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LOANS

9 Months Ended

Sep. 30, 2016

NOTE 3 – LOANS

The composition of loans receivable and loans held-for-sale is as follows:

	September 30, 2016									December 31, 2015
(In thousands)	Business Activities Loans			Acquired Loans			Total			Business Activities Loans			Acquired Loans			Total
Residential 1-4 family	$	286,663		$	7,022		$	293,685		$	261,495		$	7,799		$	269,294
Residential 5+ multifamily		7,690			5,864			13,554			6,411			6,136			12,547
Construction of residential 1-4 family		9,824			—			9,824			7,998			—			7,998
Home equity lines of credit		35,470			—			35,470			35,017			—			35,017
Residential real estate		339,647			12,886			352,533			310,921			13,935			324,856
Commercial		162,602			81,741			244,343			129,446			88,829			218,275
Construction of commercial		4,066			2,139			6,205			6,525			4,874			11,399
Commercial real estate		166,668			83,880			250,548			135,971			93,703			229,674
Farm land		4,033			—			4,033			3,193			—			3,193
Vacant land		5,830			—			5,830			8,563			—			8,563
Real estate secured		516,178			96,766			612,944			458,648			107,638			566,286
Commercial and industrial		101,146			30,009			131,155			74,657			46,764			121,421
Municipal		8,475			—			8,475			9,566			—			9,566
Consumer		5,593			68			5,661			6,195			77			6,272
Loans receivable, gross		631,392			126,843			758,235			549,066			154,479			703,545
Deferred loan origination costs, net		1,280			—			1,280			1,189			—			1,189
Allowance for loan losses		(5,613	)		(279	)		(5,892	)		(5,481	)		(235	)		(5,716	)
Loans receivable, net	$	627,059		$	126,564		$	753,623		$	544,774		$	154,244		$	699,018
Loans held-for-sale
Residential 1-4 family	$	837		$	—		$	837		$	763		$	—		$	763

Concentrations of Credit Risk

Salisbury's loans consist primarily of residential and commercial real estate loans located principally in northwestern Connecticut, New York and Massachusetts towns, which constitute Salisbury's service area. Salisbury offers a broad range of loan and credit facilities to borrowers in its service area, including residential mortgage loans, commercial real estate loans, construction loans, working capital loans, equipment loans, and a variety of consumer loans, including home equity lines of credit, and installment and collateral loans. All residential and commercial mortgage loans are collateralized by first or second mortgages on real estate. The ability of single family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the market area and real estate values. The ability of commercial borrowers to honor their repayment commitments is dependent on the general economy as well as the health of the real estate economic sector in Salisbury’s market area.

Loan Credit Quality

The composition of loans receivable by risk rating grade is as follows:

Business Activities Loans

(in thousands)	Pass		Special mention		Substandard		Doubtful		Loss		Total
September 30, 2016
Residential 1-4 family	$	276,508	$	6,111	$	3,955	$	89	$	—	$	286,663
Residential 5+ multifamily		5,611		1,912		167		—		—		7,690
Construction of residential 1-4 family		9,824		—		—		—		—		9,824
Home equity lines of credit		34,102		528		840		—		—		35,470
Residential real estate		326,045		8,551		4,962		89		—		339,647
Commercial		152,026		3,541		7,035		—		—		162,602
Construction of commercial		3,949		—		117		—		—		4,066
Commercial real estate		155,975		3,541		7,152		—		—		166,668
Farm land		3,025		—		1,008		—		—		4,033
Vacant land		5,739		63		28		—		—		5,830
Real estate secured		490,784		12,155		13,150		89		—		516,178
Commercial and industrial		98,795		1,716		635		—		—		101,146
Municipal		8,475		—		—		—		—		8,475
Consumer		5,566		27		—		—		—		5,593
Loans receivable, gross	$	603,620	$	13,898	$	13,785	$	89	$	—	$	631,392

