Note 5 – Allowance for Loan Losses

The following tables summarize the activity in the allowance for loan losses, and ending balance of loans, net of unearned fees for the periods indicated.

 

		Allowance for Loan Losses - Year Ended December 31, 2015
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Beginning balance		$	3,086			$	9,227			$	15,676			$	1,797			$	9			$	719			$	4,226			$	1,434			$	411			$	36,585
Charge-offs			(224	)			—				(694	)			(242	)			(4	)			(972	)			(680	)			—				—				(2,816	)
Recoveries			204				243				666				252				42				500				677				1,728				140				4,452
(Benefit) provision			(559	)			1,973				(4,395	)			1,331				(47	)			441				1,048				(2,263	)			261				(2,210	)
Ending balance		$	2,507			$	11,443			$	11,253			$	3,138				—			$	688			$	5,271			$	899			$	812			$	36,011
Ending balance:
Individ. evaluated for impairment		$	335			$	395			$	605			$	294				—			$	74			$	1,187				—				—			$	2,890
Loans pooled for evaluation		$	2,112			$	9,596			$	10,423			$	2,844				—			$	614			$	2,983			$	844			$	812			$	30,228
Loans acquired with deteriorated credit quality		$	60			$	1,452			$	225				—				—				—			$	1,101			$	55				—			$	2,893
		Loans, net of unearned fees – As of December 31, 2015
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Ending balance:
Total loans		$	314,265			$	1,497,567			$	322,492			$	40,362				—			$	32,429			$	194,913			$	46,135			$	74,774			$	2,522,937
Individ. evaluated for impairment		$	6,767			$	32,407			$	5,747			$	1,731				—			$	288			$	2,671			$	4			$	490			$	50,105
Loans pooled for evaluation		$	305,353			$	1,442,100			$	309,007			$	37,004				—			$	32,077			$	187,393			$	45,410			$	74,284			$	2,432,628
Loans acquired with deteriorated credit quality		$	2,145			$	23,060			$	7,738			$	1,627				—			$	64			$	4,849			$	721				—			$	40,204
		Allowance for Loan Losses - Year Ended December 31, 2014
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Beginning balance		$	3,154			$	9,700			$	16,375			$	1,208			$	66			$	589			$	4,331			$	1,559			$	1,263			$	38,245
Charge-offs			(171	)			(110	)			(1,094	)			(29	)			(3	)			(599	)			(479	)			(4	)			(69	)			(2,558	)
Recoveries			2				540				960				34				86				495				1,268				1,377				181				4,943
(Benefit) provision			101				(903	)			(565	)			584				(140	)			234				(894	)			(1,498	)			(964	)			(4,045	)
Ending balance		$	3,086			$	9,227			$	15,676			$	1,797			$	9			$	719			$	4,226			$	1,434			$	411			$	36,585
Ending balance:
Individ. evaluated for impairment		$	974			$	410			$	1,974			$	284				—			$	142			$	423			$	60				—			$	4,267
Loans pooled for evaluation		$	1,915			$	8,408			$	13,251			$	1,513			$	9			$	572			$	2,569			$	332			$	322			$	28,891
Loans acquired with deteriorated credit quality		$	197			$	409			$	451				—				—			$	5			$	1,234			$	1,042			$	89			$	3,427
		Loans, net of unearned fees – As of December 31, 2014
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Ending balance:
Total loans		$	279,420			$	1,335,939			$	352,584			$	31,314			$	112			$	33,074			$	174,945			$	38,618			$	36,518			$	2,282,524
Individ. evaluated for impairment		$	7,188			$	41,932			$	6,968			$	1,279			$	18			$	323			$	1,757			$	2,683			$	99			$	62,247
Loans pooled for evaluation		$	268,227			$	1,263,090			$	336,595			$	29,266			$	94			$	32,677			$	165,753			$	35,260			$	36,419			$	2,167,381
Loans acquired with deteriorated credit quality		$	4,005			$	30,917			$	9,021			$	770				—			$	74			$	7,435			$	675				—			$	52,897

 

