LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

12 Months Ended

Dec. 31, 2017

LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

5.LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

Ending loan balances at December 31, 2017 and 2016 were as follows:

December 31,  (in thousands)	2017		2016
Traditional Banking:
Residential real estate:
Owner occupied	$	921,565	$	1,000,148
Owner occupied - correspondent*		116,792		149,028
Nonowner occupied		205,081		156,605
Commercial real estate		1,207,293		1,060,496
Construction & land development		150,065		119,650
Commercial & industrial		341,692		259,026
Lease financing receivables		16,580		13,614
Home equity		347,655		341,285
Consumer:
Credit cards		16,078		13,414
Overdrafts		974		803
Automobile loans		65,650		52,579
Other consumer		20,501		19,744
Total Traditional Banking		3,409,926		3,186,392
Warehouse lines of credit*		525,572		585,439
Total Core Banking		3,935,498		3,771,831
Republic Processing Group*:
Tax Refund Solutions:
Easy Advances		—		—
Commercial & industrial		11,648		6,695
Republic Credit Solutions		66,888		32,252
Total Republic Processing Group		78,536		38,947
Total loans**		4,014,034		3,810,778
Allowance for loan and lease losses		(42,769)		(32,920)
Total loans, net	$	3,971,265	$	3,777,858

*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 December 31, 2017 and 2016:

December 31,  (in thousands)	2017		2016
Contractually receivable	$	4,014,673	$	3,816,086
Unearned income(1)		(1,157)		(1,050)
Unamortized premiums(2)		1,069		1,838
Unaccreted discounts(3)		(4,643)		(9,397)
Net unamortized deferred origination fees and costs(4)		4,092		3,301
Carrying value of loans	$	4,014,034	$	3,810,778

(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.

Loan Purchases

Primarily from its Warehouse clients, the Traditional Bank acquires single family, first lien mortgage loans that meet the Traditional Bank’s specifications through its Correspondent Lending channel. The volume of loans purchased through the Correspondent Lending channel may fluctuate from time to time based on several factors, including, but not limited to, borrower demand, other investment options and the Bank’s current and forecasted liquidity position. Substantially all loans purchased through the Correspondent Lending channel are purchased at a premium.  Loans acquired through the Correspondent Lending channel generally reflect borrowers outside of the Bank’s historical market footprint, with 72% of loans acquired through this origination channel as of December 31, 2017, secured by collateral in the state of California. 

In addition, the Bank has acquired in the past unsecured consumer installment loans for investment from a third-party originator. Such consumer loans were purchased at par and were selected by the Bank based on certain underwriting specifications.

The table below reflects the purchase activity of single family, first lien mortgage loans and unsecured consumer loans, by class, during 2017, 2016 and 2015.

Years Ended December 31,  (in thousands)	2017		2016		2014
Residential real estate:
Owner occupied - correspondent*	$	6,160	$	47,446	$	113,232
Consumer:
Other consumer*		—		4,422		4,284
Total purchased loans	$	6,160	$	51,868	$	117,516

*Represents origination amount, inclusive of applicable purchase premiums.

Loans Acquired in Cornerstone Acquisition

The following table summarizes loans acquired in the Company’s May 17, 2016 Cornerstone acquisition, finalized as of October 1, 2016:

	May 17, 2016
(in thousands)	Contractual Receivable		Non-accretable Discount		Accretable Discount		Acquisition-Day Fair Value
Residential real estate:
Owner occupied	$	15,487	$	—	$	(393)	$	15,094
Nonowner occupied		11,196		—		(101)		11,095
Commercial real estate		106,089		—		(1,498)		104,591
Construction & land development		18,277		—		(502)		17,775
Commercial & industrial		11,462		—		(191)		11,271
Home equity		20,652		—		(350)		20,302
Consumer and other		2,347		—		(147)		2,200
Total loans - ASC 310-20		185,510		—		(3,182)		182,328
Residential real estate:
Owner occupied		2,963		(822)		(15)		2,126
Nonowner occupied		1,721		(320)		(167)		1,234
Commercial real estate		4,315		(617)		(197)		3,501
Construction & land development		175		—		—		175
Commercial & industrial		66		(1)		1		66
Home equity		382		(178)		(11)		193
Consumer and other		4		(3)		—		1
Total loans - ASC 310-30 - PCI loans		9,626		(1,941)		(389)		7,296
Total loans acquired	$	195,136	$	(1,941)	$	(3,571)	$	189,624

Purchased-Credit-Impaired (“PCI”) Loans

The Bank acquired PCI loans on May 17, 2016 in its Cornerstone acquisition and during the year ended December 31, 2012 in two FDIC-assisted transactions. PCI loans are accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality.

