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Loans | 9 Months Ended
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Sep. 30, 2012
Loans [Abstract] |
LOANS |
5. | LOANS
Total net loans at September 30, 2012 and December 31, 2011 are summarized as follows:
|  | September 30, 2012 |  |  | December 31, 2011 |
Commercial, industrial, and agricultural |  | $ | 259,906 |  |  | $ | 253,324 |
Commercial mortgages |  |  | 257,031 |  |  |  | 242,511 |
Residential real estate |  |  | 335,796 |  |  |  | 298,628 |
Consumer |  |  | 55,979 |  |  |  | 53,471 |
Credit cards |  |  | 4,572 |  |  |  | 4,412 |
Overdrafts |  |  | 330 |  |  |  | 423 |
Less: unearned discount |  |  | (3,397 | ) |  |  | (2,886 | )
allowance for loan losses |  |  | (13,649 | ) |  |  | (12,615 | )
Loans, net |  | $ | 896,568 |  |  | $ | 837,268 |
At September 30, 2012 and December 31, 2011, net unamortized loan costs and fees of $206 and ($7), respectively, have been included in the carrying value of loans. The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within Central and Western Pennsylvania. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. Transactions in the allowance for loan losses for the three months ended September 30, 2012 were as follows:
|  | Commercial, Industrial, and Agricultural |  |  | Commercial Mortgages |  |  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |  |  | Overdrafts |  |  | Total |
Allowance for loan losses, July 1, 2012 |  | $ | 5,115 |  |  | $ | 4,553 |  |  | $ | 2,225 |  |  | $ | 1,568 |  |  | $ | 81 |  |  | $ | 148 |  |  | $ | 13,690 |
Charge-offs |  |  | (751 | ) |  |  | (165 | ) |  |  | (7 | ) |  |  | (252 | ) |  |  | (22 | ) |  |  | (80 | ) |  |  | (1,277 | )
Recoveries |  |  | 6 |  |  |  | 0 |  |  |  | 1 |  |  |  | 18 |  |  |  | 1 |  |  |  | 22 |  |  |  | 48 |
Provision (benefit) for loan losses |  |  | 103 |  |  |  | 504 |  |  |  | 113 |  |  |  | 372 |  |  |  | 19 |  |  |  | 77 |  |  |  | 1,188 |
Allowance for loan losses, September 30, 2012 |  | $ | 4,473 |  |  | $ | 4,892 |  |  | $ | 2,332 |  |  | $ | 1,706 |  |  | $ | 79 |  |  | $ | 167 |  |  | $ | 13,649 |
Transactions in the allowance for loan losses for the nine months ended September 30, 2012 were as follows:
|  | Commercial, Industrial, and Agricultural |  |  | Commercial Mortgages |  |  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |  |  | Overdrafts |  |  | Total |
Allowance for loan losses, January 1, 2012 |  | $ | 4,511 |  |  | $ | 4,470 |  |  | $ | 1,991 |  |  | $ | 1,404 |  |  | $ | 71 |  |  | $ | 168 |  |  | $ | 12,615 |
Charge-offs |  |  | (1,398 | ) |  |  | (401 | ) |  |  | (231 | ) |  |  | (890 | ) |  |  | (55 | ) |  |  | (197 | ) |  |  | (3,172 | )
Recoveries |  |  | 14 |  |  |  | 0 |  |  |  | 1 |  |  |  | 67 |  |  |  | 8 |  |  |  | 78 |  |  |  | 168 |
Provision for loan losses |  |  | 1,346 |  |  |  | 823 |  |  |  | 571 |  |  |  | 1,125 |  |  |  | 55 |  |  |  | 118 |  |  |  | 4,038 |
Allowance for loan losses, September 30, 2012 |  | $ | 4,473 |  |  | $ | 4,892 |  |  | $ | 2,332 |  |  | $ | 1,706 |  |  | $ | 79 |  |  | $ | 167 |  |  | $ | 13,649 |
Transactions in the allowance for loan losses for the three months ended September 30, 2011 were as follows:
|  | Commercial, Industrial, and Agricultural |  |  | Commercial Mortgages |  |  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |  |  | Overdrafts |  |  | Total |
Allowance for loan losses, July 1, 2011 |  | $ | 3,770 |  |  | $ | 4,399 |  |  | $ | 1,900 |  |  | $ | 1,400 |  |  | $ | 104 |  |  | $ | 142 |  |  | $ | 11,715 |
Charge-offs |  |  | (84 | ) |  |  | (12 | ) |  |  | (55 | ) |  |  | (221 | ) |  |  | (12 | ) |  |  | (50 | ) |  |  | (434 | )
Recoveries |  |  | 3 |  |  |  | — |  |  |  | 12 |  |  |  | 31 |  |  |  | 3 |  |  |  | 18 |  |  |  | 67 |
Provision (benefit) for loan losses |  |  | 33 |  |  |  | 467 |  |  |  | 154 |  |  |  | 202 |  |  |  | 2 |  |  |  | 46 |  |  |  | 904 |