		Allowance for Loan Losses - Year Ended December 31, 2013
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Beginning balance		$	3,523			$	8,782			$	21,367			$	1,155			$	243			$	696			$	4,703			$	1,400			$	779			$	42,648
Charge-offs			(46	)			(2,038	)			(2,651	)			(94	)			(68	)			(887	)			(1,599	)			(20	)			(140	)			(7,543	)
Recoveries			345				994				1,053				41				195				759				340				63				65				3,855
(Benefit) provision			(668	)			1,962				(3,394	)			106				(304	)			21				887				116				559				(715	)
Ending balance		$	3,154			$	9,700			$	16,375			$	1,208			$	66			$	589			$	4,331			$	1,559			$	1,263			$	38,245
Ending balance:
Individ. evaluated for impairment		$	775			$	1,198			$	1,140			$	169			$	1			$	8			$	585			$	91			$	8			$	3,975
Loans pooled for evaluation		$	2,039			$	7,815			$	14,749			$	1,039			$	65			$	581			$	2,402			$	751			$	789			$	30,230
Loans acquired with deteriorated credit quality		$	340			$	687			$	486				—				—				—			$	1,344			$	717			$	466			$	4,040
		Loans, net of unearned fees – As of December 31, 2013
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Ending balance:
Total loans		$	195,013			$	912,850			$	339,866			$	14,588			$	946			$	27,763			$	131,878			$	31,933			$	17,170			$	1,672,007
Individ. evaluated for impairment		$	7,342			$	59,936			$	6,918			$	778			$	60			$	90			$	3,177			$	2,756			$	178			$	81,235
Loans pooled for evaluation		$	183,015			$	822,654			$	322,865			$	13,324			$	886			$	27,592			$	122,166			$	27,611			$	16,947			$	1,537,060
Loans acquired with deteriorated credit quality		$	4,656			$	30,260			$	10,083			$	486				—			$	81			$	6,535			$	1,566			$	45			$	53,712

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including, but not limited to, trends relating to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii) non-performing loans, and (iv) delinquency within the portfolio.

The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are graded on a scale ranging from Pass to Loss. A description of the general characteristics of the risk grades is as follows:

 

•

Pass – This grade represents loans ranging from acceptable to very little or no credit risk. These loans typically meet most if not all policy standards in regard to: loan amount as a percentage of collateral value, debt service coverage, profitability, leverage, and working capital.

 

•

Special Mention – This grade represents “Other Assets Especially Mentioned” in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Company’s position in the future. These loans warrant more than normal supervision and attention.

 

•

Substandard – This grade represents “Substandard” loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been written down to the point where this is true. There is a definite need for a well defined workout/rehabilitation program.

 

•

Doubtful – This grade represents “Doubtful” loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified 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. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans.

 

•

Loss – This grade represents “Loss” loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan, even though some recovery may be affected in the future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified.

 

The following tables present ending loan balances by loan category and risk grade for the periods indicated:

 

		Credit Quality Indicators – As of December 31, 2015
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Originated loans:
Pass		$	199,837			$	1,118,868			$	275,251			$	31,427				—			$	28,339			$	166,559			$	31,440			$	66,285			$	1,918,006
Special mention			2,018				10,321				2,494				1,027				—				415				1,037				334				—				17,646
Substandard			5,730				34,454				7,674				2,263				—				244				2,724				4				—				53,093
Loss			—				—				—				—				—				—				—				—				—				—
Total originated		$	207,585			$	1,163,643			$	285,419			$	34,717				—			$	28,998			$	170,320			$	31,778			$	66,285			$	1,988,745
PNCI loans:
Pass		$	102,895			$	293,935			$	27,378			$	3,789				—			$	3,164			$	19,666			$	13,636			$	8,489			$	472,952
Special mention			600				10,795				445				80				—				74				—				—				—				11,994
Substandard			1,040				6,134				1,512				149				—				129				78				—				—				9,042
Loss			—				—				—				—				—				—				—				—				—				—
Total PNCI		$	104,535			$	310,864			$	29,335			$	4,018				—			$	3,367			$	19,744			$	13,636			$	8,489			$	493,988
PCI loans		$	2,145			$	23,060			$	7,738			$	1,627				—			$	64			$	4,849			$	721				—			$	40,204
Total loans		$	314,265			$	1,497,567			$	322,492			$	40,362				—			$	32,429			$	194,913			$	46,135			$	74,774			$	2,522,937
		Credit Quality Indicators – As of December 31, 2014
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Originated loans:
Pass		$	146,949			$	883,102			$	292,244			$	20,976			$	66			$	27,396			$	124,707			$	18,112			$	24,436			$	1,537,988
Special mention			1,122				11,521				3,590				743				11				591				636				622				—				18,836
Substandard			6,523				34,174				9,332				1,840				35				243				1,268				2,401				109				55,925
Loss			—				—				—				—				—				—				—				—				—				—
Total originated		$	154,594			$	928,797			$	305,166			$	23,559			$	112			$	28,230			$	126,611			$	21,135			$	24,545			$	1,612,749
PNCI loans:
Pass		$	119,643			$	359,537			$	36,531			$	6,813				—			$	4,399			$	40,628			$	16,808			$	11,973			$	596,332
Special mention			547				12,979				936				147				—				230				268				—				—				15,107
Substandard			631				3,709				930				25				—				141				3				—				—				5,439
Loss			—				—				—				—				—				—				—				—				—				—
Total PNCI		$	120,821			$	376,225			$	38,397			$	6,985				—			$	4,770			$	40,899			$	16,808			$	11,973			$	616,878
PCI loans		$	4,005			$	30,917			$	9,021			$	770				—			$	74			$	7,435			$	675				—			$	52,897
Total loans		$	279,420			$	1,335,939			$	352,584			$	31,314			$	112			$	33,074			$	174,945			$	38,618			$	36,518			$	2,282,524