Management utilized the following criteria in determining which loans were classified as PCI loans for its May 17, 2016 Cornerstone acquisition:

· Loans for which the Bank assigned a non-accretable discount

· Loans classified as nonaccrual when acquired

· Loans past due 90+ days when acquired

The following table reconciles the contractually required and carrying amounts of all PCI loans at December 31, 2017 and 2016:

December 31,  (in thousands)	2017		2016
Contractually required principal	$	5,435	$	15,587
Non-accretable amount		(1,691)		(1,713)
Accretable amount		(140)		(3,600)
Carrying value of loans	$	3,604	$	10,274

The following table presents a rollforward of the accretable amount on all PCI loans for years ended December 31, 2017, 2016 and 2015:

Years Ended December 31,  (in thousands)	2017		2016		2015
Balance, beginning of period	$	(3,600)	$	(4,125)	$	(2,297)
Transfers between non-accretable and accretable*		(28)		(206)		(4,055)
Net accretion into interest income on loans, including loan fees		3,488		1,120		2,227
Generated from acquisition of Cornerstone Bancorp, Inc. (recasted)		—		(389)		—
Balance, end of period	$	(140)	$	(3,600)	$	(4,125)

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

Credit Quality Indicators

Bank procedures for assessing and maintaining credit gradings differs slightly depending on whether a new or renewed loan is being underwritten, or whether an existing loan is being re-evaluated for potential credit quality concerns. The latter usually occurs upon receipt of updated financial information, or other pertinent data, that would potentially cause a change in the loan grade. Specific Bank procedures follow: 

· For new and renewed commercial and industrial (“C&I”), commercial real estate (“CRE”) and construction and land development (“C&D”) loans, the Bank’s CAD assigns the credit quality grade to the loan.

· Commercial loan officers are responsible for monitoring their respective loan portfolios and reporting any adverse material changes to senior management. When circumstances warrant a review and possible change in the credit quality grade, loan officers are required to notify the Bank’s CAD.

· A senior officer meets monthly with commercial loan officers to discuss the status of past due loans and possible classified loans. These meetings are designed to give loan officers an opportunity to identify existing loans that should be downgraded.

· Monthly, members of senior management along with managers of Commercial Lending, CAD, Accounting, Special Assets and Retail Collections attend a Special Asset Committee (“SAC”) meeting. The SAC reviews all C&I and CRE, classified, and impaired loans and discusses the relative trends and current status of these assets. In addition, the SAC reviews all classified and impaired retail residential real estate loans and all classified and impaired home equity loans. SAC also reviews the actions taken by management regarding credit-quality grades, foreclosure mitigation, loan extensions, troubled debt restructurings and collateral repossessions. Based on the information reviewed in this meeting, the SAC approves all specific loan loss allocations to be recognized by the Bank within the Allowance analysis.

· All new and renewed warehouse lines of credit are approved by the Executive Loan Committee. The CAD assigns the initial credit quality grade to warehouse facilities. Monthly, members of senior management review warehouse lending activity including data associated with the underlying collateral to the warehouse facilities, i.e., the mortgage loans associated with the balances drawn.  Key performance indicators monitored include average days outstanding for each draw, average Fair Isaac Corporation (“FICO”) credit report score for the underlying collateral, average loan-to-value (“LTV”) for the underlying collateral and other factors deemed relevant.

On at least an annual basis, the Bank’s internal loan review department analyzes all aggregate lending relationships with outstanding balances greater than $1 million that are internally classified as “Special Mention,” “Substandard,” “Doubtful” or “Loss.” In addition, on an annual basis, the Bank analyzes a sample of “Pass” rated loans.

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, public information, and current economic trends. The Bank also considers the fair value of the underlying collateral and the strength and willingness of the guarantor(s). The Bank analyzes loans individually, and based on this analysis, establishes a credit risk rating. The Bank uses the following definitions for risk ratings:

Risk Grade 1 — Excellent (Pass): Loans fully secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents; loans fully secured by publicly traded marketable securities where there is no impediment to liquidation; or loans to any publicly held company with a current long-term debt rating of A or better.

Risk Grade 2 — Good (Pass): Loans to businesses that have strong financial statements containing an unqualified opinion from a Certified Public Accounting firm and at least three consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five-year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans that are guaranteed or otherwise backed by the full faith and credit of the U.S. government or an agency thereof, such as the Small Business Administration; or loans to publicly held companies with current long-term debt ratings of Baa or better.

Risk Grade 3 — Satisfactory (Pass): Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered.

Risk Grade 4 — Satisfactory/Monitored (Pass): Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory loans due to weak balance sheets, marginal earnings or cash flow, or other uncertainties. These loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in a Satisfactory/Monitored loan is within acceptable underwriting guidelines so long as the loan is given the proper level of management supervision.

Risk Grade 5 — Special Mention: Loans that possess some credit deficiency or potential weakness that deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) credit weaknesses are considered potential and are not defined impairments to the primary source of repayment.

