7. LOANS

The loan portfolio classified by type and class as of the dates set forth were as follows:


	September 30, 2016
	Originated		Acquired		Total
	(Dollars in thousands)

Commercial & industrial	$	823,047	$	181,367	$	1,004,414
Real estate:
Owner occupied commercial real estate		249,827		137,205		387,032
Commercial real estate		761,788		347,854		1,109,642
Construction, land & land development		180,315		98,008		278,323
Residential mortgage		128,077		128,763		256,840
Consumer and other		9,005		2,362		11,367
Total loans held for investment	$	2,152,059	$	895,559	$	3,047,618

Total loans held for sale	$	38,934	$	-	$	38,934


	December 31, 2015
		Originated		Acquired		Total
		(Dollars in thousands)

Commercial & industrial	$	850,048	$	356,404	$	1,206,452
Real estate:
Owner occupied commercial real estate		188,908		164,981		353,889
Commercial real estate		521,887		382,228		904,115
Construction, land & land development		242,611		116,202		358,813
Residential mortgage		120,260		173,223		293,483
Consumer and other		9,843		4,074		13,917
Total loans held for investment	$	1,933,557	$	1,197,112	$	3,130,669

Total loans held for sale	$	384	$	-	$	384

The loan portfolio is comprised of three types, commercial and industrial loans, real estate loans and consumer and other loans. The real estate loans are further segregated into owner occupied commercial real estate, commercial real estate, which includes multi-family loans, construction, land and land development, which includes both commercial construction and loans for the construction of residential properties and residential mortgage, which includes first and second liens and home equity lines. Consumer and other loans includes various types of loans to consumers and overdrafts. Loans are further separated between loans originated by the Company and loans acquired.

Included in the loans held for investment balance was $18.3 million and $19.8 million of net deferred loan origination fees and unamortized premium and discount at September 30, 2016 and December 31, 2015, respectively. Also included in loans at September 30, 2016 and December 31, 2015 was $5.1 million and $13.4 million, respectively, in nonaccretable discount on acquired credit impaired loans. Accrued interest receivable on loans was $6.6 million and $7.3 million at September 30, 2016 and December 31, 2015, respectively. Consumer and other loans include overdrafts of $74 thousand and $560 thousand as of September 30, 2016 and December 31, 2015, respectively.

The loan portfolio consists of various types of loans made to borrowers principally located in the Houston and Dallas metropolitan areas. Although the portfolio is diversified and generally secured by various types of collateral, a substantial portion of its debtors’ ability to honor their obligations is dependent on local economic conditions. The risks created by this geographic concentration and our exposure to energy related borrowers have been considered by management in the determination of the adequacy of the allowance for loan losses.

Reserved-based energy loans outstanding represented approximately 0.9% and 4.2% of total funded loans as of September 30, 2016 and December 31, 2015, respectively. Energy related service industry loans represented approximately 3.4% and 5.2% of total funded loans as of September 30, 2016 and December 31, 2015, respectively. As of September 30, 2016, and December 31, 2015, $25.8 million and $32.3 million of reserved-based energy loans and $38.0 million and $291 thousand of energy related service industry loans were impaired, respectively. Management believes the allowance for loan losses is appropriate to cover estimated losses on loans at each balance sheet date.

Most of the Company’s activities are with customers located within the Texas cities of Houston, Dallas, Honey Grove, Austin and their respective surrounding areas. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy in the Houston and Dallas MSA’s. The Company does not have any significant concentration to any one industry or customer. As of September 30, 2016 and December 31, 2015, there were no concentrations of loans related to any single industry in excess of 10% of total loans.

Loan maturities and rate sensitivity of the loans held for investment, as of the date indicated, were as follows:


	September 30, 2016
	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years		Total
	(Dollars in thousands)

Commercial & industrial	$	418,147	$	549,666	$	36,601	$	1,004,414
Real estate:
Owner occupied commercial real estate		30,673		172,463		183,896		387,032
Commercial real estate		82,748		796,627		230,267		1,109,642
Construction, land & land development		93,302		138,864		46,157		278,323
Residential mortgage		23,489		59,847		173,504		256,840
Consumer and Other		7,915		2,602		850		11,367

Total loans held for investment	$	656,274	$	1,720,069	$	671,275	$	3,047,618

Fixed rate	$	68,238	$	472,925	$	112,488	$	653,651
Floating rate		588,036		1,247,144		558,787		2,393,967

Total loans held for investment	$	656,274	$	1,720,069	$	671,275	$	3,047,618

In the ordinary course of business, the Company has granted loans to certain directors, officers and their affiliates. In the opinion of management, all transactions entered into between the Bank and such related parties have been and are in the ordinary course of business, made on the same terms and conditions as similar transactions with unaffiliated persons.

