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Allowance for Loan and Lease Losses | 12 Months Ended
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Dec. 31, 2018
Receivables [Abstract] |
Allowance for Loan and Lease Losses | Allowance for Loan and Lease Losses Originated Loans and Leases Management reviews the appropriateness of the allowance for loan and lease losses (“allowance”) on a regular basis. Management considers the accounting policy relating to the allowance to be a critical accounting policy, given the inherent uncertainty in evaluating the levels of the allowance required to cover credit losses in the portfolio and the material effect that assumptions could have on the Company’s results of operations. The Company has developed a methodology to measure the amount of estimated loan loss exposure inherent in the loan portfolio to assure that an appropriate allowance is maintained. The Company’s methodology is based upon guidance provided in SEC Staff Accounting Bulletin No. 102, Selected Loan Loss Allowance Methodology and Documentation Issues and allowance allocations are calculated in accordance with ASC Topic 310, Receivables and ASC Topic 450, Contingencies. The model is comprised of four major components that management has deemed appropriate in evaluating the appropriateness of the allowance for loan and lease losses. While none of these components, when used independently, is effective in arriving at a reserve level that appropriately measures the risk inherent in the portfolio, management believes that using them collectively, provides reasonable measurement of the loss exposure in the portfolio. The four components include: impaired loans; criticized and classified credits; historical loss experience; and qualitative or subjective analysis. Since the methodology is based upon historical experience and trends as well as management’s judgment, factors may arise that result in different estimations. Significant factors that could give rise to changes in these estimates may include, but are not limited to, changes in economic conditions in the local area, concentration of risk, changes in interest rates, and declines in local property values. While management’s evaluation of the allowance as of December 31, 2018, considers the allowance to be appropriate, under different conditions or assumptions, the Company may need to adjust the allowance. Acquired Loans and Leases As part of our determination of the fair value of our acquired loans at the time of acquisition, the Company established a credit mark to provide for future losses in our acquired loan portfolio. To the extent that credit quality deteriorates subsequent to acquisition, such deterioration would result in the establishment of an allowance for the acquired loan portfolio. Changes in the allowance for loan and lease losses for the twelve months ended December 31, 2018, 2017 and 2016 are summarized as follows:
(in thousands) | 2018 |  | 2017 |  | 2016
Total allowance at beginning of year | $ | 39,771 |  |  | $ | 35,755 |  |  | $ | 32,004 |
Provisions charged to operations | 3,942 |  |  | 4,161 |  |  | 4,321 |
Recoveries on loans and leases | 2,137 |  |  | 2,429 |  |  | 2,139 |
Charge-offs on loans and leases | (2,440 | ) |  | (2,574 | ) |  | (2,709 | )
Total allowance at end of year | $ | 43,410 |  |  | $ | 39,771 |  |  | $ | 35,755 |
The following tables detail activity in the allowance for originated and acquired loan and lease losses by portfolio segment for the twelve months ended December 31, 2018 and 2017.
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Allowance for originated loans and leases: |  |  |  |  |  |  |  |
Beginning balance | $ | 11,812 |  |  | $ | 20,412 |  |  | $ | 6,161 |  |  | $ | 1,301 |  |  | $ | 0 |  |  | $ | 39,686 |
Charge-offs | (293 | ) |  | (60 | ) |  | (424 | ) |  | (1,350 | ) |  | 0 |  |  | (2,127 | )
Recoveries | 50 |  |  | 812 |  |  | 324 |  |  | 679 |  |  | 0 |  |  | 1,865 |
Provision | (352 | ) |  | 2,319 |  |  | 1,256 |  |  | 674 |  |  | 0 |  |  | 3,897 |
Ending Balance | $ | 11,217 |  |  | $ | 23,483 |  |  | $ | 7,317 |  |  | $ | 1,304 |  |  | $ | 0 |  |  | $ | 43,321 |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Allowance for acquired loans: |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 25 |  |  | $ | 0 |  |  | $ | 54 |  |  | $ | 6 |  |  | $ | 0 |  |  | $ | 85 |
