Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses

Loan and lease receivables consist of the following:



	June 30, 2019		December 31, 2018
	(In Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	210,471	$	203,476
Commercial real estate — non-owner occupied	477,740		484,427
Land development	49,000		42,666
Construction	185,347		161,562
Multi-family	195,363		167,868
1-4 family	31,656		34,340
Total commercial real estate	1,149,577		1,094,339
Commercial and industrial	510,448		462,321
Direct financing leases, net	30,365		33,170
Consumer and other:
Home equity and second mortgages	7,513		8,438
Other	22,896		20,789
Total consumer and other	30,409		29,227
Total gross loans and leases receivable	1,720,799		1,619,057
Less:
Allowance for loan and lease losses	19,819		20,425
Deferred loan fees	823		1,402
Loans and leases receivable, net	$	1,700,157	$	1,597,230

The total amount of the Corporation’s ownership of SBA loans comprised of the following:



	June 30, 2019		December 31, 2018
	(In Thousands)
Retained, unguaranteed portions of sold SBA loans	$	22,578	$	23,898
Other SBA loans⁽¹⁾	25,039		22,024
Total SBA loans	$	47,617	$	45,922


(1)	Primarily consisted of SBA CAPLine, Express, and impaired loans that were repurchased from the secondary market, all of which are not saleable.

As of June 30, 2019 and December 31, 2018, $17.1 million and $13.2 million of SBA loans were considered impaired, respectively.

Loans transferred to third parties consist of the guaranteed portions of SBA loans which the Corporation sold in the secondary market and participation interests in other, non-SBA originated loans. The total principal amount of the guaranteed portions of SBA loans sold during the three months ended June 30, 2019 and 2018 was $3.3 million and $3.2 million, respectively. The total principal amount of the guaranteed portions of SBA loans sold during the six months ended June 30, 2019 and 2018 was $5.6 million and $6.3 million, respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three and six months ended June 30, 2019 and 2018 have been derecognized in the unaudited Consolidated Financial Statements. The guaranteed portions of SBA loans were transferred at their fair value and the related gain was recognized upon the transfer as non-interest income in the unaudited Consolidated Financial Statements. The total outstanding balance of sold SBA loans at June 30, 2019 and December 31, 2018 was $76.0 million and $83.3 million, respectively.

The total principal amount of transferred participation interests in other, non-SBA originated loans during the three months ended June 30, 2019 and 2018 was $17.2 million and $14.8 million, respectively. The total principal amount of transferred participation interests in other originated commercial loans during the six months ended June 30, 2019 and 2018 was $24.0 million and $34.4 million, respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer. No gain or loss was recognized on participation interests in other, non-SBA originated loans as they were transferred at or near the date of loan origination and the payments received for servicing the portion of the loans participated represents adequate compensation. The total outstanding balance of these transferred loans at June 30, 2019 and December 31, 2018 was $135.6 million and $129.7 million, respectively. As of June 30, 2019 and December 31, 2018, the total amount of the Corporation’s partial ownership of these transferred loans on the unaudited Consolidated Balance Sheets was $225.8 million and $208.9 million, respectively. No loans in this participation portfolio were considered impaired as of June 30, 2019 and December 31, 2018. The Corporation does not share in the participant’s portion of any potential charge-offs. The total amount of loan participations purchased on the unaudited Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018 was $531,000 and $569,000, respectively.

