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Loans | 9 Months Ended
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Sep. 30, 2019
Receivables [Abstract] |
Loans | LOANS Total net loans at September 30, 2019 and December 31, 2018 are summarized as follows:
| September 30, 2019 |  | December 31, 2018
Commercial, industrial, and agricultural | $ | 1,033,631 |  |  | $ | 916,297 |
Commercial mortgages | 788,974 |  |  | 697,776 |
Residential real estate | 802,331 |  |  | 771,309 |
Consumer | 121,598 |  |  | 86,035 |
Credit cards | 7,393 |  |  | 7,623 |
Overdrafts | 642 |  |  | 308 |
Less: unearned discount | (5,067 | ) |  | (4,791 | )
allowance for loan losses | (20,207 | ) |  | (19,704 | )
Loans, net | $ | 2,729,295 |  |  | $ | 2,454,853 |
At September 30, 2019 and December 31, 2018, net unamortized loan fees of $3,447 and $3,175, 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 northwest Pennsylvania, central and northeast Ohio, and western New York. 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. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors. Pursuant to the Corporation’s lending policies, management considers a variety of factors when determining whether to extend credit to a customer, including loan-to-value ratios, FICO scores, quality of the borrower’s financial statements, and the ability to obtain personal guarantees. Commercial, industrial, and agricultural loans comprised 38% and 37% of the Corporation’s total loan portfolio at September 30, 2019 and December 31, 2018, respectively. Commercial mortgage loans comprised 29% and 28% of the Corporation’s total loan portfolio at September 30, 2019 and December 31, 2018, respectively. Management assigns a risk rating to all commercial loans at loan origination. The loan-to-value policy guidelines for commercial, industrial, and agricultural loans are generally a maximum of 80% of the value of business equipment, a maximum of 70% of the value of accounts receivable, and a maximum of 60% of the value of business inventory at loan origination. The loan-to-value policy guideline for commercial mortgage loans is generally a maximum of 85% of the appraised value of the real estate. Residential real estate loans comprised 29% and 31% of the Corporation’s total loan portfolio at September 30, 2019 and December 31, 2018, respectively. The loan-to-value policy guidelines for residential real estate loans vary depending on the collateral position and the specific type of loan. Higher loan-to-value terms may be approved with the appropriate private mortgage insurance coverage. The Corporation also originates and prices loans for sale into the secondary market. Loans so originated are classified as loans held for sale and are excluded from residential real estate loans reported above. The rationale for these sales is to mitigate interest rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing the loan. The Corporation also offers a variety of unsecured and secured consumer loan and credit card products which represented less than 5% of the total loan portfolio at both September 30, 2019 and December 31, 2018. Terms and collateral requirements vary depending on the size and nature of the loan. Transactions in the allowance for loan losses for the three months ended September 30, 2019 were as follows:
| Commercial,Industrial, and Agricultural |  | Commercial Mortgages |  | Residential Real Estate |  | Consumer |  | Credit Cards |  | Overdrafts |  | Total
Allowance for loan losses, July 1, 2019 | $ | 8,108 |  |  | $ | 9,538 |  |  | $ | 1,403 |  |  | $ | 2,141 |  |  | $ | 87 |  |  | $ | 160 |  |  | $ | 21,437 |
Charge-offs | (160 | ) |  | (2,650 | ) |  | (38 | ) |  | (547 | ) |  | (3 | ) |  | (113 | ) |  | (3,511 | )
Recoveries | 5 |  |  | 65 |  |  | 5 |  |  | 58 |  |  | 6 |  |  | 24 |  |  | 163 |
