XML 22 R11.htm IDEA: XBRL DOCUMENT v3.4.0.3
Loans
 3 Months Ended
Mar. 31, 2016
Loans [Abstract]  
Loans
4.  Loans

Our assessment of the allowance for loan losses is based on an evaluation of the loan portfolio, recent loss experience, current economic conditions and other pertinent factors.

An analysis of the allowance for loan losses by portfolio segment for the three months ended March 31, follows:

  
Commercial
  
Mortgage
  
Installment
  
Payment
Plan
Receivables
  
Subjective
Allocation
  
Total
 
  
(In thousands)
 
2016
                  
Balance at beginning of period
 
$
5,670
  
$
10,391
  
$
1,181
  
$
56
  
$
5,272
  
$
22,570
 
Additions (deductions)                        
Provision for loan losses
  
(404
)
  
(279
)
  
65
   
(3
)
  
91
   
(530
)
Recoveries credited to allowance
  
356
   
382
   
221
   
-
   
-
   
959
 
Loans charged against the allowance
  
-
   
(198
)
  
(306
)
  
-
   
-
   
(504
)
Balance at end of period
 
$
5,622
  
$
10,296
  
$
1,161
  
$
53
  
$
5,363
  
$
22,495
 
                         
2015
                        
Balance at beginning of period
 
$
5,445
  
$
13,444
  
$
1,814
  
$
64
  
$
5,223
  
$
25,990
 
Additions (deductions)                        
Provision for loan losses
  
328
   
(733
)
  
(85
)
  
(2
)
  
(167
)
  
(659
)
Recoveries credited to allowance
  
433
   
238
   
319
   
-
   
-
   
990
 
Loans charged against the allowance
  
(290
)
  
(868
)
  
(484
)
  
-
   
-
   
(1,642
)
Balance at end of period
 
$
5,916
  
$
12,081
  
$
1,564
  
$
62
  
$
5,056
  
$
24,679
 
 
Allowance for loan losses and recorded investment in loans by portfolio segment follows:

  
Commercial
  
Mortgage
  
Installment
  
Payment
Plan
Receivables
  
Subjective
Allocation
  
Total
 
  
(In thousands)
 
March 31, 2016
                  
Allowance for loan losses
                  
Individually evaluated for impairment
 
$
2,791
  
$
7,651
  
$
408
  
$
-
  
$
-
  
$
10,850
 
Collectively evaluated for impairment
  
2,831
   
2,645
   
753
   
53
   
5,363
   
11,645
 
Total ending allowance balance
 
$
5,622
  
$
10,296
  
$
1,161
  
$
53
  
$
5,363
  
$
22,495
 
                         
Loans
                        
Individually evaluated for impairment
 
$
17,585
  
$
64,899
  
$
5,670
  
$
-
      
$
88,154
 
Collectively evaluated for impairment
  
754,908
   
441,354
   
226,789
   
32,305
       
1,455,356
 
Total loans recorded investment
  
772,493
   
506,253
   
232,459
   
32,305
       
1,543,510
 
Accrued interest included in recorded investment
  
1,607
   
2,249
   
672
   
-
       
4,528
 
Total loans
 
$
770,886
  
$
504,004
  
$
231,787
  
$
32,305
      
$
1,538,982
 
                         
December 31, 2015
                        
Allowance for loan losses
                        
Individually evaluated for impairment
 
$
2,708
  
$
7,818
  
$
457
  
$
-
  
$
-
  
$
10,983
 
Collectively evaluated for impairment
  
2,962
   
2,573
   
724
   
56
   
5,272
   
11,587
 
Total ending allowance balance
 
$
5,670
  
$
10,391
  
$
1,181
  
$
56
  
$
5,272
  
$
22,570
 
                         
Loans
                        
Individually evaluated for impairment
 
$
16,868
  
$
66,375
  
$
5,888
  
$
-
      
$
89,131
 
Collectively evaluated for impairment
  
733,399
   
436,349
   
226,409
   
34,599
       
1,430,756
 
Total loans recorded investment
  
750,267
   
502,724
   
232,297
   
34,599
       
1,519,887
 
Accrued interest included in recorded investment
  
1,869
   
2,270
   
698
   
-
       
4,837
 
Total loans
 
$
748,398
  
$
500,454
  
$
231,599
  
$
34,599
      
$
1,515,050
 
 
Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) follow:

  
90+ and
Still
Accruing
  
Non-
Accrual
  
Total Non-
Performing
Loans
 
  
(In thousands)
 
