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Note 7 - Loans and Related Allowance for Loan and Lease Losses
9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
NOTE
7
-
LOANS AND RELATED
ALLOWANCE FOR LOAN AND LEASE LOSSES
 
Major classifications of
loans are summarized as follows (in thousands):
 
   
September 30,
   
December 31,
 
   
2017
   
2016
 
                 
Commercial and industrial
  $
99,314
    $
60,630
 
Real estate - construction
   
40,760
     
23,709
 
Real estate - mortgage:
               
Residential
   
316,191
     
270,830
 
Commercial
   
403,135
     
249,490
 
Consumer installment
   
19,141
     
4,481
 
     
878,541
     
609,140
 
Less: Allowance for loan and lease losses
   
6,852
     
6,598
 
                 
Net loans
  $
871,689
    $
602,542
 
 
The amounts above include deferred loan origination costs of $
2.0
million and
$1.7
million at
September 30, 2017
and
December 31, 2016,
respectively.
 
The Company
’s primary business activity is with customers located within its local Northeastern Ohio trade area, eastern Geauga County, and contiguous counties to the north, east, and south. The Company also serves the central Ohio market with offices in Dublin, Sunbury and Westerville, Ohio. The Northeastern Ohio trade area includes the newly acquired Liberty locations in Beachwood, Twinsburg, and Solon, Ohio. Commercial, residential, consumer, and agricultural loans are granted. Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area.
 
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances net of the
allowance for loan and lease losses. Interest income is recognized as income when earned on the accrual method. The accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of interest is doubtful. Interest received on nonaccrual loans is recorded as income or applied against principal according to management’s judgment as to the collectability of such principal.
 
Loan origination fees and certain direct loan origination costs are being deferred and the net amount amortized as an adjustment of the related loan
’s yield.  Management is amortizing these amounts over the contractual life of the related loans.
 
The following tables summarize the primary segments of the loan portfolio
and allowance for loan and lease losses (in thousands):
 
                   
Real Estate- Mortgage
                 
September 30, 2017
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
  $
3,038
    $
185
    $
2,844
    $
5,788
    $
4
    $
11,859
 
Collectively evaluated for impairment
   
96,276
     
40,575
     
313,347
     
397,347
     
19,137
     
866,682
 
Total loans
  $
99,314
    $
40,760
    $
316,191
    $
403,135
    $
19,141
    $
878,541
 
 
 
                   
Real estate- Mortgage
                 
December 31, 2016
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
  $
1,190
    $
913
    $
3,135
    $
7,187
    $
5
    $
12,430
 
Collectively evaluated for impairment
   
59,440
     
22,796
     
267,695
     
242,303
     
4,476
     
596,710
 
Total loans
  $
60,630
    $
23,709
    $
270,830
    $
249,490
    $
4,481
    $
609,140
 
 
 
                   
Real Estate- Mortgage
                 
September 30, 2017
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributable to loans:
                                               
Individually evaluated for impairment
  $
436
    $
-
    $
132
    $
692
    $
-
    $
1,260
 
Collectively evaluated for impairment
   
291
     
259
     
1,704
     
2,991
     
347
     
5,592
 
Total ending allowance balance
  $
727
    $
259
    $
1,836
    $
3,683
    $
347
    $
6,852
 
 
                   
Real Estate- Mortgage
                 
December 31, 2016
 
Commercial and industrial
   
Real estate- construction
   
Residential
   
Commercial
   
Consumer installment
   
Total
 
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending allowance balance attributable to loans:
                                               
Individually evaluated for impairment
  $
90
    $
-
    $
251
    $
186
    $
-
    $
527
 
Collectively evaluated for impairment
   
358
     
172
     
2,567
     
2,949
     
25
     
6,071
 
Total ending allowance balance
  $
448
    $
172
    $
2,818
    $
3,135
    $
25
    $
6,598
 
 
 
The Company
’s loan portfolio is segmented to a level that allows management to monitor risk and performance. The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate - Mortgage which is further segmented into Residential and Commercial real estate (“CRE”), and Consumer Installment Loans. The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers. The residential mortgage loan segment consists of loans made for the purpose of financing the activities of residential homeowners. The commercial mortgage loan segment consists of loans made for the purpose of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts. The increase in the allowance for loan loss for C&I, Real Estate Construction, CRE, and Consumer Installment loan portfolios were partially offset by a decrease in the allowance for the Residential loan portfolio.
 
