10-Q 1 form10q.htm  
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2018
 
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                                                    to

Commission File Number 000-50266


TRINITY CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)

New Mexico
 
85-0242376
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
1200 Trinity Drive
Los Alamos, New Mexico
 
87544
(Address of principal executive offices)
 
(Zip Code)

(505) 662-5171
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No

 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes     No

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Act. (Check one):

Large accelerated filer
Accelerated filer              
Non-accelerated filer     (do not check if a smaller reporting company) 
Smaller reporting company
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes     No
 
As of July 31, 2018, there were 11,657,805 shares of voting Common Stock outstanding and 8,044,292 shares of non-voting Common Stock outstanding.
 

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
 
Item 1. Financial Statements and Supplementary Data
1
Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations
24
Item 3. Quantitative and Qualitative Disclosures About Market Risk
35
Item 4. Controls and Procedures
35
PART II – OTHER INFORMATION
 
Item 1. Legal Proceedings
36
Item 1A. Risk Factors
36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
36
Item 3. Defaults Upon Senior Securities
36
Item 4. Mine Safety Disclosures
36
Item 5. Other Information
36
Item 6. Exhibits
37
Signatures
38


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

TRINITY CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands, except share and per share data)
           
 
 
June 30, 2018
(Unaudited)
   
December 31, 2017
 
ASSETS
           
Cash and due from banks
 
$
12,460
   
$
12,893
 
Interest-bearing deposits with banks
   
3,739
     
22,541
 
Cash and cash equivalents
   
16,199
     
35,434
 
Investment securities available for sale, at fair value
   
455,116
     
468,733
 
Investment securities held to maturity, at amortized cost (fair value of $7,268 and $7,369 as of June 30, 2018 and December 31, 2017, respectively)
   
7,797
     
7,854
 
Non-marketable equity securities
   
5,790
     
3,617
 
Loans held for sale
   
7,163
     
-
 
Loans (net of allowance for loan losses of $10,444 and $13,803 as of June 30, 2018 and December 31, 2017, respectively)
   
703,158
     
686,341
 
Bank owned life insurance ("BOLI")
   
26,094
     
25,656
 
Premises and equipment, net
   
28,250
     
28,542
 
Other real estate owned ("OREO"), net
   
5,870
     
6,432
 
Deferred tax assets ("DTAs"), net
   
12,054
     
10,143
 
Other assets
   
14,355
     
14,781
 
Total assets
 
$
1,281,846
   
$
1,287,533
 
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Liabilities
               
Deposits:
               
Noninterest-bearing
 
$
175,969
   
$
161,677
 
Interest-bearing
   
946,952
     
965,670
 
Total deposits
   
1,122,921
     
1,127,347
 
Borrowings
   
19,200
     
2,300
 
Junior subordinated debt
   
26,765
     
36,941
 
Other liabilities
   
7,456
     
15,399
 
Total liabilities
   
1,176,342
     
1,181,987
 
 
               
Stock owned by Employee Stock Ownership Plan ("ESOP") participants; 739,482 shares and 831,645 shares as of June 30, 2018 and December 31, 2017, respectively, at fair value
 
$
5,300
   
$
5,961
 
 
               
Commitments and contingencies (Note 13)
               
 
               
Stockholders' equity
               
Common stock voting, no par; 20,000,000 shares authorized; 11,651,173 and 11,364,862 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
   
11,651
     
11,365
 
Common stock non-voting, no par; 20,000,000 shares authorized; 8,044,292 shares and 8,286,200 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
   
8,044
     
8,286
 
Additional paid-in capital
   
35,685
     
35,071
 
Retained earnings
   
60,577
     
54,587
 
Common stock related to ESOP
   
(5,300
)
   
(5,961
)
Accumulated other comprehensive loss
   
(10,453
)
   
(3,763
)
Total shareholders' equity
   
100,204
     
99,585
 
Total liabilities and shareholders' equity
 
$
1,281,846
   
$
1,287,533
 
 
The accompanying notes are an integral part of these consolidated financial statements.

- 1 -

TRINITY CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

(In thousands, except per share data) 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2018
   
2017
   
2018
   
2017
 
Interest income:
                       
Loans held for sale
 
$
42
   
$
-
   
$
42
   
$
0
 
Loans, including fees
   
8,659
     
9,290
     
16,738
     
18,597
 
Interest and dividends on investment securities:
                               
Taxable
   
1,474
     
1,806
     
3,056
     
3,478
 
Nontaxable
   
1,047
     
333
     
2,085
     
579
 
Other interest income
   
62
     
134
     
178
     
299
 
Total interest income
   
11,284
     
11,563
     
22,099
     
22,953
 
 
                               
Interest expense:
                               
Deposits
   
419
     
442
     
831
     
901
 
Borrowings
   
129
     
41
     
182
     
77
 
Junior subordinated debt
   
351
     
593
     
1,138
     
1,313
 
Total interest expense
   
899
     
1,076
     
2,151
     
2,291
 
Net interest income
   
10,385
     
10,487
     
19,948
     
20,662
 
(Benefit) provision for loan losses
   
(700
)
   
(1,000
)
   
(480
)
   
(970
)
Net interest income after (benefit) provision for loan losses
   
11,085
     
11,487
     
20,428
     
21,632
 
 
                               
Noninterest income:
                               
