4. LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

The composition of the loan portfolio at period end follows:


(in thousands)	March 31, 2018		December 31, 2017

Traditional Banking:
Residential real estate:
Owner occupied	$	912,415	$	921,565
Owner occupied - correspondent*		111,263		116,792
Nonowner occupied		216,095		205,081
Commercial real estate		1,216,592		1,207,293
Construction & land development		160,391		150,065
Commercial & industrial		355,316		341,692
Lease financing receivables		15,751		16,580
Home equity		342,217		347,655
Consumer:
Credit cards		16,677		16,078
Overdrafts		791		974
Automobile loans		65,281		65,650
Other consumer		27,556		20,501
Total Traditional Banking		3,440,345		3,409,926
Warehouse lines of credit*		533,959		525,572
Total Core Banking		3,974,304		3,935,498

Republic Processing Group*:
Tax Refund Solutions:
Easy Advances		15,601		—
Other TRS loans		192		11,648
Republic Credit Solutions		62,403		66,888
Total Republic Processing Group		78,196		78,536

Total loans**		4,052,500		4,014,034
Allowance for loan and lease losses		(52,341)		(42,769)

Total loans, net	$	4,000,159	$	3,971,265

*Identifies loans to borrowers located primarily outside of the Bank’s market footprint.

**Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs. See table directly below for expanded detail.

The following table reconciles the contractually receivable and carrying amounts of loans at March 31, 2018 and December 31, 2017:


(in thousands)	March 31, 2018		December 31, 2017

Contractually receivable	$	4,052,694	$	4,014,673
Unearned income(1)		(1,219)		(1,157)
Unamortized premiums(2)		914		1,069
Unaccreted discounts(3)		(4,251)		(4,643)
Net unamortized deferred origination fees and costs(4)		4,362		4,092
Carrying value of loans	$	4,052,500	$	4,014,034

(1)

Unearned income relates to lease financing receivables.

(2)

Unamortized premiums predominately relate to loans acquired through the Bank’s Correspondent Lending channel.

(3)

Unaccreted discounts include accretable and non-accretable discounts and relate to loans acquired in the Bank’s 2016 Cornerstone acquisition and its 2012 FDIC-assisted transactions.

(4)

Primarily attributable to the Traditional Banking segment.

Purchased-Credit-Impaired (“PCI”) Loans

The following table reconciles the contractually required and carrying amounts of all PCI loans at March 31, 2018 and December 31, 2017:


(in thousands)	March 31, 2018		December 31, 2017

Contractually required principal	$	5,319	$	5,435
Non-accretable amount		(1,691)		(1,691)
Accretable amount		(140)		(140)
Carrying value of loans	$	3,488	$	3,604

The following table presents a rollforward of the accretable amount on all PCI loans for the three months ended March 31, 2018 and 2017:


	Three Months Ended
	March 31,
(in thousands)	2018		2017

Balance, beginning of period	$	(140)	$	(3,600)
Transfers between non-accretable and accretable*		—		90
Net accretion into interest income on loans, including loan fees		—		101
Balance, end of period	$	(140)	$	(3,409)

*Transfers are primarily attributable to changes in estimated cash flows of the underlying loans.

Credit Quality Indicators

The following tables include loans by risk category based on the Bank’s internal analyses performed as of March 31, 2018 and December 31, 2017. Risk categories are defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017:


March 31, 2018			Special				Doubtful /		PCI Loans -		PCI Loans -		Total Rated
(in thousands)	Pass		Mention		Substandard		Loss		Group 1		Substandard		Loans*