Acquired Loans

(in thousands)	Pass		Special mention		Substandard		Doubtful		Loss		Total
September 30, 2016
Residential 1-4 family	$	6,133	$	110	$	779	$	—	$	—	$	7,022
Residential 5+ multifamily		5,741		—		123		—		—		5,864
Construction of residential 1-4 family		—		—		—		—		—		—
Home equity lines of credit		—		—		—		—		—		—
Residential real estate		11,874		110		902		—		—		12,886
Commercial		72,288		4,082		5,371		—		—		81,741
Construction of commercial		1,881		—		258		—		—		2,139
Commercial real estate		74,169		4,082		5,629		—		—		83,880
Farm land		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—
Real estate secured		86,043		4,192		6,531		—		—		96,766
Commercial and industrial		28,566		1,238		205		—		—		30,009
Municipal		—		—		—		—		—		—
Consumer		65		3		—		—		—		68
Loans receivable, gross	$	114,674	$	5,433	$	6,736	$	—	$	—	$	126,843

Business Activities Loans

(in thousands)	Pass		Special mention		Substandard		Doubtful		Loss		Total
December 31, 2015
Residential 1-4 family	$	248,027	$	6,933	$	6,444	$	91	$	—	$	261,495
Residential 5+ multifamily		4,507		1,815		89		—		—		6,411
Construction of residential 1-4 family		7,111		887		—		—		—		7,998
Home equity lines of credit		33,687		545		785		—		—		35,017
Residential real estate		293,332		10,180		7,318		91		—		310,921
Commercial		120,903		4,801		3,742		—		—		129,446
Construction of commercial		6,525		—		—		—		—		6,525
Commercial real estate		127,428		4,801		3,742		—		—		135,971
Farm land		2,162		—		1,031		—		—		3,193
Vacant land		5,567		69		2,927		—		—		8,563
Real estate secured		428,489		15,050		15,018		91		—		458,648
Commercial and industrial		72,887		1,214		555		1		—		74,657
Municipal		9,566		—		—		—		—		9,566
Consumer		6,171		18		6		—		—		6,195
Loans receivable, gross	$	517,113	$	16,282	$	15,579	$	92	$	—	$	549,066

Acquired Loans

(in thousands)	Pass		Special mention		Substandard		Doubtful		Loss		Total
December 31, 2015
Residential 1-4 family	$	6,824	$	199	$	776	$	—	$	—	$	7,799
Residential 5+ multifamily		6,136		—		—		—		—		6,136
Construction of residential 1-4 family		—		—		—		—		—		—
Home equity lines of credit		—		—		—		—		—		—
Residential real estate		12,960		199		776		—		—		13,935
Commercial		80,406		4,005		4,418		—		—		88,829
Construction of commercial		4,612		—		262		—		—		4,874
Commercial real estate		85,018		4,005		4,680		—		—		93,703
Farm land		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—
Real estate secured		97,978		4,204		5,456		—		—		107,638
Commercial and industrial		45,363		875		443		83		—		46,764
Municipal		—		—		—		—		—		—
Consumer		71		6		—		—		—		77
Loans receivable, gross	$	143,412	$	5,085	$	5,899	$	83	$	—	$	154,479

The composition of loans receivable by delinquency status is as follows:

Business Activities Loans

			Past due
												180		30
(in thousands)	Current			1-29		30-59		60-89		90-179		days		days			Accruing		Non-
				days		days		days		days		and		and		90 days			accrual
												over		over		and over
September 30, 2016
Residential 1-4 family	$	281,558		$	1,892	$	313	$	679	$	74	$	2,147	$	3,213		$	—	$	3,017
Residential 5+ multifamily		7,690			—		—		—		—		—		—			—		167
Construction of residential 1-4 family		9,824			—		—		—		—		—		—			—		—
Home equity lines of credit		34,949			69		151		90		54		157		452			—		681
Residential real estate		334,021			1,961		464		769		128		2,304		3,665			—		3,865
Commercial		158,272			1,251		1,917		252		—		910		3,079			—		2,993
Construction of commercial		4,066			—		—		—		—		—		—			—		—
Commercial real estate		162,338			1,251		1,917		252		—		910		3,079			—		2,993
Farm land		2,514			795		—		—		—		724		724			—		1,009
Vacant land		5,784			46		—		—		—		—		—			—		28
Real estate secured		504,657			4,053		2,381		1,021		128		3,938		7,468			—		7,895
Commercial and industrial		99,230			1,105		627		161		—		23		811			—		23
Municipal		8,475			—		—		—		—		—		—			—		—
Consumer		5,555			19		9		10		—		—		19			—		—
Loans receivable, gross	$	617,917		$	5,177	$	3,017	$	1,192	$	128	$	3,961	$	8,298		$	—	$	7,918