March 31, 2016
         
Commercial
         
Income producing - real estate
 
$
-
  
$
1,117
  
$
1,117
 
Land, land development and construction - real estate
  
-
   
168
   
168
 
Commercial and industrial
  
147
   
2,304
   
2,451
 
Mortgage
            
1-4 family
  
-
   
4,795
   
4,795
 
Resort lending
  
-
   
805
   
805
 
Home equity - 1st lien
  
-
   
154
   
154
 
Home equity - 2nd lien
  
-
   
268
   
268
 
Purchased loans
  
3
   
2
   
5
 
Installment
            
Home equity - 1st lien
  
-
   
79
   
79
 
Home equity - 2nd lien
  
-
   
344
   
344
 
Loans not secured by real estate
  
-
   
384
   
384
 
Other
  
-
   
2
   
2
 
Payment plan receivables
            
Full refund
  
-
   
2
   
2
 
Partial refund
  
-
   
-
   
-
 
Other
  
-
   
1
   
1
 
Total recorded investment
 
$
150
  
$
10,425
  
$
10,575
 
Accrued interest included in recorded investment
 
$
3
  
$
-
  
$
3
 
December 31, 2015
            
Commercial
            
Income producing - real estate
 
$
-
  
$
1,027
  
$
1,027
 
Land, land development and construction - real estate
  
49
   
401
   
450
 
Commercial and industrial
  
69
   
2,028
   
2,097
 
Mortgage
            
1-4 family
  
-
   
4,744
   
4,744
 
Resort lending
  
-
   
1,094
   
1,094
 
Home equity - 1st lien
  
-
   
187
   
187
 
Home equity - 2nd lien
  
-
   
147
   
147
 
Purchased loans
  
-
   
2
   
2
 
Installment
            
Home equity - 1st lien
  
-
   
106
   
106
 
Home equity - 2nd lien
  
-
   
443
   
443
 
Loans not secured by real estate
  
-
   
421
   
421
 
Other
  
-
   
2
   
2
 
Payment plan receivables
            
Full refund
  
-
   
2
   
2
 
Partial refund
  
-
   
2
   
2
 
Other
  
-
   
1
   
1
 
Total recorded investment
 
$
118
  
$
10,607
  
$
10,725
 
Accrued interest included in recorded investment
 
$
2
  
$
-
  
$
2
 
 
An aging analysis of loans by class follows:

  
Loans Past Due
  
Loans not
  
Total
 
  
30-59 days
  
60-89 days
  
90+ days
  
Total
  
Past Due
  
Loans
 
  
(In thousands)
 
