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Loans and Leases
 6 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
Loans and Leases
Loans and Leases
Summary of Major Loan and Lease Categories
 
At June 30, 2018
(Dollars in thousands)
Originated
 
Acquired
 
Total
Commercial, financial and agricultural
$
880,961

 
$
45,199

 
$
926,160

Real estate-commercial
1,373,093

 
270,551

 
1,643,644

Real estate-construction
204,602

 
4,284

 
208,886

Real estate-residential secured for business purpose
267,014

 
71,698

 
338,712

Real estate-residential secured for personal purpose
296,734

 
54,689

 
351,423

Real estate-home equity secured for personal purpose
175,351

 
9,909

 
185,260

Loans to individuals
31,048

 
143

 
31,191

Lease financings
133,122

 
—

 
133,122

Total loans and leases held for investment, net of deferred income
$
3,361,925

 
$
456,473

 
$
3,818,398

Unearned lease income, included in the above table
$
(14,700
)
 
$
—

 
$
(14,700
)
Net deferred costs, included in the above table
4,060

 
—

 
4,060

Overdraft deposits included in the above table
98

 
—

 
98



 
At December 31, 2017
(Dollars in thousands)
Originated
 
Acquired
 
Total
Commercial, financial and agricultural
$
833,100

 
$
63,111

 
$
896,211

Real estate-commercial
1,235,681

 
306,460

 
1,542,141

Real estate-construction
171,244

 
4,592

 
175,836

Real estate-residential secured for business purpose
250,800

 
91,167

 
341,967

Real estate-residential secured for personal purpose
260,654

 
60,920

 
321,574

Real estate-home equity secured for personal purpose
171,884

 
12,386

 
184,270

Loans to individuals
28,156

 
144

 
28,300

Lease financings
129,768

 
—

 
129,768

Total loans and leases held for investment, net of deferred income
$
3,081,287

 
$
538,780

 
$
3,620,067

Unearned lease income, included in the above table
$
(14,243
)
 
$
—

 
$
(14,243
)
Net deferred costs, included in the above table
4,669

 
—

 
4,669

Overdraft deposits included in the above table
222

 
—

 
222


Overdraft deposits are re-classified as loans and are included in the total loans and leases on the balance sheet.

The carrying amount of acquired loans at June 30, 2018 totaled $456.5 million, including $368.6 million of loans from the Fox Chase acquisition and $87.9 million from the Valley Green Bank acquisition. At June 30, 2018, loans acquired with deteriorated credit quality, or acquired credit impaired loans, totaled $998 thousand representing $332 thousand from the Fox Chase acquisition and $666 thousand from the Valley Green Bank acquisition. Acquired credit impaired loans are accounted for in accordance with Accounting Standards Codification (ASC) Topic 310-30.
The outstanding principal balance and carrying amount for acquired credit impaired loans at June 30, 2018 and December 31, 2017 were as follows:
(Dollars in thousands)
At June 30, 2018
 
At December 31, 2017
Outstanding principal balance
$
1,378

 
$
2,325

Carrying amount
998

 
1,583

Allowance for loan losses
—

 
—

The following table presents the changes in accretable yield on acquired credit impaired loans:
 
Six Months Ended June 30,
(Dollars in thousands)
2018
 
2017
Beginning of period
$
11

 
$
50

Reclassification from nonaccretable discount
375

 
279

Accretable discount amortized to interest income
(386
)
 
(297
)
Disposals
—

 
(4
)
End of period
$
—

 
$
28


Age Analysis of Past Due Loans and Leases
The following presents, by class of loans and leases, an aging of past due loans and leases, loans and leases which are current and the recorded investment in loans and leases 90 days or more past due which are accruing interest at June 30, 2018 and December 31, 2017:
(Dollars in thousands)
30-59
Days
Past Due
 
60-89
Days
Past Due
 
90 Days
or more
Past Due
 
Total
Past Due
 
Current
 
Acquired Credit Impaired
 
Total Loans
and Leases
Held for
Investment
 
Recorded
Investment 90
Days or more
Past Due and
Accruing
Interest
At June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial and agricultural
$
1,777

 
$
141

 
$
2,240

 
$
4,158

 
$
921,735

 
$
267

 
$
926,160

 
$
—

Real estate—commercial real estate and construction:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
1,543

 
1,145

 
1,619

 
4,307

 
1,639,131

 
206

 
1,643,644

 
—

Construction
364

 
—

 
—

 
364

 
208,522

 
—

 
208,886

 
—

Real estate—residential and home equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential secured for business purpose
1,750