Mortgage loan servicing fees
   
2
     
462
     
-
     
948
 
Trust and investment services fees
   
709
     
659
     
1,506
     
1,310
 
Service charges on deposits
   
232
     
287
     
486
     
582
 
Net gain on sale of OREO
   
532
     
342
     
573
     
670
 
Net gain on sale of loans
   
-
     
-
     
-
     
-
 
Net loss on sale of securities
   
-
     
(1,248
)
   
-
     
(1,248
)
BOLI income
   
220
     
92
     
438
     
183
 
Mortgage referral fee income
   
341
     
417
     
586
     
744
 
Interchange fees
   
590
     
626
     
1,086
     
1,256
 
Other fees
   
332
     
384
     
635
     
672
 
Venture capital investment income
   
735
     
21
     
735
     
(21
)
Other noninterest income
   
11
     
56
     
14
     
72
 
Total noninterest income
   
3,704
     
2,098
     
6,059
     
5,168
 
 
                               
Noninterest expenses:
                               
Salaries and employee benefits
   
5,325
     
6,208
     
10,876
     
12,245
 
Occupancy
   
480
     
546
     
1,070
     
1,037
 
Data processing
   
913
     
1,051
     
1,942
     
2,425
 
Legal, professional and accounting fees
   
527
     
1,074
     
1,052
     
3,286
 
Change in value of MSRs
   
-
     
491
     
-
     
729
 
Other noninterest expense
   
2,163
     
3,516
     
4,281
     
7,079
 
Total noninterest expenses
   
9,408
     
12,886
     
19,221
     
26,801
 
Income (loss) before provision for income taxes
   
5,381
     
699
     
7,266
     
(1
)
Provision for income taxes
   
1,083
     
2,303
     
1,276
     
2,089
 
Net income (loss)
   
4,298
     
(1,604
)
   
5,990
     
(2,090
)
Dividends and discount accretion on preferred shares
   
-
     
-
     
-
     
770
 
Net income (loss) attributable to common stockholders
 
$
4,298
   
$
(1,604
)
 
$
5,990
   
$
(2,860
)
Basic earnings (loss) per common share
 
$
0.22
   
$
(0.09
)
 
$
0.30
   
$
(0.19
)
Diluted earnings (loss) per common share
 
$
0.22
   
$
(0.09
)
 
$
0.30
   
$
(0.19
)

The accompanying notes are an integral part of these consolidated financial statements.

- 2 -

TRINITY CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
 
 
2018
   
2017
   
2018
   
2017
 
 
 
(In thousands)
 
Net income (loss)
 
$
4,298
   
$
(1,604
)
 
$
5,990
   
$
(2,090
)
Other comprehensive income:
                               
Unrealized (loss) gains on securities available for sale
   
(892
)
   
1,484
     
(8,999
)
   
2,114
 
Securities losses reclassified into earnings
   
-
     
1,248
     
-
     
1,248
 
Related income tax expense (benefit)
   
229
     
(1,078
)
   
2,309
     
(1,330
)
Other comprehensive (loss) income
   
(663
)
   
1,654
     
(6,690
)
   
2,032
 
Total comprehensive income (loss)
 
$
3,635
   
$
50
   
$
(700
)
 
$
(58
)

The accompanying notes are an integral part of these consolidated financial statements.

- 3 -

TRINITY CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

   
Common stock
                                     
   
Voting
Issued
   
Held in
Treasury,
at cost
   
Non-voting
Issued
   
Preferred
Stock
   
Additional
Paid-in Capital
   
Retained
Earnings
   
Accumulated Other
Comprehensive
Income (Loss)
   
Common
Stock Related
to ESOP
   
Total
Stockholders'
Equity
 
Balance, December 31, 2016
 
$
9,509
   
$
-
   
$
-
   
$
74,007
   
$
(1,373
)
 
$
60,651
   
$
(5,495
)
 
$
(3,192
)
 
$
134,107
 
Net loss
                                           
(2,090
)
                   
(2,090
)
Other comprehensive income
                                                   
2,032
             
2,032
 
Redemption of Series A preferred shares
                           
(35,539
)
                                   
(35,539
)
Redemption of Series B preferred shares
                           
(1,777
)
                                   
(1,777
)
Dividends declared on preferred shares
                                           
(372
)
                   
(372
)
Series C preferred shares converted to non-voting common stock
                   
8,286
     
(37,089
)
   
28,803
                             
-
 
Common stock issued for board compensation
   
37
                             
139
                             
176
 
Amortization of preferred stock issuance costs
                           
398
             
(398
)
                   
-
 
RSUs vested
   
17
                             
(17
)
                           
-
 
RSUs compensation expense
                                   
49
                             
49
 
Balance, June 30, 2017
 
$
$ 9,563
   
$
$ -
   
$
$ 8,286
   
$
$ -
   
$
$ 27,601
   
$
$ 57,791
   
$
$ (3,463
)
 
$
$ (3,192
)
 
$
$ 96,586
 

   
Common stock
                                     
   
Voting
Issued
   
Held in
Treasury,
at cost
   
Non-voting
Issued
   
Preferred
Stock
   
Additional
Paid-in Capital
   
Retained
Earnings
   
Accumulated Other
Comprehensive
Income (Loss)
   
Common
Stock Related
to ESOP
   
Total
Stockholders'
Equity
 
Balance, December 31, 2017
 
$
11,365
   
$
-
   
$
8,286
   
$
-
   
$
35,071
   
$
54,587
   
$
(3,763
)
 
$
(5,961
)
 
