Loans

The composition of the loan portfolio, by class of loan, as of June 30, 2017 and December 31, 2016 was as follows:



	June 30, 2017						December 31, 2016
(In thousands)	Loan Balance		Accrued Interest Receivable		Recorded Investment		Loan Balance		Accrued Interest Receivable		Recorded Investment
Commercial, financial and agricultural *	$	1,006,479	$	3,837	$	1,010,316	$	994,619	$	3,558	$	998,177
Commercial real estate *	1,191,881		3,960		1,195,841		1,155,703		4,161		1,159,864
Construction real estate:
Commercial	118,605		367		118,972		135,343		398		135,741
Mortgage	47,028		103		47,131		48,699		106		48,805
Installment	4,766		15		4,781		4,903		17		4,920
Residential real estate:
Commercial	397,762		949		398,711		406,687		940		407,627
Mortgage	1,150,606		1,219		1,151,825		1,169,495		1,459		1,170,954
HELOC	209,251		873		210,124		212,441		853		213,294
Installment	18,948		52		19,000		19,874		67		19,941
Consumer	1,216,764		3,190		1,219,954		1,120,850		3,385		1,124,235
Leases	3,347		30		3,377		3,243		29		3,272
Total loans	$	5,365,437	$	14,595	$	5,380,032	$	5,271,857	$	14,973	$	5,286,830

* Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class.

Loans are shown net of deferred origination fees, costs and unearned income of $12.0 million at June 30, 2017 and $11.1 million at December 31, 2016, which represented a net deferred income position in both periods.

Overdrawn deposit accounts of $1.8 million and $2.9 million had been reclassified to loans at June 30, 2017 and December 31, 2016, respectively, and are included in the commercial, financial and agricultural loan class above.

Credit Quality

The following tables present the recorded investment in nonaccrual loans, accruing troubled debt restructurings ("TDRs"), and loans past due 90 days or more and still accruing by class of loan as of June 30, 2017 and December 31, 2016:



	June 30, 2017
(In thousands)	Nonaccrual Loans		Accruing Troubled Debt Restructurings		Loans Past Due 90 Days or More and Accruing		Total Nonperforming Loans
Commercial, financial and agricultural	$	28,179	$	325	$	—	$	28,504
Commercial real estate	16,459		5,331		—		21,790
Construction real estate:
Commercial	1,269		367		—		1,636
Mortgage	8		101		—		109
Installment	31		92		29		152
Residential real estate:
Commercial	21,149		86		—		21,235
Mortgage	17,752		10,151		867		28,770
HELOC	1,671		994		19		2,684
Installment	587		539		—		1,126
Consumer	3,273		736		1,032		5,041
Total loans	$	90,378	$	18,722	$	1,947	$	111,047



	December 31, 2016
(In thousands)	Nonaccrual Loans		Accruing Troubled Debt Restructurings		Loans Past Due 90 Days or More and Accruing		Total Nonperforming Loans
Commercial, financial and agricultural	$	20,057	$	600	$	15	$	20,672
Commercial real estate	19,169		5,305		—		24,474
Construction real estate:
Commercial	1,833		393		—		2,226
Mortgage	—		104		—		104
Installment	61		95		12		168
Residential real estate:
Commercial	23,013		89		—		23,102
Mortgage	18,313		9,612		887		28,812
HELOC	1,783		673		25		2,481
Installment	644		609		60		1,313
Consumer	2,949		748		1,139		4,836
Total loans	$	87,822	$	18,228	$	2,138	$	108,188

The following table provides additional information regarding those nonaccrual loans and accruing TDR loans that were individually evaluated for impairment and those collectively evaluated for impairment as of June 30, 2017 and December 31, 2016.



