Loans and Leases

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Loans and Leases

Loans and Leases

The loan and lease portfolio consists of loans and leases originated by the Corporation, as well as loans acquired in mergers and acquisitions. These mergers and acquisitions include the December 2017 RBPI Merger, the January 2015 Continental Bank Holdings, Inc. Merger, the November 2012 transaction with First Bank of Delaware, and the July 2010 acquisition of First Keystone Financial, Inc. Certain tables in this footnote are presented with a breakdown between originated and acquired loans and leases.

A. The table below detailsportfolio loans and leases as of the dates indicated:

	June 30, 2018						December 31, 2017
(dollars in thousands)	Originated		Acquired		Total Loans and Leases		Originated		Acquired		Total Loans and Leases
Loans held for sale	$	4,204	$	—	$	4,204	$	3,794	$	—	$	3,794
Real Estate Loans:
Commercial mortgage	$	1,237,885	$	375,836	$	1,613,721	$	1,122,327	$	401,050	$	1,523,377
Home equity lines and loans	176,771		29,658		206,429		183,283		34,992		218,275
Residential mortgage	358,271		90,789		449,060		360,935		97,951		458,886
Construction	147,636		43,238		190,874		128,266		84,188		212,454
Total real estate loans	$	1,920,563	$	539,521	$	2,460,084	$	1,794,811	$	618,181	$	2,412,992
Commercial and industrial	632,917		112,389		745,306		589,304		130,008		719,312
Consumer	49,828		1,634		51,462		35,146		3,007		38,153
Leases	97,506		35,143		132,649		68,035		47,366		115,401
Total portfolio loans and leases	$	2,700,814	$	688,687	$	3,389,501	$	2,487,296	$	798,562	$	3,285,858
Total loans and leases	$	2,705,018	$	688,687	$	3,393,705	$	2,491,090	$	798,562	$	3,289,652
Loans with fixed rates	$	1,127,713	$	412,461	$	1,540,174	$	1,034,542	$	538,510	$	1,573,052
Loans with adjustable or floating rates	1,577,305		276,226		1,853,531		1,456,548		260,052		1,716,600
Total loans and leases	$	2,705,018	$	688,687	$	3,393,705	$	2,491,090	$	798,562	$	3,289,652
Net deferred loan origination fees included in the above loan table	$	1,200	$	—	$	1,200	$	887	$	—	$	887

B. Components of the net investment in leases are detailed as follows:

	June 30, 2018									December 31, 2017
(dollars in thousands)	Originated			Acquired			Total Leases			Originated			Acquired			Total Leases
Minimum lease payments receivable	$	108,718		$	39,656		$	148,374		$	75,592		$	55,219		$	130,811
Unearned lease income	(15,735		)	(5,534		)	(21,269		)	(10,338		)	(9,523		)	(19,861		)
Initial direct costs and deferred fees	4,523			1,021			5,544			2,781			1,670			4,451
Total Leases	$	97,506		$	35,143		$	132,649		$	68,035		$	47,366		$	115,401

C. Non-Performing Loans and Leases⁽¹⁾  

	June 30, 2018						December 31, 2017
(dollars in thousands)	Originated		Acquired		Total Loans and Leases		Originated		Acquired		Total Loans and Leases
Commercial mortgage	$	—	$	1,011	$	1,011	$	90	$	782	$	872
Home equity lines and loans	1,833		490		2,323		1,221		260		1,481
Residential mortgage	1,615		1,032		2,647		1,505		2,912		4,417
Commercial and industrial	1,011		574		1,585		826		880		1,706
Leases	575		1,307		1,882		103		—		103
Total non-performing loans and leases	$	5,034	$	4,414	$	9,448	$	3,745	$	4,834	$	8,579

(1) Purchased credit-impaired loans, which have been recorded at their fair values at acquisition, and which are performing, are excluded from this table, with theexception of$87 thousandand $167 thousand of purchased credit-impaired loans as of June 30, 2018 and December 31, 2017,respectively, which became non-performing subsequent to acquisition.

D. Purchased Credit-Impaired Loans

The outstanding principal balance and related carrying amount of purchased credit-impaired loans, for which the Corporation applies ASC 310-30, Accounting for Purchased Loans with Deteriorated Credit Quality, to account for the interest earned, as of the dates indicated, are as follows:

(dollars in thousands)	June 30, 2018		December 31, 2017
Outstanding principal balance	$	38,791	$	46,543
Carrying amount(1)	$	27,601	$	30,849

(1) Includes $88 thousand and $173 thousand of purchased credit-impaired loans as of June 30, 2018 and December 31, 2017, respectively, for which the Corporation could not estimate the timing or amount of expected cash flows to be collected at acquisition, and for which no accretable yield is recognized. Additionally, the table above includes $87 thousand and $167 thousand of purchased credit-impaired loans as of June 30, 2018 and December 31, 2017, respectively, which became non-performing subsequent to acquisition, which are disclosed in Note 5C, above, and which also have no accretable yield.

