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Note 4 - Allowance for Loan Losses, Nonperforming Assets and Impaired Loans | 3 Months Ended
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Mar. 31, 2016
Notes to Financial Statements |
Allowance for Credit Losses [Text Block] | Note 4: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans The allowance for loan losses methodology incorporates individual evaluation of impaired loans and collective evaluation of groups of non-impaired loans. The Company performs ongoing analysis of the loan portfolio to determine credit quality and to identify impaired loans. Credit quality is rated based on the loan’s payment history, the borrower’s current financial situation and the value of the underlying collateral. Impaired loans are those loans that have been modified in a troubled debt restructure (“TDR” or “restructure”) and larger, non-homogeneous loans that are in nonaccrual or exhibit payment history or financial status that indicate the probability that collection will not occur when due according to the loan’s original terms. Generally, impaired loans are given risk ratings that indicate higher risk, such as “classified” or “other assets especially mentioned.” Impaired loans are individually evaluated to determine appropriate reserves and are measured at the lower of the invested amount or the fair value. Impaired loans that are not troubled debt restructures and for which fair value measurement indicates an impairment loss are designated nonaccrual. A restructured loan that maintains current status for at least six months may be in accrual status. Please refer to Note 1 of the Company’s 2015 Form 10-K, “Summary of Significant Accounting Policies” for additional information on evaluation of impaired loans and associated specific reserves, and policies regarding nonaccruals, past due status and charge-offs. Troubled debt restructures impact the estimation of the appropriate level of the allowance for loan losses. If the restructuring included forgiveness of a portion of principal, the charge-off is included in the historical charge-off rates applied to the collective evaluation methodology. Further, restructured loans are individually evaluated for impairment and any amount of book value that exceeds fair value is accrued in the allowance for loan losses. TDRs that experience a payment default are examined to determine whether the default indicates collateral dependency or a decline in estimates of cash flow used in the fair value measurement. TDRs that are determined to be collateral-dependent, as well as all impaired loans that are determined to be collateral dependent, are charged down to fair value net of estimated costs to sell. Deficiencies indicated by impairment measurements for TDRs that are not collateral dependent may be accrued in the allowance for loan losses or charged off if deemed uncollectible. The Company evaluated characteristics in the loan portfolio and determined major segments and smaller classes within each segment. These characteristics include collateral type, repayment sources, and (if applicable) the borrower’s business model. The methodology for calculating reserves for collectively-evaluated loans is applied at the class level. Portfolio Segments and Classes The segments and classes used in determining the allowance for loan losses are as follows.
Real Estate Construction | Commercial Non Real Estate
Construction, residential | Commercial and Industrial
Construction, other |
| Public sector and IDA
Consumer Real Estate | Public Sector and IDA
Equity lines |
Residential closed-end first liens | Consumer Non Real Estate
Residential closed-end junior liens | Credit cards
Investor-owned residential real estate | Automobile
| Other consumer loans
Commercial Real Estate |
Multifamily real estate |
Commercial real estate, owner-occupied |
Commercial real estate, other |