 
782

 
1,173

 
3,705

 
334,547

 
460

 
338,712

 
—

Residential secured for personal purpose
2,896

 
88

 
1,561

 
4,545

 
346,813

 
65

 
351,423

 
—

Home equity secured for personal purpose
672

 
698

 
1,205

 
2,575

 
182,685

 
—

 
185,260

 
—

Loans to individuals
137

 
49

 
101

 
287

 
30,904

 
—

 
31,191

 
101

Lease financings
1,383

 
646

 
1,575

 
3,604

 
129,518

 
—

 
133,122

 
49

Total
$
10,522

 
$
3,549

 
$
9,474

 
$
23,545

 
$
3,793,855

 
$
998

 
$
3,818,398

 
$
150

At December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial and agricultural
$
2,182

 
$
1,440

 
$
1,509

 
$
5,131

 
$
890,658

 
$
422

 
$
896,211

 
$
—

Real estate—commercial real estate and construction:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
733

 
548

 
1,410

 
2,691

 
1,539,094

 
356

 
1,542,141

 
—

Construction
1,970

 
—

 
365

 
2,335

 
173,501

 
—

 
175,836

 
—

Real estate—residential and home equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential secured for business purpose
1,651

 
315

 
1,355

 
3,321

 
338,061

 
585

 
341,967

 
162

Residential secured for personal purpose
4,368

 
1,118

 
23

 
5,509

 
315,845

 
220

 
321,574

 
—

Home equity secured for personal purpose
1,414

 
333

 
464

 
2,211

 
182,059

 
—

 
184,270

 
148

Loans to individuals
221

 
139

 
195

 
555

 
27,745

 
—

 
28,300

 
195

Lease financings
1,143

 
392

 
1,855

 
3,390

 
126,378

 
—

 
129,768

 
256

Total
$
13,682

 
$
4,285

 
$
7,176

 
$
25,143

 
$
3,593,341

 
$
1,583

 
$
3,620,067

 
$
761



Nonperforming Loans and Leases
The following presents, by class of loans and leases, nonperforming loans and leases at June 30, 2018 and December 31, 2017. Nonperforming loans exclude acquired credit impaired loans from Fox Chase and Valley Green.
 
At June 30, 2018
 
At December 31, 2017
(Dollars in thousands)
Nonaccrual
Loans and
Leases*
 
Accruing
Troubled
Debt
Restructured
Loans and
Lease
Modifications
 
Loans and
Leases
90 Days
or more
Past Due
and
Accruing
Interest
 
Total Nonperforming
Loans and
Leases
 
Nonaccrual
Loans and
Leases*
 
Accruing
Troubled
Debt
Restructured
Loans and
Lease
Modifications
 
Loans and
Leases
90 Days
or more
Past Due
and
Accruing
Interest
 
Total Nonperforming
Loans and
Leases
Commercial, financial and agricultural
$
4,084

 
$
607

 
$
—

 
$
4,691

 
$
4,448

 
$
921

 
$
—

 
$
5,369

Real estate—commercial real estate and construction:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
19,584

 
—

 
—

 
19,584

 
4,285

 
10,266

 
—

 
14,551

Construction
110

 
—

 
—

 
110

 
365

 
—

 
—

 
365

Real estate—residential and home equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential secured for business purpose
1,538

 
183

 
—

 
1,721

 
2,843

 
206

 
162

 
3,211

Residential secured for personal purpose
1,741

 
—

 
—

 
1,741

 
466

 
42

 
—

 
508

Home equity secured for personal purpose
1,565

 
—

 
—

 
1,565

 
511

 
—

 
148

 
659

Loans to individuals
—

 
—

 
101

 
101

 
—

 
—

 
195

 
195

Lease financings
1,526

 
—

 
49

 
1,575

 
1,599

 
—

 
256

 
1,855

Total
$
30,148

 
$
790

 
$
150

 
$
31,088

 
$
14,517

 
$
11,435

 
$
761

 
$
26,713

 * Includes nonaccrual troubled debt restructured loans and lease modifications of $1.8 million and $2.5 million at June 30, 2018 and December 31, 2017, respectively.

Accruing troubled debt restructuring loans of $11.4 million at December 31, 2017 includes balances of $10.3 million related to one borrower which were classified as troubled debt restructurings as the related loans were granted amortization period extensions. These troubled debt restructured loans were returned to performing status during the first quarter of 2018 as the borrower was in compliance with the modified terms of the restructurings for the required time period. At June 30, 2018, commercial real estate nonaccrual loans and leases includes a $12.0 million loan that was placed on nonaccrual status during the first quarter of 2018. A specific reserve of $650 thousand was recorded for this loan as of June 30, 2018.