Traditional Banking:
Residential real estate:
Owner occupied	$	—	$	17,690	$	12,395	$	—	$	176	$	1,609	$	31,870
Owner occupied - correspondent		—		—		383		—		—		—		383
Nonowner occupied		—		628		2,259		—		244		—		3,131
Commercial real estate		1,205,748		4,743		4,765		—		1,336		—		1,216,592
Construction & land development		159,780		—		611		—		—		—		160,391
Commercial & industrial		354,477		36		791		—		12		—		355,316
Lease financing receivables		15,751		—		—		—		—		—		15,751
Home equity		—		33		1,427		—		6		102		1,568
Consumer:
Credit cards		—		—		—		—		—		—		—
Overdrafts		—		—		—		—		—		—		—
Automobile loans		—		—		141		—		—		—		141
Other consumer		—		—		556		—		—		3		559
Total Traditional Banking		1,735,756		23,130		23,328		—		1,774		1,714		1,785,702
Warehouse lines of credit		533,959		—		—		—		—		—		533,959
Total Core Banking		2,269,715		23,130		23,328		—		1,774		1,714		2,319,661

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—		—		—
Other TRS loans		—		—		—		—		—		—		—
Republic Credit Solutions		—		—		1,306		—		—		—		1,306
Total Republic Processing Group		—		—		1,306		—		—		—		1,306

Total rated loans	$	2,269,715	$	23,130	$	24,634	$	—	$	1,774	$	1,714	$	2,320,967


December 31, 2017			Special				Doubtful /		PCI Loans -		PCI Loans -		Total Rated
(in thousands)	Pass		Mention		Substandard		Loss		Group 1		Substandard		Loans*

Traditional Banking:
Residential real estate:
Owner occupied	$	—	$	18,054	$	12,056	$	—	$	180	$	1,658	$	31,948
Owner occupied - correspondent		—		—		—		—		—		—		—
Nonowner occupied		—		635		1,240		—		248		—		2,123
Commercial real estate		1,197,299		4,824		3,798		—		1,372		—		1,207,293
Construction & land development		149,332		—		733		—		—		—		150,065
Commercial & industrial		341,377		267		21		—		27		—		341,692
Lease financing receivables		16,580		—		—		—		—		—		16,580
Home equity		—		33		1,609		—		6		110		1,758
Consumer:
Credit cards		—		—		—		—		—		—		—
Overdrafts		—		—		—		—		—		—		—
Automobile loans		—		—		108		—		—		—		108
Other consumer		—		—		571		—		—		3		574
Total Traditional Banking		1,704,588		23,813		20,136		—		1,833		1,771		1,752,141
Warehouse lines of credit		525,572		—		—		—		—		—		525,572
Total Core Banking		2,230,160		23,813		20,136		—		1,833		1,771		2,277,713

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—		—		—
Other TRS loans		11,648		—		—		—		—		—		11,648
Republic Credit Solutions		—		—		1,066		—		—		—		1,066
Total Republic Processing Group		11,648		—		1,066		—		—		—		12,714

Total rated loans	$	2,241,808	$	23,813	$	21,202	$	—	$	1,833	$	1,771	$	2,290,427

*The above tables exclude all non-classified residential real estate, home equity and consumer loans at the respective period ends.

Allowance for Loan and Lease Losses

The following table presents the activity in the Allowance by portfolio class:


	Allowance Rollforward
	Three Months Ended March 31,
	2018										2017
	Beginning				Charge-				Ending		Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance

Traditional Banking:
Residential real estate:
Owner occupied	$	6,182	$	—	$	(215)	$	21	$	5,988	$	7,158	$	(143)	$	(3)	$	59	$	7,071
Owner occupied - correspondent		292		(14)		—		—		278		373		(9)		(11)		—		353
Nonowner occupied		1,396		165		(121)		21		1,461		1,139		59		—		—		1,198
Commercial real estate		9,043		292		—		125		9,460		8,078		(197)		—		17		7,898
Construction & land development		2,364		354		—		2		2,720		1,850		383		—		—		2,233
Commercial & industrial		2,198		126		(108)		31		2,247		1,511		(44)		—		21		1,488
Lease financing receivables		174		(9)		—		—		165		136		9		—		—		145
Home equity		3,754		(111)		—		26		3,669		3,757		69		(4)		9		3,831
Consumer:
Credit cards		607		235		(93)		7		756		490		38		(27)		5		506
Overdrafts		974		17		(289)		89		791		675		83		(184)		67		641
Automobile loans		687		19		—		—		706		526		36		—		1		563
Other consumer		1,162		(135)		(120)		83		990		771		183		(230)		101		825
Total Traditional Banking		28,833		939		(946)		405		29,231		26,464		467		(459)		280		26,752
Warehouse lines of credit		1,314		21		—		—		1,335		1,464		(226)		—		—		1,238
Total Core Banking		30,147		960		(946)		405		30,566		27,928		241		(459)		280		27,990

