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Note 3 - Loans and Allowance for Loan Losses | 3 Months Ended
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Mar. 31, 2018
Notes to Financial Statements |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 3. LOANS AND ALLOWANCE FOR LOAN LOSSES Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the allowance, and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans primarily using the simple interest method based on the principal balance outstanding. Interest is not accrued on loans where collectability is uncertain. Accrued interest is presented separately in the consolidated balance sheet. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield. Acquired loans are those purchased in the Firstbank merger. These loans were recorded at estimated fair value at the merger date with no carryover of the related allowance. The acquired loans were segregated between those considered to be performing (“acquired non-impaired loans”) and those with evidence of credit deterioration (“acquired impaired loans”). Acquired loans are considered impaired if there is evidence of credit deterioration and if it is probable, at acquisition, all contractually required payments will not be collected. Acquired loans restructured after acquisition are not considered or reported as troubled debt restructurings if the loans evidenced credit deterioration as of the merger date and are accounted for in pools. The fair value estimates for acquired loans are based on expected prepayments and the amount and timing of discounted expected principal, interest and other cash flows. Credit discounts representing the principal losses expected over the life of the loan are also a component of the initial fair value. In determining the merger date fair value of acquired impaired loans, and in subsequent accounting, we have generally aggregated acquired commercial and consumer loans into pools of loans with common risk characteristics. The difference between the fair value of an acquired non-impaired loan and contractual amounts due at the merger date is accreted into income over the estimated life of the loan. Contractually required payments represent the total undiscounted amount of all uncollected principal and interest payments. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio. The excess of an acquired impaired loan’s undiscounted contractually required payments over the amount of its undiscounted cash flows expected to be collected is referred to as the non-accretable difference. The non-accretable difference, which is neither accreted into income nor recorded on the consolidated balance sheet, reflects estimated future credit losses and uncollectible contractual interest expected to be incurred over the life of the acquired impaired loan. The excess cash flows expected to be collected over the carrying amount of the acquired loan is referred to as the accretable yield. This amount is accreted into interest income over the remaining life of the acquired loans or pools using the level yield method. The accretable yield is affected by changes in interest rate indices for variable rate loans, changes in prepayment speed assumptions and changes in expected principal and interest payments over the estimated lives of the acquired impaired loans. We evaluate quarterly the remaining contractual required payments receivable and estimate cash flows expected to be collected over the lives of the impaired loans. Contractually required payments receivable may increase or decrease for a variety of reasons, for example, when the contractual terms of the loan agreement are modified, when interest rates on variable rate loans change, or when principal and/or interest payments are received. Cash flows expected to be collected on acquired impaired loans are estimated by incorporating several key assumptions similar to the initial estimate of fair value. These key assumptions include probability of default, loss given default, and the amount of actual prepayments after the merger date. Prepayments affect the estimated lives of loans and could change the amount of interest income, and possibly principal, expected to be collected. In re-forecasting future estimated cash flows, credit loss expectations are adjusted as necessary. The adjustments are based, in part, on actual loss severities recognized for each loan type, as well as changes in the probability of default. For periods in which estimated cash flows are not re-forecasted, the prior reporting period’s estimated cash flows are adjusted to reflect the actual cash received and credit events that transpired during the current reporting period. Increases in expected cash flows of acquired impaired loans subsequent to the merger date are recognized prospectively through adjustments of the yield on the loans or pools over their remaining lives, while decreases in expected cash flows are recognized as impairment through a provision for loan losses and an increase in the allowance. Our total loans at March 31, 2018 were $2.55 billion compared to $2.56 billion at December 31, 2017, a decrease of $7.3 million, or 0.3%. The components of our loan portfolio disaggregated by class of loan within the loan portfolio segments at March 31, 2018 and December 31, 2017, and the percentage change in loans from the end of 2017 to the end of the first quarter of 2018, are as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Percent |
|  | March 31, 2018 |  |  | December 31, 2017 |  |  | Increase |
|  | Balance |  |  | % |  |  | Balance |  |  | % |  |  | (Decrease) |
Originated loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 675,188,000 |  |  |  | 30.8 | % |  | $ | 680,805,000 |  |  |  | 31.3 | % |  |  | (0.8 | %)
Vacant land, land development, and residential construction |  |  | 25,514,000 |  |  |  | 1.2 |  |  |  | 23,682,000 |  |  |  | 1.1 |  |  |  | 7.7 |
Real estate – owner occupied |  |  | 468,777,000 |  |  |  | 21.4 |  |  |  | 456,065,000 |  |  |  | 21.0 |  |  |  | 2.8 |
Real estate – non-owner occupied |  |  | 715,725,000 |  |  |  | 32.6 |  |  |  | 708,824,000 |  |  |  | 32.7 |  |  |  | 1.0 |
Real estate – multi-family and residential rental |  |  | 61,762,000 |  |  |  | 2.8 |  |  |  | 64,852,000 |  |  |  | 3.0 |  |  |  | (4.8 | )
Total commercial |  |  | 1,946,966,000 |  |  |  | 88.8 |  |  |  | 1,934,228,000 |  |  |  | 89.1 |  |  |  | 0.7 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 65,604,000 |  |  |  | 3.0 |  |  |  | 69,675,000 |  |  |  | 3.2 |  |  |  | (5.8 | )
1-4 family mortgages |  |  | 179,281,000 |  |  |  | 8.2 |  |  |  | 166,054,000 |  |  |  | 7.7 |  |  |  | 8.0 |
