LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables)

6 Months Ended

Jun. 30, 2019

LOANS AND THE ALLOWANCE FOR LOAN LOSSES

The following presents a summary of the Company’s loans as of the dates noted (in thousands):


	June 30,		December 31,
	2019		2018
Cash, Securities and Other	$	149,503	$	114,165
Construction and Development		40,826		31,897
1-4 Family Residential		373,836		350,852
Non-Owner Occupied CRE		152,664		173,741
Owner Occupied CRE		112,660		108,480
Commercial and Industrial		108,516		113,660
Total loans		938,005		892,795
Deferred costs, net		1,390		1,171
Allowance for loan losses		(7,575)		(7,451)
Loans, net	$	931,820	$	886,515

Summary of aging analysis of the recorded investments in loans past due

The following presents, by class, an aging analysis of the recorded investments (excluding accrued interest receivable, deferred loan fees and deferred costs which are not material) in loans past due as of June 30, 2019 and December 31, 2018 (in thousands):


	30-59		60-89		90 or		Total				Total
	Days		Days		More Days		Loans				Recorded
June 30, 2019	Past Due		Past Due		Past Due		Past Due		Current		Investment
Cash, Securities and Other	$	—	$	—	$	—	$	—	$	149,503	$	149,503
Construction and Development		—		—		—		—		40,826		40,826
1-4 Family Residential		—		497		1,213		1,710		372,126		373,836
Non-Owner Occupied CRE		—		460		—		460		152,204		152,664
Owner Occupied CRE		—		—		—		—		112,660		112,660
Commercial and Industrial		—		2,300		—		2,300		106,216		108,516
Total	$	—	$	3,257	$	1,213	$	4,470	$	933,535	$	938,005


	30-59		60-89		90 or		Total				Total
	Days		Days		More Days		Loans				Recorded
December 31, 2018	Past Due		Past Due		Past Due		Past Due		Current		Investment
Cash, Securities and Other	$	331	$	—	$	11,252	$	11,583	$	102,582	$	114,165
Construction and Development		—		—		—		—		31,897		31,897
1-4 Family Residential		—		—		1,217		1,217		349,635		350,852
Non-Owner Occupied CRE		567		—		—		567		173,174		173,741
Owner Occupied CRE		—		—		—		—		108,480		108,480
Commercial and Industrial		—		—		1,735		1,735		111,925		113,660
Total	$	898	$	—	$	14,204	$	15,102	$	877,693	$	892,795

Schedule of recorded investment in non accrual loans by class

The following presents the recorded investment in non‑accrual loans by class as of the dates noted (in thousands):


	June 30,		December 31,
	2019		2018
Cash, Securities and Other	$	5,107	$	11,252
Construction and Development		—		—
1-4 Family Residential		—		—
Non-Owner Occupied CRE		—		—
Owner Occupied CRE		—		—
Commercial and Industrial		1,035		1,735
Total	$	6,142	$	12,987

Summary of the unpaid principal balance of loans classified as TDRs

The following presents a summary of the unpaid principal balance of loans classified as TDRs as of the dates noted (in thousands):


	June 30,		December 31,
	2019		2018
Cash, Securities, and Other	$	5,107	$	11,252
Commercial and Industrial		6,483		6,583
Total	$	11,590	$	17,835
Allowance for loan associated with TDR		(940)		(940)
Net recorded investment	$	10,650	$	16,895

Summary of recorded investment in impaired loans

The following table presents impaired loans by portfolio and related valuation allowance as of the periods presented (in thousands):


	June 30, 2019						December 31, 2018
			Unpaid		Allowance				Unpaid		Allowance
	Total		Contractual		for		Total		Contractual		for
	Recorded		Principal		Loan		Recorded		Principal		Loan
	Investment		Balance		Losses		Investment		Balance		Losses
Impaired loans with a valuation allowance:
Commercial and Industrial	$	1,035	$	1,035	$	940	$	1,735	$	1,735	$	940

Impaired loans with no related valuation allowance:
Commercial and Industrial	$	5,448	$	5,448	$	—	$	4,848	$	4,848	$	—
Cash, Securities, and Other		5,107		5,107		—		11,252		11,252		—
1-4 Family Residential		1,213		1,213		—		—		—		—
Total	$	11,768	$	11,768	$	—	$	16,100	$	16,100	$	—

Total impaired loans:
Commercial and Industrial	$	6,483	$	6,483	$	940	$	6,583	$	6,583	$	940
Cash, Securities, and Other		5,107		5,107		—		11,252		11,252		—
1-4 Family Residential		1,213		1,213		—		—		—		—
Total	$	12,803	$	12,803	$	940	$	17,835	$	17,835	$	940

The recorded investment in loans in the previous tables excludes accrued interest and deferred loan fees and costs which are not material. Interest income, if any, was recognized on the cash basis on non-accrual loans.

