8. ALLOWANCE FOR LOAN AND LEASE LOSSES

9 Months Ended

Sep. 30, 2018

Schedule of Troubled Debt Restructurings on Financing Receivables (Tables)

ALLOWANCE FOR LOAN AND LEASE LOSSES

The Company’s loan and lease portfolio allocated by management’s internal risk ratings as of September 30, 2018 and December 31, 2017 are summarized below:

September 30, 2018	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)			Real Estate
	Commercial		Commercial		Multi-family		Construction		Residential
Grade:
Pass	$	24,389	$	172,951	$	61,458	$	7,486	$	15,393
Watch		107		16,202		3,854		—		1,304
Special mention		—		1,247		—		—		—
Substandard		30		277		—		—		—
Total	$	24,526	$	190,677	$	65,312	$	7,486	$	16,697
	Credit Risk Profile by Internally Assigned Grade Other Credit Exposure
	Leases		Agriculture		Consumer				Total
Grade:
Pass	$	61	$	4,591	$	5,234			$	291,563
Watch		—		—		148				21,615
Special mention		—		—		2				1,249
Substandard		—		—		68				375
Total	$	61	$	4,591	$	5,452			$	314,802

December 31, 2017	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)			Real Estate
	Commercial		Commercial		Multi-family		Construction		Residential
Grade:
Pass	$	23,617	$	164,815	$	73,644	$	5,863	$	13,767
Watch		96		18,083		4,381		—		1,507
Special mention		66		2,265		—		—		539
Substandard		—		289		—		—		—
Doubtful		1,598		—		—		—		—
Total	$	25,377	$	185,452	$	78,025	$	5,863	$	15,813
	Credit Risk Profile by Internally Assigned Grade Other Credit Exposure
	Leases		Agriculture		Consumer				Total
Grade:
Pass	$	205	$	1,713	$	713			$	284,337
Watch		—		—		155				24,222
Special mention		—		—		70				2,940
Substandard		—		—		7				296
Doubtful		—		—		—				1,598
Total	$	205	$	1,713	$	945			$	313,393

The allocation of the Company’s allowance for loan and lease losses and by portfolio segment and by impairment methodology are summarized below:

September 30, 2018
(dollars in thousands)				Real Estate										Other
	Commercial			Commercial			Multi-Family			Construction		Residential		Leases			Agriculture		Consumer		Unallocated			Total
Allowance for Loan and Lease Losses
Beginning balance, January 1, 2018	$	447		$	2,174		$	1,047		$	269	$	205	$	—		$	31	$	14	$	291		$	4,478
Provision for loan losses		300			(208	)		(307	)		89		35		(1	)		64		80		(2	)		50
Loans charged-off		(213	)		—			—			—		—		—			—		—		—			(213	)
Recoveries		10			6			—			—		—		1			—		—		—			17
Ending balance, September 30, 2018	$	544		$	1,972		$	740		$	358	$	240	$	—		$	95	$	94	$	289		$	4,332
Ending balance:
Individually evaluated for impairment	$	—		$	118		$	—		$	—	$	63	$	—		$	—	$	—	$	—		$	181
Ending balance:
Collectively evaluated for impairment	$	544		$	1,854		$	740		$	358	$	177	$	—		$	95	$	94	$	289		$	4,151
Loans
Ending balance	$	24,526		$	190,677		$	65,312		$	7,486	$	16,697	$	61		$	4,591	$	5,452	$	—		$	314,802
Ending balance:
Individually evaluated for impairment	$	—		$	8,136		$	—		$	—	$	1,057	$	—		$	—	$	68	$	—		$	9,261
Ending balance:
Collectively evaluated for impairment	$	24,526		$	182,541		$	65,312		$	7,486	$	15,640	$	61		$	4,591	$	5,384	$	—		$	305,541
Allowance for Loan and Lease Losses
Beginning balance, June 30, 2018	$	669		$	2,100		$	839		$	298	$	239	$	—		$	49	$	11	$	287		$	4,492
Provision for loan losses		87			(130	)		(99	)		60		1		—			46		83		2			50
Loans charged off		(213	)		—			—			—		—		—			—		—		—			(213	)
Recoveries		1			2			—			—		—		—			—		—		—			3
Ending balance, September 30, 2018	$	544		$	1,972		$	740		$	358	$	240	$	—		$	95	$	94	$	289		$	4,332