Historical Loss Rates The Company’s allowance methodology for collectively-evaluated loans applies historical loss rates by class to current class balances as part of the process of determining required reserves. Class loss rates are calculated as the net charge-offs for the class as a percentage of average class balance. The Company averages loss rates for the most recent 8 quarters to determine the historical loss rate for each class. Two loss rates for each class are calculated: total net charge-offs for the class as a percentage of average class loan balance (“class loss rate”), and total net charge-offs for the class as a percentage of average classified loans in the class (“classified loss rate”). Classified loans are those with risk ratings of “substandard”, “doubtful” or “loss”. Net charge-offs in both calculations include charge-offs and recoveries of classified and non-classified loans as well as those associated with impaired loans. Class historical loss rates are applied to non-classified loan balances at the reporting date, and classified historical loss rates are applied to classified loan balances and not individually evaluated at the reporting date. Risk Factors In addition to historical loss rates, risk factors pertinent to credit risk for each class are analyzed to estimate reserves for collectively-evaluated loans. Factors include changes in national and local economic and business conditions, the nature and volume of classes within the portfolio, loan quality, loan officers’ experience, lending policies and the Company’s loan review system. The analysis of certain factors results in standard allocations to all segments and classes. These factors include loan officers’ average years of experience, the risk from changes in loan review, unemployment levels, bankruptcy rates, the interest rate environment, and the competitive, legal and regulatory environments. Factors analyzed for each class, with resultant allocations based upon the level of risk assessed for each class, include the risk from changes in lending policies, levels of past due loans, nonaccrual loans, current class balance as a percentage of total loans, and the percentage of high risk loans within the class. Additionally, factors specific to each segment are analyzed and result in allocations to the segment. Please refer to the Company’s 2015 10-K, Note 1: Summary of Significant Accounting Policies for a discussion of risk factors pertinent to each class. Real estate construction loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. These risks are measured by market-area unemployment rates, bankruptcy rates, housing market trends, and interest rates. The credit quality of consumer real estate is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, local housing market trends, and interest rates. The commercial real estate segment includes loans secured by multifamily residential real estate, commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for multi-family housing and commercial buildings, business bankruptcy rates, local unemployment and interest rate trends that would impact the businesses housed by the commercial real estate. Commercial non real estate loans are secured by collateral other than real estate, or are unsecured. Credit risk for commercial non real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, and interest rates. Public sector and IDA loans are extended to municipalities and related entities. Credit risk is based upon the entity’s ability to repay and interest rate trends. Consumer non real estate includes credit cards, automobile and other consumer loans. Credit cards and certain other consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay, measured by average unemployment, average personal bankruptcy rates and interest rates. Factor allocations applied to each class are increased for loans rated special mention and increased to a greater extent for loans rated classified. The Company allocates additional reserves for “high risk” loans. High risk loans include junior liens, interest only and high loan to value loans. A detailed analysis showing the allowance roll-forward by portfolio segment and related loan balance by segment follows.
|  | A ctivity in the Allowance for Loan Losses for the Three Months Ended March 31, 2016 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non Real Estate |  |  | Unallocated |  |  | Total |
Balance, December 31, 2015 |  | $ | 576 |  |  | $ | 1,866 |  |  | $ | 4,109 |  |  | $ | 655 |  |  | $ | 436 |  |  | $ | 627 |  |  | $ | 28 |  |  | $ | 8,297 |
Charge-offs |  |  | (29 | ) |  |  | (22 | ) |  |  | (124 | ) |  |  | (211 | ) |  |  | --- |  |  |  | (67 | ) |  |  | --- |  |  |  | (453 | )
Recoveries |  |  | --- |  |  |  | 1 |  |  |  | 38 |  |  |  | --- |  |  |  | --- |  |  |  | 21 |  |  |  | --- |  |  |  | 60 |
Provision for loan losses |  |  | (93 | ) |  |  | (115 | ) |  |  | (74 | ) |  |  | 308 |  |  |  | (25 | ) |  |  | 3 |  |  |  | 199 |  |  |  | 203 |