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		13,277		(3,705)		—		9,572		—		8,601		(860)		—		7,741
Other TRS loans		12		112		—		1		125		25		(260)		—		235		—
Republic Credit Solutions		12,610		2,906		(3,696)		258		12,078		4,967		3,769		(2,285)		180		6,631
Total Republic Processing Group		12,622		16,295		(7,401)		259		21,775		4,992		12,110		(3,145)		415		14,372

Total	$	42,769	$	17,255	$	(8,347)	$	664	$	52,341	$	32,920	$	12,351	$	(3,604)	$	695	$	42,362

Nonperforming Loans and Nonperforming Assets

Detail of nonperforming loans, nonperforming assets and select credit quality ratios follows:


(dollars in thousands)	March 31, 2018			December 31, 2017

Loans on nonaccrual status*	$	14,849		$	14,118
Loans past due 90-days-or-more and still on accrual**		1,279			956
Total nonperforming loans		16,128			15,074
Other real estate owned		160			115
Total nonperforming assets	$	16,288		$	15,189

Credit Quality Ratios - Total Company:

Nonperforming loans to total loans		0.40	%		0.38	%
Nonperforming assets to total loans (including OREO)		0.40			0.38
Nonperforming assets to total assets		0.32			0.30

Credit Quality Ratios - Core Bank:

Nonperforming loans to total loans		0.37	%		0.36	%
Nonperforming assets to total loans (including OREO)		0.38			0.36
Nonperforming assets to total assets		0.31			0.28

*Loans on nonaccrual status include impaired loans.

**Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.

The following table presents the recorded investment in nonaccrual loans and loans past due 90-days-or-more and still on accrual by class of loans:


					Past Due 90-Days-or-More
	Nonaccrual				and Still Accruing Interest*
(in thousands)	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017

Traditional Banking:
Residential real estate:
Owner occupied	$	8,952	$	9,230	$	—	$	—
Owner occupied - correspondent		—		—		—		—
Nonowner occupied		758		257		—		—
Commercial real estate		3,351		3,247		—		—
Construction & land development		62		67		—		—
Commercial & industrial		706		—		—		—
Lease financing receivables		—		—		—		—
Home equity		929		1,217		—		—
Consumer:
Credit cards		—		—		1		—
Overdrafts		—		—		—		—
Automobile loans		65		68		—		—
Other consumer		26		32		26		19
Total Traditional Banking		14,849		14,118		27		19
Warehouse lines of credit		—		—		—		—
Total Core Banking		14,849		14,118		27		19

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—
Other TRS loans		—		—		—		—
Republic Credit Solutions		—		—		1,252		937
Total Republic Processing Group		—		—		1,252		937

Total	$	14,849	$	14,118	$	1,279	$	956

* Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.

Nonaccrual loans and loans past due 90-days-or-more and still on accrual include both smaller balance, primarily retail, homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Nonaccrual loans are typically returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for six consecutive months and future contractual payments are reasonably assured. Troubled Debt Restructurings (“TDRs”) on nonaccrual status are reviewed for return to accrual status on an individual basis, with additional consideration given to performance under the modified terms.

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class of loans:


	30 - 59			60 - 89			90 or More
March 31, 2018	Days			Days			Days			Total			Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total