Purchased Credit Impaired Loans - Group 1 (“PCI-1”): To the extent that a PCI loan’s performance does not reflect an increased risk of loss of contractual principal beyond the non-accretable yield established as part of its initial day-one evaluation, such loan would be classified in the Purchased Credit Impaired - Group 1 (“PCI-1”) category, whose credit risk is considered by management equivalent to a non-PCI “Special Mention” loan within the Bank’s credit rating matrix. PCI-1 loans are considered impaired if, based on current information and events, it is probable that the future estimated cash flows of the loan have deteriorated from management’s initial acquisition day estimate.  Provisions are made for impaired PCI-1 loans to further discount the loan and allow its yield to conform to at least management’s initial expectations. Any improvement in the expected performance of a PCI-1 loan would result in a reversal of the Provision to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

Purchased Credit Impaired Loans — Substandard (“PCI-Sub”): If during the Bank’s periodic evaluations of its PCI loan portfolio, management deems a PCI-1 loan to have an increased risk of loss of contractual principal beyond the non-accretable yield established as part of its initial day-one evaluation, such loan would be classified PCI-Substandard (“PCI-Sub”) within the Bank’s credit risk matrix.  Management deems the risk of default and overall credit risk of a PCI-Sub loan to be greater than a PCI-1 loan and more analogous to a non-PCI “Substandard” loan within the Bank’s credit rating matrix. PCI-Sub loans are considered to be impaired. Any improvement in the expected performance of a PCI-Sub loan would result in a reversal of the Provision to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

Risk Grade 6 — Substandard: One or more of the following characteristics may be exhibited in loans classified as Substandard:

· Loans that possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.

· Loans are inadequately protected by the current net worth and paying capacity of the obligor.

· The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

· Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

· Unusual courses of action are needed to maintain a high probability of repayment.

· The borrower is not generating enough cash flow to repay loan principal, however, it continues to make interest payments.

· The Bank is forced into a subordinated or unsecured position due to flaws in documentation.

· The Bank is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

· There is significant deterioration in market conditions to which the borrower is highly vulnerable.

Risk Grade 7 — Doubtful: One or more of the following characteristics may be present in loans classified as Doubtful:

· Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.

· The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

· The possibility of loss is high but because of certain important pending factors, which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

Risk Grade 8 — Loss: Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified “Loss” when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

For all real estate and consumer loans, including small-dollar RGP loans, which do not meet the scope above, the Bank uses a grading system based on delinquency and nonaccrual status. Loans that are 90 days or more past due or on nonaccrual are graded Substandard. Occasionally, a real estate loan below scope may be graded as “Special Mention” or “Substandard” if the loan is cross-collateralized with a classified C&I or CRE loan.

Purchased loans accounted for under ASC Topic 310-20 are accounted for as any other Bank-originated loan, potentially becoming nonaccrual or impaired, as well as being risk rated under the Bank’s standard practices and procedures. In addition, these loans are considered in the determination of the Allowance once day-one fair values are final.

Management separately monitors PCI loans, and on at least a quarterly basis, reviews them against the factors and assumptions used in determining day-one fair values. In addition to its quarterly evaluation, a PCI loan is typically reviewed when it is modified or extended, or when information becomes available to the Bank that provides additional insight regarding the loan’s performance, the status of the borrower, or the quality or value of the underlying collateral.

If a troubled debt restructuring is performed on a PCI loan, the loan is considered impaired under the applicable TDR accounting standards and transferred out of the PCI population. The loan may require an additional Provision if its restructured cash flows are less than management’s initial day-one expectations. PCI loans for which the Bank simply chooses to extend the maturity date are generally not considered TDRs and remain in the PCI population.

The following tables include loans by risk category based on the Bank’s internal analysis performed:

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		—		—		—		—		—		—		—
Commercial & industrial		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

December 31, 2016			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	$	—	$	21,344	$	13,117	$	—	$	218	$	2,267	$	36,946
Owner occupied - correspondent		—		—		—		—		—		—		—
Nonowner occupied		—		656		1,115		—		523		—		2,294
Commercial real estate		1,042,137		7,086		4,224		—		7,049		—		1,060,496
Construction & land development		118,769		90		791		—		—		—		119,650
Commercial & industrial		257,579		1,270		154		—		23		—		259,026
Lease financing receivables		13,614		—		—		—		—		—		13,614
Home equity		—		256		1,763		—		94		99		2,212
Consumer:
Credit cards		—		—		—		—		—		—		—
Overdrafts		—		—		—		—		—		—		—
Automobile loans		—		—		—		—		—		—		—
Other consumer		—		—		166		—		1		—		167
Total Traditional Banking		1,432,099		30,702		21,330		—		7,908		2,366		1,494,405
Warehouse lines of credit		585,439		—		—		—		—		—		585,439
Total Core Banking		2,017,538		30,702		21,330		—		7,908		2,366		2,079,844
Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—		—		—
Commercial & industrial		6,695		—		—		—		—		—		6,695
Republic Credit Solutions		—		—		82		—		—		—		82
Total Republic Processing Group		6,695		—		82		—		—		—		6,777
Total rated loans	$	2,024,233	$	30,702	$	21,412	$	—	$	7,908	$	2,366	$	2,086,621

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

Subprime Lending

Both the Traditional Banking segment and the RCS segment of the Company have certain classes of loans that are considered to be “subprime” strictly due to the credit score of the borrower at the time of origination.