	June 30, 2017						December 31, 2016
(In thousands)	Nonaccrual and Accruing TDRs		Loans Individually Evaluated for Impairment		Loans Collectively Evaluated for Impairment		Nonaccrual and Accruing TDRs		Loans Individually Evaluated for Impairment		Loans Collectively Evaluated for Impairment
Commercial, financial and agricultural	$	28,504	$	28,475	$	29	$	20,657	$	20,624	$	33
Commercial real estate	21,790		21,790		—		24,474		24,474		—
Construction real estate:
Commercial	1,636		1,636		—		2,226		2,226		—
Mortgage	109		—		109		104		—		104
Installment	123		—		123		156		—		156
Residential real estate:
Commercial	21,235		21,235		—		23,102		23,102		—
Mortgage	27,903		—		27,903		27,925		—		27,925
HELOC	2,665		—		2,665		2,456		—		2,456
Installment	1,126		—		1,126		1,253		—		1,253
Consumer	4,009		8		4,001		3,697		—		3,697
Total loans	$	109,100	$	73,144	$	35,956	$	106,050	$	70,426	$	35,624

All of the loans individually evaluated for impairment were evaluated using the fair value of the underlying collateral or the present value of expected future cash flows as the measurement method.

The following table presents loans individually evaluated for impairment by class of loan, together with the related allowance recorded, as of June 30, 2017 and December 31, 2016.



	June 30, 2017						December 31, 2016
(In thousands)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial, financial and agricultural	$	17,871	$	12,837	$	—	$	41,075	$	19,965	$	—
Commercial real estate	20,199		20,014		—		23,961		23,474		—
Construction real estate:
Commercial	1,457		1,431		—		3,662		2,226		—
Residential real estate:
Commercial	21,261		20,873		—		24,409		22,687		—

With an allowance recorded:
Commercial, financial and agricultural	17,505		15,638		3,774		810		659		152
Commercial real estate	1,969		1,776		290		1,014		1,000		309
Construction real estate:
Commercial	1,592		205		44		—		—		—
Residential real estate:
Commercial	362		362		29		427		415		87
Consumer	8		8		8		—		—		—
Total	$	82,224	$	73,144	$	4,145	$	95,358	$	70,426	$	548

Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. At June 30, 2017 and December 31, 2016, there were $5.7 million and $24.7 million, respectively, of partial charge-offs on loans individually evaluated for impairment with no related allowance recorded and $3.4 million and $0.2 million, respectively, of partial charge-offs on loans individually evaluated for impairment that also had a specific reserve allocated.

The allowance for loan losses included specific reserves related to loans individually evaluated for impairment at June 30, 2017 and December 31, 2016 of $4.1 million and $0.5 million, respectively. These loans with specific reserves had a recorded investment of $18.0 million and $2.1 million as of June 30, 2017 and December 31, 2016, respectively.

Interest income on nonaccrual loans individually evaluated for impairment is recognized on a cash basis only when Park expects to receive the entire recorded investment of the loan. Interest income on accruing TDRs individually evaluated for impairment continues to be recorded on an accrual basis. The following table presents the average recorded investment and interest income recognized subsequent to impairment on loans individually evaluated for impairment as of and for the three and six months ended June 30, 2017 and June 30, 2016:



	Three Months Ended June 30, 2017						Three Months Ended June 30, 2016
(In thousands)	Recorded Investment as of June 30, 2017		Average Recorded Investment		Interest Income Recognized		Recorded Investment as of June 30, 2016		Average Recorded Investment		Interest Income Recognized
Commercial, financial and agricultural	$	28,475	$	23,320	$	120	$	29,779	$	28,600	$	308
Commercial real estate	21,790		21,768		240		29,889		22,177		185
Construction real estate:
Commercial	1,636		1,843		16		6,086		6,395		15
Residential real estate:
Commercial	21,235		20,732		61		25,070		24,648		340
Consumer	8		9		—		20		5		—
Total	$	73,144	$	67,672	$	437	$	90,844	$	81,825	$	848



