Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Components of Loans in the Consolidated Balance Sheet

The components of loans in the Consolidated Balance Sheets at June 30, 2020 and December 31, 2019, were as follows:

(Dollars in thousands)	June 30, 2020		December 31, 2019
Commercial and Non-Residential Real Estate	$	1,127,792	$	1,063,828
Residential Real Estate	279,626		271,604
Home Equity	37,383		35,106
Consumer	3,525		3,697
Purchased credit impaired loans:
Commercial and Non-Residential Real Estate	19,799		—
Residential Real Estate	27,033		—
Home Equity	—		—
Consumer	1,603		—
Total Loans	$	1,496,761	$	1,374,235
Deferred loan origination (fees) and costs, net	(2,089)		306
Loans receivable	$	1,494,672	$	1,374,541

Allowance for Credit Losses on Financing Receivables and Schedule of Loans Evaluated for Impairment

The following tables summarize the primary segments of the ALL, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2020:

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
December 31, 2019	$	10,098	$	1,272	$	327	$	78	$	11,775
Charge-offs	(1,756)		—		(23)		—		(1,779)
Recoveries	6		—		4		2		12
Provision	7,053		574		(44)		(22)		7,561
ALL balance at June 30, 2020	$	15,401	$	1,846	$	264	$	58	$	17,569
Individually evaluated for impairment	$	1,547	$	—	$	—	$	—	$	1,547
Collectively evaluated for impairment	$	13,854	$	1,846	$	264	$	58	$	16,022

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
ALL balance at March 31, 2020	$	9,597	$	1,272	$	236	$	56	$	11,161
Charge-offs	—		—		(23)		—		(23)
Recoveries	6		—		2		—		8
Provision	5,798		574		49		2		6,423
ALL balance at June 30, 2020	$	15,401	$	1,846	$	264	$	58	$	17,569

The following table summarizes the primary segments of the Company's loan portfolio as of June 30, 2020:

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
Individually evaluated for impairment	$	14,372	$	3,082	$	102	$	—	$	17,556
Collectively evaluated for impairment	1,113,420		276,544		37,281		3,525		1,430,770
Total Loans	1,127,792		279,626		37,383		3,525		1,448,326

The following tables summarize the primary segments of the ALL, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2019:

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
December 31, 2018	$	8,605	$	1,405	$	684	$	245	$	10,939
Charge-offs	(666)		—		—		(10)		(676)
Recoveries	1		1		2		1		5
Provision	1,031		(177)		26		20		900
ALL balance at June 30, 2019	$	8,971	$	1,229	$	712	$	256	$	11,168
Individually evaluated for impairment	$	534	$	—	$	—	$	—	$	534
Collectively evaluated for impairment	$	8,437	$	1,229	$	712	$	256	$	10,634

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
ALL balance at March 31, 2019	$	8,864	$	1,417	$	704	$	257	$	11,242
Charge-offs	(666)		—		—		(10)		(676)
Recoveries	1		—		1		—		2
Provision (recovery)	772		(188)		7		9		600
ALL balance at June 30, 2019	$	8,971	$	1,229	$	712	$	256	$	11,168

The following table summarizes the primary segments of the Company's loan portfolio as of June 30, 2019:

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
Individually evaluated for impairment	$	7,771	$	3,112	$	250	$	37	$	11,170
Collectively evaluated for impairment	977,059		270,715		58,643		8,812		1,315,229
Total Loans	$	984,830	$	273,827	$	58,893	$	8,849	$	1,326,399

The following tables summarize the primary segments of the ALL, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2020 for the purchased credit impaired loan portfolio:

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
December 31, 2019	$	—	$	—	$	—	$	—	$	—
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Provision	121		52		—		—		173
ALL balance at June 30, 2020	$	121	$	52	$	—	$	—	$	173
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment	$	121	$	52	$	—	$	—	173

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
ALL balance at March 31, 2020	$	—	$	—	$	—	$	—	$	—
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Provision	121		52		—		—		173
ALL balance at June 30, 2020	$	121	$	52	$	—	$	—	$	173

The following table summarizes the primary segments of the Company's purchased credit impaired loan portfolio as of June 30, 2020:

(Dollars in thousands)	Commercial		Residential		Home Equity		Consumer		Total
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment	19,799		27,033		—		1,603		48,435
Total Loans	19,799		27,033		—		1,603		48,435

Impaired Loans by Class

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of June 30, 2020 and December 31, 2019:

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
(Dollars in thousands)	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
June 30, 2020
Commercial
Commercial Business	$	8,637	$	1,068	$	661	$	9,298	$	10,499
Commercial Real Estate	2,100		479		992		3,092		3,198
Acquisition & Development	—		—		2,035		2,035		3,435
SBA Paycheck Protection Program	—		—		—		—		—
Total Commercial	10,737		1,547		3,688		14,425		17,132
Residential	—		—		3,212		3,212		3,372
Home Equity	—		—		111		111		137
Consumer	—		—		—		—		—
Total Impaired Loans	$	10,737	$	1,547	$	7,011	$	17,748	$	20,641
December 31, 2019
Commercial
Commercial Business	$	2,606	$	249	$	644	$	3,250	$	4,308
Commercial Real Estate	1,786		325		295		2,081		2,171
Acquisition & Development	—		—		2,070		2,070		3,467
SBA Paycheck Protection Program	—		—		—		—		—
Total Commercial	4,392		574		3,009		7,401		9,946
Residential	—		—		1,953		1,953		2,045
Home Equity	—		—		95		95		100
Consumer	—		—		34		34		35
Total Impaired Loans	$	4,392	$	574	$	5,091	$	9,483	$	12,126