Traditional Banking:
Residential real estate:
Owner occupied	$	1,191		$	960		$	1,344		$	3,495		$	908,920	$	912,415
Owner occupied - correspondent		383			—			—			383			110,880		111,263
Nonowner occupied		645			—			99			744			215,351		216,095
Commercial real estate		80			811			1,399			2,290			1,214,302		1,216,592
Construction & land development		—			—			—			—			160,391		160,391
Commercial & industrial		124			15			—			139			355,177		355,316
Lease financing receivables		—			—			—			—			15,751		15,751
Home equity		481			179			187			847			341,370		342,217
Consumer:
Credit cards		37			29			1			67			16,610		16,677
Overdrafts		176			1			—			177			614		791
Automobile loans		—			21			23			44			65,237		65,281
Other consumer		61			30			26			117			27,439		27,556
Total Traditional Banking		3,178			2,046			3,079			8,303			3,432,042		3,440,345
Warehouse lines of credit		—			—			—			—			533,959		533,959
Total Core Banking		3,178			2,046			3,079			8,303			3,966,001		3,974,304

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		13,163			—			—			13,163			2,438		15,601
Other TRS loans		—			—			—			—			192		192
Republic Credit Solutions		2,487			628			1,252			4,367			58,036		62,403
Total Republic Processing Group		15,650			628			1,252			17,530			60,666		78,196

Total	$	18,828		$	2,674		$	4,331		$	25,833		$	4,026,667	$	4,052,500
Delinquency ratio***		0.46	%		0.07	%		0.11	%		0.64	%

*All loans past due 90-days-or-more, excluding small balance consumer loans, were on nonaccrual status.

**Delinquent status may be determined by either the number of days past due or number of payments past due. Easy Advances do not have a contractual due date but the Company considers an Easy Advance delinquent if it remains unpaid three weeks after the taxpayer customer’s tax return is submitted to the applicable tax authority.

***Represents total loans 30-days-or-more past due by aging category divided by total loans.


	30 - 59			60 - 89			90 or More
December 31, 2017	Days			Days			Days			Total			Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total

Traditional Banking:
Residential real estate:
Owner occupied	$	2,559		$	1,166		$	1,057		$	4,782		$	916,783	$	921,565
Owner occupied - correspondent		—			—			—			—			116,792		116,792
Nonowner occupied		47			—			99			146			204,935		205,081
Commercial real estate		398			—			1,329			1,727			1,205,566		1,207,293
Construction & land development		67			—			—			67			149,998		150,065
Commercial & industrial		15			—			—			15			341,677		341,692
Lease financing receivables		—			—			—			—			16,580		16,580
Home equity		723			50			448			1,221			346,434		347,655
Consumer:
Credit cards		34			40			—			74			16,004		16,078
Overdrafts		230			3			—			233			741		974
Automobile loans		36			—			24			60			65,590		65,650
Other consumer		93			21			21			135			20,366		20,501
Total Traditional Banking		4,202			1,280			2,978			8,460			3,401,466		3,409,926
Warehouse lines of credit		—			—			—			—			525,572		525,572
Total Core Banking		4,202			1,280			2,978			8,460			3,927,038		3,935,498

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—			—			—			—			—		—
Other TRS loans		—			—			—			—			11,648		11,648
Republic Credit Solutions		3,631			1,073			937			5,641			61,247		66,888
Total Republic Processing Group		3,631			1,073			937			5,641			72,895		78,536

Total	$	7,833		$	2,353		$	3,915		$	14,101		$	3,999,933	$	4,014,034
Delinquency ratio***		0.20	%		0.06	%		0.10	%		0.35	%

*All loans past due 90-days-or-more, excluding smaller balance consumer loans, were on nonaccrual status.

**Delinquent status may be determined by either the number of days past due or number of payments past due.

***Represents total loans 30-days-or-more past due by aging category divided by total loans.

Impaired Loans

Information regarding the Bank’s impaired loans follows:


(in thousands)	March 31, 2018		December 31, 2017

Loans with no allocated Allowance	$	19,992	$	18,540
Loans with allocated Allowance		27,935		27,076
Total recorded investment in impaired loans	$	47,927	$	45,616

Amount of the allocated Allowance	$	4,579	$	4,685

Approximately $3 million and $4 million of impaired loans at March 31, 2018 and December 31, 2017 were PCI loans. Approximately $2 million and $2 million of impaired loans at March 31, 2018 and December 31, 2017 were formerly PCI loans that became classified as “impaired” through a post-acquisition troubled debt restructuring.

