LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

12 Months Ended

Dec. 31, 2015

Loans, Allowance for Loan Losses and Credit Quality [Abstract]

LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

Allowance for Loan Losses

The following table summarizes changes in the allowance for loan losses by loan category and bifurcates the amount of allowance allocated to each loan category based on collective impairment analysis and loans evaluated individually for impairment:

	December 31, 2015
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
	(Dollars in thousands)
Allowance for loan losses
Beginning balance	$	15,573		$	25,873		$	3,945	$	1,171		$	2,834		$	4,956		$	748		$	55,100
Charge-offs	(2,010		)	(330		)	—		(267		)	(285		)	(710		)	(1,316		)	(4,918		)
Recoveries	1,593			1,073			—		264			133			356			724			4,143
Provision (benefit)	(1,354		)	711			1,421		96			(92		)	287			431			1,500
Ending balance	$	13,802		$	27,327		$	5,366	$	1,264		$	2,590		$	4,889		$	587		$	55,825
Ending balance: collectively evaluated for impairment	$	13,619		$	27,123		$	5,366	$	1,260		$	1,312		$	4,651		$	564		$	53,895
Ending balance: individually evaluated for impairment	$	183		$	204		$	—	$	4		$	1,278		$	238		$	23		$	1,930
Financing receivables ending balance:
Collectively evaluated for impairment	$	838,129		$	2,619,294		$	373,064	$	95,225		$	614,014		$	921,563		$	14,427		$	5,475,716
Individually evaluated for impairment	5,147			22,986			304		1,021			15,405			5,989			558			51,410
Purchased credit impaired loans	—			11,154			—		—			9,187			251			3			20,595
Total loans by group	$	843,276		$	2,653,434		$	373,368	$	96,246		$	638,606		$	927,803		$	14,988		$	5,547,721		(1)
	December 31, 2014
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
	(Dollars in thousands)
Allowance for loan losses
Beginning balance	$	15,622		$	24,541		$	3,371	$	1,215		$	2,760		$	5,036		$	694		$	53,239
Charge-offs	(2,097		)	(5,454		)	—		(605		)	(826		)	(750		)	(1,215		)	(10,947		)
Recoveries	462			404			—		275			424			249			591			2,405
Provision (benefit)	$	1,586		$	6,382		$	574	$	286		$	476		$	421		$	678		$	10,403
Ending balance	$	15,573		$	25,873		$	3,945	$	1,171		$	2,834		$	4,956		$	748		$	55,100
Ending balance: collectively evaluated for impairment	$	15,161		$	25,676		$	3,945	$	1,164		$	1,334		$	4,694		$	710		$	52,684
Ending balance: individually evaluated for impairment	$	412		$	197		$	—	$	7		$	1,500		$	262		$	38		$	2,416
Financing receivables ending balance:
Collectively evaluated for impairment	$	856,185		$	2,304,099		$	265,501	$	84,159		$	505,799		$	858,305		$	16,335		$	4,890,383
Individually evaluated for impairment	4,654			30,729			311		1,088			15,055			5,330			868			58,035
Purchased credit impaired loans	—			12,495			182		—			9,405			228			5			22,315
Total loans by group	$	860,839		$	2,347,323		$	265,994	$	85,247		$	530,259		$	863,863		$	17,208		$	4,970,733		(1)