The following tables illustrate ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators:



	June 30, 2019
	Category
	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	178,451		$	16,454		$	10,402		$	5,164		$	210,471
Commercial real estate — non-owner occupied	436,422			39,506			1,812			—			477,740
Land development	46,315			928			—			1,757			49,000
Construction	185,181			—			166			—			185,347
Multi-family	183,788			11,575			—			—			195,363
1-4 family	30,853			92			211			500			31,656
Total commercial real estate	1,061,010			68,555			12,591			7,421			1,149,577
Commercial and industrial	411,133			27,855			53,050			18,410			510,448
Direct financing leases, net	23,196			3,816			3,353			—			30,365
Consumer and other:
Home equity and second mortgages	7,346			71			94			2			7,513
Other	22,714			—			—			182			22,896
Total consumer and other	30,060			71			94			184			30,409
Total gross loans and leases receivable	$	1,525,399		$	100,297		$	69,088		$	26,015		$	1,720,799
Category as a % of total portfolio	88.64		%	5.83		%	4.02		%	1.51		%	100.00		%



	December 31, 2018
	Category
	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	177,222		$	15,085		$	5,506		$	5,663		$	203,476
Commercial real estate — non-owner occupied	458,185			24,873			1,338			31			484,427
Land development	39,472			981			—			2,213			42,666
Construction	161,360			—			202			—			161,562
Multi-family	167,868			—			—			—			167,868
1-4 family	32,004			1,451			707			178			34,340
Total commercial real estate	1,036,111			42,390			7,753			8,085			1,094,339
Commercial and industrial	374,371			19,370			51,474			17,106			462,321
Direct financing leases, net	26,013			6,090			1,067			—			33,170
Consumer and other:
Home equity and second mortgages	8,385			3			50			—			8,438
Other	20,499			—			—			290			20,789
Total consumer and other	28,884			3			50			290			29,227
Total gross loans and leases receivable	$	1,465,379		$	67,853		$	60,344		$	25,481		$	1,619,057
Category as a % of total portfolio	90.51		%	4.19		%	3.73		%	1.57		%	100.00		%

Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from the Corporation’s borrowers, or as other circumstances dictate. The Corporation primarily uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition and are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. In addition to its nine grade risk rating system, the Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management.

Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrowers’ management team, or the industry in which the borrower operates. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of its personal relationships with such borrowers, and continued review of such borrowers’ compliance with the terms of their respective agreements.

Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends, or collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by subcommittees of the Bank’s Loan Committee.

Category III — Loans and leases in this category are identified by management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Bank. Category III loans and leases generally exhibit undesirable characteristics, such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all contractual principal and interest in accordance with the original terms of the contracts relating to the loans and leases in this category, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored by management and subcommittees of the Bank’s Loan Committee on a monthly basis.

Category IV — Loans and leases in this category are considered to be impaired. Impaired loans and leases, with the exception of performing troubled debt restructurings, have been placed on non-accrual as management has determined that it is unlikely that the Bank will receive the contractual principal and interest in accordance with the original terms of the agreement. Impaired loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually for impaired loans and leases. External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded to reflect the magnitude of the impairment. Loans and leases in this category are monitored by management and subcommittees of the Bank’s Loan Committee on a monthly basis.

The delinquency aging of the loan and lease portfolio by class of receivable was as follows:



	June 30, 2019
	30-59 Days Past Due			60-89 Days Past Due			Greater Than 90 Days Past Due			Total Past Due			Current				Total Loans and Leases
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	205,307			$	205,307
Non-owner occupied	—			—			—			—			477,740				477,740
Land development	—			—			—			—			47,243				47,243
Construction	—			—			—			—			185,347				185,347
Multi-family	—			—			—			—			195,363				195,363
1-4 family	—			—			—			—			31,307				31,307
Commercial and industrial	1,996			14			—			2,010			490,028				492,038
Direct financing leases, net	—			—			—			—			30,365				30,365
Consumer and other:
Home equity and second mortgages	—			—			—			—			7,511				7,511
Other	—			—			—			—			22,714				22,714
Total	1,996			14			—			2,010			1,692,925				1,694,935
Non-accruing loans and leases
Commercial real estate:
Owner occupied	—			350			4,814			5,164			—				5,164
Non-owner occupied	—			—			—			—			—				—
Land development	—			—			—			—			1,757				1,757
Construction	—			—			—			—			—				—
Multi-family	—			—			—			—			—				—
1-4 family	349			—			—			349			—				349
Commercial and industrial	86			83			9,996			10,165			8,245				18,410
Direct financing leases, net	—			—			—			—			—				—
Consumer and other:
Home equity and second mortgages	—			—			2			2			—				2
Other	—			—			170			170			12				182
Total	435			433			14,982			15,850			10,014			—	25,864
Total loans and leases
Commercial real estate:
Owner occupied	—			350			4,814			5,164			205,307				210,471
Non-owner occupied	—			—			—			—			477,740				477,740
Land development	—			—			—			—			49,000				49,000
Construction	—			—			—			—			185,347				185,347
Multi-family	—			—			—			—			195,363				195,363
1-4 family	349			—			—			349			31,307				31,656
Commercial and industrial	2,082			97			9,996			12,175			498,273				510,448
Direct financing leases, net	—			—			—			—			30,365				30,365
Consumer and other:
Home equity and second mortgages	—			—			2			2			7,511				7,513
Other	—			—			170			170			22,726				22,896
Total	$	2,431		$	447		$	14,982		$	17,860		$	1,702,939			$	1,720,799
Percent of portfolio	0.14		%	0.03		%	0.87		%	1.04		%	98.96		%		100.00		%



	December 31, 2018
	30-59 Days Past Due			60-89 Days Past Due			Greater Than 90 Days Past Due			Total Past Due			Current			Total Loans and Leases
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	157		$	—		$	—		$	157		$	197,656		$	197,813
Non-owner occupied	—			2,272			—			2,272			482,124			484,396
Land development	—			—			—			—			40,453			40,453
Construction	14,824			—			—			14,824			146,738			161,562
Multi-family	—			—			—			—			167,868			167,868
1-4 family	363			60			—			423			33,917			34,340
Commercial and industrial	826			247			—			1,073			444,144			445,217
Direct financing leases, net	—			—			—			—			33,170			33,170
Consumer and other:
Home equity and second mortgages	—			—			—			—			8,438			8,438
Other	—			—			—			—			20,499			20,499
Total	16,170			2,579			—			18,749			1,575,007			1,593,756
Non-accruing loans and leases
Commercial real estate:
Owner occupied	483			—			5,180			5,663			—			5,663
Non-owner occupied	—			—			31			31			—			31
Land development	—			—			119			119			2,094			2,213
Construction	—			—			—			—			—			—
Multi-family	—			—			—			—			—			—
1-4 family	—			—			—			—			—			—
Commercial and industrial	2,322			—			12,108			14,430			2,674			17,104
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			—			—			—			—
Other	—			—			279			279			11			290
Total	2,805			—			17,717			20,522			4,779			25,301
Total loans and leases
Commercial real estate:
Owner occupied	640			—			5,180			5,820			197,656			203,476
Non-owner occupied	—			2,272			31			2,303			482,124			484,427
Land development	—			—			119			119			42,547			42,666
Construction	14,824			—			—			14,824			146,738			161,562
Multi-family	—			—			—			—			167,868			167,868
1-4 family	363			60			—			423			33,917			34,340
Commercial and industrial	3,148			247			12,108			15,503			446,818			462,321
Direct financing leases, net	—			—			—			—			33,170			33,170
Consumer and other:
Home equity and second mortgages	—			—			—			—			8,438			8,438
Other	—			—			279			279			20,510			20,789
Total	$	18,975		$	2,579		$	17,717		$	39,271		$	1,579,786		$	1,619,057
Percent of portfolio	1.17		%	0.16		%	1.09		%	2.42		%	97.58		%	100.00		%

The Corporation’s total impaired assets consisted of the following:



	June 30, 2019		December 31, 2018
	(In Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	5,164	$	5,663
Commercial real estate — non-owner occupied	—		31
Land development	1,757		2,213
Construction	—		—
Multi-family	—		—
1-4 family	349		—
Total non-accrual commercial real estate	7,270		7,907
Commercial and industrial	18,410		17,104
Direct financing leases, net	—		—
Consumer and other:
Home equity and second mortgages	2		—
Other	182		290
Total non-accrual consumer and other loans	184		290
Total non-accrual loans and leases	25,864		25,301
Foreclosed properties, net	2,660		2,547
Total non-performing assets	28,524		27,848
Performing troubled debt restructurings	151		180
Total impaired assets	$	28,675	$	28,028



	June 30, 2019		December 31, 2018
Total non-accrual loans and leases to gross loans and leases	1.50	%	1.56	%
Total non-performing assets to total gross loans and leases plus foreclosed properties, net	1.66		1.72
Total non-performing assets to total assets	1.38		1.42
Allowance for loan and lease losses to gross loans and leases	1.15		1.26
Allowance for loan and lease losses to non-accrual loans and leases	76.64		80.73

As of June 30, 2019 and December 31, 2018, $16.4 million and $7.6 million of the non-accrual loans and leases were considered troubled debt restructurings, respectively. There were no unfunded commitments associated with troubled debt restructured loans and leases as of June 30, 2019.

All loans and leases modified as a troubled debt restructuring are measured for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a default, is considered in the determination of an appropriate level of the allowance for loan and lease losses.

The following table provides the number of loans modified in a troubled debt restructuring and the pre- and post-modification recorded investment by class of receivable:



	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2019
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Commercial and industrial	9	$	5,281	$	5,281	13	$	7,359	$	7,284

During the three and six months ended June 30, 2018, no loans were modified to a troubled debt restructuring. There were two commercial and industrial loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the six months ended June 30, 2019 in the amount of $2.8 million. There were no loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the six months ended June 30, 2018.

The following represents additional information regarding the Corporation’s impaired loans and leases, including performing troubled debt restructurings, by class:



	As of and for the Six Months Ended June 30, 2019
	Recorded Investment⁽¹⁾		Unpaid Principal Balance			Impairment Reserve		Average Recorded Investment⁽²⁾			Foregone Interest Income			Interest Income Recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	773	$	773		$	—	$	4,579		$	38		$	355	$	(317	)
Non-owner occupied	—		—			—		116			1			—		1
Land development	1,757		6,054			—		2,072			30			6		24
Construction	—		—			—		—			—			—		—
Multi-family	—		—			—		—			—			—		—
1-4 family	500		506			—		228			8			33		(25		)
Commercial and industrial	4,822		5,986			—		13,094			367			308		59
Direct financing leases, net	—		—			—		—			—			—		—
Consumer and other:
Home equity and second mortgages	2		2			—		—			—			7		(7		)
Other	170		836			—		210			25			—		25
Total	8,024		14,157			—		20,299			469			709		(240		)
With impairment reserve recorded:
Commercial real estate:
Owner occupied	4,391		5,750			809		705			214			—		214
Non-owner occupied	—		—			—		—			—			—		—
Land development	—		—		—	—		—		—	—		—	—		—
Construction	—		—		—	—		—		—	—		—	—		—
Multi-family	—		—			—		—			—			—		—
1-4 family	—		—			—		—			—			—		—
Commercial and industrial	13,588		14,246			3,184		3,489			728			—		728
Direct financing leases, net	—		—			—		—			—			—		—
Consumer and other:
Home equity and second mortgages	—		—			—		—			—			—		—
Other	12		12			12		15			—			—		—
Total	17,991		20,008			4,005		4,209			942			—		942
Total:
Commercial real estate:
Owner occupied	5,164		6,523			809		5,284			252			355		(103		)
Non-owner occupied	—		—			—		116			1			—		1
Land development	1,757		6,054			—		2,072			30			6		24
Construction	—		—			—		—			—			—		—
Multi-family	—		—			—		—			—			—		—
1-4 family	500		506			—		228			8			33		(25		)
Commercial and industrial	18,410		20,232			3,184		16,583			1,095			308		787
Direct financing leases, net	—		—			—		—			—			—		—
Consumer and other:
Home equity and second mortgages	2		2			—		—			—			7		(7		)
Other	182		848			12		225			25			—		25
Grand total	$	26,015	$	34,165		$	4,005	$	24,508		$	1,411		$	709	$	702


(1)	The recorded investment represents the unpaid principal balance net of any partial charge-offs.


