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Note 4 - Loans Receivable and Allowance for Loan Losses | 3 Months Ended
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Mar. 31, 2018
Notes to Financial Statements |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4 : Loans Receivable and Allowance for Loan Losses As of March 31, 2018 and December 31, 2017, loans receivable, net, consists of the following:
(In thousands) |  |  |  |  |  |  |  |
Loan portfolio segment: |  | March 31, 2018 |  |  | December 31, 2017 |
Commercial Real Estate |  | $ | 313,868 |  |  |  | 299,925 |
Residential Real Estate |  |  | 144,633 |  |  |  | 146,377 |
Commercial and Industrial |  |  | 129,913 |  |  |  | 131,161 |
Consumer and Other |  |  | 83,185 |  |  |  | 87,707 |
Construction |  |  | 46,348 |  |  |  | 47,619 |
Construction to permanent - CRE |  |  | 6,608 |  |  |  | 6,858 |
Loans receivable, gross |  |  | 724,555 |  |  |  | 719,647 |
Allowance for loan losses |  |  | (6,485 | ) |  |  | (6,297 | )
Loans receivable, net |  | $ | 718,070 |  |  |  | 713,350 |
Patriot's lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut and Westchester County in New York, and the five Boroughs of New York City. Patriot originates commercial real estate loans, commercial business loans, a variety of consumer loans, and construction loans, and has purchased residential loans since 2016. All commercial and residential real estate loans are collateralized primarily by first or second mortgages on real estate. The ability and willingness of borrowers to satisfy their loan obligations is dependent to some degree on the status of the regional economy as well as upon the regional real estate market. Accordingly, the ultimate collectability of a substantial portion of the loan portfolio and the recovery of a substantial portion of any resulting real estate acquired is susceptible to changes in market conditions. Patriot has established credit policies applicable to each type of lending activity in which it engages and evaluates the creditworthiness of each borrower. Unless extenuating circumstances exist, Patriot limits the extension of credit on commercial real estate loans to 75% of the market value of the underlying collateral. Patriot’s loan origination policy for multi–family residential real estate is limited to 80% of the market value of the underlying collateral. In the case of construction loans, the maximum loan-to-value is 75% of the “as completed” appraised value of the real estate project. Management monitors the appraised value of collateral on an on-going basis and additional collateral is requested when warranted. Real estate is the primary form of collateral, although other forms of collateral do exist and may include such assets as accounts receivable, inventory, marketable securities, time deposits, and other business assets. Risk characteristics of the Company’s portfolio classes include the following: Commercial Real Estate Loans In underwriting commercial real estate loans, Patriot evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans. Repayment of such loans may be negatively impacted should the borrower default, the value of the property collateralizing the loan substantially decline, or there are declines in general economic conditions. Where the owner occupies the property, Patriot also evaluates the business’ ability to repay the loan on a timely basis and may require personal guarantees, lease assignments, and/or the guarantee of the operating company. Residential Real Estate Loans In 2013, Patriot discontinued offering primary mortgages on personal residences. Repayment of residential real estate loans may be negatively impacted should the borrower have financial difficulties, should there be a significant decline in the value of the property securing the loan, or should there be declines in general economic conditions. In March 2017, Patriot purchased $73 million of residential real estate loans, including a premium of $985,000 over the book value of the loans. No residential real estate loans were purchased in the first quarter of 2018. Commercial and Industrial Loans Patriot’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals. These loans are generally for the financing of accounts receivable, purchases of inventory, purchases of new or used equipment, or for other short- or long-term working capital purposes. These loans are generally secured by business assets, but are also occasionally offered on an unsecured basis. In granting these types of loans, Patriot considers the borrower’s cash flow as the primary source of repayment, supported by the value of collateral, if any, and