BRYN MAWR BANK CORP - 10-K filing on 2017-03-10

Note 5 - Loans and Leases

12 Months Ended

Dec. 31, 2016

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note

Loans and Leases

The loan and lease portfolio consists of loans and leases originated by the Corporation, as well as loans acquired in mergers and acquisitions. These mergers and acquisitions include the

January

2015

acquisition of CBH, the

November

2012

transaction with First Bank of Delaware and the

July

2010

acquisition of First Keystone Financial, Inc. Many of the tables in this footnote are presented for all loans as well as supplemental tables for

originated

and

acquired

loans.

A. The table below details

all

portfolio

loans and leases as of the dates indicated:

	December 31 , 201 6			December 31, 2015
Loans held for sale	$	9,621		$	8,987
Real estate loans:
Commercial mortgage	$	1,110,898		$	964,259
Home equity lines and loans		207,999			209,473
Residential mortgage		413,540			406,404
Construction		141,964			90,421
Total real estate loans		1,874,401			1,670,557
Commercial and industrial		579,791			524,515
Consumer		25,341			22,129
Leases		55,892			51,787
Total portfolio loans and leases		2,535,425			2,268,988
Total loans and leases	$	2,545,046		$	2,277,975
Loans with fixed rates	$	1,130,172		$	1,103,622
Loans with adjustable or floating rates		1,414,874			1,174,353
Total loans and leases	$	2,545,046		$	2,277,975
Net deferred loan origination fees included in the above loan table	$	(735	)	$	(70	)

The table below details the Corporation’s

originated

portfolio loans and leases as of the dates indicated:

	December 31 , 201 6			December 31, 2015
Loans held for sale	$	9,621		$	8,987
Real estate loans:
Commercial mortgage	$	946,879		$	772,571
Home equity lines and loans		178,450			171,189
Residential mortgage		342,268			316,487
Construction		141,964			87,155
Total real estate loans		1,609,561			1,347,402
Commercial and industrial		550,334			462,746
Consumer		25,200			21,934
Leases		55,892			51,787
Total portfolio loans and leases		2,240,987			1,883,869
Total loans and leases	$	2,250,608		$	1,892,856
Loans with fixed rates	$	992,917		$	932,575
Loans with adjustable or floating rates		1,257,691			960,281
Total originated loans and leases	$	2,250,608		$	1,892,856
Net deferred loan origination fees included in the above loan table		(735	)		(70	)

The table below details the Corporation’s

acquired

portfolio loans as of the dates indicated:

	December 31 , 201 6		December 31, 201 5
Real estate loans:
Commercial mortgage	$	164,019	$	191,688
Home equity lines and loans		29,549		38,284
Residential mortgage		71,272		89,917
Construction		—		3,266
Total real estate loans		264,840		323,155
Commercial and industrial		29,457		61,769
Consumer		141		195
Total portfolio loans and leases		294,438		385,119
Total loans and leases	$	294,438	$	385,119
Loans with fixed rates	$	137,255	$	171,047
Loans with adjustable or floating rates		157,183		214,072
Total acquired loans and leases	$	294,438	$	385,119

B. Components of the net investment in leases are detailed as follows:

(dollars in thousands)	December 31 , 201 6			December 31, 201 5
Minimum lease payments receivable	$	62,379		$	58,422
Unearned lease income		(8,608	)		(8,919	)
Initial direct costs and deferred fees		2,121			2,284
Total	$	55,892		$	51,787

C. Non-Performing Loans and Leases

(1)

The following table details

all

non-performing portfolio loans and leases as of the dates indicated:

(dollars in thousands)	December 31, 2016		December 31, 201 5
Non-accrual loans and leases :
Commercial mortgage	$	320	$	829
Home equity lines and loans		2,289		2,027
Residential mortgage		2,658		3,212
Construction		—		34
Commercial and industrial		2,957		4,133
Consumer		2		—
Leases		137		9
Total	$	8,363	$	10,244

(1)

Purchased credit-impaired loans, which have been recorded at their fair values at acquisition, and which are performing, are excluded from this table, with the exception of

344

thousand

and $

661

thousand of purchased credit-impaired loans as of

December

201

and

December

31,

201

, respectively, which became non-performing subsequent to acquisition.