March 31, 2016
                  
Commercial
                  
Income producing - real estate
 
$
337
  
$
-
  
$
776
  
$
1,113
  
$
310,604
  
$
311,717
 
Land, land development and construction - real estate
  
-
   
-
   
168
   
168
   
40,795
   
40,963
 
Commercial and industrial
  
354
   
192
   
229
   
775
   
419,038
   
419,813
 
Mortgage
                        
1-4 family
  
2,505
   
662
   
4,795
   
7,962
   
275,295
   
283,257
 
Resort lending
  
677
   
-
   
805
   
1,482
   
111,434
   
112,916
 
Home equity - 1st lien
  
66
   
-
   
154
   
220
   
26,024
   
26,244
 
Home equity - 2nd lien
  
235
   
287
   
268
   
790
   
51,620
   
52,410
 
Purchased loans
  
12
   
1
   
5
   
18
   
31,408
   
31,426
 
Installment
                        
Home equity - 1st lien
  
529
   
176
   
79
   
784
   
15,429
   
16,213
 
Home equity - 2nd lien
  
215
   
133
   
344
   
692
   
18,367
   
19,059
 
Loans not secured by real estate
  
386
   
108
   
384
   
878
   
194,202
   
195,080
 
Other
  
3
   
11
   
2
   
16
   
2,091
   
2,107
 
Payment plan receivables
                        
Full refund
  
408
   
65
   
2
   
475
   
17,609
   
18,084
 
Partial refund
  
303
   
61
   
-
   
364
   
6,197
   
6,561
 
Other
  
154
   
3
   
1
   
158
   
7,502
   
7,660
 
Total recorded investment
 
$
6,184
  
$
1,699
  
$
8,012
  
$
15,895
  
$
1,527,615
  
$
1,543,510
 
Accrued interest included in recorded investment
 
$
56
  
$
21
  
$
3
  
$
80
  
$
4,448
  
$
4,528
 
                         
December 31, 2015
                        
Commercial
                        
Income producing - real estate
 
$
203
  
$
209
  
$
647
  
$
1,059
  
$
305,155
  
$
306,214
 
Land, land development and construction - real estate
  
-
   
-
   
252
   
252
   
44,231
   
44,483
 
Commercial and industrial
  
785
   
16
   
151
   
952
   
398,618
   
399,570
 
Mortgage
                        
1-4 family
  
1,943
   
640
   
4,744
   
7,327
   
272,298
   
279,625
 
Resort lending
  
307
   
-
   
1,094
   
1,401
   
114,619
   
116,020
 
Home equity - 1st lien
  
50
   
-
   
187
   
237
   
22,327
   
22,564
 
Home equity - 2nd lien
  
439
   
54
   
147
   
640
   
50,618
   
51,258
 
Purchased loans
  
9
   
1
   
2
   
12
   
33,245
   
33,257
 
Installment
                        
Home equity - 1st lien
  
315
   
107
   
106
   
528
   
16,707
   
17,235
 
Home equity - 2nd lien
  
231
   
149
   
443
   
823
   
19,727
   
20,550
 
Loans not secured by real estate
  
567
   
83
   
421
   
1,071
   
191,262
   
192,333
 
Other
  
15
   
3
   
2
   
20
   
2,159
   
2,179
 
Payment plan receivables
                        
Full refund
  
492
   
62
   
2
   
556
   
21,294
   
21,850
 
Partial refund
  
415
   
228
   
2
   
645
   
5,834
   
6,479
 
Other
  
110
   
3
   
1
   
114
   
6,156
   
6,270
 
Total recorded investment
 
$
5,881
  
$
1,555
  
$
8,201
  
$
15,637
  
$
1,504,250
  
$
1,519,887
 
Accrued interest included in recorded investment
 
$
53
  
$
17
  
$
2
  
$
72
  
$
4,765
  
$
4,837
 
 
Impaired loans are as follows :

  
March 31, 2016
  
December 31, 2015
 
Impaired loans with no allocated allowance
 
(In thousands)
 
TDR
 
$
2,368
  
$
2,518
 
Non - TDR
  
168
   
203
 
Impaired loans with an allocated allowance
        
TDR - allowance based on collateral
  
4,683
   
4,810
 
TDR - allowance based on present value cash flow
  
80,009
   
81,002
 
Non - TDR - allowance based on collateral
  
623
   
260
 
Non - TDR - allowance based on present value cash flow
  
-
   
-
 
Total impaired loans
 
$
87,851
  
$
88,793
 
         
Amount of allowance for loan losses allocated
        
TDR - allowance based on collateral
 
$
2,531
  
$
2,436
 
TDR - allowance based on present value cash flow
  
8,135
   
8,471
 
Non - TDR - allowance based on collateral
  
184
   
76
 
Non - TDR - allowance based on present value cash flow
  
-
   
-
 
Total amount of allowance for loan losses allocated
 
$
10,850
  
$
10,983
 
 
Impaired loans by class  are as follows (1):

  
March 31, 2016
  
December 31, 2015
 
       
Recorded
Investment
      
Unpaid
Principal
Balance
       
Related
Allowance
       
Recorded
Investment
      
Unpaid
Principal
Balance
       
Related
Allowance
   
With no related allowance recorded:
 
(In thousands)
    
Commercial
                  
Income producing - real estate
 
$
785
  
$
1,030
  
$
-
  
$
641
  
$
851
  
$
-
 
Land, land development & construction-real estate
  
537
   
1,112
   
-
   
818
   
1,393
   
-
 
Commercial and industrial
  
1,218
   
1,216
   
-
   
1,245
   
1,241
   
-
 
Mortgage
                        
1-4 family
  
-
   
140
   
-
   
23
   
183
   
-
 
Resort lending
  
-
   
-
   
-
   
-
   
-
   
-
 
Home equity - 1st lien
  
-
   
-
   
-
   
-
   
-
   
-
 
Home equity - 2nd lien
  
-
   
-
   
-
   
-
   
-
   
-
 
Installment
                        
Home equity - 1st lien
  
1
   
75
   
-
   
-
   
76
   
-
 
Home equity - 2nd lien
  
14
   
13
   
-
   
-
   
-
   
-
 
Loans not secured by real estate
  
-
   
-
   
-
   
-
   
-
   
-
 
Other
  
-
   
-
   
-
   
-
   
-
   
-
 
   
2,555
   
3,586
   
-
   
2,727
   
3,744
   
-
 
With an allowance recorded:
                        