Charge-offs | (41 | ) |  | (82 | ) |  | (190 | ) |  | 0 |  |  | 0 |  |  | (313 | )
Recoveries | 106 |  |  | 31 |  |  | 135 |  |  | 0 |  |  | 0 |  |  | 272 |
Provision | (35 | ) |  | 51 |  |  | 29 |  |  | 0 |  |  | 0 |  |  | 45 |
Ending Balance | $ | 55 |  |  | $ | 0 |  |  | $ | 28 |  |  | $ | 6 |  |  | $ | 0 |  |  | $ | 89 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Allowance for originated loans and leases: |  |  |  |  |  |  |  |
Beginning balance | $ | 9,389 |  |  | $ | 19,836 |  |  | $ | 5,149 |  |  | $ | 1,224 |  |  | $ | 0 |  |  | $ | 35,598 |
Charge-offs | (291 | ) |  | (21 | ) |  | (584 | ) |  | (960 | ) |  | 0 |  |  | (1,856 | )
Recoveries | 119 |  |  | 980 |  |  | 212 |  |  | 405 |  |  | 0 |  |  | 1,716 |
Provision | 2,595 |  |  | (383 | ) |  | 1,384 |  |  | 632 |  |  | 0 |  |  | 4,228 |
Ending Balance | $ | 11,812 |  |  | $ | 20,412 |  |  | $ | 6,161 |  |  | $ | 1,301 |  |  | $ | 0 |  |  | $ | 39,686 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Allowance for acquired loans: |  |  |  |  |  |  |  |
Beginning balance | $ | 0 |  |  | $ | 97 |  |  | $ | 54 |  |  | $ | 6 |  |  | $ | 0 |  |  | $ | 157 |
Charge-offs | (74 | ) |  | (159 | ) |  | (483 | ) |  | (2 | ) |  | 0 |  |  | (718 | )
Recoveries | 24 |  |  | 637 |  |  | 44 |  |  | 8 |  |  | 0 |  |  | 713 |
Provision | 75 |  |  | (575 | ) |  | 439 |  |  | (6 | ) |  | 0 |  |  | (67 | )
Ending Balance | $ | 25 |  |  | $ | 0 |  |  | $ | 54 |  |  | $ | 6 |  |  | $ | 0 |  |  | $ | 85 |
At December 31, 2018 and 2017, the allocation of the allowance for loan and lease losses summarized on the basis of the Company’s impairment methodology was as follows:
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Allowance for originated loans and leases: |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 397 |  |  | $ | 3,365 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 3,762 |
Collectively evaluated for impairment | 10,820 |  |  | 20,118 |  |  | 7,317 |  |  | 1,304 |  |  | 0 |  |  | 39,559 |
Ending balance | $ | 11,217 |  |  | $ | 23,483 |  |  | $ | 7,317 |  |  | $ | 1,304 |  |  | $ | 0 |  |  | $ | 43,321 |
Allowance for acquired loans: |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |
Collectively evaluated for impairment | 55 |  |  | 0 |  |  | 28 |  |  | 6 |  |  | 0 |  |  | 89 |
Ending balance | $ | 55 |  |  | $ | 0 |  |  | $ | 28 |  |  | $ | 6 |  |  | $ | 0 |  |  | $ | 89 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Allowance for originated loans and leases: |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 441 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 441 |
Collectively evaluated for impairment | 11,371 |  |  | 20,412 |  |  | 6,161 |  |  | 1,301 |  |  | 0 |  |  | 39,245 |
Ending balance | $ | 11,812 |  |  | $ | 20,412 |  |  | $ | 6,161 |  |  | $ | 1,301 |  |  | $ | 0 |  |  | $ | 39,686 |
Allowance for acquired loans: |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 25 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 25 |
Collectively evaluated for impairment | 0 |  |  | 0 |  |  | 54 |  |  | 6 |  |  | 0 |  |  | 60 |
Ending balance | $ | 25 |  |  | $ | 0 |  |  | $ | 54 |  |  | $ | 6 |  |  | $ | 0 |  |  | $ | 85 |
The recorded investment in loans and leases summarized on the basis of the Company’s impairment methodology as of December 31, 2018 and December 31, 2017 was as follows:
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Originated loans and leases: |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 1,864 |  |  | $ | 8,388 |  |  | $ | 3,915 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 14,167 |
Collectively evaluated for impairment | 1,032,059 |  |  | 2,153,181 |  |  | 1,288,346 |  |  | 70,228 |  |  | 14,556 |  |  | 4,558,370 |
Total | $ | 1,033,923 |  |  | $ | 2,161,569 |  |  | $ | 1,292,261 |  |  | $ | 70,228 |  |  | $ | 14,556 |  |  | $ | 4,572,537 |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Acquired loans: |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 32 |  |  | $ | 842 |  |  | $ | 2,564 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 3,438 |
Loans acquired with deteriorated credit quality | 153 |  |  | 5,852 |  |  | 5,031 |  |  | 0 |  |  | 0 |  |  | 11,036 |
Collectively evaluated for impairment | 43,527 |  |  | 172,398 |  |  | 34,038 |  |  | 761 |  |  | 0 |  |  | 250,724 |