Allowance for loan losses, September 30, 2011 |  | $ | 3,722 |  |  | $ | 4,854 |  |  | $ | 2,011 |  |  | $ | 1,412 |  |  | $ | 97 |  |  | $ | 156 |  |  | $ | 12,252 |
Transactions in the allowance for loan losses for the nine months ended September 30, 2011 were as follows:
|  | Commercial, Industrial, and Agricultural |  |  | Commercial Mortgages |  |  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |  |  | Overdrafts |  |  | Total |
Allowance for loan losses, January 1, 2011 |  | $ | 3,517 |  |  | $ | 3,511 |  |  | $ | 1,916 |  |  | $ | 1,561 |  |  | $ | 96 |  |  | $ | 219 |  |  | $ | 10,820 |
Charge-offs |  |  | (299 | ) |  |  | (100 | ) |  |  | (132 | ) |  |  | (683 | ) |  |  | (37 | ) |  |  | (165 | ) |  |  | (1,416 | )
Recoveries |  |  | 7 |  |  |  | — |  |  |  | 12 |  |  |  | 76 |  |  |  | 8 |  |  |  | 72 |  |  |  | 175 |
Provision (benefit) for loan losses |  |  | 497 |  |  |  | 1,443 |  |  |  | 215 |  |  |  | 458 |  |  |  | 30 |  |  |  | 30 |  |  |  | 2,673 |
Allowance for loan losses, September 30, 2011 |  | $ | 3,722 |  |  | $ | 4,854 |  |  | $ | 2,011 |  |  | $ | 1,412 |  |  | $ | 97 |  |  | $ | 156 |  |  | $ | 12,252 |
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of September 30, 2012 and December 31, 2011: September 30, 2012
|  | Commercial, Industrial, and Agricultural |  |  | Commercial Mortgages |  |  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |  |  | Overdrafts |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 498 |  |  | $ | 229 |  |  | $ | 68 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 795 |
Collectively evaluated for impairment |  |  | 3,975 |  |  |  | 3,392 |  |  |  | 2,264 |  |  |  | 1,706 |  |  |  | 79 |  |  |  | 167 |  |  |  | 11,583 |
Modified in a troubled debt restructuring |  |  | 0 |  |  |  | 1,271 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,271 |
Total ending allowance balance |  | $ | 4,473 |  |  | $ | 4,892 |  |  | $ | 2,332 |  |  | $ | 1,706 |  |  | $ | 79 |  |  | $ | 167 |  |  | $ | 13,649 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 6,927 |  |  | $ | 7,698 |  |  | $ | 624 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 15,249 |
Loans collectively evaluated for impairment |  |  | 252,694 |  |  |  | 239,235 |  |  |  | 335,172 |  |  |  | 55,979 |  |  |  | 4,572 |  |  |  | 330 |  |  |  | 887,982 |
Loans modified in a troubled debt restructuring |  |  | 285 |  |  |  | 10,098 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 10,383 |
Total ending loans balance |  | $ | 259,906 |  |  | $ | 257,031 |  |  | $ | 335,796 |  |  | $ | 55,979 |  |  | $ | 4,572 |  |  | $ | 330 |  |  | $ | 913,614 |
December 31, 2011
|  | Commercial, Industrial, and Agricultural |  |  | Commercial Mortgages |  |  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |  |  | Overdrafts |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 329 |  |  | $ | 917 |  |  | $ | 19 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 1,265 |
Collectively evaluated for impairment |  |  | 4,182 |  |  |  | 3,325 |  |  |  | 1,972 |  |  |  | 1,404 |  |  |  | 71 |  |  |  | 168 |  |  |  | 11,122 |
Modified in a troubled debt restructuring |  |  | 0 |  |  |  | 228 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 228 |
Total ending allowance balance |  | $ | 4,511 |  |  | $ | 4,470 |  |  | $ | 1,991 |  |  | $ | 1,404 |  |  | $ | 71 |  |  | $ | 168 |  |  | $ | 12,615 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 6,115 |  |  | $ | 8,457 |  |  | $ | 124 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 14,696 |
Loans collectively evaluated for impairment |  |  | 247,209 |  |  |  | 226,366 |  |  |  | 298,504 |  |  |  | 53,471 |  |  |  | 4,412 |  |  |  | 423 |  |  |  | 830,385 |
Loans modified in a troubled debt restructuring |  |  | 0 |  |  |  | 7,688 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 7,688 |
Total ending loans balance |  | $ | 253,324 |  |  | $ | 242,511 |  |  | $ | 298,628 |  |  | $ | 53,471 |  |  | $ | 4,412 |  |  | $ | 423 |  |  | $ | 852,769 |