Commercial
                        
Income producing - real estate
  
8,234
   
9,061
   
548
   
8,377
   
9,232
   
516
 
Land, land development & construction-real estate
  
1,484
   
1,484
   
95
   
1,690
   
1,778
   
296
 
Commercial and industrial
  
5,327
   
5,592
   
2,148
   
4,097
   
4,439
   
1,896
 
Mortgage
                        
1-4 family
  
46,608
   
48,532
   
4,976
   
47,792
   
49,808
   
5,132
 
Resort lending
  
17,929
   
17,963
   
2,654
   
18,148
   
18,319
   
2,662
 
Home equity - 1st lien
  
243
   
247
   
12
   
168
   
172
   
9
 
Home equity - 2nd lien
  
119
   
201
   
9
   
244
   
325
   
15
 
Installment
                        
Home equity - 1st lien
  
2,287
   
2,421
   
130
   
2,364
   
2,492
   
143
 
Home equity - 2nd lien
  
2,793
   
2,807
   
239
   
2,929
   
2,951
   
271
 
Loans not secured by real estate
  
569
   
641
   
38
   
587
   
658
   
42
 
Other
  
6
   
6
   
1
   
8
   
8
   
1
 
   
85,599
   
88,955
   
10,850
   
86,404
   
90,182
   
10,983
 
Total
                        
Commercial
                        
Income producing - real estate
  
9,019
   
10,091
   
548
   
9,018
   
10,083
   
516
 
Land, land development & construction-real estate
  
2,021
   
2,596
   
95
   
2,508
   
3,171
   
296
 
Commercial and industrial
  
6,545
   
6,808
   
2,148
   
5,342
   
5,680
   
1,896
 
Mortgage
                        
1-4 family
  
46,608
   
48,672
   
4,976
   
47,815
   
49,991
   
5,132
 
Resort lending
  
17,929
   
17,963
   
2,654
   
18,148
   
18,319
   
2,662
 
Home equity - 1st lien
  
243
   
247
   
12
   
168
   
172
   
9
 
Home equity - 2nd lien
  
119
   
201
   
9
   
244
   
325
   
15
 
Installment
                        
Home equity - 1st lien
  
2,288
   
2,496
   
130
   
2,364
   
2,568
   
143
 
Home equity - 2nd lien
  
2,807
   
2,820
   
239
   
2,929
   
2,951
   
271
 
Loans not secured by real estate
  
569
   
641
   
38
   
587
   
658
   
42
 
Other
  
6
   
6
   
1
   
8
   
8
   
1
 
Total
 
$
88,154
  
$
92,541
  
$
10,850
  
$
89,131
  
$
93,926
  
$
10,983
 
                         
Accrued interest included in recorded investment
 
$
303
          
$
338
         

(1) There were no impaired payment plan receivables or purchased mortgage loans at March 31, 2016 or December 31, 2015.
 
Average recorded investment in and interest income earned on impaired loans by class for the three month periods ending March 31, follows (1):

  
2016
  
2015
 
  
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
 
(In thousands)
 
Commercial
            
Income producing - real estate
 
$
713
  
$
2
  
$
5,848
  
$
53
 
Land, land development & construction-real estate
  
678
   
7
   
1,041
   
34
 
Commercial and industrial
  
1,232
   
21
   
2,768
   
37
 
Mortgage
                
1-4 family
  
12
   
1
   
13
   
-
 
Resort lending
  
-
   
-
   
31
   
-
 
Home equity line of credit - 1st lien
  
-
   
-
   
-
   
-
 
Home equity line of credit - 2nd lien
  
-
   
-
   
-
   
-
 
Installment
                
Home equity installment - 1st lien
  
1
   
1
   
-
   
-
 
Home equity installment - 2nd lien
  
7
   
-
   
-
   
-
 
Loans not secured by real estate
  
-
   
-
   
-
   
-
 
Other
  
-
   
-
   
-
   
-
 
   
2,643
   
32
   
9,701
   
124
 
With an allowance recorded:
                