personal guarantees, as applicable. Repayment of commercial and industrial loans may be negatively impacted by adverse changes in economic conditions, ineffective management, claims on the borrower’s assets by others that are superior to Patriot’s claims, a loss of demand for the borrower’s products or services, or the death or disability of the borrower or other key management personnel. Consumer and Other Loans Patriot offers individual consumers various forms of credit including installment loans, credit cards, overdraft protection, and reserve lines of credit. Repayments of such loans are generally dependent on the personal income of the borrower, which may be negatively impacted by adverse changes in economic conditions. The Company does not place a high emphasis on originating these types of loans. The Company does not have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories that are typically characterized by payment delinquencies, previous charge-offs, judgments against the consumer, a history of bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burdened ratios. Construction Loans Construction loans are of a short-term nature, generally of eighteen -months or less, that are secured by land intended for commercial, residential, or mixed-use development. Loan proceeds may be used for the acquisition of or improvements to the land under development and funds are generally disbursed as phases of construction are completed. Included in this category are loans to construct single family homes where no contract of sale exists, based upon the experience and financial strength of the builder, the type and location of the property, and other factors. Construction loans tend to be personally guaranteed by the principal(s). Repayment of such loans may be negatively impacted by an inability to complete construction, a downturn in the market for new construction, by a significant increase in interest rates, or by decline in general economic conditions. Construction to Permanent – Commercial Real Estate (“CRE”) One time close of a construction facility with simultaneous conversion to an amortizing mortgage loan. Construction to permanent loans combine a short term period similar to a construction loan, generally with a variable rate, and a longer term CRE loan typically 20 - 25 years, resetting every five years to the Federal Home Loan Bank (“FHLB”) rate. Close of the construction facility typically occurs when events dictate, such as receipt of a certificate of occupancy and property stabilization, which is defined as cash flow sufficient to support a pre-defined minimum debt coverage ratio and other conditions and covenants particular to the loan. Construction facilities are typically variable rate instruments that, upon conversion to an amortizing mortgage loan, reset to a fixed rate instrument that is the greater of the in-force variable rate plus a predetermined spread over a reference rate (e.g., prime) or a minimum interest rate. Allowance for Loan Losses The following tables summarize the activity in the allowance for loan losses, allocated to segments of the loan portfolio, for the three months ended March 31, 2018 and 2017:
(In thousands) |  | Commercial Real Estate |  |  | Residential Real Estate |  |  | Commercial and Industrial |  |  | Consumer and Other |  |  | Construction |  |  | Construction to Permanent [CRE] |  |  | Unallocated |  |  | Total |
Three months ended March 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2017 |  | $ | 2,212 |  |  |  | 959 |  |  |  | 2,023 |  |  |  | 568 |  |  |  | 481 |  |  |  | 54 |  |  |  | - |  |  |  | 6,297 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Recoveries |  |  | 3 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3 |
Provisions (credits) |  |  | 265 |  |  |  | 114 |  |  |  | (264 | ) |  |  | (22 | ) |  |  | 7 |  |  |  | 7 |  |  |  | 78 |  |  |  | 185 |
March 31, 2018 |  | $ | 2,480 |  |  |  | 1,073 |  |  |  | 1,759 |  |  |  | 546 |  |  |  | 488 |  |  |  | 61 |  |  |  | 78 |  |  |  | 6,485 |
Three months ended March 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2016 |  | $ | 1,853 |  |  |  | 534 |  |  |  | 740 |  |  |  | 641 |  |  |  | 712 |  |  |  | 69 |  |  |  | 126 |  |  |  | 4,675 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Recoveries |  |  | 2 |  |  |  | - |  |  |  | 2,769 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,771 |
Provisions (credits) |  |  | 343 |  |  |  | 539 |  |  |  | (2,460 | ) |  |  | (58 | ) |  |  | (121 | ) |  |  | 8 |  |  |  | - |  |  |  | (1,749 | )
March 31, 2017 |  | $ | 2,198 |  |  |  | 1,073 |  |  |  | 1,049 |  |  |  | 583 |  |  |  | 591 |  |  |  | 77 |  |  |  | 126 |  |  |  | 5,697 |