Provision (benefit) for loan losses | 997 |  |  | 30 |  |  | 116 |  |  | 693 |  |  | 15 |  |  | 267 |  |  | 2,118 |
Allowance for loan losses, September 30, 2019 | $ | 8,950 |  |  | $ | 6,983 |  |  | $ | 1,486 |  |  | $ | 2,345 |  |  | $ | 105 |  |  | $ | 338 |  |  | $ | 20,207 |
Transactions in the allowance for loan losses for the nine months ended September 30, 2019 were as follows:
| Commercial,Industrial, and Agricultural |  | Commercial Mortgages |  | Residential Real Estate |  | Consumer |  | Credit Cards |  | Overdrafts |  | Total
Allowance for loan losses, January 1, 2019 | $ | 7,341 |  |  | $ | 7,490 |  |  | $ | 2,156 |  |  | $ | 2,377 |  |  | $ | 103 |  |  | $ | 237 |  |  | $ | 19,704 |
Charge-offs | (160 | ) |  | (2,652 | ) |  | (282 | ) |  | (1,609 | ) |  | (55 | ) |  | (329 | ) |  | (5,087 | )
Recoveries | 13 |  |  | 66 |  |  | 72 |  |  | 132 |  |  | 12 |  |  | 83 |  |  | 378 |
Provision (benefit) for loan losses | 1,756 |  |  | 2,079 |  |  | (460 | ) |  | 1,445 |  |  | 45 |  |  | 347 |  |  | 5,212 |
Allowance for loan losses, September 30, 2019 | $ | 8,950 |  |  | $ | 6,983 |  |  | $ | 1,486 |  |  | $ | 2,345 |  |  | $ | 105 |  |  | $ | 338 |  |  | $ | 20,207 |
Transactions in the allowance for loan losses for the three months ended September 30, 2018 were as follows:
| Commercial, Industrial, and Agricultural |  | Commercial Mortgages |  | Residential Real Estate |  | Consumer |  | Credit Cards |  | Overdrafts |  | Total
Allowance for loan losses, July 1, 2018 | $ | 7,143 |  |  | $ | 10,615 |  |  | $ | 1,900 |  |  | $ | 2,156 |  |  | $ | 101 |  |  | $ | 207 |  |  | $ | 22,122 |
Charge-offs | (30 | ) |  | 0 |  |  | (212 | ) |  | (469 | ) |  | (8 | ) |  | (94 | ) |  | (813 | )
Recoveries | 3 |  |  | 0 |  |  | 55 |  |  | 28 |  |  | 3 |  |  | 17 |  |  | 106 |
Provision (benefit) for loan losses | (536 | ) |  | 682 |  |  | 235 |  |  | 608 |  |  | 11 |  |  | 95 |  |  | 1,095 |
Allowance for loan losses, September 30, 2018 | $ | 6,580 |  |  | $ | 11,297 |  |  | $ | 1,978 |  |  | $ | 2,323 |  |  | $ | 107 |  |  | $ | 225 |  |  | $ | 22,510 |
Transactions in the allowance for loan losses for the nine months ended September 30, 2018 were as follows:
| Commercial, Industrial, and Agricultural |  | Commercial Mortgages |  | Residential Real Estate |  | Consumer |  | Credit Cards |  | Overdrafts |  | Total
Allowance for loan losses, January 1, 2018 | $ | 6,160 |  |  | $ | 9,007 |  |  | $ | 2,033 |  |  | $ | 2,179 |  |  | $ | 120 |  |  | $ | 194 |  |  | $ | 19,693 |
Charge-offs | (61 | ) |  | 0 |  |  | (289 | ) |  | (1,610 | ) |  | (53 | ) |  | (236 | ) |  | (2,249 | )
Recoveries | 165 |  |  | 0 |  |  | 67 |  |  | 112 |  |  | 27 |  |  | 64 |  |  | 435 |
Provision (benefit) for loan losses | 316 |  |  | 2,290 |  |  | 167 |  |  | 1,642 |  |  | 13 |  |  | 203 |  |  | 4,631 |
Allowance for loan losses, September 30, 2018 | $ | 6,580 |  |  | $ | 11,297 |  |  | $ | 1,978 |  |  | $ | 2,323 |  |  | $ | 107 |  |  | $ | 225 |  |  | $ | 22,510 |
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, 2019 and December 31, 2018. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance. September 30, 2019
| 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 | $ | 766 |  |  | $ | 2,054 |  |  | $ | 29 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 2,849 |
Collectively evaluated for impairment | 8,148 |  |  | 4,405 |  |  | 1,457 |  |  | 2,345 |  |  | 105 |  |  | 338 |  |  | 16,798 |
Acquired with deteriorated credit quality | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Modified in a troubled debt restructuring | 36 |  |  | 524 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 560 |