$
99,585
 
Net income
                                           
5,990
                     
5,990
 
Other comprehensive loss
                                                   
(6,690
)
           
(6,690
)
Rights offering costs
                                   
(2
)
                           
(2
)
Common stock issued to board
   
10
                             
60
                             
70
 
ESOP distributions
                                                           
661
     
661
 
RSU compensation expense
                                   
612
                             
612
 
Common stock issued for vested RSUs
   
34
                             
(56
)
                           
(22
)
Conversion from non-voting to voting common stock
   
242
             
(242
)
                                           
-
 
Balance, June 30, 2018
 
$
11,651
   
$
-
   
$
8,044
   
$
-
   
$
35,685
   
$
60,577
   
$
(10,453
)
 
$
(5,300
)
 
$
100,204
 

The accompanying notes are an integral part of these consolidated financial statements.

- 4 -

TRINITY CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 
 
Six Months Ended June 30,
 
 
 
2018
   
2017
 
Cash Flows From Operating Activities
 
(Dollars in thousands)
 
Net income (loss)
 
$
5,990
     
(2,090
)
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
4,029
     
3,496
 
Benefit for loan losses
   
(480
)
   
(970
)
Net loss on sale of investment securities
   
-
     
1,248
 
Net gain on sale of loans
   
-
     
-
 
Gains and write-downs on OREO, net
   
(524
)
   
(72
)
Loss (gain) on disposal of premises and equipment
   
4
     
(38
)
Decrease in deferred income tax assets
   
398
     
978
 
Change in escrow liabilities
   
(5,581
)
   
(714
)
Change in value of MSRs
   
-
     
729
 
BOLI income
   
(438
)
   
(183
)
Compensation expense recognized for restricted stock units
   
612
     
49
 
Decrease in accrued interest payable on sub debt
   
-
     
(9,676
)
Changes in operating assets and liabilities:
   
-
         
     Other assets
   
(338
)
   
2,945
 
     Other liabilities
   
(2,362
)
   
(2,196
)
Net cash provided by (used in) operating activities before origination and gross sales of loans held for sale
   
1,310
     
(6,494
)
Gross sales of loans held for sale
   
-
     
-
 
Origination of loans held for sale
   
-
     
-
 
Net cash provided by (used in) operating activities
 
$
1,310
     
(6,494
)
 
Continued next page

- 5 -

TRINITY CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED
(Unaudited)

 
 
Six Months Ended June 30,
 
 
 
2018
   
2017
 
Cash Flows From Investing Activities
 
(Dollars in thousands)
 
Proceeds from maturities and paydowns of investment securities, available for sale
 
$
23,141
   
$
25,555
 
Proceeds from sale of investment securities, available for sale
   
-
     
56,543
 
Purchase of investment securities, available for sale
   
(21,824
)
   
(48,046
)
Purchase of investment securities, other
   
(1,450
)
   
-
 
Proceeds from maturities and paydowns of investment securities, held to maturity
   
49
     
853
 
Proceeds from sale of investment securities, other
   
-
     
31
 
Purchase bank owned life insurance
   
-
     
-
 
Proceeds from sale of other real estate owned
   
1,535
     
2,116
 
Loans paid down (funded), net
   
(23,846
)
   
35,112
 
Purchases of premises and equipment
   
(359
)
   
(3,637
)
Proceeds from sale of premises and equipment
   
-
     
69
 
Net cash (used in) provided by investing activities
   
(22,754
)
   
68,596
 
Cash Flows From Financing Activities
               
Net increase (decrease) in demand deposits, NOW accounts and savings accounts
   
12,616
     
(20,715
)
Net decrease in time deposits
   
(17,043
)
   
(28,955
)
Partial repayment of subordinated debt
   
(10,310
)
   
-
 
Proceeds from issuance of short-term borrowings
   
16,900
     
-
 
Redemption of preferred stock
   
-
     
(37,316
)
Decrease in dividends payable on preferred stock
   
-
     
(12,965
)
Issuance of common stock
   
46
     
176
 
Net cash used in (provided by) financing activities
   
2,209
     
(99,775
)
Net decrease in cash and cash equivalents
   
(19,235
)
   
(37,673
)
Cash and cash equivalents:
               
Beginning of period
   
35,434
     
119,335
 
End of period
 
$
16,199
   
$
81,662
 
Supplemental Disclosures of Cash Flow Information
               
Cash payments for:
               
     Interest
 
$
2,503
   
$
11,762
 
Non-cash investing and financing activities:
               
Transfers from loans to other real estate owned
   
721
     
693
 
Sales of other real estate owned financed by loans by the Bank
   
315
     
-
 
Transfer from loans to loans held for sale
   
7,163
     
-
 
Transfer from venture capital to loans
   
-
     
150
 
Conversion of Series C preferred stock to non-voting common stock
   
-
     
37,089
 
Dividends declared on preferred stock
   
-
     
373
 
Conversion of non-voting common stock to voting common stock
   
242
     
-
 

The accompanying notes are an integral part of these consolidated financial statements.