Total retail |  |  | 244,885,000 |  |  |  | 11.2 |  |  |  | 235,729,000 |  |  |  | 10.9 |  |  |  | 3.9 |
Total originated loans |  | $ | 2,191,851,000 |  |  |  | 100.0 | % |  | $ | 2,169,957,000 |  |  |  | 100.0 | % |  |  | 1.0 | %
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Percent |
|  | March 31, 2018 |  |  | December 31, 2017 |  |  | Increase |
|  | Balance |  |  | % |  |  | Balance |  |  | % |  |  | (Decrease) |
Acquired loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 64,617,000 |  |  |  | 18.0 | % |  | $ | 72,959,000 |  |  |  | 18.8 | % |  |  | (11.4 | %)
Vacant land, land development, and residential construction |  |  | 5,924,000 |  |  |  | 1.6 |  |  |  | 6,191,000 |  |  |  | 1.6 |  |  |  | (4.3 | )
Real estate – owner occupied |  |  | 62,375,000 |  |  |  | 17.5 |  |  |  | 70,263,000 |  |  |  | 18.1 |  |  |  | (11.2 | )
Real estate – non-owner occupied |  |  | 78,481,000 |  |  |  | 21.8 |  |  |  | 82,861,000 |  |  |  | 21.3 |  |  |  | (5.3 | )
Real estate – multi-family and residential rental |  |  | 34,666,000 |  |  |  | 9.6 |  |  |  | 37,066,000 |  |  |  | 9.5 |  |  |  | (6.5 | )
Total commercial |  |  | 246,063,000 |  |  |  | 68.5 |  |  |  | 269,340,000 |  |  |  | 69.3 |  |  |  | (8.6 | )
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 27,575,000 |  |  |  | 7.7 |  |  |  | 30,750,000 |  |  |  | 7.9 |  |  |  | (10.3 | )
1-4 family mortgages |  |  | 85,715,000 |  |  |  | 23.8 |  |  |  | 88,505,000 |  |  |  | 22.8 |  |  |  | (3.2 | )
Total retail |  |  | 113,290,000 |  |  |  | 31.5 |  |  |  | 119,255,000 |  |  |  | 30.7 |  |  |  | (5.0 | )
Total acquired loans |  | $ | 359,353,000 |  |  |  | 100.0 | % |  | $ | 388,595,000 |  |  |  | 100.0 | % |  |  | (7.5 | %)
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Percent |
|  | March 31, 2018 |  |  | December 31, 2017 |  |  | Increase |
|  | Balance |  |  | % |  |  | Balance |  |  | % |  |  | (Decrease) |
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 739,805,000 |  |  |  | 29.0 | % |  | $ | 753,764,000 |  |  |  | 29.4 | % |  |  | (1.9 | %)
Vacant land, land development, and residential construction |  |  | 31,438,000 |  |  |  | 1.2 |  |  |  | 29,873,000 |  |  |  | 1.2 |  |  |  | 5.2 |
Real estate – owner occupied |  |  | 531,152,000 |  |  |  | 20.8 |  |  |  | 526,328,000 |  |  |  | 20.6 |  |  |  | 0.9 |
Real estate – non-owner occupied |  |  | 794,206,000 |  |  |  | 31.2 |  |  |  | 791,685,000 |  |  |  | 30.9 |  |  |  | 0.3 |
Real estate – multi-family and residential rental |  |  | 96,428,000 |  |  |  | 3.8 |  |  |  | 101,918,000 |  |  |  | 4.0 |  |  |  | (5.4 | )
Total commercial |  |  | 2,193,029,000 |  |  |  | 86.0 |  |  |  | 2,203,568,000 |  |  |  | 86.1 |  |  |  | (0.5 | )
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 93,179,000 |  |  |  | 3.6 |  |  |  | 100,425,000 |  |  |  | 3.9 |  |  |  | (7.2 | )
1-4 family mortgages |  |  | 264,996,000 |  |  |  | 10.4 |  |  |  | 254,559,000 |  |  |  | 10.0 |  |  |  | 4.1 |
Total retail |  |  | 358,175,000 |  |  |  | 14.0 |  |  |  | 354,984,000 |  |  |  | 13.9 |  |  |  | 0.9 |
Total loans |  | $ | 2,551,204,000 |  |  |  | 100.0 | % |  | $ | 2,558,552,000 |  |  |  | 100.0 | % |  |  | (0.3 | %)
The total contractually required payments due on and carrying value of acquired impaired loans were $9.2 million and $5.0 million, respectively, as of March 31, 2018. The total contractually required payments due on and carrying value of acquired impaired loans were $11.9 million and $5.2 million, respectively, as of December 31, 2017. Changes in the accretable yield for acquired impaired loans for the three months ended March 31, 2018 and March 31, 2017 were as follows:
Balance at December 31, 2017 |  | $ | 1,404,000 |
Additions |  |  | 0 |
Accretion income |  |  | (131,000 | )
Net reclassification from nonaccretable to accretable |  |  | 86,000 |
Reductions (1) |  |  | (40,000 | )
Balance at March 31, 2018 |  | $ | 1,319,000 |
Balance at December 31, 2016 |  | $ | 1,726,000 |
Additions |  |  | 1,000 |
Accretion income |  |  | (147,000 | )
Net reclassification from nonaccretable to accretable |  |  | 63,000 |
Reductions (1) |  |  | (179,000 | )
Balance at March 31, 2017 |  | $ | 1,464,000 |
( 1 ) Reductions primarily reflect the result of exit events, including loan payoffs and charge-offs. Nonperforming originated loans as of March 31, 2018 and December 31, 2017 were as follows:
|  | March 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
Loans past due 90 days or more still accruing interest |  | $ | 0 |  |  | $ | 0 |
Nonaccrual loans |  |  | 2,763,000 |  |  |  | 3,672,000 |
Total nonperforming originated loans |  | $ | 2,763,000 |  |  | $ | 3,672,000 |
Nonperforming acquired loans as of March 31, 2018 and December 31, 2017 were as follows:
|  | March 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
Loans past due 90 days or more still accruing interest |  | $ | 0 |  |  | $ | 0 |
Nonaccrual loans |  |  | 2,979,000 |  |  |  | 3,471,000 |
Total nonperforming acquired loans |  | $ | 2,979,000 |  |  | $ | 3,471,000 |
The recorded principal balance of all nonperforming loans was as follows:
|  | March 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
Commercial: |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 619,000 |  |  | $ | 1,444,000 |
Vacant land, land development, and residential construction |  |  | 0 |  |  |  | 35,000 |
Real estate – owner occupied |  |  | 1,831,000 |  |  |  | 2,241,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 154,000 |  |  |  | 178,000 |
Total commercial |  |  | 2,604,000 |  |  |  | 3,898,000 |
Retail: |  |  |  |  |  |  |  |
Home equity and other |  |  | 512,000 |  |  |  | 577,000 |
1-4 family mortgages |  |  | 2,626,000 |  |  |  | 2,668,000 |
Total retail |  |  | 3,138,000 |  |  |  | 3,245,000 |
Total nonperforming loans |  | $ | 5,742,000 |  |  | $ | 7,143,000 |
Acquired impaired loans are not reported as nonperforming loans based on acquired impaired loan accounting. Acquired non-impaired loans are placed on nonaccrual status and reported as nonperforming or past due using the same criteria applied to the originated loan portfolio. An age analysis of past due loans is as follows as of March 31, 2018:
|  | 30 – 59 Days Past Due |  |  | 60 – 89 Days Past Due |  |  | Greater Than 89 Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | Recorded Balance > 89 Days and Accruing |
Originated loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 1,350,000 |  |  | $ | 929,000 |  |  | $ | 0 |  |  | $ | 2,279,000 |  |  | $ | 672,909,000 |  |  | $ | 675,188,000 |  |  | $ | 0 |