The following tables present information related to loans individually evaluated for impairment by portfolio segment as of September 30, 2012 and December 31, 2011 and for the three and nine months ended September 30, 2012 and 2011: September 30, 2012
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance for Loan Losses Allocated |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  | $ | 6,616 |  |  | $ | 3,752 |  |  | $ | 498 |
Commercial mortgage |  |  | 6,614 |  |  |  | 6,063 |  |  |  | 1,500 |
Residential real estate |  |  | 551 |  |  |  | 459 |  |  |  | 68 |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  |  | 4,217 |  |  |  | 3,460 |  |  |  | 0 |
Commercial mortgage |  |  | 13,511 |  |  |  | 11,733 |  |  |  | 0 |
Residential real estate |  |  | 183 |  |  |  | 165 |  |  |  | 0 |
Total |  | $ | 31,692 |  |  | $ | 25,632 |  |  | $ | 2,066 |
December 31, 2011
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance for Loan Losses Allocated |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  | $ | 4,329 |  |  | $ | 2,815 |  |  | $ | 462 |
Commercial mortgage |  |  | 4,724 |  |  |  | 4,065 |  |  |  | 1,012 |
Residential real estate |  |  | 187 |  |  |  | 124 |  |  |  | 19 |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  |  | 3,892 |  |  |  | 3,300 |  |  |  | 0 |
Commercial mortgage |  |  | 13,839 |  |  |  | 12,080 |  |  |  | 0 |
Residential real estate |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total |  | $ | 26,971 |  |  | $ | 22,384 |  |  | $ | 1,493 |
|  | Three Months Ended September 30, 2012 |  |  | Nine Months Ended September 30, 2012 |
|  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Cash Basis Interest Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Cash Basis Interest Recognized |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  | $ | 4,140 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 3,406 |  |  | $ | 3 |  |  | $ | 3 |
Commercial mortgage |  |  | 6,180 |  |  |  | 3 |  |  |  | 3 |  |  |  | 5,549 |  |  |  | 3 |  |  |  | 3 |
Residential real estate |  |  | 476 |  |  |  | 3 |  |  |  | 3 |  |  |  | 322 |  |  |  | 11 |  |  |  | 11 |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  |  | 3,506 |  |  |  | 0 |  |  |  | 0 |  |  |  | 3,459 |  |  |  | 0 |  |  |  | 0 |
Commercial mortgage |  |  | 11,971 |  |  |  | 0 |  |  |  | 0 |  |  |  | 12,016 |  |  |  | 0 |  |  |  | 0 |
Residential real estate |  |  | 151 |  |  |  | 0 |  |  |  | 0 |  |  |  | 75 |  |  |  | 0 |  |  |  | 0 |
Total |  | $ | 26,424 |  |  | $ | 6 |  |  | $ | 6 |  |  | $ | 24,827 |  |  | $ | 17 |  |  | $ | 17 |
|  | Three Months Ended September 30, 2011 |  |  | Nine Months Ended September 30, 2011 |
|  | Average |  |  | Interest |  |  | Cash Basis |  |  | Average |  |  | Interest |  |  | Cash Basis |
|  | Recorded |  |  | Income |  |  | Interest |  |  | Recorded |  |  | Income |  |  | Interest |
|  | Investment |  |  | Recognized |  |  | Recognized |  |  | Investment |  |  | Recognized |  |  | Recognized |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  | $ | 1,097 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 1,330 |  |  | $ | 0 |  |  | $ | 0 |
Commercial mortgage |  |  | 6,554 |  |  |  | 0 |  |  |  | 0 |  |  |  | 8,050 |  |  |  | 16 |  |  |  | 16 |
Residential real estate |  |  | 175 |  |  |  | 3 |  |  |  | 3 |  |  |  | 193 |  |  |  | 3 |  |  |  | 3 |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural |  |  | 1,525 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,738 |  |  |  | 0 |  |  |  | 0 |
Commercial mortgage |  |  | 7,831 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,275 |  |  |  | 0 |  |  |  | 0 |
Residential real estate |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total |  | $ | 17,182 |  |  | $ | 3 |  |  | $ | 3 |  |  | $ | 15,586 |  |  | $ | 19 |  |  | $ | 19 |
The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still accruing interest by class of loans as of September 30, 2012 and December 31, 2011:
|  | September 30, 2012 |  |  | December 31, 2011 |
|  | Nonaccrual |  |  | Past Due Over 90 Days Still on Accrual |  |  | Nonaccrual |  |  | Past Due Over 90 Days Still on Accrual |
Commercial, industrial, and agricultural |  | $ | 6,669 |  |  | $ | 47 |  |  | $ | 6,949 |  |  | $ | 10 |
Commercial mortgages |  |  | 9,353 |  |  |  | 0 |  |  |  | 8,359 |  |  |  | 122 |
Residential real estate |  |  | 2,532 |  |  |  | 136 |  |  |  | 1,254 |  |  |  | 157 |
Consumer |  |  | 3 |  |  |  | 250 |  |  |  | 5 |  |  |  | 125 |
Credit cards |  |  | 0 |  |  |  | 21 |  |  |  | 0 |  |  |  | 27 |
Total |  | $ | 18,557 |  |  | $ | 454 |  |  | $ | 16,567 |  |  | $ | 441 |
Nonaccrual loans and loans past due over 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following table presents the aging of the recorded investment in past due loans as of September 30, 2012 and December 31, 2011 by class of loans. The recorded investment in loans excludes accrued interest and loan origination fees, net due to their insignificance. September 30, 2012
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater Than 90 Days Past Due |  |  | Total Past Due |  |  | Loans Not Past Due |  |  | Total |
Commercial, industrial, and agricultural |  | $ | 396 |  |  | $ | 87 |  |  | $ | 6,716 |  |  | $ | 7,199 |  |  | $ | 252,707 |  |  | $ | 259,906 |
Commercial mortgages |  |  | 2,093 |  |  |  | 1,681 |  |  |  | 7,693 |  |  |  | 11,467 |  |  |  | 245,564 |  |  |  | 257,031 |
Residential real estate |  |  | 1,299 |  |  |  | 383 |  |  |  | 2,668 |  |  |  | 4,350 |  |  |  | 331,446 |  |  |  | 335,796 |
Consumer |  |  | 576 |  |  |  | 234 |  |  |  | 253 |  |  |  | 1,063 |  |  |  | 54,916 |  |  |  | 55,979 |
Credit cards |  |  | 17 |  |  |  | 21 |  |  |  | 21 |  |  |  | 59 |  |  |  | 4,513 |  |  |  | 4,572 |
Overdrafts |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 330 |  |  |  | 330 |
Total |  | $ | 4,381 |  |  | $ | 2,406 |  |  | $ | 17,351 |  |  | $ | 24,138 |  |  | $ | 889,476 |  |  | $ | 913,614 |
December 31, 2011
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater Than 90 Days Past Due |  |  | Total Past Due |  |  | Loans Not Past Due |  |  | Total |
Commercial, industrial, and agricultural |  | $ | 239 |  |  | $ | 53 |  |  | $ | 6,959 |  |  | $ | 7,251 |  |  | $ | 246,073 |  |  | $ | 253,324 |
Commercial mortgages |  |  | 1,064 |  |  |  | 2,620 |  |  |  | 7,043 |  |  |  | 10,727 |  |  |  | 231,784 |  |  |  | 242,511 |
Residential real estate |  |  | 1,816 |  |  |  | 682 |  |  |  | 1,411 |  |  |  | 3,909 |  |  |  | 294,719 |  |  |  | 298,628 |
Consumer |  |  | 392 |  |  |  | 185 |  |  |  | 130 |  |  |  | 707 |  |  |  | 52,764 |  |  |  | 53,471 |
Credit cards |  |  | 34 |  |  |  | 19 |  |  |  | 27 |  |  |  | 80 |  |  |  | 4,332 |  |  |  | 4,412 |
Overdrafts |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 423 |  |  |  | 423 |
Total |  | $ | 3,545 |  |  | $ | 3,559 |  |  | $ | 15,570 |  |  | $ | 22,674 |  |  | $ | 830,095 |  |  | $ | 852,769 |
Troubled Debt Restructurings In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without a loan modification. This evaluation is performed using the Corporation’s internal underwriting policies. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. Except as discussed in the following paragraph, all loans modified in troubled debt restructurings are performing in accordance with their modified terms as of September 30, 2012. No principal balances were forgiven in connection with the loan restructurings that are discussed in the following paragraphs. The Corporation has allocated $712 and $228 of specific reserves to one commercial mortgage customer whose loan terms have been modified in troubled debt restructurings as of September 30, 2012 and December 31, 2011, respectively. The interest rate on the original loan was 6.60%. Due to financial difficulties experienced by the customer, the interest rate was reduced to 4.19% in the third quarter of 2010 