- 6 -

Note 1. Basis of Presentation

Consolidation:  The accompanying unaudited consolidated financial statements include the consolidated balances and results of operations of Trinity Capital Corporation ("Trinity" or the "Company") and its wholly owned subsidiaries: Los Alamos National Bank (the "Bank") and TCC Advisors Corporation ("TCC Advisors"), collectively referred to as the "Company." Trinity Capital Trust I ("Trust I"), Trinity Capital Trust III ("Trust III"), Trinity Capital Trust IV ("Trust IV") and Trinity Capital Trust V ("Trust V"), collectively referred to as the "Trusts," are trust subsidiaries of Trinity. Trinity owns all of the outstanding common securities of the Trusts. The Trusts are considered variable interest entities ("VIEs") under Accounting Standards Codification ("ASC") Topic 810, "Consolidation."  Because Trinity is not the primary beneficiary of the Trusts, the financial statements of the Trusts are not included in the consolidated financial statements of the Company.  TCC Advisors Corporation and Trust I were dissolved in March 2018.

Basis of presentation: The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany items and transactions have been eliminated in consolidation.  The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP") and general practices within the financial services industry.  In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the year then ended.  Actual results could differ from those estimates.

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis, and all such adjustments are of a normal recurring nature. These financial statements and the notes thereto should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the "2017 Form 10-K"). Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 or any other period.

Reclassifications: Some items in the prior year financial statements have been reclassified to conform to the current presentation.  Reclassifications had no effect on prior year net income or shareholders' equity.

Note 2. Earnings (Loss) Per Share Data

Average number of shares used in calculation of basic and diluted earnings (loss) per common share were as follows for the three and six months ended June 30, 2018 and 2017:
 
 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
 
 
2018
   
2017
   
2018
   
2017
 
 
 
(In thousands, except share data)
 
Net income (loss)
 
$
4,298
   
$
(1,604
)
 
$
5,990
   
$
(2,090
)
Dividends and discount accretion on preferred shares
   
-
     
-
     
-
     
770
 
Net income (loss) attributable to common stockholders
 
$
4,298
   
$
(1,604
)
 
$
5,990
   
$
(2,860
)
Weighted average common shares issued
   
19,689,941
     
17,535,821
     
19,677,809
     
14,685,239
 
LESS: Weighted average treasury stock shares
   
-
     
-
     
-
     
-
 
Weighted average common shares outstanding, net
   
19,689,941
     
17,535,821
     
19,677,809
     
14,685,239
 
Basic earnings (loss) per common share
 
$
0.22
   
$
(0.09
)
 
$
0.30
   
$
(0.19
)
Dilutive effect of stock-based compensation
   
181,634
     
-
     
169,972
     
-
 
Weighted average common shares outstanding including dilutive shares
   
19,871,575
     
17,535,821
     
19,847,781
     
14,685,239
 
Diluted earnings (loss) per common share
 
$
0.22
   
$
(0.09
)
 
$
0.30
   
$
(0.19
)
 
Certain restricted stock units ("RSUs") were not included in the above calculation, as they would have had an anti-dilutive effect.  The total number of excluded shares relating to such RSUs was approximately 97,000 for the three months ended June 30, 2017.  There were no shares excluded from the calculation for the three months ended June 30, 2018.  The total number of excluded shares relating to such RSUs was approximately 97,000 shares for the six months ended June 30, 2017.  There were no shares excluded from the calculation for the six months ended June 30, 2018.

Note 3. Recent Accounting Pronouncements

Newly effective standards:  In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date.  This update deferred the effective date of ASU 2014-09 by one year, making it effective for annual reporting periods beginning after December 15, 2017 including interim reporting periods within that reporting period. The Company's revenue is primarily comprised of net interest income on financial assets and liabilities, which is explicitly excluded from the scope of this guidance, and non-interest income.  The Company has reviewed non-interest income, such as deposit fees, assets management and investment advisory fees, OREO gains and losses on sale, and credit card interchange fees.  The Company completed its overall assessment of revenue streams and related contracts affected by the guidance and adopted ASC 606 on January 1, 2018 with no impact on total shareholders' equity or net income.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825).  The amendments in this update require that public entities measure equity investments with readily determinable fair values, at fair value, with changes in their fair value recorded through net income.  This ASU clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset ("DTAs") related to available for sale securities in combination with the entity's other DTA. This ASU also prescribes an exit price be used to determine the fair value of financial instruments not measured at fair value for disclosure in the fair value note.  The amendments within the update are effective for fiscal years and all interim periods beginning after December 15, 2017.  The Company has determined that the evaluation of deferred tax asset ("DTA") valuation allowance and the exit price for financial instruments are within scope for the Company.  The Company adopted this standard on January 1, 2018 and used a third-party to provide the exit pricing for Note 16, Fair Value Measurements, as required under ASU 2016-01.  The adoption of ASU 2016-01 did not have an impact on the Company's financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718).  ASU 2017-09 was effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  This ASU provides clarity on the guidance related to stock compensation when there have been changes to the terms or conditions of a share-based payment award to which an entity would be required to apply modification accounting under ASC 718.  The ASU provides the three following criteria must be met in order to not account for the effect of the modification of terms or conditions: the fair value, the vesting conditions and the classification as an equity or liability instrument of the modified award is the same as the original award immediately before the original award is modified. The Company adopted ASU 2017-09 on January 1, 2018.  The adoption of ASU 2017-09 did not have a material impact on the Company's Consolidated Financial Statements.