Vacant land, land development, and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 25,514,000 |  |  |  | 25,514,000 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 251,000 |  |  |  | 251,000 |  |  |  | 468,526,000 |  |  |  | 468,777,000 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 715,725,000 |  |  |  | 715,725,000 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 61,762,000 |  |  |  | 61,762,000 |  |  |  | 0 |
Total commercial |  |  | 1,350,000 |  |  |  | 929,000 |  |  |  | 251,000 |  |  |  | 2,530,000 |  |  |  | 1,944,436,000 |  |  |  | 1,946,966,000 |  |  |  | 0 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 65,000 |  |  |  | 0 |  |  |  | 0 |  |  |  | 65,000 |  |  |  | 65,539,000 |  |  |  | 65,604,000 |  |  |  | 0 |
1-4 family mortgages |  |  | 0 |  |  |  | 246,000 |  |  |  | 220,000 |  |  |  | 466,000 |  |  |  | 178,815,000 |  |  |  | 179,281,000 |  |  |  | 0 |
Total retail |  |  | 65,000 |  |  |  | 246,000 |  |  |  | 220,000 |  |  |  | 531,000 |  |  |  | 244,354,000 |  |  |  | 244,885,000 |  |  |  | 0 |
Total past due loans |  | $ | 1,415,000 |  |  | $ | 1,175,000 |  |  | $ | 471,000 |  |  | $ | 3,061,000 |  |  | $ | 2,188,790,000 |  |  | $ | 2,191,851,000 |  |  | $ | 0 |
|  | 30 – 59 |  |  | 60 – 89 |  |  | Greater Than 89 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded Balance > 89 |
|  | Days |  |  | Days |  |  | Days |  |  | Total |  |  |  |  |  |  | Total |  |  | Days and |
|  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Current |  |  | Loans |  |  | Accruing |
Acquired loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 0 |  |  | $ | 0 |  |  | $ | 113,000 |  |  | $ | 113,000 |  |  | $ | 64,504,000 |  |  | $ | 64,617,000 |  |  | $ | 0 |
Vacant land, land development, and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 5,924,000 |  |  |  | 5,924,000 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 156,000 |  |  |  | 243,000 |  |  |  | 399,000 |  |  |  | 61,976,000 |  |  |  | 62,375,000 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 78,481,000 |  |  |  | 78,481,000 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 27,000 |  |  |  | 0 |  |  |  | 9,000 |  |  |  | 36,000 |  |  |  | 34,630,000 |  |  |  | 34,666,000 |  |  |  | 0 |
Total commercial |  |  | 27,000 |  |  |  | 156,000 |  |  |  | 365,000 |  |  |  | 548,000 |  |  |  | 245,515,000 |  |  |  | 246,063,000 |  |  |  | 0 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 163,000 |  |  |  | 44,000 |  |  |  | 42,000 |  |  |  | 249,000 |  |  |  | 27,326,000 |  |  |  | 27,575,000 |  |  |  | 0 |
1-4 family mortgages |  |  | 645,000 |  |  |  | 231,000 |  |  |  | 475,000 |  |  |  | 1,351,000 |  |  |  | 84,364,000 |  |  |  | 85,715,000 |  |  |  | 0 |
Total retail |  |  | 808,000 |  |  |  | 275,000 |  |  |  | 517,000 |  |  |  | 1,600,000 |  |  |  | 111,690,000 |  |  |  | 113,290,000 |  |  |  | 0 |
Total past due loans |  | $ | 835,000 |  |  | $ | 431,000 |  |  | $ | 882,000 |  |  | $ | 2,148,000 |  |  | $ | 357,205,000 |  |  | $ | 359,353,000 |  |  | $ | 0 |
An age analysis of past due loans is as follows as of December 31, 2017:
|  | 30 – 59 Days Past Due |  |  | 60 – 89 Days Past Due |  |  | Greater Than 89 Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Loans |  |  | Recorded Balance > 89 Days and Accruing |
Originated loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 0 |  |  | $ | 0 |  |  | $ | 178,000 |  |  | $ | 178,000 |  |  | $ | 680,627,000 |  |  | $ | 680,805,000 |  |  | $ | 0 |
Vacant land, land development, and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 35,000 |  |  |  | 35,000 |  |  |  | 23,647,000 |  |  |  | 23,682,000 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 1,244,000 |  |  |  | 1,244,000 |  |  |  | 454,821,000 |  |  |  | 456,065,000 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 708,824,000 |  |  |  | 708,824,000 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 64,852,000 |  |  |  | 64,852,000 |  |  |  | 0 |
Total commercial |  |  | 0 |  |  |  | 0 |  |  |  | 1,457,000 |  |  |  | 1,457,000 |  |  |  | 1,932,771,000 |  |  |  | 1,934,228,000 |  |  |  | 0 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 647,000 |  |  |  | 11,000 |  |  |  | 86,000 |  |  |  | 744,000 |  |  |  | 68,931,000 |  |  |  | 69,675,000 |  |  |  | 0 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |  |  |  | 250,000 |  |  |  | 250,000 |  |  |  | 165,804,000 |  |  |  | 166,054,000 |  |  |  | 0 |
Total retail |  |  | 647,000 |  |  |  | 11,000 |  |  |  | 336,000 |  |  |  | 994,000 |  |  |  | 234,735,000 |  |  |  | 235,729,000 |  |  |  | 0 |
Total past due loans |  | $ | 647,000 |  |  | $ | 11,000 |  |  | $ | 1,793,000 |  |  | $ | 2,451,000 |  |  | $ | 2,167,506,000 |  |  | $ | 2,169,957,000 |  |  | $ | 0 |
|  | 30 – 59 |  |  | 60 – 89 |  |  | Greater Than 89 |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Recorded Balance > 89 |
|  | Days |  |  | Days |  |  | Days |  |  | Total |  |  |  |  |  |  | Total |  |  | Days and |
|  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Current |  |  | Loans |  |  | Accruing |
Acquired Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 40,000 |  |  | $ | 0 |  |  | $ | 114,000 |  |  | $ | 154,000 |  |  | $ | 72,805,000 |  |  | $ | 72,959,000 |  |  | $ | 0 |
Vacant land, land development, and residential construction |  |  | 14,000 |  |  |  | 0 |  |  |  | 0 |  |  |  | 14,000 |  |  |  | 6,177,000 |  |  |  | 6,191,000 |  |  |  | 0 |
Real estate – owner occupied |  |  | 634,000 |  |  |  | 0 |  |  |  | 271,000 |  |  |  | 905,000 |  |  |  | 69,358,000 |  |  |  | 70,263,000 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 82,861,000 |  |  |  | 82,861,000 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 108,000 |  |  |  | 108,000 |  |  |  | 36,958,000 |  |  |  | 37,066,000 |  |  |  | 0 |
Total commercial |  |  | 688,000 |  |  |  | 0 |  |  |  | 493,000 |  |  |  | 1,181,000 |  |  |  | 268,159,000 |  |  |  | 269,340,000 |  |  |  | 0 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 408,000 |  |  |  | 52,000 |  |  |  | 154,000 |  |  |  | 614,000 |  |  |  | 30,136,000 |  |  |  | 30,750,000 |  |  |  | 0 |
1-4 family mortgages |  |  | 690,000 |  |  |  | 333,000 |  |  |  | 661,000 |  |  |  | 1,684,000 |  |  |  | 86,821,000 |  |  |  | 88,505,000 |  |  |  | 0 |
Total retail |  |  | 1,098,000 |  |  |  | 385,000 |  |  |  | 815,000 |  |  |  | 2,298,000 |  |  |  | 116,957,000 |  |  |  | 119,255,000 |  |  |  | 0 |
Total past due loans |  | $ | 1,786,000 |  |  | $ | 385,000 |  |  | $ | 1,308,000 |  |  | $ | 3,479,000 |  |  | $ | 385,116,000 |  |  | $ | 388,595,000 |  |  | $ | 0 |