Credit Quality Indicators
The following tables present by class, the recorded investment in loans and leases held for investment by credit quality indicator at June 30, 2018 and December 31, 2017.
The Corporation employs a ten (10) grade risk rating system related to the credit quality of commercial loans and residential real estate loans secured for a business purpose of which the first six categories are pass categories (credits not adversely rated). The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating. Loans with a relationship balance of less than $1 million are reviewed on a performance basis, with the primary monitored metrics being delinquency (60 days or more past due) and revolving stagnancy. Loans with relationships greater than $1 million are reviewed at least annually.  Loan relationships exceeding $15 million or classified as special mention or substandard are reviewed at least quarterly, or more frequently based on management’s discretion. 

1.
Cash Secured—No credit risk
2.
Fully Secured—Negligible credit risk
3.
Strong—Minimal credit risk
4.
Satisfactory—Nominal credit risk
5.
Acceptable—Moderate credit risk
6.
Pre-Watch—Marginal, but stable credit risk
7.
Special Mention—Potential weakness
8.
Substandard—Well-defined weakness
9.
Doubtful—Collection in-full improbable
10.
Loss—Considered uncollectible
Commercial Credit Exposure Credit Risk by Internally Assigned Grades
The following table presents classifications for originated loans:
(Dollars in thousands)
Commercial,
Financial and
Agricultural
 
Real Estate—
Commercial
 
Real Estate—
Construction
 
Real Estate—
Residential Secured
for Business Purpose
 
Total
At June 30, 2018
 
 
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
 
 
1. Cash secured/ 2. Fully secured
$
2,846

 
$
—

 
$
24,304

 
$
—

 
$
27,150

3. Strong
13,926

 
612

 
—

 
—

 
14,538

4. Satisfactory
21,425

 
25,860

 
—

 
268

 
47,553

5. Acceptable
606,047

 
1,045,630

 
74,818

 
225,971

 
1,952,466

6. Pre-watch
204,593

 
249,505

 
103,970

 
36,000

 
594,068

7. Special Mention
23,203

 
41,286

 
1,400

 
984

 
66,873

8. Substandard
8,921

 
10,200

 
110

 
3,791

 
23,022

9. Doubtful
—

 
—

 
—

 
—

 
—

10.Loss
—

 
—

 
—

 
—

 
—

Total
$
880,961

 
$
1,373,093

 
$
204,602

 
$
267,014

 
$
2,725,670

At December 31, 2017
 
 
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
 
 
1. Cash secured/ 2. Fully secured
$
2,521

 
$
—

 
$
20,420

 
$
—

 
$
22,941

3. Strong
9,206

 
1,821

 
—

 
—

 
11,027

4. Satisfactory
30,283

 
26,950

 
—

 
274

 
57,507

5. Acceptable
593,205

 
960,258

 
76,899

 
215,750

 
1,846,112

6. Pre-watch
179,990

 
209,844

 
72,168

 
29,738

 
491,740

7. Special Mention
4,027

 
12,974

 
1,392

 
296

 
18,689

8. Substandard
13,868

 
23,834

 
365

 
4,742

 
42,809

9. Doubtful
—

 
—

 
—

 
—

 
—

10.Loss
—

 
—

 
—

 
—

 
—

Total
$
833,100

 
$
1,235,681

 
$
171,244

 
$
250,800

 
$
2,490,825

The following table presents classifications for acquired loans:
(Dollars in thousands)
Commercial,
Financial and
Agricultural
 
Real Estate—
Commercial
 
Real Estate—
Construction
 
Real Estate—
Residential Secured
for Business Purpose
 
Total
At June 30, 2018
 
 
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
 
 
1. Cash secured/ 2. Fully secured
$
—

 
$
—

 
$
—

 
$
—

 
$
—

3. Strong
—

 
—

 
—

 
—

 
—

4. Satisfactory
—

 
—

 
—

 
—

 
—

5. Acceptable
42,051

 
164,915

 
—

 
61,566

 
268,532

6. Pre-watch
1,229

 
86,041

 
4,284

 
8,784

 
100,338

7. Special Mention
865

 
4,462

 
—

 
—

 
5,327

8. Substandard
1,054

 
15,133

 
—

 
1,348

 
17,535

9. Doubtful
—

 
—

 
—

 
—

 
—

10.Loss
—

 
—

 
—

 
—

 
—

Total
$
45,199

 
$
270,551

 
$
4,284

 
$
71,698

 
$
391,732

December 31, 2017
 
 
 
 
 
 
 
 
 
Grade:
 
 
 
 
 
 
 
 
 