The following table presents changes in the accretable discount on purchased credit-impaired loans, for which the Corporation applies ASC 310-30, for the six months ended June 30, 2018: 

(dollars in thousands)	Accretable Discount
Balance, December 31, 2017	$	4,083
Accretion	(1,361		)
Reclassifications from nonaccretable difference	110
Additions/adjustments	211
Disposals	—
Balance, June 30, 2018	$	3,043

E. Age Analysis of Past Due Loans and Leases

The following tables present an aging of all portfolio loans and leases as of the dates indicated:

	Accruing Loans and Leases
As of June 30, 2018	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current*		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
(dollars in thousands)
Commercial mortgage	$	2,645	$	150	$	—	$	2,795	$	1,609,915	$	1,612,710	$	1,011	$	1,613,721
Home equity lines and loans	—		—		—		—		204,106		204,106		2,323		206,429
Residential mortgage	891		127		—		1,018		445,395		446,413		2,647		449,060
Construction	2,854		1,083		—		3,937		186,937		190,874		—		190,874
Commercial and industrial	832		163		—		995		742,726		743,721		1,585		745,306
Consumer	19		—		—		19		51,443		51,462		—		51,462
Leases	786		829		—		1,615		129,152		130,767		1,882		132,649
Total portfolio loans and leases	$	8,027	$	2,352	$	—	$	10,379	$	3,369,674	$	3,380,053	$	9,448	$	3,389,501

	Accruing Loans and Leases
As of December 31, 2017	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current*		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
(dollars in thousands)
Commercial mortgage	$	1,366	$	2,428	$	—	$	3,794	$	1,518,711	$	1,522,505	$	872	$	1,523,377
Home equity lines and loans	338		10		—		348		216,446		216,794		1,481		218,275
Residential mortgage	1,386		79		—		1,465		453,004		454,469		4,417		458,886
Construction	—		—		—		—		212,454		212,454		—		212,454
Commercial and industrial	658		286		—		944		716,662		717,606		1,706		719,312
Consumer	1,106		—		—		1,106		37,047		38,153		—		38,153
Leases	125		177		—		302		114,996		115,298		103		115,401
Total portfolio loans and leases	$	4,979	$	2,980	$	—	$	7,959	$	3,269,320	$	3,277,279	$	8,579	$	3,285,858

*Included as “current” are $6.5 million and $4.1 million of loans and leases as of June 30, 2018 and December 31, 2017, respectively, which are classified as administratively delinquent. An administratively delinquent loan is one which has been approved for a renewal or extension but has not had all the required documents fully executed as of the reporting date. Management does not consider these loans to be delinquent.

The following tables present an aging of originated portfolio loans and leases as of the dates indicated:

	Accruing Loans and Leases
As of June 30, 2018	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current*		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
(dollars in thousands)
Commercial mortgage	$	2,107	$	77	$	—	$	2,184	$	1,235,701	$	1,237,885	$	—	$	1,237,885
Home equity lines and loans	—		—		—		—		174,938		174,938		1,833		176,771
Residential mortgage	626		64		—		690		355,966		356,656		1,615		358,271
Construction	2,854		1,083		—		3,937		143,699		147,636		—		147,636
Commercial and industrial	766		—		—		766		631,140		631,906		1,011		632,917
Consumer	19		—		—		19		49,809		49,828		—		49,828
Leases	311		508		—		819		96,112		96,931		575		97,506
Total originated portfolio loans and leases	$	6,683	$	1,732	$	—	$	8,415	$	2,687,365	$	2,695,780	$	5,034	$	2,700,814

	Accruing Loans and Leases
As of December 31, 2017	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current*		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
(dollars in thousands)
Commercial mortgage	$	1,255	$	81	$	—	$	1,336	$	1,120,901	$	1,122,237	$	90	$	1,122,327
Home equity lines and loans	26		—		—		26		182,036		182,062		1,221		183,283
Residential mortgage	721		—		—		721		358,709		359,430		1,505		360,935
Construction	—		—		—		—		128,266		128,266		—		128,266
Commercial and industrial	439		236		—		675		587,803		588,478		826		589,304
Consumer	21		—		—		21		35,125		35,146		—		35,146
Leases	125		177		—		302		67,630		67,932		103		68,035
Total originated portfolio loans and leases	$	2,587	$	494	$	—	$	3,081	$	2,480,470	$	2,483,551	$	3,745	$	2,487,296

*Included as “current” are $6.2 million and $4.0 million of loans and leases as of June 30, 2018 and December 31, 2017, respectively, which are classified as administratively delinquent. An administratively delinquent loan is one which has been approved for a renewal or extension but has not had all the required documents fully executed as of the reporting date. Management does not consider these loans to be delinquent.