Traditional Bank loans considered subprime totaled approximately $47 million and $50 million at December 31, 2017 and 2016. Approximately $12 million and $13 million of the outstanding Traditional Bank subprime loan portfolio at December 31, 2017 and 2016 were originated for Community Reinvestment Act (“CRA”) purposes. Management does not consider these loans to possess significantly higher credit risk due to other underwriting qualifications.

The RCS segment originates both a short-term line-of-credit product and a credit card product. The Bank sells 90% of the balances maintained through these two products within two days of loan origination and retains a 10% interest. Both of these products are unsecured and made to borrowers with subprime or near prime credit scores. The aggregate outstanding balance held-for-investment for these two portfolios totaled $33 million and $20 million at December 31, 2017 and 2016.

Allowance for Loan and Lease Losses

The following tables present the activity in the Allowance by portfolio class for the years ended December 31, 2017, 2016 and 2015:

	Allowance Rollforward
	Years Ended December 31,
	2017										2016
	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	$	7,158	$	(933)	$	(300)	$	257	$	6,182	$	8,301	$	(1,148)	$	(416)	$	421	$	7,158
Owner occupied - correspondent		373		(81)		—		—		292		623		(250)		—		—		373
Nonowner occupied		1,139		272		(30)		15		1,396		1,052		79		—		8		1,139
Commercial real estate		8,078		826		—		139		9,043		7,672		768		(514)		152		8,078
Construction & land development		1,850		508		—		6		2,364		1,303		513		(44)		78		1,850
Commercial & industrial		1,511		842		(189)		34		2,198		1,455		259		(330)		127		1,511
Lease financing receivables		136		38		—		—		174		89		47		—		—		136
Home equity		3,757		37		(222)		182		3,754		2,996		961		(351)		151		3,757
Consumer:
Credit cards		490		247		(168)		38		607		448		154		(164)		52		490
Overdrafts		675		1,031		(960)		228		974		351		898		(816)		242		675
Automobile loans		526		188		(30)		3		687		56		481		(12)		1		526
Other consumer		771		948		(884)		327		1,162		479		686		(735)		341		771
Total Traditional Banking		26,464		3,923		(2,783)		1,229		28,833		24,825		3,448		(3,382)		1,573		26,464
Warehouse lines of credit		1,464		(150)		—		—		1,314		967		497		—		—		1,464
Total Core Banking		27,928		3,773		(2,783)		1,229		30,147		25,792		3,945		(3,382)		1,573		27,928
Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		6,789		(8,121)		1,332		—		—		3,048		(3,474)		426		—
Refund Anticipation Loans		—		(241)		—		241		—		—		(301)		—		301		—
Commercial & industrial		25		(13)		—		—		12		—		25		—		—		25
Republic Credit Solutions		4,967		17,396		(10,659)		906		12,610		1,699		7,776		(5,000)		492		4,967
Total Republic Processing Group		4,992		23,931		(18,780)		2,479		12,622		1,699		10,548		(8,474)		1,219		4,992
Total	$	32,920	$	27,704	$	(21,563)	$	3,708	$	42,769	$	27,491	$	14,493	$	(11,856)	$	2,792	$	32,920

	Allowance Rollforward
	Year Ended December 31, 2015
	Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance
Traditional Banking:
Residential real estate:
Owner occupied	$	8,565	$	50	$	(622)	$	308	$	8,301
Owner occupied - correspondent		567		56		—		—		623
Nonowner occupied		837		331		(126)		10		1,052
Commercial real estate		7,774		346		(546)		98		7,672
Construction & land development		926		377		—		—		1,303
Commercial & industrial		1,167		282		(56)		62		1,455
Lease financing receivables		25		64		—		—		89
Home equity		2,730		584		(466)		148		2,996
Consumer:
Credit cards		285		256		(146)		53		448
Overdrafts		382		255		(598)		312		351
Automobile loans		32		24		—		—		56
Other consumer		277		272		(441)		371		479
Total Traditional Banking		23,567		2,897		(3,001)		1,362		24,825
Warehouse lines of credit		799		168		—		—		967
Total Core Banking		24,366		3,065		(3,001)		1,362		25,792
Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—
Refund Anticipation Loans		—		(279)		—		279		—
Commercial & industrial		—		—		—		—		—
Republic Credit Solutions		44		2,610		(971)		16		1,699
Total Republic Processing Group		44		2,331		(971)		295		1,699
Total	$	24,410	$	5,396	$	(3,972)	$	1,657	$	27,491

Nonperforming Loans and Nonperforming Assets

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

December 31,  (dollars in thousands)	2017			2016
Loans on nonaccrual status*	$	14,118		$	15,892
Loans past due 90-days-or-more and still on accrual**		956			167
Total nonperforming loans		15,074			16,059
Other real estate owned		115			1,391
Total nonperforming assets	$	15,189		$	17,450
Credit Quality Ratios - Total Company:
Nonperforming loans to total loans		0.38	%		0.42	%
Nonperforming assets to total loans (including OREO)		0.38			0.46
Nonperforming assets to total assets		0.30			0.36
Credit Quality Ratios - Core Bank:
Nonperforming loans to total loans		0.36	%		0.42	%
Nonperforming assets to total loans (including OREO)		0.36			0.46
Nonperforming assets to total assets		0.28			0.36