(2)	Average recorded investment is calculated primarily using daily average balances.



	As of and for the Year Ended December 31, 2018
	Recorded Investment⁽¹⁾		Unpaid Principal Balance		Impairment Reserve		Average Recorded Investment⁽²⁾		Foregone Interest Income		Interest Income Recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	1,273	$	1,273	$	—	$	6,638	$	756	$	197	$	559
Non-owner occupied	31		72		—		33		2		—		2
Land development	2,213		6,510		—		2,366		68		—		68
Construction	—		—		—		2,148		219		—		219
Multi-family	—		—		—		—		—		—		—
1-4 family	178		183		—		808		42		81		(39		)
Commercial and industrial	6,828		7,527		—		8,809		1,058		980		78
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	—		—		—		1		—		46		(46		)
Other	279		945		—		305		55		—		55
Total	10,802		16,510		—		21,108		2,200		1,304		896
With impairment reserve recorded:
Commercial real estate:
Owner occupied	4,390		5,749		675		635		182		—		182
Non-owner occupied	—		—		—		—		—		—		—
Land development	—		—		—		—		—		—		—
Construction	—		—		—		—		—		—		—
Multi-family	—		—		—		—		—		—		—
1-4 family	—		—		—		—		—		—		—
Commercial and industrial	10,278		10,278		3,710		4,687		1,096		—		1,096
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	—		—		—		—		—		—		—
Other	11		11		11		1		—		—		—
Total	14,679		16,038		4,396		5,323		1,278		—		1,278
Total:
Commercial real estate:
Owner occupied	5,663		7,022		675		7,273		938		197		741
Non-owner occupied	31		72		—		33		2		—		2
Land development	2,213		6,510		—		2,366		68		—		68
Construction	—		—		—		2,148		219		—		219
Multi-family	—		—		—		—		—		—		—
1-4 family	178		183		—		808		42		81		(39		)
Commercial and industrial	17,106		17,805		3,710		13,496		2,154		980		1,174
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity and second mortgages	—		—		—		1		—		46		(46		)
Other	290		956		11		306		55		—		55
Grand total	$	25,481	$	32,548	$	4,396	$	26,431	$	3,478	$	1,304	$	2,174


(1)	The recorded investment represents the unpaid principal balance net of any partial charge-offs.


(2)	Average recorded investment is calculated primarily using daily average balances.

The difference between the recorded investment of loans and leases and the unpaid principal balance of $8.2 million and $7.1 million as of June 30, 2019 and December 31, 2018, respectively, represents partial charge-offs of loans and leases resulting from losses due to the appraised value of the collateral securing the loans and leases being below the carrying values of the loans and leases. Impaired loans and leases also included $151,000 and $180,000 of loans as of June 30, 2019 and December 31, 2018, respectively, that were performing troubled debt restructurings, and although not on non-accrual, were reported as impaired due to the concession in terms. When a loan is placed on non-accrual, interest accrual is discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to such loan’s principal. Foregone interest represents the interest that was contractually due on the loan but not received or recorded. To the extent the amount of principal on a non-accrual loan is fully collected and additional cash is received, the Corporation will recognize interest income.

To determine the level and composition of the allowance for loan and lease losses, the Corporation categorizes the portfolio into segments with similar risk characteristics. First, the Corporation evaluates loans and leases for potential impairment classification. The Corporation analyzes each loan and lease determined to be impaired on an individual basis to determine a specific reserve based upon the estimated value of the underlying collateral for collateral-dependent loans, or alternatively, the present value of expected cash flows. The Corporation applies historical trends from established risk factors to each category of loans and leases that has not been individually evaluated for the purpose of establishing the general portion of the allowance.

