Quarterly report pursuant to Section 13 or 15(d)

LOANS

v3.19.1
LOANS
3 Months Ended
Mar. 31, 2019
LOANS [Abstract]  
LOANS
NOTE 3 – LOANS

Portfolio loans were as follows (dollars in thousands):

   
March 31,
2019
   
December 31,
2018
 
Commercial and industrial
 
$
493,891
   
$
513,345
 
Commercial real estate:
               
Residential developed
   
14,723
     
14,825
 
Unsecured to residential developers
   
     
 
Vacant and unimproved
   
45,423
     
44,169
 
Commercial development
   
701
     
712
 
Residential improved
   
100,801
     
98,500
 
Commercial improved
   
291,612
     
295,618
 
Manufacturing and industrial
   
119,540
     
114,887
 
Total commercial real estate
   
572,800
     
568,711
 
Consumer
               
Residential mortgage
   
237,207
     
238,174
 
Unsecured
   
367
     
130
 
Home equity
   
73,631
     
78,503
 
Other secured
   
6,671
     
6,795
 
Total consumer
   
317,876
     
323,602
 
Total loans
   
1,384,567
     
1,405,658
 
Allowance for loan losses
   
(16,892
)
   
(16,876
)
   
$
1,367,675
   
$
1,388,782
 

Activity in the allowance for loan losses by portfolio segment was as follows (dollars in thousands):

Three months ended March 31, 2019
 
Commercial
and
Industrial
   
Commercial
Real Estate
   
Consumer
   
Unallocated
   
Total
 
Beginning balance
 
$
6,856
   
$
6,544
   
$
3,449
   
$
27
   
$
16,876
 
Charge-offs
   
     
(132
)
   
(25
)
   
     
(157
)
Recoveries
   
136
     
224
     
63
     
     
423
 
Provision for loan losses
   
(3
)
   
(189
)
   
(61
)
   
3
     
(250
)
Ending Balance
 
$
6,989
   
$
6,447
   
$
3,426
   
$
30
   
$
16,892
 

Three months ended March 31, 2018
 
Commercial
and
Industrial
   
Commercial
Real Estate
   
Consumer
   
Unallocated
   
Total
 
Beginning balance
 
$
6,478
   
$
6,590
   
$
3,494
   
$
38
   
$
16,600
 
Charge-offs
   
(66
)
   
     
(31
)
   
     
(97
)
Recoveries
   
34
     
203
     
35
     
     
272
 
Provision for loan losses
   
60
     
(261
)
   
105
     
(4
)
   
(100
)
Ending Balance
 
$
6,506
   
$
6,532
   
$
3,603
   
$
34
   
$
16,675
 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method (dollars in thousands):

March 31, 2019
 
Commercial
and
Industrial
   
Commercial
Real Estate
   
Consumer
   
Unallocated
   
Total
 
Allowance for loan losses:
                             
Ending allowance attributable to loans:
                             
Individually reviewed for impairment
 
$
438
   
$
41
   
$
448
   
$
   
$
927
 
Collectively evaluated for impairment
   
6,551
     
6,406
     
2,978
     
30
     
15,965
 
Total ending allowance balance
 
$
6,989
   
$
6,447
   
$
3,426
   
$
30
   
$
16,892
 
Loans:
                                       
Individually reviewed for impairment
 
$
6,624
   
$
3,204
   
$
6,073
   
$
   
$
15,901
 
Collectively evaluated for impairment
   
487,267
     
569,596
     
311,803
     
     
1,368,666
 
Total ending loans balance
 
$
493,891
   
$
572,800
   
$
317,876
   
$
   
$
1,384,567
 

December 31, 2018
 
Commercial
and
Industrial
   
Commercial
Real Estate
   
Consumer
   
Unallocated
   
Total
 
Allowance for loan losses:
                             
Ending allowance attributable to loans:
                             
Individually reviewed for impairment
 
$
449
   
$
181
   
$
468
   
$
   
$
1,098
 
Collectively evaluated for impairment
   
6,407
     
6,363
     
2,981
     
27
     
15,778
 
Total ending allowance balance
 
$
6,856
   
$
6,544
   
$
3,449
   
$
27
   
$
16,876
 
Loans:
                                       
Individually reviewed for impairment
 
$
7,375
   
$
3,499
   
$
6,347
   
$
   
$
17,221
 
Collectively evaluated for impairment
   
505,970
     
565,212
     
317,255
     
     
1,388,437
 
Total ending loans balance
 
$
513,345
   
$
568,711
   
$
323,602
   
$
   
$
1,405,658
 

The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2019 (dollars in thousands):