*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*
December 31,  (in thousands)	2017		2016		2017		2016
Traditional Banking:
Residential real estate:
Owner occupied	$	9,230	$	10,955	$	—	$	—
Owner occupied - correspondent		—		—		—		—
Nonowner occupied		257		852		—		—
Commercial real estate		3,247		2,725		—		—
Construction & land development		67		77		—		—
Commercial & industrial		—		154		—		—
Lease financing receivables		—		—		—		—
Home equity		1,217		1,069		—		—
Consumer:
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Automobile loans		68		—		—		—
Other consumer		32		60		19		85
Total Traditional Banking		14,118		15,892		19		85
Warehouse lines of credit		—		—		—		—
Total Core Banking		14,118		15,892		19		85
Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—
Commercial & industrial		—		—		—		—
Republic Credit Solutions		—		—		937		82
Total Republic Processing Group		—		—		937		82
Total	$	14,118	$	15,892	$	956	$	167

*  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.

The Bank considers the performance of the loan portfolio and its impact on the Allowance. For residential and consumer loan classes, the Bank also evaluates credit quality based on the aging status of the loan and by payment activity. The following tables present the recorded investment in residential and consumer loans based on payment activity as of December 31, 2017 and 2016:

	Residential Real Estate								Consumer
			Owner														Republic
December 31, 2017	Owner		Occupied -		Nonowner		Home		Credit				Automobile		Other		Credit
(in thousands)	Occupied		Correspondent		Occupied		Equity		Cards		Overdrafts		Loans		Consumer		Solutions
Performing	$	912,335	$	116,792	$	204,824	$	346,438	$	16,078	$	974	$	65,582	$	20,450	$	65,951
Nonperforming		9,230		—		257		1,217		—		—		68		51		937
Total	$	921,565	$	116,792	$	205,081	$	347,655	$	16,078	$	974	$	65,650	$	20,501	$	66,888

	Residential Real Estate								Consumer
			Owner														Republic
December 31, 2016	Owner		Occupied -		Nonowner		Home		Credit				Automobile		Other		Credit
(in thousands)	Occupied		Correspondent		Occupied		Equity		Cards		Overdrafts		Loans		Consumer		Solutions
Performing	$	989,193	$	149,028	$	155,753	$	340,216	$	13,414	$	803	$	52,579	$	19,599	$	32,170
Nonperforming		10,955		—		852		1,069		—		—		—		145		82
Total	$	1,000,148	$	149,028	$	156,605	$	341,285	$	13,414	$	803	$	52,579	$	19,744	$	32,252

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
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		—			—			—			—			—		—
Commercial & industrial		—			—			—			—			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 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.

***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, 2016	Days			Days			Days			Total			Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total
Traditional Banking:
Residential real estate:
Owner occupied	$	1,696		$	337		$	2,521		$	4,554		$	995,594	$	1,000,148
Owner occupied - correspondent		—			—			—			—			149,028		149,028
Nonowner occupied		—			—			46			46			156,559		156,605
Commercial real estate		8			—			417			425			1,060,071		1,060,496
Construction & land development		—			—			—			—			119,650		119,650
Commercial & industrial		342			—			—			342			258,684		259,026
Lease financing receivables		—			—			—			—			13,614		13,614
Home equity		316			160			494			970			340,315		341,285
Consumer:
Credit cards		14			4			—			18			13,396		13,414
Overdrafts		159			1			1			161			642		803
Automobile loans		—			—			—			—			52,579		52,579
Other consumer		114			106			85			305			19,439		19,744
Total Traditional Banking		2,649			608			3,564			6,821			3,179,571		3,186,392
Warehouse lines of credit		—			—			—			—			585,439		585,439
Total Core Banking		2,649			608			3,564			6,821			3,765,010		3,771,831
Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—			—			—			—			—		—
Commercial & industrial		—			—			—			—			6,695		6,695
Republic Credit Solutions		1,751			304			82			2,137			30,115		32,252
Total Republic Processing Group		1,751			304			82			2,137			36,810		38,947
Total	$	4,400		$	912		$	3,646		$	8,958		$	3,801,820	$	3,810,778
Delinquency ratio***		0.12	%		0.02	%		0.10	%		0.24	%

*All loans past due 90 days-or-more, excluding PCI 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 divided by total loans.

