CHFC 2018 Annual Report

Nonperforming Loans — Consumer Loan Portfolio Nonperforming residential mortgage loans were $8.0 million at December 31, 2018, a decrease of $0.6 million, or 7.5%, from $8.6 million at December 31, 2017. Nonperforming residential mortgage loans comprised 0.2% of total residential mortgage loans at December 31, 2018, compared to 0.3% at December 31, 2017. At December 31, 2018, a total of $1.1 million of nonperforming residential mortgage loans were in various stages of foreclosure, compared to $0.5 million at December 31, 2017. Nonperforming consumer installment loans were $1.3 million at December 31, 2018, compared to $0.8 million at December 31, 2017. Nonperforming consumer installment loans comprised 0.1% of total consumer installment loans at both December 31, 2018 and 2017. Nonperforming home equity loans were $3.6 million at December 31, 2018, a decrease of $0.7 million, or 16.3%, from $4.3million at December 31, 2017. Nonperforming home equity loans comprised 0.5%of total home equity loans at bothDecember 31, 2018 and 2017. 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 we grant a concession on their loan because we determine that it is probable that if a modification of their loan is granted, such as reducing their monthly payments, we would be able to bring their loan relationships into 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 (both accruing and nonaccrual) at December 31, 2018 and 2017: Accruing TDRs Total (Dollars in thousands) Current Past Due 31-89 Days Sub- Total Nonaccrual TDRs December 31, 2018 Commercial loan portfolio $ 32,173 $ 335 $ 32,508 $ 24,343 $ 56,851 Consumer loan portfolio 12,532 540 13,072 3,732 16,804 Total TDRs $ 44,705 $ 875 $ 45,580 $ 28,075 $ 73,655 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 A summary of changes in accruing TDRs in the commercial loan portfolio follows: Years Ended December 31, (Dollars in thousands) 2018 2017 Balance at beginning of period $ 34,484 $ 45,388 Additions for modifications 13,137 5,273 Principal payments and pay-offs (7,810) (8,530) Transfers from nonaccrual status 2,242 3,286 Transfers to nonaccrual status (9,545) (10,933) Balance at end of period $ 32,508 $ 34,484 61