December 31, 2017
(dollars in thousands)				Real Estate										Other
	Commercial			Commercial			Multi-Family		Construction		Residential			Leases			Agriculture			Consumer			Unallocated		Total
Ending balance:
Individually evaluated for impairment	$	—		$	261		$	21	$	—	$	73		$	—		$	—		$	—		$	—	$	355
Ending balance:
Collectively evaluated for impairment	$	447		$	1,913		$	1,026	$	269	$	132		$	—		$	31		$	14		$	291	$	4,123
Loans
Ending balance	$	25,377		$	185,452		$	78,025	$	5,863	$	15,813		$	205		$	1,713		$	945		$	—	$	313,393
Ending balance:
Individually evaluated for impairment	$	1,598		$	10,070		$	474	$	—	$	1,615		$	—		$	—		$	—		$	—	$	13,757
Ending balance:
Collectively evaluated for impairment	$	23,779		$	175,382		$	77,551	$	5,863	$	14,198		$	205		$	1,713		$	945		$	—	$	299,636
September 30, 2017
(dollars in thousands)				Real Estate										Other
	Commercial			Commercial			Multi-Family		Construction		Residential			Leases			Agriculture			Consumer			Unallocated		Total
Allowance for Loan and Lease Losses
Beginning balance, January 1, 2017	$	855		$	2,050		$	851	$	446	$	253		$	1		$	64		$	24		$	278	$	4,822
Provision for loan losses		240			(16	)		147		34		(22	)		(40	)		(35	)		(11	)		3		300
Loans charged-off		(673	)		—			—		—		—			—			—			—			—		(673	)
Recoveries		5			54			—		—		—			39			—			4			—		102
Ending balance, September 30, 2017	$	427		$	2,088		$	998	$	480	$	231		$	—		$	29		$	17		$	281	$	4,551
Allowance for Loan and Lease Losses
Beginning balance, June 30, 2017	$	916		$	2,091		$	789	$	457	$	268		$	1		$	59		$	19		$	281	$	4,881
Provision for loan losses		182			(4	)		209		23		(37	)		(40	)		(30	)		(3	)		—		300
Loans charged off		(673	)		—			—		—		—			—			—			—			—		(673	)
Recoveries		2			1			—		—		—			39			—			1			—		43
Ending balance, September 30, 2017	$	427		$	2,088		$	998	$	480	$	231		$	—		$	29		$	17		$	281	$	4,551

The Company’s aging analysis of the loan and lease portfolio at September 30, 2018 and December 31, 2017 are summarized below:

September 30, 2018													Past Due
(dollars in thousands)					Past Due								Greater Than
	30-59 Days		60-89 Days		Greater Than		Total Past						90 Days and
	Past Due		Past Due		90 Days		Due		Current		Total Loans		Accruing		Nonaccrual
Commercial:
Commercial	$	—	$	—	$	—	$	—	$	24,526	$	24,526	$	—	$	30
Real estate:
Commercial		278		—		—		278		190,399		190,677		—		278
Multi-family		—		—		—		—		65,312		65,312		—		—
Construction		—		—		—		—		7,486		7,486		—		—
Residential		3,273		499		—		3,772		12,925		16,697		—		—
Other:
Leases		—		—		—		—		61		61		—		—
Agriculture		—		—		—		—		4,591		4,591		—		—
Consumer		—		—		68		68		5,384		5,452		—		68
Total	$	3,551	$	499	$	68	$	4,118	$	310,684	$	314,802	$	—	$	376

December 31, 2017													Past Due
(dollars in thousands)					Past Due								Greater Than
	30-59 Days		60-89 Days		Greater Than		Total Past						90 Days and
	Past Due		Past Due		90 Days		Due		Current		Total Loans		Accruing		Nonaccrual
Commercial:
Commercial	$	—	$	—	$	—	$	—	$	25,377	$	25,377	$	—	$	1,597
Real estate:
Commercial		—		—		289		289		185,163		185,452		—		289
Multi-family		—		—		—		—		78,025		78,025		—		—
Construction		—		—		—		—		5,863		5,863		—		—
Residential		146		—		—		146		15,667		15,813		—		—
Other:
Leases		—		—		—		—		205		205		—		—
Agriculture		—		—		—		—		1,713		1,713		—		—
Consumer		1		—		—		1		944		945		—		6
Total	$	147	$	—	$	289	$	436	$	312,957	$	313,393	$	—	$	1,892