The following tables present the balance in the Allowance and the recorded investment in loans by portfolio class based on impairment method as of March 31, 2018 and December 31, 2017:


	Allowance for Loan and Lease Losses								Loans
	Individually				PCI with				Individually				PCI with		PCI without
March 31, 2018	Evaluated		Collectively		Post Acquisition		Total		Evaluated		Collectively		Post Acquisition		Post Acquisition		Total		Allowance to
(dollars in thousands)	Excluding PCI		Evaluated		Impairment		Allowance		Excluding PCI		Evaluated		Impairment		Impairment		Loans		Total Loans

Traditional Banking:
Residential real estate:
Owner occupied	$	2,280	$	3,430	$	278	$	5,988	$	27,610	$	883,020	$	1,785	$	—	$	912,415		0.66	%
Owner occupied - correspondent		—		278		—		278		383		110,880		—		—		111,263		0.25
Nonowner occupied		3		1,456		2		1,461		2,827		213,024		244		—		216,095		0.68
Commercial real estate		729		8,683		48		9,460		10,071		1,205,185		1,334		2		1,216,592		0.78
Construction & land development		100		2,620		—		2,720		611		159,780		—		—		160,391		1.70
Commercial & industrial		88		2,159		—		2,247		799		354,505		—		12		355,316		0.63
Lease financing receivables		—		165		—		165		—		15,751		—		—		15,751		1.05
Home equity		402		3,162		105		3,669		1,427		340,682		108		—		342,217		1.07
Consumer:
Credit cards		—		756		—		756		—		16,677		—		—		16,677		4.53
Overdrafts		—		791		—		791		—		791		—		—		791		100.00
Automobile loans		41		665		—		706		141		65,140		—		—		65,281		1.08
Other consumer		479		508		3		990		530		27,023		3		—		27,556		3.59
Total Traditional Banking		4,122		24,673		436		29,231		44,399		3,392,458		3,474		14		3,440,345		0.85
Warehouse lines of credit		—		1,335		—		1,335		—		533,959		—		—		533,959		0.25
Total Core Banking		4,122		26,008		436		30,566		44,399		3,926,417		3,474		14		3,974,304		0.77

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		9,572		—		9,572		—		15,601		—		—		15,601		61.36
Other TRS loans		—		125		—		125		—		192		—		—		192		65.10
Republic Credit Solutions		21		12,057		—		12,078		54		62,349		—		—		62,403		19.35
Total Republic Processing Group		21		21,754		—		21,775		54		78,142		—		—		78,196		27.85
Total	$	4,143	$	47,762	$	436	$	52,341	$	44,453	$	4,004,559	$	3,474	$	14	$	4,052,500		1.29	%


	Allowance for Loan and Lease Losses								Loans
	Individually				PCI with				Individually				PCI with		PCI without
December 31, 2017	Evaluated		Collectively		Post Acquisition		Total		Evaluated		Collectively		Post Acquisition		Post Acquisition		Total		Allowance to
(dollars in thousands)	Excluding PCI		Evaluated		Impairment		Allowance		Excluding PCI		Evaluated		Impairment		Impairment		Loans		Total Loans

Traditional Banking:
Residential real estate:
Owner occupied	$	2,361	$	3,501	$	320	$	6,182	$	27,605	$	892,122	$	1,838	$	—	$	921,565		0.67	%
Owner occupied - correspondent		—		292		—		292		—		116,792		—		—		116,792		0.25
Nonowner occupied		4		1,390		2		1,396		1,814		203,019		248		—		205,081		0.68
Commercial real estate		407		8,588		48		9,043		9,185		1,196,736		1,369		3		1,207,293		0.75
Construction & land development		107		2,257		—		2,364		733		149,332		—		—		150,065		1.58
Commercial & industrial		288		1,910		—		2,198		308		341,357		—		27		341,692		0.64
Lease financing receivables		—		174		—		174		—		16,580		—		—		16,580		1.05
Home equity		425		3,218		111		3,754		1,609		345,930		115		1		347,655		1.08
Consumer:
Credit cards		—		607		—		607		—		16,078		—		—		16,078		3.78
Overdrafts		—		974		—		974		—		974		—		—		974		100.00
Automobile loans		32		655		—		687		108		65,542		—		—		65,650		1.05
Other consumer		528		631		3		1,162		552		19,946		3		—		20,501		5.67
Total Traditional Banking		4,152		24,197		484		28,833		41,914		3,364,408		3,573		31		3,409,926		0.85
Warehouse lines of credit		—		1,314		—		1,314		—		525,572		—		—		525,572		0.25
Total Core Banking		4,152		25,511		484		30,147		41,914		3,889,980		3,573		31		3,935,498		0.77

