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Loans and the Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2017
Receivables [Abstract]  
Loans and the Allowance for Loan Losses

Note 6. Loans and the Allowance for Loan Losses

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, premiums and discounts related to purchase accounting, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

Loan segments are defined as a group of loans, which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. Management has determined that the Company has five segments of loans: commercial, commercial real estate, commercial construction, residential real estate (including home equity) and consumer.

The recognition of interest income on commercial, commercial real estate, commercial construction and residential loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to nonaccrual status in accordance with the Company’s policy, typically after 90 days of non-payment.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The policy of the Company is to generally grant commercial, residential and consumer loans to residents and businesses within our market area. The borrowers’ abilities to repay their obligations are dependent upon various factors including the borrowers’ income and net worth, cash flows generated by the borrowers’ underlying collateral, value of the underlying collateral, and priority of the lender’s lien on the property. Such factors are dependent upon various economic conditions and individual circumstances beyond the control of the Company. The Company is therefore subject to risk of loss. The Company believes its lending policies and procedures adequately minimize the potential exposure to such risks and that adequate provisions for loan losses are provided for all known and inherent risks. Collateral and/or personal guarantees are required for a large majority of the Company’s loans.

Loans Held-for-Sale

Residential mortgage loans, originated and intended for sale in the secondary market, are carried at the lower of aggregate cost or estimated fair value as determined by outstanding commitments from investors. For these loans originated and intended for sale, gains and losses on loan sales (sale proceeds minus carrying value) are recorded in other income and direct loan origination costs and fees are deferred at origination of the loan and are recognized in other income upon sale of the loan.

Other loans held-for-sale are carried at the lower of aggregate cost or estimated fair value. A portion of these loans, taxi medallion loans, have no material observable trading in any market. Fair value is established with consideration of a range of market participant indications, for all or parts of these loans, and discounted cash flow analyses, which have significant unobservable inputs. See Note 7 for further discussion.

Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Allowance for Loan losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired.

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDRs”) and classified as impaired. As part of the evaluation of impaired loans, the Company individually reviews for impairment all non-homogeneous loans internally classified as substandard or below. Generally, smaller impaired non-homogeneous loans and impaired homogeneous loans are collectively evaluated for impairment.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

TDRs are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For TDRs that subsequently defaults, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience, the primary factor, is determined by loan class and is based on the actual loss history experienced by the Bank over an actual three-year rolling calculation. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment and with the exogenous factor adjustments based on the risks present for each loan category. These exogenous factors include consideration of the following: concentrations of credit; delinquency & nonaccrual trends; economic & business conditions including evaluation of the national and regional economies and industries with significant loan concentrations; external factors including legal, regulatory or competitive pressures that may impact the loan portfolio; changes in the experience, ability, or size of the lending staff, management, or board of directors that may impact the loan portfolio; changes in underwriting standards, collection procedures, charge-off practices, or other changes in lending policies and procedures that may impact the loan portfolio; loss and recovery trends; changes in portfolio size and mix; and trends in problem loans.

Purchased Credit-Impaired Loans

The Company acquires groups of loans in conjunction with mergers, some of which have shown evidence of credit deterioration since origination. These purchased credit-impaired loans are recorded at their estimated fair value, such that there is no carryover of the seller’s allowance for loan losses (“ALLL”). After acquisition, probable incurred credit losses are recognized by an increase in the ALLL.

Such purchased credit-impaired loans (“PCI”) are identified on an individual basis. The Company estimates the amount and timing of expected cash flows for each loan and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

A PCI loan may be resolved either through a sale of the loan, by working with the customer and obtaining partial or full repayment, by short sale of the collateral, or by foreclosure. A gain or loss on resolution would be recognized based on the difference between the proceeds received and the carrying amount of the loan.

PCI loans that met the criteria for nonaccrual may be considered performing, regardless of whether the customer is contractually delinquent, if management can reasonably estimate the timing and amount of the expected cash flows on such loans and if management expects to fully collect the new carrying value of the loans. As such, management may no longer consider the loans to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable discount.

