Allowance for Loan Losses and Credit Quality (Tables)

6 Months Ended

Jun. 30, 2018

The following table provides an aging of the loan portfolio by loan class at June 30, 2018:



(Dollars in thousands)	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days Accruing		Non-accrual Loans
Commercial
Construction	$	—	$	—	$	—	$	—	$	138,144	$	138,144	$	—	$	—
Commercial Business	13		251		808		1,072		105,286		106,358		—		4,111
Commercial Real Estate	1,333		514		3,268		5,115		373,883		378,998		—		3,268
Mortgage Warehouse Lines	—		—		—		—		204,359		204,359		—		—
Residential Real Estate	—		60		1,123		1,183		44,865		46,048		—		1,123
Consumer
Loans to Individuals	—		—		205		205		25,357		25,562		—		411
Other	—		—		—		—		192		192		—		—
Total loans	$	1,346	$	825	$	5,404	$	7,575	$	892,086	899,661		$	—	$	8,913
Deferred loan costs, net											251
Total loans, including deferred loan costs, net											$	899,912

The following table provides an aging of the loan portfolio by loan class at December 31, 2017:



(Dollars in thousands)	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days Accruing		Non-accrual Loans
Commercial
Construction	$	—	$	—	$	—	$	—	$	136,412	$	136,412	$	—	$	—
Commercial Business	180		545		619		1,344		91,562		92,906		—		4,212
Commercial Real Estate	540		—		2,465		3,005		305,919		308,924		—		2,465
Mortgage Warehouse Lines	—		—		—		—		189,412		189,412		—		—
Residential Real Estate	911		256		69		1,236		39,258		40,494		—		69
Consumer
Loans to Individuals	119		—		116		235		20,790		21,025		—		368
Other	—		—		—		—		183		183		—		—
Total loans	$	1,750	$	801	$	3,269	$	5,820	$	783,536	789,356		$	—	$	7,114
Deferred loan costs, net											550
Total loans, including deferred loan costs, net											$	789,906

Financing Receivable Credit Quality Indicators

The following table provides a breakdown of the loan portfolio by credit quality indicator at June 30, 2018:



(Dollars in thousands)
Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	133,827	$	93,532	$	357,024	$	204,359	$	44,579
Special Mention	4,317		8,535		11,083		—		116
Substandard	—		4,031		10,891		—		1,353
Doubtful	—		260		—		—		—
Total	$	138,144	$	106,358	$	378,998	$	204,359	$	46,048



Consumer Credit Exposure - By Payment Activity	Loans To Individuals		Other

Performing	$	25,151	$	192
Non-performing	411		—
Total	$	25,562	$	192

The following table provides a breakdown of the loan portfolio by credit quality indicator at December 31, 2017:



(Dollars in thousands)
Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	136,180	$	84,746	$	289,203	$	189,412	$	39,539
Special Mention	232		3,454		13,267		—		666
Substandard	—		1,252		6,454		—		289
Doubtful	—		3,454		—		—		—
Total	$	136,412	$	92,906	$	308,924	$	189,412	$	40,494



Consumer Credit Exposure - By Payment Activity	Loans To Individuals		Other
Performing	$	20,657	$	183
Non-performing	368		—
Total	$	21,025	$	183

Allowance for Credit Losses on Financing Receivables

The following tables summarize the distribution of the allowance for loan losses and loans receivable by loan class and impairment method at June 30, 2018 and December 31, 2017:



	June 30, 2018
(Dollars in thousands)	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate		Loans to Individuals		Other		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	487	$	229	$	—	$	—	$	—	$	—	$	—	$	716
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—		—
Collectively evaluated for impairment	1,661		1,178		3,085		920		462		169		—		307		7,782
Ending Balance	$	1,661	$	1,665	$	3,314	$	920	$	462	$	169	$	—	$	307	$	8,498

Loans receivable:
Individually evaluated for impairment	$	104	$	4,320	$	7,234	$	—	$	1,123	$	411	$	—	$	—	$	13,192
Loans acquired with deteriorated credit quality	—		303		1,452		—		—		—		—		—		1,755
Collectively evaluated for impairment	138,040		101,735		370,312		204,359		44,925		25,151		192		—		884,714
Ending Balance	$	138,144	$	106,358	$	378,998	$	204,359	$	46,048	$	25,562	$	192	$	—	899,661
Deferred loan costs, net																	251
																	$	899,912



	December 31, 2017
(Dollars in thousands)	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate		Loans to Individuals		Other		Unallocated		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	592	$	92	$	—	$	—	$	—	$	—	$	—	$	684
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—		—
Collectively evaluated for impairment	1,703		1,128		2,857		852		392		114		—		283		7,329
Ending Balance	$	1,703	$	1,720	$	2,949	$	852	$	392	$	114	$	—	$	283	$	8,013