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—		—		—		—		—		—
Other TRS loans		—		12		—		12		—		11,648		—		—		11,648		0.10
Republic Credit Solutions		49		12,561		—		12,610		129		66,759		—		—		66,888		18.85
Total Republic Processing Group		49		12,573		—		12,622		129		78,407		—		—		78,536		16.07
Total	$	4,201	$	38,084	$	484	$	42,769	$	42,043	$	3,968,387	$	3,573	$	31	$	4,014,034		1.07	%

The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2018 and December 31, 2017 and for the three months ended March 31, 2018 and 2017. The difference between the “Unpaid Principal Balance” and “Recorded Investment” columns represents life-to-date partial write downs/charge offs taken on individual impaired credits.


	As of						Three Months Ended
	March 31, 2018						March 31, 2018
											Cash Basis
	Unpaid						Average		Interest		Interest
	Principal		Recorded		Allocated		Recorded		Income		Income
(in thousands)	Balance		Investment		Allowance		Investment		Recognized		Recognized

Impaired loans with no allocated Allowance:
Residential real estate:
Owner occupied	$	11,078	$	10,370	$	—	$	10,580	$	50	$	—
Owner occupied - correspondent		383		383		—		192		4		—
Nonowner occupied		3,141		2,749		—		2,227		22		—
Commercial real estate		5,649		4,575		—		4,503		17		—
Construction & land development		476		476		—		534		5		—
Commercial & industrial		820		712		—		366		3		—
Lease financing receivables		—		—		—		—		—		—
Home equity		751		674		—		828		3		—
Consumer		53		53		—		39		1		—
Impaired loans with allocated Allowance:
Residential real estate:
Owner occupied		19,146		19,026		2,558		18,840		172		—
Owner occupied - correspondent		—		—		—		—		—		—
Nonowner occupied		325		322		5		340		3		—
Commercial real estate		6,829		6,829		777		6,477		73		—
Construction & land development		135		135		100		139		1		—
Commercial & industrial		87		87		88		188		1		—
Lease financing receivables		—		—		—		—		—		—
Home equity		861		861		507		802		7		—
Consumer		675		675		544		722		5		—
Total impaired loans	$	50,409	$	47,927	$	4,579	$	46,777	$	367	$	—


	As of						Three Months Ended
	December 31, 2017						March 31, 2017
											Cash Basis
	Unpaid						Average		Interest		Interest
	Principal		Recorded		Allocated		Recorded		Income		Income
(in thousands)	Balance		Investment		Allowance		Investment		Recognized		Recognized

Impaired loans with no allocated Allowance:
Residential real estate:
Owner occupied	$	11,664	$	10,789	$	—	$	12,261	$	29	$	—
Owner occupied - correspondent		—		—		—		—		—		—
Non owner occupied		1,784		1,704		—		1,394		8		—
Commercial real estate		5,504		4,430		—		5,153		21		—
Construction & land development		591		591		—		476		5		—
Commercial & industrial		20		20		—		61		1		—
Lease financing receivables		—		—		—		—		—		—
Home equity		1,071		981		—		1,350		4		—
Consumer		25		25		—		43		—		—
Impaired loans with allocated Allowance:
Residential real estate:
Owner occupied		18,676		18,654		2,681		21,204		181		—
Owner occupied - correspondent		—		—		—		—		—		—
Non owner occupied		361		358		6		490		6		—
Commercial real estate		6,124		6,124		455		6,744		67		—
Construction & land development		142		142		107		401		5		—
Commercial & industrial		288		288		288		386		—		—
Lease financing receivables		—		—		—		—		—		—
Home equity		743		743		536		806		10		—
Consumer		767		767		612		63		—		—
Total impaired loans	$	47,760	$	45,616	$	4,685	$	50,832	$	337	$	—

Troubled Debt Restructurings

A TDR is a situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of their debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Bank’s internal underwriting policy.