	December 31, 2013
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
	(Dollars in thousands)
Allowance for loan losses
Beginning balance	$	13,461		$	22,598		$	2,811		$	1,524		$	2,930		$	7,703		$	807		$	51,834
Charge-offs	(2,683		)	(3,587		)	(308		)	(773		)	(622		)	(1,370		)	(1,175		)	(10,518		)
Recoveries	272			206			100			279			143			135			588			1,723
Provision (benefit)	4,572			5,324			768			185			309			(1,432		)	474			10,200
Ending balance	$	15,622		$	24,541		$	3,371		$	1,215		$	2,760		$	5,036		$	694		$	53,239
Ending balance: collectively evaluated for impairment	$	14,472		$	23,776		$	3,371		$	1,106		$	1,196		$	4,920		$	624		$	49,465
Ending balance: individually evaluated for impairment	$	1,150		$	765		$	—		$	109		$	1,564		$	116		$	70		$	3,774
Financing receivables ending balance:
Collectively evaluated for impairment	$	775,053		$	2,191,132		$	223,562		$	75,337		$	515,854		$	816,925		$	18,845		$	4,616,708
Individually evaluated for impairment	9,148			39,516			100			1,903			15,200			4,890			1,298			72,055
Purchase credit impaired loans	1			18,612			197			—			10,389			326			19			29,544
Total loans by group	$	784,202		$	2,249,260		$	223,859		$	77,240		$	541,443		$	822,141		$	20,162		$	4,718,307		(1)

(1) The amount of net deferred fees on loans and net unamortized discounts on acquired loans not deemed to be PCI included in the ending balance was $10.9 million, $4.7 million, and $3.9 million at December 31, 2015, 2014, and 2013, respectively.

For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the portfolio segments detailed in the above tables.  Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment.  Some of the risk characteristics unique to each loan category include:

Commercial Portfolio

• Commercial and Industrial: Loans in this category consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment.  Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant & equipment, or real estate, if applicable. Repayment sources consist of primarily, operating cash flow, and secondarily, liquidation of assets.

• Commercial Real Estate: Loans in this category consist of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.  Loans are typically written with amortizing payment structures.  Collateral values are determined based upon third party appraisals and evaluations.  Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources consist of primarily, cash flow from operating leases and rents, and secondarily, liquidation of assets.

• Commercial Construction: Loans in this category consist of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property.  Project types include residential 1-4 family, condominium and multi-family homes, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties.  Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project.  Collateral values are determined based upon third party appraisals and evaluations.  Loan to value ratios at origination are governed by established policy and regulatory guidelines.  Repayment sources vary depending upon the type of project and may consist of sale or lease of units, operating cash flows or liquidation of other assets.

• Small Business: Loans in this category consist of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment.  Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant & equipment, or real estate if applicable.  Repayment sources consist primarily of operating cash flows, and secondarily, liquidation of assets.

For the commercial portfolio it is the Company’s policy to obtain personal guarantees for payment from individuals holding material ownership interests of the borrowing entities.

Consumer Portfolio

• Residential Real Estate: Residential mortgage loans held in the Company’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral.  Collateral consists of mortgage liens on 1-4 family residential properties.  The Company does not originate or purchase sub-prime loans.

• Home Equity: Home equity loans and lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on owner-occupied 1-4 family homes, condominiums or vacation homes. The home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest. The home equity line of credit has a variable rate and is billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Additionally, the Company has the option of renewing the line of credit for additional draw periods.  Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines.

• Other Consumer: Other consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, debt consolidation, personal expenses or overdraft protection.  Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines.  These loans may be secured or unsecured.

Credit Quality

The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring (“TDR”).

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point commercial risk-rating system, which assigns a risk-grade to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-ratings categories are defined as follows:

• 1- 6 Rating — Pass: Risk-rating grades “1” through “6” comprise those loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share. Collateral coverage is protective.

• 7 Rating — Potential Weakness: Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Company’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

• 8 Rating — Definite Weakness Loss Unlikely: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loan may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

• 9 Rating — Partial Loss Probable: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

• 10 Rating — Definite Loss: Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Company is not warranted.

The credit quality of the commercial loan portfolio is actively monitored and any changes in credit quality are reflected in risk-rating changes. Risk-ratings are assigned or reviewed for all new loans, when advancing significant additions to existing relationships (over $50,000), at least quarterly for all actively managed loans, and any time a significant event occurs, including at renewal of the loan.

The Company utilizes a comprehensive strategy for monitoring commercial credit quality. Borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by an experienced credit analysis group. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis.