Total | $ | 43,712 |  |  | $ | 179,092 |  |  | $ | 41,633 |  |  | $ | 761 |  |  | $ | 0 |  |  | $ | 265,198 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Originated loans and leases: |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 1,759 |  |  | $ | 6,626 |  |  | $ | 3,965 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 12,350 |
Collectively evaluated for impairment | 1,038,916 |  |  | 1,986,354 |  |  | 1,247,887 |  |  | 62,358 |  |  | 14,467 |  |  | 4,349,982 |
Total | $ | 1,040,675 |  |  | $ | 1,992,980 |  |  | $ | 1,251,852 |  |  | $ | 62,358 |  |  | $ | 14,467 |  |  | $ | 4,362,332 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial |  | Commercial Real Estate |  | Residential Real Estate |  | Consumer and Other |  | Finance Leases |  | Total
Acquired loans: |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 276 |  |  | $ | 1,372 |  |  | $ | 1,823 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 3,471 |
Loans acquired with deteriorated credit quality | 506 |  |  | 7,481 |  |  | 3,975 |  |  | 0 |  |  | 0 |  |  | 11,962 |
Collectively evaluated for impairment | 50,194 |  |  | 198,894 |  |  | 45,291 |  |  | 765 |  |  | 0 |  |  | 295,144 |
Total | $ | 50,976 |  |  | $ | 207,747 |  |  | $ | 51,089 |  |  | $ | 765 |  |  | $ | 0 |  |  | $ | 310,577 |
A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans consist of our non-homogenous nonaccrual loans, and all loans restructured in a troubled debt restructuring (TDR). Specific reserves on individually identified impaired loans that are not collateral dependent are measured based on the present value of expected future cash flows discounted at the original effective interest rate of each loan. For loans that are collateral dependent, impairment is measured based on the fair value of the collateral less estimated selling costs, and such impaired amounts are generally charged off. The majority of impaired loans are collateral dependent impaired loans that have limited exposure or require limited specific reserves because of the amount of collateral support with respect to these loans, and previous charge-offs. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured. In these cases, interest is recognized on a cash basis. There was no interest income recognized on impaired loans and leases for 2018, 2017 and 2016. The recorded investment on impaired loans as of December 31, 2018, and 2017 was as follows:
| December 31, 2018 |  | December 31, 2017
(in thousands) | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
Originated loans and leases with no related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 183 |  |  | $ | 271 |  |  | $ | 0 |  |  | $ | 1,246 |  |  | $ | 1,250 |  |  | $ | 0 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |
Commercial real estate other | 3,205 |  |  | 3,405 |  |  | 0 |  |  | 6,626 |  |  | 6,633 |  |  | 0 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |
Home equity | 3,915 |  |  | 4,168 |  |  | 0 |  |  | 3,965 |  |  | 4,049 |  |  | 0 |
Subtotal | $ | 7,303 |  |  | $ | 7,844 |  |  | $ | 0 |  |  | $ | 11,837 |  |  | $ | 11,932 |  |  | $ | 0 |
Originated loans and leases with related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 5,183 |  |  | $ | 5,183 |  |  | $ | 3,365 |  |  | $ | 513 |  |  | $ | 532 |  |  | $ | 441 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |
Commercial real estate other | 1,681 |  |  | 1,681 |  |  | 397 |  |  | 0 |  |  | 0 |  |  | 0 |
Subtotal | 6,864 |  |  | 6,864 |  |  | 3,762 |  |  | 513 |  |  | 532 |  |  | 441 |
Total | $ | 14,167 |  |  | $ | 14,708 |  |  | $ | 3,762 |  |  | $ | 12,350 |  |  | $ | 12,464 |  |  | $ | 441 |
| December 31, 2018 |  | December 31, 2017
(in thousands) | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
Acquired loans with no related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 32 |  |  | $ | 32 |  |  | $ | 0 |  |  | $ | 226 |  |  | $ | 226 |  |  | $ | 0 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |
Commercial real estate other | 842 |  |  | 924 |  |  | 0 |  |  | 1,372 |  |  | 1,474 |  |  | 0 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |
Home equity | 2,564 |  |  | 2,696 |  |  | 0 |  |  | 1,823 |  |  | 1,854 |  |  | 0 |
Subtotal | $ | 3,438 |  |  | $ | 3,652 |  |  | $ | 0 |  |  | $ | 3,421 |  |  | $ | 3,554 |  |  | $ | 0 |
Acquired loans with related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 50 |  |  | $ | 50 |  |  | $ | 25 |
Subtotal | 0 |  |  | 0 |  |  | 0 |  |  | 50 |  |  | 50 |  |  | 25 |
Total | $ | 3,438 |  |  | $ | 3,652 |  |  | $ | 0 |  |  | $ | 3,471 |  |  | $ | 3,604 |  |  | $ | 25 |