An analysis of activity with respect to these related-party loans for the periods ended September 30, 2016 and December 31, 2015 was as follows:


	September 30,		December 31,
	2016		2015
	(Dollars in thousands)

Beginning balance	$	9,741	$	-
Additions (at Acquisition)		-		10,003
Advances		502		-
Repayments		(4,138)		(262)
Ending Balance	$	6,105	$	9,741

Acquired Loans — The outstanding principal balance and recorded investment in the total acquired loans from all completed acquisitions, as of the dates set forth, was as follows:


	September 30,		December 31,
	2016		2015
	(Dollars in thousands)

Credit impaired acquired loans:
Outstanding principal balance	$	42,265	$	60,554
Recorded investment		34,122		46,174
Discount, net	$	8,143	$	14,380

Other acquired loans:
Outstanding principal balance		867,193		1,162,068
Deferred fees, net		(201)		(162)
Recorded investment		861,437		1,150,938
Discount, net	$	5,555	$	10,968

Total acquired loans:
Outstanding principal balance		909,458		1,222,622
Deferred fees, net		(201)		(162)
Recorded investment		895,559		1,197,112
Discount, net	$	13,698	$	25,348

Changes in the accretable yield for credit impaired acquired loans for the periods indicated, were as follows:


	Nine Months Ended September 30,
	2016		2015
	(Dollars in thousands)

Balance at beginning of period	$	967	$	685
Reclassifications from nonaccretable discount		3,087		557
Accretion		(1,051)		(196)
Balance at period end	$	3,003	$	1,046

Purchased credit impaired loans are evaluated on an ongoing basis after acquisition. Reclassifications from nonaccretable discount to accretable yield are recorded based on the current estimates of the timing and amount of expected future cash flows.

Nonaccrual and Past Due Loans — When management doubts a borrower’s ability to meet payment obligations, which typically occurs when principal or interest payments are more than 90 days past due, the loans are placed on nonaccrual status.

The age analysis of loans, segregated by class, as of the dates set forth was as follows:


	September 30, 2016
	Loans Past Due and Still Accruing
	30 - 89 Days Past Due		90 Days or More Past Due		Total		Nonaccrual		Purchased Credit Impaired		Current		Total Loans
	(Dollars in thousands)

Originated Loans
Commercial & industrial	$	746	$	658	$	1,404	$	56,452	$	-	$	765,191	$	823,047
Real estate:
Owner occupied commercial real estate		726		-		726		1,454		-		247,647		249,827
Commercial real estate		-		-		-		2,095		-		759,693		761,788
Construction, land & land development		4,272		-		4,272		-		-		176,043		180,315
Residential mortgage		3,244		424		3,668		580		-		123,829		128,077
Consumer and other		96		-		96		119		-		8,790		9,005
Total originated loans	$	9,084	$	1,082	$	10,166	$	60,700	$	-	$	2,081,193	$	2,152,059

Acquired Loans
Commercial & industrial	$	1,963	$	24	$	1,987	$	25,642	$	4,778	$	148,960	$	181,367
Real estate:
Owner occupied commercial real estate		5,586		305		5,891		2,583		5,989		122,742		137,205
Commercial real estate		989		-		989		2,623		11,960		332,282		347,854
Construction, land & land development		460		2,214		2,674		358		8,331		86,645		98,008
Residential mortgage		322		25		347		1,534		3,064		123,818		128,763
Consumer and other		33		14		47		12		-		2,303		2,362
Total acquired loans	$	9,353	$	2,582	$	11,935	$	32,752	$	34,122	$	816,750	$	895,559
Total loans held for investment	$	18,437	$	3,664	$	22,101	$	93,452	$	34,122	$	2,897,943	$	3,047,618