Acquired Loans

September 30, 2016
Residential 1-4 family	$	5,961	$	282	$	—	$	—	$	—	$	779	$	779	$	—	$	779
Residential 5+ multifamily		5,299		—		442		—		—		123		565		—		123
Construction of residential 1-4 family		—		—		—		—		—		—		—		—		—
Home equity credit lines of credit		—		—		—		—		—		—		—		—		—
Residential real estate		11,260		282		442		—		—		902		1344		—		902
Commercial		74,978		2,695		1,503		—		974		1,591		4,068		365		2,199
Construction of commercial		1,881		—		—		—		—		258		258		—		258
Commercial real estate		76,859		2,695		1,503		—		974		1,849		4,326		365		2,457
Farm land		—		—		—		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—		—		—		—
Real estate secured		88,119		2,977		1,945		—		974		2,751		5,670		365		3,359
Commercial and industrial		27,711		622		543		1,103		30		—		1,676		30		—
Municipal		—		—		—		—		—		—		—		—		—
Consumer		68		—		—		—		—		—		—		—		—
Loans receivable, gross	$	115,898	$	3,599	$	2,488	$	1,103	$	1,004	$	2,751	$	7,346	$	395	$	3,359

Business Activities Loans

			Past due
												180		30
(in thousands)	Current			1-29		30-59		60-89		90-179		days		days			Accruing		Non-
				days		days		days		days		and		and		90 days			accrual
												over		over		and over
December 30, 2015
Residential 1-4 family	$	254,152		$	1,781	$	1,931	$	683	$	973	$	1,975	$	5,562		$	—	$	5,671
Residential 5+ multifamily		6,254			—		68		—		—		89		157			—		89
Construction of residential 1-4 family		7,826			172		—		—		—		—		—			—		—
Home equity lines of credit		33,744			363		306		101		113		390		910			—		601
Residential real estate		301,976			2,316		2,305		784		1,086		2,454		6,629			—		6,361
Commercial		126,440			1,618		474		—		233		681		1,388			—		2,349
Construction of commercial		6,525			—		—		—		—		—		—			—		—
Commercial real estate		132,965			1,618		474		—		233		681		1,388			—		2,349
Farm land		2,172			298		—		—		—		723		723			—		1,031
Vacant land		5,734			—		6		—		—		2,823		2,829			—		2,855
Real estate secured		442,847			4,232		2,785		784		1,319		6,681		11,569			—		12,596
Commercial and industrial		73,698			906		35		—		—		18		53			—		461
Municipal		9,566			—		—		—		—		—		—			—		—
Consumer		6,096			61		21		17		—		—		38			—		80
Loans receivable, gross	$	532,207		$	5,199	$	2,841	$	801	$	1,319	$	6,699	$	11,660		$	—	$	13,137

Acquired Loans

December 30, 2015
Residential 1-4 family	$	6,823	$	—	$	—	$	110	$	—	$	866	$	976	$	90	$	776
Residential 5+ multifamily		6,136		—		—		—		—		—		—		—		—
Construction of residential 1-4 family		—		—		—		—		—		—		—		—		—
Home equity lines of credit		—		—		—		—		—		—		—		—		—
Residential real estate		12,959		—		—		110		—		866		976		90		776
Commercial		81,140		4,848		916		—		—		1,925		2,841		—		2,000
Construction of commercial		4,612		—		—		—		—		262		262		—		262
Commercial real estate		85,752		4,848		916		—		—		2,187		3,103		—		2,262
Farm land		—		—		—		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—		—		—		—
Real estate secured		98,711		4,848		916		110		—		3,053		4,079		90		3,038
Commercial and industrial		46,128		471		83		82		—		—		165		—		—
Municipal		—		—		—		—		—		—		—		—		—
Consumer		77		—		—		—		—		—		—		—		—
Loans receivable, gross	$	144,916	$	5,319	$	999	$	192	$	—	$	3,053	$	4,244	$	90	$	3,038

Interest on non-accrual loans that would have been recorded as additional interest income for the nine months ended September 30, 2016 and 2015 had the loans been current in accordance with their original terms totaled $666,000 and $609,000, respectively.