	Six Months Ended June 30, 2017						Six Months Ended June 30, 2016
(In thousands)	Recorded Investment as of June 30, 2017		Average Recorded Investment		Interest Income Recognized		Recorded Investment as of June 30, 2016		Average Recorded Investment		Interest Income Recognized
Commercial, financial and agricultural	$	28,475	$	21,789	$	340	$	29,779	$	29,319	$	546
Commercial real estate	21,790		22,504		471		29,889		19,863		365
Construction real estate:
Commercial	1,636		1,960		31		6,086		6,564		28
Residential real estate:
Commercial	21,235		21,220		406		25,070		24,795		2,305
Consumer	8		6		—		20		3		—
Total	$	73,144	$	67,479	$	1,248	$	90,844	$	80,544	$	3,244

The following tables present the aging of the recorded investment in past due loans as of June 30, 2017 and December 31, 2016 by class of loan.



	June 30, 2017
(In thousands)	Accruing Loans Past Due 30-89 Days		Past Due Nonaccrual Loans and Loans Past Due 90 Days or More and Accruing ⁽¹⁾		Total Past Due		Total Current ⁽²⁾		Total Recorded Investment
Commercial, financial and agricultural	$	227	$	10,364	$	10,591	$	999,725	$	1,010,316
Commercial real estate	290		2,572		2,862		1,192,979		1,195,841
Construction real estate:
Commercial	—		24		24		118,948		118,972
Mortgage	155		—		155		46,976		47,131
Installment	133		50		183		4,598		4,781
Residential real estate:
Commercial	39		1,715		1,754		396,957		398,711
Mortgage	8,333		10,278		18,611		1,133,214		1,151,825
HELOC	379		1,118		1,497		208,627		210,124
Installment	250		308		558		18,442		19,000
Consumer	9,073		2,232		11,305		1,208,649		1,219,954
Leases	—		—		—		3,377		3,377
Total loans	$	18,879	$	28,661	$	47,540	$	5,332,492	$	5,380,032

(1) Includes $1.9 million of loans past due 90 days or more and accruing. The remaining are past due nonaccrual loans.

(2) Includes $63.7 million of nonaccrual loans which are current in regards to contractual principal and interest payments.



	December 31, 2016
(in thousands)	Accruing Loans Past Due 30-89 Days		Past Due Nonaccrual Loans and Loans Past Due 90 Days or More and Accruing ⁽¹⁾		Total Past Due		Total Current ⁽²⁾		Total Recorded Investment
Commercial, financial and agricultural	$	371	$	4,113	$	4,484	$	993,693	$	998,177
Commercial real estate	355		2,499		2,854		1,157,010		1,159,864
Construction real estate:
Commercial	—		541		541		135,200		135,741
Mortgage	559		—		559		48,246		48,805
Installment	223		64		287		4,633		4,920
Residential real estate:
Commercial	330		3,631		3,961		403,666		407,627
Mortgage	10,854		9,769		20,623		1,150,331		1,170,954
HELOC	970		1,020		1,990		211,304		213,294
Installment	350		319		669		19,272		19,941
Consumer	12,579		2,094		14,673		1,109,562		1,124,235
Leases	—		—		—		3,272		3,272
Total loans	$	26,591	$	24,050	$	50,641	$	5,236,189	$	5,286,830

(1) Includes $2.1 million of loans past due 90 days or more and accruing. The remaining are past due nonaccrual loans.

(2) Includes $65.9 million of nonaccrual loans which are current in regards to contractual principal and interest payments.