The average recorded investment and interest income recognized on impaired originated loans for the twelve months ended December 31, 2018, 2017, and 2016 was as follows:
Twelve Months Ended December 31,
| 2018 |  | 2017 |  | 2016
(in thousands) | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
Originated loans and leases with no related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 1,979 |  |  | $ | 0 |  |  | $ | 718 |  |  | $ | 0 |  |  | $ | 249 |  |  | $ | 0 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |
Commercial real estate other | 5,165 |  |  | 0 |  |  | 7,287 |  |  | 0 |  |  | 6,089 |  |  | 0 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |
Home equity | 3,983 |  |  | 0 |  |  | 3,551 |  |  | 0 |  |  | 3,003 |  |  | 0 |
Subtotal | $ | 11,127 |  |  | $ | 0 |  |  | $ | 11,556 |  |  | $ | 0 |  |  | $ | 9,341 |  |  | $ | 0 |
Originated loans and leases with related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 1,374 |  |  | $ | 0 |  |  | $ | 276 |  |  | $ | 0 |  |  | $ | 114 |  |  | $ | 0 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |
Commercial real estate other | 1,357 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 1,715 |  |  | 0 |
Subtotal | $ | 2,731 |  |  | $ | 0 |  |  | $ | 276 |  |  | $ | 0 |  |  | $ | 1,829 |  |  | $ | 0 |
Total | $ | 13,858 |  |  | $ | 0 |  |  | $ | 11,832 |  |  | $ | 0 |  |  | $ | 11,170 |  |  | $ | 0 |
The average recorded investment and interest income recognized on impaired acquired loans for the twelve months ended December 31, 2018, 2017 and 2016 was as follows:
Twelve Months Ended December 31,
| 2018 |  | 2017 |  | 2016
(in thousands) | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
Acquired loans with no related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 50 |  |  | $ | 0 |  |  | $ | 111 |  |  | $ | 0 |  |  | $ | 183 |  |  | $ | 0 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |
Construction | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 152 |  |  | 0 |
Commercial real estate other | 999 |  |  | 0 |  |  | 2,141 |  |  | 0 |  |  | 4,141 |  |  | 0 |
Residential real estate |  |  |  |  |  |  |  |  |  |  |
Home equity | 2,945 |  |  | 0 |  |  | 1,861 |  |  | 0 |  |  | 1,316 |  |  | 0 |
Subtotal | $ | 3,994 |  |  | $ | 0 |  |  | $ | 4,113 |  |  | $ | 0 |  |  | $ | 5,792 |  |  | $ | 0 |
Acquired loans with related allowance |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial other | $ | 0 |  |  | $ | 0 |  |  | $ | 10 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |
Commercial real estate other | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 58 |  |  | 0 |
Subtotal | $ | 0 |  |  | $ | 0 |  |  | $ | 10 |  |  | $ | 0 |  |  | $ | 58 |  |  | $ | 0 |
Total | $ | 3,994 |  |  | $ | 0 |  |  | $ | 4,123 |  |  | $ | 0 |  |  | $ | 5,850 |  |  | $ | 0 |
The average recorded investment in impaired loans was $17.9 million at December 31, 2018, $15.8 million at December 31, 2017, and $17.0 million at December 31, 2016. Loans are considered modified in a TDR when, due to a borrower’s financial difficulties, the Company makes a concession(s) to the borrower that it would not otherwise consider. When modifications are provided for reasons other than as a result of the financial distress of the borrower, these loans are not classified as TDRs or impaired. These modifications primarily include, among others, an extension of the term of the loan, and granting a period when interest-only payments can be made, with the principal payments and interest caught up over the remaining term of the loan or at maturity, among others. The following tables present loans by class modified in 2018 and 2017 as troubled debt restructurings. Troubled Debt Restructuring
December 31, 2018 | Twelve months ended
|  |  |  |  |  |  | Defaulted TDRs 3
(in thousands) | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post- Modification Outstanding Recorded Investment |  | Number of Loans |  | Post- Modification Outstanding Recorded Investment
Commercial real estate |  |  |  |  |  |  |  |  |
Commercial real estate other 1 | 1 |  |  | 26 |  |  | 26 |  |  | 0 |  |  | 0 |
Residential real estate |  |  |  |  |  |  |  |  |
Home equity 2 | 6 |  |  | $ | 507 |  |  | $ | 507 |  |  | 0 |  |  | $ | 0 |
Total | 7 |  |  | $ | 533 |  |  | $ | 533 |  |  | 0 |  |  | $ | 0 |
1 | Represents the following concessions: extension of term and reduction of rate.
