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v3.19.3

Loans | 9 Months Ended
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Sep. 30, 2019
Loans |
Loans | Note 4 – Loans Major classifications of loans were as follows:
|  | September 30, 2019 |  | December 31, 2018 |
Commercial |  | $ | 333,664 |  | $ | 314,323 |
Leases |  |  | 108,152 |  |  | 78,806 |
Real estate - commercial |  |  | 826,780 |  |  | 820,941 |
Real estate - construction |  |  | 91,066 |  |  | 108,390 |
Real estate - residential |  |  | 388,511 |  |  | 407,068 |
HELOC |  |  | 126,309 |  |  | 140,442 |
Other 1 |  |  | 14,140 |  |  | 14,439 |
Total loans, excluding deferred loan costs and PCI loans |  |  | 1,888,622 |  |  | 1,884,409 |
Net deferred loan costs |  |  | 2,054 |  |  | 1,653 |
Total loans, excluding PCI loans |  |  | 1,890,676 |  |  | 1,886,062 |
PCI loans, net of purchase accounting adjustments |  |  | 9,135 |  |  | 10,965 |
Total loans |  | $ | 1,899,811 |  | $ | 1,897,027 |
1 The “Other” class includes consumer and overdrafts. It is the policy of the Company to review each prospective credit prior to making a loan in order to determine if an adequate level of security or collateral has been obtained. The type of collateral, when required, will vary from liquid assets to real estate. The Company’s access to collateral, in the event of borrower default, is assured through adherence to lending laws, the Company’s lending standards and credit monitoring procedures. With selected exceptions, the Bank makes loans solely within its market area. There are no significant concentrations of loans where the customers’ ability to honor loan terms is dependent upon a single economic sector, although the real estate related categories listed above represent 75.4% and 77.9% of the portfolio at September 30, 2019, and December 31, 2018, respectively. Aged analysis of past due loans by class of loans was as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Investment
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90 days or
|  |  |  |  |  |  |  | 90 Days or |  |  |  |  |  |  |  |  |  |  |  |  |  | Greater Past
|  | 30-59 Days |  | 60-89 Days |  | Greater Past |  | Total Past |  |  |  |  |  |  |  |  |  |  | Due and
September 30, 2019 |  | Past Due |  | Past Due |  | Due |  | Due |  | Current |  | Nonaccrual |  | Total Loans |  | Accruing
Commercial |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | 333,516 |  | $ | 148 |  | $ | 333,664 |  | $ | -
Leases |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 108,078 |  |  | 74 |  |  | 108,152 |  |  | -
Real estate - commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 1,397 |  |  | 1,216 |  |  | - |  |  | 2,613 |  |  | 140,928 |  |  | 1,183 |  |  | 144,724 |  |  | -
Owner occupied special purpose |  |  | 1,416 |  |  | 93 |  |  | - |  |  | 1,509 |  |  | 173,835 |  |  | 1,591 |  |  | 176,935 |  |  | -
Non-owner occupied general purpose |  |  | 623 |  |  | - |  |  | - |  |  | 623 |  |  | 328,870 |  |  | 564 |  |  | 330,057 |  |  | -
Non-owner occupied special purpose |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 106,043 |  |  | 2,960 |  |  | 109,003 |  |  | -
Retail properties |  |  | 597 |  |  | - |  |  | - |  |  | 597 |  |  | 51,015 |  |  | 1,122 |  |  | 52,734 |  |  | -
Farm |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 13,327 |  |  | - |  |  | 13,327 |  |  | -
Real estate - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | 93 |  |  | - |  |  | - |  |  | 93 |  |  | 5,142 |  |  | - |  |  | 5,235 |  |  | -
Land |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 12,258 |  |  | - |  |  | 12,258 |  |  | -
Commercial speculative |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 51,991 |  |  | - |  |  | 51,991 |  |  | -
All other |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 21,488 |  |  | 94 |  |  | 21,582 |  |  | -