The following table details non-performing

originated

portfolio loans and leases as of the dates indicated:

(dollars in thousands)	December 31 , 201 6		December 31, 201 5
Non-accrual originated loans and leases :
Commercial mortgage	$	265	$	279
Home equity lines and loans		2,169		1,788
Residential mortgage		1,654		1,964
Construction		—		34
Commercial and industrial		941		3,044
Consumer		2		—
Leases		137		9
Total	$	5,168	$	7,118

The following table details non-performing

acquired

portfolio loans

(1)

as of the dates indicated:

(dollars in thousands)	December 31 , 201 6		December 31, 201 5
Non-accrual acquired loans and leases :
Commercial mortgage	$	55	$	550
Home equity lines and loans		120		239
Residential mortgage		1,004		1,248
Commercial and industrial		2,016		1,089
Total	$	3,195	$	3,126

(1)

Purchased credit-impaired loans, which have been recorded at their fair values at acquisition, and which are performing, are excluded from this table, with the exception of

thousand

and $

661

thousand of purchased credit-impaired loans as of

December

201

and

December

31,

201

, respectively, which became non-performing subsequent to acquisition.

D. Purchased Credit-Impaired Loans

The outstanding principal balance and related carrying amount of credit-impaired loans, for which the Corporation applies ASC

310

30,

Accounting for Purchased Loans with Deteriorated Credit Quality

, to account for the interest earned, as of the dates indicated, are as follows:

(dollars in thousands)	December 31 , 201 6		December 31, 201 5
Outstanding principal balance	$	18,091	$	24,879
Carrying amount (1)	$	12,432	$	16,846

(1)

Includes $

368

thousand

and $

699

thousand

purchased credit-impaired loans as of

December

201

and

December

31,

201

, respectively, for which the Corporation could not estimate the timing or amount of expected cash flows to be collected at acquisition, and for which no accretable yield is recognized. Additionally, the table above includes $

344

thousand and $

661

thousand of purchased credit-impaired loans as of

December

201

and

December

31,

201

, respectively, which became non-performing

subsequent to acquisition, which are disclosed in Note

5C,

above, and which also have no accretable yield.

The following table presents changes in the accretable discount on purchased credit-impaired loans, for which the Corporation applies ASC

310

30,

for the

twelve

months ended

December

31,

2016:

(dollars in thousands)	Accretable Discount
Balance, December 31, 2015	$	6,115
Accretion		(1,858	)
Reclassifications from nonaccretable difference		182
Additions/adjustments		68
Disposals		(1,274	)
Balance, December 31, 2016	$	3,233

E. Age Analysis of Past Due Loans and Leases

The following tables present an aging of

all

portfolio loans and leases as of the dates indicated:

	Accruing Loans and Leases
(dollars in thousands) As of December 31, 2016	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current *		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
Commercial mortgage	$	666	$	722	$	—	$	1,388	$	1,109,190	$	1,110,578	$	320	$	1,110,898
Home equity lines and loans		11		—		—		11		205,699		205,710		2,289		207,999
Residential mortgage		823		490		—		1,313		409,569		410,882		2,658		413,540
Construction		—		—		—		—		141,964		141,964		—		141,964
Commercial and industrial		36		—		—		36		576,798		576,834		2,957		579,791
Consumer		10		5		—		15		25,324		25,339		2		25,341
Leases		177		86		—		263		55,492		55,755		137		55,892
	$	1,723	$	1,303	$	—	$	3,026	$	2,524,036	$	2,527,062	$	8,363	$	2,535,425

	Accruing Loans and Leases
(dollars in thousands) As of December 31, 2015	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current *		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
Commercial mortgage	$	1,126	$	211	$	—	$	1,337	$	962,093	$	963,430	$	829	$	964,259
Home equity lines and loans		1,596		15		—		1,611		205,835		207,446		2,027		209,473
Residential mortgage		1,923		74		—		1,997		401,195		403,192		3,212		406,404
Construction		—		—		—		—		90,387		90,387		34		90,421
Commercial and industrial		99		39		—		138		520,244		520,382		4,133		524,515
Consumer		20		—		—		20		22,109		22,129		—		22,129
Leases		375		123		—		498		51,280		51,778		9		51,787
	$	5,139	$	462	$	—	$	5,601	$	2,253,143	$	2,258,744	$	10,244	$	2,268,988