Balance, March 31, 2016 |  | $ | 454 |  |  | $ | 1,730 |  |  | $ | 3,949 |  |  | $ | 752 |  |  | $ | 411 |  |  | $ | 584 |  |  | $ | 227 |  |  | $ | 8,107 |
|  | A ctivity in the Allowance for Loan Losses for the Three Months Ended March 31, 2015 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non Real Estate |  |  | Unallocated |  |  | Total |
Balance, December 31, 2014 |  | $ | 612 |  |  | $ | 1,662 |  |  | $ | 3,537 |  |  | $ | 1,475 |  |  | $ | 327 |  |  | $ | 602 |  |  | $ | 48 |  |  | $ | 8,263 |
Charge-offs |  |  | --- |  |  |  | (72 | ) |  |  | (100 | ) |  |  | --- |  |  |  | --- |  |  |  | (88 | ) |  |  | --- |  |  |  | (260 | )
Recoveries |  |  | --- |  |  |  | --- |  |  |  | 12 |  |  |  | --- |  |  |  | --- |  |  |  | 41 |  |  |  | --- |  |  |  | 53 |
Provision for loan losses |  |  | (145 | ) |  |  | 30 |  |  |  | 262 |  |  |  | (59 | ) |  |  | 106 |  |  |  | 21 |  |  |  | (14 | ) |  |  | 201 |
Balance, March 31, 2015 |  | $ | 467 |  |  | $ | 1,620 |  |  | $ | 3,711 |  |  | $ | 1,416 |  |  | $ | 433 |  |  | $ | 576 |  |  | $ | 34 |  |  | $ | 8,257 |
|  | Activity in th e Allowance for Loan Losses for the year ended December 31 , 201 5 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non Real Estate |  |  | Unallocated |  |  | Total |
Balance, December 31, 2014 |  | $ | 612 |  |  | $ | 1,662 |  |  | $ | 3,537 |  |  | $ | 1,475 |  |  | $ | 327 |  |  | $ | 602 |  |  | $ | 48 |  |  | $ | 8,263 |
Charge-offs |  |  | --- |  |  |  | (205 | ) |  |  | (1,114 | ) |  |  | (490 | ) |  |  | --- |  |  |  | (311 | ) |  |  | --- |  |  |  | (2,120 | )
Recoveries |  |  | --- |  |  |  | 2 |  |  |  | 49 |  |  |  | 1 |  |  |  | --- |  |  |  | 93 |  |  |  | --- |  |  |  | 145 |
Provision for loan losses |  |  | (36 | ) |  |  | 407 |  |  |  | 1,637 |  |  |  | (331 | ) |  |  | 109 |  |  |  | 243 |  |  |  | (20 | ) |  |  | 2,009 |
Balance, December 31, 2015 |  | $ | 576 |  |  | $ | 1,866 |  |  | $ | 4,109 |  |  | $ | 655 |  |  | $ | 436 |  |  | $ | 627 |  |  | $ | 28 |  |  | $ | 8,297 |
|  | Allowance for Loan Losses as of March 31, 2016 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | --- |  |  | $ | 22 |  |  | $ | 58 |  |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | 80 |
Collectively evaluated for impairment |  |  | 454 |  |  |  | 1,708 |  |  |  | 3,891 |  |  |  | 752 |  |  |  | 411 |  |  |  | 584 |  |  |  | 227 |  |  |  | 8,027 |
Total |  | $ | 454 |  |  | $ | 1,730 |  |  | $ | 3,949 |  |  | $ | 752 |  |  | $ | 411 |  |  | $ | 584 |  |  | $ | 227 |  |  | $ | 8,107 |
|  | Allowance for Loan Losses as of December 31, 2015 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | --- |  |  | $ | 22 |  |  | $ | 23 |  |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | 45 |
Collectively evaluated for impairment |  |  | 576 |  |  |  | 1,844 |  |  |  | 4,086 |  |  |  | 655 |  |  |  | 436 |  |  |  | 627 |  |  |  | 28 |  |  |  | 8,252 |
Total |  | $ | 576 |  |  | $ | 1,866 |  |  | $ | 4,109 |  |  | $ | 655 |  |  | $ | 436 |  |  | $ | 627 |  |  | $ | 28 |  |  | $ | 8,297 |
|  | Loans as of March 31, 2016 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | 682 |  |  | $ | 953 |  |  | $ | 11,537 |  |  | $ | 817 |  |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | 13,989 |
Collectively evaluated for impairment |  |  | 38,511 |  |  |  | 143,315 |  |  |  | 299,100 |  |  |  | 32,865 |  |  |  | 50,777 |  |  |  | 29,933 |  |  |  | --- |  |  |  | 594,501 |
Total loans |  | $ | 39,193 |  |  | $ | 144,268 |  |  | $ | 310,637 |  |  | $ | 33,682 |  |  | $ | 50,777 |  |  | $ | 29,933 |  |  | $ | --- |  |  | $ | 608,490 |
|  | Loans as of December 31, 2015 |
|  | Real Estate Construction |  |  | Consumer Real Estate |  |  | Commercial Real Estate |  |  | Commercial Non Real Estate |  |  | Public Sector and IDA |  |  | Consumer Non Real Estate |  |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | 718 |  |  | $ | 962 |  |  | $ | 12,575 |  |  | $ | 1,091 |  |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | 15,346 |
Collectively evaluated for impairment |  |  | 47,533 |  |  |  | 142,542 |  |  |  | 296,803 |  |  |  | 36,480 |  |  |  | 51,335 |  |  |  | 29,845 |  |  |  | --- |  |  |  | 604,538 |
Total |  | $ | 48,251 |  |  | $ | 143,504 |  |  | $ | 309,378 |  |  | $ | 37,571 |  |  | $ | 51,335 |  |  | $ | 29,845 |  |  | $ | --- |  |  | $ | 619,884 |
A summary of ratios for the allowance for loan losses follows.