1. Cash secured/ 2. Fully secured
$
1,120

 
$
—

 
$
—

 
$
—

 
$
1,120

3. Strong
—

 
—

 
—

 
—

 
—

4. Satisfactory
125

 
482

 
—

 
—

 
607

5. Acceptable
49,949

 
183,490

 
—

 
73,402

 
306,841

6. Pre-watch
6,183

 
98,977

 
4,592

 
15,861

 
125,613

7. Special Mention
1,007

 
17,028

 
—

 
—

 
18,035

8. Substandard
4,727

 
6,483

 
—

 
1,904

 
13,114

9. Doubtful
—

 
—

 
—

 
—

 
—

10.Loss
—

 
—

 
—

 
—

 
—

Total
$
63,111

 
$
306,460

 
$
4,592

 
$
91,167

 
$
465,330


Credit Exposure—Real Estate—Residential Secured for Personal Purpose, Real Estate—Home Equity Secured for Personal Purpose, Loans to individuals, Lease Financing Credit Risk Profile by Payment Activity
The Corporation monitors the credit risk profile by payment activity for the following classifications of loans and leases: residential real estate loans secured for a personal purpose, home equity loans secured for a personal purpose, loans to individuals and lease financings. Nonperforming loans and leases are loans and leases past due 90 days or more, loans and leases on nonaccrual of interest and troubled debt restructured loans and lease modifications. Performing loans and leases are reviewed only if the loan becomes 60 days or more past due. Nonperforming loans and leases are reviewed monthly. Performing loans and leases have a nominal to moderate risk of loss.
The following table presents classifications for originated loans:
(Dollars in thousands)
Real Estate—
Residential
Secured for
Personal Purpose
 
Real Estate—
Home Equity
Secured for
Personal Purpose
 
Loans to
Individuals
 
Lease
Financings
 
Total
At June 30, 2018
 
 
 
 
 
 
 
 
 
Performing
$
296,127

 
$
174,866

 
$
30,947

 
$
131,547

 
$
633,487

Nonperforming
607

 
485

 
101

 
1,575

 
2,768

Total
$
296,734

 
$
175,351

 
$
31,048

 
$
133,122

 
$
636,255

At December 31, 2017
 
 
 
 
 
 
 
 
 
Performing
$
260,589

 
$
171,527

 
$
27,961

 
$
127,913

 
$
587,990

Nonperforming
65

 
357

 
195

 
1,855

 
2,472

Total
$
260,654

 
$
171,884

 
$
28,156

 
$
129,768

 
$
590,462


The following table presents classifications for acquired loans:
(Dollars in thousands)
Real Estate—
Residential
Secured for
Personal Purpose
 
Real Estate—
Home Equity
Secured for
Personal Purpose
 
Loans to
Individuals
 
Lease
Financings
 
Total
At June 30, 2018
 
 
 
 
 
 
 
 
 
Performing
$
53,555

 
$
8,829

 
$
143

 
$
—

 
$
62,527

Nonperforming
1,134

 
1,080

 
—

 
—

 
2,214

Total
$
54,689

 
$
9,909

 
$
143

 
$
—

 
$
64,741

At December 31, 2017
 
 
 
 
 
 
 
 
 
Performing
$
60,477

 
$
12,084

 
$
144

 
$
—

 
$
72,705

Nonperforming
443

 
302

 
—

 
—

 
745

Total
$
60,920

 
$
12,386

 
$
144

 
$
—

 
$
73,450


Reserve for Loan and Lease Losses and Recorded Investment in Loans and Leases
The following presents, by portfolio segment, a summary of the activity in the reserve for loan and lease losses for the three and six months ended June 30, 2018 and 2017:
(Dollars in thousands)
Commercial,
Financial
and
Agricultural
 
Real Estate—
Commercial
and
Construction
 
Real Estate—
Residential
Secured for
Business
Purpose
 
Real Estate—
Residential
and Home
Equity
Secured for
Personal
Purpose
 
Loans to
Individuals
 
Lease
Financings
 
Unallocated
 
Total
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
6,942

 
$
11,178

 
$
1,871

 
$
1,908

 
$
372

 
$
1,079

 
$
60

 
$
23,410

Charge-offs
(13,048
)
 
—

 
—

 
—

 
(79
)
 
(169
)
 
N/A

 
(13,296
)
Recoveries
23

 
—

 
7

 
8

 
16

 
75

 
N/A

 
129

Provision (recovery of provision)
13,341

 
1,149

 
126

 
578

 
138

 
86

 
(9
)
 