*included as “current” are

$15.3

million and

$10.5

million of loans and leases as of

December

31,

2016

and

2015,

respectively, which are classified as Administratively Delinquent. An Administratively Delinquent loan is

one

which has been approved for a renewal or extension but has not had all the required documents fully executed as of the reporting date. The Corporation does

not

consider these loans to be delinquent.

The following tables present an aging of

originated

portfolio loans and leases as of the dates indicated:

	Accruing Loans and Leases
(dollars in thousands) As of December 31, 2016	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current *		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
Commercial mortgage	$	—	$	722	$	—	$	722	$	945,892	$	946,614	$	265	$	946,879
Home equity lines and loans		11		—		—		11		176,270		176,281		2,169		178,450
Residential mortgage		773		64		—		837		339,778		340,615		1,653		342,268
Construction		—		—		—		—		141,964		141,964		—		141,964
Commercial and industrial		—		—		—		—		549,393		549,393		941		550,334
Consumer		10		5		—		15		25,183		25,198		2		25,200
Leases		177		86		—		263		55,492		55,755		137		55,892
	$	971	$	877	$	—	$	1,848	$	2,233,972	$	2,235,820	$	5,167	$	2,240,987

	Accruing Loans and Leases
(dollars in thousands) As of December 31, 2015	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current *		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
Commercial mortgage	$	1,016	$	155	$	—	$	1,171	$	771,121	$	772,292	$	279	$	772,571
Home equity lines and loans		1,445		—		—		1,445		167,956		169,401		1,788		171,189
Residential mortgage		1,475		9		—		1,484		313,039		314,523		1,964		316,487
Construction		—		—		—		—		87,121		87,121		34		87,155
Commercial and industrial		—		—		—		—		459,702		459,702		3,044		462,746
Consumer		20		—		—		20		21,914		21,934		—		21,934
Leases		375		123		—		498		51,280		51,778		9		51,787
	$	4,331	$	287	$	—	$	4,618	$	1,872,133	$	1,876,751	$	7,118	$	1,883,869

*included as “current” are

$13.5

million and

$10.1

million of loans and leases as of

December

31,

2016

and

2015,

respectively, which are classified as Administratively Delinquent. An Administratively Delinquent loan is

one

which has been approved for a renewal or extension but has not had all the required documents fully executed as of the reporting date. The Corporation does not consider these loans to be delinquent.

The following tables present an aging of

acquire

portfolio loans and leases as of the dates indicated:

	Accruing Loans and Leases
(dollars in thousands) As of December 31, 2016	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current *		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
Commercial mortgage	$	666	$	—	$	—	$	666	$	163,298	$	163,964	$	55	$	164,019
Home equity lines and loans		—		—		—		—		29,429		29,429		120		29,549
Residential mortgage		50		426		—		476		69,791		70,267		1,005		71,272
Construction		—		—		—		—		—		—		—		—
Commercial and industrial		36		—		—		36		27,405		27,441		2,016		29,457
Consumer		—		—		—		—		141		141		—		141
	$	752	$	426	$	—	$	1,178	$	290,064	$	291,242	$	3,196	$	294,438

	Accruing Loans and Leases
(dollars in thousands) As of December 31, 201 5	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current *		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
Commercial mortgage	$	110	$	56	$	—	$	166	$	190,972	$	191,138	$	550	$	191,688
Home equity lines and loans		151		15		—		166		37,879		38,045		239		38,284
Residential mortgage		448		65		—		513		88,156		88,669		1,248		89,917
Construction		—		—		—		—		3,266		3,266		—		3,266
Commercial and industrial		99		39		—		138		60,542		60,680		1,089		61,769
Consumer		—		—		—		—		195		195		—		195
	$	808	$	175	$	—	$	983	$	381,010	$	381,993	$	3,126	$	385,119

*included as “current” are

$1.8

million and

$418

thousand of loans and leases as of

December

31,

2016

and

2015,

respectively, which are classified as Administratively Delinquent. An Administratively Delinquent loan is

one

which has been approved for a renewal or extension but has not had all the required documents fully executed as of the reporting date. The Corporation does not consider these loans to be delinquent.