Loans held-for-sale

The following table presents loans held-for-sale by loan segment:

June 30, December 31,
      2017       2016
(dollars in thousands)
Commercial   $ 50,891 $ 70,105
Commercial real estate - 7,712
Residential real estate   233     188
Total carrying amount $        51,124 $        78,005

As of June 30, 2017 and December 31, 2016, the commercial loans held-for-sale segment included the Company’s entire taxi medallion portfolio, with a carrying value of $50.9 million and $65.6 million, net of $12.3 million and $-0- million valuation allowance, respectively.

Activity in the valuation allowance was as follows for the following periods:

Three Months Three Months
Ended Ended
      June 30, 2017       June 30, 2016
(dollars in thousands)
Balance at beginning of period $ 2,600 $ -
Increase in valuation allowance 9,725 -
Balance at end of period $ 12,325 $ -
  
  
Six Months Six Months
Ended Ended
June 30, 2017 June 30, 2016
(dollars in thousands)
Balance at beginning of period $ - $ -
Increase in valuation allowance   12,325 -
Balance at end of period $ 12,325 $ -

Loans receivable

The following table sets forth the composition of the Company’s loan portfolio, including net deferred loan fees, at June 30, 2017 and December 31, 2016:

June 30, December 31,
      2017       2016
(dollars in thousands)
Commercial $ 610,442 $ 553,576
Commercial real estate 2,470,957 2,204,710
Commercial construction 431,050 486,228
Residential real estate 251,107 232,547
Consumer 2,005 2,380
Gross loans 3,765,561 3,479,441
Net deferred loan fees (3,989 ) (3,609 )
Total loans receivable $       3,761,572 $       3,475,832

At June 30, 2017 and December 31, 2016 loan balances of approximately $1.8 billion were pledged to secure borrowings from the FHLB of New York.

Purchased Credit-Impaired Loans

The Company holds purchased loans for which there was, at their acquisition date, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected. The recorded investment of those loans is as follows at June 30, 2017 and December 31, 2016.

June 30, December 31,
      2017       2016
  (dollars in thousands)
Commercial $ 7,951 $ 7,098
Commercial real estate 260 982
Total carrying amount $       8,211 $       8,080

For those purchased loans disclosed above, the Company did not increase the allowance for loan losses during both the three and six months ended June 30, 2017 and June 30, 2016. No allowances for loan losses were reversed during the three and six months ended June 30, 2017 and 2016.

The accretable yield, or income expected to be collected, on the purchased credit-impaired loans above is as follows for the following periods:

Three Months Three Months
Ended Ended
      June 30, 2017       June 30, 2016
(dollars in thousands)
Balance at beginning of period   $ 2,674 $ 3,416
Accretion of income (178 ) (183 )
Balance at end of period $ 2,496 $ 3,233
  
  
Six Months Six Months
Ended Ended
June 30, 2017 June 30, 2016
(dollars in thousands)
Balance at beginning of period $ 2,860 $ 3,599
Accretion of income (364 ) (366 )
Balance at end of period $             2,496 $             3,233

Loans Receivable on Nonaccrual Status

The following tables presents nonaccrual loans included in loans receivable by loan segment as of the periods presented:

June 30, December 31,
      2017       2016
(dollars in thousands)
Commercial $ 1,351 $ 1,460
Commercial real estate 8,571     1,081
Residential real estate     4,133 3,193
Total loans receivable on nonaccrual status $        14,055 $       5,734

Nonaccrual loans and loans 90 days or greater past due and still accruing include both smaller balance homogeneous loans that are collectively evaluated for impairment and loans individually evaluated for impairment.

The Company continuously monitors the credit quality of its loans receivable. In addition to its internal monitoring, the Company utilizes the services of a third-party loan review firm to periodically validate the credit quality of its loans receivable on a sample basis. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the loan quality or inadequately protect the Company’s credit position at some future date. Assets are classified “Substandard” if the asset has a well-defined weakness that requires management’s attention to a greater degree than for loans classified special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as “Doubtful” if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a “distinct possibility” that a degree of loss will occur if the inadequacies are not corrected. All loans past due 90 days or greater and all impaired loans are included in the appropriate category below.