|  | As of the Three Months Ended March 31, |  |  | For the Year E nded December 31, |
|  | 2016 |  |  | 2015 |  |  | 2015 |
Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees |  |  | 1.33 | % |  |  | 1.33 | % |  |  | 1.34 | %
Ratio of net charge-offs to average loans, net of unearned income and deferred fees (1) |  |  | 0.26 | % |  |  | 0.14 | % |  |  | 0.32 | %
(1) | Net charge-offs are on an annualized basis.
A summary of nonperforming assets follows.
|  | March 31, |  |  | December 31, |
|  | 2016 |  |  | 2015 |  |  | 2015 |
Nonperforming assets: |  |  |  |  |  |  |  |  |  |  |  |
Nonaccrual loans |  | $ | 1,901 |  |  | $ | 3,102 |  |  | $ | 2,043 |
Restructured loans in nonaccrual |  |  | 4,504 |  |  |  | 6,123 |  |  |  | 4,639 |
Total nonperforming loans |  |  | 6,405 |  |  |  | 9,225 |  |  |  | 6,682 |
Other real estate owned, net |  |  | 3,612 |  |  |  | 4,573 |  |  |  | 4,165 |
Total nonperforming assets |  | $ | 10,017 |  |  | $ | 13,798 |  |  | $ | 10,847 |
Ratio of nonperforming assets to loans, net of unearned income and deferred fees, plus other real estate owned |  |  | 1.64 | % |  |  | 2.20 | % |  |  | 1.74 | %
Ratio of allowance for loan losses to nonperforming loans ( 1 ) |  |  | 126.57 | % |  |  | 89.51 | % |  |  | 124.17 | %
(1) | The Company defines nonperforming loans as nonaccrual loans. Loans 90 days or more past due and still accruing and accruing restructured loans are excluded.
A summary of loans past due 90 days or more and impaired loans follows.
|  | March 31, |  |  | December 31, |
|  | 2016 |  |  | 2015 |  |  | 2015 |
Loans past due 90 days or more and still accruing |  | $ | 328 |  |  | $ | 272 |  |  | $ | 156 |
Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees |  |  | 0.05 | % |  |  | 0.04 | % |  |  | 0.03 | %
Accruing restructured loans |  | $ | 7,724 |  |  | $ | 5,992 |  |  | $ | 8,814 |
Impaired loans: |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans with no valuation allowance |  | $ | 12,171 |  |  | $ | 11,265 |  |  | $ | 12,973 |
Impaired loans with a valuation allowance |  |  | 1,818 |  |  |  | 3,729 |  |  |  | 2,373 |
Total impaired loans |  | $ | 13,989 |  |  | $ | 14,994 |  |  | $ | 15,346 |
Valuation allowance |  |  | (80 | ) |  |  | (236 | ) |  |  | (45 | )
Impaired loans, net of allowance |  | $ | 13,909 |  |  | $ | 14,758 |  |  | $ | 15,301 |
Average recorded investment in impaired loans (1) |  | $ | 14,796 |  |  | $ | 15,192 |  |  | $ | 17,297 |
Interest income recognized on impaired loans, after designation as impaired |  | $ | 125 |  |  | $ | 174 |  |  | $ | 769 |
Amount of income recognized on a cash basis |  | $ | --- |  |  | $ | --- |  |  | $ | --- |
(1) Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status. Nonaccrual loans that meet the Company’s balance threshold of $250 and all TDRs are designated as impaired. No interest income was recognized on nonaccrual loans for the three months ended March 31, 2016 or March 31, 2015 or for the year ended December 31, 2015. A detailed analysis of investment in impaired loans, associated reserves and interest income recognized, segregated by loan class follows.