	December 31, 2015
	Loans Past Due and Still Accruing
	30 - 89 Days Past Due		90 Days or More Past Due		Total		Nonaccrual		Purchased Credit Impaired		Current		Total Loans
	(Dollars in thousands)

Originated Loans
Commercial & industrial	$	2,064	$	25	$	2,089	$	34,205	$	-	$	813,754	$	850,048
Real estate:
Owner occupied commercial real estate		9,158		-		9,158		829		-		178,921		188,908
Commercial real estate		1,108		-		1,108		-		-		520,779		521,887
Construction, land & land development		181		-		181		472		-		241,958		242,611
Residential mortgage		890		-		890		197		-		119,173		120,260
Consumer and other		593		20		613		-		-		9,230		9,843
Total originated loans	$	13,994	$	45	$	14,039	$	35,703	$	-	$	1,883,815	$	1,933,557

Acquired Loans
Commercial & industrial	$	10,908	$	-	$	10,908	$	420	$	13,905	$	331,171	$	356,404
Real estate:
Owner occupied commercial real estate		741		-		741		-		7,149		157,091		164,981
Commercial real estate				-		-		1,590		12,288		368,350		382,228
Construction, land & land development		111		-		111		-		8,681		107,410		116,202
Residential mortgage		4,065		6		4,071		1,292		4,151		163,709		173,223
Consumer and other		52		1		53		-		-		4,021		4,074
Total acquired loans	$	15,877	$	7	$	15,884	$	3,302	$	46,174	$	1,131,752	$	1,197,112
Total loans held for investment	$	29,871	$	52	$	29,923	$	39,005	$	46,174	$	3,015,567	$	3,130,669

Impaired Loans — The following is a summary of information related to impaired, nonaccrual and restructured loans and accruing loans past due 90 days or more as of the dates set forth:


	September 30, 2016
	Originated		Acquired		Total
	(Dollars in thousands)

Nonaccrual loans	$	52,005	$	32,486	$	84,491
Accruing loans past due 90 days or more		1,082		2,582		3,664
Restructured loans - nonaccrual		8,695		266		8,961
Restructured loans - accruing		5,368		10		5,378
Total nonperforming loans	$	67,150	$	35,344	$	102,494


	December 31, 2015
	Originated		Acquired		Total
	(Dollars in thousands)

Nonaccrual loans	$	35,145	$	2,396	$	37,541
Accruing loans past due 90 days or more		45		7		52
Restructured loans - nonaccrual		558		906		1,464
Restructured loans - accruing		5,694		294		5,988
Total nonperforming loans	$	41,442	$	3,603	$	45,045

Based on an analysis of impaired loans at September 30, 2016 and December 31, 2015, an allowance of $11.6 million and $14.8 million, respectively, was allocated to impaired loans. The average recorded investment in impaired loans for the nine months ended September 30, 2016 and for the year ended December 31, 2015, was $71.3 million and $16.7 million, respectively. There was approximately $382 thousand and $39 thousand in interest recognized on impaired loans, for the three months ended September 30, 2016 and 2015, respectively. There was approximately $757 thousand and $324 thousand in interest recognized on impaired loans, for the nine months ended September 30, 2016 and 2015, respectively. Interest recognized includes interest accrued on restructured loans that are performing based on their restructured terms and interest collected on paid nonaccrual loans.

Impaired loans of $93.5 million and $39.0 million at September 30, 2016 and December 31, 2015 respectively, have been categorized by management as nonaccrual loans. This increase was due primarily to migration to nonperforming loans in the acquired and energy portfolios. Interest foregone on nonaccrual loans for the three months ended September 30, 2016 and 2015 was approximately $1.8 million and $83 thousand, respectively, and for the nine months ended September 30, 2016 and 2015 was approximately $3.4 million and $313 thousand, respectively.

The following tables present, for the periods indicated, the average recorded investment in impaired loans and the approximate amount of interest recognized on impaired loans. Interest recognized includes interest accrued on restructured loans that have performed based on their restructured terms and interest collected on nonaccrual loans that were paid in full during the period.