Consumer loans, whether unsecured or secured by real estate, automobiles, or other personal property, are susceptible to three primary risks; non-payment due to income loss, over-extension of credit and, when the borrower is unable to pay, shortfall in collateral value. Typically non-payment is due to loss of job and will follow general economic trends in the marketplace driven primarily by rises in the unemployment rate. Loss of collateral value can be due to market demand shifts, damage to collateral itself or a combination of the two.

Problem consumer loans are generally identified by payment history of the borrower (delinquency). The Bank manages its consumer loan portfolios by monitoring delinquency and contacting borrowers to encourage repayment, suggest modifications if appropriate, and, when continued scheduled payments become unrealistic, initiate repossession or foreclosure through appropriate channels. Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the credit and periodically (every 3-12 months depending on collateral type) once repayment is questionable and the loan has been classified.

Commercial real estate loans generally fall into two categories, owner-occupied and non-owner occupied. Loans secured by owner occupied real estate are primarily susceptible to changes in the business conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual fortunes of the business owner, and general economic conditions and changes in business cycles. These same risks apply to commercial loans whether secured by equipment or other personal property or unsecured. Losses on loans secured by owner occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related shifts in lease rates, rental rates or room rates. Most often these shifts are a result of changes in general economic or market conditions or overbuilding and resultant over-supply. Losses are dependent on value of underlying collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs.

 

Construction loans, whether owner occupied or non-owner occupied commercial real estate loans or residential development loans, are not only susceptible to the related risks described above but the added risks of construction itself including cost over-runs, mismanagement of the project, or lack of demand or market changes experienced at time of completion. Again, losses are primarily related to underlying collateral value and changes therein as described above.

Problem C&I loans are generally identified by periodic review of financial information which may include financial statements, tax returns, rent rolls and payment history of the borrower (delinquency). Based on this information the Bank may decide to take any of several courses of action including demand for repayment, additional collateral or guarantors, and, when repayment becomes unlikely through borrower’s income and cash flow, repossession or foreclosure of the underlying collateral.

Collateral values may be determined by appraisals obtained through Bank approved, licensed appraisers, qualified independent third parties, public value information (blue book values for autos), sales invoices, or other appropriate means. Appropriate valuations are obtained at initiation of the credit and periodically (every 3-12 months depending on collateral type) once repayment is questionable and the loan has been classified.

Once a loan becomes delinquent and repayment becomes questionable, a Bank collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss, using a recent valuation as appropriate to the underlying collateral less estimated costs of sale, and charge the loan down to the estimated net realizable amount. Depending on the length of time until ultimate collection, the Bank may revalue the underlying collateral and take additional charge-offs as warranted. Revaluations may occur as often as every 3-12 months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when collateral is liquidated and actual loss is known. Unpaid balances on loans after or during collection and liquidation may also be pursued through lawsuit and attachment of wages or judgment liens on borrower’s other assets.