The following tables summarize, by loan portfolio segment, the amount of loans receivable evaluated individually and collectively for impairment as of March 31, 2018 and December 31, 2017:
(In thousands) |  | Commercial Real Estate |  |  | Residential Real Estate |  |  | Commercial and Industrial |  |  | Consumer and Other |  |  | Construction |  |  | Construction to Permanent [CRE] |  |  | Unallocated |  |  | Total |
March 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | - |  |  |  | - |  |  |  | 51 |  |  |  | 4 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 55 |
Collectively evaluated for impairment |  |  | 2,480 |  |  |  | 1,073 |  |  |  | 1,708 |  |  |  | 542 |  |  |  | 488 |  |  |  | 61 |  |  |  | 78 |  |  |  | 6,430 |
Total allowance for loan losses |  | $ | 2,480 |  |  |  | 1,073 |  |  |  | 1,759 |  |  |  | 546 |  |  |  | 488 |  |  |  | 61 |  |  |  | 78 |  |  |  | 6,485 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 2,429 |  |  |  | 3,343 |  |  |  | 1,521 |  |  |  | 694 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,987 |
Collectively evaluated for impairment |  |  | 311,439 |  |  |  | 141,290 |  |  |  | 128,392 |  |  |  | 82,491 |  |  |  | 46,348 |  |  |  | 6,608 |  |  |  | - |  |  |  | 716,568 |
Total loans receivable, gross |  | $ | 313,868 |  |  |  | 144,633 |  |  |  | 129,913 |  |  |  | 83,185 |  |  |  | 46,348 |  |  |  | 6,608 |  |  |  | - |  |  |  | 724,555 |
(In thousands) |  | Commercial Real Estate |  |  | Residential Real Estate |  |  | Commercial and Industrial |  |  | Consumer and Other |  |  | Construction |  |  | Construction to Permanent [CRE] |  |  | Unallocated |  |  | Total |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | - |  |  |  | - |  |  |  | 251 |  |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 253 |
Collectively evaluated for impairment |  |  | 2,212 |  |  |  | 959 |  |  |  | 1,772 |  |  |  | 566 |  |  |  | 481 |  |  |  | 54 |  |  |  | - |  |  |  | 6,044 |
Total allowance for loan losses |  | $ | 2,212 |  |  |  | 959 |  |  |  | 2,023 |  |  |  | 568 |  |  |  | 481 |  |  |  | 54 |  |  |  | - |  |  |  | 6,297 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 1,977 |  |  |  | 3,336 |  |  |  | 748 |  |  |  | 692 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6,753 |
Collectively evaluated for impairment |  |  | 297,948 |  |  |  | 143,041 |  |  |  | 130,413 |  |  |  | 87,015 |  |  |  | 47,619 |  |  |  | 6,858 |  |  |  | - |  |  |  | 712,894 |
Total loans receivable, gross |  | $ | 299,925 |  |  |  | 146,377 |  |  |  | 131,161 |  |  |  | 87,707 |  |  |  | 47,619 |  |  |  | 6,858 |  |  |  | - |  |  |  | 719,647 |
Patriot monitors the credit quality of its loans receivable on an ongoing basis. Credit quality is monitored by reviewing certain indicators, including loan to value ratios, debt service coverage ratios, and credit scores. Patriot employs a risk rating system as part of the risk assessment of its loan portfolio. At origination, lending officers are required to assign a risk rating to each loan in their portfolio, which is ratified or modified by the Loan Committee to which the loan is submitted for approval. If financial developments occur on a loan in the lending officer’s portfolio of responsibility, the risk rating is reviewed and adjusted, as applicable. In carrying out its oversight responsibilities, the Loan Committee can adjust a risk rating based on available information. In addition, the risk ratings on all commercial loans over $250,000 are reviewed annually by the Credit Department. Additionally, Patriot retains a third -party objective and independent loan reviewing expert to perform a quarterly analysis of the results of its risk rating process. The quarterly review is based on a randomly selected sample of loans within established parameters (e.g., value, concentration), in order to assess and validate the risk ratings assigned to individual loans. Any changes to the assigned risk ratings, based on the quarterly review, are required to be approved by the Loan Committee. When assigning a risk rating to a loan, management utilizes the Bank’s internal eleven -point risk rating system. An asset is considered “special mention” when it has a potential weakness based on objective evidence, but does not currently expose the Company to sufficient risk to warrant classification in one of the following categories:
| ● | Sub-standard: An asset is classified “sub-standard” if it is not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Sub-standard assets have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that the Company will sustain some loss, if noted deficiencies are not corrected.