Credit Quality Indicators

Management utilizes past due information as a credit quality indicator across the loan portfolio. Past due information as of June 30, 2017 and December 31, 2016 is included in the tables above. The past due information is the primary credit quality indicator within the following classes of loans: (1) mortgage loans and installment loans in the construction real estate segment; (2) mortgage loans, HELOC and installment loans in the residential real estate segment; and (3) consumer loans. The primary credit indicator for commercial loans is based on an internal grading system that grades commercial loans on a scale from 1 to 8. Credit grades are continuously monitored by the responsible loan officer and adjustments are made when appropriate. A grade of 1 indicates little or no credit risk and a grade of 8 is considered a loss. Commercial loans that are pass-rated (graded an 1 through a 4) are considered to be of acceptable credit risk. Commercial loans graded a 5 (special mention) are considered to be watch list credits and a higher loan loss reserve percentage is allocated to these loans. Loans classified as special mention have potential weaknesses that require management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of Park’s credit position at some future date. Commercial loans graded 6 (substandard), also considered to be watch list credits, are considered to represent higher credit risk and, as a result, a higher loan loss reserve percentage is allocated to these loans. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or the value of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Park will sustain some loss if the deficiencies are not corrected. Commercial loans that are graded a 7 (doubtful) are shown as nonaccrual and Park generally charges these loans down to their fair value by taking a partial charge-off or recording a specific reserve. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Certain 6-rated loans and all 7-rated loans are placed on nonaccrual status and included within the impaired category. A loan is deemed impaired when management determines the borrower's ability to perform in accordance with the contractual loan agreement is in doubt. Any commercial loan graded an 8 (loss) is completely charged off.

The tables below present the recorded investment by loan grade at June 30, 2017 and December 31, 2016 for all commercial loans:



	June 30, 2017
(In thousands)	5 Rated		6 Rated		Nonaccrual and Accruing Troubled Debt Restructurings		Pass-Rated		Recorded Investment
Commercial, financial and agricultural *	$	3,230	$	136	$	28,504	$	978,446	$	1,010,316
Commercial real estate *	7,248		—		21,790		1,166,803		1,195,841
Construction real estate:
Commercial	—		115		1,636		117,221		118,972
Residential real estate:
Commercial	1,071		254		21,235		376,151		398,711
Leases	—		—		—		3,377		3,377
Total commercial loans	$	11,549	$	505	$	73,165	$	2,641,998	$	2,727,217

* Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class.



	December 31, 2016
(In thousands)	5 Rated		6 Rated		Nonaccrual and Accruing Troubled Debt Restructurings		Pass-Rated		Recorded Investment
Commercial, financial and agricultural *	$	5,826	$	—	$	20,657	$	971,694	$	998,177
Commercial real estate *	7,548		190		24,474		1,127,652		1,159,864
Construction real estate:
Commercial	287		118		2,226		133,110		135,741
Residential real estate:
Commercial	1,055		124		23,102		383,346		407,627
Leases	—		—		—		3,272		3,272
Total Commercial Loans	$	14,716	$	432	$	70,459	$	2,619,074	$	2,704,681

* Included within each of commercial, financial and agricultural loans and commercial real estate loans is an immaterial amount of consumer loans that are not broken out by class.

Troubled Debt Restructurings ("TDRs")

Management classifies loans as TDRs when a borrower is experiencing financial difficulties and Park has granted a concession to the borrower as part of a modification or in the loan renewal process. 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 the borrower's debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Company’s internal underwriting policy. Management’s policy is to modify loans by extending the term or by granting a temporary or permanent contractual interest rate below the market rate, not by forgiving debt. A court's discharge of a borrower's debt in a Chapter 7 bankruptcy is considered a concession when the borrower does not reaffirm the discharged debt.

Certain loans which were modified during the six-month periods ended June 30, 2017 and June 30, 2016 did not meet the definition of a TDR as the modification was a delay in a payment that was considered to be insignificant. Management considers a forbearance period of up to three months or a delay in payment of up to 30 days to be insignificant. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note. Management reviews all accruing TDRs quarterly to ensure payments continue to be made in accordance with the modified terms.

Quarterly, management reviews renewals/modifications of loans previously identified as TDRs to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification did not contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate, the TDR classification is removed if the borrower has complied with the terms of the loan at the date of the renewal/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the renewal/modification. The majority of these TDRs were originally considered restructurings in a prior year as a result of a renewal/modification with an interest rate that was not commensurate with the risk of the underlying loan at the time of the renewal/modification. There were no TDR classifications removed during the three-month or six-month periods ended June 30, 2017. The TDR classification was removed on $917,000 of loans during the three-month period ended June 30, 2016 and $1.7 million of loans during the six-month period ended June 30, 2016, respectively.