The following table shows the ending balance of current, past due, and nonaccrual originated loans by loan category as of the date indicated:

 

		Analysis of Past Due and Nonaccrual Originated Loans – As of December 31, 2015
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
Originated loan balance:
Past due:
30-59 Days		$	791			$	200			$	1,033			$	402				—			$	12			$	2,197				—				—			$	4,635
60-89 Days			—				491				324				341				—				40				—				—				—				1,196
> 90 Days			271				3,425				520				82				—				19				24				—				—				4,341
Total past due		$	1,062			$	4,116			$	1,877			$	825				—			$	71			$	2,221				—				—			$	10,172
Current			206,523				1,159,527				283,542				33,892				—				28,927				168,099				—				—				1,978,573
Total orig. loans		$	207,585			$	1,163,643			$	285,419			$	34,717				—			$	28,998			$	170,320			$	31,778			$	66,285			$	1,988,745
> 90 Days and still accruing			—				—				—				—				—				—				—				—				—				—
Nonaccrual loans		$	3,045			$	14,196			$	3,379			$	1,195				—			$	21			$	976			$	12				—			$	22,824

The following table shows the ending balance of current, past due, and nonaccrual PNCI loans by loan category as of the date indicated:

 

		Analysis of Past Due and Nonaccrual PNCI Loans – As of December 31, 2015
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
PNCI loan balance:
Past due:
30-59 Days		$	3,106			$	4,037			$	92			$	23				—				—			$	1				—				—			$	7,259
60-89 Days			—				—				—				—				—			$	13				—				—				—				13
> 90 Days			58				748				275				71				—				10				—				—			$	490				1,652
Total past due		$	3,164			$	4,785			$	367			$	94				—			$	23			$	1				—			$	490			$	8,924
Current			101,371				306,079				28,968				3,924				—				3,344				19,743			$	13,636				7,999				485,064
Total PNCI loans		$	104,535			$	310,864			$	29,335			$	4,018				—			$	3,367			$	19,744			$	13,636			$	8,489			$	493,988
> 90 Days and still accruing			—				—				—				—				—				—				—				—				—				—
Nonaccrual loans		$	348			$	3,742			$	676			$	109				—			$	33				—				—			$	490			$	5,398

 

The following table shows the ending balance of current, past due, and nonaccrual originated loans by loan category as of the date indicated:

 

		Analysis of Past Due and Nonaccrual Originated Loans – As of December 31, 2014
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
Originated loan balance:
Past due:
30-59 Days		$	1,296			$	735			$	2,066			$	615			$	4			$	64			$	739				—				—			$	5,519
60-89 Days			919				—				296				192				—				24				99				—				—				1,530
> 90 Days			100				900				754				202				17				46				61				—				—				2,080
Total past due		$	2,315			$	1,635			$	3,116			$	1,009			$	21			$	134			$	899				—				—			$	9,129
Current			152,279				927,162				302,050				22,550				91				28,096				125,712				21,135				24,545				1,603,620
Total orig. loans		$	154,594			$	928,797			$	305,166			$	23,559			$	112			$	28,230			$	126,611			$	21,135			$	24,545			$	1,612,749
> 90 Days and still accruing			—				—				—				—				—				—				—				—				—				—
Nonaccrual loans		$	3,430			$	20,736			$	4,336			$	1,197			$	18			$	66			$	246			$	2,401			$	99			$	32,529

The following table shows the ending balance of current, past due, and nonaccrual PNCI loans by loan category as of the date indicated:

 

		Analysis of Past Due and Nonaccrual PNCI Loans – As of December 31, 2014
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
PNCI loan balance:
Past due:
30-59 Days		$	2,041			$	260			$	275				—				—			$	25			$	67				—				—			$	2,668
60-89 Days			24				—				118				—				—				3				—				—				—				145
> 90 Days			239				—				73				25				—				76				—				—				—				413
Total past due		$	2,304			$	260			$	466			$	25				—			$	104			$	67				—				—			$	3,226
Current			118,517				375,965				37,931				6,960				—				4,666				40,832				16,808				11,973			$	613,652
Total PNCI loans		$	120,821			$	376,225			$	38,397			$	6,985				—			$	4,770			$	40,899			$	16,808			$	11,973			$	616,878
> 90 Days and still accruing			—				—				—				—				—				—				—				—				—				—
Nonaccrual loans		$	799			$	366			$	346			$	25				—			$	110				—				—				—			$	1,646

Impaired originated loans are those where management has concluded that it is probable that the borrower will be unable to pay all amounts due under the contractual terms. The following tables show the recorded investment (financial statement balance), unpaid principal balance, average recorded investment, and interest income recognized for impaired Originated and PNCI loans, segregated by those with no related allowance recorded and those with an allowance recorded for the periods indicated.

