LOANS AND LOANS HELD FOR SALE

Loans are presented net of unearned income of $2.1 million and $1.3 million at December 31, 2014 and 2013. The following table indicates the composition of the loans as of the dates presented:



	December 31,
(dollars in thousands)	2014		2013
Commercial
Commercial real estate	$	1,682,236	$	1,607,756
Commercial and industrial	994,138		842,449
Commercial construction	216,148		143,675
Total Commercial Loans	2,892,522		2,593,880
Consumer
Residential mortgage	489,586		487,092
Home equity	418,563		414,195
Installment and other consumer	65,567		67,883
Consumer construction	2,508		3,149
Total Consumer Loans	976,224		972,319
Total Portfolio Loans	3,868,746		3,566,199
Loans held for sale	2,970		2,136
Total Loans	$	3,871,716	$	3,568,335

We attempt to limit our exposure to credit risk by diversifying our loan portfolio by segment, collateral and industry and actively managing concentrations. When concentrations exist in certain segments, we mitigate this risk by monitoring the relevant economic indicators and internal risk rating trends and through stress testing of the loans in these segments. Total commercial loans represented 75 percent of total portfolio loans at December 31, 2014 and 73 percent of total portfolio loans at December 31, 2013. Within our commercial portfolio, CRE and Commercial Construction portfolios combined comprise 66 percent of total commercial loans and 49 percent of total portfolio loans at December 31, 2014 and 68 percent of total commercial loans and 49 percent of total portfolio loans at December 31, 2013. Further segmentation of the CRE and Commercial Construction portfolios by industry and collateral type reveal no concentration in excess of nine percent of total loans at either December 31, 2014 or December 31, 2013.

Our market area includes Pennsylvania and the contiguous states of Ohio, West Virginia, New York and Maryland. The majority of our commercial and consumer loans are made to businesses and individuals in this market area resulting in a geographic concentration. We believe our knowledge and familiarity with customers and conditions locally outweighs this geographic concentration risk. The conditions of the local and regional economies are monitored closely through publicly available data as well as information supplied by our customers. Management believes underwriting guidelines, active monitoring of economic conditions and ongoing review by credit administration mitigates the concentration risk present in the loan portfolio. Our CRE and Commercial Construction portfolios have out of market exposure of 8 percent of the combined portfolio and 3.9 percent of total loans at December 31, 2014 and 7.9 percent of the combined portfolio and 3.9 percent of total loans at December 31, 2013.

TDRs are loans where we, for economic or legal reasons related to a borrower's financial difficulties, grant a concession to the borrower that we would not otherwise grant. We strive to identify borrowers in financial difficulty early and work with them to modify the terms before their loan reaches nonaccrual status. These modified terms generally include extensions of maturity dates at a stated interest rate lower than the current market rate for a new loan with similar risk characteristics, reductions in contractual interest rates or principal deferment. While unusual, there may be instances of principal forgiveness. These modifications are generally for longer term periods that would not be considered insignificant. Additionally, we classify loans where the debt obligation has been discharged through a Chapter 7 Bankruptcy and not reaffirmed as TDRs.

We individually evaluate all substandard commercial loans that have experienced a forbearance or change in terms agreement, as well as all substandard consumer and residential mortgage loans that entered into an agreement to modify their existing loan to determine if they should be designated as TDRs. All TDRs are considered to be impaired loans and will be reported as impaired loans for the remaining life of the loan, unless the restructuring agreement specifies and interest rate equal to or greater than the rate that would be accepted at the time of the restructuring for a new loan with comparable risk and it is fully expected that the remaining principal and interest will be collected according to the restructured agreement. Further, all impaired loans are reported as nonaccrual loans unless the loan is a TDR that has met the requirements to be returned to accruing status. TDRs can be returned to accruing status if the ultimate collectability of all contractual amounts due, according to the restructured agreement, is not in doubt and there is a period of a minimum of six months of satisfactory payment performance by the borrower either immediately before or after the restructuring.

The following table summarizes the restructured loans as of the dates presented:



	December 31, 2014						December 31, 2013
(dollars in thousands)	Performing TDRs		Nonperforming TDRs		Total TDRs		Performing TDRs		Nonperforming TDRs		Total TDRs
Commercial real estate	$	16,939	$	2,180	$	19,119	$	19,711	$	3,898	$	23,609
Commercial and industrial	8,074		356		8,430		7,521		1,884		9,405
Commercial construction	5,736		1,869		7,605		5,338		2,708		8,046
Residential mortgage	2,839		459		3,298		2,581		1,356		3,937
Home equity	3,342		562		3,904		3,924		218		4,142
Installment and other consumer	53		10		63		154		3		157
Total	$	36,983	$	5,436	$	42,419	$	39,229	$	10,067	$	49,296

The following tables present the restructured loans for the 12 months ended December 31:



	2014
(dollars in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽¹⁾		Total Difference in Recorded Investment
Commercial real estate
Principal deferral	4	$	1,991	$	1,965	$	26
Commercial and industrial
Principal deferral	2	$	381	$	356	$	25
Commercial construction
Maturity date extension	1	1,019		974		45
Residential mortgage
Chapter 7 bankruptcy⁽²⁾	9	651		634		17
Home equity
Maturity date extension	6	349		348		1
Interest rate reduction and maturity date extension	2	96		95		1
Chapter 7 bankruptcy⁽²⁾	15	432		382		50
Installment and other consumer
Chapter 7 bankruptcy⁽²⁾	5	30		23		7
Total by Concession Type
Principal deferral	6	2,372		2,321		51
Interest rate reduction and maturity date extension	2	96		95		1
Maturity date extension	7	1,368		1,322		46
Chapter 7 bankruptcy⁽²⁾	29	1,113		1,039		74
Total	44	$	4,949	$	4,777	$	172


(1)	Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.


(2)	Chapter 7 bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.



	2013
(dollars in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment⁽¹⁾		Post-Modification Outstanding Recorded Investment⁽¹⁾		Total Difference in Recorded Investment
Commercial real estate
Principal deferral	4	$	2,772	$	2,494	$	(278	)
Interest rate reduction and maturity date extension	2	664		636		(28		)
Principal forgiveness ⁽²⁾	1	4,339		4,216		(123		)
Maturity date extension	1	219		219		—
Chapter 7 bankruptcy⁽³⁾	6	227		190		(37		)
Commercial and industrial
Principal deferral	2	$	670	$	638	$	(32	)
Maturity date extension	1	751		739		(12		)
Chapter 7 bankruptcy⁽³⁾	1	3		1		(2		)
Residential mortgage
Principal deferral	2	153		149		(4		)
Interest rate reduction	1	54		54		—
Chapter 7 bankruptcy⁽³⁾	8	617		592		(25		)
Home Equity
Principal deferral	1	174		17		(157		)
Chapter 7 bankruptcy⁽³⁾	30	1,032		982		(50		)
Installment and other consumer
Chapter 7 bankruptcy⁽³⁾	11	104		91		(13		)
Total by Concession Type
Principal deferral	9	3,769		3,298		(471		)
Interest rate reduction	1	54		54		—
Interest rate reduction and maturity date extension	2	664		636		(28		)
Principal forgiveness ⁽²⁾	1	4,339		4,216		(123		)
Maturity date extension	2	970		958		(12		)
Chapter 7 bankruptcy⁽³⁾	56	1,983		1,856		(127		)
Total	71	$	11,779	$	11,018	$	(761	)


(1)	Excludes loans that were fully paid off or fully charged-off by period end. The pre-modification balance represents the balance outstanding prior to modification. The post-modification balance represents the outstanding balance at period end.


(2)	This loan had debt forgiveness of $0.1 million to the customer; however, the loan was previously charged-off to a balance below the actual contractual balance.


(3)	Chapter 7 bankruptcy loans where the debt has been legally discharged through the bankruptcy court and not reaffirmed.

During 2014, we modified six loans that were not considered to be TDRs, including four C&I loans for $3.2 million and two CRE loans for $1.2 million. The modifications primarily represented instances where we were adequately compensated through additional collateral or a higher interest rate or there was an insignificant delay in payment. As of December 31, 2014, we have no commitments to lend additional funds on any TDRs.

We returned nine TDRs to accruing status during the twelve months ended December 31, 2014 totaling $1.9 million. We returned six TDRs to accruing status during 2013 totaling $6.9 million.

Defaulted TDRs are loans having a payment default of 90 days or more after the restructuring takes place. The following table is a summary of TDRs which defaulted during the years ended December 31, 2014 and 2013 that had been restructured within the last 12 months prior to defaulting:



	Defaulted TDRs
	For the Year Ended December 31, 2014			For the Year Ended December 31, 2013
(dollars in thousands)	Number of Defaults	Recorded Investment		Number of Defaults	Recorded Investment
Commercial real estate	—	$	—	1	$	75
Commercial and industrial	—	—		2	438
Residential real estate	1	20		8	607
Home equity	2	44		6	193
Total	3	$	64	17	$	1,313

The following table is a summary of nonperforming assets as of the dates presented:



	December 31,
(dollars in thousands)	2014		2013
Nonperforming Assets
Nonaccrual loans	$	7,021	$	12,387
Nonaccrual TDRs	5,436		10,067
Total nonaccrual loans	12,457		22,454
OREO	166		410
Total Nonperforming Assets	$	12,623	$	22,864

OREO consists of five properties and is included in other assets in the Consolidated Balance Sheets. It is our policy to obtain OREO appraisals on an annual basis.

We have granted loans to certain officers and directors of S&T as well as to certain affiliates of the officers and directors in the ordinary course of business. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and did not involve more than normal risk of collectability.

The following table presents a summary of the aggregate amount of loans to any such persons as of December 31:



(dollars in thousands)	2014			2013
Balance at beginning of year	$	23,848		$	36,075
New loans	27,799			22,534
Repayments	(24,279		)	(34,761		)
Balance at End of Year	$	27,368		$	23,848