and further reduced to 4.07% in the third quarter of 2011. In the first quarter of 2012, the customer was granted interest-only terms for six months, and in the third quarter of 2012, the customer defaulted on the loan, resulting in an additional provision for loan losses of $503 for the three and nine months ended September 30, 2012. The loan was placed on nonaccrual status effective September 30, 2012 since collection of principal and interest was considered doubtful. This loan had a total recorded investment of $1,657 and $1,662 as of September 30, 2012 and December 31, 2011, respectively. The Corporation has allocated $100 of specific reserves to one commercial mortgage customer with two loans whose terms have been modified in a troubled debt restructuring as of September 30, 2012. The interest rates on the original loans were 6.45% and 6.47%. Due to financial difficulties experienced by the customer, the interest rates on both loans were reduced to 5.75% in the first quarter of 2012, and the maturity dates were extended to 2020 and 2024, resulting in an additional provision for loan losses of $101 for the three and nine months ended September 30, 2012. These loans had a total recorded investment of $1,825 as of September 30, 2012. This commercial customer has two additional mortgage loans that were deemed to be impaired as of December 31, 2011 and whose terms were modified in a troubled debt restructuring in the first quarter of 2012. The loan payments were modified to reflect a twenty year amortization with a balloon payment due after five years. These loans had a total recorded investment of $706 and $728 and specific reserves of $459 and $465 as of September 30, 2012 and December 31, 2011, respectively. No additional provision for loan losses was required to be recorded during the three and nine months ended September 30, 2012 in connection with the loan modifications. The Corporation has a commercial mortgage customer whose loan relationships have interest-only terms that were extended during 2011. The original interest rates on the loans, which were also the market rates of interest at the time of the loan modification, were not reduced; therefore, no additional provision for loan losses was required to be recorded. These loans have a total recorded investment of $4,520 and $4,588 at September 30, 2012 and December 31, 2011, respectively. In addition, the Corporation has a commercial mortgage customer whose loan relationship was restructured due to the forgiveness of accrued interest and late charges. The original interest rate on the loan, which was also the market rate of interest at the time of the loan modification, was not reduced; therefore, no additional provision for loan losses was required to be recorded. This loan has a recorded investment of $1,390 and $1,438 at September 30, 2012 and December 31, 2011. The Corporation has a commercial customer with five loans whose terms were modified in a troubled debt restructuring in the first quarter of 2012 due to financial difficulties experienced by the customer. The outstanding balances on the five loans, which ranged in maturity from 2012 to 2014, were combined into one new loan with a five year term. The blended original interest rates on the loans, which were also the market rates of interest at the time of the loan modification, were not reduced; therefore no additional provision for loan losses was required to be recorded. This loan has a total recorded investment of $285 at September 30, 2012. The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring, and, except as disclosed on the previous page, there have been no payment defaults on loans modified in a troubled debt restructuring. Credit Quality Indicators The Corporation classifies commercial, industrial, and agricultural loans and commercial mortgage loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans with an outstanding balance greater than $1 million are analyzed at least semiannually and loans with an outstanding balance of less than $1 million are analyzed at least annually. The Corporation uses the following definitions for 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 or of the Corporation’s credit position 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 Corporation will sustain some loss if the deficiencies are not corrected. 