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Loans and Allowance for Loan and Lease Losses - (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of composition of loan portfolio

The loan portfolio consisted of the following at:


	June 30, 2020						December 31, 2019
(Dollars in thousands)	Amount		Percent		Amount		Percent
Commercial loans	$	698,280	51.0	%	$	409,420	36.2	%
Commercial real estate loans – owner occupied	195,379		14.3	%	219,483		19.5	%
Commercial real estate loans – all other	203,330		14.8	%	208,283		18.5	%
Residential mortgage loans – multi-family	164,575		12.0	%	176,523		15.7	%
Residential mortgage loans – single family	15,522		1.1	%	18,782		1.7	%
Construction and land development loans	7,247		0.5	%	2,981		0.3	%
Consumer loans	85,414		6.3	%	90,867		8.1	%
Gross loans	1,369,747		100.0	%	1,126,339		100.0	%
Deferred fee (income) costs, net	(781)				4,783
Allowance for loan and lease losses	(18,166)				(13,611)
Loans, net	$	1,350,800			$	1,117,511

Schedule of allowance for loan losses and loan balances

Set forth below is a summary of the activity in the ALLL, by portfolio type, during the three and six months ended June 30, 2020 and 2019:


(Dollars in thousands)	Commercial		Real Estate		Construction and Land Development		Consumer and Single Family Mortgages		Unallocated		Total
ALLL in the three months ended June 30, 2020:
Balance at beginning of period	$	11,218	$	4,368	$	55	$	1,879	$	—	$	17,520
Charge offs	(2,229)		—		—		(20)		—		(2,249)
Recoveries	42		—		—		3		—		45
Provision	2,456		365		22		7		—		2,850
Balance at end of period	$	11,487	$	4,733	$	77	$	1,869	$	—	$	18,166
ALLL in the six months ended June 30, 2020:
Balance at beginning of period	$	8,883	$	2,897	$	34	$	1,797	$	—	$	13,611
Charge offs	(4,478)		—		—		(84)		—		(4,562)
Recoveries	60		—		—		7		—		67
Provision	7,022		1,836		43		149		—		9,050
Balance at end of period	$	11,487	$	4,733	$	77	$	1,869	$	—	$	18,166
ALLL in the three months ended June 30, 2019:
Balance at beginning of period	$	6,895	$	2,709	$	295	$	1,486	$	129	$	11,514
Charge offs	(103)		—		—		(24)		—		(127)
Recoveries	82		—		—		5		—		87
Provision	(65)		81		(176)		289		(129)		—
Balance at end of period	$	6,809	$	2,790	$	119	$	1,756	$	—	$	11,474
ALLL in the six months ended June 30, 2019:
Balance at beginning of period	$	8,071	$	3,643	$	426	$	1,290	$	76	$	13,506
Charge offs	(5,772)		—		—		(53)		—		(5,825)
Recoveries	483		—		—		10		—		493
Provision	4,027		(853)		(307)		509		(76)		3,300
Balance at end of period	$	6,809	$	2,790	$	119	$	1,756	$	—	$	11,474

Set forth below is information regarding loan balances and the related ALLL, by portfolio type, as of June 30, 2020 and December 31, 2019.