March 31, 2019
 
Unpaid
Principal
Balance
   
Recorded
Investment
   
Allowance
Allocated
 
With no related allowance recorded:
                 
Commercial and industrial
 
$
1,396
   
$
1,396
   
$
 
Commercial real estate:
                       
Residential developed
   
     
     
 
Unsecured to residential developers
   
     
     
 
Vacant and unimproved
   
134
     
134
     
 
Commercial development
   
     
     
 
Residential improved
   
136
     
136
     
 
Commercial improved
   
1,646
     
1,646
     
 
Manufacturing and industrial
   
     
     
 
     
1,916
     
1,916
     
 
Consumer:
                       
Residential mortgage
   
     
     
 
Unsecured
   
     
     
 
Home equity
   
     
     
 
Other secured
   
     
     
 
     
     
     
 
Total with no related allowance recorded
 
$
3,312
   
$
3,312
   
$
 
With an allowance recorded:
                       
Commercial and industrial
 
$
5,228
   
$
5,228
   
$
438
 
Commercial real estate:
                       
Residential developed
   
171
     
171
     
3
 
Unsecured to residential developers
   
     
     
 
Vacant and unimproved
   
     
     
 
Commercial development
   
     
     
 
Residential improved
   
147
     
147
     
11
 
Commercial improved
   
595
     
595
     
17
 
Manufacturing and industrial
   
375
     
375
     
10
 
     
1,288
     
1,288
     
41
 
Consumer:
                       
Residential mortgage
   
4,826
     
4,826
     
356
 
Unsecured
   
254
     
254
     
19
 
Home equity
   
960
     
960
     
71
 
Other secured
   
33
     
33
     
2
 
     
6,073
     
6,073
     
448
 
Total with an allowance recorded
 
$
12,589
   
$
12,589
   
$
927
 
Total
 
$
15,901
   
$
15,901
   
$
927
 

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2018 (dollars in thousands):

December 31, 2018
 
Unpaid
Principal
Balance
   
Recorded
Investment
   
Allowance
Allocated
 
With no related allowance recorded:
                 
Commercial and industrial
 
$
2,515
   
$
1,375
   
$
 
Commercial real estate:
                       
Residential developed
   
     
     
 
Unsecured to residential developers
   
     
     
 
Vacant and unimproved
   
143
     
143
     
 
Commercial development
   
     
     
 
Residential improved
   
140
     
140
     
 
Commercial improved
   
1,675
     
1,675
     
 
Manufacturing and industrial
   
     
     
 
     
1,958
     
1,958
     
 
Consumer:
                       
Residential mortgage
   
     
     
 
Unsecured
   
     
     
 
Home equity
   
     
     
 
Other secured
   
     
     
 
     
     
     
 
Total with no related allowance recorded
 
$
4,473
   
$
3,333
   
$
 
With an allowance recorded:
                       
Commercial and industrial
 
$
6,000
   
$
6,000
   
$
449
 
Commercial real estate:
                       
Residential developed
   
172
     
172
     
2
 
Unsecured to residential developers
   
     
     
 
Vacant and unimproved
   
     
     
 
Commercial development
   
     
     
 
Residential improved
   
193
     
193
     
13
 
Commercial improved
   
794
     
794
     
155
 
Manufacturing and industrial
   
382
     
382
     
11
 
     
1,541
     
1,541
     
181
 
Consumer:
                       
Residential mortgage
   
5,029
     
5,029
     
371
 
Unsecured
   
     
     
 
Home equity
   
1,318
     
1,318
     
97
 
Other secured
   
     
     
 
     
6,347
     
6,347
     
468
 
Total with an allowance recorded
 
$
13,888
   
$
13,888
   
$
1,098
 
Total
 
$
18,361
   
$
17,221
   
$
1,098
 

The following table presents information regarding average balances of impaired loans and interest recognized on impaired loans for the three month periods ended March 31, 2019 and 2018 (dollars in thousands):

   
Three
Months
Ended
March 31,
2019
   
Three
Months
Ended
March 31,
2018
 
Average of impaired loans during the period:
           
Commercial and industrial
 
$
6,825
   
$
6,847
 
Commercial real estate:
               
Residential developed
   
172
     
178
 
Unsecured to residential developers
   
     
 