Troubled Debt Restructurings

Troubled debt restructurings occurring during the periods are as follows:

Business Activities Loans

	Nine months ended
	September 30, 2016						September 30, 2015
(in thousands)	Quantity		Pre- modification balance		Post- modification balance		Quantity		Pre- modification balance		Post- modification balance
Residential real estate		4	$	683	$	683		2	$	923	$	923
Commercial real estate		2		2,123		2,123		1		294		294
Home equity lines of credit		—		—		—		1		35		35
Troubled debt restructurings		6	$	2,806	$	2,806		4		1,252		1,252
Rate reduction and term extension		1	$	174	$	174		1	$	294	$	294
Interest only and term extension		—		—		—		—		—		—
Debt consolidation		1		1,863		1,863		—		—		—
Debt consolidation and term extension		1		260		260		—		—		—
Note bifurcation		—		—		—		1		48		48
Term extension		3		509		509		2		910		910
Troubled debt restructurings		6	$	2,806	$	2,806		4		1,252		1,252

Acquired Loans

	Nine months ended
	September 30, 2016						September 30, 2015
(in thousands)	Quantity		Pre- modification balance		Post- modification balance		Quantity		Pre- modification balance		Post- modification balance
Residential real estate		1	$	88	$	88		—	$	—	$	—
Commercial real estate		—		—		—		1		184		184
Home equity lines of credit		—		—		—		—		—		—
Troubled debt restructurings		1	$	88	$	88		1	$	184	$	184
Rate reduction and term extension		1	$	88	$	88		1	$	184	$	184
Interest only and term extension		—		—		—		—		—		—
Interest only		—		—		—		—		—		—
Debt consolidation and term extension		—		—		—		—		—		—
Term extension		—		—		—		—		—		—
Troubled debt restructurings		1	$	88	$	88		1	$	184	$	184

Seven loans were modified in troubled debt restructurings during 2016, one of which was past due at September 30, 2016.

As of September 30, 2016, there were no commitments to lend additional amounts on troubled debt restructurings.

As of September 30, 2016, the Bank had $2,793,000 in loans collateralized by residential real estate property in the process of foreclosure.

Allowance for Loan Losses

Changes in the allowance for loan losses are as follows:

	Business Activities Loans												Acquired Loans
(in thousands)	Three months ended September 30, 2016												Three months ended September 30, 2016
	Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance		Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance
Residential	$	2,248	$	224		$	(155	)	$	8	$	2,325	$	69	$	5		$	—		$	—	$	74
Commercial		1,734		29			(1	)		—		1,762		134		37			—			—		171
Land		166		82			(42	)		—		206		—		—			—			—		—
Real estate		4,148		335			(198	)		8		4,293		203		42			—			—		245
Commercial and industrial		851		(16	)		(2	)		25		858		37		(11	)		—			8		34
Municipal		56		(3	)		—			—		53		—		—			—			—		—
Consumer		89		17			(17	)		5		94		—		—			—			—		—
Unallocated		334		(19	)		—			—		315		—		—			—			—		—
Totals	$	5,478	$	314		$	(217	)	$	38	$	5,613	$	240	$	31		$	—		$	8	$	279
	Business Activities Loans												Acquired Loans
(in thousands)	Nine months ended September 30, 2016												Nine months ended September 30, 2016
	Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance		Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance
Residential	$	2,477	$	370		$	(550	)	$	28	$	2,325	$	79	$	(5	)	$	—		$	—	$	74
Commercial		1,466		332			(37	)		1		1,762		132		133			(98	)		4		171
Land		188		106			(88	)		—		206		—		—			—			—		—
Real estate		4,131		808			(675	)		29		4,293		211		128			(98	)		4		245
Commercial and industrial		683		167			(32	)		40		858		24		403			(416	)		23		34
Municipal		61		(8	)		—			—		53		—		—			—			—		—
Consumer		124		1			(46	)		15		94		—		—			—			—		—
Unallocated		482		(167	)		—			—		315		—		—			—			—		—
Totals	$	5,481	$	801		$	(753	)	$	84	$	5,613	$	235	$	531		$	(514	)	$	27	$	279
	Business Activities Loans												Acquired Loans
(in thousands)	Three months ended September 30, 2015												Three months ended September 30, 2015
	Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance		Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance
Residential	$	2,147	$	632		$	(92	)	$	111	$	2,798	$	15	$	55		$	—		$	—	$	70
Commercial		1,339		(102	)		(10	)		—		1,227		77		81			—			5		163
Land		182		168			(72	)		—		278		—		—			—			—		—
Real estate		3,668		698			(174	)		111		4,303		92		136			—			5		233
Commercial and industrial		691		(197	)		—			4		498		52		(22	)		—			10		40
Municipal		64		(16	)		—			—		48		—		—			—			—		—
Consumer		123		1			(17	)		6		113		—		—			—			—		—
Unallocated		369		55			—			—		424		—		—			—			—		—
Totals	$	4,915	$	541		$	(191	)	$	121	$	5,386	$	144	$	114		$	—		$	15	$	273
	Business Activities Loans												Acquired Loans
(in thousands)	Nine months ended September 30, 2015												Nine months ended September 30, 2015
	Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance		Beginning balance		Provision			Charge- offs			Reco- veries		Ending balance
Residential	$	2,306	$	952		$	(573	)	$	113	$	2,798	$	—	$	70		$	—		$	—	$	70
Commercial		1,697		(256	)		(214	)		—		1,227		7		151			—			5		163
Land		164		186			(72	)		—		278		—		—			—			—		—
Real estate		4,167		882			(859	)		113		4,303		7		221			—			5		233
Commercial and industrial		583		(484	)		(56	)		455		498		14		—			—			26		40
Municipal		61		(13	)		—			—		48		—		—			—			—		—
Consumer		117		30			(47	)		13		113		—		—			—			—		—
Unallocated		409		15			—			—		424		—		—			—			—		—
Totals	$	5,337	$	430		$	(962	)	$	581	$	5,386	$	21	$	221		$	—		$	31	$	273