Real estate - residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | - |  |  | 496 |  |  | - |  |  | 496 |  |  | 68,114 |  |  | 379 |  |  | 68,989 |  |  | -
Multi-family |  |  | 1 |  |  | - |  |  | - |  |  | 1 |  |  | 183,475 |  |  | - |  |  | 183,476 |  |  | -
Owner occupied |  |  | 106 |  |  | 307 |  |  | - |  |  | 413 |  |  | 132,933 |  |  | 2,700 |  |  | 136,046 |  |  | -
HELOC |  |  | 627 |  |  | 93 |  |  | 18 |  |  | 738 |  |  | 124,556 |  |  | 1,015 |  |  | 126,309 |  |  | 19
Other 1 |  |  | 7 |  |  | - |  |  | - |  |  | 7 |  |  | 16,165 |  |  | 22 |  |  | 16,194 |  |  | -
Total, excluding PCI loans |  | $ | 4,867 |  | $ | 2,205 |  | $ | 18 |  | $ | 7,090 |  | $ | 1,871,734 |  | $ | 11,852 |  | $ | 1,890,676 |  | $ | 19
PCI loans, net of purchase accounting adjustments |  |  | 865 |  |  | - |  |  | - |  |  | 865 |  |  | 6,474 |  |  | 1,796 |  |  | 9,135 |  |  | -
Total |  | $ | 5,732 |  | $ | 2,205 |  | $ | 18 |  | $ | 7,955 |  | $ | 1,878,208 |  | $ | 13,648 |  | $ | 1,899,811 |  | $ | 19
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Investment
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90 days or
|  |  |  |  |  |  |  | 90 Days or |  |  |  |  |  |  |  |  |  |  |  |  |  | Greater Past
|  | 30-59 Days |  | 60-89 Days |  | Greater Past |  | Total Past |  |  |  |  |  |  |  |  |  |  | Due and
December 31, 2018 |  | Past Due |  | Past Due |  | Due |  | Due |  | Current |  | Nonaccrual |  | Total Loans |  | Accruing
Commercial |  | $ | 58 |  | $ | - |  | $ | 352 |  | $ | 410 |  | $ | 313,913 |  | $ | - |  | $ | 314,323 |  | $ | 361
Leases |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 78,806 |  |  | - |  |  | 78,806 |  |  | -
Real estate - commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 1,768 |  |  | - |  |  | 33 |  |  | 1,801 |  |  | 160,892 |  |  | 1,579 |  |  | 164,272 |  |  | 36
Owner occupied special purpose |  |  | 826 |  |  | 135 |  |  | - |  |  | 961 |  |  | 192,426 |  |  | 395 |  |  | 193,782 |  |  | -
Non-owner occupied general purpose |  |  | 2,832 |  |  | 203 |  |  | - |  |  | 3,035 |  |  | 286,115 |  |  | 4,236 |  |  | 293,386 |  |  | -
Non-owner occupied special purpose |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 106,036 |  |  | 3,099 |  |  | 109,135 |  |  | -
Retail properties |  |  | - |  |  | 620 |  |  | - |  |  | 620 |  |  | 45,968 |  |  | - |  |  | 46,588 |  |  | -
Farm |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 13,778 |  |  | - |  |  | 13,778 |  |  | -
Real estate - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 5,102 |  |  | - |  |  | 5,102 |  |  | -
Land |  |  | 266 |  |  | - |  |  | - |  |  | 266 |  |  | 2,478 |  |  | - |  |  | 2,744 |  |  | -
Commercial speculative |  |  | - |  |  | - |  |  | 350 |  |  | 350 |  |  | 55,060 |  |  | - |  |  | 55,410 |  |  | 355
All other |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 45,028 |  |  | 106 |  |  | 45,134 |  |  | -
Real estate - residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | 801 |  |  | 156 |  |  | - |  |  | 957 |  |  | 69,148 |  |  | 353 |  |  | 70,458 |  |  | -
Multi-family |  |  | 545 |  |  | - |  |  | 179 |  |  | 724 |  |  | 195,504 |  |  | - |  |  | 196,228 |  |  | 180
Owner occupied |  |  | 1,241 |  |  | 705 |  |  | - |  |  | 1,946 |  |  | 135,360 |  |  | 3,076 |  |  | 140,382 |  |  | -
HELOC |  |  | 775 |  |  | - |  |  | - |  |  | 775 |  |  | 138,801 |  |  | 866 |  |  | 140,442 |  |  | -
Other 1 |  |  | 53 |  |  | 5 |  |  | 3 |  |  | 61 |  |  | 16,000 |  |  | 31 |  |  | 16,092 |  |  | 3
Total, excluding PCI loans |  | $ | 9,165 |  | $ | 1,824 |  | $ | 917 |  | $ | 11,906 |  | $ | 1,860,415 |  | $ | 13,741 |  | $ | 1,886,062 |  | $ | 935
PCI loans, net of purchase accounting adjustments |  |  | 1,452 |  |  | - |  |  | - |  |  | 1,452 |  |  | 7,248 |  |  | 2,265 |  |  | 10,965 |  |  | -
Total |  | $ | 10,617 |  | $ | 1,824 |  | $ | 917 |  | $ | 13,358 |  | $ | 1,867,663 |  | $ | 16,006 |  | $ | 1,897,027 |  | $ | 935