2 | Represents the following concessions: extension of term and reduction of rate.
3 | TDRs that defaulted during the 12 months ended December 31, 2018 that had been restructured in the prior twelve months.
December 31, 2017 | Twelve months ended
|  |  |  |  |  |  | Defaulted TDRs 2
(in thousands) | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post- Modification Outstanding Recorded Investment |  | Number of Loans |  | Post- Modification Outstanding Recorded Investment
Residential real estate |  |  |  |  |  |  |  |  |
Home equity 1 | 6 |  |  | $ | 716 |  |  | $ | 716 |  |  | 1 |  |  | $ | 55 |
Total | 6 |  |  | $ | 716 |  |  | $ | 716 |  |  | 1 |  |  | $ | 55 |
1 | Represents the following concessions: extension of term and reduction of rate.
2 | TDRs that defaulted during the 12 months ended December 31, 2017 that had been restructured in the prior twelve months.
The Company recognized TDRs with a balance of $533,000 during 2018, compared to $716,000 in 2017. The Company was not committed to lend additional amounts as of December 31, 2018 to customers with outstanding loans that are classified as TDRs. The following table presents credit quality indicators (internal risk grade) by class of commercial loans, commercial real estate loans and agricultural loans as of December 31, 2018 and 2017.
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial Other |  | Commercial and Industrial Agriculture |  | Commercial Real Estate Other |  | Commercial Real Estate Agriculture |  | Commercial Real Estate Construction |  | Total
Originated loans and leases |  |  |  |  |  |  |  |
Internal risk grade: |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 910,476 |  |  | $ | 93,939 |  |  | $ | 1,797,599 |  |  | $ | 157,156 |  |  | $ | 164,285 |  |  | $ | 3,123,455 |
Special Mention | 8,675 |  |  | 4,951 |  |  | 9,484 |  |  | 4,964 |  |  | 0 |  |  | 28,074 |
Substandard | 7,278 |  |  | 8,604 |  |  | 20,196 |  |  | 7,885 |  |  | 0 |  |  | 43,963 |
Total | $ | 926,429 |  |  | $ | 107,494 |  |  | $ | 1,827,279 |  |  | $ | 170,005 |  |  | $ | 164,285 |  |  | $ | 3,195,492 |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial Other |  | Commercial and Industrial Agriculture |  | Commercial Real Estate Other |  | Commercial Real Estate Agriculture |  | Commercial Real Estate Construction |  | Total
Acquired loans |  |  |  |  |  |  |  |  |  |  |
Internal risk grade: |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 43,447 |  |  | $ | 0 |  |  | $ | 174,383 |  |  | $ | 224 |  |  | $ | 1,384 |  |  | $ | 219,438 |
Special Mention | 0 |  |  | 0 |  |  | 452 |  |  | 0 |  |  | 0 |  |  | 452 |
Substandard | 265 |  |  | 0 |  |  | 2,649 |  |  | 0 |  |  | 0 |  |  | 2,914 |
Total | $ | 43,712 |  |  | $ | 0 |  |  | $ | 177,484 |  |  | $ | 224 |  |  | $ | 1,384 |  |  | $ | 222,804 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial Other |  | Commercial and Industrial Agriculture |  | Commercial Real Estate Other |  | Commercial Real Estate Agriculture |  | Commercial Real Estate Construction |  | Total
Originated loans and leases |  |  |  |  |  |  |  |
Internal risk grade: |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 919,214 |  |  | $ | 100,470 |  |  | $ | 1,627,713 |  |  | $ | 119,392 |  |  | $ | 201,948 |  |  | $ | 2,968,737 |