The carrying amount of the purchased credit impaired loan portfolio is as follows:

(Dollars in thousands)	As of June 30, 2020
Commercial	$	20,904
Residential	25,928
Home Equity	—
Consumer	1,603
Outstanding balance	$	48,435
Carrying amount, net of allowance	$	48,262

Average Recorded Investment in Impaired Loans and Related Interest Income Recognized

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated:

	Six Months Ended June 30, 2020						Three Months Ended June 30, 2020
(Dollars in thousands)	Average Investment in Impaired Loans		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis		Average Investment in Impaired Loans		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis
Commercial
Commercial Business	$	3,972	$	1	$	—	$	4,681	$	1	$	—
Commercial Real Estate	3,054		52		52		3,211		26		29
Acquisition & Development	2,043		57		19		2,038		29		—
SBA Paycheck Protection Program	—		—		—		—		—		—
Total Commercial	9,069		110		71		9,930		56		29
Residential	2,547		11		9		2,712		6		4
Home Equity	110		—		—		120		—		—
Consumer	10		—		—		—		—		—
Total	$	11,736	$	121	$	80	$	12,762	$	62	$	33

	Six Months Ended June 30, 2019						Three Months Ended June 30, 2019
(Dollars in thousands)	Average Investment in Impaired Loans		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis		Average Investment in Impaired Loans		Interest Income Recognized on Accrual Basis		Interest Income Recognized on Cash Basis
Commercial
Commercial Business	$	3,516	$	—	$	—	$	3,424	$	—	$	—
Commercial Real Estate	3,809		81		83		3,579		40		45
Acquisition & Development	2,194		61		60		2,173		31		31
SBA Paycheck Protection Program	—		—		—		—		—		—
Total Commercial	9,519		142		143		9,176		71		76
Residential	2,990		7		7		3,123		3		4
Home Equity	166		1		1		210		1		1
Consumer	51		—		—		23		—		—
Total	$	12,726	$	150	$	151	$	12,532	$	75	$	81

Classes of the Loan Portfolio Summarized by the Aggregate Pass and the Criticized Categories

The following table represents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of June 30, 2020 and December 31, 2019:

(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
June 30, 2020
Commercial
Commercial Business	$	463,570	$	8,782	$	9,497	$	—	$	481,849
Commercial Real Estate	365,802		53,890		7,028		—		426,720
Acquisition & Development	114,343		10,487		4,631		—		129,461
SBA Paycheck Protection Program	89,762		—		—		—		89,762
Total Commercial	1,033,477		73,159		21,156		—		1,127,792
Residential	275,357		1,400		2,758		111		279,626
Home Equity	36,899		382		102		—		37,383
Consumer	3,489		36		—		—		3,525
Total Loans	$	1,349,222	$	74,977	$	24,016	$	111	$	1,448,326
December 31, 2019
Commercial
Commercial Business	$	511,590	$	17,398	$	11,894	$	—	$	540,882
Commercial Real Estate	406,712		3,564		1,494		—		411,770
Acquisition & Development	106,428		1,869		2,879		—		111,176
SBA Paycheck Protection Program	—		—		—		—		—
Total Commercial	1,024,730		22,831		16,267		—		1,063,828
Residential	267,367		1,946		2,177		114		271,604
Home Equity	34,641		383		82		—		35,106
Consumer	3,613		56		28		—		3,697
Total Loans	$	1,330,351	$	25,216	$	18,554	$	114	$	1,374,235

The following table represents the classes of the purchased credit impaired loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of June 30, 2020:

(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
June 30, 2020
Commercial
Commercial Business	$	14,623	$	1,425	$	402	$	—	$	16,450
Commercial Real Estate	1,340		—		16		—		1,356
Acquisition & Development	1,853		—		140		—		1,993
Total Commercial	17,816		1,425		558		—		19,799
Residential	26,013		—		1,020		—		27,033
Home Equity	—		—		—		—		—
Consumer	1,128		233		242		—		1,603
Total Loans	$	44,957	$	1,658	$	1,820	$	—	$	48,435

Classes of the Loan Portfolio Summarized by Aging Categories

The following table presents the classes of the loan portfolio summarized by aging categories of performing loans and non-accrual loans as of June 30, 2020 and December 31, 2019:

(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Total Loans		Non-Accrual		90+ Days Still Accruing
June 30, 2020
Commercial
Commercial Business	$	481,455	$	152	$	—	$	242	$	394	$	481,849	$	8,899	$	—
Commercial Real Estate	425,824		—		—		896		896		426,720		1,333		—
Acquisition & Development	128,672		—		—		789		789		129,461		378		—
SBA Paycheck Protection Program	89,762		—		—		—		—		89,762		—		—
Total Commercial	1,125,713		152		—		1,927		2,079		1,127,792		10,610		—
Residential	277,230		—		647		1,749		2,396		279,626		2,734		—
Home Equity	36,999		228		—		156		384		37,383		111		—
Consumer	3,503		3		19		—		22		3,525		—		—
Total Loans	$	1,443,445	$	383	$	666	$	3,832	$	4,881	$	1,448,326	$	13,455	$	—
December 31, 2019
Commercial
Commercial Business	$	537,602	$	3,189	$	47	$	44	$	3,280	$	540,882	$	2,848	$	—
Commercial Real Estate	411,070		522		178		—		700		411,770		295		—
Acquisition & Development	110,717		180		—		279		459		111,176		390		—
SBA Paycheck Protection Program	—		—		—		—		—		—		—		—
Total Commercial	1,059,389		3,891		225		323		4,439		1,063,828		3,533		—
Residential	267,515		3,003		549		537		4,089		271,604		1,461		—
Home Equity	34,382		545		84		95		724		35,106		95		—
Consumer	3,610		1		58		28		87		3,697		34		—
Total Loans	$	1,364,896	$	7,440	$	916	$	983	$	9,339	$	1,374,235	$	5,123	$	—

The following table presents the classes of the purchased credit impaired loan portfolio summarized by aging categories of performing loans and non-accrual loans as of June 30, 2020:

(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Total Loans		Non-Accrual		90+ Days Still Accruing
June 30, 2020
Commercial
Commercial Business	$	14,615	$	230	$	14	$	1,591	$	1,835	$	16,450	$	448	$	—
Commercial Real Estate	1,292		48		—		16		64		1,356		64		—
Acquisition & Development	1,668		144		41		140		325		1,993		140		—
Total Commercial	17,575		422		55		1,747		2,224		19,799		652		—
Residential	21,263		935		568		4,267		5,770		27,033		3,496		—
Home Equity	—		—		—		—		—		—		—		—
Consumer	1,354		4		3		242		249		1,603		241		—
Total Loans	$	40,192	$	1,361	$	626	$	6,256	$	8,243	$	48,435	$	4,389	$	—

Troubled Debt Restructurings on Financing Receivables

	New TDR's 1
	Six Months Ended June 30, 2020					Three Months Ended June 30, 2020
(Dollars in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial
Commercial Business	5	$	6,237	$	6,232	3	$	6,083	$	6,083
Commercial Real Estate	2	159		159		—	—		—
Acquisition & Development	—	—		—		—	—		—
SBA Paycheck Protection Program	—	—		—		—	—		—
Total Commercial	7	6,396		6,391		3	6,083		6,083
Residential	1	87		87		1	87		87
Home Equity	—	—		—		—	—		—
Consumer	—	—		—		—	—		—
Total	8	6,483		6,478		4	6,170		6,170

	Six Months Ended June 30, 2019					Three Months Ended June 30, 2019
(Dollars in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial
Commercial Business	2	$	336	$	333	1	$	68	$	68
Commercial Real Estate	—	—		—		—	—		—
Acquisition & Development	—	—		—		—	—		—
SBA Paycheck Protection Program	—	—		—		—	—		—
Total Commercial	2	336		333		1	68		68
Residential	—	—		—		—	—		—
Home Equity	—	—		—		—	—		—
Consumer	—	—		—		—	—		—
Total	2	$	336	$	333	1	$	68	$	68

¹ The pre-modification and post-modification balances represent the balances outstanding immediately before and after modification of the loan.

Schedule of Accretable Yield

Accretable yield, or income expected to be collected, is as follows:

(Dollars in thousands)	As of June 30, 2020
Beginning balance	$	—
New loans purchased	11,746
Accretion of income	(959)
Reclassification from non-accretable difference	545
Disposals	—
Ending balance	$	11,332

PCI Loans Contractually Required Payments

Purchased credit impaired loans purchased during the three and six month periods ended June 30, 2020, for which it was probable at acquisition that all contractually required payments would not be collected are as follows:

(Dollars in thousands)	As of June 30, 2020
Contractually required payments receivable of loans purchased during the period:
Commercial	$	36,046
Residential	47,787
Home Equity	—
Consumer	2,990
Cash flows expected to be collected at acquisition	$	86,823
Fair value of loans acquired at acquisition	$	50,235

The following table outlines the contractually required payments receivable, cash flows the Company expects to receive, non-accretable credit adjustments, and the accretable yield for all First State loans as of the acquisition date:

(Dollars in thousands)	Contractually Required Payments Receivable		Non-Accretable Credit Adjustments		Cash Flows Expected to be Collected		Accretable FMV Adjustments		Carrying Value of Loans Receivable
Purchased credit impaired loans	$	86,823	$	24,842	$	61,981	$	11,746	$	50,235
Purchased performing loans	12,818		2,561		10,257		1,817		8,440
Other purchased loans	1,978		—		1,978		—		1,978
Total	$	101,620	$	27,403	$	74,217	$	13,563	$	60,653