Credit Quality Indicators

The following table presents information, excluding loans held-for-sale and net deferred loan fees, about the Company’s loan credit quality at June 30, 2017 and December 31, 2016:

June 30, 2017
Special
      Pass       Mention       Substandard       Doubtful       Total
(dollars in thousands)
Commercial $ 597,308 $ 3,062 $ 10,072 $ - $ 610,442
Commercial real estate   2,421,030 29,352 20,575 - 2,470,957
Commercial construction 425,713 2,816 2,521 - 431,050
Residential real estate 246,830 - 4,277 - 251,107
Consumer 1,953 - 52 - 2,005
Gross loans $      3,692,834 $      35,230 $      37,497 $ - $      3,765,561
   
   
December 31, 2016
Special
Pass Mention Substandard Doubtful Total
(dollars in thousands)
Commercial $ 539,961 $ 3,255 $ 10,360 $ - $ 553,576
Commercial real estate 2,154,343 31,173 19,194 - 2,204,710
Commercial construction 480,319 3,388 2,521 - 486,228
Residential real estate 228,990 - 3,557 - 232,547
Consumer 2,318 - 62 - 2,380
Gross loans $ 3,405,931 $ 37,816 $ 35,694 $ - $ 3,479,441

The following table provides an analysis of the impaired loans by segment as of June 30, 2017 and December 31, 2016:

June 30, 2017
Unpaid
Recorded Principal Related
      Investment       Balance       Allowance
No related allowance recorded (dollars in thousands)
Commercial $ 3,184 $ 3,197
Commercial real estate 15,380 15,405
Commercial construction 4,271 4,271
Residential real estate 1,192 1,401
Consumer 52 52
Total $        24,079 $        24,326
  
  
With an allowance recorded
Commercial real estate $ 1,926 $ 2,338 $ 162
  
   
Total
Commercial $ 3,184 $ 3,197 $ -
Commercial real estate 17,306 17,743 162
Commercial construction 4,271 4,271 -
Residential real estate 1,192 1,401 -
Consumer 52 52 -
Total (including allowance) $ 26,005 $ 26,664 $       162
 
 
December 31, 2016
Unpaid
Recorded Principal Related
Investment Balance Allowance
No related allowance recorded (dollars in thousands)
Commercial $ 3,637 $ 4,063
Commercial real estate 18,288 18,288
Commercial construction 5,909 5,909
Residential real estate 1,851 2,055
Consumer 62 62
Total $ 29,747 $ 30,377
 
  
With an allowance recorded
Commercial real estate $ 1,244 $ 1,244 $ 145
 
Total
Commercial $ 3,637 $ 4,063 $ -
Commercial real estate 19,532 19,532 145
Commercial construction 5,909 5,909 -
Residential real estate 1,851 2,055 -
Consumer 62 62 -
Total (including allowance) $ 30,991 $ 31,621 $ 145

The following table provides an analysis related to the average recorded investment and interest income recognized on impaired loans by segment as of and for the three and six months ended June 30, 2017 and 2016:

Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Average Interest Average Interest Average Interest Average Interest
Recorded Income Recorded Income Recorded Income Recorded Income
   Investment    Recognized    Investment    Recognized    Investment    Recognized    Investment    Recognized
(dollars in thousands)
Impaired loans (no allowance)
  
Commercial $ 3,209 $ 42 $ 2,370 $ 20 $ 3,230 $ 81 $ 2,337 $ 20
Commercial real estate 15,456 97 16,072 27 14,526 203 15,623 53
Commercial construction 4,263 69 1,426 16 4,266 152 1,911 33
Residential real estate 1,200 2 3,947 5 1,210 4 4,021 10
Consumer 54 - 79 1 56 1 82 2
Total $ 24,182 $ 210 $ 23,894 $ 69 $ 23,288 $ 441 $ 23,974 $ 118
  
Impaired loans (allowance):
  