- 7 -

Newly Issued But Not Effective Accounting Standards: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those periods using a modified retrospective approach and early adoption is permitted. This ASU requires a lessee to record a right-to-use asset and liability representing the obligation to make lease payments for long-term leases.  It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, this is not expected to be material to the Company's results of operations or financial position.  The Company continues to evaluate the extent of potential impact the new guidance will have on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  The Company has created an internal committee focused on the implementation of ASU 2016-13 and is currently in the process of evaluating data needs and the effects of ASU 2016-13 on its financial statements and disclosures.  The Company is also working with a third party allowance for loan and lease losses ("ALLL") software provider to help with implementation.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Shares-Based Payment Accounting.  This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.  The Company does not expect any impact from this ASU on the Company's financial statements.



Note 4. Restrictions on Cash and Due From Banks

The Bank is required to maintain reserve balances in cash or on deposit with the Board of Governors of the Federal Reserve System ("FRB"), based on a percentage of deposits.  As of June 30, 2018 and December 31, 2017, the reserve requirement on deposit at the FRB was $0 due to the large balance maintained at the FRB.

Restricted cash included in "cash and due from banks" on the Consolidated Balance Sheets was $100 thousand and $0 at June 30, 2018 and December 31, 2017, respectively.  This restricted cash is maintained at a bank as collateral for our credit card portfolio.

The Company maintains some of its cash in bank deposit accounts at financial institutions other than its subsidiaries that, at times, may exceed federally insured limits.  The Company may lose all uninsured balances if one of the correspondent banks fails without warning.  The Company has not experienced any losses in such accounts.  The Company believes it is not exposed to any significant credit risk on cash and cash equivalents as the Company reviews this risk on a quarterly basis.

Note 5. Investment Securities

Amortized cost and fair values of investment securities are summarized as follows:

Securities Available for Sale:
 
Amortized Cost
   
Gross
Unrealized Gains
   
Gross
Unrealized Losses
   
Fair Value
 
 
 
(In thousands)
 
June 30, 2018
                       
U.S. Government sponsored agencies
 
$
69,305
   
$
-
   
$
(1,947
)
 
$
67,358
 
State and political subdivisions
   
163,412
     
134
     
(3,617
)
   
159,929
 
Residential mortgage backed securities
   
107,531
     
4
     
(2,063
)
   
105,472
 
Residential collateralized mortgage obligations
   
16,918
     
49
     
(192
)
   
16,775
 
Commercial mortgage backed securities
   
110,004
     
-
     
(4,918
)
   
105,086
 
SBA pools
   
515
     
-
     
(19
)
   
496
 
Totals
 
$
467,685
   
$
187
   
$
(12,756
)
 
$
455,116
 
 
                               
December 31, 2017
                               
U.S. Government sponsored agencies
 
$
69,315
   
$
-
   
$
(764
)
 
$
68,551
 
State and political subdivisions
   
157,652
     
1,306
     
(252
)
   
158,706
 
Residential mortgage backed securities
   
124,578
     
98
     
(1,593
)
   
123,083
 
Residential collateralized mortgage obligations
   
9,715
     
51
     
(80
)
   
9,686
 
Commercial mortgage backed securities
   
110,483
     
67
     
(2,388
)
   
108,162
 
SBA pools
   
560
     
-
     
(15
)
   
545
 
Totals
 
$
472,303
   
$
1,522
   
$
(5,092
)
 
$
468,733
 

Securities Held to Maturity
 
Amortized Cost
   
Gross
Unrealized Gains
   
Gross
Unrealized Losses
   
Fair Value
 
 
 
(In thousands)
 
June 30, 2018
                       
SBA pools
 
$
7,797
   
$
-
   
$
(529
)
 
$
7,268
 
Totals
 
$
7,797
   
$
-
   
$
(529
)
 
$
7,268
 
 
                               
December 31, 2017
                               
SBA pools
 
$
7,854
   
$
-
   
$
(485
)
 
$
7,369
 
Totals
 
$
7,854
   
$
-
   
$
(485
)
 
$
7,369
 

Realized net gains (losses) on sale and call of securities available for sale are summarized as follows:

 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
 
2018
   
2017
   
2018
   
2017
 
 
(In thousands)
 
Gross realized gains
 
$
-
   
$
6
   
$
-
   
$
6
 
Gross realized losses
   
-
     
(1,254
)
   
-
     
(1,254
)
Net gains (losses)
 
$
-
   
$
(1,248
)
 
$
-
   
$
(1,248
)

There was no tax benefit for the three or six months ended June 30, 2018 related to net realized gains and losses.  There was a tax benefit of $482 thousand related to these net realized gains and losses for the three and six months ended June 30, 2017.

- 8 -

A summary of unrealized loss information for investment securities, categorized by security type, as of June 30, 2018 and December 31, 2017 was as follows:

 
 
Less than 12 Months
   
12 Months or Longer
   
Total
 
 
 
Fair Value
   
Unrealized Losses
   
Fair Value
   
Unrealized Losses
   
Fair Value
   
Unrealized Losses
 
   
(In thousands)
 
 
Securities Available for Sale:
                                   
June 30, 2018
                                   
U.S. Government sponsored agencies
 
$
48,156
   
$
(1,224
)
 
$
19,202
   
$
(723
)
 
$
67,358
   
$
(1,947
)
State and political subdivisions
   
117,940
     
(2,684
)
   
29,110
     
(933
)
   
147,050
     
(3,617
)
Residential mortgage backed securities
   
30,730
     
(562
)
   
71,409
     
(1,501
)
   
102,139
     
(2,063
)
Residential collateralized mortgage obligations
   
9,563
     
(80
)
   
3,131
     
(112
)
   
12,694
     
(192
)
Commercial mortgage backed securities
   
26,316
     
(736
)
   