Impaired originated loans as of March 31, 2018, and average originated impaired loans for the three months ended March 31, 2018, were as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 234,000 |  |  | $ | 234,000 |  |  |  |  |  |  | $ | 206,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  |  |  |  |  | 17,000 |
Real estate – owner occupied |  |  | 2,937,000 |  |  |  | 2,875,000 |  |  |  |  |  |  |  | 2,164,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  |  |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 337,000 |  |  |  | 337,000 |  |  |  |  |  |  |  | 343,000 |
Total commercial |  |  | 3,508,000 |  |  |  | 3,446,000 |  |  |  |  |  |  |  | 2,730,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 768,000 |  |  |  | 751,000 |  |  |  |  |  |  |  | 716,000 |
1-4 family mortgages |  |  | 1,106,000 |  |  |  | 419,000 |  |  |  |  |  |  |  | 437,000 |
Total retail |  |  | 1,874,000 |  |  |  | 1,170,000 |  |  |  |  |  |  |  | 1,153,000 |
Total with no related allowance recorded |  | $ | 5,382,000 |  |  | $ | 4,616,000 |  |  |  |  |  |  | $ | 3,883,000 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 2,623,000 |  |  | $ | 2,133,000 |  |  | $ | 304,000 |  |  | $ | 2,561,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 1,717,000 |  |  |  | 1,674,000 |  |  |  | 226,000 |  |  |  | 1,532,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 145,000 |  |  |  | 145,000 |  |  |  | 17,000 |  |  |  | 72,000 |
Total commercial |  |  | 4,485,000 |  |  |  | 3,952,000 |  |  |  | 547,000 |  |  |  | 4,165,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 508,000 |  |  |  | 498,000 |  |  |  | 258,000 |  |  |  | 823,000 |
1-4 family mortgages |  |  | 412,000 |  |  |  | 354,000 |  |  |  | 58,000 |  |  |  | 232,000 |
Total retail |  |  | 920,000 |  |  |  | 852,000 |  |  |  | 316,000 |  |  |  | 1,055,000 |
Total with an allowance recorded |  | $ | 5,405,000 |  |  | $ | 4,804,000 |  |  | $ | 863,000 |  |  | $ | 5,220,000 |
Total impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 7,993,000 |  |  | $ | 7,398,000 |  |  | $ | 547,000 |  |  | $ | 6,895,000 |
Retail |  |  | 2,794,000 |  |  |  | 2,022,000 |  |  |  | 316,000 |  |  |  | 2,208,000 |
Total impaired loans |  | $ | 10,787,000 |  |  | $ | 9,420,000 |  |  | $ | 863,000 |  |  | $ | 9,103,000 |
Impaired acquired loans as of March 31, 2018, and average impaired acquired loans for the three months ended March 31, 2018, were as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 743,000 |  |  | $ | 733,000 |  |  |  |  |  |  | $ | 877,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  |  |  |  |  | 0 |
Real estate – owner occupied |  |  | 1,110,000 |  |  |  | 715,000 |  |  |  |  |  |  |  | 687,000 |
Real estate – non-owner occupied |  |  | 232,000 |  |  |  | 232,000 |  |  |  |  |  |  |  | 235,000 |
Real estate – multi-family and residential rental |  |  | 62,000 |  |  |  | 44,000 |  |  |  |  |  |  |  | 131,000 |
Total commercial |  |  | 2,147,000 |  |  |  | 1,724,000 |  |  |  |  |  |  |  | 1,930,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 690,000 |  |  |  | 649,000 |  |  |  |  |  |  |  | 578,000 |
1-4 family mortgages |  |  | 2,586,000 |  |  |  | 2,007,000 |  |  |  |  |  |  |  | 2,080,000 |
Total retail |  |  | 3,276,000 |  |  |  | 2,656,000 |  |  |  |  |  |  |  | 2,658,000 |
Total with no related allowance recorded |  | $ | 5,423,000 |  |  | $ | 4,380,000 |  |  |  |  |  |  | $ | 4,588,000 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 1,597,000 |  |  |  | 1,597,000 |  |  |  | 307,000 |  |  |  | 799,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total commercial |  |  | 1,597,000 |  |  |  | 1,597,000 |  |  |  | 307,000 |  |  |  | 799,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total retail |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total with an allowance recorded |  | $ | 1,597,000 |  |  | $ | 1,597,000 |  |  | $ | 307,000 |  |  | $ | 799,000 |
Total impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 3,744,000 |  |  | $ | 3,321,000 |  |  | $ | 307,000 |  |  | $ | 2,729,000 |
Retail |  |  | 3,276,000 |  |  |  | 2,656,000 |  |  |  | 0 |  |  |  | 2,658,000 |
Total impaired loans |  | $ | 7,020,000 |  |  | $ | 5,977,000 |  |  | $ | 307,000 |  |  | $ | 5,387,000 |
Impaired originated loans as of December 31, 2017, and average impaired originated loans for the three months ended March 31, 2017, were as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 765,000 |  |  | $ | 178,000 |  |  |  |  |  |  | $ | 1,589,000 |
Vacant land, land development and residential construction |  |  | 454,000 |  |  |  | 35,000 |  |  |  |  |  |  |  | 88,000 |
Real estate – owner occupied |  |  | 1,528,000 |  |  |  | 1,452,000 |  |  |  |  |  |  |  | 113,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  |  |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 349,000 |  |  |  | 349,000 |  |  |  |  |  |  |  | 197,000 |
Total commercial |  |  | 3,096,000 |  |  |  | 2,014,000 |  |  |  |  |  |  |  | 1,987,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 693,000 |  |  |  | 680,000 |  |  |  |  |  |  |  | 247,000 |
1-4 family mortgages |  |  | 1,126,000 |  |  |  | 456,000 |  |  |  |  |  |  |  | 649,000 |
Total retail |  |  | 1,819,000 |  |  |  | 1,136,000 |  |  |  |  |  |  |  | 896,000 |
Total with no related allowance recorded |  | $ | 4,915,000 |  |  | $ | 3,150,000 |  |  |  |  |  |  | $ | 2,883,000 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 3,038,000 |  |  | $ | 2,989,000 |  |  | $ | 963,000 |  |  | $ | 2,690,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 749,000 |
Real estate – owner occupied |  |  | 1,409,000 |  |  |  | 1,391,000 |  |  |  | 239,000 |  |  |  | 1,144,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,745,000 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 751,000 |
Total commercial |  |  | 4,447,000 |  |  |  | 4,380,000 |  |  |  | 1,202,000 |  |  |  | 10,079,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 1,225,000 |  |  |  | 1,147,000 |  |  |  | 652,000 |  |  |  | 697,000 |
1-4 family mortgages |  |  | 165,000 |  |  |  | 110,000 |  |  |  | 13,000 |  |  |  | 137,000 |
Total retail |  |  | 1,390,000 |  |  |  | 1,257,000 |  |  |  | 665,000 |  |  |  | 834,000 |
Total with an allowance recorded |  | $ | 5,837,000 |  |  | $ | 5,637,000 |  |  | $ | 1,867,000 |  |  | $ | 10,913,000 |
Total impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 7,543,000 |  |  | $ | 6,394,000 |  |  | $ | 1,202,000 |  |  | $ | 12,066,000 |
Retail |  |  | 3,209,000 |  |  |  | 2,393,000 |  |  |  | 665,000 |  |  |  | 1,730,000 |
Total impaired loans |  | $ | 10,752,000 |  |  | $ | 8,787,000 |  |  | $ | 1,867,000 |  |  | $ | 13,796,000 |