At June 30, 2017 and December 31, 2016, there were $43.9 million and $46.9 million, respectively, of TDRs included in the nonaccrual loan totals. At June 30, 2017 and December 31, 2016, $36.7 million and $38.0 million, respectively, of these nonaccrual TDRs were performing in accordance with the terms of the restructured note. As of June 30, 2017 and December 31, 2016, loans with a recorded investment of $18.7 million and $18.2 million, respectively, were included in accruing TDR loan totals. Management will continue to review the restructured loans and may determine it appropriate to move certain nonaccrual TDRs to accrual status in the future.

At June 30, 2017 and December 31, 2016, Park had commitments to lend $0.9 million and $0.7 million, respectively, of additional funds to borrowers whose outstanding loan terms had been modified in a TDR.

There were $0.6 million and $0.2 million of specific reserves related to TDRs at June 30, 2017 and December 31, 2016, respectively. Modifications made in 2016 and 2017 were largely the result of renewals and extending the maturity date of the loan at terms consistent with the original note. These modifications were deemed to be TDRs primarily due to Park’s conclusion that the borrower would likely not have qualified for similar terms through another lender. Many of the modifications deemed to be TDRs were previously identified as impaired loans, and thus were also previously evaluated for impairment under Accounting Standards Codification (ASC) 310. Additional specific reserves of $10,000 and $950,000 were recorded during the three-month periods ended June 30, 2017 and June 30, 2016, respectively, as a result of TDRs identified in the respective periods. Additional specific reserves of $290,000 and $975,000 were recorded during the six-month periods ended June 30, 2017 and June 30, 2016, respectively, as a result of TDRs identified in the respective periods.

The terms of certain other loans were modified during the six-month periods ended June 30, 2017 and June 30, 2016 that did not meet the definition of a TDR. Modified substandard commercial loans which did not meet the definition of a TDR had a total recorded investment as of June 30, 2017 and June 30, 2016 of $111,000 and $33,000, respectively. The renewal/modification of these loans: (1) resulted in a delay in a payment that was considered to be insignificant, or (2) resulted in Park obtaining additional collateral or guarantees that improved the likelihood of the ultimate collection of the loans such that each modification was deemed to be at market terms. Modified consumer loans which did not meet the definition of a TDR had a total recorded investment of $5.0 million and $4.4 million, as of June 30, 2017 and June 30, 2016, respectively. Many of these loans were to borrowers who were not experiencing financial difficulties but who were looking to reduce their cost of funds.

The following tables detail the number of contracts modified as TDRs during the three-month and six-month periods ended June 30, 2017 and June 30, 2016, as well as the recorded investment of these contracts at June 30, 2017 and June 30, 2016. The recorded investment pre- and post-modification is generally the same due to the fact that Park does not typically provide for forgiveness of principal.



	Three Months Ended June 30, 2017
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	3	$	—	$	164	$	164
Commercial real estate	2	802		—		802
Construction real estate:
Commercial	—	—		—		—
Mortgage	1	—		8		8
Installment	—	—		—		—
Residential real estate:
Commercial	4	—		282		282
Mortgage	10	438		506		944
HELOC	9	160		48		208
Installment	2	40		—		40
Consumer	72	37		551		588
Total loans	103	$	1,477	$	1,559	$	3,036



	Three Months Ended June 30, 2016
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	10	$	51	$	3,248	$	3,299
Commercial real estate	4	3,326		581		3,907
Construction real estate:
Commercial	1	—		196		196
Mortgage	—	—		—		—
Installment	1	—		10		10
Residential real estate:
Commercial	1	—		132		132
Mortgage	4	—		441		441
HELOC	2	17		38		55
Installment	2	39		3		42
Consumer	85	122		623		745
Total loans	110	$	3,555	$	5,272	$	8,827

Of those loans which were modified and determined to be a TDR during the three-month period ended June 30, 2017, $175,000 were on nonaccrual status as of December 31, 2016. Of those loans which were modified and determined to be a TDR during the three-month period ended June 30, 2016, $1.9 million were on nonaccrual status as of December 31, 2015.