1 The “Other” class includes consumer, overdrafts and net deferred costs. Credit Quality Indicators The Company categorizes loans into credit risk categories based on current financial information, overall debt service coverage, comparison to industry averages, historical payment experience, and current economic trends. This analysis includes loans with outstanding balances or commitments greater than $50,000 and excludes homogeneous loans such as home equity lines of credit and residential mortgages. Loans with a classified risk rating are reviewed quarterly regardless of size or loan type. The Company uses the following definitions for classified risk ratings: Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or 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 the Bank will sustain some loss if the deficiencies are not corrected. The substandard credit quality indicator includes both potential problem loans that are currently performing and nonperforming loans. Doubtful. 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. Credits that are not covered by the definitions above are pass credits, which are not considered to be adversely rated. Credit Quality Indicators by class of loans were as follows:
September 30, 2019 |  |  |  |  | Special |  |  |  |  |  |  |  |  |
|  | Pass |  | Mention |  | Substandard |  | Doubtful |  | Total
Commercial |  | $ | 316,680 |  | $ | 8,905 |  | $ | 8,079 |  | $ | - |  | $ | 333,664
Leases |  |  | 108,078 |  |  | - |  |  | 74 |  |  | - |  |  | 108,152
Real estate - commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 140,867 |  |  | 851 |  |  | 3,006 |  |  | - |  |  | 144,724
Owner occupied special purpose |  |  | 170,525 |  |  | 4,819 |  |  | 1,591 |  |  | - |  |  | 176,935
Non-owner occupied general purpose |  |  | 325,621 |  |  | 590 |  |  | 3,846 |  |  | - |  |  | 330,057
Non-owner occupied special purpose |  |  | 106,043 |  |  | - |  |  | 2,960 |  |  | - |  |  | 109,003
Retail Properties |  |  | 51,015 |  |  | 597 |  |  | 1,122 |  |  | - |  |  | 52,734
Farm |  |  | 10,899 |  |  | 1,218 |  |  | 1,210 |  |  | - |  |  | 13,327
Real estate - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | 5,235 |  |  | - |  |  | - |  |  | - |  |  | 5,235
Land |  |  | 12,258 |  |  | - |  |  | - |  |  | - |  |  | 12,258
Commercial speculative |  |  | 51,991 |  |  | - |  |  | - |  |  | - |  |  | 51,991
All other |  |  | 21,318 |  |  | - |  |  | 264 |  |  | - |  |  | 21,582
Real estate - residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | 68,005 |  |  | - |  |  | 984 |  |  | - |  |  | 68,989
Multi-Family |  |  | 183,046 |  |  | - |  |  | 430 |  |  | - |  |  | 183,476
Owner occupied |  |  | 132,146 |  |  | 134 |  |  | 3,766 |  |  | - |  |  | 136,046
HELOC |  |  | 124,185 |  |  | 139 |  |  | 1,985 |  |  | - |  |  | 126,309
Other 1 |  |  | 15,832 |  |  | 340 |  |  | 22 |  |  | - |  |  | 16,194
Total, excluding PCI loans |  | $ | 1,843,744 |  | $ | 17,593 |  | $ | 29,339 |  | $ | - |  | $ | 1,890,676
PCI loans, net of purchase accounting adjustments |  |  | 825 |  |  | - |  |  | 8,310 |  |  | - |  |  | 9,135
Total |  | $ | 1,844,569 |  | $ | 17,593 |  | $ | 37,649 |  | $ | - |  | $ | 1,899,811
December 31, 2018 |  |  |  |  | Special |  |  |  |  |  |  |  |  |
|  | Pass |  | Mention |  | Substandard |  | Doubtful |  | Total
Commercial |  | $ | 305,993 |  | $ | 8,193 |  | $ | 137 |  | $ | - |  | $ | 314,323
Leases |  |  | 78,806 |  |  | - |  |  | - |  |  | - |  |  | 78,806
Real estate - commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 157,334 |  |  | 1,660 |  |  | 5,278 |  |  | - |  |  | 164,272
Owner occupied special purpose |  |  | 186,218 |  |  | 3,429 |  |  | 4,135 |  |  | - |  |  | 193,782
Non-owner occupied general purpose |  |  | 284,818 |  |  | 202 |  |  | 8,366 |  |  | - |  |  | 293,386