Total ending allowance balance | $ | 8,950 |  |  | $ | 6,983 |  |  | $ | 1,486 |  |  | $ | 2,345 |  |  | $ | 105 |  |  | $ | 338 |  |  | $ | 20,207 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 2,898 |  |  | $ | 3,110 |  |  | $ | 489 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 6,497 |
Collectively evaluated for impairment | 1,027,732 |  |  | 780,484 |  |  | 801,842 |  |  | 121,598 |  |  | 7,393 |  |  | 642 |  |  | 2,739,691 |
Acquired with deteriorated credit quality | 0 |  |  | 534 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 534 |
Modified in a troubled debt restructuring | 3,001 |  |  | 4,846 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 7,847 |
Total ending loans balance | $ | 1,033,631 |  |  | $ | 788,974 |  |  | $ | 802,331 |  |  | $ | 121,598 |  |  | $ | 7,393 |  |  | $ | 642 |  |  | $ | 2,754,569 |
December 31, 2018
| 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 | $ | 54 |  |  | $ | 4 |  |  | $ | 100 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 10 |  |  | $ | 168 |
Collectively evaluated for impairment | 7,183 |  |  | 3,036 |  |  | 2,056 |  |  | 2,377 |  |  | 103 |  |  | 227 |  |  | 14,982 |
Acquired with deteriorated credit quality | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Modified in a troubled debt restructuring | 104 |  |  | 4,450 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 4,554 |
Total ending allowance balance | $ | 7,341 |  |  | $ | 7,490 |  |  | $ | 2,156 |  |  | $ | 2,377 |  |  | $ | 103 |  |  | $ | 237 |  |  | $ | 19,704 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 1,334 |  |  | $ | 1,446 |  |  | $ | 502 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 10 |  |  | $ | 3,292 |
Collectively evaluated for impairment | 910,386 |  |  | 685,714 |  |  | 770,807 |  |  | 86,035 |  |  | 7,623 |  |  | 298 |  |  | 2,460,863 |
Acquired with deteriorated credit quality | 0 |  |  | 567 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 567 |
Modified in a troubled debt restructuring | 4,577 |  |  | 10,049 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 14,626 |
Total ending loans balance | $ | 916,297 |  |  | $ | 697,776 |  |  | $ | 771,309 |  |  | $ | 86,035 |  |  | $ | 7,623 |  |  | $ | 308 |  |  | $ | 2,479,348 |
The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of September 30, 2019 and December 31, 2018 and for the three and nine months ended September 30, 2019 and 2018: September 30, 2019
| Unpaid Principal Balance |  | Recorded Investment |  | Allowance for Loan Losses Allocated
With an allowance recorded: |  |  |  |  |
Commercial, industrial, and agricultural | $ | 3,021 |  |  | $ | 1,691 |  |  | $ | 802 |
Commercial mortgage | 8,055 |  |  | 6,258 |  |  | 2,578 |
Residential real estate | 489 |  |  | 489 |  |  | 29 |
With no related allowance recorded: |  |  |  |  |
Commercial, industrial, and agricultural | 5,258 |  |  | 4,208 |  |  | 0 |
Commercial mortgage | 1,423 |  |  | 1,698 |  |  | 0 |
Residential real estate | 0 |  |  | 0 |  |  | 0 |
Total | $ | 18,246 |  |  | $ | 14,344 |  |  | $ | 3,409 |
December 31, 2018
| Unpaid Principal Balance |  | Recorded Investment |  | Allowance for Loan Losses Allocated
With an allowance recorded: |  |  |  |  |
Commercial, industrial, and agricultural | $ | 3,053 |  |  | $ | 3,037 |  |  | $ | 158 |
Commercial mortgage | 10,799 |  |  | 6,709 |  |  | 4,454 |
Residential real estate | 502 |  |  | 502 |  |  | 100 |
Overdrafts | 10 |  |  | 10 |  |  | 10 |
With no related allowance recorded: |  |  |  |  |
Commercial, industrial, and agricultural | 3,684 |  |  | 2,874 |  |  | 0 |
Commercial mortgage | 5,659 |  |  | 4,786 |  |  | 0 |
Residential real estate | 0 |  |  | 0 |  |  | 0 |
Overdrafts | 0 |  |  | 0 |  |  | 0 |
Total | $ | 23,707 |  |  | $ | 17,918 |  |  | $ | 4,722 |
The unpaid principal balance of impaired loans includes the Corporation’s recorded investment in the loan and amounts that have been charged off.