	Three Months Ended
	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)

Originated Loans
Commercial & industrial	$	62,932	$	38	$	8,878	$	5
Owner occupied commercial real estate		1,498		73		1,059		20
Commercial real estate		6,589		80		1,806		9
Construction, land & land development		-		-		492		-
Residential mortgage		575		-		76		-
Consumer and other		183		1		146		2
Total originated loans	$	71,777	$	192	$	12,457	$	36

Acquired Loans
Commercial & industrial	$	20,362	$	63	$	677	$	3
Owner occupied commercial real estate		3,029		-		-		-
Commercial real estate		2,304		48		899		-
Construction, land & land development		239		-		-		-
Residential mortgage		1,959		79		477		-
Consumer and other		9		-		-		-
Total acquired loans	$	27,902	$	190	$	2,053	$	3
Total	$	99,679	$	382	$	14,510	$	39


	Nine Months Ended
	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)

Originated Loans
Commercial & industrial	$	51,141	$	57	$	5,151	$	24
Owner occupied commercial real estate		1,030		73		1,173		20
Commercial real estate		5,718		241		1,246		13
Construction, land & land development		205		180		598		15
Residential mortgage		531		10		735		233
Consumer and other		135		5		170		8
Total originated loans	$	58,760	$	566	$	9,073	$	313

Acquired Loans
Commercial & industrial	$	7,372	$	63	$	354	$	4
Owner occupied commercial real estate		1,431		-		-		-
Commercial real estate		1,932		48		663		-
Construction, land & land development		79		-		-		-
Residential mortgage		1,691		80		300		7
Consumer and other		4		-		1		-
Total acquired loans	$	12,509	$	191	$	1,318	$	11
Total	$	71,269	$	757	$	10,391	$	324

The following tables present additional information regarding impaired loans that were individually evaluated for impairment as of the dates indicated:


	September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)

Originated Loans
With no related allowance recorded:
Commercial & industrial	$	15,106	$	15,151	$	-
Owner occupied commercial real estate		1,454		1,464		-
Commercial real estate		7,261		7,267		-
Residential mortgage		565		561		-
Consumer and other		102		102		-
Total with no related allowance recorded:	$	24,488	$	24,545	$	-

With an allowance recorded:
Commercial & industrial	$	41,447	$	41,682	$	8,765
Residential mortgage		14		14		14
Consumer and other		119		119		119
Total with an allowance recorded:	$	41,580	$	41,815	$	8,898
Total originated loans	$	66,068	$	66,360	$	8,898

Acquired Loans
With no related allowance recorded:
Commercial & industrial	$	9,190	$	9,195	$	-
Owner occupied commercial real estate		2,583		2,587		-
Commercial real estate		2,623		2,646		-
Construction, land & land development		358		358		-
Residential mortgage		1,534		1,525		-
Consumer and other		10		10		-
Total with no related allowance recorded:	$	16,298	$	16,321	$	-

With an allowance recorded:
Commercial & industrial	$	16,462	$	16,535	$	2,684
Consumer and other		2		2		2
Total with an allowance recorded:	$	16,464	$	16,537	$	2,686
Total acquired loans	$	32,762	$	32,858	$	2,686

Total:
Commercial & industrial	$	82,205	$	82,563	$	11,449
Real estate		16,392		16,422		14
Consumer and other		233		233		121
Total	$	98,830	$	99,218	$	11,584


	December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)

Originated Loans
With no related allowance recorded:
Commercial & industrial	$	1,898	$	1,899	$	-
Owner occupied commercial real estate		829		834		-
Commercial real estate		5,356		5,356		-
Construction, land & land development		268		268		-
Residential mortgage		183		183		-
Consumer and other		174		174		-
Total with no related allowance recorded:	$	8,708	$	8,714	$	-

With an allowance recorded:
Commercial & industrial	$	32,471	$	32,510	$	14,733
Construction, land & land development		204		204		92
Residential mortgage		14		15		14
Total with an allowance recorded:	$	32,689	$	32,729	$	14,839
Total originated loans	$	41,397	$	41,443	$	14,839

Acquired Loans
With no related allowance recorded:
Commercial & industrial	$	714	$	714	$	-
Commercial real estate		1,590		1,607		-
Residential mortgage		1,240		1,235		-
Total with no related allowance recorded:	$	3,544	$	3,556	$	-

With an allowance recorded:
Residential mortgage	$	52	$	52	$	1
Total with an allowance recorded:	$	52	$	52	$	1
Total acquired loans	$	3,596	$	3,608	$	1

Total:
Commercial & Industrial	$	35,083	$	35,123	$	14,733
Real Estate		9,736		9,754		107
Consumer and other		174		174		-
Total	$	44,993	$	45,051	$	14,840

Credit Quality — Internally assigned risk grades for loans are defined as follows:

Grade 1 (Highest Quality — No Apparent Risk) — This category includes loans to borrowers of unquestioned credit standing which are secured by readily marketable collateral of undisputed value, with appropriate margin. It also includes loans to borrowing entities with: excellent capitalization, liquidity and earnings levels; quality management; positive financial trends; and favorable industry conditions.