Vacant and unimproved
   
138
     
168
 
Commercial development
   
     
126
 
Residential improved
   
308
     
1,455
 
Commercial improved
   
2,340
     
3,731
 
Manufacturing and industrial
   
379
     
253
 
Consumer
   
6,197
     
8,067
 
Interest income recognized during impairment:
               
Commercial and industrial
   
288
     
302
 
Commercial real estate
   
44
     
74
 
Consumer
   
75
     
85
 
Cash-basis interest income recognized
               
Commercial and industrial
   
282
     
294
 
Commercial real estate
   
49
     
80
 
Consumer
   
76
     
87
 

Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.  The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2019 and December 31, 2018:

March 31, 2019
 
Nonaccrual
   
Over 90
days
Accruing
 
Commercial and industrial
 
$
   
$
 
Commercial real estate:
               
Residential developed
   
     
 
Unsecured to residential developers
   
     
 
Vacant and unimproved
   
     
 
Commercial development
   
     
 
Residential improved
   
102
     
 
Commercial improved
   
111
     
 
Manufacturing and industrial
   
     
 
     
213
     
 
Consumer:
               
Residential mortgage
   
195
     
 
Unsecured
   
     
 
Home equity
   
     
1
 
Other secured
   
     
 
     
195
     
1
 
Total
 
$
408
   
$
1
 

December 31, 2018
 
Nonaccrual
   
Over 90 days
Accruing
 
Commercial and industrial
 
$
874
   
$
 
Commercial real estate:
               
Residential developed
   
     
 
Unsecured to residential developers
   
     
 
Vacant and unimproved
   
     
 
Commercial development
   
     
 
Residential improved
   
15
     
 
Commercial improved
   
303
     
 
Manufacturing and industrial
   
     
 
     
318
     
 
Consumer:
               
Residential mortgage
   
111
     
 
Unsecured
   
     
 
Home equity
   
     
1
 
Other secured
   
     
 
     
111
     
1
 
Total
 
$
1,303
   
$
1
 

The following table presents the aging of the recorded investment in past due loans as of March 31, 2019 and December 31, 2018 by class of loans (dollars in thousands):

March 31, 2019
 
30-90
Days
   
Greater Than
90 Days
   
Total
Past Due
   
Loans Not
Past Due
   
Total
 
Commercial and industrial
 
$
69
    $
   
$
69
   
$
493,822
   
$
493,891
 
Commercial real estate:
                                       
Residential developed
   
     
     
     
14,723
     
14,723
 
Unsecured to residential developers
   
     
     
     
     
 
Vacant and unimproved
   
     
     
     
45,423
     
45,423
 
Commercial development
   
     
     
     
701
     
701
 
Residential improved
   
59
     
102
     
161
     
100,640
     
100,801
 
Commercial improved
   
     
111
     
111
     
291,501
     
291,612
 
Manufacturing and industrial
   
     
     
     
119,540
     
119,540
 
     
59
     
213
     
272
     
572,528
     
572,800
 
Consumer:
                                       
Residential mortgage
   
     
194
     
194
     
237,013
     
237,207
 
Unsecured
   
6
     
     
6
     
361
     
367
 
Home equity
   
3
     
1
     
4
     
73,627
     
73,631
 
Other secured
   
129
     
     
129
     
6,542
     
6,671
 
     
138
     
195
     
333
     
317,543
     
317,876
 
Total
 
$
266
   
$
408
   
$
674
   
$
1,383,893
   
$
1,384,567
 

December 31, 2018
 
30-90
Days
   
Greater Than
90 Days
   
Total
Past Due
   
Loans Not
Past Due
   
Total
 
Commercial and industrial
 
$
   
$
   
$
   
$
513,345
   
$
513,345
 
Commercial real estate:
                                       
Residential developed
   
     
     
     
14,825
     
14,825
 
Unsecured to residential developers
   
     
     
     
     
 
Vacant and unimproved
   
57
     
     
57
     
44,112
     
44,169
 
Commercial development
   
     
     
     
712
     
712
 
Residential improved
   
86
     
16
     
102
     
98,398
     
98,500
 
Commercial improved
   
100
     
303
     
403
     
295,215
     
295,618
 
Manufacturing and industrial
   
     
     
     
114,887
     
114,887
 
     
243
     
319
     
562
     
568,149
     
568,711
 
Consumer:
                                       