78,770
     
(4,182
)
   
105,086
     
(4,918
)
SBA pools
   
-
     
-
     
496
     
(19
)
   
496
     
(19
)
Totals
 
$
232,706
   
$
(5,286
)
 
$
202,118
   
$
(7,470
)
 
$
434,824
   
$
(12,756
)
 
                                               
December 31, 2017
                                               
U.S. Government sponsored agencies
 
$
49,070
   
$
(331
)
 
$
19,481
   
$
(433
)
 
$
68,551
   
$
(764
)
State and political subdivisions
   
23,217
     
(95
)
   
24,774
     
(157
)
   
47,991
     
(252
)
Residential mortgage backed securities
   
18,771
     
(199
)
   
88,100
     
(1,394
)
   
106,871
     
(1,593
)
Residential collateralized mortgage obligations
   
4,761
     
(67
)
   
3,502
     
(13
)
   
8,263
     
(80
)
Commercial mortgage backed securities
   
6,961
     
(94
)
   
81,042
     
(2,294
)
   
88,003
     
(2,388
)
SBA pools
   
-
     
-
     
545
     
(15
)
   
545
     
(15
)
Totals
 
$
102,780
   
$
(786
)
 
$
217,444
   
$
(4,306
)
 
$
320,224
   
$
(5,092
)
 
                                               
Securities Held to Maturity:
                                               
June 30, 2018
                                               
SBA Pools
 
$
-
   
$
-
   
$
7,268
   
$
(529
)
 
$
7,268
   
$
(529
)
Totals
 
$
-
   
$
-
   
$
7,268
   
$
(529
)
 
$
7,268
   
$
(529
)
 
                                               
December 31, 2017
                                               
SBA Pools
 
$
-
   
$
-
   
$
7,369
   
$
(485
)
 
$
7,369
   
$
(485
)
Totals
 
$
-
   
$
-
   
$
7,369
   
$
(485
)
 
$
7,369
   
$
(485
)

As of June 30, 2018, the Company's security portfolio consisted of 154 securities, 133 of which were in an unrealized loss position. As of June 30, 2018, $455.4 million in investment securities had unrealized losses with aggregate depreciation of 2.83% of the Company's amortized cost basis.  Of these securities, $217.4 million had a continuous unrealized loss position for twelve months or longer with an aggregate depreciation of 3.55%.  The unrealized losses relate principally to the general change in interest rates and illiquidity, and not credit quality, that has occurred since the securities purchase dates, and such unrecognized losses or gains will continue to vary with general interest rate level fluctuations in the future.  As management does not intend to sell the securities, and it is likely that it will not be required to sell the securities before their anticipated recovery, no declines are deemed to be other than temporary.

The amortized cost and fair value of investment securities, as of June 30, 2018, by contractual maturity are shown below.  Maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

 
 
Available for Sale
   
Held to Maturity
 
 
 
Amortized Cost
   
Fair Value
   
Amortized Cost
   
Fair Value
 
 
 
(In thousands)
 
One year or less
 
$
200
   
$
200
   
$
-
   
$
-
 
One to five years
   
65,546
     
63,738
     
-
     
-
 
Five to ten years
   
6,566
     
6,439
     
-
     
-
 
Over ten years
   
160,920
     
157,406
     
7,797
     
7,268
 
Subtotal
   
233,232
     
227,783
     
7,797
     
7,268
 
Residential mortgage backed securities
   
107,531
     
105,472
     
-
     
-
 
Residential collateralized mortgage obligations
   
16,918
     
16,775
     
-
     
-
 
Commercial mortgage backed securities
   
110,004
     
105,086
                 
Total
 
$
467,685
   
$
455,116
   
$
7,797
   
$
7,268
 

Securities with carrying amounts of $102.0 million and $87.4 million as of June 30, 2018 and December 31, 2017, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

- 9 -

Note 6. Loans and Allowance for Loan Losses

As of June 30, 2018 and December 31, 2017, loans consisted of:

 
 
June 30, 2018
   
December 31, 2017
 
 
 
(In thousands)
 
Commercial
 
$
68,137
   
$
61,388
 
Commercial real estate
   
404,663
     
378,802
 
Residential real estate
   
161,664
     
178,296
 
Construction real estate
   
68,136
     
63,569
 
Installment and other
   
12,099
     
18,952
 
Total loans
   
714,699
     
701,007
 
Unearned income
   
(1,097
)
   
(863
)
Gross loans
   
713,602
     
700,144
 
Allowance for loan losses
   
(10,444
)
   
(13,803
)
Net loans
 
$
703,158
   
$
686,341
 

Loan Origination/Risk Management. The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk.  Management and the Board of Directors review and approve these policies and procedures on an annual basis.  A reporting system supplements the review process by providing management with reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans.  Management has identified the following categories in its loan portfolios:
 
Commercial loans: These loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and prudently expand its business.  Underwriting standards are designed to promote relationship banking rather than transactional banking.  Management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed.  Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.  The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value.  Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis.  In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans: These loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of other real estate loans.  These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.  Commercial real estate lending typically involves higher original amounts than other types of loans and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan.  Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy.  The properties securing the Company's commercial real estate portfolio are geographically concentrated in the markets in which the Company operates.  Management monitors and evaluates commercial real estate loans based on collateral, location and risk grade criteria.  The Company also utilizes third-party sources to provide insight and guidance about economic conditions and trends affecting market areas it serves.  In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.  As of June 30, 2018, 25.2% of the outstanding principal balances of the Company's commercial real estate loans were secured by owner-occupied properties.