Non-owner occupied special purpose |  |  | 104,526 |  |  | 1,510 |  |  | 3,099 |  |  | - |  |  | 109,135
Retail Properties |  |  | 44,805 |  |  | - |  |  | 1,783 |  |  | - |  |  | 46,588
Farm |  |  | 11,307 |  |  | 1,249 |  |  | 1,222 |  |  | - |  |  | 13,778
Real estate - construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | 5,102 |  |  | - |  |  | - |  |  | - |  |  | 5,102
Land |  |  | 2,744 |  |  | - |  |  | - |  |  | - |  |  | 2,744
Commercial speculative |  |  | 55,410 |  |  | - |  |  | - |  |  | - |  |  | 55,410
All other |  |  | 42,524 |  |  | - |  |  | 2,610 |  |  | - |  |  | 45,134
Real estate - residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | 69,242 |  |  | - |  |  | 1,216 |  |  | - |  |  | 70,458
Multi-Family |  |  | 195,249 |  |  | - |  |  | 979 |  |  | - |  |  | 196,228
Owner occupied |  |  | 135,858 |  |  | - |  |  | 4,524 |  |  | - |  |  | 140,382
HELOC |  |  | 138,553 |  |  | - |  |  | 1,889 |  |  | - |  |  | 140,442
Other 1 |  |  | 16,061 |  |  | - |  |  | 31 |  |  | - |  |  | 16,092
Total, excluding PCI loans |  | $ | 1,834,550 |  | $ | 16,243 |  | $ | 35,269 |  | $ | - |  | $ | 1,886,062
PCI loans, net of purchase accounting adjustments |  |  | 907 |  |  | 2,906 |  |  | 7,152 |  |  | - |  |  | 10,965
Total |  | $ | 1,835,457 |  | $ | 19,149 |  | $ | 42,421 |  | $ | - |  | $ | 1,897,027
1 The “Other” class includes consumer, overdrafts and net deferred costs. The Company had $425,000 and $448,000 in residential real estate loans in the process of foreclosure as of September 30, 2019 and December 31, 2018, respectively. The following tables set forth the recorded investments, unpaid principal balance and related allowance, excluding purchased credit-impaired loans, by class of loans as of September 30, 2019, and the average recorded investment and interest income recognized for the three and nine months ended September 30, 2019:
|  |  |  | Three Months Ended |  | Nine Months Ended
|  | As of September 30, 2019 |  | September 30, 2019 |  | September 30, 2019
|  |  |  |  | Unpaid |  |  |  |  | Average |  | Interest |  | Average |  | Interest
|  | Recorded |  | Principal |  | Related |  | Recorded |  | Income |  | Recorded |  | Income
|  | Investment |  | Balance |  | Allowance |  | Investment |  | Recognized |  | Investment |  | Recognized
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Leases |  |  | 74 |  |  | 75 |  |  | - |  |  | 43 |  |  | - |  |  | 37 |  |  | -
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 1,254 |  |  | 1,328 |  |  | - |  |  | 1,108 |  |  | 2 |  |  | 1,457 |  |  | 5
Owner occupied special purpose |  |  | 1,591 |  |  | 1,748 |  |  | - |  |  | 1,045 |  |  | - |  |  | 993 |  |  | -
Non-owner occupied general purpose |  |  | 564 |  |  | 595 |  |  | - |  |  | 566 |  |  | - |  |  | 851 |  |  | -
Non-owner occupied special purpose |  |  | 2,960 |  |  | 3,575 |  |  | - |  |  | 2,960 |  |  | - |  |  | 1,480 |  |  | -
Retail properties |  |  | 1,122 |  |  | 1,159 |  |  | - |  |  | 1,130 |  |  | - |  |  | 561 |  |  | -
Farm |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Land |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Commercial speculative |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
All other |  |  | 94 |  |  | 131 |  |  | - |  |  | 98 |  |  | - |  |  | 71 |  |  | -
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | 379 |  |  | 500 |  |  | - |  |  | 381 |  |  | - |  |  | 366 |  |  | -
Multi-Family |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Owner occupied |  |  | 3,059 |  |  | 4,595 |  |  | - |  |  | 3,078 |  |  | 11 |  |  | 3,209 |  |  | 32
HELOC |  |  | 1,032 |  |  | 1,407 |  |  | - |  |  | 1,075 |  |  | - |  |  | 958 |  |  | 1
Other 1 |  |  | 4 |  |  | 4 |  |  | - |  |  | 4 |  |  | - |  |  | 6 |  |  | -
Total impaired loans with no recorded allowance |  |  | 12,133 |  |  | 15,117 |  |  | - |  |  | 11,488 |  |  | 13 |  |  | 9,989 |  |  | 38