Impaired acquired loans as of December 31, 2017, and average impaired acquired loans for the three months ended March 31, 2017, were as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 1,039,000 |  |  | $ | 1,021,000 |  |  |  |  |  |  | $ | 892,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  |  |  |  |  | 0 |
Real estate – owner occupied |  |  | 1,027,000 |  |  |  | 659,000 |  |  |  |  |  |  |  | 1,151,000 |
Real estate – non-owner occupied |  |  | 238,000 |  |  |  | 237,000 |  |  |  |  |  |  |  | 751,000 |
Real estate – multi-family and residential rental |  |  | 237,000 |  |  |  | 218,000 |  |  |  |  |  |  |  | 160,000 |
Total commercial |  |  | 2,541,000 |  |  |  | 2,135,000 |  |  |  |  |  |  |  | 2,954,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 694,000 |  |  |  | 507,000 |  |  |  |  |  |  |  | 336,000 |
1-4 family mortgages |  |  | 2,703,000 |  |  |  | 2,153,000 |  |  |  |  |  |  |  | 1,662,000 |
Total retail |  |  | 3,397,000 |  |  |  | 2,660,000 |  |  |  |  |  |  |  | 1,998,000 |
Total with no related allowance recorded |  | $ | 5,938,000 |  |  | $ | 4,795,000 |  |  |  |  |  |  | $ | 4,952,000 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | First Quarter |
|  | Unpaid |  |  |  |  |  |  |  |  |  |  | Average |
|  | Contractual |  |  | Recorded |  |  |  |  |  |  | Recorded |
|  | Principal |  |  | Principal |  |  | Related |  |  | Principal |
|  | Balance |  |  | Balance |  |  | Allowance |  |  | Balance |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 19,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 48,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total commercial |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 67,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 172,000 |
Total retail |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 172,000 |
Total with an allowance recorded |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 239,000 |
Total impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 2,541,000 |  |  | $ | 2,135,000 |  |  | $ | 0 |  |  | $ | 3,021,000 |
Retail |  |  | 3,397,000 |  |  |  | 2,660,000 |  |  |  | 0 |  |  |  | 2,170,000 |
Total impaired loans |  | $ | 5,938,000 |  |  | $ | 4,795,000 |  |  | $ | 0 |  |  | $ | 5,191,000 |
Impaired loans for which no allocation of the allowance for loan losses has been made generally reflect situations whereby the loans have been charged-down to estimated collateral value. Interest income recognized on accruing troubled debt restructurings totaled $0.3 million and $0.2 million during the first quarters of 2018 and 2017, respectively. No interest income was recognized on nonaccrual loans during either the first quarter of 2018 or 2017. Lost interest income on nonaccrual loans totaled $0.1 million during both the first quarter of 2018 and the respective 2017 period. Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral. Credit quality indicators were as follows as of March 31, 2018: Originated loans Commercial credit exposure – credit risk profiled by internal credit risk grades:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Internal credit risk grade groupings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grades 1 – 4 |  | $ | 468,826,000 |  |  | $ | 17,645,000 |  |  | $ | 313,933,000 |  |  | $ | 564,093,000 |  |  | $ | 39,571,000 |
Grades 5 – 7 |  |  | 187,118,000 |  |  |  | 7,767,000 |  |  |  | 140,088,000 |  |  |  | 151,632,000 |  |  |  | 21,709,000 |
Grades 8 – 9 |  |  | 19,244,000 |  |  |  | 102,000 |  |  |  | 14,756,000 |  |  |  | 0 |  |  |  | 482,000 |
Total commercial |  | $ | 675,188,000 |  |  | $ | 25,514,000 |  |  | $ | 468,777,000 |  |  | $ | 715,725,000 |  |  | $ | 61,762,000 |
Retail credit exposure – credit risk profiled by collateral type:
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Total retail |  | $ | 65,604,000 |  |  | $ | 179,281,000 |
Acquired loans Commercial credit exposure – credit risk profiled by internal credit risk grades:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Internal credit risk grade groupings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grades 1 – 4 |  | $ | 39,543,000 |  |  | $ | 1,412,000 |  |  | $ | 28,823,000 |  |  | $ | 54,951,000 |  |  | $ | 17,376,000 |
Grades 5 – 7 |  |  | 24,591,000 |  |  |  | 4,512,000 |  |  |  | 30,940,000 |  |  |  | 23,448,000 |  |  |  | 17,132,000 |
Grades 8 – 9 |  |  | 483,000 |  |  |  | 0 |  |  |  | 2,612,000 |  |  |  | 82,000 |  |  |  | 158,000 |
Total commercial |  | $ | 64,617,000 |  |  | $ | 5,924,000 |  |  | $ | 62,375,000 |  |  | $ | 78,481,000 |  |  | $ | 34,666,000 |
Retail credit exposure – credit risk profiled by collateral type:
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Total retail |  | $ | 27,575,000 |  |  | $ | 85,715,000 |
Credit quality indicators were as follows as of December 31, 2017: Originated loans Commercial credit exposure – credit risk profiled by internal credit risk grades:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Internal credit risk grade groupings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grades 1 – 4 |  | $ | 469,537,000 |  |  | $ | 15,090,000 |  |  | $ | 326,700,000 |  |  | $ | 559,388,000 |  |  | $ | 42,951,000 |
Grades 5 – 7 |  |  | 189,851,000 |  |  |  | 8,557,000 |  |  |  | 123,024,000 |  |  |  | 149,135,000 |  |  |  | 21,552,000 |
Grades 8 – 9 |  |  | 21,417,000 |  |  |  | 35,000 |  |  |  | 6,341,000 |  |  |  | 301,000 |  |  |  | 349,000 |
Total commercial |  | $ | 680,805,000 |  |  | $ | 23,682,000 |  |  | $ | 456,065,000 |  |  | $ | 708,824,000 |  |  | $ | 64,852,000 |
Retail credit exposure – credit risk profiled by collateral type:
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Total retail |  | $ | 69,675,000 |  |  | $ | 166,054,000 |
Acquired loans Commercial credit exposure – credit risk profiled by internal credit risk grades:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Internal credit risk grade groupings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grades 1 – 4 |  | $ | 46,263,000 |  |  | $ | 1,446,000 |  |  | $ | 28,706,000 |  |  | $ | 52,674,000 |  |  | $ | 17,499,000 |
Grades 5 – 7 |  |  | 25,654,000 |  |  |  | 4,745,000 |  |  |  | 39,565,000 |  |  |  | 30,102,000 |  |  |  | 19,212,000 |
Grades 8 – 9 |  |  | 1,042,000 |  |  |  | 0 |  |  |  | 1,992,000 |  |  |  | 85,000 |  |  |  | 355,000 |
Total commercial |  | $ | 72,959,000 |  |  | $ | 6,191,000 |  |  | $ | 70,263,000 |  |  | $ | 82,861,000 |  |  | $ | 37,066,000 |
Retail credit exposure – credit risk profiled by collateral type:
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Total retail |  | $ | 30,750,000 |  |  | $ | 88,505,000 |
| All commercial loans are graded using the following criteria:
| Grade 1. | Excellent credit rating that contain very little, if any, risk of loss.