Impaired Loans

Information regarding the Bank’s impaired loans follows:

December 31,  (in thousands)	2017		2016		2015
Loans with no allocated Allowance	$	18,540	$	21,416	$	26,143
Loans with allocated Allowance		27,076		31,268		39,980
Total recorded investment in impaired loans	$	45,616	$	52,684	$	66,123
Amount of the allocated Allowance	$	4,685	$	4,925	$	5,427
Average of individually impaired loans during the year		47,361		56,981		74,482
Interest income recognized during impairment		1,392		1,466		1,882
Cash basis interest income recognized		—		—		—

Approximately $4 million and $4 million of impaired loans at December 31, 2017 and 2016 were PCI loans. Approximately $2 million and $3 million of impaired loans at December 31, 2017 and 2016 were formerly PCI loans which 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 December 31, 2017 and 2016:

	Allowance for Loan and Lease Losses										Loans
	Individually				PCI with		PCI without				Individually				PCI with		PCI without
December 31, 2017	Evaluated		Collectively		Post Acquisition		Post Acquisition		Total		Evaluated		Collectively		Post Acquisition		Post Acquisition		Total
(dollars in thousands)	Excluding PCI		Evaluated		Impairment		Impairment		Allowance		Excluding PCI		Evaluated		Impairment		Impairment		Loans
Traditional Banking:
Residential real estate:
Owner occupied	$	2,361	$	3,501	$	320	$	—	$	6,182	$	27,605	$	892,122	$	1,838	$	—	$	921,565
Owner occupied - correspondent		—		292		—		—		292		—		116,792		—		—		116,792
Nonowner occupied		4		1,390		2		—		1,396		1,814		203,019		248		—		205,081
Commercial real estate		407		8,588		48		—		9,043		9,185		1,196,736		1,369		3		1,207,293
Construction & land development		107		2,257		—		—		2,364		733		149,332		—		—		150,065
Commercial & industrial		288		1,910		—		—		2,198		308		341,357		—		27		341,692
Lease financing receivables		—		174		—		—		174		—		16,580		—		—		16,580
Home equity		425		3,218		111		—		3,754		1,609		345,930		115		1		347,655
Consumer:
Credit cards		—		607		—		—		607		—		16,078		—		—		16,078
Overdrafts		—		974		—		—		974		—		974		—		—		974
Automobile loans		32		655		—		—		687		108		65,542		—		—		65,650
Other consumer		528		631		3		—		1,162		552		19,946		3		—		20,501
Total Traditional Banking		4,152		24,197		484		—		28,833		41,914		3,364,408		3,573		31		3,409,926
Warehouse lines of credit		—		1,314		—		—		1,314		—		525,572		—		—		525,572
Total Core Banking		4,152		25,511		484		—		30,147		41,914		3,889,980		3,573		31		3,935,498
Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—		—		—		—		—		—
Commercial & industrial		—		12		—		—		12		—		11,648		—		—		11,648
Republic Credit Solutions		49		12,561		—		—		12,610		129		66,759		—		—		66,888
Total Republic Processing Group		49		12,573		—		—		12,622		129		78,407		—		—		78,536
Total	$	4,201	$	38,084	$	484	$	—	$	42,769	$	42,043	$	3,968,387	$	3,573	$	31	$	4,014,034

	Allowance for Loan and Lease Losses										Loans
	Individually				PCI with		PCI without				Individually				PCI with		PCI without
December 31, 2016	Evaluated		Collectively		Post Acquisition		Post Acquisition		Total		Evaluated		Collectively		Post Acquisition		Post Acquisition		Total
(dollars in thousands)	Excluding PCI		Evaluated		Impairment		Impairment		Allowance		Excluding PCI		Evaluated		Impairment		Impairment		Loans
Traditional Banking:
Residential real estate:
Owner occupied	$	3,203	$	3,797	$	158	$	—	$	7,158	$	31,908	$	965,755	$	2,297	$	188	$	1,000,148
Owner occupied - correspondent		—		373		—		—		373		—		149,028		—		—		149,028
Nonowner occupied		65		1,067		7		—		1,139		1,601		154,481		268		255		156,605
Commercial real estate		532		7,501		45		—		8,078		11,769		1,041,678		1,164		5,885		1,060,496
Construction & land development		120		1,730		—		—		1,850		882		118,768		—		—		119,650
Commercial & industrial		227		1,284		—		—		1,511		686		258,317		—		23		259,026
Lease financing receivables		—		136		—		—		136		—		13,614		—		—		13,614
Home equity		433		3,225		99		—		3,757		1,929		339,163		99		94		341,285
Consumer:
Credit cards		—		490		—		—		490		—		13,414		—		—		13,414
Overdrafts		—		675		—		—		675		—		803		—		—		803
Automobile loans		—		526		—		—		526		—		52,579		—		—		52,579
Other consumer		36		735		—		—		771		81		19,662		—		1		19,744
Total Traditional Banking		4,616		21,539		309		—		26,464		48,856		3,127,262		3,828		6,446		3,186,392
Warehouse lines of credit		—		1,464		—		—		1,464		—		585,439		—		—		585,439
Total Core Banking		4,616		23,003		309		—		27,928		48,856		3,712,701		3,828		6,446		3,771,831
Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—		—		—		—		—		—
Commercial & industrial		—		25		—		—		25		—		6,695		—		—		6,695
Republic Credit Solutions		—		4,967		—		—		4,967		—		32,252		—		—		32,252
Total Republic Processing Group		—		4,992		—		—		4,992		—		38,947		—		—		38,947
Total	$	4,616	$	27,995	$	309	$	—	$	32,920	$	48,856	$	3,751,648	$	3,828	$	6,446	$	3,810,778