Residential mortgage
   
     
110
     
110
     
238,064
     
238,174
 
Unsecured
   
7
     
     
7
     
123
     
130
 
Home equity
   
67
     
1
     
68
     
78,435
     
78,503
 
Other secured
   
130
     
     
130
     
6,665
     
6,795
 
     
204
     
111
     
315
     
323,287
     
323,602
 
Total
 
$
447
   
$
430
   
$
877
   
$
1,404,781
   
$
1,405,658
 

The Company had allocated $927,000 and $1,098,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDRs”) as of March 31, 2019 and December 31, 2018, respectively.  These loans may have involved the restructuring of terms to allow customers to mitigate the risk of foreclosure by meeting a lower loan payment requirement based upon their current cash flow.  These may also include loans that renewed at existing contractual rates, but below market rates for comparable credit.  The Company has been active at utilizing these programs and working with its customers to reduce the risk of foreclosure.  For commercial loans, these modifications typically include an interest only period and, in some cases, a lowering of the interest rate on the loan.  In some cases, the modification will include separating the note into two notes with the first note structured to be supported by current cash flows and collateral, and the second note made for the remaining unsecured debt.  The second note is charged off immediately and collected only after the first note is paid in full.  This modification type is commonly referred to as an A-B note structure.  For consumer mortgage loans, the restructuring typically includes a lowering of the interest rate to provide payment and cash flow relief.  For each restructuring, a comprehensive credit underwriting analysis of the borrower’s financial condition and prospects of repayment under the revised terms is performed to assess whether the structure can be successful and that cash flows will be sufficient to support the restructured debt.  An analysis is also performed to determine whether the restructured loan should be on accrual status.  Generally, if the loan is on accrual at the time of restructure, it will remain on accrual after the restructuring.  In some cases, a nonaccrual loan may be placed on accrual at restructuring if the loan’s actual payment history demonstrates it would have cash flowed under the restructured terms.  After six consecutive payments under the restructured terms, a nonaccrual restructured loan is reviewed for possible upgrade to accruing status.

In situations where there is a subsequent modification or renewal and the loan is brought to market terms, including a contractual interest rate not less than a market interest rate for new debt with similar credit risk characteristics, the TDR and impaired loan designations may be removed.  In addition, the TDR designation may also be removed from loans modified under an A-B note structure.  If the remaining “A” note is at a market rate at the time of restructuring (taking into account the borrower’s credit risk and prevailing market conditions), the loan can be removed from TDR designation in a subsequent calendar year after six months of performance in accordance with the new terms.  The market rate relative to the borrower’s credit risk is determined through analysis of market pricing information gathered from peers and use of a loan pricing model.  The general objective of the model is to achieve a consistent return on equity from one credit to the next, taking into consideration differences in credit risk.  In the model, credits with higher risk receive a higher potential loss allocation, and therefore require a higher interest rate to achieve the target return on equity.

As with other impaired loans, an allowance for loan loss is estimated for each TDR based on the most likely source of repayment for each loan.  For impaired commercial real estate loans that are collateral dependent, the allowance is computed based on the fair value of the underlying collateral, less estimated costs to sell.  For impaired commercial loans where repayment is expected from cash flows from business operations, the allowance is computed based on a discounted cash flow computation.  Certain groups of TDRs, such as residential mortgages, have common characteristics and for them the allowance is computed based on a discounted cash flow computation on the change in weighted rate for the pool.  The allowance allocations for commercial TDRs where we have reduced the contractual interest rate are computed by measuring cash flows using the new payment terms discounted at the original contractual rate.

The following table presents information regarding troubled debt restructurings as of March 31, 2019 and December 31, 2018 (dollars in thousands):

   
March 31, 2019
   
December 31, 2018
 
   
Number of
Loans
   
Outstanding
Recorded
Balance
   
Number of
Loans
   
Outstanding
Recorded
Balance
 
Commercial and industrial
   
12
   
$
6,624
     
18
   
$
6,502
 
Commercial real estate
   
20
     
3,204
     
22
     
3,305
 
Consumer
   
79
     
6,073
     
83
     
6,346
 
     
111
   
$
15,901
     
123
   
$
16,153
 

The following table presents information related to accruing troubled debt restructurings as of March 31, 2019 and December 31, 2018.  The table presents the amount of accruing troubled debt restructurings that were on nonaccrual status prior to the restructuring, accruing at the time of restructuring and those that were upgraded to accruing status after receiving six consecutive monthly payments in accordance with the restructured terms as of each period reported (dollars in thousands):