| Grade 2. | Strong sources of repayment and have low repayment risk.
| Grade 3. | Good sources of repayment and have limited repayment risk.
| Grade 4. | Adequate sources of repayment and acceptable repayment risk; however, characteristics are present that render the credit more vulnerable to a negative event.
| Grade 5. | Marginally acceptable sources of repayment and exhibit defined weaknesses and negative characteristics.
| Grade 6. | Well defined weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if the credit does not stabilize or if further deterioration is observed in the near term, the loan will likely be downgraded and placed on the Watch List (i.e., list of lending relationships that receive increased scrutiny and review by the Board of Directors and senior management).
| Grade 7. | Defined weaknesses or negative trends that merit close monitoring through Watch List status.
| Grade 8. | Inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral, resulting in a distinct possibility of loss requiring close monitoring through Watch List status.
| Grade 9. | Vital weaknesses exist where collection of principal is highly questionable.
| Grade 10. | Considered uncollectable and of such little value that continuance as an asset is not warranted.
| The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position.
Activity in the allowance for loan losses and the recorded investments in originated loans as of and during the three months ended March 31, 2018 are as follows:
|  | Commercial |  |  | Retail |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Loans |  |  | Unallocated |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 16,456,000 |  |  | $ | 2,584,000 |  |  | $ | 93,000 |  |  | $ | 19,133,000 |
Provision for loan losses |  |  | (341,000 | ) |  |  | (563,000 | ) |  |  | 122,000 |  |  |  | (782,000 | )
Charge-offs |  |  | (258,000 | ) |  |  | (135,000 | ) |  |  | 0 |  |  |  | (393,000 | )
Recoveries |  |  | 1,008,000 |  |  |  | 115,000 |  |  |  | 0 |  |  |  | 1,123,000 |
Ending balance |  | $ | 16,865,000 |  |  | $ | 2,001,000 |  |  | $ | 215,000 |  |  | $ | 19,081,000 |
Ending balance: individually evaluated for impairment |  | $ | 547,000 |  |  | $ | 316,000 |  |  | $ | 0 |  |  | $ | 863,000 |
Ending balance: collectively evaluated for impairment |  | $ | 16,318,000 |  |  | $ | 1,685,000 |  |  | $ | 215,000 |  |  | $ | 18,218,000 |
Total loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 1,946,966,000 |  |  | $ | 244,885,000 |  |  |  |  |  |  | $ | 2,191,851,000 |
Ending balance: individually evaluated for impairment |  | $ | 7,398,000 |  |  | $ | 2,022,000 |  |  |  |  |  |  | $ | 9,420,000 |
Ending balance: collectively evaluated for impairment |  | $ | 1,939,568,000 |  |  | $ | 242,863,000 |  |  |  |  |  |  | $ | 2,182,431,000 |
Activity in the allowance for loan losses for acquired loans during the three months ended March 31, 2018 is as follows:
|  | Commercial |  |  | Retail |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Loans |  |  | Unallocated |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 291,000 |  |  | $ | 77,000 |  |  | $ | 0 |  |  | $ | 368,000 |
Provision for loan losses |  |  | 314,000 |  |  |  | 468,000 |  |  |  | 0 |  |  |  | 782,000 |
Charge-offs |  |  | (246,000 | ) |  |  | (15,000 | ) |  |  | 0 |  |  |  | (261,000 | )
Recoveries |  |  | 0 |  |  |  | 4,000 |  |  |  | 0 |  |  |  | 4,000 |
Ending balance |  | $ | 359,000 |  |  | $ | 534,000 |  |  | $ | 0 |  |  | $ | 893,000 |
Activity in the allowance for loan losses and the recorded investments in originated loans as of and during the twelve months ended December 31, 2017 are as follows:
|  | Commercial |  |  | Retail |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Loans |  |  | Unallocated |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 16,026,000 |  |  | $ | 1,882,000 |  |  | $ | (40,000 | ) |  | $ | 17,868,000 |
Provision for loan losses |  |  | 1,148,000 |  |  |  | 1,360,000 |  |  |  | 133,000 |  |  |  | 2,641,000 |
Charge-offs |  |  | (2,292,000 | ) |  |  | (891,000 | ) |  |  | 0 |  |  |  | (3,183,000 | )
Recoveries |  |  | 1,574,000 |  |  |  | 233,000 |  |  |  | 0 |  |  |  | 1,807,000 |
Ending balance |  | $ | 16,456,000 |  |  | $ | 2,584,000 |  |  | $ | 93,000 |  |  | $ | 19,133,000 |
Ending balance: individually evaluated for impairment |  | $ | 1,202,000 |  |  | $ | 665,000 |  |  | $ | 0 |  |  | $ | 1,867,000 |
Ending balance: collectively evaluated for impairment |  | $ | 15,254,000 |  |  | $ | 1,919,000 |  |  | $ | 93,000 |  |  | $ | 17,266,000 |
Total loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 1,934,228,000 |  |  | $ | 235,729,000 |  |  |  |  |  |  | $ | 2,169,957,000 |
Ending balance: individually evaluated for impairment |  | $ | 6,394,000 |  |  | $ | 2,393,000 |  |  |  |  |  |  | $ | 8,787,000 |
Ending balance: collectively evaluated for impairment |  | $ | 1,927,834,000 |  |  | $ | 233,336,000 |  |  |  |  |  |  | $ | 2,161,170,000 |
Activity in the allowance for loan losses for acquired loans during the twelve months ended December 31, 2017 is as follows:
|  | Commercial |  |  | Retail |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Loans |  |  | Unallocated |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 75,000 |  |  | $ | 18,000 |  |  | $ | 0 |  |  | $ | 93,000 |
Provision for loan losses |  |  | 210,000 |  |  |  | 99,000 |  |  |  | 0 |  |  |  | 309,000 |
Charge-offs |  |  | (12,000 | ) |  |  | (40,000 | ) |  |  | 0 |  |  |  | (52,000 | )
Recoveries |  |  | 18,000 |  |  |  | 0 |  |  |  | 0 |  |  |  | 18,000 |
Ending balance |  | $ | 291,000 |  |  | $ | 77,000 |  |  | $ | 0 |  |  | $ | 368,000 |
In accordance with acquisition accounting rules, acquired loans were recorded at fair value at the merger date and the prior allowance was eliminated. Loans modified as troubled debt restructurings during the three months ended March 31, 2018 were as follows:
|  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  |  |  | Modification |  |  | Modification |
|  |  |  |  |  | Recorded |  |  | Recorded |
|  | Number of |  |  | Principal |  |  | Principal |
|  | Contracts |  |  | Balance |  |  | Balance |