Management evaluates individual loans in all of the commercial segments for possible impairment
based on guidance established by the Board of Directors. Loans are considered to be impaired when, based on current information and events, it is probable that the Company 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 evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. 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 Company does
not
separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired, or the loan was modified in a troubled debt restructuring.
 
Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using
one
of
the following methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs. The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method. The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis. The Company’s policy for recognizing interest income on impaired loans does
not
differ from its overall policy for interest recognition.
 
The following table
s present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was
not
necessary (in thousands):
 
September 30, 2017
 
Impaired Loans
 
           
Unpaid
         
   
Recorded
    Principal    
Related
 
   
Investment
    Balance    
Allowance
 
With no related allowance recorded:
                       
Commercial and industrial
  $
1,368
    $
1,550
    $
-
 
Real estate - construction
   
185
     
185
     
-
 
Real estate - mortgage:
                       
Residential
   
1,875
     
2,092
     
-
 
Commercial
   
2,969
     
3,108
     
-
 
Total
  $
6,397
    $
6,935
    $
-
 
                         
With an allowance recorded:
                       
Commercial and industrial
  $
1,670
    $
2,115
    $
436
 
Real estate - mortgage:
                       
Residential
   
969
     
1,005
     
132
 
Commercial
   
2,819
     
2,984
     
692
 
Consumer installment
   
4
     
4
     
-
 
Total
  $
5,462
    $
6,108
    $
1,260
 
                         
Total:
                       
Commercial and industrial
  $
3,038
    $
3,665
    $
436
 
Real estate - construction
   
185
     
185
     
-
 
Real estate - mortgage:
                       
Residential
   
2,844
     
3,097
     
132
 
Commercial
   
5,788
     
6,092
     
692
 
Consumer installment
   
4
     
4
     
-
 
Total
  $
11,859
    $
13,043
    $
1,260
 
 
December 31, 2016
 
Impaired Loans
 
           
Unpaid
         
   
Recorded
    Principal    
Related
 
   
Investment
    Balance    
Allowance
 
With no related allowance recorded:
                       
Commercial and industrial
  $
319
    $
318
    $
-
 
Real estate - construction
   
913
     
909
     
-
 
Real estate - mortgage:
                       
Residential
   
2,142
     
2,140
     
-
 
Commercial
   
2,031
     
2,027
     
-
 
Total
  $
5,405
    $
5,394
    $
-
 
                         
With an allowance recorded:
                       
Commercial and industrial
  $
871
    $
868
    $
90
 
Real estate - mortgage:
                       
Residential
   
993
     
991
     
251
 
Commercial
   
5,156
     
5,147
     
186
 
Consumer installment
   
5
     
5
     
-
 
Total
  $
7,025
    $
7,011
    $
527
 
                         
Total:
                       
Commercial and industrial
  $
1,190
    $
1,186
    $
90
 
Real estate - construction
   
913
     
909
     
-
 
Real estate - mortgage:
                       
Residential
   
3,135
     
3,131
     
251
 
Commercial
   
7,187
     
7,174
     
186
 
Consumer installment
   
5
     
5
     
-
 
Total
  $
12,430
    $
12,405
    $
527
 
 
The tables above include troubled debt restructuring totaling $
2.4
million at
September 30, 2017
and
$2.7
million as of
December 31, 2016.
 
The following table
s present the average balance and interest income by class, recognized on impaired loans (in thousands):
 
   
For the Three Months Ended
September 30, 2017
   
For the Nine Months Ended
September 30, 2017
 
   
Average
Recorded
Investment
   
Interest
Income
Recognized
   
Average
Recorded
Investment
   
Interest
Income
Recognized
 
Total:
                               
Commercial and industrial
  $
2,633
    $
69
    $
1,962
    $
210
 
Real estate - construction
   
431
     
-
     
738
     
1
 
Real estate - mortgage:
                               
Residential
   
2,988
     
19
     
3,149
     
69
 
Commercial
   
7,216
     
48
     
7,223
     
231
 
Consumer installment
   
5
     
1
     
5
     
1
 
    $
13,273
    $
137
    $
13,077
    $
512
 
 
   
For the Three Months Ended
September 30, 2016
   
For the Nine Months Ended
September 30, 2016
 
   
Average
Recorded
Investment
   
Interest
Income
Recognized
   
Average
Recorded
Investment
   
Interest
Income
Recognized
 
Total:
                               