All TDRs are considered “Impaired,” including PCI loans subsequently restructured. The majority of the Bank’s commercial related and construction TDRs involve a restructuring of financing terms such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the debt. The substantial majority of the Bank’s residential real estate TDR concessions involve reducing the client’s loan payment through a rate reduction for a set period based on the borrower’s ability to service the modified loan payment. Retail loans may also be classified as TDRs due to legal modifications, such as bankruptcies.

Nonaccrual loans modified as TDRs typically remain on nonaccrual status and continue to be reported as nonperforming loans for a minimum of six consecutive months. Accruing loans modified as TDRs are evaluated for nonaccrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. At March 31, 2018 and December 31, 2017, $6 million and $6 million of TDRs were on nonaccrual status.

Detail of TDRs differentiated by loan type and accrual status follows:


	Troubled Debt			Troubled Debt			Total
	Restructurings on			Restructurings on			Troubled Debt
	Nonaccrual Status			Accrual Status			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
March 31, 2018 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate	62	$	4,797	180	$	20,966	242	$	25,763
Commercial real estate	2		1,342	14		6,519	16		7,861
Construction & land development	1		62	2		549	3		611
Commercial & industrial	—		—	5		25	5		25
Consumer	—		—	828		485	828		485
Total troubled debt restructurings	65	$	6,201	1,029	$	28,544	1,094	$	34,745


	Troubled Debt			Troubled Debt			Total
	Restructurings on			Restructurings on			Troubled Debt
	Nonaccrual Status			Accrual Status			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
December 31, 2017 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate	62	$	4,926	183	$	20,189	245	$	25,115
Commercial real estate	2		1,366	14		6,499	16		7,865
Construction & land development	1		67	3		666	4		733
Commercial & industrial	—		—	2		287	2		287
Consumer	—		—	830		637	830		637
Total troubled debt restructurings	65	$	6,359	1,032	$	28,278	1,097	$	34,637

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30-days-or-more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms at March 31, 2018 and December 31, 2017 follows:


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
March 31, 2018 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate loans (including home equity loans):
Interest only payments	1	$	4	—	$	—	1	$	4
Rate reduction	144		17,205	34		3,162	178		20,367
Principal deferral	13		2,610	3		639	16		3,249
Legal modification	20		1,054	27		1,089	47		2,143
Total residential TDRs	178		20,873	64		4,890	242		25,763

Commercial related and construction/land development loans:
Interest only payments	3		808	—		—	3		808
Rate reduction	7		3,125	1		78	8		3,203
Principal deferral	10		3,147	3		1,339	13		4,486
Total commercial TDRs	20		7,080	4		1,417	24		8,497

Consumer loans:
Principal deferral	828		485	—		—	828		485
Total troubled debt restructurings	1,026	$	28,438	68	$	6,307	1,094	$	34,745


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
December 31, 2017 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate loans (including home equity loans):
Interest only payments	1	$	5	1	$	458	2	$	463
Rate reduction	147		17,617	32		3,081	179		20,698
Principal deferral	13		1,436	2		121	15		1,557
Legal modification	21		1,118	28		1,279	49		2,397
Total residential TDRs	182		20,176	63		4,939	245		25,115

Commercial related and construction/land development loans:
Interest only payments	3		837	—		—	3		837
Rate reduction	7		3,185	1		79	8		3,264
Principal deferral	9		3,430	2		1,354	11		4,784
Total commercial TDRs	19		7,452	3		1,433	22		8,885

Consumer loans:
Principal deferral	830		637	—		—	830		637
Total troubled debt restructurings	1,031	$	28,265	66	$	6,372	1,097	$	34,637

As of March 31, 2018 and December 31, 2017, 82% and 82% of the Bank’s TDRs were performing according to their modified terms. The Bank had provided $3 million and $4 million of specific reserve allocations to clients whose loan terms have been modified in TDRs as of March 31, 2018 and December 31, 2017. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships at March 31, 2018 or December 31, 2017.