| Three months ended September 30, 2019 |  | Three months ended September 30, 2018
| 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 | $ | 1,480 |  |  | $ | 32 |  |  | $ | 32 |  |  | $ | 3,460 |  |  | $ | 11 |  |  | $ | 11 |
Commercial mortgage | 7,024 |  |  | 12 |  |  | 12 |  |  | 9,042 |  |  | 37 |  |  | 37 |
Residential real estate | 245 |  |  | 8 |  |  | 8 |  |  | 0 |  |  | 0 |  |  | 0 |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural | 3,977 |  |  | 42 |  |  | 42 |  |  | 5,569 |  |  | 69 |  |  | 69 |
Commercial mortgage | 2,435 |  |  | 29 |  |  | 29 |  |  | 5,153 |  |  | 20 |  |  | 20 |
Residential real estate | 236 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Total | $ | 15,397 |  |  | $ | 123 |  |  | $ | 123 |  |  | $ | 23,224 |  |  | $ | 137 |  |  | $ | 137 |
| Nine months ended September 30, 2019 |  | Nine months ended September 30, 2018
| 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 | $ | 1,819 |  |  | $ | 74 |  |  | $ | 74 |  |  | $ | 2,672 |  |  | $ | 54 |  |  | $ | 54 |
Commercial mortgage | 7,145 |  |  | 100 |  |  | 100 |  |  | 9,147 |  |  | 111 |  |  | 111 |
Residential real estate | 122 |  |  | 8 |  |  | 8 |  |  | 0 |  |  | 0 |  |  | 0 |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial, industrial, and agricultural | 3,676 |  |  | 128 |  |  | 128 |  |  | 5,084 |  |  | 160 |  |  | 160 |
Commercial mortgage | 3,250 |  |  | 62 |  |  | 62 |  |  | 4,511 |  |  | 66 |  |  | 66 |
Residential real estate | 368 |  |  | 11 |  |  | 11 |  |  | 0 |  |  | 0 |  |  | 0 |
Total | $ | 16,380 |  |  | $ | 383 |  |  | $ | 383 |  |  | $ | 21,414 |  |  | $ | 391 |  |  | $ | 391 |
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, 2019 and December 31, 2018:
| September 30, 2019 |  | December 31, 2018
| Nonaccrual |  | Past Due Over 90 Days Still on Accrual |  | Nonaccrual |  | Past Due Over 90 Days Still on Accrual
Commercial, industrial, and agricultural | $ | 3,994 |  |  | $ | 443 |  |  | $ | 2,076 |  |  | $ | 487 |
Commercial mortgages | 5,299 |  |  | 0 |  |  | 6,329 |  |  | 53 |
Residential real estate | 4,779 |  |  | 62 |  |  | 5,187 |  |  | 299 |
Consumer | 737 |  |  | 0 |  |  | 670 |  |  | 43 |
Credit cards | 0 |  |  | 45 |  |  | 0 |  |  | 5 |
Total | $ | 14,809 |  |  | $ | 550 |  |  | $ | 14,262 |  |  | $ | 887 |
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, 2019 and December 31, 2018 by class of loans. September 30, 2019
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 89 Days Past Due |  | Total Past Due |  | Loans Not Past Due |  | Total
Commercial, industrial, and agricultural | $ | 1,508 |  |  | $ | 2,041 |  |  | $ | 4,080 |  |  | $ | 7,629 |  |  | $ | 1,026,002 |  |  | $ | 1,033,631 |
Commercial mortgages | 230 |  |  | 0 |  |  | 1,868 |  |  | 2,098 |  |  | 786,876 |  |  | 788,974 |
Residential real estate | 2,759 |  |  | 759 |  |  | 2,415 |  |  | 5,933 |  |  | 796,398 |  |  | 802,331 |
Consumer | 472 |  |  | 230 |  |  | 317 |  |  | 1,019 |  |  | 120,579 |  |  | 121,598 |
Credit cards | 53 |  |  | 48 |  |  | 45 |  |  | 146 |  |  | 7,247 |  |  | 7,393 |
Overdrafts | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 642 |  |  | 642 |
Total | $ | 5,022 |  |  | $ | 3,078 |  |  | $ | 8,725 |  |  | $ | 16,825 |  |  | $ | 2,737,744 |  |  | $ | 2,754,569 |
December 31, 2018
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 89 Days Past Due |  | Total Past Due |  | Loans Not Past Due |  | Total
Commercial, industrial, and agricultural | $ | 2,339 |  |  | $ | 9 |  |  | $ | 2,264 |  |  | $ | 4,612 |  |  | $ | 911,685 |  |  | $ | 916,297 |
Commercial mortgages | 758 |  |  | 3,055 |  |  | 283 |  |  | 4,096 |  |  | 693,680 |  |  | 697,776 |
Residential real estate | 3,982 |  |  | 1,257 |  |  | 3,988 |  |  | 9,227 |  |  | 762,082 |  |  | 771,309 |
Consumer | 470 |  |  | 282 |  |  | 363 |  |  | 1,115 |  |  | 84,920 |  |  | 86,035 |
Credit cards | 59 |  |  | 15 |  |  | 5 |  |  | 79 |  |  | 7,544 |  |  | 7,623 |
Overdrafts | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 308 |  |  | 308 |
Total | $ | 7,608 |  |  | $ | 4,618 |  |  | $ | 6,903 |  |  | $ | 19,129 |  |  | $ | 2,460,219 |  |  | $ | 2,479,348 |
Troubled Debt Restructurings The terms of certain loans have been modified as troubled debt restructurings. The modification of the terms of such loans included either or both of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. The following table presents the number of loans, loan balances, and specific reserves for loans that have been restructured in a troubled debt restructuring as of September 30, 2019 and December 31, 2018.