Originated loans |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 3 |  |  | $ | 107,000 |  |  | $ | 96,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 4 |  |  |  | 3,865,000 |  |  |  | 3,854,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total originated commercial |  |  | 7 |  |  |  | 3,972,000 |  |  |  | 3,950,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 1 |  |  |  | 50,000 |  |  |  | 50,000 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total originated retail |  |  | 1 |  |  |  | 50,000 |  |  |  | 50,000 |
Total originated loans |  |  | 8 |  |  | $ | 4,022,000 |  |  | $ | 4,000,000 |
Acquired loans |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 0 |  |  | $ | 0 |  |  | $ | 0 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 3 |  |  |  | 1,597,000 |  |  |  | 1,597,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total acquired commercial |  |  | 3 |  |  |  | 1,597,000 |  |  |  | 1,597,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 6 |  |  |  | 118,000 |  |  |  | 119,000 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total acquired retail |  |  | 6 |  |  |  | 118,000 |  |  |  | 119,000 |
Total acquired loans |  |  | 9 |  |  | $ | 1,715,000 |  |  | $ | 1,716,000 |
Loans modified as troubled debt restructurings during the three months ended March 31, 2017 were as follows:
|  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  |  |  | Modification |  |  | Modification |
|  |  |  |  |  | Recorded |  |  | Recorded |
|  | Number of |  |  | Principal |  |  | Principal |
|  | Contracts |  |  | Balance |  |  | Balance |
Originated loans |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 0 |  |  | $ | 0 |  |  | $ | 0 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total originated commercial |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 4 |  |  |  | 328,000 |  |  |  | 329,000 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total originated retail |  |  | 4 |  |  |  | 328,000 |  |  |  | 329,000 |
Total originated loans |  |  | 4 |  |  | $ | 328,000 |  |  | $ | 329,000 |
Acquired loans |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 1 |  |  | $ | 31,000 |  |  | $ | 31,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total acquired commercial |  |  | 1 |  |  |  | 31,000 |  |  |  | 31,000 |
Retail: |  |  |  |  |  |  |  |  |  |  |  |
Home equity and other |  |  | 2 |  |  |  | 6,000 |  |  |  | 7,000 |
1-4 family mortgages |  |  | 1 |  |  |  | 57,000 |  |  |  | 57,000 |
Total acquired retail |  |  | 3 |  |  |  | 63,000 |  |  |  | 64,000 |
Total acquired loans |  |  | 4 |  |  | $ | 94,000 |  |  | $ | 95,000 |
The following originated loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due within the three months ended March 31, 2018 ( amounts as of period end):
|  |  |  |  |  | Recorded |
|  | Number of |  |  | Principal |
|  | Contracts |  |  | Balance |
Commercial: |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 0 |  |  | $ | 0 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 1 |  |  |  | 251,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |
Total commercial |  |  | 1 |  |  |  | 251,000 |
Retail: |  |  |  |  |  |  |  |
Home equity and other |  |  | 0 |  |  |  | 0 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |
Total retail |  |  | 0 |  |  |  | 0 |
Total |  |  | 1 |  |  | $ | 251,000 |
The following acquired loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due within the three months ended March 31, 2018 ( amounts as of period end):
|  |  |  |  |  | Recorded |
|  | Number of |  |  | Principal |
|  | Contracts |  |  | Balance |
Commercial: |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 1 |  |  | $ | 113,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |
Total commercial |  |  | 1 |  |  |  | 113,000 |
Retail: |  |  |  |  |  |  |  |
Home equity and other |  |  | 2 |  |  |  | 20,000 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |
Total retail |  |  | 2 |  |  |  | 20,000 |
Total |  |  | 3 |  |  | $ | 133,000 |
The following originated loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due within the three months ended March 31, 2017 ( amounts as of period end):
|  |  |  |  |  | Recorded |
|  | Number of |  |  | Principal |
|  | Contracts |  |  | Balance |
Commercial: |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 2 |  |  | $ | 34,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 1 |  |  |  | 130,000 |
Total commercial |  |  | 3 |  |  |  | 164,000 |
Retail: |  |  |  |  |  |  |  |
Home equity and other |  |  | 0 |  |  |  | 0 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |
Total retail |  |  | 0 |  |  |  | 0 |
Total |  |  | 3 |  |  | $ | 164,000 |
The following acquired loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due within the three months ended March 31, 2017 ( amounts as of period end):
|  |  |  |  |  | Recorded |
|  | Number of |  |  | Principal |
|  | Contracts |  |  | Balance |
Commercial: |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 1 |  |  | $ | 24,000 |
Vacant land, land development and residential construction |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |
Total commercial |  |  | 1 |  |  |  | 24,000 |
Retail: |  |  |  |  |  |  |  |
Home equity and other |  |  | 0 |  |  |  | 0 |
1-4 family mortgages |  |  | 0 |  |  |  | 0 |
Total retail |  |  | 0 |  |  |  | 0 |
Total |  |  | 1 |  |  | $ | 24,000 |
Activity for originated loans categorized as troubled debt restructurings during the three months ended March 31, 2018 is as follows:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Commercial Loan Portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 2,989,000 |  |  | $ | 383,000 |  |  | $ | 1,599,000 |  |  | $ | 0 |  |  | $ | 0 |
Charge-Offs |  |  | (230,000 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Payments |  |  | (882,000 | ) |  |  | (45,000 | ) |  |  | (855,000 | ) |  |  | 0 |  |  |  | 0 |
Transfers to ORE |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Net Additions/Deletions |  |  | 105,000 |  |  |  | 0 |  |  |  | 3,804,000 |  |  |  | 0 |  |  |  | 0 |
Ending Balance |  | $ | 1,982,000 |  |  | $ | 338,000 |  |  | $ | 4,548,000 |  |  | $ | 0 |  |  | $ | 0 |