Commercial
                
Income producing - real estate
  
8,306
   
107
   
12,849
   
157
 
Land, land development & construction-real estate
  
1,587
   
13
   
2,709
   
14
 
Commercial and industrial
  
4,712
   
23
   
8,177
   
66
 
Mortgage
                
1-4 family
  
47,200
   
502
   
52,451
   
551
 
Resort lending
  
18,039
   
160
   
18,632
   
171
 
Home equity line of credit - 1st lien
  
206
   
2
   
162
   
2
 
Home equity line of credit - 2nd lien
  
182
   
1
   
123
   
2
 
Installment
                
Home equity installment - 1st lien
  
2,326
   
42
   
2,691
   
50
 
Home equity installment - 2nd lien
  
2,861
   
44
   
3,174
   
51
 
Loans not secured by real estate
  
578
   
9
   
694
   
10
 
Other
  
7
   
-
   
12
   
-
 
   
86,004
   
903
   
101,674
   
1,074
 
Total
                
Commercial
                
Income producing - real estate
  
9,019
   
109
   
18,697
   
210
 
Land, land development & construction-real estate
  
2,265
   
20
   
3,750
   
48
 
Commercial and industrial
  
5,944
   
44
   
10,945
   
103
 
Mortgage
                
1-4 family
  
47,212
   
503
   
52,464
   
551
 
Resort lending
  
18,039
   
160
   
18,663
   
171
 
Home equity line of credit - 1st lien
  
206
   
2
   
162
   
2
 
Home equity line of credit - 2nd lien
  
182
   
1
   
123
   
2
 
Installment
                
Home equity installment - 1st lien
  
2,327
   
43
   
2,691
   
50
 
Home equity installment - 2nd lien
  
2,868
   
44
   
3,174
   
51
 
Loans not secured by real estate
  
578
   
9
   
694
   
10
 
Other
  
7
   
-
   
12
   
-
 
Total
 
$
88,647
  
$
935
  
$
111,375
  
$
1,198
 

(1)There were no impaired payment plan receivables or purchased mortgage loans during the three month periods ended March 31, 2016 and 2015, respectively.
 
Our average investment in impaired loans was approximately $88.6 million and $111.4 million for the three-month periods ended March 31, 2016 and 2015, respectively.  Cash receipts on impaired loans on non-accrual status are generally applied to the principal balance.  Interest income recognized on impaired loans during the three months ending March 31, 2016 and 2015, was approximately $0.9 million and $1.2 million, respectively.

Troubled debt restructurings follow:

  
March 31, 2016
 
  
Commercial
  
Retail
   
Total
 
  
(In thousands)
 
Performing TDRs
 
$
13,950
  
$
66,619
   
$
80,569
 
Non-performing TDRs(1)
  
2,798
   
3,693
(2)
  
6,491
 
Total
 
$
16,748
  
$
70,312
   
$
87,060
 
 
  
December 31, 2015
 
  
Commercial
  
Retail
   
Total
 
  
(In thousands)
 
Performing TDRs
 
$
13,318
  
$
68,194
   
$
81,512
 
Non-performing TDRs(1)
  
3,041
   
3,777
(2)
  
6,818
 
Total
 
$
16,359
  
$
71,971
   
$
88,330
 
 
(1)Included in non-performing loans table above.
(2)Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.

We allocated $10.7 million and $10.9 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2016 and December 31, 2015, respectively.

During the three months ended March 31, 2016 and 2015, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans generally included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan have generally been for periods ranging from 9 months to 36 months but have extended to as much as 480 months in certain circumstances. Modifications involving an extension of the maturity date have generally been for periods ranging from 1 month to 60 months but have extended to as much as 230 months in certain circumstances.
 
Loans that have been classified as troubled debt restructurings during the three-month periods ended March 31 follow:

  
Number of
Contracts
  
Pre-modification
Recorded
Balance
  
Post-modification
Recorded
Balance
 
  (Dollars in thousands) 
2016
         
Commercial
         
Income producing - real estate
  
2
  
$
110
  
$
110
 
Land, land development & construction-real estate
  
-
   
-
   
-
 
Commercial and industrial
  
4
   
1,758
   
1,758
 
Mortgage
            
1-4 family
  
2
   
83
   
153
 
Resort lending
  
1
   
116
   
117
 
Home equity - 1st lien
  
1
   
107
   
78
 
Home equity - 2nd lien
  
-
   
-
   
-
 
Installment
            
Home equity - 1st lien
  
1
   
30
   
31
 
Home equity - 2nd lien
  
2
   
55
   
56
 
Loans not secured by real estate
  
-
   
-
   
-
 
Other
  
-
   
-
   
-
 
Total
  
13
  
$
2,259
  
$
2,303
 
             
2015
            
Commercial
            
Income producing - real estate
  
1
  
$
156
  
$
164
 
Land, land development & construction-real estate
  
-
   
-
   
-
 
Commercial and industrial
  
2
   
236
   
234
 
Mortgage
            
1-4 family
  
5
   
1,005
   
805
 
Resort lending
  
-
   
-
   
-
 
Home equity - 1st lien
  
-
   
-
   
-
 
Home equity - 2nd lien
  
-
   
-
   
-
 
Installment
            
Home equity - 1st lien
  
4
   
167
   
140
 
Home equity - 2nd lien
  
-
   
-
   
-
 
Loans not secured by real estate
  
-
   
-
   
-
 
Other
  
-
   
-
   
-
 
Total
  
12
  
$
1,564
  
$
1,343
 

The troubled debt restructurings described above for 2016 increased the allowance for loan losses by $0.06 million and resulted in zero charge offs while the troubled debt restructurings described above for 2015 increased the allowance for loan losses by $0.03 million and resulted in zero charge offs.
 