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 148 |  |  | 150 |  |  | 110 |  |  | 149 |  |  | - |  |  | 74 |  |  | -
Leases |  |  | - |  |  | - |  |  | - |  |  | 57 |  |  | - |  |  | - |  |  | -
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 125 |  |  | 125 |  |  | 36 |  |  | 395 |  |  | 3 |  |  | 260 |  |  | 11
Owner occupied special purpose |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Non-owner occupied general purpose |  |  | 55 |  |  | 55 |  |  | 1 |  |  | 55 |  |  | 2 |  |  | 1,577 |  |  | 4
Non-owner occupied special purpose |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 1,549 |  |  | -
Retail properties |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Farm |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Land |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Commercial speculative |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
All other |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 29 |  |  | -
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | 791 |  |  | 791 |  |  | 10 |  |  | 795 |  |  | 13 |  |  | 799 |  |  | 35
Multi-Family |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Owner occupied |  |  | 3,280 |  |  | 3,280 |  |  | 55 |  |  | 3,321 |  |  | 37 |  |  | 3,478 |  |  | 117
HELOC |  |  | 1,359 |  |  | 1,359 |  |  | 55 |  |  | 1,370 |  |  | 20 |  |  | 1,358 |  |  | 59
Other 1 |  |  | 18 |  |  | 20 |  |  | 7 |  |  | 19 |  |  | - |  |  | 21 |  |  | -
Total impaired loans with a recorded allowance |  |  | 5,776 |  |  | 5,780 |  |  | 274 |  |  | 6,161 |  |  | 75 |  |  | 9,145 |  |  | 226
Total impaired loans |  | $ | 17,909 |  | $ | 20,897 |  | $ | 274 |  | $ | 17,649 |  | $ | 88 |  | $ | 19,134 |  | $ | 264
1 The “Other” class includes consumer, overdrafts and net deferred costs. The following tables set forth the recorded investments, unpaid principal balance and related allowance, excluding purchased credit-impaired loans, by class of loans as of December 31, 2018, and the average recorded investment and interest income recognized for the three and nine months ended September 30, 2018:
|  |  |  |  |  |  |  |  |  |  | Three Months Ended |  | Nine Months Ended
|  | As of December 31, 2018 |  | September 30, 2018 |  | September 30, 2018
|  |  |  | Unpaid |  |  |  | Average |  | Interest |  | Average |  | Interest
|  | Recorded |  | Principal |  | Related |  | Recorded |  | Income |  | Recorded |  | Income
|  | Investment |  | Balance |  | Allowance |  | Investment |  | Recognized |  | Investment |  | Recognized
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | -
Leases |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 1,659 |  |  | 1,782 |  |  | - |  |  | 1,263 |  |  | 2 |  |  | 1,035 |  |  | 5
Owner occupied special purpose |  |  | 395 |  |  | 530 |  |  | - |  |  | 417 |  |  | - |  |  | 375 |  |  | -
Non-owner occupied general purpose |  |  | 1,138 |  |  | 1,159 |  |  | - |  |  | 91 |  |  | - |  |  | 653 |  |  | -
Non-owner occupied special purpose |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Retail properties |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Farm |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Land |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Commercial speculative |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
All other |  |  | 49 |  |  | 73 |  |  | - |  |  | 121 |  |  | - |  |  | 125 |  |  | -
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | 353 |  |  | 459 |  |  | - |  |  | 368 |  |  | - |  |  | 369 |  |  | -
Multi-Family |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 2,361 |  |  | -
Owner occupied |  |  | 3,359 |  |  | 4,882 |  |  | - |  |  | 4,050 |  |  | 11 |  |  | 4,532 |  |  | 29
HELOC |  |  | 884 |  |  | 1,003 |  |  | - |  |  | 687 |  |  | - |  |  | 880 |  |  | 1