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:



	As of and for the Three Months Ended June 30, 2019
	Commercial Real Estate			Commercial and Industrial			Consumer and Other			Total
	(In Thousands)
Beginning balance	$	11,205		$	8,485		$	759		$	20,449
Charge-offs	—			(13		)	(2		)	(15		)
Recoveries	72			72			25			169
Net recoveries	72			59			23			154
Provision for loan and lease losses	(8		)	(652		)	(124		)	(784		)
Ending balance	$	11,269		$	7,892		$	658		$	19,819



	As of and for the Three Months Ended June 30, 2018
	Commercial Real Estate			Commercial and Industrial			Consumer and Other			Total
	(In Thousands)
Beginning balance	$	9,990		$	8,151		$	497		$	18,638
Charge-offs	(121		)	(168		)	(17		)	(306		)
Recoveries	2			17			2			21
Net charge-offs	(119		)	(151		)	(15		)	(285		)
Provision for loan and lease losses	1,276			1,237			66			2,579
Ending balance	$	11,147		$	9,237		$	548		$	20,932



	As of and for the Six Months Ended June 30, 2019
	Commercial Real Estate			Commercial and Industrial			Consumer and Other			Total
	(In Thousands)
Beginning balance	$	11,662		$	8,079		$	684		$	20,425
Charge-offs	—			(61		)	(2		)	(63		)
Recoveries	73			92			28			193
Net recoveries	73			31			26			130
Provision for loan and lease losses	(466		)	(218		)	(52		)	(736		)
Ending balance	$	11,269		$	7,892		$	658		$	19,819



	As of and for the Six Months Ended June 30, 2018
	Commercial Real Estate			Commercial and Industrial			Consumer and Other			Total
	(In Thousands)
Beginning balance	$	10,131		$	8,225		$	407		$	18,763
Charge-offs	(2,296		)	(657		)	(37		)	(2,990		)
Recoveries	15			19			71			105
Net (charge-offs) recoveries	(2,281		)	(638		)	34			(2,885		)
Provision for loan and lease losses	3,297			1,650			107			5,054
Ending balance	$	11,147		$	9,237		$	548		$	20,932

The following tables provide information regarding the allowance for loan and lease losses and balances by type of allowance methodology.



	As of June 30, 2019
	Commercial Real Estate		Commercial and Industrial		Consumer and Other		Total
	(In Thousands)
Allowance for loan and lease losses:
Collectively evaluated for impairment	$	10,460	$	4,708	$	646	$	15,814
Individually evaluated for impairment	809		3,184		12		4,005
Loans acquired with deteriorated credit quality	—		—		—		—
Total	$	11,269	$	7,892	$	658	$	19,819
Loans and lease receivables:
Collectively evaluated for impairment	$	1,142,156	$	522,403	$	30,225	$	1,694,784
Individually evaluated for impairment	7,342		18,409		184		25,935
Loans acquired with deteriorated credit quality	79		1		—		80
Total	$	1,149,577	$	540,813	$	30,409	$	1,720,799



	As of December 31, 2018
	Commercial Real Estate		Commercial and Industrial		Consumer and Other		Total
	(In Thousands)
Allowance for loan and lease losses:
Collectively evaluated for impairment	$	10,987	$	4,369	$	673	$	16,029
Individually evaluated for impairment	675		3,710		11		4,396
Loans acquired with deteriorated credit quality	—		—		—		—
Total	$	11,662	$	8,079	$	684	$	20,425
Loans and lease receivables:
Collectively evaluated for impairment	$	1,086,254	$	478,385	$	28,937	$	1,593,576
Individually evaluated for impairment	7,914		17,104		290		25,308
Loans acquired with deteriorated credit quality	171		2		—		173
Total	$	1,094,339	$	495,491	$	29,227	$	1,619,057