(Dollars in thousands)	Commercial		Real Estate		Construction and Land Development		Consumer and Single Family Mortgages		Unallocated		Total
ALLL balance at June 30, 2020 related to:
Loans individually evaluated for impairment	$	911	$	—	$	—	$	—	$	—	$	911
Loans collectively evaluated for impairment	10,576		4,733		77		1,869		—		17,255
Total	$	11,487	$	4,733	$	77	$	1,869	$	—	$	18,166
Loan balance at June 30, 2020 related to:
Loans individually evaluated for impairment	$	17,968	$	5,875	$	—	$	—	$	—	$	23,843
Loans collectively evaluated for impairment	680,312		557,410		7,247		100,935		—		1,345,904
Total	$	698,280	$	563,285	$	7,247	$	100,935	$	—	$	1,369,747
ALLL balance at December 31, 2019 related to:
Loans individually evaluated for impairment	$	561	$	—	$	—	$	—	$	—	$	561
Loans collectively evaluated for impairment	8,322		2,897		34		1,797		—		13,050
Total	$	8,883	$	2,897	$	34	$	1,797	$	—	$	13,611
Loan balance at December 31, 2019 related to:
Loans individually evaluated for impairment	$	9,056	$	6,507	$	—	$	—	$	—	$	15,563
Loans collectively evaluated for impairment	400,364		597,782		2,981		109,649		—		1,110,776
Total	$	409,420	$	604,289	$	2,981	$	109,649	$	—	$	1,126,339

Summary of delinquency status of loans by portfolio type

The following table provides a summary of the delinquency status of loans by portfolio type at June 30, 2020 and December 31, 2019:


(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans Outstanding		Loans >90 Days and Accruing
At June 30, 2020
Commercial loans	$	4,070	$	1,842	$	11,857	$	17,769	$	680,511	$	698,280	$	670
Commercial real estate loans – owner-occupied	—		1,063		—		1,063		194,316		195,379		—
Commercial real estate loans – all other	—		—		—		—		203,330		203,330		—
Residential mortgage loans – multi-family	—		—		375		375		164,200		164,575		375
Residential mortgage loans – single family	—		—		—		—		15,522		15,522		—
Construction and land development loans	—		—		—		—		7,247		7,247		—
Consumer loans	200		—		180		380		85,034		85,414		—
Total	$	4,270	$	2,905	$	12,412	$	19,587	$	1,350,160	$	1,369,747	$	1,045
At December 31, 2019
Commercial loans	$	354	$	1,361	$	533	$	2,248	$	407,172	$	409,420	$	—
Commercial real estate loans – owner-occupied	749		—		—		749		218,734		219,483		—
Commercial real estate loans – all other	—		—		—		—		208,283		208,283		—
Residential mortgage loans – multi-family	—		—		—		—		176,523		176,523		—
Residential mortgage loans – single family	—		—		—		—		18,782		18,782		—
Construction and land development loans	—		—		—		—		2,981		2,981		—
Consumer loans	312		3		—		315		90,552		90,867		—
Total	$	1,415	$	1,364	$	533	$	3,312	$	1,123,027	$	1,126,339	$	—

Schedule of loans on nonaccrual status by portfolio type

The following table provides information with respect to loans on nonaccrual status, by portfolio type, as of June 30, 2020 and December 31, 2019:


	June 30, 2020		December 31, 2019
	(Dollars in thousands)
Nonaccrual loans:
Commercial loans	$	18,200	$	9,101
Commercial real estate loans – owner occupied	6,225		6,507




Consumer	256		74
Total⁽¹⁾	$	24,681	$	15,682

(1) Nonaccrual loans may include loans that are currently considered performing loans.

Summary of loans by portfolio type and internal credit quality ratings

The following table provides a summary of loans by portfolio type and our internal asset quality ratings as of June 30, 2020 and December 31, 2019:


	June 30, 2020		December 31, 2019
	(Dollars in thousands)
Pass:
Commercial loans	$	623,600	$	357,079
Commercial real estate loans – owner occupied	163,675		206,589
Commercial real estate loans – all other	203,330		208,283
Residential mortgage loans – multi family	164,201		176,523
Residential mortgage loans – single family	15,522		18,782
Construction and land development loans	7,247		2,981
Consumer loans	84,796		90,793
Total pass loans	$	1,262,371	$	1,061,030
Special Mention:
Commercial loans	$	20,321	$	21,894
Commercial real estate loans – owner occupied	4,239		6,387

Residential mortgage loans – multi family	375		—



Total special mention loans	$	24,935	$	28,281
Substandard:
Commercial loans	$	50,532	$	30,447
Commercial real estate loans – owner occupied	27,465		6,507