Other 1 |  |  | 7 |  |  | 7 |  |  | - |  |  | 15 |  |  | - |  |  | 10 |  |  | -
Total impaired loans with no recorded allowance |  |  | 7,844 |  |  | 9,895 |  |  | - |  |  | 7,012 |  |  | 13 |  |  | 10,340 |  |  | 35
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Leases |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  | 396 |  |  | 396 |  |  | 3 |  |  | 259 |  |  | 22 |  |  | 259 |  |  | 22
Owner occupied special purpose |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Non-owner occupied general purpose |  |  | 3,098 |  |  | 4,038 |  |  | 97 |  |  | - |  |  | - |  |  | - |  |  | -
Non-owner occupied special purpose |  |  | 3,099 |  |  | 3,575 |  |  | 139 |  |  | 3,099 |  |  | - |  |  | 1,550 |  |  | -
Retail properties |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Farm |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilder |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Land |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Commercial speculative |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
All other |  |  | 57 |  |  | 58 |  |  | 1 |  |  | 30 |  |  | - |  |  | 29 |  |  | -
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investor |  |  | 808 |  |  | 808 |  |  | 4 |  |  | 812 |  |  | 11 |  |  | 820 |  |  | 33
Multi-Family |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | -
Owner occupied |  |  | 3,676 |  |  | 3,679 |  |  | 46 |  |  | 3,678 |  |  | 35 |  |  | 3,576 |  |  | 108
HELOC |  |  | 1,357 |  |  | 1,357 |  |  | 49 |  |  | 1,371 |  |  | 17 |  |  | 1,203 |  |  | 41
Other 1 |  |  | 24 |  |  | 25 |  |  | 13 |  |  | 14 |  |  | - |  |  | 13 |  |  | -
Total impaired loans with a recorded allowance |  |  | 12,515 |  |  | 13,936 |  |  | 352 |  |  | 9,263 |  |  | 85 |  |  | 7,450 |  |  | 204
Total impaired loans |  | $ | 20,359 |  | $ | 23,831 |  | $ | 352 |  | $ | 16,275 |  | $ | 98 |  | $ | 17,790 |  | $ | 239
1 The “Other” class includes consumer, overdrafts and net deferred costs. Troubled debt restructurings (“TDRs”) are loans for which the contractual terms have been modified and both of these conditions exist: (1) there is a concession to the borrower and (2) the borrower is experiencing financial difficulties. Loans are restructured on a case-by-case basis during the loan collection process with modifications generally initiated at the request of the borrower. These modifications may include reduction in interest rates, extension of term, deferrals of principal, and other modifications. The Bank participates in the U.S. Department of the Treasury’s (the “Treasury”) Home Affordable Modification Program (“HAMP”) which gives qualifying homeowners an opportunity to refinance into more affordable monthly payments. The specific allocation of the allowance for loan and lease losses for TDRs is determined by calculating the present value of the TDR cash flows by discounting the original payment less an assumption for probability of default at the original note’s issue rate, and adding this amount to the present value of collateral less selling costs. If the resulting amount is less than the recorded book value, the Bank either establishes a valuation allowance (i.e., specific reserve) as a component of the allowance for loan and lease losses or charges off the impaired balance if it determines that such amount is a confirmed loss. This method is used consistently for all segments of the portfolio. The allowance for loan and lease losses also includes an allowance based on a loss migration analysis for each loan category on loans and leases that are not individually evaluated for specific impairment. All loans charged-off, including TDRs charged-off, are factored into this calculation by portfolio segment. TDRs that were modified during the period are as follows:
|  | TDR Modifications |  | TDR Modifications |
|  | Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019 |