The following table details the amount of outstanding principal balances relative to each of the risk-rating categories for the Company’s commercial portfolio:

The following table details the internal risk-rating categories for the Company’s commercial portfolio:

		December 31, 2015
Category	Risk Rating	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	765,753	$	2,484,025	$	363,781	$	93,008	$	3,706,567
Potential weakness	7	54,375		112,022		7,678		2,444		176,519
Definite weakness	8	23,073		56,276		1,909		732		81,990
Partial loss probable	9	75		1,111		—		62		1,248
Definite loss	10	—		—		—		—		—
Total		$	843,276	$	2,653,434	$	373,368	$	96,246	$	3,966,324
		December 31, 2014
Category	Risk Rating	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	801,578	$	2,196,109	$	248,696	$	81,255	$	3,327,638
Potential weakness	7	37,802		82,372		15,464		2,932		138,570
Definite weakness	8	20,241		67,571		1,834		949		90,595
Partial loss probable	9	1,218		1,271		—		111		2,600
Definite loss	10	—		—		—		—		—
Total		$	860,839	$	2,347,323	$	265,994	$	85,247	$	3,559,403

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) scores and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a quarterly basis. In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios, periodically. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios as of the periods indicated below:

	December 31
	2015		2014
Residential portfolio
FICO score (re-scored)(1)	742		739
LTV (re-valued)(2)	61.4	%	67.1	%
Home equity portfolio
FICO score (re-scored)(1)	765		764
LTV (re-valued)(2)	55.8	%	53.6	%

(1) The average FICO scores above are based upon rescores available from November and origination score data for loans booked between December 1 and December 31, for the years indicated.

(2) The combined LTV ratios for December 31, 2015 are based upon updated automated valuations as of March 31, 2015 and actual score data for loans booked from April 1, 2015 through December 31, 2015. The combined LTV ratios for December 31, 2014 are based upon updated automated valuations as of February 28, 2013 and actual score data for loans booked from March 1, 2013 through December 31, 2014. For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.

Asset Quality

The Bank’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of seasoned collection specialists and the Bank seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame.  As a general rule, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans. The Company also may use discretion regarding other loans over 90 days delinquent if the loan is well secured and/or in process of collection. Set forth is information regarding the Company’s nonperforming loans at the period shown:

The following table shows nonaccrual loans at the dates indicated:

	December 31
	2015		2014
	(Dollars in thousands)
Commercial and industrial	$	3,699	$	2,822
Commercial real estate	7,856		7,279
Commercial construction	304		311
Small business	239		246
Residential real estate	8,795		8,697
Home equity	6,742		8,038
Other consumer	55		—
Total nonaccrual loans(1)	$	27,690	$	27,393

(1) Included in these amounts were $5.2 million nonaccruing TDRs at both December 31, 2015 and 2014, respectively.

The following table shows information regarding foreclosed residential real estate property at the date indicated:

	December 31, 2015
	(Dollars in thousands)
Foreclosed residential real estate property held by the creditor	$	1,430
Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure	$	285

The following table shows the age analysis of past due financing receivables as of the dates indicated:

	December 31, 2015
	30-59 days			60-89 days			90 days or more			Total Past Due			Current		Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance
	(Dollars in thousands)
Commercial and industrial	9	$	399	4	$	1,021	8	$	3,039	21	$	4,459	$	838,817	$	843,276	$	—
Commercial real estate	19	7,349		6	1,627		13	4,458		38	13,434		2,640,000		2,653,434		—
Commercial construction	—	—		—	—		1	304		1	304		373,064		373,368		—
Small business	11	93		4	9		13	69		28	171		96,075		96,246		—
Residential real estate	20	3,119		11	2,049		19	3,433		50	8,601		630,005		638,606		—
Home equity	21	1,526		11	903		20	1,338		52	3,767		924,036		927,803		—
Other consumer	297	231		12	65		13	25		322	321		14,667		14,988		—
Total	377	$	12,717	48	$	5,674	87	$	12,666	512	$	31,057	$	5,516,664	$	5,547,721	$	—