Commercial $ - $ - $ 93,260 $ 784 $ - $ - $ 88,691 $ 1,522
Commercial real estate 1,933 33 153 - 1,941 38 153 -
Total $ 1,933 $ 33 $ 93,413 $ 784 $ 1,941 $ 38 $ 88,844   $ 1,522
  
Total impaired loans:
 
Commercial $ 3,209 $ 42 $ 95,630 $ 804 $ 3,230 $ 81 $ 91,028 $ 1,542
Commercial real estate   17,389   130     16,225 27   16,467 241 15,776 53
Commercial construction   4,263 69 1,426     16 4,266   152   1,911 33
Residential mortgage 1,200 2 3,947 5 1,210   4 4,021   10
Consumer 54 - 79 1 56 1 82 2
 
Total $ 26,115 $ 234 $ 117,307 $ 853 $ 25,229 $ 479 $ 112,818 $ 1,640

Included in impaired loans at June 30, 2017 and December 31, 2016 are loans that are deemed troubled debt restructurings. The recorded investment in loans include accrued interest receivable and other capitalized costs such as real estate taxes paid on behalf of the borrower and loan origination fees, net, when applicable. Cash basis interest and interest income recognized on accrual basis approximate each other.

The following table provides an analysis of the aging of gross loans (excluding loans held-for-sale) that are past due at June 30, 2017 and December 31, 2016 by segment:

Aging Analysis

June 30, 2017
90 Days or
Greater Past Total Past
30-59 Days 60-89 Days Due and Still Due and
    Past Due     Past Due     Accruing     Nonaccrual     Nonaccrual     Current     Gross Loans
(dollars in thousands)
Commercial $ 454 $ 18 $ 5,551 $ 1,351 $ 7,374 $ 603,068 $ 610,442
                                           
Commercial real estate - - - 8,571 8,571 2,462,386 2,470,957
                                           
Commercial construction - 460 - - 460 430,590 431,050
                                           
Residential real estate - 745 - 4,133 4,878 246,229 251,107
                                           
Consumer 7 - - - 7 1,998 2,005
                                           
Total $ 461 $ 1,223 $ 5,551 $ 14,055 $ 21,290 $ 3,744,271 $ 3,765,561
  
    
December 31, 2016
90 Days or
Greater Past Total Past
30-59 Days 60-89 Days Due and Still Due and
Past Due Past Due Accruing Nonaccrual Nonaccrual Current Gross Loans
(dollars in thousands)
Commercial $ 475 $ 18 $ 4,630 $ 1,460 $ 6,583 $ 546,993 $ 553,576
                                           
Commercial real estate 4,928 1,584 663 1,081 8,256 2,196,454 2,204,710
                                           
Commercial construction - - - - - 486,228 486,228
                                           
Residential real estate   2,131 388   -     3,193   5,712     226,835   232,547
                                           
Consumer   -     -   - -     -   2,380   2,380
                                           
Total $ 7,534 $ 1,990 $ 5,293 $ 5,734 $ 20,551 $      3,458,890 $      3,479,441

Included in the 90 days or greater past due and still accruing/accreting category as of both June 30, 2017 and December 31, 2016 are three purchased credit-impaired loans, net of their fair value marks, which are accreting income per their valuation at date of acquisition.

The following tables detail, at the period-end presented, the amount of gross loans (excluding loans held-for-sale) that are evaluated individually, and collectively, for impairment, those acquired with deteriorated quality, and the related portion of the allowance for loan losses (“ALLL”) that are allocated to each loan portfolio segment:

June 30, 2017
Commercial Commercial Residential
    Commercial     real estate     construction     real estate     Consumer     Unallocated     Total
(dollars in thousands)
ALLL
Individually evaluated for impairment $  - $ 162 $ - $ - $ - $ - $ 162
Collectively evaluated for impairment 7,238 14,227 4,241 985 2 546 27,239
Acquired portfolio - 1,000 - - - - 1,000
Acquired with deteriorated credit quality - - - - - - -
Total ALLL $ 7,238 $ 15,389 $ 4,241 $ 985 $ 2 $ 546 $ 28,401
   