|  | # of |  | Pre-modification |  | Post-modification |  | # of |  | Pre-modification |  | Post-modification |
|  | contracts |  | recorded investment |  | recorded investment |  | contracts |  | recorded investment |  | recorded investment |
Troubled debt restructurings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate - commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-owner occupied general purpose |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other 1 |  | - |  | $ | - |  | $ | - |  | 1 |  | $ | 58 |  | $ | 55 |
Retail properties |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other 1 |  | 1 |  |  | 1,159 |  |  | 1,122 |  | 1 |  |  | 1,159 |  |  | 1,122 |
Real estate - residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HAMP 2 |  | - |  |  | - |  |  | - |  | 3 |  |  | 399 |  |  | 297 |
HELOC |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HAMP 2 |  | - |  |  | - |  |  | - |  | 1 |  |  | 39 |  |  | 34 |
Other 1 |  | - |  |  | - |  |  | - |  | 1 |  |  | 39 |  |  | 38 |
Total |  | 1 |  | $ | 1,159 |  | $ | 1,122 |  | 7 |  | $ | 1,694 |  | $ | 1,546 |
|  | TDR Modifications |  | TDR Modifications |
|  | Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2018 |
|  | # of |  | Pre-modification |  | Post-modification |  | # of |  | Pre-modification |  | Post-modification |
|  | contracts |  | recorded investment |  | recorded investment |  | contracts |  | recorded investment |  | recorded investment |
Troubled debt restructurings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate - commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied general purpose |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other 1 |  | 1 |  | $ | 427 |  | $ | 424 |  | 1 |  | $ | 427 |  | $ | 424 |
Owner occupied special purpose |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other 1 |  |  |  |  |  |  |  |  |  | 1 |  |  | 110 |  |  | 52 |
Real estate - residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HAMP 2 |  | 1 |  |  | 211 |  |  | 211 |  | 3 |  |  | 383 |  |  | 331 |
Other 1 |  | 1 |  |  | 34 |  |  | 29 |  | 1 |  |  | 34 |  |  | 29 |
HELOC |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
HAMP 2 |  | 1 |  |  | 26 |  |  | 26 |  | 1 |  |  | 26 |  |  | 26 |
Rate 3 |  |  |  |  |  |  |  |  |  | 1 |  |  | 24 |  |  | 24 |
Other 1 |  | 2 |  |  | 93 |  |  | 92 |  | 9 |  |  | 596 |  |  | 587 |
Total |  | 6 |  | $ | 791 |  | $ | 782 |  | 17 |  | $ | 1,600 |  | $ | 1,473 |
1 Other: Change of terms from bankruptcy court. 2 HAMP: Home Affordable Modification Program. 3 Rate: Refers to interest rate reduction. TDRs are classified as being in default on a case-by-case basis when they fail to be in compliance with the modified terms. There was no TDR default activity for the periods ended September 30, 2019 and September 30, 2018, for loans that were restructured within the 12 month period prior to default. The following table details the accretable discount on all of the Company’s purchased loans, both non-PCI loans and PCI loans as of September 30, 2019 and September 30, 2018. The Company acquired non-PCI loans when it purchased the Chicago branch of Talmer Bank and Trust in late 2016 and in its acquisition of ABC Bank in 2018. The accretable discount recorded in the third quarter of 2019 totaled $1.0 million; the balance of the non-PCI loan discount was $6.6 million as of September 30, 2019. In the third quarter of 2018, the accretable discount totaled $775,000; the balance of the non-PCI loan discount was $9.6 million as of September 30, 2018. The accretable discount recorded for the nine months ended 2019 totaled $1.8 million; the balance of the non-PCI loan discount was $6.6 million as of September 30, 2019. For the nine months ended 2018, the accretable discount totaled $2.0 million; the balance of the non-PCI loan discount was $9.6 million as of September 30, 2018.