	December 31, 2014
	30-59 days			60-89 days			90 days or more			Total Past Due			Current		Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance
	(Dollars in thousands)
Commercial and industrial	18	$	3,192	10	$	1,007	19	$	2,320	47	$	6,519	$	854,320	$	860,839	$	—
Commercial real estate	19	13,428		6	1,480		16	4,225		41	19,133		2,328,190		2,347,323		—
Commercial construction	1	506		—	—		1	311		2	817		265,177		265,994		—
Small business	7	21		8	113		7	173		22	307		84,940		85,247		—
Residential real estate	13	1,670		10	1,798		36	4,826		59	8,294		521,965		530,259		106
Home equity	20	1,559		7	307		23	2,402		50	4,268		859,595		863,863		—
Other consumer	318	382		16	23		15	15		349	420		16,788		17,208		13
Total	396	$	20,758	57	$	4,728	117	$	14,272	570	$	39,758	$	4,930,975	$	4,970,733	$	119

Troubled Debt Restructurings

In the course of resolving nonperforming loans, the Bank may choose to restructure the contractual terms of certain loans. The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions. Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

	December 31
	2015		2014
	(Dollars in thousands)
TDRs on accrual status	$	32,849	$	38,382
TDRs on nonaccrual status	5,225		5,248
Total TDRs	$	38,074	$	43,630
Amount of specific reserves included in the allowance for loan loss associated with TDRs:	$	1,628	$	2,004
Additional commitments to lend to a borrower who has been a party to a TDR:	$	972	$	1,400

The Company’s policy is to have any restructured loan which is on nonaccrual status prior to being modified remain on nonaccrual status for six months, subsequent to being modified, before management considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession. For all residential loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized.

The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

	Years Ended December 31
	2015
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment(1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial and industrial	13	$	1,314	$	1,314
Commercial real estate	6	2,941		2,941
Small business	9	293		293
Residential real estate	8	843		870
Home equity	8	694		694
Total	44	$	6,085	$	6,112
	2014
Troubled debt restructurings
Commercial and industrial	12	$	681	$	681
Commercial real estate	13	4,329		4,329
Small business	5	133		133
Residential real estate	9	1,535		1,568
Home equity	11	923		926
Other consumer	1	8		8
Total	51	$	7,609	$	7,645
	2013
Troubled debt restructurings
Commercial and industrial	11	$	732	$	732
Commercial real estate	9	8,100		8,100
Small business	12	556		556
Residential real estate	9	2,401		2,427
Home equity	17	1,347		1,347
Other consumer	9	27		27
Total	67	$	13,163	$	13,189

(1) The post-modification balances represent the legal principal balance of the loan on the date of modification. These amounts may show an increase when modifications include a capitalization of interest.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated:

	Years Ended December 31
	2015		2014		2013
	(Dollars in thousands)
Extended maturity	$	2,936	$	3,441	$	3,582
Adjusted interest rate	—		727		—
Combination rate and maturity	2,199		2,640		8,917
Court ordered concession	977		837		690
Total	$	6,112	$	7,645	$	13,189

The Company considers a loan to have defaulted when it reaches 90 days past due. The following table shows loans that were modified during the prior twelve months and subsequently defaulted during the periods indicated:

	Years Ended December 31
	2015			2014			2013
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	3	$	339	2	$	196	—	$	—
Commercial real estate	1	502		—	—		1	176
Residential real estate	2	326		3	214		—	—
Home equity	1	100		—	—		—	—
Other consumer	—	—		—	—		1	1
Total	7	$	1,267	5	$	410	2	$	177

All TDR loans are considered impaired and therefore are subject to a specific review for impairment. The impairment analysis appropriately discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification. The amount of impairment, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans (commercial and industrial, commercial construction, commercial real estate and small business loans), residential loans, and home equity loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In such an instance, any shortfall between the value of the collateral and the carrying value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell. The Company charges off the amount of any confirmed loan loss in the period when the loans, or portion of loans, are deemed uncollectible. Smaller balance consumer TDR loans are reviewed for performance to determine when a charge-off is appropriate.