Consumer loans	618		74
Total substandard loans	$	78,615	$	37,028
Doubtful:
Commercial loans	$	3,826	$	—






Total doubtful loans	$	3,826	$	—
Total Loans:	$	1,369,747	$	1,126,339

Schedule of Impaired Loans

The following table sets forth information regarding impaired loans, at June 30, 2020 and December 31, 2019:


	June 30, 2020		December 31, 2019
	(Dollars in thousands)
Impaired loans:
Nonaccruing loans	$	24,681	$	15,682
Nonaccruing restructured loans⁽¹⁾	—		—
Accruing restructured loans⁽¹⁾⁽²⁾	—		—

Total impaired loans	$	24,681	$	15,682
Impaired loans less than 90 days delinquent and included in total impaired loans	$	13,314	$	15,149

(1)As of June 30, 2020 and December 31, 2019, we had no restructured loans.

(2)See “Troubled Debt Restructurings” below for a description of accruing restructured loans at June 30, 2020 and December 31, 2019.

The table below contains additional information with respect to impaired loans, by portfolio type, as of June 30, 2020 and December 31, 2019:


	June 30, 2020										December 31, 2019
	Recorded Investment		Unpaid Principal Balance		Related Allowance (1)		Recorded Investment		Unpaid Principal Balance		Related Allowance (1)
	(Dollars in thousands)
No allowance recorded:
Commercial loans	$	15,208	$	22,832	$	—	$	7,996	$	12,090	$	—
Commercial real estate loans – owner occupied	6,225		6,750		—		6,507		6,784		—




Consumer loans	256		297		—		74		101		—
Total	$	21,689	$	29,879	$	—	$	14,577	$	18,975	$	—
With allowance recorded:
Commercial loans	$	2,992	$	3,062	$	911	$	1,105	$	1,122	$	561






Total	$	2,992	$	3,062	$	911	$	1,105	$	1,122	$	561
All impaired loans
Commercial loans	$	18,200	$	25,894	$	911	$	9,101	$	13,212	$	561
Commercial real estate loans – owner occupied	6,225		6,750		—		6,507		6,784		—




Consumer loans	256		297		—		74		101		—
Total	$	24,681	$	32,941	$	911	$	15,682	$	20,097	$	561

(1)When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, then specific reserves are not required to be set aside for the loan within the ALLL. This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the balance of the principal outstanding.

Average balances and interest income recognized on impaired loans, by portfolio type, for the three and six months ended June 30, 2020 and 2019 were as follows:


	Three Months Ended June 30,														Six Months Ended June 30,
	2020						2019						2020				2019
	Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized		Average Balance		Interest Income Recognized
	(Dollars in thousands)
No allowance recorded:
Commercial loans	$	13,784	$	19	$	471	$	—	$	11,855	$	115	$	1,432	$	—
Commercial real estate loans – owner occupied	6,297		—		794		—		6,367		—		806		—
Commercial real estate loans – all other	—		—		—		—		—		—		—		—

Residential mortgage loans – single family	—		—		—		—		—		—		—		—

Consumer loans	221		—		67		—		172		—		59		—
Total	20,302		19		1,332		—		18,394		115		2,297		—
With allowance recorded:
Commercial loans	2,048		—		—		—		1,734		—		—		—






Total	2,048		—		—		—		1,734		—		—		—
Total
Commercial loans	15,832		19		471		—		13,589		115		1,432		—
Commercial real estate loans – owner occupied	6,297		—		794		—		6,367		—		806		—
Commercial real estate loans – all other	—		—		—		—		—		—		—		—

Residential mortgage loans – single family	—		—		—		—		—		—		—		—

Consumer loans	221		—		67		—		172		—		59		—
Total	$	22,350	$	19	$	1,332	$	—	$	20,128	$	115	$	2,297	$	—