A summary of the categories of TDR loan modifications by respective performance as of March 31, 2018 and 2017 that were modified during the three months ended March 31, 2018 and 2017 follows:


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
March 31, 2018 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate loans (including home equity loans):
Interest only payments	—	$	—	—	$	—	—	$	—
Rate reduction	—		—	1		85	1		85
Principal deferral	1		1,204	1		522	2		1,726
Legal modification	—		—	—		—	—		—
Total residential TDRs	1		1,204	2		607	3		1,811

Commercial related and construction/land development loans:
Interest only payments	—		—	—		—	—		—
Rate reduction	—		—	—		—	—		—
Principal deferral	2		3	1		14	3		17
Total commercial TDRs	2		3	1		14	3		17

Consumer loans:
Principal deferral	1		61	—		—	1		61
Total troubled debt restructurings	4	$	1,268	3	$	621	7	$	1,889


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
March 31, 2017 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate loans (including home equity loans):
Interest only payments	—	$	—	—	$	—	—	$	—
Rate reduction	1		159	—		—	1		159
Principal deferral	—		—	—		—	—		—
Legal modification	2		38	—		—	2		38
Total residential TDRs	3		197	—		—	3		197

Commercial related and construction/land development loans:
Interest only payments	—		—	—		—	—		—
Rate reduction	—		—	—		—	—		—
Principal deferral	—		—	—		—	—		—
Total commercial TDRs	—		—	—		—	—		—
Total troubled debt restructurings	3	$	197	—	$	—	3	$	197

The tables above are inclusive of loans that were TDRs at the end of previous periods and were re-modified, e.g., a maturity date extension during the current period.

As of March 31, 2018 and 2017, 67% and 100% of the Bank’s TDRs that occurred during the first quarters of 2018 and 2017 were performing according to their modified terms. The Bank provided approximately $127,000 and $29,000 in specific reserve allocations to clients whose loan terms were modified in TDRs during the first quarters of 2018 and 2017.

There was no significant change between the pre and post modification loan balances for the three months ending March 31, 2018 and 2017.

The following table presents loans by class modified as troubled debt restructurings within the previous 12 months of March 31, 2018 and 2017 and for which there was a payment default during the three months ended March 31, 2018 and 2017.


	Three Months Ended
	March 31,
	2018			2017
	Number of	Recorded		Number of	Recorded
(dollars in thousands)	Loans	Investment		Loans	Investment

Residential real estate:
Owner occupied	1	$	522	—	$	—
Commercial & industrial	1		14	—		—

Total	2	$	536	—	$	—

Foreclosures

The following table presents the carrying amount of foreclosed properties held at March 31, 2018 and December 31, 2017 as a result of the Bank obtaining physical possession of such properties:


(in thousands)	March 31, 2018		December 31, 2017

Residential real estate	$	160	$	115

Total other real estate owned	$	160	$	115

The following table presents the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction as of March 31, 2018 and December 31, 2017:


(in thousands)	March 31, 2018		December 31, 2017

Recorded investment in consumer residential real estate mortgage loans in the process of foreclosure	$	1,113	$	1,392

Easy Advances

The Company’s TRS segment offered its EA product during the first two months of 2018 and 2017. The Company based its estimated provision for EA losses on current year EA delinquency information and prior year IRS funding patterns of federal tax refunds subsequent to the first quarter. Each year, all unpaid EAs are charged-off by the end of the second quarter.

Information regarding EAs follows:


	Three Months Ended
	March 31,
(in thousands)	2018			2017

Easy Advances originated	$	430,212		$	328,519
Net Charge to the Provision for Easy Advances		13,277			8,601
Provision to total Easy Advances originated		3.09	%		2.62	%
Easy Advances net charge-offs	$	3,705		$	860
Easy Advances net charge-offs to total Easy Advances originated		0.86	%		0.26	%