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The table below sets forth information regarding the Company’s impaired loans as of the dates indicated:

	As of and For the Years Ended December 31
	2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	2,613	$	3,002	$	—	$	3,024	$	71
Commercial real estate	12,008		13,128		—		11,676		375
Commercial construction	304		305		—		308		—
Small business	527		618		—		584		22
Residential real estate	3,874		4,033		—		3,958		157
Home equity	4,893		5,005		—		5,023		195
Other consumer	184		185		—		201		15
Subtotal	24,403		26,276		—		24,774		835
With an allowance recorded
Commercial and industrial	2,534		2,648		183		2,848		48
Commercial real estate	10,978		11,047		204		10,789		592
Small business	494		523		4		535		30
Residential real estate	11,531		12,652		1,278		11,669		460
Home equity	1,096		1,287		238		655		14
Other consumer	374		389		23		408		14
Subtotal	27,007		28,546		1,930		26,904		1,158
Total	$	51,410	$	54,822	$	1,930	$	51,678	$	1,993
	2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	3,005	$	3,278	$	—	$	4,557	$	258
Commercial real estate	15,982		17,164		—		16,703		1,025
Commercial construction	311		311		—		311		13
Small business	692		718		—		772		45
Residential real estate	2,439		2,502		—		2,493		102
Home equity	4,169		4,221		—		4,264		198
Other consumer	338		341		—		364		24
Subtotal	26,936		28,535		—		29,464		1,665
With an allowance recorded
Commercial and industrial	1,649		1,859		412		2,032		98
Commercial real estate	14,747		15,514		197		15,650		842
Small business	396		458		7		456		32
Residential real estate	12,616		13,727		1,500		12,817		537
Home equity	1,161		1,264		262		1,203		46
Other consumer	530		530		38		580		22
Subtotal	31,099		33,352		2,416		32,738		1,577
Total	$	58,035	$	61,887	$	2,416	$	62,202	$	3,242

	2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	7,147	$	7,288	$	—	$	7,338	$	338
Commercial real estate	14,283		15,891		—		15,728		1,075
Commercial construction	100		408		—		1,105		43
Small business	1,474		1,805		—		1,854		121
Residential real estate	1,972		2,026		—		2,021		95
Home equity	4,263		4,322		—		4,335		202
Other consumer	446		446		—		515		41
Subtotal	29,685		32,186		—		32,896		1,915
With an allowance recorded
Commercial and industrial	2,001		2,045		1,150		2,572		125
Commercial real estate	25,233		25,377		765		25,595		1,326
Small business	429		462		109		459		28
Residential real estate	13,228		14,197		1,564		13,405		515
Home equity	627		694		116		642		26
Other consumer	852		856		70		954		33
Subtotal	42,370		43,631		3,774		43,627		2,053
Total	$	72,055	$	75,817	$	3,774	$	76,523	$	3,968

Purchased Credit Impaired Loans

Certain loans acquired by the Company may have shown evidence of deterioration of credit quality since origination and it was therefore deemed unlikely that the Company would be able to collect all contractually required payments. As such, these loans were deemed to be PCI loans and the carrying value and prospective income recognition are predicated upon future cash flows expected to be collected. The following table displays certain information pertaining to PCI loans at the dates indicated:

	December 31
	2015		2014
	(Dollars in thousands)
Outstanding balance	$	23,199	$	25,279
Carrying amount	$	20,595	$	22,315

The following table summarizes activity in the accretable yield for the PCI loan portfolio:

	2015			2014
	(Dollars in thousands)
Beginning balance	$	2,974		$	2,514
Acquisition	319			—
Accretion	(2,485		)	(2,299		)
Other change in expected cash flows (1)	1,721			2,565
Reclassification from nonaccretable difference for loans which have paid off (2)	298			194
Ending balance	$	2,827		$	2,974

(1) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).

(2) Results in increased income during the period when a loan pays off at amount greater than originally expected.