The composition of loans receivable and the allowance for loan losses is as follows:

Business Activities Loans

(in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans		Allowance
September 30, 2016
Residential 1-4 family	$	280,711	$	1,698	$	5,952	$	147	$	286,663	$	1,845
Residential 5+ multifamily		5,860		54		1,830		—		7,690		54
Construction of residential 1-4 family		9,824		85		—		—		9,824		85
Home equity lines of credit		34,674		324		796		17		35,470		341
Residential real estate		331,069		2,161		8,578		164		339,647		2,325
Commercial		158,185		1,646		4,417		69		162,602		1,715
Construction of commercial		3,949		48		117		—		4,066		48
Commercial real estate		162,134		1,694		4,534		69		166,668		1,763
Farm land		3,025		27		1,008		9		4,033		36
Vacant land		5,589		166		241		4		5,830		170
Real estate secured		501,817		4,048		14,361		246		516,178		4,294
Commercial and industrial		101,063		853		83		4		101,146		857
Municipal		8,475		53		—		—		8,475		53
Consumer		5,593		94		—		—		5,593		94
Unallocated allowance		—		315		—		—		—		315
Totals	$	616,948	$	5,363	$	14,444	$	250	$	631,392	$	5,613

Acquired Loans

(in thousands)	Collectively evaluated				Individually evaluated				ASC 310-30 loans				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans		Allowance		Loans		Allowance
September 30, 2016
Residential 1-4 family	$	6,244	$	—	$	779	$	74	$	—	$	—	$	7,023	$	74
Residential 5+ multifamily		5,741		—		123		—		—		—		5,864		—
Construction of residential 1-4 family		—		—		—		—		—		—		—		—
Home equity lines of credit		—		—		—		—		—		—		—		—
Residential real estate		11,985		—		902		74		—		—		12,887		74
Commercial		74,858		22		2,955		82		3,928		64		81,741		168
Construction of commercial		1,881		3		258		—		—		—		2,139		3
Commercial real estate		76,739		25		3,213		82		3,928		64		83,880		171
Farm land		—		—		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—		—		—
Real estate secured		88,724		25		4,115		156		3,928		64		96,767		245
Commercial and industrial		29,676		26		—		—		332		8		30,008		34
Municipal		—		—		—		—		—		—		—		—
Consumer		52		—		—		—		16		—		68		—
Unallocated allowance		—		—		—		—		—		—		—		—
Totals	$	118,452	$	51	$	4,115	$	156	$	4,276	$	72	$	126,843	$	279