	Six Months Ended June 30, 2017
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	11	$	—	$	3,052	$	3,052
Commercial real estate	6	803		380		1,183
Construction real estate:
Commercial	—	—		—		—
Mortgage	1	—		8		8
Installment	—	—		—		—
Residential real estate:
Commercial	5	—		282		282
Mortgage	19	438		1,110		1,548
HELOC	12	359		47		406
Installment	3	73		—		73
Consumer	129	52		965		1,017
Total loans	186	$	1,725	$	5,844	$	7,569



	Six Months Ended June 30, 2016
(In thousands)	Number of Contracts	Accruing		Nonaccrual		Total Recorded Investment
Commercial, financial and agricultural	17	$	51	$	3,945	$	3,996
Commercial real estate	4	3,327		581		3,908
Construction real estate:
Commercial	1	—		196		196
Mortgage	—	—		—		—
Installment	1	—		10		10
Residential real estate:
Commercial	3	—		695		695
Mortgage	9	98		654		752
HELOC	8	80		157		237
Installment	2	39		3		42
Consumer	149	134		824		958
Total loans	194	$	3,729	$	7,065	$	10,794

Of those loans which were modified and determined to be a TDR during the six-month period ended June 30, 2017, $2.8 million were on nonaccrual status as of December 31, 2016. Of those loans which were modified and determined to be a TDR during the six-month period ended June 30, 2016, $2.8 million were on nonaccrual status as of December 31, 2015.

The following tables present the recorded investment in financing receivables which were modified as TDRs within the previous 12 months and for which there was a payment default during the three-month and six-month periods ended June 30, 2017 and June 30, 2016, respectively. For these tables, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms. The additional allowance for loan loss resulting from the defaults on TDR loans was immaterial.



	Three Months Ended June 30, 2017			Three Months Ended June 30, 2016
(In thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial, financial and agricultural	4	$	109	—	$	—
Commercial real estate	4	657		1	582
Construction real estate:
Commercial	—	—		—	—
Mortgage	—	—		—	—
Installment	—	—		—	—
Residential real estate:
Commercial	1	29		2	563
Mortgage	10	724		3	288
HELOC	2	10		—	—
Installment	1	2		1	3
Consumer	48	579		39	311
Leases	—	—		—	—
Total loans	70	$	2,110	46	$	1,747

Of the $2.1 million in modified TDRs which defaulted during the three months ended June 30, 2017, $13,000 were accruing loans and $2.1 million were nonaccrual loans. Of the $1.7 million in modified TDRs which defaulted during the three months ended June 30, 2016, $58,000 were accruing loans and $1.7 million were nonaccrual loans.



	Six Months Ended June 30, 2017			Six Months Ended June 30, 2016
(In thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial, financial and agricultural	4	$	109	—	$	—
Commercial real estate	5	834		1	582
Construction real estate:
Commercial	—	—		—	—
Mortgage	—	—		—	—
Installment	—	—		—	—
Residential real estate:
Commercial	1	29		2	563
Mortgage	10	724		3	288
HELOC	2	10		—	—
Installment	1	2		1	3
Consumer	56	618		42	339
Leases	—	—		—	—
Total loans	79	$	2,326	49	$	1,775

Of the $2.3 million in modified TDRs which defaulted during the six months ended June 30, 2017, $13,000 were accruing loans and $2.3 million were nonaccrual loans. Of the $1.8 million in modified TDRs which defaulted during the six months ended June 30, 2016, $58,000 were accruing loans and $1.7 million were nonaccrual loans.