With respect to loans to developers and builders that are secured by non-owner occupied properties that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success.

Construction real estate loans: These loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners.  Construction real estate loans are generally based upon estimates of costs and values associated with the completed project and often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project.  Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained.  These loans are monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Residential real estate loans: Underwriting standards for residential real estate and home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, maximum loan-to-value levels, debt-to-income levels, collection remedies, the number of such loans a borrower can have at one time and documentation requirements.

Installment loans: The Company originates consumer loans utilizing a credit scoring analysis to supplement the underwriting process.  To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed.  This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk.  Additionally, trend and outlook reports are reviewed by management on a regular basis.

The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company's policies and procedures, which include periodic internal reviews and reports to identify and address risk factors developing within the loan portfolio. The Company engages external independent loan reviews that assess and validate the credit risk program on a periodic basis.  Results of these reviews are presented to and reviewed by management and the Board of Directors.

- 10 -

The following table presents the contractual aging of the recorded investment in current and past due loans by category of loans as of June 30, 2018 and December 31, 2017, including nonaccrual loans:

 
 
Current
   
30-59 Days
Past Due
   
60-89 Days
Past Due
   
Loans Past Due
90 Days or More
   
Total
Past Due
   
Total
 
June 30, 2018
 
(In thousands)
 
Commercial
 
$
68,100
   
$
37
   
$
-
   
$
-
   
$
37
   
$
68,137
 
Commercial real estate
   
403,689
     
165
     
-
     
809
     
974
     
404,663
 
Residential real estate
   
158,993
     
1,134
     
503
     
1,034
     
2,671
     
161,664
 
Construction real estate
   
64,970
     
226
     
-
     
2,940
     
3,166
     
68,136
 
Installment and other
   
11,982
     
26
     
-
     
91
     
117
     
12,099
 
Total loans
 
$
707,734
   
$
1,588
   
$
503
   
$
4,874
   
$
6,965
   
$
714,699
 
 
                                               
Nonaccrual loan classification, included above
 
$
4,104
   
$
911
   
$
503
   
$
4,874
   
$
6,288
   
$
10,392
 
 
                                               
December 31, 2017
                                               
Commercial
 
$
59,703
   
$
173
   
$
1,475
   
$
37
   
$
1,685
   
$
61,388
 
Commercial real estate
   
371,640
     
5,490
     
-
     
1,672
     
7,162
     
378,802
 
Residential real estate
   
174,388
     
1,899
     
-
     
2,009
     
3,908
     
178,296
 
Construction real estate
   
59,291
     
423
     
74
     
3,781
     
4,278
     
63,569
 
Installment and other
   
18,705
     
80
     
81
     
86
     
247
     
18,952
 
Total loans
 
$
683,727
   
$
8,065
   
$
1,630
   
$
7,585
   
$
17,280
   
$
701,007
 
 
                                               
Nonaccrual loan classification, included above
 
$
3,858
   
$
5,859
   
$
38
   
$
7,585
   
$
13,482
   
$
17,340
 

The following table presents the recorded investment in nonaccrual loans and loans past due 90 days or more and still accruing interest by category of loans as of June 30, 2018 and December 31, 2017:

 
 
June 30, 2018
   
December 31, 2017
 
 
 
Nonaccrual
   
Loans Past Due
90 Days or More
and Still Accruing Interest
   
Nonaccrual
   
Loans Past Due
90 Days or More
and Still Accruing Interest
 
 
 
(In thousands)
 
Commercial
 
$
48
   
$
-
   
$
102
   
$
-
 
Commercial real estate
   
2,965
     
-
     
8,617
     
-
 
Residential real estate
   
4,257
     
-
     
4,599
     
-
 
Construction real estate
   
3,031
     
-
     
3,911
     
-
 
Installment and other
   
91
     
-
     
111
     
-
 
Total
 
$
10,392
   
$
-
   
$
17,340
   
$
-
 

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans.  Under the Company's risk rating system, problem and potential problem loans are classified as "Special Mention," "Substandard," and "Doubtful." Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention.  Substandard loans include those characterized by the likelihood that the Company will sustain some loss if the deficiencies are not corrected.  Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.  Any time a situation warrants, the risk rating may be reviewed.

Loans not meeting the criteria above that are analyzed individually are considered to be pass-rated loans.  The following table presents the risk category by category of loans based on the most recent analysis performed as of June 30, 2018 and December 31, 2017:

 
 
Pass
   
Special Mention
   
Substandard
   
Doubtful
   
Total
 
June 30, 2018
 
(In thousands)
 
Commercial
 
$
64,607
   
$
1,796
   
$
1,734
   
$
-
   
$
68,137
 
Commercial real estate
   
392,740
     
3,190
     
8,733
     
-
     
404,663
 
Residential real estate
   
155,914
     
-
     
5,750
     
-
     
161,664
 
Construction real estate
   
64,315
     
790
     
3,031
     
-
     
68,136
 
Installment and other
   
11,999
     
-
     
100
     
-
     
12,099
 
Total
 
$
689,575
   
$
5,776
   
$
19,348
   
$
-
   
$
714,699
 
 
                                       
