Allowance for Credit Losses on Loans (Tables)

3 Months Ended

Mar. 31, 2020

Allowance for Credit Losses on Loans


	March 31,		December 31,
	2020		2019
	(Dollars in thousands)
Loans held-for-investment:
Commercial	$	682,280	$	603,345
Real estate:
CRE - owner occupied		543,164		548,907
CRE - non-owner occupied		755,008		767,821
Land and construction		153,358		147,189
Home equity		117,768		151,775
Multifamily		172,875		180,623
Residential mortgages		96,271		100,759
Consumer and other		33,445		33,744
Loans		2,554,169		2,534,163
Deferred loan fees, net		(258)		(319)
Loans, net of deferred fees		2,553,911		2,533,844
Allowance for credit losses on loans(1)		(44,703)		(23,285)
Loans, net	$	2,509,208	$	2,510,559

(1)Allowance for credit losses on loans at March 31, 2020, Allowance for loan losses for the prior periods

Schedule of changes in allowance for loan (credit) losses


			CRE		CRE
			Owner		Non-owner		Land &		Home		Multi-		Residential		Consumer
	Commercial		Occupied		Occupied		Construction		Equity		Family		Mortgage		and Other		Total
	(Dollars in thousands)
Beginning of period balance	$	10,453	$	3,825	$	3,760	$	2,621	$	2,244	$	57	$	243	$	82	$	23,285
Adoption of Topic 326		(3,663)		3,169		7,912		(1,163)		(923)		1,196		435		1,607		8,570
Balance at adoption on January 1, 2020		6,790		6,994		11,672		1,458		1,321		1,253		678		1,689		31,855
Charge-offs		(670)		—		—		—		—		—		—		(3)		(673)
Recoveries		209		—		—		19		23		—		—		—		251
Net (charge-offs) recoveries		(461)		—		—		19		23		—		—		(3)		(422)
Provision for credit losses on loans		6,472		743		3,973		1,126		402		369		30		155		13,270
End of period balance	$	12,801	$	7,737	$	15,645	$	2,603	$	1,746	$	1,622	$	708	$	1,841	$	44,703

Changes in the allowance for loan losses were as follows for the three months ended March 31, 2019:


	Commercial		Real Estate		Consumer		Total
	(Dollars in thousands)
Beginning of period balance	$	17,061	$	10,671	$	116	$	27,848
Charge-offs		(226)		—		—		(226)
Recoveries		715		42		—		757
Net recoveries		489		42		—		531
Provision (credit) for loan losses		(1,993)		958		(26)		(1,061)
End of period balance	$	15,557	$	11,671	$	90	$	27,318

Schedule of balance in allowance for loan losses and recorded investment in loans by portfolio segment, based on impairment method


	December 31, 2019
					Allowance
	Unpaid				for Loan
	Principal		Recorded		Losses
	Balance		Investment		Allocated
	(Dollars in thousands)
With no related allowance recorded:
Commercial	$	2,113	$	2,113	$	—
Real estate:
CRE		5,094		5,094		—
Home Equity		360		360		—
Total with no related allowance recorded		7,567		7,567		—

With an allowance recorded:
Commercial		2,697		2,697		1,835
Total with an allowance recorded		2,697		2,697		1,835
Total	$	10,264	$	10,264	$	1,835

Schedule of loans held-for-investment individually evaluated for impairment by class of loans


	December 31, 2019
	Commercial		Real Estate		Consumer		Total
	(Dollars in thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,835	$	—	$	—	$	1,835
Collectively evaluated for impairment		8,618		12,750		82		21,450
Total allowance balance	$	10,453	$	12,750	$	82	$	23,285
Loans:
Individually evaluated for impairment	$	4,810	$	5,454	$	—	$	10,264
Collectively evaluated for impairment		626,737		1,877,280		19,882		2,523,899
Total loan balance	$	631,547	$	1,882,734	$	19,882	$	2,534,163

