Loans, Allowance for Loan Losses and Credit Quality

3 Months Ended

Mar. 31, 2017

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

The following tables bifurcate the amount of loans and the allowance allocated to each loan category based on the type of impairment analysis as of the periods indicated:

	March 31, 2017
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables ending balance:
Collectively evaluated for impairment	$	842,891	$	3,002,407	$	356,173	$	125,628	$	632,634	$	1,002,898	$	10,057	$	5,972,688
Individually evaluated for impairment	$	38,438	$	14,766	$	—	$	746	$	13,674	$	5,685	$	358	$	73,667
Purchased credit impaired loans	$	—	$	10,132	$	—	$	—	$	7,691	$	188	$	—	$	18,011
Total loans by group	$	881,329	$	3,027,305	$	356,173	$	126,374	$	653,999	$	1,008,771	$	10,415	$	6,064,366	(1	)

	December 31, 2016
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables ending balance:
Collectively evaluated for impairment	$	862,875	$	2,983,642	$	320,391	$	121,855	$	622,392	$	982,095	$	10,666	$	5,903,916
Individually evaluated for impairment	$	39,178	$	16,813	$	—	$	871	$	14,175	$	5,863	$	397	$	77,297
Purchased credit impaired loans	$	—	$	10,343	$	—	$	—	$	7,859	$	189	$	1	$	18,392
Total loans by group	$	902,053	$	3,010,798	$	320,391	$	122,726	$	644,426	$	988,147	$	11,064	$	5,999,605	(1	)

(1) The amount of net deferred costs on originated loans included in the ending balance was $5.5 million and $5.1 million at March 31, 2017 and December 31, 2016 respectively. Net unamortized discounts on acquired loans not deemed to be purchased credit impaired ("PCI") included in the ending balance was $8.3 million and $8.6 million at March 31, 2017 and December 31, 2016, respectively.

The following tables summarize changes in allowance for loan losses by loan category for the periods indicated:

	Three Months Ended March 31, 2017
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate		Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	16,921		$	30,369	$	4,522		$	1,502		$	2,621		$	5,238		$	393		$	61,566
Charge-offs	—			—		—			(70		)	(23		)	(14		)	(401		)	(508		)
Recoveries	187			31		—			66			12			76			288			660
Provision (benefit)	(590		)	343		501			35			106			45			160			600
Ending balance	$	16,518		$	30,743	$	5,023		$	1,533		$	2,716		$	5,345		$	440		$	62,318
Ending balance: collectively evaluated for impairment	$	12,960		$	30,570	$	5,023		$	1,531		$	1,650		$	5,110		$	419		$	57,263
Ending balance: individually evaluated for impairment	$	3,558		$	173	$	—		$	2		$	1,066		$	235		$	21		$	5,055
	Three Months Ended March 31, 2016
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate		Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	13,802		$	27,327	$	5,366		$	1,264		$	2,590		$	4,889		$	587		$	55,825
Charge-offs	(2		)	—		—			(63		)	(19		)	(147		)	(306		)	(537		)
Recoveries	138			189		—			21			—			27			244			619
Provision (benefit)	(453		)	1,079		(266		)	119			(4		)	146			(96		)	525
Ending balance	$	13,485		$	28,595	$	5,100		$	1,341		$	2,567		$	4,915		$	429		$	56,432
Ending balance: individually evaluated for impairment	$	222		$	802	$	—		$	3		$	1,223		$	231		$	26		$	2,507
Ending balance: collectively evaluated for impairment	$	13,263		$	27,793	$	5,100		$	1,338		$	1,344		$	4,684		$	403		$	53,925

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 and 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 and 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 credit 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. Each home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest. Each 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, each 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 each 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:

		March 31, 2017
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	782,142	$	2,900,222	$	354,245	$	123,998	$	4,160,607
Potential weakness	7	36,868		89,588		1,096		1,542		129,094
Definite weakness-loss unlikely	8	62,219		35,079		832		828		98,958
Partial loss probable	9	100		2,416		—		6		2,522
Definite loss	10	—		—		—		—		—
Total		$	881,329	$	3,027,305	$	356,173	$	126,374	$	4,391,181