The following tables present an aging of acquired portfolio loans and leases as of the dates indicated:

	Accruing Loans and Leases
As of June 30, 2018	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current*		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
(dollars in thousands)
Commercial mortgage	$	538	$	73	$	—	$	611	$	374,214	$	374,825	$	1,011	$	375,836
Home equity lines and loans	—		—		—		—		29,168		29,168		490		29,658
Residential mortgage	265		63		—		328		89,429		89,757		1,032		90,789
Construction	—		—		—		—		43,238		43,238		—		43,238
Commercial and industrial	66		163		—		229		111,586		111,815		574		112,389
Consumer	—		—		—		—		1,634		1,634		—		1,634
Leases	475		321		—		796		33,040		33,836		1,307		35,143
Total acquired portfolio loans and leases	$	1,344	$	620	$	—	$	1,964	$	682,309	$	684,273	$	4,414	$	688,687

	Accruing Loans and Leases
As of December 31, 2017	30 – 59 Days Past Due		60 – 89 Days Past Due		Over 89 Days Past Due		Total Past Due		Current*		Total Accruing Loans and Leases		Nonaccrual Loans and Leases		Total Loans and Leases
(dollars in thousands)
Commercial mortgage	$	111	$	2,347	$	—	$	2,458	$	397,810	$	400,268	$	782	$	401,050
Home equity lines and loans	312		10		—		322		34,410		34,732		260		34,992
Residential mortgage	665		79		—		744		94,295		95,039		2,912		97,951
Construction	—		—		—		—		84,188		84,188		—		84,188
Commercial and industrial	219		50		—		269		128,859		129,128		880		130,008
Consumer	1,085		—		—		1,085		1,922		3,007		—		3,007
Leases	—		—		—		—		47,366		47,366		—		47,366
Total acquired portfolio loans and leases	$	2,392	$	2,486	$	—	$	4,878	$	788,850	$	793,728	$	4,834	$	798,562

*Included as “current” are $297 thousand and $102 thousand of loans and leases as of June 30, 2018 and December 31, 2017, respectively, which are classified as administratively delinquent. An administratively delinquent loan is one which has been approved for a renewal or extension but has not had all the required documents fully executed as of the reporting date. Management does not consider these loans to be delinquent.

F. Allowance for Loan and Lease Losses (the “Allowance”)

The following tables detail the roll-forward of the Allowance for the three and six months ended June 30, 2018 and 2017:

(dollars in thousands)	Commercial Mortgage			Home Equity Lines and Loans			Residential Mortgage		Construction		Commercial and Industrial			Consumer			Leases			Unallocated		Total
Balance, December 31, 2017	$	7,550		$	1,086		$	1,926	$	937	$	5,038		$	246		$	742		$	—	$	17,525
Charge-offs	(16		)	(225		)	—		—		(750		)	(92		)	(1,348		)	—		(2,431		)
Recoveries	6			1			1		2		1			3			123			—		137
Provision for loan and lease losses	493			71			6		219		1,383			132			1,863			—		4,167
Balance, June 30, 2018	$	8,033		$	933		$	1,933	$	1,158	$	5,672		$	289		$	1,380		$	—	$	19,398

(dollars in thousands)	Commercial Mortgage			Home Equity Lines and Loans			Residential Mortgage		Construction		Commercial and Industrial			Consumer			Leases			Unallocated		Total
Balance, March 31, 2018	$	7,174		$	1,045		$	1,898	$	844	$	5,361		$	291		$	1,049		$	—	$	17,662
Charge-offs	(16		)	(200		)	—		—		(467		)	(43		)	(751		)	—		(1,477		)
Recoveries	3			1			1		1		—			2			68			—		76
Provision for loan and lease losses	872			87			34		313		778			39			1,014			—		3,137
Balance, June 30, 2018	$	8,033		$	933		$	1,933	$	1,158	$	5,672		$	289		$	1,380		$	—	$	19,398