December 31, 2017
                                       
Commercial
 
$
58,769
   
$
2
   
$
2,617
   
$
-
   
$
61,388
 
Commercial real estate
   
359,768
     
4,762
     
14,272
     
-
     
378,802
 
Residential real estate
   
172,101
     
-
     
6,195
     
-
     
178,296
 
Construction real estate
   
56,661
     
917
     
5,991
     
-
     
63,569
 
Installment and other
   
18,523
     
-
     
429
     
-
     
18,952
 
Total
 
$
665,822
   
$
5,681
   
$
29,504
   
$
-
   
$
701,007
 

- 11 -

The following table shows all loans, including nonaccrual loans, by risk category and aging as of June 30, 2018 and December 31, 2017:

 
Pass
   
Special Mention
   
Substandard
   
Doubtful
   
Total
 
June 30, 2018
(In thousands)
 
Current
 
$
688,938
   
$
5,776
   
$
13,020
   
$
-
   
$
707,734
 
Past due 30-59 days
   
637
     
-
     
951
     
-
     
1,588
 
Past due 60-89 days
   
-
     
-
     
503
     
-
     
503
 
Past due 90 days or more
   
-
     
-
     
4,874
     
-
     
4,874
 
Total
 
$
689,575
   
$
5,776
   
$
19,348
   
$
-
   
$
714,699
 
 
                                       
December 31, 2017
   
Current
 
$
662,445
   
$
5,681
   
$
15,601
   
$
-
   
$
683,727
 
Past due 30-59 days
   
1,785
     
-
     
6,280
     
-
     
8,065
 
Past due 60-89 days
   
1,592
     
-
     
38
     
-
     
1,630
 
Past due 90 days or more
   
-
     
-
     
7,585
     
-
     
7,585
 
Total
 
$
665,822
   
$
5,681
   
$
29,504
   
$
-
   
$
701,007
 

As of June 30, 2018 and December 31, 2017, nonaccrual loans totaling $10.4 million and $17.3 million were classified as Substandard, respectively.
 
The following table presents loans individually evaluated for impairment by category of loans as of June 30, 2018 and December 31, 2017, showing the unpaid principal balance, the recorded investment of the loan (reflecting any loans with partial charge-offs), and the amount of allowance for loan losses specifically allocated for these impaired loans (if any):

 
 
June 30, 2018
   
December 31, 2017
 
 
 
Unpaid
Principal
Balance
   
Recorded
Investment
 
Allowance
for Loan Losses
Allocated
   
Unpaid
Principal
Balance
   
Recorded
Investment
 
Allowance
for Loan Losses
Allocated
 
 
 
(In thousands)
 
With no related allowance recorded:
                               
Commercial
 
$
118
   
$
114
       
$
184
   
$
182
     
Commercial real estate
   
5,903
     
2,965
         
4,294
     
4,154
     
Residential real estate
   
5,882
     
5,035
         
6,585
     
5,808
     
Construction real estate
   
6,254
     
4,796
         
7,471
     
6,049
     
Installment and other
   
300
     
299
         
349
     
348
     
With an allowance recorded:
                                       
Commercial
   
13,306
     
13,305
   
$
248
     
13,361
     
13,359
   
$
211
 
Commercial real estate
   
6,417
     
6,417
     
941
     
10,987
     
10,987
     
3,735
 
Residential real estate
   
5,526
     
5,525
     
830
     
6,774
     
6,774
     
943
 
Construction real estate
   
1,350
     
1,350
     
37
     
3,244
     
3,244
     
231
 
Installment and other
   
238
     
238
     
27
     
236
     
236
     
32
 
Total
 
$
45,294
   
$
40,044
   
$
2,083
   
$
53,485
   
$
51,141
   
$
5,152
 

The table above includes $36.3 million of troubled debt restructurings, or restructured loans, at June 30, 2018 and $38.9 million of restructured loans at December 31, 2017.

The following table presents loans individually evaluated for impairment by class of loans for the three and six months ended June 30, 2018 and 2017, showing the average recorded investment and the interest income recognized:

 
 
Three Months Ended
   
Six Months Ended
 
 
 
June 30, 2018
   
June 30, 2017
   
June 30, 2018
   
June 30, 2017
 
 
 
Average
Recorded
Investment
   
Interest
Income
Recognized
   
Average
Recorded
Investment
   
Interest
Income
Recognized
   
Average
Recorded
Investment
   
Interest
Income
Recognized
   
Average
Recorded
Investment
   
Interest
Income
Recognized
 
 
 
(In thousands)
 
With no related allowance recorded:
                                               
Commercial
 
$
105
   
$
1
   
$
1,428
   
$
11
   
$
131
   
$
2
   
$
1,674
   
$
21
 
Commercial real estate
   
4,010
     
-
     
3,873
     
7
     
4,058
     
-
     
4,627
     
15
 
Residential real estate
   
5,023
     
16
     
4,469
     
9
     
5,285
     
31
     
4,477
     
18
 
Construction real estate
   
5,113
     
22
     
7,817
     
27
     
5,425
     
44
     
7,222
     
53
 
Installment and other
   
304
     
2
     
348
     
4
     
319
     
5
     
336
     
8
 
With an allowance recorded:
                                                               
Commercial
   
13,285
     
189
     
13,701
     
184
     
13,310
     
376
     
13,797
     
366
 
Commercial real estate
   
6,446
     
73
     
6,352
     
68
     
7,959
     
145
     
6,360
     
135
 
Residential real estate
   
6,083
     
57
     
7,900
     
78
     
6,313
     
113