Loans that have been classified as troubled debt restructurings during the past twelve months and that have subsequently defaulted during the three-month periods ended March 31 follow:

  
Number of
Contracts
  
Recorded
Balance
 
  
(Dollars in thousands)
 
2016
      
Commercial
      
Income producing - real estate
  
-
  
$
-
 
Land, land development & construction-real estate
  
-
   
-
 
Commercial and industrial
  
-
   
-
 
Mortgage
        
1-4 family
  
-
   
-
 
Resort lending
  
-
   
-
 
Home equity - 1st lien
  
-
   
-
 
Home equity - 2nd lien
  
-
   
-
 
Installment
        
Home equity - 1st lien
  
-
   
-
 
Home equity - 2nd lien
  
-
   
-
 
Loans not secured by real estate
  
-
   
-
 
Other
  
-
   
-
 
   
-
  
$
-
 
         
2015
        
Commercial
        
Income producing - real estate
  
-
  
$
-
 
Land, land development & construction-real estate
  
-
   
-
 
Commercial and industrial
  
1
   
91
 
Mortgage
        
1-4 family
  
-
   
-
 
Resort lending
  
-
   
-
 
Home equity - 1st lien
  
-
   
-
 
Home equity - 2nd lien
  
-
   
-
 
Installment
        
Home equity - 1st lien
  
-
   
-
 
Home equity - 2nd lien
  
-
   
-
 
Loans not secured by real estate
  
-
   
-
 
Other
  
-
   
-
 
   
1
  
$
91
 

A loan is considered to be in payment default generally once it is 90 days contractually past due under the modified terms.

There were no troubled debt restructurings that subsequently defaulted in 2016 while the troubled debt restructurings that subsequently defaulted described above for 2015 had no impact on the balance of the allowance for loan losses and resulted in zero charge offs.

The terms of certain other loans were modified during the three months ended March 31, 2016 and 2015 in a manner that did not meet the definition of a troubled debt restructuring.  The modification of these loans could have included modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.
 
In order to determine whether a borrower is experiencing financial difficulty, we perform an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under our internal underwriting policy.

Credit Quality Indicators – As part of our on on-going monitoring of the credit quality of our loan portfolios, we track certain credit quality indicators including (a) weighted-average risk grade of commercial loans, (b) the level of classified commercial loans, (c) credit scores of mortgage and installment loan borrowers, (d) financial performance of certain counterparties for payment plan receivables and (e) delinquency history and non-performing loans.

For commercial loans, we use a loan rating system that is similar to those employed by state and federal banking regulators. Loans are graded on a scale of 1 to 12. A description of the general characteristics of the ratings follows:

Rating 1 through 6: These loans are generally referred to as our “non-watch” commercial credits that include very high or exceptional credit fundamentals through acceptable credit fundamentals.

Rating 7 and 8: These loans are generally referred to as our “watch” commercial credits. This rating includes loans to borrowers that exhibit potential credit weakness or downward trends. If not checked or cured these trends could weaken our asset or credit position. While potentially weak, no loss of principal or interest is envisioned with these ratings.

Rating 9: These loans are generally referred to as our “substandard accruing” commercial credits. This rating includes loans to borrowers that exhibit a well-defined weakness where payment default is probable and loss is possible if deficiencies are not corrected. Generally, loans with this rating are considered collectible as to both principal and interest primarily due to collateral coverage.

Rating 10 and 11: These loans are generally referred to as our “substandard - non-accrual” and “doubtful” commercial credits. This rating includes loans to borrowers with weaknesses that make collection of debt in full, on the basis of current facts, conditions and values at best questionable and at worst improbable. All of these loans are placed in non-accrual.

Rating 12: These loans are generally referred to as our “loss” commercial credits. This rating includes loans to borrowers that are deemed incapable of repayment and are charged-off.
 