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

The following tables detail the roll-forward of the Allowance for the

twelve

months ended

December

31,

2016:

(dollars in thousands)	Commercial Mortgage			Home Equity Lines and Loans			Residential Mortgage			Construction		Commercial and Industrial			Consumer			Leases			Unallocated			Total
Balance, December 31, 2015	$	5,199		$	1,307		$	1,740		$	1,324	$	5,609		$	142		$	518		$	18		$	15,857
Charge-offs		(110	)		(592	)		(306	)		—		(1,298	)		(173	)		(808	)		—			(3,287	)
Recoveries		62			68			48			64		93			23			232			—			590
Provision for loan and lease losses		1,076			472			435			845		738			161			617			(18	)		4,326
Balance, December 31, 2016	$	6,227			1,255			1,917			2,233		5,142			153			559			—			17,486

The following table details the roll-forward of the Allowance for the

twelve

months ended

December

31,

2015:

(dollars in thousands)	Commercial Mortgage			Home Equity Lines and Loans			Residential Mortgage			Construction			Commercial and Industrial			Consumer			Leases			Unallocated			Total
Balance, December 31, 2014	$	3,948		$	1,917		$	1,736		$	1,367		$	4,533		$	238		$	468		$	379		$	14,586
Charge-offs		(50	)		(774	)		(791	)		—			(1,220	)		(177	)		(442	)		—			(3,454	)
Recoveries		27			98			35			4			35			29			101			—			329
Provision for loan and lease losses		1,274			66			760			(47	)		2,261			52			391			(361	)		4,396
Balance December 31, 2015	$	5,199		$	1,307		$	1,740		$	1,324		$	5,609		$	142		$	518		$	18		$	15,857

The following table details the allocation of the Allowance for

all

portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of

December

31,

2016

and

December

31,

2015:

(dollars in thousands) As of December 31, 201 6	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Unallocated		Total
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	—	$	73	$	—	$	5	$	8	$	—	$	—	$	86
Collectively evaluated for impairment		6,227		1,255		1,844		2,233		5,137		145		559		—		17,400
Purchased credit-impaired (1)		—		—		—		—		—		—		—		—		—
Total	$	6,227	$	1,255	$	1,917	$	2,233	$	5,142	$	153	$	559	$	—	$	17,486
As of December 31, 201 5
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	115	$	54	$	—	$	519	$	5	$	—	$	—	$	693
Collectively evaluated for impairment		5,199		1,192		1,686		1,324		5,090		137		518		18		15,164
Purchased credit-impaired (1)		—		—		—		—		—		—		—		—		—
Total	$	5,199	$	1,307	$	1,740	$	1,324	$	5,609	$	142	$	518	$	18	$	15,857

(1)	Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following table details the carrying value for

all

portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of

December

31,

2016

and

December

31,

2015:

(dollars in thousands) As of December 31 , 201 6	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
Carrying value of loans and leases:
Individually evaluated for impairment	$	1,576	$	2,354	$	7,266	$	—	$	2,946	$	31	$	—	$	14,173
Collectively evaluated for impairment		1,098,788		205,540		406,271		141,964		575,055		25,310		55,892		2,508,820
Purchased credit-impaired (1)		10,534		105		3		—		1,790		—		—		12,432
Total	$	1,110,898	$	207,999	$	413,540	$	141,964	$	579,791	$	25,341	$	55,892	$	2,535,425
As of December 31, 201 5
Carrying value of loans and leases:
Individually evaluated for impairment	$	349	$	1,980	$	7,754	$	33	$	4,240	$	30	$	—	$	14,386
Collectively evaluated for impairment		952,448		207,378		398,635		89,625		515,784		22,099		51,787		2,237,756
Purchased credit-impaired (1)		11,462		115		15		763		4,491		—		—		16,846
Total	$	964,259	$	209,473	$	406,404	$	90,421	$	524,515	$	22,129	$	51,787	$	2,268,988