|  | Impaired Loans as of March 31, 2016 |
|  | Principal Balance |  |  | Total Recorded Investment (1) |  |  | Recorded Investment (1 ) for Which There is No Related Allowance |  |  | Recorded Investment (1) for Which There is a Related Allowance |  |  | Related Allowance |
Real Estate Construction (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction 1-4 family residential |  | $ | 689 |  |  | $ | 682 |  |  | $ | 682 |  |  | $ | --- |  |  | $ | --- |
Co nsumer Real Estate (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential closed-end first liens |  |  | 708 |  |  |  | 664 |  |  |  | 303 |  |  |  | 361 |  |  |  | 13 |
Residential closed-end junior liens |  |  | 214 |  |  |  | 214 |  |  |  | --- |  |  |  | 214 |  |  |  | 5 |
Investor-owned residential real estate |  |  | 75 |  |  |  | 75 |  |  |  | --- |  |  |  | 75 |  |  |  | 4 |
Commercial Real Estate (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 1,867 |  |  |  | 1,594 |  |  |  | 1,594 |  |  |  | --- |  |  |  | --- |
Commercial real estate, owner-occupied |  |  | 4,213 |  |  |  | 4,165 |  |  |  | 2,997 |  |  |  | 1,168 |  |  |  | 58 |
Commercial real estate, other |  |  | 5,966 |  |  |  | 5,778 |  |  |  | 5,778 |  |  |  | --- |  |  |  | --- |
Commercial Non Real Estate (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 824 |  |  |  | 817 |  |  |  | 817 |  |  |  | --- |  |  |  | --- |
Total |  | $ | 14,556 |  |  | $ | 13,989 |  |  | $ | 12,171 |  |  | $ | 1,818 |  |  | $ | 80 |
(1) Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status. (2) Only classes with impaired loans are shown.
|  | Impaired Loans as of December 31, 2015 |
|  | Principal Balance |  |  | Total Recorded Investment (1) |  |  | Recorded Investment (1) for Which There is No Related Allowance |  |  | Recorded Investment (1) for Which There is a Related Allowance |  |  | Related Allowance |
Real Estate Construction (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction 1-4 family residential |  | $ | 718 |  |  | $ | 718 |  |  | $ | 718 |  |  | $ | --- |  |  | $ | --- |
Co nsumer Real Estate (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential closed-end first liens |  |  | 713 |  |  |  | 669 |  |  |  | 305 |  |  |  | 364 |  |  |  | 13 |
Residential closed-end junior liens |  |  | 218 |  |  |  | 218 |  |  |  | --- |  |  |  | 218 |  |  |  | 5 |
Investor-owned residential real estate |  |  | 75 |  |  |  | 75 |  |  |  | --- |  |  |  | 75 |  |  |  | 4 |
Commercial Real Estate (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 1,988 |  |  |  | 1,728 |  |  |  | 1,728 |  |  |  | --- |  |  |  | --- |
Commercial real estate, owner occupied |  |  | 5,068 |  |  |  | 5,020 |  |  |  | 3,304 |  |  |  | 1,716 |  |  |  | 23 |
Commercial real estate, other |  |  | 5,990 |  |  |  | 5,827 |  |  |  | 5,827 |  |  |  | --- |  |  |  | --- |
Commercial Non Real Estate (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 1,099 |  |  |  | 1,091 |  |  |  | 1,091 |  |  |  | --- |  |  |  | --- |
Total |  | $ | 15,869 |  |  | $ | 15,346 |  |  | $ | 12,973 |  |  | $ | 2,373 |  |  | $ | 45 |
(1) Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status. (2) Only classes with impaired loans are shown. The following tables show the average recorded investment and interest income recognized for impaired loans.