The following table summarizes loan ratings by loan class for our commercial loan segment:

  
Commercial
 
  
Non-watch
1-6
  
Watch
7-8
  
Substandard
Accrual
9
  
Non-
Accrual
10-11
  
Total
 
        
(In thousands)
       
March 31, 2016
               
Income producing - real estate
 
$
303,195
  
$
6,367
  
$
1,038
  
$
1,117
  
$
311,717
 
Land, land development and construction - real estate
  
39,120
   
1,675
   
-
   
168
   
40,963
 
Commercial and industrial
  
391,207
   
20,687
   
5,615
   
2,304
   
419,813
 
Total
 
$
733,522
  
$
28,729
  
$
6,653
  
$
3,589
  
$
772,493
 
Accrued interest included in total
 
$
1,507
  
$
82
  
$
18
  
$
-
  
$
1,607
 
                     
December 31, 2015
                    
Income producing - real estate
 
$
296,898
  
$
6,866
  
$
1,423
  
$
1,027
  
$
306,214
 
Land, land development and construction - real estate
  
40,844
   
2,995
   
243
   
401
   
44,483
 
Commercial and industrial
  
371,357
   
19,502
   
6,683
   
2,028
   
399,570
 
Total
 
$
709,099
  
$
29,363
  
$
8,349
  
$
3,456
  
$
750,267
 
Accrued interest included in total
 
$
1,729
  
$
108
  
$
32
  
$
-
  
$
1,869
 
 
For each of our mortgage and installment segment classes we generally monitor credit quality based on the credit scores of the borrowers. These credit scores are generally updated semi-annually.
 
The following tables summarize credit scores by loan class for our mortgage and installment loan segments:

  
Mortgage (1)
 
  
1-4 Family
  
Resort
Lending
  
Home
Equity
1st Lien
  
Home
Equity
2nd Lien
  
Purchased
Loans
    
   
 
Total
 
  
(In thousands)
 
March 31, 2016
                  
800 and above
 
$
29,357
  
$
13,694
  
$
4,206
  
$
7,409
  
$
2,298
  
$
56,964
 
750-799  
84,315
   
39,748
   
10,292
   
18,190
   
20,775
   
173,320
 
700-749  
54,911
   
31,331
   
4,601
   
11,796
   
6,901
   
109,540
 
650-699  
51,725
   
16,538
   
3,696
   
7,501
   
-
   
79,460
 
600-649  
27,962
   
4,934
   
1,447
   
3,720
   
-
   
38,063
 
550-599  
16,128
   
3,052
   
1,022
   
1,887
   
-
   
22,089
 
500-549  
10,348
   
985
   
561
   
1,261
   
-
   
13,155
 
Under 500
  
4,570
   
548
   
223
   
252
   
-
   
5,593
 
Unknown
  
3,941
   
2,086
   
196
   
394
   
1,452
   
8,069
 
Total
 
$
283,257
  
$
112,916
  
$
26,244
  
$
52,410
  
$
31,426
  
$
506,253
 
Accrued interest included in total
 
$
1,368
  
$
489
  
$
93
  
$
195
  
$
104
  
$
2,249
 
                          
December 31, 2015
                        
800 and above
 
$
28,760
  
$
13,943
  
$
4,374
  
$
7,696
  
$
2,310
  
$
57,083
 
750-799  
78,802
   
40,888
   
7,137
   
17,405
   
23,283
   
167,515
 
700-749  
56,519
   
31,980
   
4,341
   
11,022
   
6,940
   
110,802
 
650-699  
51,813
   
17,433
   
3,203
   
7,691
   
-
   
80,140
 
600-649  
27,966
   
4,991
   
1,467
   
3,684
   
-
   
38,108
 
550-599  
16,714
   
3,070
   
1,027
   
1,918
   
-
   
22,729
 
500-549  
10,610
   
1,051
   
572
   
1,295
   
-
   
13,528
 
Under 500
  
4,708
   
554
   
244
   
265
   
-
   
5,771
 
Unknown
  
3,733
   
2,110
   
199
   
282
   
724
   
7,048
 
Total
 
$
279,625
  
$
116,020
  
$
22,564
  
$
51,258
  
$
33,257
  
$
502,724
 
Accrued interest included in total
 
$
1,396
  
$
477
  
$
87
  
$
196
  
$
114
  
$
2,270
 

(1)
Credit scores have been updated within the last twelve months.
 