		December 31, 2016
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	783,825	$	2,876,570	$	317,099	$	120,304	$	4,097,798
Potential weakness	7	46,176		84,641		1,363		1,859		134,039
Definite weakness-loss unlikely	8	71,991		47,164		1,929		556		121,640
Partial loss probable	9	61		2,423		—		7		2,491
Definite loss	10	—		—		—		—		—
Total		$	902,053	$	3,010,798	$	320,391	$	122,726	$	4,355,968

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 regular 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:

	March 31, 2017		December 31, 2016
Residential portfolio
FICO score (re-scored)(1)	744		743
LTV (re-valued)(2)	63.4	%	63.2	%
Home equity portfolio
FICO score (re-scored)(1)	767		767
LTV (re-valued)(2)	54.9	%	55.9	%

(1) The average FICO scores for March 31, 2017 and December 31, 2016 are based upon rescores available from November 30, 2016 and origination score data for loans booked between December 1, 2016 and the dates indicated.

(2) The combined LTV ratios for March 31, 2017 and December 31, 2016 are based upon updated automated valuations as of March 31, 2015 and origination value data for loans booked between April 1, 2015 and through the dates indicated. For home equity loans and lines in a subordinate lien position, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.

Asset Quality

The Company’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 Company 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.

The following table shows information regarding nonaccrual loans at the dates indicated:

	March 31, 2017		December 31, 2016
	(Dollars in thousands)
Commercial and industrial	$	36,877	$	37,455
Commercial real estate	4,792		6,266
Small business	207		302
Residential real estate	7,139		7,782
Home equity	5,987		5,553
Other consumer	48		47
Total nonaccrual loans (1)	$	55,050	$	57,405

(1) Included in these amounts were $5.4 million and $5.2 million of nonaccruing TDRs at March 31, 2017 and December 31, 2016, respectively.

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

	March 31, 2017		December 31, 2016
	(Dollars in thousands)
Foreclosed residential real estate property held by the creditor	$	3,006	$	3,775
Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure	$	2,277	$	1,715

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

	March 31, 2017
	30-59 days			60-89 days			90 days or more			Total Past Due					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		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	10	$	3,089	6	$	14,666	34	$	1,123	50	$	18,878	$	862,451	$	881,329	$	—
Commercial real estate	15	3,158		—	—		9	3,141		24	6,299		3,021,006		3,027,305		—
Commercial construction	—	—		—	—		—	—		—	—		356,173		356,173		—
Small business	9	331		8	108		13	120		30	559		125,815		126,374		—
Residential real estate	11	1,867		6	968		23	3,258		40	6,093		647,906		653,999		—
Home equity	14	1,156		6	460		18	1,417		38	3,033		1,005,738		1,008,771		—
Other consumer (1)	226	151		14	42		17	16		257	209		10,206		10,415		2
Total	285	$	9,752	40	$	16,244	114	$	9,075	439	$	35,071	$	6,029,295	$	6,064,366	$	2

	December 31, 2016
	30-59 days			60-89 days			90 days or more			Total Past Due					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		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	8	$	100	32	$	253	6	$	2,480	46	$	2,833	$	899,220	$	902,053	$	—
Commercial real estate	5	1,518		8	1,957		8	3,105		21	6,580		3,004,218		3,010,798		—
Commercial construction	—	—		—	—		—	—		—	—		320,391		320,391		—
Small business	9	323		—	—		19	140		28	463		122,263		122,726		—
Residential real estate	11	1,277		9	1,950		27	3,507		47	6,734		637,692		644,426		—
Home equity	19	1,117		11	767		16	1,209		46	3,093		985,054		988,147		—
Other consumer (1)	249	184		12	17		15	7		276	208		10,856		11,064		2
Total	301	$	4,519	72	$	4,944	91	$	10,448	464	$	19,911	$	5,979,694	$	5,999,605	$	2

(1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances.