| September 30, 2019 |  | December 31, 2018
| Number of Loans |  | Loan Balance |  | Specific Reserve |  | Number of Loans |  | Loan Balance |  | Specific Reserve
Commercial, industrial, and agricultural | 10 |  |  | $ | 3,197 |  |  | $ | 38 |  |  | 10 |  |  | $ | 4,577 |  |  | $ | 104 |
Commercial mortgages | 13 |  |  | 7,002 |  |  | 536 |  |  | 15 |  |  | 10,049 |  |  | 4,450 |
Residential real estate | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Consumer | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Credit cards | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Total | 23 |  |  | $ | 10,199 |  |  | $ | 574 |  |  | 25 |  |  | $ | 14,626 |  |  | $ | 4,554 |
There was one loan modified as troubled debt restructurings during the three and nine months ended September 30, 2019 and four loans modified as troubled debt restructurings during the nine months ended September 30, 2018. There were no loans modified as troubled debt restructurings during the three months ended September 30, 2018.
| Three and nine months ended September 30, 2019 |  | Nine months ended September 30, 2018
| Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
Commercial, industrial, and agricultural | 0 |  |  | $ | 0 |  |  | $ | 0 |  |  | 0 |  |  | $ | 0 |  |  | $ | 0 |
Commercial mortgages | 1 |  |  | 383 |  |  | 383 |  |  | 4 |  |  | 1,091 |  |  | 1,091 |
Residential real estate | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Consumer | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Credit cards | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Total | 1 |  |  | $ | 383 |  |  | $ | 383 |  |  | 4 |  |  | $ | 1,091 |  |  | $ | 1,091 |
A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no loans modified as troubled debt restructurings for which there was a payment default within a twelve-month cycle following the modification during the period ended September 30, 2019 and September 30, 2018. There were no principal balances forgiven in connection with the loan restructurings. In order to determine whether a borrower is experiencing financial difficulty, the Corporation evaluates the probability that the borrower will default on any of its debt payments in the foreseeable future without a loan modification. This evaluation is performed using the Corporation’s internal underwriting policies. The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring. Generally, nonperforming troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. 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. 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, 2019
| Pass |  | Special Mention |  | Substandard |  | Doubtful |  | Total
Commercial, industrial, and agricultural | $ | 997,103 |  |  | $ | 19,197 |  |  | $ | 17,331 |  |  | $ | 0 |  |  | $ | 1,033,631 |
Commercial mortgages | 770,873 |  |  | 9,753 |  |  | 8,348 |  |  | 0 |  |  | 788,974 |
Total | $ | 1,767,976 |  |  | $ | 28,950 |  |  | $ | 25,679 |  |  | $ | 0 |  |  | $ | 1,822,605 |
December 31, 2018
| Pass |  | Special Mention |  | Substandard |  | Doubtful |  | Total
Commercial, industrial, and agricultural | $ | 890,360 |  |  | $ | 10,484 |  |  | $ | 15,453 |  |  | $ | 0 |  |  | $ | 916,297 |
Commercial mortgages | 684,806 |  |  | 3,236 |  |  | 9,734 |  |  | 0 |  |  | 697,776 |
Total | $ | 1,575,166 |  |  | $ | 13,720 |  |  | $ | 25,187 |  |  | $ | 0 |  |  | $ | 1,614,073 |
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, 2019 and December 31, 2018:
| September 30, 2019 |  | December 31, 2018
| Residential Real Estate |  | Consumer |  | Credit Cards |  | Residential Real Estate |  | Consumer |  | Credit Cards
Performing | $ | 797,490 |  |  | $ | 120,861 |  |  | $ | 7,348 |  |  | $ | 765,823 |  |  | $ | 85,322 |  |  | $ | 7,618 |
Nonperforming | 4,841 |  |  | 737 |  |  | 45 |  |  | 5,486 |  |  | 713 |  |  | 5 |
Total | $ | 802,331 |  |  | $ | 121,598 |  |  | $ | 7,393 |  |  | $ | 771,309 |  |  | $ | 86,035 |  |  | $ | 7,623 |
The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday Financial Services Corporation (“Holiday”) are considered to be subprime loans. Holiday is 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. Holiday’s loan portfolio is summarized as follows at September 30, 2019 and December 31, 2018:
| 9/30/2019 |  | 12/31/2018
Consumer | $ | 27,664 |  |  | $ | 26,568 |
Less: unearned discount | (5,067 | ) |  | (4,791 | )
Total | $ | 22,597 |  |  | $ | 21,777 |

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