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. Loans not rated as special mention, substandard, or doubtful are considered to be pass rated loans. All loans included in the following tables have been assigned a risk rating within 12 months of the balance sheet date. September 30, 2012
|  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
Commercial, industrial, and agricultural |  | $ | 239,052 |  |  | $ | 1,624 |  |  | $ | 19,067 |  |  | $ | 163 |  |  | $ | 259,906 |
Commercial mortgages |  |  | 232,522 |  |  |  | 2,844 |  |  |  | 20,959 |  |  |  | 706 |  |  |  | 257,031 |
Total |  | $ | 471,574 |  |  | $ | 4,468 |  |  | $ | 40,026 |  |  | $ | 869 |  |  | $ | 516,937 |
December 31, 2011
|  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Total |
Commercial, industrial, and agricultural |  | $ | 223,457 |  |  | $ | 4,176 |  |  | $ | 25,490 |  |  | $ | 201 |  |  | $ | 253,324 |
Commercial mortgages |  |  | 214,098 |  |  |  | 3,172 |  |  |  | 24,513 |  |  |  | 728 |  |  |  | 242,511 |
Total |  | $ | 437,555 |  |  | $ | 7,348 |  |  | $ | 50,003 |  |  | $ | 929 |  |  | $ | 495,835 |
The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday Financial Services Corporation (“Holiday”), a subsidiary that offers small balance unsecured and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics than are typical in the Bank’s consumer loan portfolio, are considered to be subprime loans. Holiday’s loan portfolio is summarized as follows at September 30, 2012 and December 31, 2011:
|  | September 30, 2012 |  |  | December 31, 2011 |
Consumer |  | $ | 21,031 |  |  | $ | 18,176 |
Residential real estate |  |  | 987 |  |  |  | 1,056 |
Less: unearned discount |  |  | (3,397 | ) |  |  | (2,886 | )
Total |  | $ | 18,621 |  |  | $ | 16,346 |
During the three months ended September 30, 2012, Holiday purchased the loans and other assets of a consumer discount company in Ebensburg, Pennsylvania. The purchase price was $1,248 for the performing loans and customers of the business. The purchase price resulted in Holiday recording a $75 customer relationship intangible asset which is being amortized using the straight-line method over three years. This amount is included in accrued interest receivable and other assets on the consolidated balance sheet. Goodwill of $125 was also recorded in connection with the acquisition. Due to the insignificance of the assets acquired in relation to the consolidated financial statements as a whole, no further business combination disclosures are included in the notes to consolidated financial statements. The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential real estate, consumer, and credit card loan classes, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential, consumer, and credit card loans based on payment activity as of September 30, 2012 and December 31, 2011:
|  | September 30, 2012 |  |  | December 31, 2011 |
|  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |  |  | Residential Real Estate |  |  | Consumer |  |  | Credit Cards |
Performing |  | $ | 333,128 |  |  | $ | 55,726 |  |  | $ | 4,551 |  |  | $ | 297,217 |  |  | $ | 53,341 |  |  | $ | 4,385 |
Non-performing |  |  | 2,668 |  |  |  | 253 |  |  |  | 21 |  |  |  | 1,411 |  |  |  | 130 |  |  |  | 27 |
Total |  | $ | 335,796 |  |  | $ | 55,979 |  |  | $ | 4,572 |  |  | $ | 298,628 |  |  | $ | 53,471 |  |  | $ | 4,412 |
The Corporation considers all overdraft loans to be performing loans given their short-term duration.

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