|  | For the Three Months Ended March 31, 2016 |
|  | Average Recorded Investment (1) |  |  | Interest Income Recognized |
Real Estate Construction (2) |  |  |  |  |  |  |  |
Construction 1-4 family residential |  | $ | 682 |  |  | $ | --- |
Co nsumer Real Estate (2) |  |  |  |  |  |  |  |
Residential closed-end first liens |  |  | 667 |  |  |  | 10 |
Residential closed-end junior liens |  |  | 216 |  |  |  | 4 |
Investor-owned residential real estate |  |  | 75 |  |  |  | 1 |
Commercial Real Estate (2) |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 1,595 |  |  |  | --- |
Commercial real estate, owner occupied |  |  | 4,949 |  |  |  | 68 |
Commercial real estate, other |  |  | 5,793 |  |  |  | 42 |
Commercial Non Real Estate (2) |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 819 |  |  |  | --- |
Total |  | $ | 14,796 |  |  | $ | 125 |
(1) Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status. (2) Only classes with impaired loans are shown.
|  | For the Three Months Ended March 31, 2015 |
|  | Average Recorded Investment (1) |  |  | Interest Income Recognized |
Co nsumer Real Estate (2) |  |  |  |  |  |  |  |
Residential closed-end first liens |  | $ | 501 |  |  | $ | 7 |
Residential closed-end junior liens |  |  | 236 |  |  |  | 4 |
Investor-owned residential real estate |  |  | 76 |  |  |  | 1 |
Commercial Real Estate (2) |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 2,708 |  |  |  | 25 |
Commercial real estate, owner occupied |  |  | 4,974 |  |  |  | 58 |
Commercial real estate, other |  |  | 6,023 |  |  |  | 80 |
Commercial Non Real Estate (2) |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 674 |  |  |  | (1 | )
Total |  | $ | 15,192 |  |  | $ | 174 |
(1) Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status. (2) Only classes with impaired loans are shown.
|  | For the Year Ended December 31, 2015 |
|  | Average Recorded Investment (1) |  |  | Interest Income Recognized |
Real Estate Construction (2) |  |  |  |  |  |  |  |
Construction 1-4 family residential |  | $ | 612 |  |  | $ | 23 |
Consumer Real Estate (2) |  |  |  |  |  |  |  |
Residential closed-end first liens |  |  | 681 |  |  |  | 43 |
Residential closed-end junior liens |  |  | 228 |  |  |  | 15 |
Investor-owned residential real estate |  |  | 76 |  |  |  | 5 |
Commercial Real Estate (2) |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 2,581 |  |  |  | 84 |
Commercial real estate, owner occupied |  |  | 6,141 |  |  |  | 251 |
Commercial real estate, other |  |  | 5,888 |  |  |  | 308 |
Commercial Non Real Estate (2) |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 1,090 |  |  |  | 40 |
Total |  | $ | 17,297 |  |  | $ | 769 |
(1) Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status. (2) Only classes with impaired loans are shown. The Company reviews nonaccrual loans on an individual loan basis to determine whether future payments are reasonably assured. To satisfy this criteria, the Company’s evaluation must determine that the underlying cause of the original delinquency or weakness that indicated nonaccrual status has been resolved, such as receipt of new guarantees, increased cash flows that cover the debt service or other resolution. Nonaccrual loans that demonstrate reasonable assurance of future payments and that have made at least six consecutive payments in accordance with repayment terms and timeframes may be returned to accrual status. A restructured loan that maintains current status for at least six months may be returned to accrual status. An analysis of past due and nonaccrual loans follows.
March 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 30 – 89 Days Past Due |  |  | 90 or M ore Days Past Due |  |  | 90 or More Days Past Due and Still Accruing |  |  | Nonaccruals (Including Impaired Nonaccruals) |
Real Estate Construction (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction residential |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | 683 |
Consumer Real Estate (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 9 |  |  |  | 48 |  |  |  | 48 |  |  |  | --- |
Residential closed-end first liens |  |  | 1,049 |  |  |  | 239 |  |  |  | 239 |  |  |  | --- |
Residential closed-end junior liens |  |  | 290 |  |  |  | 38 |  |  |  | 38 |  |  |  |  |
Investor-owned residential real estate |  |  | 319 |  |  |  | --- |  |  |  | --- |  |  |  | 11 |
Commercial Real Estate (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 676 |  |  |  | 1,594 |  |  |  | --- |  |  |  | 1,594 |
Commercial real estate, owner-occupied |  |  | --- |  |  |  | 357 |  |  |  | --- |  |  |  | 485 |
Commercial real estate, other |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | 2,820 |
Commercial Non Real Estate (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 22 |  |  |  | 812 |  |  |  | --- |  |  |  | 812 |
Consumer Non Real Estate (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 1 |  |  |  | 2 |  |  |  | 2 |  |  |  | --- |
Automobile |  |  | 195 |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Other consumer loans |  |  | 21 |  |  |  | 2 |  |  |  | 1 |  |  |  | --- |
Total |  | $ | 2,582 |  |  | $ | 3,092 |  |  | $ | 328 |  |  | $ | 6,405 |
(1) Only classes with past-due or nonaccrual loans are shown.