15,409

Ending balance
$
7,258

 
$
12,327

 
$
2,004

 
$
2,494

 
$
447

 
$
1,071

 
$
51

 
$
25,652

Three Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
7,890

 
$
7,624

 
$
1,345

 
$
1,001

 
$
335

 
$
1,329

 
$
4

 
$
19,528

Charge-offs
(108
)
 
(30
)
 
(1,139
)
 
—

 
(114
)
 
(327
)
 
N/A

 
(1,718
)
Recoveries
210

 
—

 
8

 
4

 
46

 
66

 
N/A

 
334

Provision (recovery of provision)
321

 
874

 
915

 
(30
)
 
62

 
592

 
33

 
2,767

Recovery of provision for acquired credit impaired loans
—

 
—

 
—

 
(1
)
 
—

 
—

 
—

 
(1
)
Ending balance
$
8,313

 
$
8,468

 
$
1,129

 
$
974

 
$
329

 
$
1,660

 
$
37

 
$
20,910

Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
6,742

 
$
9,839

 
$
1,661

 
$
1,754

 
$
373

 
$
1,132

 
$
54

 
$
21,555

Charge-offs
(13,649
)
 
(40
)
 
—

 
—

 
(171
)
 
(305
)
 
N/A

 
(14,165
)
Recoveries
249

 
73

 
258

 
65

 
46

 
109

 
N/A

 
800

Provision (recovery of provision)
13,916

 
2,455

 
85

 
674

 
199

 
135

 
(3
)
 
17,461

Provision for acquired credit impaired loans
—

 
—

 
—

 
1

 
—

 
—

 
—

 
1

Ending balance
$
7,258

 
$
12,327

 
$
2,004

 
$
2,494

 
$
447

 
$
1,071

 
$
51

 
$
25,652

Six Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
7,037

 
$
7,505

 
$
774

 
$
993

 
$
364

 
$
788

 
$
38

 
$
17,499

Charge-offs
(286
)
 
(30
)
 
(1,181
)
 
(94
)
 
(240
)
 
(584
)
 
N/A

 
(2,415
)
Recoveries
397

 
3

 
18

 
21

 
81

 
95

 
N/A

 
615

Provision (recovery of provision)
1,165

 
990

 
1,518

 
52

 
124

 
1,361

 
(1
)
 
5,209

Provision for acquired credit impaired loans
—

 
—

 
—

 
2

 
—

 
—

 
—

 
2

Ending balance
$
8,313

 
$
8,468

 
$
1,129

 
$
974

 
$
329

 
$
1,660

 
$
37

 
$
20,910

N/A – Not applicable
Charge-offs for the three and six months ended June 30, 2018 include a charge-off of $12.7 million for a commercial loan relationship related to alleged fraudulent activities believed to be perpetrated by one or more employees of the borrower. The Bank owns a participating interest which originally totaled $13.0 million in an approximately $80.0 million commercial lending facility. The charge-off represents the entire principal amount owed to the Bank.
The following presents, by portfolio segment, a summary of the balance in the reserve for loan and lease losses disaggregated on the basis of impairment method and the recorded investment in loans and leases disaggregated on the basis of impairment method at June 30, 2018 and 2017:
(Dollars in thousands)
Commercial,
Financial
and
Agricultural
 
Real Estate—
Commercial
and
Construction
 
Real Estate—
Residential
Secured for
Business
Purpose
 
Real Estate—
Residential
and Home
Equity
Secured for
Personal
Purpose
 
Loans to
Individuals
 
Lease
Financings
 
Unallocated
 
Total
At June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
$
646

 
$
866

 
$
12

 
$
—

 
$
—

 
$
—

 
N/A

 
$
1,524

Ending balance: collectively evaluated for impairment
6,612

 
11,420

 
1,951

 
2,494

 
447

 
1,071

 
51

 
24,046

Ending balance: acquired credit impaired loans evaluated for impairment
—

 
41

 
41

 
—

 
—

 
—

 
—

 
82

Total ending balance
$
7,258

 
$
12,327

 
$
2,004

 
$
2,494

 
$
447

 
$
1,071

 
$
51

 
$
25,652

Loans and leases held for investment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
$
6,238

 
$
21,004

 
$
2,132

 
$
3,306

 
$
—

 
$
1,250

 
 
 
$
33,930

Ending balance: collectively evaluated for impairment
874,723

 
1,554,844

 
264,882

 
468,779

 
31,048

 
131,872

 
 
 
3,326,148

Loans measured at fair value
—

 
1,847

 
—

 
—

 
—

 
—

 
 
 
1,847

Acquired non-credit impaired loans
44,932

 
274,629

 
71,238

 
64,533

 
143

 
—

 
 
 
455,475

Acquired credit impaired loans
267

 
206

 
460

 
65

 
—

 
—

 
 