   
March 31,
2019
   
December 31,
2018
 
Accruing TDR - nonaccrual at restructuring
 
$
   
$
 
Accruing TDR - accruing at restructuring
   
9,844
     
10,336
 
Accruing TDR - upgraded to accruing after six consecutive payments
   
5,844
     
5,693
 
   
$
15,688
   
$
16,029
 

The following tables present information regarding troubled debt restructurings executed during the three month periods ended March 31, 2019 and 2018 (dollars in thousands):

   
Three Months Ended March 31, 2019
   
Three Months Ended March 31, 2018
 
   
# of
Loans
   
Pre-TDR
Balance
   
Writedown
Upon
TDR
   
# of
Loans
   
Pre-TDR
Balance
   
Writedown
Upon
TDR
 
Commercial and industrial
   
   
$
   
$
     
   
$
   
$
 
Commercial real estate
   
     
     
     
3
     
492
     
 
Consumer
   
     
     
     
2
     
68
     
 
   
   
$
   
$
   
5
   
$
560
   
$
 

According to the accounting standards, not all loan modifications are TDRs.  TDRs are modifications or renewals where the Company has granted a concession to a borrower in financial distress.  The Company reviews all modifications and renewals for determination of TDR status.  In some situations a borrower may be experiencing financial distress, but the Company does not provide a concession.  These modifications are not considered TDRs.  In other cases, the Company might provide a concession, such as a reduction in interest rate, but the borrower is not experiencing financial distress.  This could be the case if the Company is matching a competitor’s interest rate.  These modifications would also not be considered TDRs.  Finally, any renewals at existing terms for borrowers not experiencing financial distress would not be considered TDRs.  As with other loans not considered TDR or impaired, allowance allocations are based on the historical based allocation for the applicable loan grade and loan class.
Payment defaults on TDRs have been minimal and during the three month periods ended March 31, 2019 and 2018, the balance of loans that became delinquent by more than 90 days past due or that were transferred to nonaccrual within 12 months of restructuring were not material.

Credit Quality Indicators:   The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.  The Company analyzes commercial loans individually and classifies these relationships by credit risk grading.  The Company uses an eight point grading system, with grades 5 through 8 being considered classified, or watch, credits.  All commercial loans are assigned a grade at origination, at each renewal or any amendment.  When a credit is first downgraded to a watch credit (either through renewal, amendment, loan officer identification or the loan review process), an Administrative Loan Review (“ALR”) is generated by the credit department and the loan officer.  All watch credits have an ALR completed quarterly which analyzes the collateral position and cash flow of the borrower and its guarantors.  Management meets quarterly with loan officers to discuss each of these credits in detail and to help formulate solutions where progress has stalled.  When necessary, the loan officer proposes changes to the assigned loan grade as part of the ALR.  Additionally, Loan Review reviews all loan grades upon origination, renewal or amendment and again as loans are selected though the loan review process.  The credit will stay on the ALR until either its grade has improved to a 4 or the credit relationship is at a zero balance.  The Company uses the following definitions for the risk grades:

1. Excellent - Loans supported by extremely strong financial condition or secured by the Bank’s own deposits. Minimal risk to the Bank and the probability of serious rapid financial deterioration is extremely small.

2. Above Average - Loans supported by sound financial statements that indicate the ability to repay or borrowings secured (and margined properly) with marketable securities. Nominal risk to the Bank and probability of serious financial deterioration is highly unlikely. The overall quality of these credits is very high.

3. Good Quality - Loans supported by satisfactory asset quality and liquidity, good debt capacity coverage, and good management in all critical positions. Loans are secured by acceptable collateral with adequate margins. There is a slight risk of deterioration if adverse market conditions prevail.

4. Acceptable Risk - Loans carrying an acceptable risk to the Bank, which may be slightly below average quality. The borrower has limited financial strength with considerable leverage. There is some probability of deterioration if adverse market conditions prevail. These credits should be monitored closely by the Relationship Manager.

5. Marginally Acceptable - Loans are of marginal quality with above normal risk to the Bank. The borrower shows acceptable asset quality but very little liquidity with high leverage. There is inconsistent earning performance without the ability to sustain adverse market conditions. The primary source of repayment is questionable, but the secondary source of repayment still remains an option. Very close attention by the Relationship Manager and management is needed.

6. Substandard - Loans are inadequately protected by the net worth and paying capacity of the borrower or the collateral pledged. The primary and secondary sources of repayment are questionable. Heavy debt condition may be evident and volume and earnings deterioration may be underway. It is possible that the Bank will sustain some loss if the deficiencies are not immediately addressed and corrected.