| ● | Doubtful: Assets classified as “doubtful” have all of the weaknesses inherent in those classified as “sub-standard”, with the added characteristic that the identified weaknesses make collection or liquidation-in-full improbable, on the basis of currently existing facts, conditions, and values.
Charge-offs, to reduce the loan to its recoverable value, generally commence after the loan is classified as “doubtful”. In accordance with Federal Financial Institutions Examination Council published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end” and “Closed-end” credits are charged off when 180 days and 120 days delinquent, respectively. If an account is classified as “Loss”, the full balance of the loan receivable is charged off, regardless of the potential recovery from a sale of the underlying collateral. Any amount that may be recovered on the sale of collateral underlying a loan is recognized as a “recovery” in the period in which the collateral is sold. The following tables summarize non-performing (i.e., non-accruing) loans by aging category and status, within the applicable loan portfolio segment as of March 31, 2018 and December 31, 2017:
(In thousands) |  | Non-accruing Loans |  |  |  |  |
|  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90 Days or Greater Past Due |  |  | Total Past Due |  |  | Current |  |  | Total Non-accruing Loans |
As of March 31, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan portfolio segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sub-standard |  | $ | - |  |  |  | - |  |  |  | 474 |  |  |  | 474 |  |  |  | - |  |  |  | 474 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sub-standard |  |  | - |  |  |  | - |  |  |  | 3,037 |  |  |  | 3,037 |  |  |  | - |  |  |  | 3,037 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sub-standard |  |  | - |  |  |  | 6 |  |  |  | 1,515 |  |  |  | 1,521 |  |  |  | - |  |  |  | 1,521 |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sub-standard |  |  | - |  |  |  | - |  |  |  | 4 |  |  |  | 4 |  |  |  | - |  |  |  | 4 |
Total non-accruing loans |  | $ | - |  |  |  | 6 |  |  |  | 5,030 |  |  |  | 5,036 |  |  |  | - |  |  |  | 5,036 |
As of December 31, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan portfolio segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sub-standard |  | $ | - |  |  |  | - |  |  |  | 3,028 |  |  |  | 3,028 |  |  |  | - |  |  |  | 3,028 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sub-standard |  |  | - |  |  |  | - |  |  |  | 748 |  |  |  | 748 |  |  |  | - |  |  |  | 748 |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sub-standard |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | 2 |  |  |  | - |  |  |  | 2 |
Total non-accruing loans |  | $ | - |  |  |  | - |  |  |  | 3,778 |  |  |  | 3,778 |  |  |  | - |  |  |  | 3,778 |
If non-accrual loans had been performing in accordance with the original contractual terms, additional interest income of $81,000 and $21,000 would have been recognized in income during the three months ended March 31, 2018 and 2017, respectively. Additionally, certain loans for which the borrower cannot demonstrate sufficient cash flow to continue loan payments in the future and certain troubled debt restructurings (“TDRs”) are placed on non-accrual status. During the three months ended March 31, 2018 and 2017, no interest income was collected and recognized on non-accruing loans. The accrual of interest on loans is discontinued at the time the loan is 90 days past due for payment unless the loan is well-secured and in process of collection. Consumer installment loans are typically charged off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual status or charged-off, at an earlier date, if collection of principal or interest is considered doubtful. All interest accrued, but not collected for loans that are placed on non-accrual status or charged off, is reversed against interest income. The interest on these loans is accounted for on the cash-basis method until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, future payments are reasonably assured, and there is six months of performance. Management considers all non-accrual loans and troubled debt restructurings to be impaired. In most cases, loan payments that are past due less than 90 days, based on contractual terms, are considered collection delays and not an indication of loan impairment. The Bank considers consumer installment loans to be pools of smaller homogeneous loan balances, which are collectively evaluated for impairment. The following tables summarize performing and non-performing loans receivable by portfolio segment, by aging category, by delinquency status as of March 31, 2018 and December 31, 2017.