(dollars in thousands)	Commercial Mortgage		Home Equity Lines and Loans			Residential Mortgage			Construction			Commercial and Industrial			Consumer			Leases			Unallocated		Total
Balance, December 31, 2016	$	6,227	$	1,255		$	1,917		$	2,233		$	5,142		$	153		$	559		$	—	$	17,486
Charge-offs	—		(606		)	(70		)	—			(259		)	(59		)	(513		)	—		(1,507		)
Recoveries	6		—			—			2			15			4			185			—		212
Provision for loan and lease losses	375		565			(71		)	(1,124		)	(85		)	79			469			—		208
Balance, June 30, 2017	$	6,608	$	1,214		$	1,776		$	1,111		$	4,813		$	177		$	700		$	—	$	16,399

(dollars in thousands)	Commercial Mortgage		Home Equity Lines and Loans			Residential Mortgage			Construction			Commercial and Industrial			Consumer			Leases			Unallocated		Total
Balance, March 31, 2017	$	6,410	$	1,243		$	1,798		$	2,195		$	4,747		$	135		$	579		$	—	$	17,107
Charge-offs	—		(169		)	(43		)	—			(200		)	(18		)	(307		)	—		(737		)
Recoveries	3		—			—			1			15			2			91			—		112
Provision for loan and lease losses	195		140			21			(1,085		)	251			58			337			—		(83		)
Balance, June 30, 2017	$	6,608	$	1,214		$	1,776		$	1,111		$	4,813		$	177		$	700		$	—	$	16,399

The following tables detail the allocation of the Allowance for all portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of June 30, 2018 and December 31, 2017:

As of June 30, 2018	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Unallocated		Total
(dollars in thousands)
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	19	$	299	$	—	$	104	$	4	$	—	$	—	$	426
Collectively evaluated for impairment	8,033		914		1,634		1,158		5,568		285		1,380		—		18,972
Purchased credit-impaired(1)	—		—		—		—		—		—		—		—		—
Total	$	8,033	$	933	$	1,933	$	1,158	$	5,672	$	289	$	1,380	$	—	$	19,398

⁽¹⁾ Purchased credit-impaired loans are evaluated for impairment on an individual basis.

As of December 31, 2017	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Unallocated		Total
(dollars in thousands)
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	19	$	230	$	—	$	5	$	4	$	—	$	—	$	258
Collectively evaluated for impairment	7,550		1,067		1,696		937		5,033		242		742		—		17,267
Purchased credit-impaired(1)	—		—		—		—		—		—		—		—		—
Total	$	7,550	$	1,086	$	1,926	$	937	$	5,038	$	246	$	742	$	—	$	17,525

⁽¹⁾ Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following tables detail the carrying value for all portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of June 30, 2018 and December 31, 2017:

As of June 30, 2018	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Carrying value of loans and leases:
Individually evaluated for impairment	$	1,011	$	2,995	$	5,603	$	—	$	1,864	$	27	$	—	$	11,500
Collectively evaluated for impairment	1,603,381		202,923		443,457		188,474		728,081		51,435		132,649		3,350,400
Purchased credit-impaired(1)	9,329		511		—		2,400		15,361		—		—		27,601
Total	$	1,613,721	$	206,429	$	449,060	$	190,874	$	745,306	$	51,462	$	132,649	$	3,389,501

⁽¹⁾ Purchased credit-impaired loans are evaluated for impairment on an individual basis.

As of December 31, 2017	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Carrying value of loans and leases:
Individually evaluated for impairment	$	2,128	$	2,162	$	7,726	$	—	$	1,897	$	27	$	—	$	13,940
Collectively evaluated for impairment	1,503,825		215,604		451,160		204,088		712,865		38,126		115,401		3,241,069
Purchased credit-impaired(1)	17,424		509		—		8,366		4,550		—		—		30,849
Total	$	1,523,377	$	218,275	$	458,886	$	212,454	$	719,312	$	38,153	$	115,401	$	3,285,858

⁽¹⁾ Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following tables detail the allocation of the Allowance for originated portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of June 30, 2018 and December 31, 2017:

As of June 30, 2018	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	19	$	182	$	—	$	4	$	4	$	—	$	209
Collectively evaluated for impairment	8,033		914		1,634		1,158		5,568		285		1,380		18,972
Total	$	8,033	$	933	$	1,816	$	1,158	$	5,572	$	289	$	1,380	$	19,181

As of December 31, 2017	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	19	$	180	$	—	$	5	$	4	$	—	$	208
Collectively evaluated for impairment	7,550		1,067		1,696		937		5,033		242		742		17,267
Total	$	7,550	$	1,086	$	1,876	$	937	$	5,038	$	246	$	742	$	17,475

The following tables detail the carrying value for originated portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of June 30, 2018 and December 31, 2017:

As of June 30, 2018	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Carrying value of loans and leases:
Individually evaluated for impairment	$	—	$	2,505	$	3,974	$	—	$	1,377	$	27	$	—	$	7,883
Collectively evaluated for impairment	1,237,885		174,266		354,297		147,636		631,540		49,801		97,506		2,692,931
Total	$	1,237,885	$	176,771	$	358,271	$	147,636	$	632,917	$	49,828	$	97,506	$	2,700,814

As of December 31, 2017	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Carrying value of loans and leases:
Individually evaluated for impairment	$	1,345	$	1,902	$	4,418	$	—	$	1,186	$	27	$	—	$	8,878
Collectively evaluated for impairment	1,120,982		181,381		356,517		128,266		588,118		35,119		68,035		2,478,418
Total	$	1,122,327	$	183,283	$	360,935	$	128,266	$	589,304	$	35,146	$	68,035	$	2,487,296

The following tables detail the allocation of the Allowance for acquired portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of June 30, 2018 and December 31, 2017:

As of June 30, 2018	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	—	$	117	$	—	$	100	$	—	$	—	$	217
Collectively evaluated for impairment	—		—		—		—		—		—		—		—
Purchased credit-impaired(1)	—		—		—		—		—		—		—		—
Total	$	—	$	—	$	117	$	—	$	100	$	—	$	—	$	217

⁽¹⁾ Purchased credit-impaired loans are evaluated for impairment on an individual basis.

As of December 31, 2017	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Allowance on loans and leases:
Individually evaluated for impairment	$	—	$	—	$	50	$	—	$	—	$	—	$	—	$	50
Collectively evaluated for impairment	—		—		—		—		—		—		—		—
Purchased credit-impaired(1)	—		—		—		—		—		—		—		—
Total	$	—	$	—	$	50	$	—	$	—	$	—	$	—	$	50

⁽¹⁾ Purchased credit-impaired loans are evaluated for impairment on an individual basis.

The following tables detail the carrying value for acquired portfolio loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of June 30, 2018 and December 31, 2017:

As of June 30, 2018	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Carrying value of loans and leases:
Individually evaluated for impairment	$	1,011	$	490	$	1,629	$	—	$	487	$	—	$	—	$	3,617
Collectively evaluated for impairment	365,496		28,657		89,160		40,838		96,541		1,634		35,143		657,469
Purchased credit-impaired(1)	9,329		511		—		2,400		15,361		—		—		27,601
Total	$	375,836	$	29,658	$	90,789	$	43,238	$	112,389	$	1,634	$	35,143	$	688,687

⁽¹⁾Purchased credit-impaired loans are evaluated for impairment on an individual basis.

As of December 31, 2017	Commercial Mortgage		Home Equity Lines and Loans		Residential Mortgage		Construction		Commercial and Industrial		Consumer		Leases		Total
(dollars in thousands)
Carrying value of loans and leases:
Individually evaluated for impairment	$	783	$	260	$	3,308	$	—	$	711	$	—	$	—	$	5,062
Collectively evaluated for impairment	382,843		34,223		94,643		75,822		124,747		3,007		47,366		762,651
Purchased credit-impaired(1)	17,424		509		—		8,366		4,550		—		—		30,849
Total	$	401,050	$	34,992	$	97,951	$	84,188	$	130,008	$	3,007	$	47,366	$	798,562

⁽¹⁾Purchased credit-impaired loans are evaluated for impairment on an individual basis.

As part of the process of determining the Allowance for the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by both in-house staff as well as external loan reviewers. The result of these reviews is reflected in the risk grade assigned to each loan. These internally assigned grades are as follows:

• Pass – Loans considered satisfactory with no indications of deterioration.

• Special mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

• Substandard - Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

• Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

In addition, for the remaining segments of the loan and lease portfolio, which include residential mortgage, home equity lines and loans, consumer, and leases, the credit quality indicator used to determine this component of the Allowance is based on performance status.

The following tables detail the carrying value of all portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of June 30, 2018 and December 31, 2017:

Credit Risk Profile by Internally Assigned Grade

	Commercial Mortgage				Construction				Commercial and Industrial				Total
(dollars in thousands)	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Pass	$	1,585,083	$	1,490,862	$	180,805	$	193,227	$	726,009	$	711,145	$	2,491,897	$	2,395,234
Special Mention	2,357		13,448		2,208		3,902		230		889		4,795		18,239
Substandard	25,717		18,194		7,861		15,325		18,797		6,013		52,375		39,532
Doubtful	564		873		—		—		270		1,265		834		2,138
Total	$	1,613,721	$	1,523,377	$	190,874	$	212,454	$	745,306	$	719,312	$	2,549,901	$	2,455,143