Grade 2 (Good Quality — Minimal Risk) — This category includes loans to investment grade entities with: good liquidity and financial condition; nominal term debt; strong debt service capability; solid management; and quality financial information. These loans are usually secured with current assets, but may be unsecured. Alternative financing from other lenders is generally available to these borrowers.

Grade 3 (Satisfactory Quality — Acceptable Risk — Tier One) — This category includes loans to entities maintaining fair liquidity and acceptable financial conditions. The level of term debt is moderate, with adequate debt service capability. Earnings may be volatile, but borrowers in this category generally do not show a loss within the last three years. Primary debt service must be supported by identified secondary repayment sources or by guarantors with adequate and proven responsibility and capacity.

Grade 4 (Satisfactory Quality — Acceptable Risk — Tier Two) — This category includes loans to borrowers maintaining acceptable financial conditions; however, borrowers may exhibit certain characteristics of leverage or asset dependency that reflect a greater level of risk than Tier One credits. This category may also include borrowers exhibiting explainable interim losses within the previous three years and/or industry characteristics that warrant frequent monitoring.

Grade 5 (Monitored Loans) — This category includes loans with trends or characteristics which, if continued, could result in impaired repayment ability. The borrower may exhibit a low degree of liquidity and relatively high leverage, erratic earnings history (including the possibility of a reported loss in the past four years), significant term debt and a nominal cushion for debt service capacity. Loans in this category may also include financing to start-up borrowers backed by experienced management and significant capital investment or established companies in distressed industry conditions.

Grade 6 (Other Assets Especially Mentioned) — This category includes loans which have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or a weakening of the Company’s credit position at some future date. Grade 6 loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Grade 7 (Substandard — Accruing) — This category includes loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any, or loans with identified weaknesses but where there is sufficient collateral value and/or cash flow coverage. This category includes loans that: (1) may require a secondary source of repayment (liquidation of collateral or repayment by a guarantor); (2) lack current financial information or appraisals; and/or (3) have collateral deficiencies such that the Company would be in an unsecured position with an obligor not deserving unsecured credit. This category may also include borrowers with operating losses in recent periods.

Grade 8 (Substandard — Nonaccrual) — This category includes loans (1) with the same basic characteristics as Grade 7 loans and (2) has also meet the Company’s criteria for nonaccrual status, but do not warrant a Grade 9 or Grade 10 classification.

Grade 9 (Doubtful/Exposure) — This category includes loans with all the Grade 7 or 8 characteristics but with weaknesses that make collection (or liquidation) highly questionable and improbable.

Grade 10 (Loss) — This category includes loans which are considered uncollectible, or of such little value that they should no longer be carried as an asset of the Company.

The credit risk profile of loans aggregated by class and internally assigned risk grades as of the dates set forth were as follows:


	September 30, 2016
	Grade 1 - 4 (Pass)		Grade 5 (Watch)		Grade 6 (Special Mention)		Grade 7 (Substandard-Accrual)		Grade 8 (Substandard-Nonaccrual)		Grade 9 (Doubtful)			PCI	Total
	(Dollars in thousands)

Originated Loans
Commercial & Industrial	$	722,111	$	14,321	$	24,915	$	5,248	$	50,192	$	6,260	$	-	$	823,047
Owner Occupied Commercial Real Estate		233,939		9,999		1,764		2,671		1,454		-		-		249,827
Commercial Real Estate		664,406		32,704		47,949		14,634		2,095		-		-		761,788
Construction & Land Development		167,613		2,108		9,392		1,202		-		-		-		180,315
Residential Mortgage		120,251		5,610		1,444		192		580		-		-		128,077
Other Consumer		8,694		95		58		39		119		-		-		9,005
Total originated loans	$	1,917,014	$	64,837	$	85,522	$	23,986	$	54,440	$	6,260	$	-	$	2,152,059