(In thousands) |  | Performing (Accruing) Loans |  |  |  |  |  |  |  |  |
As of March 31, 2018: |  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90 Days or Greater Past Due |  |  | Total |  |  | Current |  |  | Total Performing Loans |  |  | Non-accruing Loans |  |  | Loans Receivable Gross |
Loan portfolio segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 19 |  |  |  | 670 |  |  |  | - |  |  |  | 689 |  |  |  | 299,011 |  |  |  | 299,700 |  |  |  | - |  |  |  | 299,700 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9,989 |  |  |  | 9,989 |  |  |  | - |  |  |  | 9,989 |
Substandard |  |  | - |  |  |  | 2,705 |  |  |  | - |  |  |  | 2,705 |  |  |  | 1,000 |  |  |  | 3,705 |  |  |  | 474 |  |  |  | 4,179 |
|  |  | 19 |  |  |  | 3,375 |  |  |  | - |  |  |  | 3,394 |  |  |  | 310,000 |  |  |  | 313,394 |  |  |  | 474 |  |  |  | 313,868 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 121 |  |  |  | 1,271 |  |  |  | - |  |  |  | 1,392 |  |  |  | 138,685 |  |  |  | 140,077 |  |  |  | - |  |  |  | 140,077 |
Special Mention |  |  | 1,519 |  |  |  | - |  |  |  | - |  |  |  | 1,519 |  |  |  | - |  |  |  | 1,519 |  |  |  | - |  |  |  | 1,519 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,037 |  |  |  | 3,037 |
|  |  | 1,640 |  |  |  | 1,271 |  |  |  | - |  |  |  | 2,911 |  |  |  | 138,685 |  |  |  | 141,596 |  |  |  | 3,037 |  |  |  | 144,633 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 293 |  |  |  | 829 |  |  |  | - |  |  |  | 1,122 |  |  |  | 127,270 |  |  |  | 128,392 |  |  |  | - |  |  |  | 128,392 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,521 |  |  |  | 1,521 |
|  |  | 293 |  |  |  | 829 |  |  |  | - |  |  |  | 1,122 |  |  |  | 127,270 |  |  |  | 128,392 |  |  |  | 1,521 |  |  |  | 129,913 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 129 |  |  |  | 80 |  |  |  | 350 |  |  |  | 559 |  |  |  | 82,622 |  |  |  | 83,181 |  |  |  | - |  |  |  | 83,181 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4 |  |  |  | 4 |
|  |  | 129 |  |  |  | 80 |  |  |  | 350 |  |  |  | 559 |  |  |  | 82,622 |  |  |  | 83,181 |  |  |  | 4 |  |  |  | 83,185 |
Construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | - |  |  |  | - |  |  |  | 2,039 |  |  |  | 2,039 |  |  |  | 35,509 |  |  |  | 37,548 |  |  |  | - |  |  |  | 37,548 |
Substandard |  |  | - |  |  |  | - |  |  |  | 8,800 |  |  |  | 8,800 |  |  |  | - |  |  |  | 8,800 |  |  |  | - |  |  |  | 8,800 |
|  |  | - |  |  |  | - |  |  |  | 10,839 |  |  |  | 10,839 |  |  |  | 35,509 |  |  |  | 46,348 |  |  |  | - |  |  |  | 46,348 |
Construction to permanent - CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6,608 |  |  |  | 6,608 |  |  |  | - |  |  |  | 6,608 |
Total |  | $ | 2,081 |  |  |  | 5,555 |  |  |  | 11,189 |  |  |  | 18,825 |  |  |  | 700,694 |  |  |  | 719,519 |  |  |  | 5,036 |  |  |  | 724,555 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 562 |  |  |  | 2,850 |  |  |  | 2,389 |  |  |  | 5,801 |  |  |  | 689,705 |  |  |  | 695,506 |  |  |  | - |  |  |  | 695,506 |
Special Mention |  |  | 1,519 |  |  |  | - |  |  |  | - |  |  |  | 1,519 |  |  |  | 9,989 |  |  |  | 11,508 |  |  |  | - |  |  |  | 11,508 |
Substandard |  |  | - |  |  |  | 2,705 |  |  |  | 8,800 |  |  |  | 11,505 |  |  |  | 1,000 |  |  |  | 12,505 |  |  |  | 5,036 |  |  |  | 17,541 |