(1)	Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following table details the allocation of the Allowance for

originated

portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of

December

31,

2016

and

December

31,

2015:

(dollars in thousands) As of December 31 , 201 6	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Unallocated		Total
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	—	$	45	$	—	$	5	$	8	$	—	$	—	$	58
Collectively evaluated for impairment		6,227		1,255		1,844		2,233		5,137		145		559		—		17,400
Total	$	6,227	$	1,255	$	1,889	$	2,233	$	5,142	$	153	$	559	$	—	$	17,458
As of December 31, 201 5
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	115	$	54	$	—	$	519	$	5	$	—	$	—	$	693
Collectively evaluated for impairment		5,199		1,192		1,686		1,324		5,090		137		518		18		15,164
Total	$	5,199	$	1,307	$	1,740	$	1,324	$	5,609	$	142	$	518	$	18	$	15,857

The following table details the carrying value for

originated

portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of

December

31,

2016

and

December

31,

2015:

(dollars in thousands) As of December 31 , 201 6	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
Carrying value of loans and leases:
Individually evaluated for impairment	$	1,521	$	2,319	$	4,111	$	—	$	1,190	$	31	$	—	$	9,172
Collectively evaluated for impairment		945,358		176,131		338,157		141,964		549,144		25,169		55,892		2,231,815
Total	$	946,879	$	178,450	$	342,268	$	141,964	$	550,334	$	25,200	$	55,892	$	2,240,987
As of December 31, 201 5
Carrying value of loans and leases:
Individually evaluated for impairment	$	279	$	1,832	$	4,394	$	33	$	3,229	$	30	$	—	$	9,797
Collectively evaluated for impairment		772,292		169,357		312,093		87,122		459,517		21,904		51,787		1,874,072
Total	$	772,571	$	171,189	$	316,487	$	87,155	$	462,746	$	21,934	$	51,787	$	1,883,869

The following table details the allocation of the Allowance for

acquired

portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of

December

31,

2016

and

December

31,

2015:

(dollars in thousands) As of December 31 , 201 6	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Unallocated		Total
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	—	$	28	$	—	$	—	$	—	$	—	$	—	$	28
Collectively evaluated for impairment		—		—		—		—		—		—		—		—		—
Purchased credit-impaired (1)		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	28	$	—	$	—	$	—	$	—	$	—	$	28
As of December 31, 201 5
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		—		—		—		—		—		—		—		—		—
Purchased credit-impaired (1)		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)

Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following table details the carrying value for

acquired

portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of

December

31,

2016

and

December

31,

2015:

(dollars in thousands) As of December 31 , 201 6	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
Carrying value of loans and leases:
Individually evaluated for impairment	$	55		35		3,155		—		1,756		—		—		5,001
Collectively evaluated for impairment		153,430		29,409		68,114		—		25,911		141		—		277,005
Purchased credit-impaired (1)		10,534		105		3		—		1,790		—		—		12,432
Total	$	164,019		29,549		71,272		—		29,457		141		—		294,438
As of December 31, 201 5
Carrying value of loans and leases:
Individually evaluated for impairment	$	70	$	148	$	3,360	$	—	$	1,011	$	—	$	—	$	4,589
Collectively evaluated for impairment		180,156		38,021		86,542		2,503		56,267		195		—		363,684
Purchased credit-impaired (1)		11,462		115		15		763		4,491		—		—		16,846
Total	$	191,688	$	38,284	$	89,917	$	3,266	$	61,769	$	195	$	—	$	385,119

(1)

Purchased credit-impaired loans are evaluated for impairment on an individual basis.

As part of the process of determining the Allowance for the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by both in-house staff as well as external loan reviewers. The result of these reviews is reflected in the risk grade assigned to each loan. These internally assigned grades are as follows:

•	Pass – Loans considered satisfactory with no indications of deterioration.

•

Special mention - Loans classified as special mention have a potential weakness that deserves 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.

•

Substandard - Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

•

Doubtful - 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.

In addition, for the remaining segments of the loan and lease portfolio, which include residential mortgage, home equity lines and loans, consumer, and leases, the credit quality indicator used to determine this component of the Allowance is based on performance status.