Commercial and industrial
  $
864
    $
4
    $
1,218
    $
9
 
Real estate - construction
   
1,105
     
3
     
1,404
     
22
 
Real estate - mortgage:
                               
Residential
   
3,389
     
-
     
3,660
     
36
 
Commercial
   
7,939
     
8
     
7,449
     
115
 
Consumer installment
   
5
     
-
     
6
     
-
 
    $
13,302
    $
15
    $
13,737
    $
182
 
 
Management uses a
nine
-point internal risk-rating system to monitor the credit quality of the overall loan portfolio. The
first
five
categories are considered
not
critic
ized and are aggregated as Pass rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but
not
to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are
not
corrected.  All loans greater than
90
days past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.  
 
To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan-rating process with several layers of internal and external oversight.
  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death, occurs to raise awareness of a possible credit event.  The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis with the Chief Credit Officer ultimately responsible for accurate and timely risk ratings.  The Credit Department performs an annual review of all commercial relationships with loan balances of
$1,000,000
or greater.  Confirmation of the appropriate risk grade is included in the review on an ongoing basis.  The Company engages an external consultant to conduct loan reviews on a semiannual basis. Generally, the external consultant reviews commercial relationships greater than
$250,000
and/or criticized relationships greater than
$125,000.
  Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.
 
The primary risk of commercial and industrial loans is the cu
rrent economic uncertainties. C&I loans are, by nature, secured by less substantial collateral than real estate-secured loans. The primary risk of real estate construction loans is potential delays and /or disputes during the completion process. The primary risk of residential real estate loans is current economic uncertainties along with the slow recovery in the housing market. The primary risk of commercial real estate loans is loss of income of the owner or occupier of the property and the inability of the market to sustain rent levels. Consumer installment loans historically have experienced higher delinquency rates. Consumer installments are typically secured by less substantial collateral than other types of credits.
 
The following table
s present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk-rating system (in thousands):
 
           
Special
                   
Total
 
   
Pass
   
Mention
   
Substandard
   
Doubtful
   
Loans
 
September 30, 2017
                                       
                                         
Commercial and industrial
  $
92,855
    $
2,188
    $
4,271
    $
-
    $
99,314
 
Real estate - construction
   
40,737
     
-
     
23
     
-
     
40,760
 
Real estate - mortgage:
                                       
Residential
   
310,086
     
744
     
5,361
     
-
     
316,191
 
Commercial
   
393,538
     
4,477
     
5,120
     
-
     
403,135
 
Consumer installment
   
18,909
     
-
     
232
     
-
     
19,141
 
Total
  $
856,125
    $
7,409
    $
15,007
    $
-
    $
878,541
 
 
           
Special
                   
Total
 
December 31, 2016
 
Pass
   
Mention
   
Substandard
   
Doubtful
   
Loans
 
                                         
Commercial and industrial
  $
58,539
    $
663
    $
1,428
    $
-
    $
60,630
 
Real estate - construction
   
23,541
     
144
     
24
     
-
     
23,709
 
Real estate - mortgage:
                                       
Residential
   
264,481
     
428
     
5,921
     
-
     
270,830
 
Commercial
   
240,678
     
4,422
     
4,390
     
-
     
249,490
 
Consumer installment
   
4,467
     
-
     
14
     
-
     
4,481
 
Total
  $
591,706
    $
5,657
    $
11,777
    $
-
    $
609,140
 
 
Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.
 
Nonperforming assets include non
accrual loans, troubled debt restructurings (TDRs), loans
90
days or more past due, EMORECO assets, other real estate owned, and repossessed assets. A loan is classified as nonaccrual when, in the opinion of management, there are serious doubts about collectability of interest and principal. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of principal and interest is doubtful.  Payments received on nonaccrual loans are applied against the principal balance.
 