Loans receivable, gross |  | $ | 2,081 |  |  |  | 5,555 |  |  |  | 11,189 |  |  |  | 18,825 |  |  |  | 700,694 |  |  |  | 719,519 |  |  |  | 5,036 |  |  |  | 724,555 |
(In thousands) |  | Performing (Accruing) Loans |  |  |  |  |  |  |  |  |
As of December 31, 2017: |  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90 Days or Greater Past Due |  |  | Total |  |  | Current |  |  | Total Performing Loans |  |  | Non-accruing Loans |  |  | Loans Receivable Gross |
Loan portfolio segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 286,428 |  |  |  | 286,428 |  |  |  | - |  |  |  | 286,428 |
Special Mention |  |  | - |  |  |  | 1,121 |  |  |  | - |  |  |  | 1,121 |  |  |  | 9,317 |  |  |  | 10,438 |  |  |  | - |  |  |  | 10,438 |
Substandard |  |  | - |  |  |  | 1,688 |  |  |  | - |  |  |  | 1,688 |  |  |  | 1,371 |  |  |  | 3,059 |  |  |  | - |  |  |  | 3,059 |
|  |  | - |  |  |  | 2,809 |  |  |  | - |  |  |  | 2,809 |  |  |  | 297,116 |  |  |  | 299,925 |  |  |  | - |  |  |  | 299,925 |
Residential Real Estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 1,068 |  |  |  | 255 |  |  |  | - |  |  |  | 1,323 |  |  |  | 140,497 |  |  |  | 141,820 |  |  |  | - |  |  |  | 141,820 |
Special Mention |  |  | - |  |  |  | 1,529 |  |  |  | - |  |  |  | 1,529 |  |  |  | - |  |  |  | 1,529 |  |  |  | - |  |  |  | 1,529 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,028 |  |  |  | 3,028 |
|  |  | 1,068 |  |  |  | 1,784 |  |  |  | - |  |  |  | 2,852 |  |  |  | 140,497 |  |  |  | 143,349 |  |  |  | 3,028 |  |  |  | 146,377 |
Commercial and Industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | - |  |  |  | 2,000 |  |  |  | 375 |  |  |  | 2,375 |  |  |  | 127,057 |  |  |  | 129,432 |  |  |  | - |  |  |  | 129,432 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | 981 |  |  |  | 981 |  |  |  | - |  |  |  | 981 |  |  |  | 748 |  |  |  | 1,729 |
|  |  | - |  |  |  | 2,000 |  |  |  | 1,356 |  |  |  | 3,356 |  |  |  | 127,057 |  |  |  | 130,413 |  |  |  | 748 |  |  |  | 131,161 |
Consumer and Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 498 |  |  |  | - |  |  |  | - |  |  |  | 498 |  |  |  | 87,207 |  |  |  | 87,705 |  |  |  | - |  |  |  | 87,705 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | 2 |
|  |  | 498 |  |  |  | - |  |  |  | - |  |  |  | 498 |  |  |  | 87,207 |  |  |  | 87,705 |  |  |  | 2 |  |  |  | 87,707 |
Construction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 47,619 |  |  |  | 47,619 |  |  |  | - |  |  |  | 47,619 |
Construction to permanent - CRE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6,858 |  |  |  | 6,858 |  |  |  | - |  |  |  | 6,858 |
Total |  | $ | 1,566 |  |  |  | 6,593 |  |  |  | 1,356 |  |  |  | 9,515 |  |  |  | 706,354 |  |  |  | 715,869 |  |  |  | 3,778 |  |  |  | 719,647 |
Loans receivable, gross: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 1,566 |  |  |  | 2,255 |  |  |  | 375 |  |  |  | 4,196 |  |  |  | 695,666 |  |  |  | 699,862 |  |  |  | - |  |  |  | 699,862 |
Special Mention |  |  | - |  |  |  | 2,650 |  |  |  | - |  |  |  | 2,650 |  |  |  | 9,317 |  |  |  | 11,967 |  |  |  | - |  |  |  | 11,967 |
Substandard |  |  | - |  |  |  | 1,688 |  |  |  | 981 |  |  |  | 2,669 |  |  |  | 1,371 |  |  |  | 4,040 |  |  |  | 3,778 |  |  |  | 7,818 |
Loans receivable, gross |  | $ | 1,566 |  |  |  | 6,593 |  |  |  | 1,356 |  |  |  | 9,515 |  |  |  | 706,354 |  |  |  | 715,869 |  |  |  | 3,778 |  |  |  | 719,647 |