Schedule of nonperforming loans by class


						Restructured
	Nonaccrual		Nonaccrual			and Loans
	with no		with			over 90 Days
	Allowance for		Allowance for			Past Due
	Credit		Credit			and Still
	Losses		Losses			Accruing	Total
	(Dollars in thousands)
Commercial	$	781	$	1,827	$	442	$	3,050
Real estate:
CRE - Owner Occupied		7,346		—		—		7,346
CRE - Non-Owner Occupied		—		—		—		—
Land and construction		—		—		—		—
Home equity		126		—		—		126
Multifamily		—		—		—		—
Residential mortgages		—		—		—		—
Consumer		—		1,566		—		1,566
Total	$	8,253	$	3,393	$	442	$	12,088


			Restructured
			and Loans
			over 90 Days
			Past Due
			and Still
	Nonaccrual		Accruing		Total
	(Dollars in thousands)
Commercial	$	3,444	$	1,153	$	4,597
Real estate:
CRE		5,094		—		5,094
Home equity		137		—		137
Total	$	8,675	$	1,153	$	9,828

Schedule of aging of past due loans by class of loans


	March 31, 2020
	30 - 59		60 - 89		90 Days or
	Days		Days		Greater		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total
	(Dollars in thousands)
Commercial	$	7,256	$	1,130	$	2,158	$	10,544	$	671,736	$	682,280
Real estate:
CRE - Owner Occupied		693		1,184		5,094		6,971		536,193		543,164
CRE - Non-Owner Occupied		—		—		—		—		755,008		755,008
Land and construction		—		—		—		—		153,358		153,358
Home equity		571		125		—		696		117,072		117,768
Multifamily		—		—		—		—		172,875		172,875
Residential mortgages		—		—		—		—		96,271		96,271
Consumer		—		—		—		—		33,445		33,445
Total	$	8,520	$	2,439	$	7,252	$	18,211	$	2,535,958	$	2,554,169


	December 31, 2019
	30 - 59		60 - 89		90 Days or
	Days		Days		Greater		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total
	(Dollars in thousands)
Commercial	$	4,770	$	2,097	$	3,217	$	10,084	$	593,261	$	603,345
Real estate:
CRE - Owner Occupied		—		—		5,094		5,094		543,813		548,907
CRE - Non-Owner Occupied		—		—		—		—		767,821		767,821
Land and construction		—		—		—		—		147,189		147,189
Home equity		—		137		—		137		151,638		151,775
Multifamily		—		—		—		—		180,623		180,623
Residential mortgages		—		—		—		—		100,759		100,759
Consumer		—		—		—		—		33,744		33,744
Total	$	4,770	$	2,234	$	8,311	$	15,315	$	2,518,848	$	2,534,163

Schedule of amortized cost basis of collateral-dependant loans


		Collateral Type
		Real
		Estate		Business
		Property		Assets		Unsecured		Total
	(Dollars in thousands)
Commercial	$	1,600	$	575	$	1,252	$	3,427
Real estate:								-
CRE - Owner Occupied		5,094		-		-		5,094
CRE - Non-Owner Occupied		-		-		-		-
Land and construction		-		-		-		-
Home equity		-		-		-		-
Multifamily		-		-		-		-
Residential mortgages		-		-		-		-
Consumer		-		-		-		-
Total	$	6,694	$	575	$	1,252	$	8,521

Summary of loan portfolio by loan type and credit quality classification


														Revolving
														Loans
		Term Loans Amortized Cost Basis by Originated Period												Amortized
												2015 and		Cost
		3/31/2020		12/31/2019		12/31/2018		12/31/2017		12/31/2016		Prior		Basis		Total
	(Dollars in thousands)
Commercial:
Pass	$	64,965	$	54,854	$	37,330	$	18,556	$	12,307	$	11,754	$	348,529	$	548,295
Watch		4,115		6,482		8,093		6,756		3,861		6,461		48,902		84,670
Special Mention		2,370		7,724		5,419		4,993		5,763		537		2,905		29,711
Substandard		55		368		23		519		2,890		107		13,034		16,996
Substandard-Nonaccrual		600		435		943		-		282		53		295		2,608
Total		72,105		69,863		51,808		30,824		25,103		18,912		413,665		682,280

