 30, 2012, $110,000 were accruing loans and $16.9 million were nonaccrual loans.