As of March 31, 2018, the loans over 90 days past due and still accruing consists of two construction loans. The loans are well secured and the Company is confident, if necessary, the collateral will serve to ultimately assure full realization of principal and interest. Troubled Debt Restructurings (“TDR”) On a case-by-case basis, Patriot may agree to modify the contractual terms of a borrower’s loan to assist customers who may be experiencing financial difficulty. If the borrower is experiencing financial difficulties and a concession has been made, the loan is classified as a TDR. There were no loans modified as TDRs and no defaults of TDRs during the three months ended March 31, 2018 and 2017. At March 31, 2018 and December 31, 2017, there were no commitments to advance additional funds under TDRs. Substantially all TDR loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below market rate, an extension of the term of the loan, or a combination of adjusting these two contractual attributes. TDR loan modifications may result in the forgiveness of principal or accrued interest. In addition, when modifying commercial loans, Patriot frequently obtains additional collateral or guarantor support. If the borrower has performed under the existing contractual terms of the loan and Patriot’s underwriters determine that the borrower has the capacity to continue to perform under the terms of the TDR, the loan continues accruing interest. Non-accruing TDRs may be returned to accrual status when there has been a sustained period of performance (generally six consecutive months of payments) and both principal and interest are reasonably assured of collection. Impaired Loans Impaired loans may consist of non-accrual loans and/or performing and non-performing TDRs. As of March 31, 2018 and December 31, 2017, based on the on-going monitoring and analysis of the loan portfolio, impaired loans of $8.0 million and $6.8 million, respectively, were identified, for which $55,000 and $253,000 specific reserves were established, respectively. Loans not requiring specific reserves had sufficient collateral values, less costs to sell, supporting the net investment in the loan which includes principal balance, unamortized fees and costs and accrued interest, if any. In some cases, there may be no specific reserves due to the carrying amount of the loan having been charged off. Once a borrower is in default, Patriot is under no obligation to advance additional funds on unused commitments. At March 31, 2018 and December 31, 2017, exposure to the impaired loans was related to 15 and 12 borrowers, respectively. In all cases, appraisal reports of the underlying collateral, if any, have been obtained from independent licensed appraisal firms. For non-performing loans, the independently determined appraised values were reduced by an estimate of the costs to sell the assets, in order to estimate the potential loss, if any, that may eventually be realized. Performing loans are monitored to determine when, if at all, additional loan loss reserves may be required for a loss of underlying collateral value. The following summarizes the investment in, outstanding principal balance of, and the related allowance, if any, for impaired loans as of March 31, 2018 and December 31, 2017:
(In thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | March 31, 2018 |  |  | December 31, 2017 |
|  | Recorded Investment |  |  | Principal Outstanding |  |  | Related Allowance |  |  | Recorded Investment |  |  | Principal Outstanding |  |  | Related Allowance |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | $ | 2,429 |  |  |  | 2,429 |  |  |  | - |  |  |  | 1,977 |  |  |  | 2,425 |  |  |  | - |
Residential Real Estate |  |  | 3,343 |  |  |  | 3,343 |  |  |  | - |  |  |  | 3,336 |  |  |  | 3,369 |  |  |  | - |
Commercial and Industrial |  |  | 1,470 |  |  |  | 1,470 |  |  |  | - |  |  |  | 497 |  |  |  | 683 |  |  |  | - |
Consumer and Other |  |  | 690 |  |  |  | 690 |  |  |  | - |  |  |  | 690 |  |  |  | 818 |  |  |  | - |
|  |  | 7,932 |  |  |  | 7,932 |  |  |  | - |  |  |  | 6,500 |  |  |  | 7,295 |  |  |  | - |
With a related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Residential Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial and Industrial |  |  | 51 |  |  |  | 51 |  |  |  | 51 |  |  |  | 251 |  |  |  | 251 |  |  |  | 251 |
Consumer and Other |  |  | 4 |  |  |  | 4 |  |  |  | 4 |  |  |  | 2 |  |  |  | 2 |  |  |  | 2 |
|  |  | 55 |  |  |  | 55 |  |  |  | 55 |  |  |  | 253 |  |  |  | 253 |  |  |  | 253 |
Impaired Loans, Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  |  | 2,429 |  |  |  | 2,429 |  |  |  | - |  |  |  | 1,977 |  |  |  | 2,425 |  |  |  | - |
Residential Real Estate |  |  | 3,343 |  |  |  | 3,343 |  |  |  | - |  |  |  | 3,336 |  |  |  | 3,369 |  |  |  | - |
Commercial and Industrial |  |  | 1,521 |  |  |  | 1,521 |  |  |  | 51 |  |  |  | 748 |  |  |  | 934 |  |  |  | 251 |
Consumer and Other |  |  | 694 |  |  |  | 694 |  |  |  | 4 |  |  |  | 692 |  |  |  | 820 |  |  |  | 2 |
Impaired Loans, Total |  | $ | 7,987 |  |  |  | 7,987 |  |  |  | 55 |  |  |  | 6,753 |  |  |  | 7,548 |  |  |  | 253 |
The following tables summarize additional information regarding impaired loans for the three months ended March 31, 2018 and 2017.
(In thousands) |  | Three Months Ended March 31, |
|  | 2018 |  |  | 2017 |
|  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  | $ | 2,205 |  |  |  | 25 |  |  |  | 6,236 |  |  |  | 73 |
Residential Real Estate |  |  | 3,342 |  |  |  | 3 |  |  |  | 1,910 |  |  |  | 3 |
Commercial and Industrial |  |  | 739 |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer and Other |  |  | 691 |  |  |  | 7 |  |  |  | 541 |  |  |  | 5 |
|  |  | 6,977 |  |  |  | 35 |  |  |  | 8,687 |  |  |  | 81 |
With a related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Residential Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial and Industrial |  |  | 393 |  |  |  | - |  |  |  | 231 |  |  |  | - |
Consumer and Other |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 395 |  |  |  | - |  |  |  | 231 |  |  |  | - |
Impaired Loans, Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Real Estate |  |  | 2,205 |  |  |  | 25 |  |  |  | 6,236 |  |  |  | 73 |
Residential Real Estate |  |  | 3,342 |  |  |  | 3 |  |  |  | 1,910 |  |  |  | 3 |
Commercial and Industrial |  |  | 1,132 |  |  |  | - |  |  |  | 231 |  |  |  | - |
Consumer and Other |  |  | 693 |  |  |  | 7 |  |  |  | 541 |  |  |  | 5 |
Impaired Loans, Total |  | $ | 7,372 |  |  |  | 35 |  |  |  | 8,918 |  |  |  | 81 |

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