December 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 30 – 89 Days Past Due |  |  | 90 or M ore Days Past Due |  |  | 90 or More Days Past Due and Still Accruing |  |  | Nonaccruals (Including Impaired Nonaccruals) |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, residential |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | 718 |
Construction, other |  |  | 26 |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 16 |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Residential closed-end first liens |  |  | 1,402 |  |  |  | 106 |  |  |  | 106 |  |  |  | 14 |
Residential closed-end junior liens |  |  | 123 |  |  |  | 39 |  |  |  | 39 |  |  |  | --- |
Investor-owned residential real estate |  |  | 248 |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 684 |  |  |  | 1,728 |  |  |  | --- |  |  |  | 1,728 |
Commercial real estate, owner occupied |  |  | --- |  |  |  | 357 |  |  |  | --- |  |  |  | 494 |
Commercial real estate, other |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | 2,845 |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 142 |  |  |  | 883 |  |  |  | --- |  |  |  | 883 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Public sector and IDA |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 5 |  |  |  | 6 |  |  |  | 6 |  |  |  | --- |
Automobile |  |  | 286 |  |  |  | 5 |  |  |  | 5 |  |  |  | --- |
Other consumer loans |  |  | 60 |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Total |  | $ | 2,992 |  |  | $ | 3,124 |  |  | $ | 156 |  |  | $ | 6,682 |
The estimate of credit risk for non-impaired loans is obtained by applying allocations for internal and external factors. The allocations are increased for loans that exhibit greater credit quality risk. Credit quality indicators, which the Company terms risk grades, are assigned through the Company’s credit review function for larger loans and selective review of loans that fall below credit review thresholds. Loans that do not indicate heightened risk are graded as “pass.” Loans that appear to have elevated credit risk because of frequent or persistent past due status, which is less than 75 days, or that show weakness in the borrower’s financial condition are risk graded “special mention.” Loans with frequent or persistent delinquency exceeding 75 days or that have a higher level of weakness in the borrower’s financial condition are graded “classified.” Classified loans have regulatory risk ratings of “substandard” and “doubtful.” Allowance for loan loss allocations are increased by 50% and by 100% for loans with grades of “special mention” and “classified,” respectively. Determination of risk grades was completed for the portfolio as of March 31, 2016 and December 31, 2015. The following displays collectively-evaluated loans by credit quality indicator.
March 31, 2016 |  |  |  |  |  |  |  |  |
|  | Pass |  |  | Special Mention (Excluding Impaired) |  |  | Classified (Excluding Impaired) |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |
Construction, 1-4 family residential |  | $ | 11,709 |  |  | $ | 3,694 |  |  | $ | --- |
Construction, other |  |  | 23,108 |  |  |  | --- |  |  |  | --- |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 16,468 |  |  |  | 33 |  |  |  | 95 |
Closed-end first liens |  |  | 76,645 |  |  |  | 728 |  |  |  | 1,729 |
Closed-end junior liens |  |  | 5,041 |  |  |  | 23 |  |  |  | 130 |
Investor-owned residential real estate |  |  | 41,635 |  |  |  | 30 |  |  |  | 758 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Multifamily residential real estate |  |  | 81,296 |  |  |  | --- |  |  |  | 1,791 |
Commercial real estate owner-occupied |  |  | 119,319 |  |  |  | 1,163 |  |  |  | 1,227 |
Commercial real estate, other |  |  | 94,247 |  |  |  | 57 |  |  |  | --- |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 32,400 |  |  |  | 234 |  |  |  | 231 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  |  | 50,777 |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 5,808 |  |  |  | --- |  |  |  | --- |
Automobile |  |  | 12,509 |  |  |  | 75 |  |  |  | 188 |
Other consumer |  |  | 11,241 |  |  |  | 82 |  |  |  | 30 |
Total |  | $ | 582,203 |  |  | $ | 6,119 |  |  | $ | 6,179 |
The following displays collectively-evaluated loans by credit quality indicator.