The following tables detail the carrying value of

all

portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of

December

31,

2016

and

December

31,

2015:

Credit Risk Profile by Internally Assigned Grade

(dollars in thousands)	Commercial Mortgage				Construction				Commercial and Industrial				Total
	December 31 , 201 6		December 31, 201 5		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Pass	$	1,099,557	$	946,887	$	140,370	$	88,653	$	570,342	$	510,040	$	1,810,269	$	1,545,580
Special Mention		1,892		7,029		—		—		2,315		1,123		4,207		8,152
Substandard		9,449		10,343		1,594		1,768		5,512		13,352		16,555		25,463
Doubtful		—		—		—		—		1,622		—		1,622		—
Total	$	1,110,898	$	964,259	$	141,964	$	90,421	$	579,791	$	524,515	$	1,832,653	$	1,579,195

Credit Risk Profile by Payment Activity

(dollars in thousands)	Residential Mortgage				Home Equity Lines and Loans				Consumer				Leases				Total
	December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Performing	$	410,882	$	403,192	$	205,710	$	207,446	$	25,339	$	22,129	$	55,755	$	51,778	$	697,686	$	684,545
Non-performing		2,658		3,212		2,289		2,027		2		—		137		9		5,086		5,248
Total	$	413,540	$	406,404	$	207,999	$	209,473	$	25,341	$	22,129	$	55,892	$	51,787	$	702,772	$	689,793

The following tables detail the carrying value of

originated

portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of

December

31,

2016

and

December

31,

2015:

Credit Risk Profile by Internally Assigned Grade

(dollars in thousands)	Commercial Mortgage				Construction				Commercial and Industrial				Total
	December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Pass	$	936,737	$	758,240	$	140,370	$	86,065	$	544,876	$	454,454	$	1,621,983	$	1,298,759
Special Mention		1,892		7,029		—		—		2,279		1,015		4,171		8,044
Substandard		8,250		7,302		1,594		1,090		3,054		7,277		12,898		15,669
Doubtful		—		—		—		—		125		—		125		—
Total	$	946,879	$	772,571	$	141,964	$	87,155	$	550,334	$	462,746	$	1,639,177	$	1,322,472

Credit Risk Profile by Payment Activity

(dollars in thousands)	Residential Mortgage				Home Equity Lines and Loans				Consumer				Leases				Total
	December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Performing	$	340,615	$	314,523	$	176,281	$	169,401	$	25,198	$	21,934	$	55,755	$	51,778	$	597,849	$	557,636
Non-performing		1,653		1,964		2,169		1,788		2		—		137		9		3,961		3,761
Total	$	342,268	$	316,487	$	178,450	$	171,189	$	25,200	$	21,934	$	55,892	$	51,787	$	601,810	$	561,397

The following tables detail the carrying value of

acquired

portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of

December

31,

2016

and

December

31,

2015:

Credit Risk Profile by Internally Assigned Grade

(dollars in thousands)	Commercial Mortgage				Construction				Commercial and Industrial				Total
	December 31 , 201 6		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Pass	$	162,820	$	188,647	$	—	$	2,588	$	25,466	$	55,586	$	188,286	$	246,821
Special Mention		—		—		—		—		36		108		36		108
Substandard		1,199		3,041		—		678		2,458		6,075		3,657		9,794
Doubtful		—		—		—		—		1,497		—		1,497		—
Total	$	164,019	$	191,688	$	—	$	3,266	$	29,457	$	61,769	$	193,476	$	256,723

Credit Risk Profile by Payment Activity

(dollars in thousands)	Residential Mortgage				Home Equity Lines and Loans				Consumer				Total
	December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Performing	$	70,267	$	88,669	$	29,429	$	38,045	$	141	$	195		99,837	$	126,909
Non-performing		1,005		1,248		120		239		—		—		1,125		1,487
Total	$	71,272	$	89,917	$	29,549	$	38,284	$	141	$	195		100,962	$	128,396

G. Troubl

ed Debt Restructurings (“TDRs”)

The restructuring of a loan is considered a “troubled debt restructuring” if both of the following conditions are met: (i) the borrower is experiencing financial difficulties, and (ii) the creditor has granted a concession. The most common concessions granted include

one

or more modifications to the terms of the debt, such as (a) a reduction in the interest rate for the remaining life of the debt, (b) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (c) a temporary period of interest-only payments, (d) a reduction in the contractual payment amount for either a short period or remaining term of the loan, and (e) for leases, a reduced lease payment. A less common concession granted is the forgiveness of a portion of the principal.