The following tables present loans individually evaluated for impairment by class of loans as of December 31, 2017, 2016 and 2015. 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						Twelve Months Ended
	December 31, 2017						December 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	$	—	$	11,253	$	179	$	—
Owner occupied - correspondent		—		—		—		—		—		—
Nonowner occupied		1,784		1,704		—		1,526		86		—
Commercial real estate		5,504		4,430		—		4,863		71		—
Construction & land development		591		591		—		565		29		—
Commercial & industrial		20		20		—		116		4		—
Lease financing receivables		—		—		—		—		—		—
Home equity		1,071		981		—		1,205		11		—
Consumer		25		25		—		62		1		—
Impaired loans with allocated Allowance:
Residential real estate:
Owner occupied		18,676		18,654		2,681		20,212		655		—
Owner occupied - correspondent		—		—		—		—		—		—
Nonowner occupied		361		358		6		416		14		—
Commercial real estate		6,124		6,124		455		5,501		294		—
Construction & land development		142		142		107		209		3		—
Commercial & industrial		288		288		288		225		8		—
Lease financing receivables		—		—		—		—		—		—
Home equity		743		743		536		820		17		—
Consumer		767		767		612		388		20		—
Total impaired loans	$	47,760	$	45,616	$	4,685	$	47,361	$	1,392	$	—

	As of						Twelve Months Ended
	December 31, 2016						December 31, 2016
											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	$	13,727	$	12,629	$	—	$	13,219	$	140	$	—
Owner occupied - correspondent		—		—		—		—		—		—
Non owner occupied		1,399		1,376		—		1,293		20		—
Commercial real estate		6,610		5,536		—		6,462		106		—
Construction & land development		476		476		—		476		20		—
Commercial & industrial		67		67		—		115		7		—
Lease financing receivables		—		—		—		—		—		—
Home equity		1,358		1,287		—		1,674		15		—
Consumer		45		45		—		70		—		—
Impaired loans with allocated Allowance:
Residential real estate:
Owner occupied		21,595		21,576		3,361		22,867		782		—
Owner occupied - correspondent		—		—		—		—		—		—
Non owner occupied		491		493		73		799		24		—
Commercial real estate		7,397		7,397		577		8,592		292		—
Construction & land development		405		406		120		421		19		—
Commercial & industrial		619		619		227		621		1		—
Lease financing receivables		—		—		—		—		—		—
Home equity		742		741		532		331		39		—
Consumer		37		36		35		41		1		—
Total impaired loans	$	54,968	$	52,684	$	4,925	$	56,981	$	1,466	$	—

	As of						Twelve Months Ended
	December 31, 2015						December 31, 2015
											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	$	14,287	$	13,256	$	—	$	10,907	$	100	$	—
Owner occupied - correspondent		—		—		—		—		—		—
Non owner occupied		1,978		1,928		—		2,234		31		—
Commercial real estate		7,406		6,743		—		9,653		170		—
Construction & land development		2,067		2,067		—		2,096		19		—
Commercial & industrial		18		18		—		1,682		3		—
Lease financing receivables		—		—		—		—		—		—
Home equity		2,263		2,087		—		2,222		23		—
Consumer		44		44		—		32		—		—
Impaired loans with allocated Allowance:
Residential real estate:
Owner occupied		25,896		25,850		3,830		28,917		885		—
Owner occupied - correspondent		—		—		—		—		—		—
Non owner occupied		1,231		1,208		174		2,004		60		—
Commercial real estate		10,546		10,504		830		11,378		469		—
Construction & land development		650		650		159		664		36		—
Commercial & industrial		1,497		1,497		318		2,351		81		—
Lease financing receivables		—		—		—		—		—		—
Home equity		258		229		100		292		4		—
Consumer		42		42		16		50		1		—
Total impaired loans	$	68,183	$	66,123	$	5,427	$	74,482	$	1,882	$	—

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 December 31, 2017 and 2016, $6 million and $10 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
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

	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, 2016 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate	79	$	7,199	198	$	21,554	277	$	28,753
Commercial real estate	6		2,430	17		8,835	23		11,265
Construction & land development	1		77	4		804	5		881
Commercial & industrial	1		154	2		533	3		687
Total troubled debt restructurings	87	$	9,860	221	$	31,726	308	$	41,586

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 December 31, 2017 and 2016 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
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

	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, 2016 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate loans (including home equity loans):
Interest only payments	2	$	155	1	$	493	3	$	648
Rate reduction	148		18,125	57		6,213	205		24,338
Principal deferral	7		616	7		306	14		922
Legal modification	17		806	38		2,039	55		2,845
Total residential TDRs	174		19,702	103		9,051	277		28,753
Commercial related and construction/land development loans:
Interest only payments	5		2,666	1		413	6		3,079
Rate reduction	8		4,769	2		228	10		4,997
Principal deferral	10		2,737	5		2,020	15		4,757
Total commercial TDRs	23		10,172	8		2,661	31		12,833
Total troubled debt restructurings	197	$	29,874	111	$	11,712	308	$	41,586

As of December 31, 2017 and 2016, 82% and 72% of the Bank’s TDRs were performing according to their modified terms. The Bank had provided $4 million and $4 million of specific reserve allocations to clients whose loan terms have been modified in TDRs as of December 31, 2017 and 2016. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships at December 31, 2017 and 2016.