7. Doubtful - Loans supported by weak or no financial statements, as well as the ability to repay the entire loan, are questionable. Loans in this category are normally characterized less than adequate collateral, insolvent, or extremely weak financial condition. A loan classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses makes collection or liquidation in full highly questionable. The possibility of loss is extremely high, however, activity may be underway to minimize the loss or maximize the recovery.

8. Loss - Loans are considered uncollectible and of little or no value as a bank asset.

As of March 31, 2019 and December 31, 2018, the risk grade category of commercial loans by class of loans were as follows (dollars in thousands):

March 31, 2019
   
1
     
2
     
3
     
4
     
5
     
6
     
7
     
8
   
Total
 
Commercial and industrial
 
$
15,000
   
$
16,222
   
$
149,782
   
$
296,388
   
$
10,307
   
$
6,192
   
$
   
$
   
$
493,891
 
Commercial real estate:
                                                                       
Residential developed
   
     
     
     
14,295
     
428
     
     
     
     
14,723
 
Unsecured to residential developers
   
     
     
     
     
     
     
     
     
 
Vacant and unimproved
   
     
9,618
     
2,826
     
30,819
     
2,160
     
     
     
     
45,423
 
Commercial development
   
     
     
85
     
616
     
     
     
     
     
701
 
Residential improved
   
     
     
19,658
     
80,677
     
263
     
101
     
102
     
     
100,801
 
Commercial improved
   
     
4,729
     
62,895
     
218,562
     
4,953
     
362
     
111
     
     
291,612
 
Manufacturing & industrial
   
     
3,332
     
24,923
     
86,663
     
4,622
     
     
     
     
119,540
 
   
$
15,000
   
$
33,901
   
$
260,169
   
$
728,020
   
$
22,733
   
$
6,655
   
$
213
   
$
   
$
1,066,691
 

December 31, 2018
   
1
     
2
     
3
     
4
     
5
     
6
     
7
     
8
   
Total
 
Commercial and industrial
 
$
15,000
   
$
15,708
   
$
164,901
   
$
299,622
   
$
11,186
   
$
6,054
   
$
874
   
$
   
$
513,345
 
Commercial real estate:
                                                                       
Residential developed
   
     
     
     
14,220
     
605
     
     
     
     
14,825
 
Unsecured to residential developers
   
     
     
     
     
     
     
     
     
 
Vacant and unimproved
   
     
7,635
     
3,543
     
30,688
     
2,303
     
     
     
     
44,169
 
Commercial development
   
     
     
86
     
626
     
     
     
     
     
712
 
Residential improved
   
     
     
19,645
     
78,337
     
311
     
192
     
15
     
     
98,500
 
Commercial improved
   
     
5,292
     
62,756
     
222,152
     
4,751
     
364
     
303
     
     
295,618
 
Manufacturing & industrial
   
     
3,372
     
24,799
     
81,261
     
5,455
     
     
     
     
114,887
 
   
$
15,000
   
$
32,007
   
$
275,730
   
$
726,906
   
$
24,611
   
$
6,610
   
$
1,192
   
$
   
$
1,082,056
 

Commercial loans rated a 6 or worse per the Company’s internal risk rating system are considered substandard, doubtful or loss. Commercial loans classified as substandard or worse were as follows at period-end (dollars in thousands):

   
March 31,
2019
   
December 31,
2018
 
Not classified as impaired
 
$
   
$
 
Classified as impaired
   
6,868
     
7,802
 
Total commercial loans classified substandard or worse
 
$
6,868
   
$
7,802
 

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in consumer loans based on payment activity (dollars in thousands):

March 31, 2019
 
Residential
Mortgage
   
Consumer
Unsecured
   
Home
Equity
   
Consumer
Other
 
Performing
 
$
237,013
   
$
367
   
$
73,630
   
$
6,671
 
Nonperforming
   
194
     
     
1
     
 
Total
 
$
237,207
   
$
367
   
$
73,631
   
$
6,671
 

December 31, 2018
 
Residential
Mortgage
   
Consumer
Unsecured
   
Home
Equity
   
Consumer
Other
 
Performing
 
$
238,064
   
$
130
   
$
78,502
   
$
6,795
 
Nonperforming
   
110
     
     
1
     
 
Total
 
$
238,174
   
$
130
   
$
78,503
   
$
6,795