  
Installment(1)
 
  
Home
Equity
1st Lien
  
Home
Equity
2nd Lien
  
Loans not
Secured by
Real Estate
  
Other
  
Total
 
  
(In thousands)
 
March 31, 2016
               
800 and above
 
$
1,638
  
$
1,678
  
$
43,330
  
$
91
  
$
46,737
 
750-799  
3,850
   
5,552
   
89,742
   
522
   
99,666
 
700-749  
2,375
   
3,591
   
35,628
   
633
   
42,227
 
650-699  
3,308
   
3,761
   
16,394
   
459
   
23,922
 
600-649  
2,032
   
2,068
   
4,663
   
202
   
8,965
 
550-599  
1,741
   
1,296
   
1,825
   
105
   
4,967
 
500-549  
1,000
   
804
   
1,068
   
55
   
2,927
 
Under 500
  
211
   
280
   
297
   
23
   
811
 
Unknown
  
58
   
29
   
2,133
   
17
   
2,237
 
Total
 
$
16,213
  
$
19,059
  
$
195,080
  
$
2,107
  
$
232,459
 
Accrued interest included in total
 
$
69
  
$
73
  
$
514
  
$
16
  
$
672
 
                      
December 31, 2015
                    
800 and above
 
$
1,792
  
$
1,782
  
$
44,254
  
$
58
  
$
47,886
 
750-799  
4,117
   
5,931
   
86,800
   
531
   
97,379
 
700-749  
2,507
   
3,899
   
34,789
   
694
   
41,889
 
650-699  
3,508
   
4,182
   
16,456
   
499
   
24,645
 
600-649  
2,173
   
2,153
   
4,979
   
200
   
9,505
 
550-599  
1,800
   
1,346
   
1,997
   
109
   
5,252
 
500-549  
1,056
   
855
   
1,170
   
61
   
3,142
 
Under 500
  
223
   
370
   
385
   
23
   
1,001
 
Unknown
  
59
   
32
   
1,503
   
4
   
1,598
 
Total
 
$
17,235
  
$
20,550
  
$
192,333
  
$
2,179
  
$
232,297
 
Accrued interest included in total
 
$
78
  
$
83
  
$
520
  
$
17
  
$
698
 

(1)
Credit scores have been updated within the last twelve months.

Mepco Finance Corporation (“Mepco”) is a wholly-owned subsidiary of our Bank that operates a vehicle service contract payment plan business throughout the United States. See Note #14 for more information about Mepco’s business. As of March 31, 2016, approximately 56.0% of Mepco’s outstanding payment plan receivables relate to programs in which a third party insurer or risk retention group is obligated to pay Mepco the full refund owing upon cancellation of the related service contract (including with respect to both the portion funded to the service contract seller and the portion funded to the administrator). These receivables are shown as “Full Refund” in the table below. Another approximately 20.3% of Mepco’s outstanding payment plan receivables as of March 31, 2016, relate to programs in which a third party insurer or risk retention group is obligated to pay Mepco the refund owing upon cancellation only with respect to the unearned portion previously funded by Mepco to the administrator (but not to the service contract seller). These receivables are shown as “Partial Refund” in the table below. The balance of Mepco’s outstanding payment plan receivables relate to programs in which there is no insurer or risk retention group that has any contractual liability to Mepco for any portion of the refund amount. These receivables are shown as “Other” in the table below. For each class of our payment plan receivables we monitor financial information on the counterparties as we evaluate the credit quality of this portfolio.
 
The following table summarizes credit ratings of insurer or risk retention group counterparties by class of payment plan receivable:

  
Payment Plan Receivables
 
  
Full
Refund
  
Partial
Refund
  
Other
  
Total
 
  
(In thousands)
 
March 31, 2016
            
AM Best rating
            
A+ 
$
-
  
$
11
  
$
-
  
$
11
 
A
  
1,845
   
5,285
   
-
   
7,130
 
A-  
2,576
   
1,208
   
7,658
   
11,442
 
Not rated
  
13,663
   
57
   
2
   
13,722
 
Total
 
$
18,084
  
$
6,561
  
$
7,660
  
$
32,305
 
                  
December 31, 2015
                
AM Best rating
                
A+ 
$
-
  
$
6
  
$
-
  
$
6
 
A
  
2,712
   
5,203
   
-
   
7,915
 
A-  
3,418
   
1,177
   
6,265
   
10,860
 
Not rated
  
15,720
   
93
   
5
   
15,818
 
Total
 
$
21,850
  
$
6,479
  
$
6,270
  
$
34,599
 

Although Mepco has contractual recourse against various counterparties for refunds owing upon cancellation of vehicle service contracts, see Note #14 below regarding certain risks and difficulties associated with collecting these refunds.

Foreclosed residential real estate properties included in other real estate and repossessed assets on our Condensed Consolidated Statements of Financial Condition totaled $2.5 million and $2.8 million at March 31, 2016 and December 31, 2015, respectively.  Retail mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process according to local requirements totaled $1.4 million and $1.1 million at March 31, 2016 and December 31, 2015, respectively.