A summary of the categories of TDR loan modifications and respective performance as of December 31, 2017, 2016 and 2015 that were modified during the years ended December 31, 2017, 2016 and 2015 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
December 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		219	—		—	1		219
Principal deferral	4		1,013	—		—	4		1,013
Legal modification	6		351	2		197	8		548
Total residential TDRs	11		1,583	2		197	13		1,780
Commercial related and construction/land development loans:
Interest only payments	—		—	—		—	—		—
Rate reduction	—		—	—		—	—		—
Principal deferral	2		266	—		—	2		266
Total commercial TDRs	2		266	—		—	2		266
Consumer loans:
Principal deferral	830		637	—		—	830		637
Total troubled debt restructurings	843	$	2,486	2	$	197	845	$	2,683

	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, 2016 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate loans (including home equity loans):
Interest only payments	1	$	146	—	$	—	1	$	146
Rate reduction	6		566	3		149	9		715
Principal deferral	—		—	—		—	—		—
Legal modification	4		319	7		741	11		1,060
Total residential TDRs	11		1,031	10		890	21		1,921
Commercial related and construction/land development loans:
Interest only payments	2		1,718	—		—	2		1,718
Rate reduction	2		749	1		135	3		884
Principal deferral	1		465	1		1,429	2		1,894
Total commercial TDRs	5		2,932	2		1,564	7		4,496
Total troubled debt restructurings	16	$	3,963	12	$	2,454	28	$	6,417

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

	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, 2015 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate loans (including home equity loans):
Interest only payments	1	$	617	—	$	—	1	$	617
Rate reduction	17		2,148	5		519	22		2,667
Principal deferral	—		—	2		43	2		43
Legal modification	3		153	4		162	7		315
Total residential TDRs	21		2,918	11		724	32		3,642
Commercial related and construction/land development loans:
Interest only payments	3		465	—		—	3		465
Rate reduction	1		815	—		—	1		815
Principal deferral	4		716	4		1,898	8		2,614
Legal modification	—		—	—		—	—		—
Total commercial TDRs	8		1,996	4		1,898	12		3,894
Total troubled debt restructurings	29	$	4,914	15	$	2,622	44	$	7,536

The table above is inclusive of loans that were TDRs at the end of previous years and were re-modified, e.g., a maturity date extension during the current year.

As of December 31, 2017, 2016 and 2015, 93%, 62% and 65% of the Bank’s TDRs that occurred during the years ended December 31, 2017, 2016 and 2015 were performing according to their modified terms. The Bank provided approximately $885,000,  $377,000 and $300,000 in specific reserve allocations to clients whose loan terms were modified in TDRs during 2017, 2016 and 2015.

There was no significant change between the pre and post modification loan balances at December 31, 2017, 2016 and 2015.

The following tables present loans by class modified as troubled debt restructurings within the previous 12 months of December 31, 2017, 2016 and 2015 and for which there was a payment default during 2017, 2016 and 2015:

	2017			2016			2015
	Number of	Recorded		Number of	Recorded		Number of	Recorded
Years Ended December 31,  (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate:
Owner occupied	2	$	197	5	$	498	12	$	724
Commercial real estate	—		—	—		—	2		1,704
Construction & land development	—		—	1		86	—		—
Commercial & industrial	—		—	—		—	1		194
Home equity	—		—	1		286	—		—
Consumer	823		129	—		—	—		—
Total	825	$	326	7	$	870	15	$	2,622

Foreclosures

The following table presents the carrying amount of foreclosed properties held at December 31, 2017 and 2016 as a result of the Bank obtaining physical possession of such properties:

December 31,  (in thousands)	2017		2016
Residential real estate	$	115	$	1,391
Total other real estate owned	$	115	$	1,391

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 December 31, 2017 and 2016:

December 31,  (in thousands)	2017		2016
Recorded investment in consumer residential real estate mortgage loans in the process of foreclosure	$	1,392	$	1,677

Easy Advances

The Company’s TRS segment offered its EA product during the first two months of 2017 and 2016.  The Company based its estimated provision for loan losses of EAs on current year EA delinquency information and prior year IRS funding patterns of federal tax refunds subsequent to the first quarter.  At December 31, 2017 and 2016, all EAs originated had been either charged-off or collected.

Information regarding EAs follows:

Years Ended December 31,  (dollars in thousands)	2017			2016
Easy Advances originated	$	328,519		$	123,230
Net Charge to the Provision for Easy Advances		6,789			3,048
Provision to total Easy Advances originated		2.07	%		2.47	%
Easy Advances net charge-offs (recoveries)	$	6,789		$	3,048
Easy Advances net charge-offs to total Easy Advances originated		2.07	%		2.47	%