December 31, 201 5 |  |  |  |  |  |  |  |  |
|  | Pass |  |  | Special Mention (Excluding Impaired) |  |  | Classified (Excluding Impaired) |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |
Construction, 1-4 family residential |  | $ | 10,626 |  |  | $ | 3,694 |  |  | $ | --- |
Construction, other |  |  | 33,213 |  |  |  | --- |  |  |  | --- |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 16,236 |  |  |  | 15 |  |  |  | 87 |
Closed-end first liens |  |  | 78,614 |  |  |  | 708 |  |  |  | 1,370 |
Closed-end junior liens |  |  | 4,983 |  |  |  | 55 |  |  |  | 61 |
Investor-owned residential real estate |  |  | 39,616 |  |  |  | 31 |  |  |  | 766 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Multifamily residential real estate |  |  | 77,060 |  |  |  | --- |  |  |  | 1,804 |
Commercial real estate owner-occupied |  |  | 121,741 |  |  |  | 1,165 |  |  |  | 1,274 |
Commercial real estate, other |  |  | 93,701 |  |  |  | 58 |  |  |  | --- |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 35,652 |  |  |  | 285 |  |  |  | 543 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  |  | 51,335 |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 5,773 |  |  |  | --- |  |  |  | --- |
Automobile |  |  | 12,414 |  |  |  | 102 |  |  |  | 138 |
Other consumer |  |  | 11,359 |  |  |  | 31 |  |  |  | 28 |
Total |  | $ | 592,323 |  |  | $ | 6,144 |  |  | $ | 6,071 |
Sales , Purchases and Reclassification of Loans The Company finances mortgages under “best efforts” contracts with mortgage purchasers. The mortgages are designated as held for sale upon initiation. There have been no reclassifications from portfolio loans to held for sale. There have been no loans held for sale transferred to portfolio loans. Occasionally, the Company purchases or sells participations in loans. All participation loans purchased met the Company’s normal underwriting standards at the time the participation was entered. Participation loans are included in the appropriate portfolio balances to which the allowance methodology is applied. Troubled Debt Restructurings The Company modifies loans in troubled debt restructurings. Total troubled debt restructurings amounted to $12,228 at March 31, 2016, $13,453 at December 31, 2015, and $12,115 at March 31, 2015. The Company did not modify any loans in troubled debt restructures during the three-month period ended March 31, 2016. The following table presents restructurings by class that occurred during the three-month period ended March 31, 2015. Note: Only classes with restructured loans are presented.
|  | Restructurings That Occurred During the Three Months Ended March 31, 2015 |
|  | Number of Contracts |  |  | Pre-Modification Outstanding Principal Balance |  |  | Post-Modification Outstanding Principal Balance |
Commercial R eal E state |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate, owner occupied |  |  | 1 |  |  |  | 994 |  |  |  | 907 |
Total |  |  | 1 |  |  | $ | 994 |  |  | $ | 907 |
During the three-month period ended March 31, 2015, the Company restructured one loan to provide payment relief . The restructuring provided payment relief by forgiving principal of $100, capitalizing interest and re-amortizing payments. The fair value measurement of the restructured loan as of March 31, 2015 resulted in no specific allocation to the allowance for loan losses. The Company analyzed its TDR portfolio for loans that defaulted during the three month periods ended March 31, 2016 and March 31, 2015, and that were modified within 12 months prior to default. The Company defines default as one or more payments that occur more than 90 days past the due date, charge-offs, or foreclosure after the date of restructuring. There were no restructured loans that defaulted that were modified within 12 months prior to default for the three month periods ended March 31, 2016 and 2015.

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