Credit Risk Profile by Payment Activity

	Residential Mortgage				Home Equity Lines and Loans				Consumer				Leases				Total
(dollars inthousands)	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Performing	$	446,413	$	454,469	$	204,106	$	216,794	$	51,462	$	38,153	$	130,767	$	115,298	$	832,748	$	824,714
Non-performing	2,647		4,417		2,323		1,481		—		—		1,882		103		6,852		6,001
Total	$	449,060	$	458,886	$	206,429	$	218,275	$	51,462	$	38,153	$	132,649	$	115,401	$	839,600	$	830,715

The following tables detail the carrying value of originated portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of June 30, 2018 and December 31, 2017:

Credit Risk Profile by Internally Assigned Grade

	Commercial Mortgage				Construction				Commercial and Industrial				Total
(dollars in thousands)	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Pass	$	1,228,319	$	1,114,171	$	140,896	$	126,260	$	630,227	$	586,896	$	1,999,442	$	1,827,327
Special Mention	990		—		1,279		—		—		664		2,269		664
Substandard	8,576		8,156		5,461		2,006		2,420		1,389		16,457		11,551
Doubtful	—		—		—		—		270		355		270		355
Total	$	1,237,885	$	1,122,327	$	147,636	$	128,266	$	632,917	$	589,304	$	2,018,438	$	1,839,897

Credit Risk Profile by Payment Activity

	Residential Mortgage				Home Equity Lines and Loans				Consumer				Leases				Total
(dollars in thousands)	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Performing	$	356,656	$	359,430	$	174,938	$	182,062	$	49,828	$	35,146	$	96,931	$	67,932	$	678,353	$	644,570
Non-performing	1,615		1,505		1,833		1,221		—		—		575		103		4,023		2,829
Total	$	358,271	$	360,935	$	176,771	$	183,283	$	49,828	$	35,146	$	97,506	$	68,035	$	682,376	$	647,399

The following tables detail the carrying value of acquired portfolio loans and leases by portfolio segment based on the credit quality indicators used to determine the Allowance as of June 30, 2018 and December 31, 2017:

Credit Risk Profile by Internally Assigned Grade

	Commercial Mortgage				Construction				Commercial and Industrial				Total
(dollars in thousands)	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Pass	$	356,764	$	376,691	$	39,909	$	66,967	$	95,782	$	124,249	$	492,455	$	567,907
Special Mention	1,367		13,448		929		3,902		230		225		2,526		17,575
Substandard	17,141		10,038		2,400		13,319		16,377		4,624		35,918		27,981
Doubtful	564		873		—		—		—		910		564		1,783
Total	$	375,836	$	401,050	$	43,238	$	84,188	$	112,389	$	130,008	$	531,463	$	615,246

 Credit Risk Profile by Payment Activity

	Residential Mortgage				Home Equity Lines and Loans				Consumer				Leases				Total
(dollars inthousands)	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Performing	$	89,757	$	95,039	$	29,168	$	34,732	$	1,634	$	3,007	$	33,836	$	47,366	$	154,395	$	180,144
Non-performing	1,032		2,912		490		260		—		—		1,307		—		2,829		3,172
Total	$	90,789	$	97,951	$	29,658	$	34,992	$	1,634	$	3,007	$	35,143	$	47,366	$	157,224	$	183,316

G. Troubled Debt Restructurings (“TDRs”)

The restructuring of a loan is considered a “troubled debt restructuring” if both of the following conditions are met: (i) the borrower is experiencing financial difficulties, and (ii) the creditor has granted a concession. The most common concessions granted include one or more modifications to the terms of the debt, such as (a) a reduction in the interest rate for the remaining life of the debt, (b) an extension of the maturity date at an interest rate lower than the current market rate for new debt with similar risk, (c) a temporary period of interest-only payments, (d) a reduction in the contractual payment amount for either a short period or remaining term of the loan, and (e) for leases, a reduced lease payment. A less common concession granted is the forgiveness of a portion of the principal.

The determination of whether a borrower is experiencing financial difficulties takes into account not only the current financial condition of the borrower, but also the potential financial condition of the borrower, were a concession not granted. Similarly, the determination of whether a concession has been granted is very subjective in nature. For example, simply extending the term of a loan at its original interest rate or even at a higher interest rate could be interpreted as a concession unless the borrower could readily obtain similar credit terms from a different lender.