Acquired Loans
Commercial & Industrial	$	90,425	$	4,967	$	17,252	$	38,303	$	25,642	$	-	$	4,778	$	181,367
Owner Occupied Commercial Real Estate		100,627		2,571		8,670		16,765		2,583				5,989		137,205
Commercial Real Estate		286,005		21,418		21,180		4,668		2,623				11,960		347,854
Construction & Land Development		74,105		12,612		-		2,602		358				8,331		98,008
Residential Mortgage		123,678		109		218		160		1,534				3,064		128,763
Other Consumer		2,131		5		214		-		12				-		2,362
Total acquired loans	$	676,971	$	41,682	$	47,534	$	62,498	$	32,752	$	-	$	34,122	$	895,559

Total loans	$	2,593,985	$	106,519	$	133,056	$	86,484	$	87,192	$	6,260	$	34,122	$	3,047,618


	December 31, 2015
	Grade 1 - 4 (Pass)		Grade 5 (Watch)		Grade 6 (Special Mention)		Grade 7 (Substandard-Accrual)		Grade 8 (Substandard-Nonaccrual)		Grade 9 (Doubtful)			PCI	Total
	(Dollars in thousands)

Originated Loans
Commercial & Industrial	$	715,287	$	27,938	$	26,745	$	45,873	$	26,856	$	7,349	$	-	$	850,048
Owner Occupied Commercial Real Estate		182,873		737		3,742		727		829		-		-		188,908
Commercial Real Estate		470,838		26,627		7,655		16,767		-		-		-		521,887
Construction & Land Development		240,713		1,426		-		-		472		-		-		242,611
Residential Mortgage		119,153		-		882		28		197		-		-		120,260
Other Consumer		9,569		99		116		59		-		-		-		9,843
Total originated loans	$	1,738,433	$	56,827	$	39,140	$	63,454	$	28,354	$	7,349	$	-	$	1,933,557

Acquired Loans
Commercial & Industrial	$	285,229	$	20,146	$	19,324	$	17,380	$	420	$	-	$	13,905	$	356,404
Owner Occupied Commercial Real Estate		139,950		3,959		12,372		1,551		-		-		7,149		164,981
Commercial Real Estate		327,338		22,648		12,591		5,773		1,590		-		12,288		382,228
Construction & Land Development		92,556		13,677		1,288		-		-		-		8,681		116,202
Residential Mortgage		165,696		1,222		226		636		1,292		-		4,151		173,223
Other Consumer		3,674		400		-		-		-		-		-		4,074
Total acquired loans	$	1,014,443	$	62,052	$	45,801	$	25,340	$	3,302	$	-	$	46,174	$	1,197,112

Total loans	$	2,752,876	$	118,879	$	84,941	$	88,794	$	31,656	$	7,349	$	46,174	$	3,130,669

Troubled Debt Restructurings — The restructuring of a loan is considered a troubled debt restructuring if both the borrower is experiencing financial difficulties and the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.

Troubled debt restructurings identified during the periods indicated were as follows:


	Nine Months Ended
	September 30, 2016					September 30, 2015
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Recorded Investment as of September 30, 2016		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Recorded Investment as of September 30, 2015
	(Dollars in thousands)

Commercial & industrial	3	$	8,883	$	8,592	6	$	1,657	$	886
Commercial real estate	-		-		-	1		5,417		5,417
Total	3	$	8,883	$	8,592	7	$	7,074	$	6,303

The modifications primarily relate to extending the maturity date of the loans, which includes loans modified post-bankruptcy. The Company did not forgive any principal or interest on the restructured loans. For the nine months ended September 30, 2016, the Company added $8.8 in new troubled debt restructuring of which $8.6 million was still outstanding on September 30, 2016. The decrease in outstanding balance was primarily due to payments received. For the nine months ended September 30, 2015, the Company added $7.1 million in new troubled debt restructurings of which $6.3 million was still outstanding on September 30, 2015. The decrease in outstanding balance was primarily due to payments received. Troubled debt restructurings are individually evaluated for impairment.

Troubled debt restructurings are individually evaluated for impairment. The allowance for loan losses included specific reserves of $1.9 million related to $2.5 million of these loans at September 30, 2016.