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Retail Loan Portfolio: |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 1,127,000 |  |  | $ | 146,000 |
Charge-Offs |  |  | 0 |  |  |  | 0 |
Payments |  |  | (8,000 | ) |  |  | (2,000 | )
Transfers to ORE |  |  | 0 |  |  |  | 0 |
Net Additions/Deletions |  |  | 50,000 |  |  |  | 0 |
Ending Balance |  | $ | 1,169,000 |  |  | $ | 144,000 |
Activity for acquired loans categorized as troubled debt restructurings during the three months ended March 31, 2018 is as follows:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Commercial Loan Portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 1,001,000 |  |  | $ | 0 |  |  | $ | 427,000 |  |  | $ | 237,000 |  |  | $ | 41,000 |
Charge-Offs |  |  | (275,000 | ) |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Payments |  |  | (10,000 | ) |  |  | 0 |  |  |  | (17,000 | ) |  |  | (5,000 | ) |  |  | (5,000 | )
Transfers to ORE |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Net Additions/Deletions |  |  | 0 |  |  |  | 0 |  |  |  | 1,597,000 |  |  |  | 0 |  |  |  | 0 |
Ending Balance |  | $ | 716,000 |  |  | $ | 0 |  |  | $ | 2,007,000 |  |  | $ | 232,000 |  |  | $ | 36,000 |
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Retail Loan Portfolio: |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 219,000 |  |  | $ | 393,000 |
Charge-Offs |  |  | (15,000 | ) |  |  | 0 |
Payments |  |  | (1,000 | ) |  |  | (9,000 | )
Transfers to ORE |  |  | (82,000 | ) |  |  | 0 |
Net Additions/Deletions |  |  | 119,000 |  |  |  | 0 |
Ending Balance |  | $ | 240,000 |  |  | $ | 384,000 |
Activity for originated loans categorized as troubled debt restructurings during the three months ended March 31, 2017 is as follows:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Commercial Loan Portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 1,503,000 |  |  | $ | 1,488,000 |  |  | $ | 906,000 |  |  | $ | 5,110,000 |  |  | $ | 716,000 |
Charge-Offs |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Payments |  |  | (125,000 | ) |  |  | (529,000 | ) |  |  | (27,000 | ) |  |  | (123,000 | ) |  |  | (113,000 | )
Transfers to ORE |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Net Additions/Deletions |  |  | 159,000 |  |  |  | 0 |  |  |  | 0 |  |  |  | (436,000 | ) |  |  | (312,000 | )
Ending Balance |  | $ | 1,537,000 |  |  | $ | 959,000 |  |  | $ | 879,000 |  |  | $ | 4,551,000 |  |  | $ | 291,000 |
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Retail Loan Portfolio: |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 385,000 |  |  | $ | 157,000 |
Charge-Offs |  |  | 0 |  |  |  | 0 |
Payments |  |  | 0 |  |  |  | (3,000 | )
Transfers to ORE |  |  | 0 |  |  |  | 0 |
Net Additions/Deletions |  |  | 321,000 |  |  |  | 0 |
Ending Balance |  | $ | 706,000 |  |  | $ | 154,000 |
Activity for acquired loans categorized as troubled debt restructurings during the three months ended March 31, 2017 is as follows:
|  | Commercial and Industrial |  |  | Commercial Vacant Land, Land Development, and Residential Construction |  |  | Commercial Real Estate - Owner Occupied |  |  | Commercial Real Estate - Non-Owner Occupied |  |  | Commercial Real Estate - Multi-Family and Residential Rental |
Commercial Loan Portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 1,125,000 |  |  | $ | 0 |  |  | $ | 900,000 |  |  | $ | 728,000 |  |  | $ | 60,000 |
Charge-Offs |  |  | 0 |  |  |  | 0 |  |  |  | (12,000 | ) |  |  | 0 |  |  |  | 0 |
Payments |  |  | (233,000 | ) |  |  | 0 |  |  |  | 0 |  |  |  | (145,000 | ) |  |  | 0 |
Transfers to ORE |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Net Additions/Deletions |  |  | 30,000 |  |  |  | 0 |  |  |  | 108,000 |  |  |  | 0 |  |  |  | 8,000 |
Ending Balance |  | $ | 922,000 |  |  | $ | 0 |  |  | $ | 996,000 |  |  | $ | 583,000 |  |  | $ | 68,000 |
|  | Retail |  |  | Retail |
|  | Home Equity |  |  | 1-4 Family |
|  | and Other |  |  | Mortgages |
Retail Loan Portfolio: |  |  |  |  |  |  |  |
Beginning Balance |  | $ | 208,000 |  |  | $ | 326,000 |
Charge-Offs |  |  | 0 |  |  |  | 0 |
Payments |  |  | (9,000 | ) |  |  | (4,000 | )
Transfers to ORE |  |  | 0 |  |  |  | 0 |
Net Additions/Deletions |  |  | 7,000 |  |  |  | 54,000 |
Ending Balance |  | $ | 206,000 |  |  | $ | 376,000 |
The allowance related to loans categorized as troubled debt restructurings was as follows:
|  | March 31, |  |  | December 31, |
|  | 2018 |  |  | 2017 |
Commercial: |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 85,000 |  |  | $ | 107,000 |
Vacant land, land development, and residential construction |  |  | 0 |  |  |  | 0 |
Real estate – owner occupied |  |  | 375,000 |  |  |  | 141,000 |
Real estate – non-owner occupied |  |  | 0 |  |  |  | 0 |
Real estate – multi-family and residential rental |  |  | 0 |  |  |  | 0 |
Total commercial |  |  | 460,000 |  |  |  | 248,000 |
Retail: |  |  |  |  |  |  |  |
Home equity and other |  |  | 215,000 |  |  |  | 196,000 |
1-4 family mortgages |  |  | 21,000 |  |  |  | 0 |
Total retail |  |  | 236,000 |  |  |  | 196,000 |
Total related allowance |  | $ | 696,000 |  |  | $ | 444,000 |
In general, our policy dictates that a renewal or modification of an 8 - or 9 -rated commercial loan meets the criteria of a troubled debt restructuring, although we review and consider all renewed and modified loans as part of our troubled debt restructuring assessment procedures. Loan relationships rated 8 contain significant financial weaknesses, resulting in a distinct possibility of loss, while relationships rated 9 reflect vital financial weaknesses, resulting in a highly questionable ability on our part to collect principal; we believe borrowers warranting such ratings would have difficulty obtaining financing from other market participants. Thus, due to the lack of comparable market rates for loans with similar risk characteristics, we believe 8 - or 9 -rated loans renewed or modified were done so at below market rates. Loans that are identified as troubled debt restructurings are considered impaired and are individually evaluated for impairment when assessing these credits in our allowance for loan losses calculation.

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