Special Mention | 6,680 |  |  | 8,068 |  |  | 19,068 |  |  | 9,980 |  |  | 538 |  |  | 44,334 |
Substandard | 6,173 |  |  | 70 |  |  | 14,001 |  |  | 340 |  |  | 0 |  |  | 20,584 |
Total | $ | 932,067 |  |  | $ | 108,608 |  |  | $ | 1,660,782 |  |  | $ | 129,712 |  |  | $ | 202,486 |  |  | $ | 3,033,655 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
(in thousands) | Commercial and Industrial Other |  | Commercial and Industrial Agriculture |  | Commercial Real Estate Other |  | Commercial Real Estate Agriculture |  | Commercial Real Estate Construction |  | Total
Acquired loans |  |  |  |  |  |  |  |  |  |  |
Internal risk grade: |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 50,554 |  |  | $ | 0 |  |  | $ | 198,822 |  |  | $ | 247 |  |  | $ | 1,480 |  |  | $ | 251,103 |
Special Mention | 0 |  |  | 0 |  |  | 2,265 |  |  | 0 |  |  | 0 |  |  | 2,265 |
Substandard | 422 |  |  | 0 |  |  | 4,933 |  |  | 0 |  |  | 0 |  |  | 5,355 |
Total | $ | 50,976 |  |  | $ | 0 |  |  | $ | 206,020 |  |  | $ | 247 |  |  | $ | 1,480 |  |  | $ | 258,723 |
The following table presents credit quality indicators by class of residential real estate loans and by class of consumer loans as of December 31, 2018 and 2017. Nonperforming loans include nonaccrual, impaired and loans 90 days past due and accruing interest, all other loans are considered performing.
December 31, 2018
(in thousands) | Residential Home Equity |  | Residential Mortgages |  | Consumer Indirect |  | Consumer Other |  | Total
Originated loans and leases |  |  |  |  |  |  |  |  |
Performing | $ | 206,675 |  |  | $ | 1,076,032 |  |  | $ | 12,508 |  |  | $ | 57,486 |  |  | $ | 1,352,701 |
Nonperforming | 1,784 |  |  | 7,770 |  |  | 155 |  |  | 79 |  |  | 9,788 |
Total | $ | 208,459 |  |  | $ | 1,083,802 |  |  | $ | 12,663 |  |  | $ | 57,565 |  |  | $ | 1,362,489 |
December 31, 2018 |  |  |  |  |  |  |  |  |
(in thousands) | Residential Home Equity |  | Residential Mortgages |  | Consumer Indirect |  | Consumer Other |  | Total
Acquired Loans and Leases |  |  |  |  |  |  |  |  |
Performing | $ | 19,735 |  |  | $ | 19,380 |  |  | $ | 0 |  |  | $ | 761 |  |  | $ | 39,876 |
Nonperforming | 1,414 |  |  | 1,104 |  |  | 0 |  |  | 0 |  |  | 2,518 |
Total | $ | 21,149 |  |  | $ | 20,484 |  |  | $ | 0 |  |  | $ | 761 |  |  | $ | 42,394 |
December 31, 2017 |  |  |  |  |  |  |  |  |
(in thousands) | Residential Home Equity |  | Residential Mortgages |  | Consumer Indirect |  | Consumer Other |  | Total
Originated loans and leases |  |  |  |  |  |  |  |  |
Performing | $ | 211,275 |  |  | $ | 1,032,932 |  |  | $ | 11,866 |  |  | $ | 50,138 |  |  | $ | 1,306,211 |
Nonperforming | 1,537 |  |  | 6,108 |  |  | 278 |  |  | 76 |  |  | 7,999 |
Total | $ | 212,812 |  |  | $ | 1,039,040 |  |  | $ | 12,144 |  |  | $ | 50,214 |  |  | $ | 1,314,210 |
December 31, 2017
(in thousands) | Residential Home Equity |  | Residential Mortgages |  | Consumer Indirect |  | Consumer Other |  | Total
Acquired loans |  |  |  |  |  |  |  |  |
Performing | $ | 26,840 |  |  | $ | 21,531 |  |  | $ | 0 |  |  | $ | 765 |  |  | $ | 49,136 |
Nonperforming | 1,604 |  |  | 1,114 |  |  | 0 |  |  | 0 |  |  | 2,718 |
Total | $ | 28,444 |  |  | $ | 22,645 |  |  | $ | 0 |  |  | $ | 765 |  |  | $ | 51,854 |

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