CHFC 2017 Annual Report

Nonperforming Loans — Consumer Loan Portfolio Nonperforming residential mortgage loans were $8.6 million at December 31, 2017, an increase of $1.7 million, or 23.9%, from $7.0 million at December 31, 2016. Nonperforming residential mortgage loans comprised 0.3% of total residential mortgage loans at December 31, 2017, compared to 0.2% of total residential mortgage loans at December 31, 2016. At December 31, 2017, a total of $0.5 million of nonperforming residential mortgage loans were in various stages of foreclosure, compared to $1.8 million at December 31, 2016. Nonperforming consumer installment loans were $0.8 million at December 31, 2017, compared to $0.9 million at December 31, 2016. Nonperforming consumer installment loans comprised 0.05% of total consumer installment loans at December 31, 2017 compared to 0.06% at 2016. Nonperforming home equity loans were $4.3 million at December 31, 2017, an increase of $1.0 million, or 28.5%, from $3.4 million at December 31, 2016. Nonperforming home equity loans comprised 0.5% of total home equity loans at December 31, 2017, compared to 0.4% of total home equity loans at December 31, 2016. Troubled Debt Restructurings (TDRs) We assess all loan modifications to determine whether a restructuring constitutes a TDR. A restructuring is considered a TDR when a borrower demonstrates financial difficulties and for which a concession has been granted. We determined that it was probable that certain customers who were past due on their loans, if provided a modification of their loans by reducing their monthly payments, would be able to bring their loan relationships to a performing status. We believe loan modifications will potentially result in a lower level of loan losses and loan collection costs than if we proceeded immediately through the foreclosure process with these borrowers. Accruing TDRs continue to accrue interest at the loan's original interest rate as we expect to collect the remaining principal balance on the loan. Nonaccrual loans that meet the definition of a TDR do not accrue interest as we do not expect to collect the full amount of principal and interest owed from the borrower on these loans. The following summarizes TDRs at December 31, 2017 and 2016: Accruing TDRs Total (Dollars in thousands) Current Past Due 31-90 Days Sub- Total Nonaccrual TDRs December 31, 2017 Commercial loan portfolio $ 30,706 $ 3,778 $ 34,484 $ 24,358 $ 58,842 Consumer loan portfolio 13,552 746 14,298 4,748 19,046 Total TDRs $ 44,258 $ 4,524 $ 48,782 $ 29,106 $ 77,888 December 31, 2016 Commercial loan portfolio $ 43,041 $ 2,347 $ 45,388 $ 25,397 $ 70,785 Consumer loan portfolio 16,690 457 17,147 5,134 22,281 Total TDRs $ 59,731 $ 2,804 $ 62,535 $ 30,531 $ 93,066 A summary of changes in accruing TDRs in the commercial loan portfolio follows: Years Ended December 31, (Dollars in thousands) 2017 2016 Balance at beginning of period $ 45,388 $ 46,141 Additions for modifications 5,273 13,238 Principal payments and pay-offs (8,530) (10,457) Transfers from nonaccrual status 3,286 2,045 Transfers to nonaccrual status (10,933) (5,579) Balance at end of period $ 34,484 $ 45,388 57