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:

	March 31, 2017		December 31, 2016
	(Dollars in thousands)
TDRs on accrual status	$	25,575	$	27,093
TDRs on nonaccrual	5,439		5,199
Total TDRs	$	31,014	$	32,292
Amount of specific reserves included in the allowance for loan losses associated with TDRs	$	1,439	$	1,417
Additional commitments to lend to a borrower who has been a party to a TDR	$	2,116	$	1,378

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:

	Three Months Ended
	March 31, 2017
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial and industrial	2	$	80	$	80
Commercial real estate	4	934		934
Small business	4	143		143
Home equity	2	140		140
Total	12	$	1,297	$	1,297

	Three Months Ended
	March 31, 2016
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial and industrial	3	$	277	$	277
Commercial real estate	2	424		424
Residential real estate	2	423		465
Home equity	1	182		182
Other consumer	4	85		85
Total	12	$	1,391	$	1,433

(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:

	Three Months Ended March 31
	2017		2016
	(Dollars in thousands)
Extended maturity	$	1,207	$	1,195
Combination rate and maturity	—		238
Court ordered concession	90		—
Total	$	1,297	$	1,433

The Company considers a loan to have defaulted when it reaches 90 days past due. There were no loans modified during the past twelve months which have subsequently defaulted during the three months ended March 31, 2017 and 2016.

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 tables below set forth information regarding the Company’s impaired loans by loan portfolio at the dates indicated:

	March 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	28,319	$	29,280	$	—
Commercial real estate	9,596		10,742		—
Small business	300		359		—
Residential real estate	3,640		3,858		—
Home equity	4,289		4,378		—
Other consumer	117		118		—
Subtotal	46,261		48,735		—
With an allowance recorded
Commercial and industrial	$	10,119	$	10,220	$	3,558
Commercial real estate	5,170		5,516		173
Small business	446		462		2
Residential real estate	10,034		10,626		1,066
Home equity	1,396		1,568		235
Other consumer	241		242		21
Subtotal	27,406		28,634		5,055
Total	$	73,667	$	77,369	$	5,055

	December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	28,776	$	29,772	$	—
Commercial real estate	11,628		12,891		—
Commercial construction	—		—		—
Small business	494		569		—
Residential real estate	4,216		4,427		—
Home equity	4,485		4,572		—
Other consumer	146		146		—
Subtotal	49,745		52,377		—
With an allowance recorded
Commercial and industrial	$	10,402	$	10,440	$	3,661
Commercial real estate	5,185		5,533		196
Small business	377		392		8
Residential real estate	9,959		10,530		1,086
Home equity	1,378		1,547		242
Other consumer	251		252		21
Subtotal	27,552		28,694		5,214
Total	$	77,297	$	81,071	$	5,214

The following tables set forth information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:

	Three Months Ended
	March 31, 2017
	Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	39,193	$	208
Commercial real estate	9,678		91
Small business	304		3
Residential real estate	3,671		43
Home equity	4,323		44
Other consumer	120		2
Subtotal	57,289		391
With an allowance recorded
Commercial and industrial	$	10,178	$	4
Commercial real estate	5,189		50
Small business	457		5
Residential real estate	10,057		85
Home equity	1,402		13
Other consumer	245		2
Subtotal	27,528		159
Total	$	84,817	$	550

	Three Months Ended
	March 31, 2016
	Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	2,871	$	17
Commercial real estate	15,093		137
Small business	478		4
Residential real estate	3,639		43
Home equity	4,718		48
Other consumer	146		3
Subtotal	26,945		252
With an allowance recorded
Commercial and industrial	$	2,090	$	4
Commercial real estate	8,024		69
Small business	484		8
Residential real estate	10,528		94
Home equity	1,323		10
Other consumer	398		3
Subtotal	22,847		188
Total	$	49,792	$	440

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:

	March 31, 2017		December 31, 2016
	(Dollars in thousands)
Outstanding balance	$	20,034	$	20,477
Carrying amount	$	18,011	$	18,392

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

	Three Months Ended March 31
	2017			2016
	(Dollars in thousands)
Beginning balance	$	2,370		$	2,827
Acquisition	—			—
Accretion	(307		)	(409		)
Other change in expected cash flows (1)	216			297
Reclassification from nonaccretable difference for loans which have paid off (2)	—			64
Ending balance	$	2,279		$	2,779

(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 interest income during the period in which the loan paid off at amount greater than originally expected.