 
998

Total ending balance
$
926,160

 
$
1,852,530

 
$
338,712

 
$
536,683

 
$
31,191

 
$
133,122

 
 
 
$
3,818,398

At June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reserve for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
$
10

 
$
59

 
$
37

 
$
25

 
$
—

 
$
886

 
N/A

 
$
1,017

Ending balance: collectively evaluated for impairment
8,303

 
8,409

 
1,092

 
949

 
329

 
774

 
37

 
19,893

Total ending balance
$
8,313

 
$
8,468

 
$
1,129

 
$
974

 
$
329

 
$
1,660

 
$
37

 
$
20,910

Loans and leases held for investment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
$
9,794

 
$
20,735

 
$
5,196

 
$
967

 
$
—

 
$
5,021

 
 
 
$
41,713

Ending balance: collectively evaluated for impairment
809,693

 
1,268,132

 
189,173

 
394,683

 
27,442

 
125,133

 
 
 
2,814,256

Loans measured at fair value
—

 
2,058

 
—

 
—

 
—

 
—

 
 
 
2,058

Acquired non-credit impaired loans
85,178

 
378,413

 
99,151

 
82,770

 
146

 
—

 
 
 
645,658

Acquired credit impaired loans
502

 
5,185

 
583

 
215

 
—

 
—

 
 
 
6,485

Total ending balance
$
905,167

 
$
1,674,523

 
$
294,103

 
$
478,635

 
$
27,588

 
$
130,154

 
 
 
$
3,510,170

N/A – Not applicable
The Corporation records a provision for loan loss for the acquired non-impaired loans only when additional deterioration of the portfolio is identified over the projections utilized in the initial fair value analysis. After the acquisition measurement period, the present value of any decreases in expected cash flows of acquired credit impaired loans will generally result in an impairment charge recorded as a provision for loan loss, resulting in an increase to the allowance.
Impaired Loans (excludes Lease Financings)
The following presents, by class of loans, the recorded investment and unpaid principal balance of impaired loans, the amounts of the impaired loans for which there is not a reserve for credit losses and the amounts for which there is a reserve for credit losses at June 30, 2018 and December 31, 2017. The impaired loans exclude acquired credit impaired loans.
 
At June 30, 2018
 
At December 31, 2017
(Dollars in thousands)
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Reserve
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Reserve
Impaired loans with no related reserve recorded:
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial and agricultural
$
4,122

 
$
4,848

 
 
 
$
7,019

 
$
8,301

 
 
Real estate—commercial real estate
7,489

 
8,336

 
 
 
15,621

 
16,507

 
 
Real estate—construction
110

 
113

 
 
 
365

 
365

 
 
Real estate—residential secured for business purpose
1,926

 
2,062

 
 
 
3,430

 
4,620

 
 
Real estate—residential secured for personal purpose
1,741

 
1,784

 
 
 
508

 
566

 
 
Real estate—home equity secured for personal purpose
1,565

 
1,595

 
 
 
511

 
523

 
 
Total impaired loans with no related reserve recorded
$
16,953

 
$
18,738

 
 
 
$
27,454

 
$
30,882

 
 
Impaired loans with a reserve recorded:
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial and agricultural
$
2,116

 
$
2,180

 
$
646

 
$
60

 
$
60

 
$
31

Real estate—commercial real estate
13,405

 
13,645

 
866

 
933

 
933

 
99

Real estate—residential secured for business purpose
206

 
272

 
12

 
35

 
37

 
1

Total impaired loans with a reserve recorded
$
15,727

 
$
16,097

 
$
1,524

 
$
1,028

 
$
1,030

 
$
131

Total impaired loans:
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial and agricultural
$
6,238

 
$
7,028

 
$
646

 
$
7,079

 
$
8,361

 
$
31

Real estate—commercial real estate
20,894

 
21,981

 
866

 
16,554

 
17,440

 
99

Real estate—construction
110

 
113

 
—

 
365

 
365

 
—

Real estate—residential secured for business purpose
2,132

 
2,334

 
12

 
3,465

 
4,657

 
1

Real estate—residential secured for personal purpose
1,741

 
1,784

 
—

 
508

 
566

 
—

Real estate—home equity secured for personal purpose
1,565

 
1,595

 
—

 
511

 
523

 
—

Total impaired loans
$
32,680

 
$
34,835

 
$
1,524

 
$
28,482

 
$
31,912

 
$
131


Impaired loans include nonaccrual loans, accruing troubled debt restructured loans and other accruing impaired loans for which it is probable that not all principal and interest payments due will be collectible in accordance with the original contractual terms. These loans are individually measured to determine the amount of potential impairment. The loans are reviewed for impairment based on the fair value of the collateral for collateral dependent loans and for certain loans based on discounted cash flows using the loans’ initial effective interest rates. Impaired loans include other accruing impaired loans of $3.3 million and $4.1 million at June 30, 2018 and December 31, 2017, respectively. Specific reserves on other accruing impaired loans were $25 thousand and $99 thousand at June 30, 2018 and December 31, 2017, respectively.
The following presents by class of loans, the average recorded investment in impaired loans and an analysis of interest on impaired loans. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Therefore, interest income on accruing impaired loans is recognized using the accrual method. 
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
(Dollars in thousands)
Average
Recorded
Investment
 