Loans receivable:
Individually evaluated for impairment	$	232	$	4,459	$	5,713	$	—	$	69	$	368	$	—	$	—	$	10,841
Loans acquired with deteriorated credit quality	—		274		590		—		—		—		—		—		864
Collectively evaluated for impairment	136,180		88,173		302,621		189,412		40,425		20,657		183		—		777,651
Ending Balance	$	136,412	$	92,906	$	308,924	$	189,412	$	40,494	$	21,025	$	183	$	—	789,356
Deferred loan costs, net																	550
																	$	789,906

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent

The activity in the allowance for loan loss by loan class for the three and six months ended June 30, 2018 and 2017 was as follows:



(Dollars in thousands)	Construction		Commercial Business			Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate		Loans to Individuals			Other		Unallocated			Total
Balance - March 31, 2018	$	1,612	$	1,675		$	3,166	$	732	$	446	$	129		$	—	$	537		$	8,297
Provision charged/(credited) to operations	49		16			140		188		16		46			—		(230		)	225
Loans charged off	—		(32		)	—		—		—		(7		)	—		—			(39		)
Recoveries of loans charged off	—		6			8		—		—		1			—		—			15
Balance - June 30, 2018	$	1,661	$	1,665		$	3,314	$	920	$	462	$	169		$	—	$	307		$	8,498

Balance - March 31, 2017	$	1,370	$	1,822		$	2,634	$	642	$	365	$	122		$	—	$	595		$	7,550
Provision charged/(credited) to operations	85		(386		)	352		260		20		(3		)	—		(178		)	150
Loans charged off	—		—			—		—		—		—			—		—			—
Recoveries of loans charged off	—		1			5		—		—		1			—		—			7
Balance - June 30, 2017	$	1,455	$	1,437		$	2,991	$	902	$	385	$	120		$	—	$	417		$	7,707



(Dollars in thousands)	Construction			Commercial Business			Commercial Real Estate		Mortgage Warehouse Lines			Residential Real Estate			Loans to Individuals			Other			Unallocated			Total
Balance - January 1, 2018	$	1,703		$	1,720		$	2,949	$	852		$	392		$	114		$	—		$	283		$	8,013
Provision charged/(credited) to operations	(42		)	(36		)	304		68			70			61			1			24			450
Loans charged off	—			(32		)	—		—			—			(7		)	(1		)	—			(40		)
Recoveries of loans charged off	—			13			61		—			—			1			—			—			75
Balance - June 30, 2018	$	1,661		$	1,665		$	3,314	$	920		$	462		$	169		$	—		$	307		$	8,498

Balance - January 1, 2017	$	1,204		$	1,732		$	2,574	$	973		$	367		$	112		$	—		$	532		$	7,494
Provision charged/(credited) to operations	251			(298		)	408		(71		)	119			6			—			(115		)	300
Loans charged off	—			—			—		—			(101		)	—			—			—			(101		)
Recoveries of loans charged off	—			3			9		—			—			2			—			—			14
Balance - June 30, 2017	$	1,455		$	1,437		$	2,991	$	902		$	385		$	120		$	—		$	417		$	7,707

Impaired Financing Receivables

The following table presents additional information regarding purchased credit-impaired loans at June 30, 2018 and December 31, 2017:



(Dollars in thousands)	June 30, 2018		December 31, 2017
Outstanding balance	$	2,094	$	998
Carrying amount	$	1,755	$	860

Impaired Loans Receivables (By Class)



							Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance:
Commercial:
Construction	$	104	$	104	$	—	$	104	$	2	$	125	$	4
Commercial Business	1,318		1,573		—		1,332		27		1,291		54
Commercial Real Estate	2,435		2,808		—		4,089		1		3,027		18
Mortgage Warehouse Lines	—		—		—		—		—		—		—
Subtotal	3,857		4,485		—		5,525		30		4,443		76
Residential Real Estate	1,123		1,188		—		811		—		539		—
Consumer:
Loans to Individuals	411		487		—		424		—		415
Other	—		—		—		—		—
Subtotal	411		487		—		424		—		415		—
With no allowance:	$	5,391	$	6,160	$	—	$	6,760	$	30	$	5,397	$	76