The following table
s present the classes of the loan portfolio summarized by the aging categories of performing loans (in thousands):
 
           
30-59 Days
   
60-89 Days
   
90 Days+
   
Total
   
Total
 
   
Current
   
Past Due
   
Past Due
   
Past Due
   
Past Due
   
Loans
 
September 30, 2017
                                               
                                                 
Commercial and industrial
  $
98,449
    $
632
    $
-
    $
233
    $
865
    $
99,314
 
Real estate - construction
   
40,760
     
-
     
-
     
-
     
-
     
40,760
 
Real estate - mortgage:
                                               
Residential
   
313,720
     
1,101
     
37
     
1,333
     
2,471
     
316,191
 
Commercial
   
400,497
     
1,236
     
1,037
     
365
     
2,638
     
403,135
 
Consumer installment
   
19,128
     
10
     
3
     
-
     
13
     
19,141
 
Total
  $
872,554
    $
2,979
    $
1,077
    $
1,931
    $
5,987
    $
878,541
 
 
           
30-59 Days
   
60-89 Days
   
90 Days+
   
Total
   
Total
 
   
Current
   
Past Due
   
Past Due
   
Past Due
   
Past Due
   
Loans
 
December 31, 2016
                                               
                                                 
Commercial and industrial
  $
60,407
    $
17
    $
2
    $
204
    $
223
    $
60,630
 
Real estate - construction
   
23,709
     
-
     
-
     
-
     
-
     
23,709
 
Real estate - mortgage:
                                               
Residential
   
268,041
     
1,909
     
207
     
673
     
2,789
     
270,830
 
Commercial
   
249,081
     
92
     
-
     
317
     
409
     
249,490
 
Consumer installment
   
4,465
     
-
     
10
     
6
     
16
     
4,481
 
Total
  $
605,703
    $
2,018
    $
219
    $
1,200
    $
3,437
    $
609,140
 
 
The following tables present the classes of the loan portfolio summarized by nonaccrual loans (in thousands):
 
September 30, 2017
         
90+ Days Past
 
   
Nonaccrual
    Due and Accruing  
                 
                 
Commercial and industrial
  $
1,367
    $
20
 
Real estate - mortgage:
               
Residential
   
3,802
     
248
 
Commercial
   
3,356
     
-
 
Total
  $
8,525
    $
268
 
 
December 31, 2016
         
90+ Days Past
 
   
Nonaccrual
    Due and Accruing  
                 
                 
Commercial and industrial
  $
454
    $
-
 
Real estate - mortgage:
               
Residential
   
4,034
     
-
 
Commercial
   
1,409
     
-
 
Consumer installment
   
6
     
-
 
Total
  $
5,903
    $
-
 
 
Interest income that would have been recorded had these loans
not
been placed on nonaccrual status was $
398,000
for the
nine
months ended
September 30, 2017
and
$309,000
for the year ended
December 31, 2016.
 
An allowance for loan
and lease losses (“ALLL”) is maintained to absorb losses from the loan portfolio.  The ALLL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans.
 
The Company
’s methodology for determining the ALLL is based on the requirements of ASC Section
310
-
10
-
35
for loans individually evaluated for impairment (discussed above) and ASC Subtopic
450
-
20
for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance. The total of the
two
components represents the Company’s ALLL. Management also performs impairment analyses on TDRs, which
may
result in specific reserves.
 
Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.
  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.
 
The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the
ALLL analysis.  Management tracks the historical net charge-off activity at the purpose code level. The historical charge-off factor was calculated using the last
twelve
consecutive historical quarters.
 
Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.
The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and nonaccrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.
 
Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the
ALLL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL.
 
The following table
s summarize the primary segments of the loan portfolio (in thousands):
 
   
Commercial
and industrial
   
Real estate- construction
   
Real estate- residential mortgage
   
Real estate- commercial mortgage
   
Consumer installment
   
Total
 
ALLL balance at December 31, 2016
  $
448
    $
172
    $
2,818
    $
3,135
    $
25
    $
6,598
 
Charge-offs
   
(439
)    
-
     
(74
)    
(39
)    
(384
)    
(936
)
Recoveries
   
189
     
34
     
59
     
111
     
182
     
575
 
Provision
   
529
     
53
     
(967
)    
476
     
524
     
615
 
ALLL balance at September 30, 2017
  $
727
    $
259
    $
1,836
    $
3,683
    $
347
    $
6,852
 
 
   
Commercial
and industrial
   
Real estate- construction
   
Real estate- residential mortgage
   
Real estate- commercial mortgage
   
Consumer installment
   
Total
 
ALLL balance at December 31, 2015
  $
867
    $
276
    $
3,139
    $
2,078
    $
25
    $
6,385
 
Charge-offs
   
(197
)    
-
     
(394
)    
(70
)    
(18
)    
(679
)
Recoveries
   
51
     
-
     
113
     
140
     
9
     
313
 
Provision
   
(208
)    
(138
)    
(97
)    
747
     
11
     
315
 
ALLL balance at September 30, 2016
  $
513
    $
138
    $
2,761
    $
2,895
    $
27
    $
6,334
 