The following table presents the balance of TDRs as of the indicated dates:

(dollars in thousands)	June 30, 2018		December 31, 2017
TDRs included in nonperforming loans and leases	$	1,044	$	3,289
TDRs in compliance with modified terms	4,117		5,800
Total TDRs	$	5,161	$	9,089

The following table presents information regarding loan and lease modifications categorized as TDRs for the three months ended June 30, 2018:

	For the Three Months Ended June 30, 2018
(dollars in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Home equity loans and lines	1	$	8	$	8
Residential mortgages	2	219		219
Leases	2	33		33
Total	5	$	260	$	260

The following table presents information regarding the types of loan and lease modifications made for the three months ended June 30, 2018:

	Number of Contracts
	Loan Term Extension	Interest Rate Change and Term Extension	Interest Rate Change and/or Interest-Only Period	Contractual Payment Reduction (Leases only)	Temporary Payment Deferral
Home equity loans and lines	—	1	—	—	—
Residential mortgages	1	1	—	—	—
Leases	—	—	—	2	—
Total	1	2	—	2	—

The following table presents information regarding loan and lease modifications categorized as TDRs for the six months ended June 30, 2018: 

	For the Six Months Ended June 30, 2018
(dollars in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Home equity loans and lines	1	$	8	$	8
Residential mortgages	2	219		219
Commercial and industrial	1	18		18
Leases	2	33		33
Total	6	$	278	$	278

The following table presents information regarding the types of loan and lease modifications made for the six months ended June 30, 2018:

	Number of Contracts
	Loan Term Extension	Interest Rate Change and Term Extension	Interest Rate Change and/or Interest-Only Period	Contractual Payment Reduction (Leases only)	Temporary Payment Deferral
Home equity loans and lines	—	1	—	—	—
Residential mortgages	1	1	—	—	—
Commercial and industrial	—	1	—	—	—
Leases	—	—	—	2	—
Total	1	3	—	2	—

During the six months ended June 30, 2018, one home equity line of credit with a principal balance of $25 thousand and one lease with a principal balance of $50 thousand, which had been previously modified to troubled debt restructurings defaulted and were charged off.

H. Impaired Loans

The following tables detail the recorded investment and principal balance of impaired loans by portfolio segment, their related Allowance and interest income recognized for the three and six months ended June 30, 2018 and 2017 (purchased credit-impaired loans are not included in the tables):

As of and for the Three Months Ended June 30, 2018	Recorded Investment**		Principal Balance		Related Allowance		Average Principal Balance		Interest Income Recognized		Cash-Basis Interest Income Recognized
(dollars in thousands)
Impaired loans with related allowance:
Home equity lines and loans	$	570	$	570	$	19	$	572	$	6	$	—
Residential mortgage	2,379		2,379		299		2,383		22		—
Commercial and industrial	267		362		104		314		—		—
Consumer	27		27		4		27		—		—
Total	$	3,243	$	3,338	$	426	$	3,296	$	28	$	—
Impaired loans without related allowance*:
Commercial mortgage	$	1,011	$	1,010	$	—	$	1,022	$	—	$	—
Home equity lines and loans	2,425		2,487		—		2,450		2		—
Residential mortgage	3,223		3,265		—		3,236		19		—
Commercial and industrial	1,598		2,300		—		1,620		5		—
Total	$	8,257	$	9,062	$	—	$	8,328	$	26	$	—
Grand total	$	11,500	$	12,400	$	426	$	11,624	$	54	$	—

*The table above does not include the recorded investment of $2.0 million of impaired leases without a related Allowance.

**Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

As of and for the Six Months Ended June 30, 2018	Recorded Investment**		Principal Balance		Related Allowance		Average Principal Balance		Interest Income Recognized		Cash-Basis Interest Income Recognized
(dollars in thousands)
Impaired loans with related allowance:
Home equity lines and loans	$	570	$	570	$	19	$	574	$	11	$	—
Residential mortgage	2,379		2,379		299		2,387		45		—
Commercial and industrial	267		362		104		391		—		—
Consumer	27		27		4		27		1		—
Total	$	3,243	$	3,338	$	426	$	3,379	$	57	$	—
Impaired loans without related allowance*:
Commercial mortgage	$	1,011	$	1,010	$	—	$	771	$	6	$	—
Home equity lines and loans	2,425		2,487		—		2,473		8		—
Residential mortgage	3,223		3,265		—		3,105		41		—
Commercial and industrial	1,598		2,300		—		1,569		12		—
Total	$	8,257	$	9,062	$	—	$	7,918	$	67	$	—
Grand total	$	11,500	$	12,400	$	426	$	11,297	$	124	$	—

*The table above does not include the recorded investment of $2.0 million of impaired leases without a related Allowance.

**Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

As of and for the Three Months Ended June 30, 2017	Recorded Investment**		Principal Balance		Related Allowance		Average Principal Balance		Interest Income Recognized		Cash-Basis Interest Income Recognized
(dollars in thousands)
Impaired loans with related allowance:
Home equity lines and loans	$	21	$	21	$	3	$	21	$	—	$	—
Residential mortgage	1,578		1,578		112		1,581		20		—
Consumer	38		38		14		38		—		—
Total	1,637		1,637		129		1,640		20		—
Impaired loans without related allowance*:
Commercial mortgage	$	2,071	$	2,106	$	—	$	2,113	$	15	$	—
Home equity lines and loans	1,514		2,054		—		1,536		1		—
Residential mortgage	5,371		5,712		—		5,496		36		—
Commercial and industrial	2,140		2,796		—		2,338		3		—
Total	$	11,096	$	12,668	$	—	$	11,483	$	55	$	—
Grand total	$	12,733	$	14,305	$	129	$	13,123	$	75	$	—

*The table above does not include the recorded investment of $380 thousand of impaired leases without a related Allowance.

**Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

As of and for the Six Months Ended June 30, 2017	Recorded Investment**		Principal Balance		Related Allowance		Average Principal Balance		Interest Income Recognized		Cash-Basis Interest Income Recognized
(dollars in thousands)
Impaired loans with related allowance:
Home equity lines and loans	$	21	$	21	$	3	$	21	$	1	$	—
Residential mortgage	1,578		1,578		112		1,585		41		—
Consumer	38		38		14		39		1		—
Total	$	1,637	$	1,637	$	129	$	1,645	$	43	$	—
Impaired loans without related allowance*:
Commercial mortgage	$	2,071	$	2,106	$	—	$	2,117	$	39	$	—
Home equity lines and loans	1,514		2,054		—		1,579		3		—
Residential mortgage	5,371		5,712		—		5,521		76		—
Commercial and industrial	2,140		2,796		—		2,367		6		—
Total	$	11,096	$	12,668	$	—	$	11,584	$	124	$	—
Grand total	$	12,733	$	14,305	$	129	$	13,229	$	167	$	—

*The table above does not include the recorded investment of $380 thousand of impaired leases without a related Allowance.

**Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

(dollars in thousands)	Recorded Investment (2)		Principal Balance		Related Allowance
As of December 31, 2017
Impaired loans with related allowance:
Home equity lines and loans	$	577	$	577	$	19
Residential mortgage	2,436		2,435		230
Commercial and industrial	18		19		5
Consumer	27		27		4
Total	3,058		3,058		258
Impaired loans without related allowance(1):
Home equity lines and loans	$	1,585	$	1,645	$	—
Residential mortgage	5,290		5,529		—
Commercial and industrial	1,879		3,613		—
Commercial mortgage	2,128		2,218		—
Total	$	10,882	$	13,005	$	—
Grand total	$	13,940	$	16,063	$	258

⁽¹⁾  The table above does not include the recorded investment of$272 thousandof impaired leases without a related Allowance.

⁽²⁾  Recorded investment equals principal balance less partial charge-offs and interest payments on non-performing loans that have been applied to principal.

I. Loan Mark

Loans acquired in mergers and acquisitions are recorded at fair value as of the date of the transaction. This adjustment to the acquired principal amount is referred to as the “Loan Mark”. With the exception of purchased credit impaired loans, for which the Loan Mark is accounted under ASC 310-30, the Loan Mark is amortized or accreted as an adjustment to yield over the lives of the loans.

The following tables detail, for acquired loans, the outstanding principal, remaining loan mark, and recorded investment, by portfolio segment, as of the dates indicated:

	As of June 30, 2018
(dollars in thousands)	Outstanding Principal		Remaining Loan Mark			Recorded Investment
Commercial mortgage	$	385,801	$	(9,965	)	$	375,836
Home equity lines and loans	32,271		(2,613		)	29,658
Residential mortgage	93,916		(3,127		)	90,789
Construction	43,676		(438		)	43,238
Commercial and industrial	121,265		(8,876		)	112,389
Consumer	1,669		(35		)	1,634
Leases	36,792		(1,649		)	35,143
Total	$	715,390	$	(26,703	)	$	688,687

	As of December 31, 2017
(dollars in thousands)	Outstanding Principal		Remaining Loan Mark			Recorded Investment
Commercial mortgage	$	412,263	$	(11,213	)	$	401,050
Home equity lines and loans	37,944		(2,952		)	34,992
Residential mortgage	101,523		(3,572		)	97,951
Construction	86,081		(1,893		)	84,188
Commercial and industrial	141,960		(11,952		)	130,008
Consumer	3,051		(44		)	3,007
Leases	50,530		(3,164		)	47,366
Total	$	833,352	$	(34,790	)	$	798,562