CRE - Owner Occupied:
Pass		31,231		87,203		73,534		66,267		53,059		137,935		16,604		465,833
Watch		5,216		6,901		9,735		8,204		5,020		20,652		-		55,728
Special Mention		334		769		235		2,850		550		4,377		-		9,115
Substandard		-		510		-		3,440		720		472		-		5,142
Substandard-Nonaccrual		-		265		-		-		-		7,081		-		7,346
Total		36,781		95,648		83,504		80,761		59,349		170,517		16,604		543,164

CRE - Non-Owner Occupied:
Pass		57,046		152,841		90,155		123,087		69,165		237,623		3,577		733,494
Watch		-		3,379		1,460		521		7,074		6,657		-		19,091
Special Mention		-		61		-		-		-		1,373		-		1,434
Substandard		-		-		-		-		-		989		-		989
Substandard-Nonaccrual		-		-		-		-		-		-		-		-
Total		57,046		156,281		91,615		123,608		76,239		246,642		3,577		755,008

Land and contruction:
Pass		44,780		49,617		28,182		1,560		-		1,398		1,581		127,118
Watch		7,613		12,922		-		-		-		-		-		20,535
Special Mention		4,122		-		-		-		-		-		-		4,122
Substandard		1,583		-		-		-		-		-		-		1,583
Substandard-Nonaccrual		-		-		-		-		-		-		-		-
Total		58,098		62,539		28,182		1,560		-		1,398		1,581		153,358

Home equity:
Pass		-		-		824		-		-		-		109,085		109,909
Watch		-		-		-		281		-		-		5,750		6,031
Special Mention		-		-		-		-		-		-		100		100
Substandard		-		-		-		-		-		146		1,456		1,602
Substandard-Nonaccrual		-		-		-		-		-		126		-		126
Total		-		-		824		281		-		272		116,391		117,768

Multifamily:
Pass		9,939		48,689		18,764		30,371		18,187		43,011		844		169,805
Watch		-		-		-		-		846		401		-		1,247
Special Mention		-		1,225		-		598		-		-		-		1,823
Substandard		-		-		-		-		-		-		-		-
Substandard-Nonaccrual		-		-		-		-		-		-		-		-
Total		9,939		49,914		18,764		30,969		19,033		43,412		844		172,875

Residential mortgage:
Pass		1,722		11,744		4,205		11,992		37,569		19,047		-		86,279
Watch		-		439		1,688		-		1,912		1,846		-		5,885
Special Mention		-		691		-		1,295		561		1,069		-		3,616
Substandard		-		222		-		-		-		269		-		491
Substandard-Nonaccrual		-		-		-		-		-		-		-		-
Total		1,722		13,096		5,893		13,287		40,042		22,231		-		96,271

Consumer:
Pass		15		2,980		1,589		24		14		1,051		24,941		30,614
Watch		-		37		-		-		131		-		1,013		1,181
Special Mention		-		84		-		-		-		-		-		84
Substandard		-		-		-		-		-		-		-		-
Substandard-Nonaccrual		-		-		1,566		-		-		-		-		1,566
Total		15		3,101		3,155		24		145		1,051		25,954		33,445

Total loans	$	235,706	$	450,442	$	283,745	$	281,314	$	219,911	$	504,435	$	578,616	$	2,554,169

Schedule of loans by class modified as troubled debt restructurings


	During the Three Months Ended
		March 31, 2020
				Pre-modification		Post-modification
		Number		Outstanding		Outstanding
		of		Recorded		Recorded
Troubled Debt Restructurings:		Contracts		Investment		Investment
	(Dollars in thousands)
Commercial		3	$	13	$	13
Real estate:
CRE - owner occupied		—		—		—
CRE - non-owner occupied		—		—		—
Land and construction		—		—		—
Home equity		—		—		—
Multifamily		—		—		—
Residential mortgages		—		—		—
Consumer		—		—		—
Total		3	$	13	$	13