 

		Impaired Originated Loans – As of December 31, 2015
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
With no related allowance recorded:
Recorded investment		$	3,886			$	27,109			$	2,963			$	947				—			$	20			$	576			$	4				—			$	35,505
Unpaid principal		$	5,998			$	29,678			$	6,079			$	1,349				—			$	35			$	688			$	65				—			$	43,892
Average recorded Investment		$	3,586			$	32,793			$	2,982			$	848				—			$	29			$	494			$	1,202			$	50			$	41,984
Interest income Recognized		$	81			$	893			$	23			$	5				—				—			$	29				—				—			$	1,031
With an allowance recorded:
Recorded investment		$	2,006			$	1,418			$	1,724			$	674				—			$	1			$	2,094				—				—			$	7,917
Unpaid principal		$	2,073			$	1,453			$	1,904			$	701				—			$	1			$	2,117				—				—			$	8,249
Related allowance		$	335			$	146			$	525			$	256				—			$	1			$	1,187				—				—			$	2,450
Average recorded Investment		$	2,365			$	2,180			$	2,455			$	589				—			$	23			$	1,716			$	141				—			$	9,469
Interest income Recognized		$	49			$	74			$	31			$	26				—				—			$	122				—				—			$	302

 

		Impaired PNCI Loans – As of December 31, 2015
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
With no related allowance recorded:
Recorded investment		$	875			$	1,132			$	454			$	71				—			$	33			$	1				—			$	490			$	3,056
Unpaid principal		$	908			$	1,248			$	505			$	73				—			$	52			$	1				—			$	490			$	3,277
Average recorded Investment		$	609			$	749			$	400			$	48				—			$	35			$	4				—			$	245			$	2,090
Interest income Recognized		$	31			$	32			$	3			$	2				—			$	1				—				—			$	18			$	87
With an allowance recorded:
Recorded investment			—			$	2,748			$	606			$	39				—			$	234				—				—				—			$	3,627
Unpaid principal			—			$	2,858			$	612			$	40				—			$	234				—				—				—			$	3,744
Related allowance			—			$	248			$	80			$	39				—			$	73				—				—				—			$	440
Average recorded Investment		$	417			$	1,447			$	521			$	19				—			$	227				—				—				—			$	2,631
Interest income Recognized			—			$	149			$	14				—				—			$	11				—				—				—			$	174
		Impaired Originated Loans – As of December 31, 2014
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
With no related allowance recorded:
Recorded investment		$	3,287			$	38,477			$	3,001			$	750			$	14			$	25			$	412			$	2,401			$	99			$	48,466
Unpaid principal		$	5,138			$	41,949			$	6,094			$	1,187			$	49			$	32			$	433			$	6,588			$	190			$	61,660
Average recorded Investment		$	3,826			$	45,915			$	3,355			$	651			$	35			$	21			$	1,030			$	2,437			$	84			$	57,354
Interest income Recognized		$	38			$	995			$	26			$	6				—			$	1			$	26				—			$	3			$	1,095
With an allowance recorded:
Recorded investment		$	2,724			$	2,943			$	3,185			$	504			$	4			$	41			$	1,338			$	282				—			$	11,021
Unpaid principal		$	2,865			$	3,101			$	3,533			$	597			$	6			$	41			$	1,438			$	282				—			$	11,863
Related allowance		$	797			$	302			$	1,769			$	284				—			$	11			$	423			$	60				—			$	3,646
Average recorded Investment		$	2,677			$	4,119			$	2,982			$	365			$	4			$	25			$	1,428			$	283			$	55			$	11,938
Interest income Recognized		$	91			$	144			$	71			$	13				—				—			$	71			$	19				—			$	409
		Impaired PNCI Loans – As of December 31, 2014
		RE Mortgage								Home Equity								Auto				Other								Construction
(in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
With no related allowance recorded:
Recorded investment		$	343			$	366			$	346			$	25				—			$	37			$	7				—				—			$	1,124
Unpaid principal		$	353			$	2,620			$	374			$	25				—			$	54			$	7				—				—			$	3,433
Average recorded Investment		$	246			$	753			$	287			$	12				—			$	36			$	10				—				—			$	1,344
Interest income Recognized		$	14				—			$	(1	)			—				—				—			$	1				—				—			$	14
With an allowance recorded:
Recorded investment		$	834			$	146			$	436				—				—			$	220				—				—				—			$	1,636
Unpaid principal		$	852			$	146			$	436				—				—			$	220				—				—				—			$	1,654
Related allowance		$	177			$	108			$	205				—				—			$	131				—				—				—			$	621
Average recorded Investment		$	516			$	148			$	319				—				—			$	124				—				—				—			$	1,107
Interest income Recognized		$	8			$	8			$	20				—				—			$	12				—				—				—			$	48