Interest
Income
Recognized*
 
Additional
Interest Income
That Would
Have Been
Recognized
Under Original
Terms
 
Average
Recorded
Investment
 
Interest
Income
Recognized*
 
Additional
Interest Income
That Would
Have Been
Recognized
Under Original
Terms
Commercial, financial and agricultural
$
6,394

 
$
32

 
$
134

 
$
11,470

 
$
64

 
$
86

Real estate—commercial real estate
22,914

 
18

 
265

 
20,777

 
184

 
81

Real estate—construction
56

 
—

 
3

 
274

 
—

 
10

Real estate—residential secured for business purpose
1,966

 
5

 
23

 
4,184

 
21

 
61

Real estate—residential secured for personal purpose
889

 
2

 
33

 
699

 
1

 
15

Real estate—home equity secured for personal purpose
1,033

 
—

 
31

 
354

 
—

 
5

Total
$
33,252

 
$
57

 
$
489

 
$
37,758

 
$
270

 
$
258

*
Includes interest income recognized on a cash basis for nonaccrual loans of $2 thousand and $3 thousand for the three months ended June 30, 2018 and 2017, respectively, and interest income recognized on the accrual method for accruing impaired loans of $55 thousand and $267 thousand for the three months ended June 30, 2018 and 2017, respectively.
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
(Dollars in thousands)
Average
Recorded
Investment
 
Interest
Income
Recognized*
 
Additional
Interest Income
That Would
Have Been
Recognized
Under Original
Terms
 
Average
Recorded
Investment
 
Interest
Income
Recognized*
 
Additional
Interest Income
That Would
Have Been
Recognized
Under Original
Terms
Commercial, financial and agricultural
$
7,090

 
$
72

 
$
211

 
$
11,506

 
$
110

 
$
171

Real estate—commercial real estate
20,105

 
190

 
552

 
22,464

 
417

 
154

Real estate—construction
137

 
—

 
5

 
156

 
—

 
10

Real estate—residential secured for business purpose
2,107

 
10

 
47

 
4,302

 
37

 
105

Real estate—residential secured for personal purpose
720

 
3

 
44

 
636

 
1

 
23

Real estate—home equity secured for personal purpose
819

 
—

 
39

 
431

 
—

 
10

Total
$
30,978

 
$
275

 
$
898

 
$
39,495

 
$
565

 
$
473


*
Includes interest income recognized on a cash basis for nonaccrual loans of $8 thousand and $4 thousand for the six months ended June 30, 2018 and 2017, respectively, and interest income recognized on the accrual method for accruing impaired loans of $267 thousand and $561 thousand for the six months ended June 30, 2018 and 2017, respectively.

Impaired Leases
The Corporation had impaired leases of $1.3 million at June 30, 2018 and December 31, 2017 with no related reserves. See discussion in Reserve for Loan and Lease Losses and Recorded Investment in Loans and Leases.
Troubled Debt Restructured Loans
The following presents, by class of loans, information regarding accruing and nonaccrual loans that were restructured:
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
(Dollars in thousands)
Number
of
Loans
 
Pre-
Restructuring
Outstanding
Recorded
Investment
 
Post-
Restructuring
Outstanding
Recorded
Investment
 
Related
Reserve
 
Number
of
Loans
 
Pre-
Restructuring
Outstanding
Recorded
Investment
 
Post-
Restructuring
Outstanding
Recorded
Investment
 
Related
Reserve
Accruing Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
—

 
$
—

 
$
—

 
$
—

 
3

 
$
9,206

 
$
9,206

 
$
—

Total
—

 
$
—

 
$
—

 
$
—

 
3

 
$
9,206

 
$
9,206

 
$
—

Nonaccrual Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
—

 
$
—

 
$
—

 
$
—

 
1

 
$
328

 
$
328

 
$
—

Real estate—residential secured for personal purpose
1

 
66

 
66

 
—

 
—

 
—

 
—

 
—

Total
1

 
$
66

 
$
66

 
$
—

 
1

 
$
328

 
$
328

 
$
—

 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
(Dollars in thousands)
Number
of
Loans
 