Purchased Accounting Accretion |  |  |  |  |  |  |  |  |  |  |  |
For the Three Months Ended |  | Accretable Discount- Non-PCI Loans |  | Accretable Discount- PCI Loans |  | Non-Accretable Discount- PCI Loans |  | Total
Beginning balance, July 1, 2019 |  | $ | 1,216 |  | $ | 931 |  | $ | 5,500 |  | $ | 7,647
Accretion |  |  | (217) |  |  | (218) |  |  | (606) |  |  | (1,041)
Transfer |  |  | - |  |  | 1 |  |  | (1) |  |  | -
Ending balance, September 30, 2019 |  | $ | 999 |  | $ | 714 |  | $ | 4,893 |  | $ | 6,606
For the Three Months Ended |  | Accretable Discount- Non-PCI Loans |  | Accretable Discount- PCI Loans |  | Non-Accretable Discount- PCI Loans |  | Total
Beginning balance, July 1, 2018 |  | $ | 2,995 |  | $ | 1,373 |  | $ | 6,403 |  | $ | 10,771
Accretion |  |  | (312) |  |  | (129) |  |  | (334) |  |  | (775)
Transfer |  |  | (373) |  |  | (26) |  |  | - |  |  | (399)
Ending balance, September 30, 2018 |  | $ | 2,310 |  | $ | 1,218 |  | $ | 6,069 |  | $ | 9,597
For the Nine Months Ended |  | Accretable Discount - Non-PCI Loans |  | Accretable Discount - PCI Loans |  | Non-Accretable Discount - PCI Loans |  | Total
Beginning balance, January 1, 2019 |  | $ | 1,867 |  | $ | 1,099 |  | $ | 5,969 |  | $ | 8,935
Accretion |  |  | (868) |  |  | (340) |  |  | (606) |  |  | (1,814)
Charge-offs |  |  | - |  |  | (48) |  |  | (467) |  |  | (515)
Transfer |  |  | - |  |  | 3 |  |  | (3) |  |  | -
Ending balance, September 30, 2019 |  | $ | 999 |  | $ | 714 |  | $ | 4,893 |  | $ | 6,606
For the Nine Months Ended |  | Accretable Discount - Non-PCI Loans |  | Accretable Discount - PCI Loans |  | Non-Accretable Discount - PCI Loans |  | Total
Beginning balance, January 1, 2018 |  | $ | 835 |  | $ | - |  | $ | - |  | $ | 835
Purchases |  |  | 3,182 |  |  | 1,551 |  |  | 6,536 |  |  | 11,269
Accretion |  |  | (1,334) |  |  | (305) |  |  | (334) |  |  | (1,973)
Transfer |  |  | (373) |  |  | (28) |  |  | (133) |  |  | (534)
Ending balance, September 30, 2018 |  | $ | 2,310 |  | $ | 1,218 |  | $ | 6,069 |  | $ | 9,597

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