The determination of whether a borrower is experiencing financial difficulties takes into account not only the current financial condition of the borrower, but also the potential financial condition of the borrower, were a concession not granted. Similarly, the determination of whether a concession has been granted is very subjective in nature. For example, simply extending the term of a loan at its original interest rate or even at a higher interest rate could be interpreted as a concession unless the borrower could readily obtain similar credit terms from a different lender.

The following table presents the balance of TDRs as of the indicated dates:

(dollars in thousands)	December 31 , 201 6		December 31, 201 5
TDRs included in nonperforming loans and leases	$	2,632	$	1,935
TDRs in compliance with modified terms		6,395		4,880
Total TDRs	$	9,027	$	6,815

The following table presents information regarding loan and lease modifications categorized as TDRs for the

twelve

months ended

December

31,

2016:

	For the Twelve Months Ended December 31, 2016
(dollars in thousands)	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial mortgage		1	$	1,256	$	1,256
Residential		2		141		148
Home equity lines and loans		6		265		265
Commercial and industrial		4		1,006		1,006
Leases		3		104		104
Total		16	$	2,772	$	2,779

The following table presents information regarding the types of loan and lease modifications made for the

twelve

months ended

December

31,

2016:

	Number of Contracts
	Interest Rate Change		Loan Term Extension		Interest Rate Change and Term Extension		Interest Rate Change and/or Interest-Only Period		Contractual Payment Reduction (Leases only)		Temporary Payment Deferral
Commercial mortgage		—		1		—		—		—		—
Residential		—		—		2		—		—		—
Home equity lines and loans		—		—		—		6		—
Commercial and industrial		—		3		—		—		—		1
Leases		—		—		—		—		3		—
Total		—		4		2		6		3		1

The following table presents information regarding loan and lease modifications categorized as TDRs for the

twelve

months ended

December

31,

2015:

	For the Twelve Months Ended December 31, 2015
(dollars in thousands)	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Residential		4	$	2,181	$	2,181
Home equity lines and loans		1		22		22
Leases		2		66		66
Total		7	$	2,269	$	2,269

The following table presents information regarding the types of loan and lease modifications made for the

twelve

months ended

December

31,

2015:

	Number of Contracts
	Interest Rate Change		Loan Term Extension		Interest Rate Change and Term Extension		Interest Rate Change and/or Interest-Only Period		Contractual Payment Reduction (Leases only)		Temporary P ayment Deferral
Residential		—		—		2		2		—		—
Home equity lines and loans		—		—		—		1		—		—
Leases		—		—		—		—		2		—
Total		—		—		2		3		2		—

During the

twelve

months ended

December

31,

2016,

there were no defaults of loans that had received troubled debt restructurings in

2015.

H. Impaired Loans

The following tables detail the recorded investment and principal balance of impaired loans by portfolio segment, their related allowance for loan and lease losses and interest income recognized for the

twelve

months ended

December

31,

2016,

2015

and

2014

(purchased credit-impaired loans are not included in the tables):

(dollars in thousands) As of or for the Twelve Months Ended December 31, 2016	Recorded Investment**		Principal Balance		Related Allowance		Average Principal Balance		Interest I ncome R ecognized		Cash-Basis Interest Income Recognized
Impaired loans with related allowance:
Residential mortgage	$	622	$	622	$	73	$	639	$	27	$	—
Commercial and industrial		84		84		5		103		5		—
Consumer		31		31		8		33		2		—
Total		737		737		86		775		34		—

Impaired loans* without related allowance:
Commercial mortgage		1,577		1,577		—		1,583		70		—
Home equity lines and loans		2,354		2,778		—		2,833		25		—
Residential mortgage		6,644		6,970		—		7,544		276		—
Commercial and industrial		2,862		3,692		—		8,362		146		—
Total		13,437		15,017		—		20,322		517		—
												—
Grand total	$	14,174	$	15,754	$	86	$	21,097	$	551	$	—

The table above does not include the recorded investment

$24

thousand of impaired leases without a related allowance for loan and lease losses.

**Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

(dollars in thousands) As of or for the Twelve Months Ended December 31, 2015	Recorded Investment**		Principal Balance		Related Allowance		Average Principal Balance		Interest I ncome R ecognized		Cash-Basis Interest Income Recognized
Impaired loans with related allowance:
Home equity lines and loans	$	115	$	115	$	115	$	125	$	4	$	—
Residential mortgage		515		527		54		531		23		—
Commercial and industrial		2,011		2,002		519		2,215		49		—
Consumer		30		30		5		31		1		—
Total		2,671		2,674		693		2,902		77		—

Impaired loans* without related allowance:
Commercial mortgage		349		358		—		361		9		—
Home equity lines and loans		1,865		2,447		—		2,605		46		—
Residential mortgage		7,239		8,166		—		8,085		257		—
Construction		33		996		—		1,087		—		—
Commercial and industrial		2,229		3,089		—		4,985		124		—
Total		11,715		15,056		—		17,123		436		—
												—
Grand total	$	14,386	$	17,730	$	693	$	20,025	$	513	$	—

The table above does not include the recorded investment

thousand of impaired leases without a related allowance for loan and lease losses.

**Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

(dollars in thousands) As of or for the Twelve Months Ended December 31, 2014	Recorded Investment**		Principal Balance		Related Allowance		Average Principal Balance		Interest I ncome R ecognized		Cash-Basis Interest Income Recognized
Impaired loans with related allowance:
Home equity lines and loans	$	111	$	198	$	4	$	197	$	—	$	—
Residential mortgage		3,273		3,260		184		3,289		112		—
Commercial and industrial		2,069		2,527		448		2,577		49		—
Consumer		31		32		32		32		1		—
Total		5,484		6,017		668		6,095		162		—

Impaired loans* without related allowance:
Commercial mortgage		97		97		—		103		4		—
Home equity lines and loans		1,044		1,137		—		1,251		12		—
Residential mortgage		5,369		5,794		—		6,210		152		—
Construction		264		1,225		—		1,427		—		—
Commercial and industrial		1,391		1,403		—		1,430		11		—
Total		8,165		9,656		—		10,421		179		—
												—
Grand total	$	13,649	$	15,673	$	668	$	16,516	$	341	$	—

The table above does not include the recorded investment of $

thousand of impaired leases without a related allowance for loan and lease losses.

**Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

Loan

Mark

Loans acquired in mergers and acquisitions are recorded at fair value as of the date of the transaction. This adjustment to the acquired principal amount is referred to as the “Loan Mark”. With the exception of purchased credit impaired loans, for which the Loan Mark is accounted under ASC

310

30,

the Loan Mark is amortized or accreted as an adjustment to yield over the lives of the loans.

The following tables detail, for

acquired loans

, the outstanding principal, remaining loan mark, and recorded investment, by portfolio segment, as of the dates indicated:

(dollars in thousands)	As of December 31, 2016
	Outstanding Principal		Remaining Loan Mark			Recorded Investment
Commercial mortgage	$	168,612	$	(4,593	)	$	164,019
Home equity lines and loans		31,236		(1,687	)		29,549
Residential mortgage		73,902		(2,630	)		71,272
Commercial and industrial		32,812		(3,355	)		29,457
Consumer		163		(22	)		141
Total	$	306,725	$	(12,287	)	$	294,438

(dollars in thousands)	As of December 31, 2015
	Outstanding Principal		Remaining Loan Mark			Recorded Investment
Commercial mortgage	$	197,532	$	(5,844	)	$	191,688
Home equity lines and loans		40,258		(1,974	)		38,284
Residential mortgage		93,230		(3,313	)		89,917
Construction		3,807		(541	)		3,266
Commercial and industrial		67,181		(5,412	)		61,769
Consumer		220		(25	)		195
Total	$	402,228	$	(17,109	)	$	385,119