Pre-
Restructuring
Outstanding
Recorded
Investment
 
Post-
Restructuring
Outstanding
Recorded
Investment
 
Related
Allowance
 
Number
of
Loans
 
Pre-
Restructuring
Outstanding
Recorded
Investment
 
Post-
Restructuring
Outstanding
Recorded
Investment
 
Related
Allowance
Accruing Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
—

 
$
—

 
$
—

 
$
—

 
3

 
$
9,206

 
$
9,206

 
$
—

Total
—

 
$
—

 
$
—

 
$
—

 
3

 
$
9,206

 
$
9,206

 
$
—

Nonaccrual Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
—

 
$
—

 
$
—

 
$
—

 
1

 
$
328

 
$
328

 
$
—

Real estate—residential secured for personal purpose
1

 
66

 
66

 
—

 
—

 
—

 
—

 
—

Total
1

 
$
66

 
$
66

 
$
—

 
1

 
$
328

 
$
328

 
$
—



The Corporation grants concessions to existing borrowers primarily related to extensions of interest-only payment periods and an occasional payment modification. These modifications typically are for up to one year. The goal when restructuring a credit is to establish a reasonable period of time to provide cash flow relief to customers experiencing cash flow difficulties. Accruing troubled debt restructured loans are primarily comprised of loans on which interest is being accrued under the restructured terms, and the loans are current or less than ninety days past due.

The following presents, by class of loans, information regarding the types of concessions granted on accruing and nonaccrual loans that were restructured during the three and six months ended June 30, 2018 and 2017.
 
Maturity Date
Extension
 
Amortization Period Extension
 
Total Concessions
Granted
(Dollars in thousands)
No. of
Loans
 
Amount
 
No. of
Loans
 
Amount
 
No. of
Loans
 
Amount
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Accruing Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Total
—

 
$
—

 
—

 
$
—

 
—

 
$
—

Nonaccrual Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate—residential secured for personal purpose
—

 
$
—

 
1

 
$
66

 
1

 
$
66

Total
—

 
$
—

 
1

 
$
66

 
1

 
$
66

Three Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Accruing Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
—

 
$
—

 
3

 
$
9,206

 
3

 
$
9,206

Total
—

 
$
—

 
3

 
$
9,206

 
3

 
$
9,206

Nonaccrual Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
1

 
$
328

 
—

 
$
—

 
1

 
$
328

Total
1

 
$
328

 
—

 
$
—

 
1

 
$
328

Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Accruing Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Total
—

 
$
—

 
—

 
$
—

 
—

 
$
—

Nonaccrual Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate—residential secured for personal purpose
—

 
$
—

 
1

 
$
66

 
1

 
$
66

Total
—

 
$
—

 
1

 
$
66

 
1

 
$
66

Six Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
Accruing Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
—

 
$
—

 
3

 
$
9,206

 
3

 
$
9,206

Total
—

 
$
—

 
3

 
$
9,206

 
3

 
$
9,206

Nonaccrual Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
Real estate—commercial real estate
1

 
$
328

 
—

 
$
—

 
1

 
$
328

Total
1

 
$
328

 
—

 
$
—

 
1

 
$
328


The following presents, by class of loans, information regarding accruing and nonaccrual troubled debt restructured loans, for which there were payment defaults within twelve months of the restructuring date:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
(Dollars in thousands)
Number
of Loans
 
Recorded
Investment
 
Number
of Loans
 
Recorded
Investment
 
Number
of Loans
 
Recorded
Investment
 
Number
of Loans
 
Recorded
Investment
Accruing Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial and agricultural
—

 
$
—

 
—

 
$
—

 
1

 
$
953

 
—

 
$
—

Total
—

 
$
—

 
—

 
$
—

 
1

 
$
953

 
—

 
$
—

Nonaccrual Troubled Debt Restructured Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
—

 
$
—

 
—

 
$
—

 
—

 
$
—

 
—

 
$
—


The following presents, by class of loans, information regarding consumer mortgages collateralized by residential real estate property that are in the process of foreclosure at June 30, 2018 and December 31, 2017:
(Dollars in thousands)
At June 30, 2018
 
At December 31, 2017
Real estate-residential secured for personal purpose
$
—

 
$
31

Real estate-home equity secured for personal purpose
812

 
—

Total
$
812

 
$
31


    
The following presents foreclosed residential real estate property included in other real estate owned at June 30, 2018 and December 31, 2017.
(Dollars in thousands)
At June 30, 2018
 
At December 31, 2017
Foreclosed residential real estate
$
440

 
$
80