Gross loans
Individually evaluated for impairment $ 3,184 $ 17,306 $ 4,271 $ 1,192 $ 52 $ 26,005
Collectively evaluated for impairment 579,510 2,003,595 426,779 185,135 1,489 3,196,508
Acquired portfolio 19,797 449,796 - 64,780 464 534,837
Acquired with deteriorated credit quality 7,951 260 - - - 8,211
Total gross loans $ 610,442 $ 2,470,957 $ 431,050 $ 251,107 $ 2,005 $ 3,765,561
   
  December 31, 2016
Commercial Commercial Residential
Commercial real estate construction real estate Consumer Unallocated Total
(dollars in thousands)
ALLL
Individually evaluated for impairment $  - $ 145 $ - $ - $ - $ - $ 145
Collectively evaluated for impairment 6,632 12,438 4,789 958 3 779 25,599
Acquired portfolio - - - - - -   -
Acquired with deteriorated credit quality - - - - - - -
Total ALLL $ 6,632 $ 12,583 $ 4,789 $ 958 $ 3 $ 779 $ 25,744
   
Gross loans
Individually evaluated for impairment $ 3,637 $ 19,532 $ 5,909 $ 1,851 $ 62   $ 30,991
Collectively evaluated for impairment 517,869   1,621,745   478,865   163,686 1,757     2,783,922
Acquired portfolio   24,972   562,451   1,454   67,010   561   656,448
Acquired with deteriorated credit quality 7,098 982 - -   - 8,080
Total gross loans $      553,576 $      2,204,710 $      486,228 $      232,547 $      2,380 $      3,479,441

The Company’s allowance for loan losses is analyzed quarterly. Many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other factors inherent in the extension of credit. There have been no material changes to the allowance for loan losses (“ALLL”) methodology as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

A summary of the activity in the ALLL is as follows:

Three Months Ended June 30, 2017
Commercial   Commercial Residential
    Commercial     real estate     construction     real estate     Consumer     Unallocated     Total
(dollars in thousands)
Balance at March 31, 2017 $ 6,667 $ 14,118 $ 4,574 $ 1,008 $ 3 $ 531 $ 26,901
                                                     
Charge-offs - - - - (10 ) - (10 )
                                                     
Recoveries 15 45 - - - - 60
                                                     
Provision 556 1,226 (333 ) (23 ) 9 15 1,450
                                                     
Balance at June 30, 2017 $ 7,238 $ 15,389 $ 4,241 $ 985 $ 2 $ 546 $ 28,401
  
Three Months Ended June 30, 2016
Commercial Commercial Residential
Commercial real estate construction real estate Consumer Unallocated Total
(dollars in thousands)
Balance at March 31, 2016 $ 13,097 $ 10,941 $ 3,617 $ 1,074 $ 4 $ 341 $ 29,074
                                                     
Charge-offs   (72 )   - -   -     (5 ) -   (77 )
                                                     
Recoveries   1     12   -     2   1       -   16  
                                                     
Provision 2,522 418   423 15 4 368 3,750
                                                     
Balance at June 30, 2016 $      15,548 $       11,371 $           4,040 $       1,091 $              4 $ 709 $       32,763

Six Months Ended June 30, 2017
Commercial Commercial Residential
   Commercial    real estate    construction    real estate    Consumer    Unallocated    Total
(dollars in thousands)
Balance at December 31, 2016 $ 6,632 $ 12,583 $ 4,789 $ 958 $ 3 $ 779 $ 25,744
                                                         
Charge-offs - (71 ) - - (11 ) - (82 )
                                                         
Recoveries 141 48 - - - - 189
                                                         
Provision 465 2,829 (548 ) 27 10 (233 ) 2,550
                                                         
Balance at June 30, 2017 $ 7,238 $ 15,389 $           4,241 $ 985 $ 2 $ 546 $ 28,401
  
  
Six Months Ended June 30, 2016
Commercial Commercial Residential
Commercial real estate construction real estate Consumer Unallocated Total
(dollars in thousands)
Balance at December 31, 2015 $ 10,949 $ 10,926 $ 3,253 $ 976 $ 4 $ 464 $ 26,572
                                                         