Business Activities Loans

(in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans		Allowance
December 31, 2015
Residential 1-4 family	$	253,156	$	1,415	$	8,339	$	610	$	261,495	$	2,025
Residential 5+ multifamily		4,640		33		1,771		—		6,411		33
Construction of residential 1-4 family		7,998		65		—		—		7,998		65
Home equity lines of credit		34,298		286		719		68		35,017		354
Residential real estate		300,092		1,799		10,829		678		310,921		2,477
Commercial		125,173		1,265		4,273		113		129,446		1,378
Construction of commercial		6,403		87		122		1		6,525		88
Commercial real estate		131,576		1,352		4,395		114		135,971		1,466
Farm land		2,162		23		1,031		14		3,193		37
Vacant land		5,486		122		3,077		29		8,563		151
Real estate secured		439,316		3,296		19,332		835		458,648		4,131
Commercial and industrial		74,131		673		526		10		74,657		683
Municipal		9,566		61		—		—		9,566		61
Consumer		6,115		124		80		—		6,195		124
Unallocated allowance		—		482		—		—		—		482
Totals	$	529,128	$	4,636	$	19,938	$	845	$	549,066	$	5,481

Acquired Loans

(in thousands)	Collectively evaluated				Individually evaluated				ASC 310-30 loans				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans		Allowance		Loans		Allowance
December 31, 2015
Residential 1-4 family	$	7,023	$	—	$	776	$	79	$	—	$	—	$	7,799	$	79
Residential 5+ multifamily		6,136		—		—		—		—		—		6,136		—
Construction of residential 1-4 family		—		—		—		—		—		—		—		—
Home equity lines of credit		—		—		—		—		—		—		—		—
Residential real estate		13,159		—		776		79		—		—		13,935		79
Commercial		81,300		19		2,742		107		4,787		2		88,829		128
Construction of commercial		4,612		4		262		—		—		—		4,874		4
Commercial real estate		85,912		23		3,004		107		4,787		2		93,703		132
Farm land		—		—		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—		—		—
Real estate secured		99,071		23		3,780		186		4,787		2		107,638		211
Commercial and industrial		45,650		24		—		—		1,114		—		46,764		24
Municipal		—		—		—		—		—		—		—		—
Consumer		61		—		—		—		16		—		77		—
Unallocated allowance		—		—		—		—		—		—		—		—
Totals	$	144,782	$	47	$	3,780	$	186	$	5,917	$	2	$	154,479	$	235

The credit quality segments of loans receivable and the allowance for loan losses are as follows:

Business Activities Loans

September 30, 2016 (in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans	Allowance
Performing loans	$	612,039	$	4,849	$	—	$	—	$	612,039	$	4,849
Potential problem loans		4,909		200		—		—		4,909		200
Impaired loans		—		—		14,444		250		14,444		250
Unallocated allowance		—		315		—		—		—		315
Totals	$	616,948	$	5,364	$	14,444	$	250	$	631,392	$	5,614

Acquired Loans

September 30, 2016 (in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans	Allowance
Performing loans	$	120,106	$	70	$	—	$	—	$	120,106	$	70
Potential problem loans		2,622		53		—		—		2,622		53
Impaired loans		—		—		4,115		156		4,115		156
Totals	$	122,728	$	123	$	4,115	$	156	$	126,843	$	279

Business Activities Loans

December 30, 2015 (in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans	Allowance
Performing loans	$	527,905	$	4,110	$	—	$	—	$	527,905	$	4,110
Potential problem loans		1,223		44		—		—		1,223		44
Impaired loans		—		—		19,938		845		19,938		845
Unallocated allowance		—		482		—		—		—		482
Totals	$	529,128	$	4,636	$	19,938	$	845	$	549,066	$	5,481

Acquired Loans

December 30, 2015 (in thousands)	Collectively evaluated				Individually evaluated				Total portfolio
		Loans		Allowance		Loans		Allowance		Loans	Allowance
Performing loans	$	148,580	$	46	$	—	$	—	$	148,580	$	46
Potential problem loans		2,119		2		—		—		2,119		2
Impaired loans		—		—		3,780		187		3,780		187
Unallocated allowance		—		—		—		—		—		—
Totals	$	150,699	$	48	$	3,780	$	187	$	154,479	$	235

A specific valuation allowance is established for the impairment amount of each impaired loan, calculated using the present value of expected cash flows or fair value of collateral, in accordance with the most likely means of recovery. Certain data with respect to loans individually evaluated for impairment is as follows:

Business Activities Loans

	Impaired loans with specific allowance										Impaired loans with no specific allowance
(in thousands)	Loan balance							Specific		Income	Loan balance							Income
		Book		Note		Average		allowance		recognized		Book		Note		Average		recognized
September 30, 2016
Residential	$	5,530	$	6,080	$	6,418	$	147	$	72	$	2,252	$	2,409	$	2,683	$	69
Home equity lines of credit		410		436		463		17		1		386		419		346		5
Residential real estate		5,940		6,516		6,881		164		73		2,638		2,828		3,029		74
Commercial		3,568		3,958		3,393		69		73		849		1,106		996		17
Construction of commercial		—		—		72		—		—		117		123		47		5
Farm land		723		784		440		9		—		286		358		580		—
Vacant land		46		46		2,305		4		2		195		232		201		8
Real estate secured		10,277		11,304		13,091		246		148		4,085		4,647		4,853		104
Commercial and industrial		4		4		40		4		—		78		106		217		2
Consumer		—		—		—		—		—		—		—		8		—
Totals	$	10,281	$	11,308	$	13,131	$	250	$	148	$	4,163	$	4,753	$	5,078	$	106

Acquired Loans

	Impaired loans with specific allowance										Impaired loans with no specific allowance
(in thousands)	Loan balance							Specific		Income	Loan balance							Income
		Book		Note		Average		allowance		recognized		Book		Note		Average		recognized
September 30, 2016
Residential 1-4 family	$	779	$	893	$	637	$	74	$	3	$	123	$	123	$	267	$	—
Home equity credit		—		—		—		—		—		—		—		—		—
Residential real estate		779		893		637		74		3		123		123		267		—
Commercial		1,146		1,557		577		82		111		1,809		2,268		2,085		158
Construction of commercial		—		—		—		—		—		258		272		259		—
Farm land		—		—		—		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—		—		—		—
Real estate secured		1,925		2,450		1,214		156		114		2,190		2,663		2,611		158
Commercial and industrial		—		—		100		—		—		—		—		24		—
Consumer		—		—		—		—		—		—		—		—		—
Totals	$	1,925	$	2,450	$	1,314	$	156	$	114	$	2,190	$	2,663	$	2,635	$	158

Business Activities Loans

	Impaired loans with specific allowance										Impaired loans with no specific allowance
(in thousands)	Loan balance							Specific		Income	Loan balance							Income
		Book		Note		Average		allowance		recognized		Book		Note		Average		recognized
December 31, 2015
Residential 1-4 family	$	7,482	$	8,094	$	6,213	$	610	$	109	$	2,628	$	2,770	$	3,043	$	82
Home equity lines of credit		535		659		176		68		6		184		199		611		2
Residential real estate		8,017		8,753		6,389		678		115		2,812		2,969		3,654		84
Commercial		3,131		3,405		2,629		113		113		1,142		1,393		2,130		12
Construction of commercial		122		128		—		1		—		—		—		127		6
Farm land		733		773		445		14		—		298		352		270		15
Vacant land		2,870		3,836		3,058		29		2		207		241		5		7
Real estate secured		14,873		16,895		12,521		835		230		4,459		4,955		6,186		124
Commercial and industrial		95		98		120		10		8		431		481		464		7
Consumer		—		—		—		—		—		80		108		—		—
Totals	$	14,968	$	16,993	$	12,641	$	845	$	238	$	4,970	$	5,544	$	6,650	$	131

Acquired Loans

	Impaired loans with specific allowance										Impaired loans with no specific allowance
(in thousands)	Loan balance							Specific		Income	Loan balance							Income
		Book		Note		Average		allowance		recognized		Book		Note		Average		recognized
December 31, 2015
Residential 1-4 family	$	599	$	716	$	176	$	79	$	—	$	177	$	177	$	436	$	4
Home equity lines of credit		—		—		—		—		—		—		—		—		—
Residential real estate		599		716		176		79		—		177		177		436		4
Commercial		675		826		557		107		61		2,067		2,843		2,097		10
Construction of commercial		—		—		—		—		—		262		273		138		16
Farm land		—		—		—		—		—		—		—		—		—
Vacant land		—		—		—		—		—		—		—		—		—
Real estate secured		1,274		1,542		733		186		61		2,506		3,293		2,671		30
Commercial and industrial		—		—		4		—		1		—		4		—		—
Consumer		—		—		—		—		—		—		—		—		—
Totals	$	1,274	$	1,542	$	737	$	186	$	62	$	2,506	$	3,297	$	2,671	$	30

(1) The table above reflects the book, note and specific allowance as of December 31, 2015, while the average balances and income recognized are for the nine months ended September 30, 2015.