 

At December 31, 2015, $29,269,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to lend $35,000 of additional funds on these TDRs as of December 31, 2015. At December 31, 2015, $1,396,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of December 31, 2015.

At December 31, 2014, $45,676,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to lend $54,000 of additional funds on these TDRs as of December 31, 2014. At December 31, 2014, $1,307,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of December 31, 2014.

At December 31, 2013, $56,739,000 of Originated loans were TDRs and classified as impaired. The Company had obligations to lend $25,000 of additional funds on these TDRs as of December 31, 2013. At December 31, 2013, $901,000 of PNCI loans were TDRs and classified as impaired. The Company had no obligations to lend additional funds on these TDRs as of December 31, 2013.

The following tables show certain information regarding Troubled Debt Restructurings (TDRs) that occurred during the periods indicated:

 

		TDR Information for the Year Ended December 31, 2015
		RE Mortgage								Home Equity								Auto				Other								Construction
(dollars in thousands)		Resid.				Comm.				Lines				Loans				Indirect				Consum.				C&I				Resid.				Comm.				Total
Number			4				5				2				2				—				2				8				—				—				23
Pre-mod outstanding principal balance		$	800			$	1,518			$	301			$	315				—			$	89			$	956				—				—			$	3,979
Post-mod outstanding principal balance		$	801			$	1,517			$	301			$	321				—			$	89			$	944				—				—			$	3,973
Financial impact due to TDR taken as additional provision		$	8			$	(5	)			—			$	38				—			$	5			$	405				—				—			$	451
Number that defaulted during the period			4				2				3				1				—				—				—				—				—				10
Recorded investment of TDRs that defaulted during the period		$	221			$	280			$	182			$	53				—				—				—				—				—			$	736
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions			—				—				—			$	(9	)			—				—				—				—				—			$	(9	)
		TDR Information for the Year Ended December 31, 2014
		RE Mortgage								Home Equity								Auto Indirect				Other Consum.				C&I				Construction								Total
(dollars in thousands)		Resid.				Comm.				Lines				Loans																Resid.				Comm.
Number			5				7				6				2				—				1				7				1				2				31
Pre-mod outstanding principal balance		$	1,048			$	1,980			$	940			$	100				—			$	147			$	218			$	102			$	219			$	4,754
Post-mod outstanding principal balance		$	1,050			$	1,890			$	967			$	102				—			$	147			$	219			$	85			$	196			$	4,656
Financial impact due to TDR taken as additional provision		$	91			$	22				—			$	(1	)			—			$	66			$	101				—				—			$	279
Number that defaulted during the period			2				2				1				—				—				—				1				—				—				6
Recorded investment of TDRs that defaulted during the period		$	344			$	423			$	20				—				—				—			$	116				—				—			$	903
Financial impact due to the default of previous TDR taken as charge-offs or additional provisions			—				—				—				—				—				—			$	(8	)			—				—			$	(8	)

Modifications classified as Troubled Debt Restructurings can include one or a combination of the following: rate modifications, term extensions, interest only modifications, either temporary or long-term, payment modifications, and collateral substitutions/additions.

 

For all new Troubled Debt Restructurings, an impairment analysis is conducted. If the loan is determined to be collateral dependent, any additional amount of impairment will be calculated based on the difference between estimated collectible value and the current carrying balance of the loan. This difference could result in an increased provision and is typically charged off. If the asset is determined not to be collateral dependent, the impairment is measured on the net present value difference between the expected cash flows of the restructured loan and the cash flows which would have been received under the original terms. The effect of this could result in a requirement for additional provision to the reserve. The effect of these required provisions for the period are indicated above.

Typically if a TDR defaults during the period, the loan is then considered collateral dependent and, if it was not already considered collateral dependent, an appropriate provision will be reserved or charge will be taken. The additional provisions required resulting from default of previously modified TDR’s are noted above.