Charge-offs (517 ) - - (67 ) (5 ) - (589 )
                                                         
Recoveries 2 25 - 2 1 - 30  
                                                         
Provision 5,114 420 787 180 4 245   6,750
                                                         
Balance at June 30, 2016 $      15,548 $      11,371 $      4,040 $           1,091 $ 4 $ 709 $      32,763

Troubled Debt Restructurings

Loans are considered to have been modified in a troubled debt restructuring (“TDRs”) when due to a borrower’s financial difficulties, the Company makes certain concessions to the borrower that it would not otherwise consider. Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Generally, a nonaccrual loan that has been modified in a troubled debt restructuring remains on nonaccrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual status.

At June 30, 2017, there were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status or were contractually past due 90 days or greater and still accruing interest, or whose terms have been modified in troubled debt restructurings.

The following table presents a rollforward of TDRs and the related changes to the allowance for loan losses (“ALLL”) that occurred for the periods presented:

Six Months Ended Year Ended
June 30, 2017 December 31, 2016
(dollars in thousands)
Recorded Recorded
Investment         ALLL         Investment         ALLL
Troubled Debt Restructurings
 
Beginning balance $      13,818 $                - $      86,629 $      4,500
Additions 3,079 - 26,325 8,250
Payoffs/paydowns (1,226 ) - (2,616 ) -
Transfers (580 ) - (96,520 ) -
Other - - - (12,750 )
Ending balance $ 15,091 $ - $ 13,818 $ -

TDRs totaled $15.1 million at June 30, 2017, of which $4.9 million were on nonaccrual status and $10.2 million were performing under restructured terms. At December 31, 2016, TDRs, totaled $13.8 million, of which $0.5 million were on nonaccrual status and $13.3 million were performing under restructured terms. TDRs as of June 30, 2017 did not increase the ALLL during the three and six months ended June 30, 2017. There were no charge-offs in connection with a loan modification at the time of modification during the three or six months ended June 30, 2017. There were no TDRs for which there was a payment default within twelve months following the modification during the three and six months ended June 30, 2017.

TDRs totaled $99.2 million at June 30, 2016, of which $1.4 million were on nonaccrual status and $97.8 million were performing troubled debt restructurings. The Company had allocated $7.8 in specific allocations with respect to loans whose loan terms had been modified in troubled debt restructurings as of June 30, 2016. TDRs as of June 30, 2016 increased the ALLL by $1.5 and $3.3 million during the three and six months ended June 30, 2016, respectively.

The $7.8 million in specific allocations referenced above were associated with taxi medallion lending and were calculated based on the present value of estimated cash flows, including contractual debt interest service through maturity, and principal repayments based on the estimated fair value of the collateral excluding any consideration for personal guarantees of borrowers, which provide an additional source of repayment but cannot be relied upon. The valuation per corporate medallion used for the calculation at June 30, 2016 was approximately $750,000. An additional $3.3 million specific allocation was required at June 30, 2016 due to a decline in the Company’s estimated valuation of taxi medallions since December 31, 2015, when the specific allocation was $4.5 million.

The following table presents loans by class modified as TDRs that occurred during the six months ended June 30, 2016 (dollars in thousands):

Pre-Modification Post-Modification
        Outstanding         Outstanding
Number of Recorded Recorded
Loans Investment Investment
        Troubled debt restructurings: (dollars in thousands)
  Commercial 12 $      12,018 $      12,018
Commercial real estate 1 575 575
Commercial construction - - -
Residential real estate - - -
Consumer - - -
  
Total 13 $ 12,593 $ 12,593

Included in the above TDRs were eight loans secured by 15 New York City taxi medallions totaling $10.1 million. These loan modifications included interest rate reductions and maturity extensions. All eight loans were accruing prior to modification, while seven remained in accrual status post-modification.

The TDRs described above increased the allowance for loan losses by $108 thousand during the six months ended June 30, 2016. There were no charge-offs in connection with a loan modification at the time of modification during the three and six months ended June 30, 2016. There were no TDRs for which there was a payment default within twelve months following the modification during the three or six months ended June 30, 2016.