 
   
Commercial
and industrial
   
Real estate- construction
   
Real estate- residential mortgage
   
Real estate- commercial mortgage
   
Consumer installment
   
Total
 
ALLL balance at June 30, 2017
  $
613
    $
202
    $
1,767
    $
4,012
    $
11
    $
6,605
 
Charge-offs
   
(4
)    
-
     
-
     
(20
)    
(229
)    
(253
)
Recoveries
   
46
     
11
     
45
     
111
     
7
     
220
 
Provision
   
72
     
46
     
24
     
(420
)    
558
     
280
 
ALLL balance at September 30, 2017
  $
727
    $
259
    $
1,836
    $
3,683
    $
347
    $
6,852
 
 
 
   
Commercial
and industrial
   
Real estate- construction
   
Real estate- residential mortgage
   
Real estate- commercial mortgage
   
Consumer installment
   
Total
 
ALLL balance at June 30, 2016
  $
484
    $
159
    $
2,788
    $
2,909
    $
26
    $
6,366
 
Charge-offs
   
(74
)    
-
     
(149
)    
-
     
(3
)    
(226
)
Recoveries
   
4
     
-
     
82
     
-
     
3
     
89
 
Provision
   
99
     
(21
)    
40
     
(14
)    
1
     
105
 
ALLL balance at September 30, 2016
  $
513
    $
138
    $
2,761
    $
2,895
    $
27
    $
6,334
 
 
The negative provision allocated to
residential real estate loans in the amount of
$967,000
for the
three
-month period ended
September 30, 2017
is due to the payoff of a large commercial credit during that period.
 
The negative provision allocated to
commercial real estate loans in the amount of
$420,000
for the
nine
-month period ended
September 30, 2017
is due to changes in qualitative factors during that period.
 
The following table
s summarize troubled debt restructurings (in thousands):
 
   
For the Three Months Ended
 
   
September 30, 2017
 
   
Number of Contracts
   
Pre-Modification
   
Post-Modification
 
   
Term
                    Outstanding Recorded     Outstanding Recorded  
Troubled Debt Restructurings   Modification    
Other
   
Total
    Investment     Investment  
Residential real estate
   
1
     
-
     
1
    $
29
    $
29
 
 
   
For the Nine Months Ended
 
   
September 30, 2017
 
   
Number of Contracts
   
Pre-Modification
   
Post-Modification
 
   
Term
                    Outstanding Recorded     Outstanding Recorded  
Troubled Debt Restructurings   Modification    
Other
   
Total
    Investment     Investment  
Commercial and industrial
   
1
     
1
     
2
    $
954
    $
955
 
Residential real estate
   
3
     
-
     
3
     
39
     
39
 
 
 
   
For the Nine Months Ended
 
   
September 30, 2016
 
   
Number of Contracts
   
Pre-Modification
   
Post-Modification
 
   
Term
                    Outstanding Recorded     Outstanding Recorded  
Troubled Debt Restructurings   Modification    
Other
   
Total
    Investment     Investment  
Commercial and industrial
   
2
     
-
     
2
    $
169
    $
169
 
Residential real estate
   
1
     
-
     
1
     
58
     
58
 
Commercial real estate
   
1
     
-
     
1
     
311
     
311
 
 
 
For the
three
months ended
September 30, 2016
there were
no
troubled debt restructurings.
 
One
contract, with a recorded investment of
$33,000,
subsequently defaulted
during
2017.
This contract was paid off as of
September 30, 2017.
There were
no
other subsequent defaults of troubled debt restructurings for the
three
and
nine
months ended
September 30, 2017.
 
The following tables summarize subsequent defaults of troubled debt restructurings (in thousands)
for the
three
and
nine
-month periods ended
September 30, 2016:
 
   
For the Three Months Ended
 
   
September 30, 2016
 
Troubled Debt Restructurings
subsequently defaulted
 
Number of
Contracts
   
Recorded
Investment
 
Commercial and industrial
   
1
    $
3
 
Residential real estate
   
1
     
58
 
 
   
For the Nine Months Ended
 
   
September 30, 2016
 
Troubled Debt Restructurings
subsequently defaulted
 
Number of
Contracts
   
Recorded
Investment
 
Commercial and industrial
   
2
    $
273
 
Real estate construction
   
1
     
58