With an allowance:
Commercial:
Construction	$	—	$	—	$	—	$	—	$	—			$	—
Commercial Business	3,305		3,356		487		3,328		46		3,376		92
Commercial Real Estate	6,251		7,044		229		4,127		59		4,204		100
Mortgage Warehouse Lines	—		—		—		—		—				—
Subtotal	9,556		10,400		716		7,455		105		7,580		192
Residential Real Estate	—		—		—		—		—
Consumer:
Loans to Individuals	—		—		—		—		—
Other	—		—		—		—		—
Subtotal	—		—		—		—		—		—		—
With an allowance:	$	9,556	$	10,400	$	716	$	7,455	$	105	$	7,580	$	192
Total:
Construction	104		104		—		104		2		125		4
Commercial Business	4,623		4,929		487		4,660		73		4,667		146
Commercial Real Estate	8,686		9,852		229		8,216		60		7,231		118
Mortgage Warehouse Lines	—		—		—		—		—		—		—
Residential Real Estate	1,123		1,188		—		811		—		539		—
Consumer	411		487		—		424		—		415		—
Total	$	14,947	$	16,560	$	716	$	14,215	$	135	$	12,977	$	268

Impaired Loans Receivables (By Class)



	December 31, 2017
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no allowance:
Commercial:
Construction	$	232	$	232	$	—
Commercial Business	1,271		1,419		—
Commercial Real Estate	1,348		1,372		—
Mortgage Warehouse Lines	—		—		—
Subtotal	2,851		3,023		—
Residential Real Estate	69		123		—
Consumer:
Loans to Individuals	368		438		—
Other	—		—		—
Subtotal	368		438		—
With no allowance	$	3,288	$	3,584	$	—
With an allowance:
Commercial:
Construction	$	—	$	—	$	—
Commercial Business	3,462		3,464		592
Commercial Real Estate	4,955		5,748		92
Mortgage Warehouse Lines	—		—		—
Subtotal	8,417		9,212		684
Residential Real Estate	—		—		—
Consumer:
Loans to Individuals	—		—		—
Other	—		—		—
Subtotal	—		—		—
With an allowance	$	8,417	$	9,212	$	684

Total:
Construction	232		232		—
Commercial Business	4,733		4,883		592
Commercial Real Estate	6,303		7,120		92
Mortgage Warehouse Lines	—		—		—
Residential Real Estate	69		123		—
Consumer	368		438		—
Total	$	11,705	$	12,796	$	684

Impaired Loans Receivables (By Class)



	Three Months Ended June 30, 2017				Six Months Ended June 30, 2017
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no allowance:
Commercial:
Construction	$	188	$	3	$	186	$	6
Commercial Business	688		82		741		86
Commercial Real Estate	2,723		92		2,772		105
Mortgage Warehouse Lines	—		—		—		—
Subtotal	3,599		177		3,699		197
Residential Real Estate	181		—		210		—

Consumer:
Loans to Individuals	297		—		316		—
Other	—		—		—		—
Subtotal	297		—		316		—
With no allowance:	$	4,077	$	177	$	4,225	$	197
With an allowance:
Commercial:
Construction	$	137	$	—	$	171	$	—
Commercial Business	3,680		60		2,595		127
Commercial Real Estate	2,989		43		2,600		85
Mortgage Warehouse Lines	—		—		—		—
Subtotal	6,806		103		5,366		212
Residential Real Estate	—		—		100		—
Consumer:
Loans to Individuals	—		—		—		—
Other	—		—		—		—
Subtotal	—		—		—		—
With an allowance:	$	6,806	$	103	$	5,466	$	212
Total:
Construction	325		3		357		6
Commercial Business	4,368		142		3,336		213
Commercial Real Estate	5,712		135		5,372		190
Mortgage Warehouse Lines	—		—		—		—
Residential Real Estate	181		—		310		—
Consumer	297		—		316		—
Total	$	10,883	$	280	$	9,691	$	409

Credit Impaired Loans Acquired, Change In Amortizable Yield

Changes in accretable discount for purchased credit-impaired loans for the three and six months ended June 30, 2018 and June 30, 2017 were as follows:



	Three months ended June 30,						Six months ended June 30,
(Dollars in thousands)	2018			2017			2018			2017
Balance at beginning of period	$	103		$	23		$	126		$	30
Acquisition of impaired loans	168			—			168			—
Transfer from non-accretable discount	—			161			—			161
Accretion of discount	(38		)	(13		)	(61		)	(20		)
Balance at end of period	$	233		$	171		$	233		$	171

Troubled Debt Restructurings on Financing Receivables

The following table summarizes the recorded investment in consumer mortgage loans secured by residential real estate in the process of foreclosure (dollars in thousands):



June 30, 2018			December 31, 2017
Number of loans	Recorded Investment		Number of loans	Recorded Investment
1	$	77	1	$	77