The average balance of impaired loans and interest income recognized on impaired loans during the three months ended June 30, 2019 and 2018 are included in the table below (in thousands):


	Three Months Ended June 30,
	2019				2018
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans with a valuation allowance:
Commercial and Industrial	$	1,235	$	—	$	1,835	$	—

Impaired loans with no related valuation allowance:
Commercial and Industrial	$	5,268	$	68	$	—	$	—
Cash, Securities, and Other		8,042		—		—		—
1-4 Family Residential		412		26		—		—
Total	$	13,722	$	94	$	—	$	—

Total impaired loans:
Commercial and Industrial	$	6,503	$	68	$	1,835	$	—
Cash, Securities, and Other		8,042		—		—		—
1-4 Family Residential		412		26		—		—
Total	$	14,957	$	94	$	1,835	$	—

The average balance of impaired loans and interest income recognized on impaired loans during the six months ended June 30, 2019 and 2018 are included in the table below (in thousands):


	Six Months Ended June 30,
	2019				2018
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Impaired loans with a valuation allowance:
Commercial and Industrial	$	1,398	$	—	$	1,835	$	—

Impaired loans with no related valuation allowance:
Commercial and Industrial	$	5,131	$	188	$	—	$	—
Cash, Securities, and Other		9,072		—		—		—
1-4 Family Residential		412		51		—		—
Total	$	14,615	$	239	$	—	$	—

Total impaired loans:
Commercial and Industrial	$	6,529	$	188	$	1,835	$	—
Cash, Securities, and Other		9,072		—		—		—
1-4 Family Residential		412		51		—		—
Total	$	16,013	$	239	$	1,835	$	—

Schedule of activity in the Company’s allowance for loan losses by portfolio class

Allocation of a portion of the allowance for loan losses to one category of loans does not preclude its availability to absorb losses in other categories. The following presents the activity in the Company’s allowance for loan losses by portfolio class for the periods presented (in thousands):


	Cash,		Construction		1-4		Non-Owner		Owner		Commercial
	Securities		and		Family		Occupied		Occupied		and
	and Other		Development		Residential		CRE		CRE		Industrial		Total
Changes in allowance for loan losses for the three months ended June 30, 2019
Beginning balance	$	877	$	266	$	2,588	$	1,235	$	780	$	1,899	$	7,645
Provision for (recovery of) credit losses		164		24		62		(149)		20		(199)		(78)
Charge-offs		—		—		—		—		—		—		—
Recoveries		8		—		—		—		—		—		8
Ending balance	$	1,049	$	290	$	2,650	$	1,086	$	800	$	1,700	$	7,575

Changes in allowance for loan losses for the six months ended June 30, 2019
Beginning balance	$	764	$	232	$	2,552	$	1,264	$	789	$	1,850	$	7,451
Provision for (recovery of) credit losses		277		58		98		(178)		11		(150)		116
Charge-offs		—		—		—		—		—		—		—
Recoveries		8		—		—		—		—		—		8
Ending balance	$	1,049	$	290	$	2,650	$	1,086	$	800	$	1,700	$	7,575

Allowance for loan losses at June 30, 2019 allocated to loans evaluated for impairment:
Individually	$	—	$	—	$	—	$	—	$	—	$	940	$	940
Collectively		1,049		290		2,650		1,086		800		760		6,635
Ending balance	$	1,049	$	290	$	2,650	$	1,086	$	800	$	1,700	$	7,575

Loans at June 30, 2019, evaluated for impairment:
Individually	$	5,107	$	—	$	1,213	$	—	$	—	$	6,483	$	12,803
Collectively		144,396		40,826		372,623		152,664		112,660		102,033		925,202
Ending balance	$	149,503	$	40,826	$	373,836	$	152,664	$	112,660	$	108,516	$	938,005


	Cash,		Construction		1-4		Non-Owner		Owner		Commercial
	Securities		and		Family		Occupied		Occupied		and
	and Other		Development		Residential		CRE		CRE		Industrial		Total
Changes in allowance for loan losses for the three months ended June 30, 2018
Beginning balance	$	969	$	228	$	2,334	$	1,313	$	724	$	1,532	$	7,100
Provision for (recovery of) credit losses		(35)		(1)		(377)		(114)		(98)		625		—
Charge-offs		—		—		—		—		—		—		—
Recoveries		—		—		—		—		—		—		—
Ending balance	$	934	$	227	$	1,957	$	1,199	$	626	$	2,157	$	7,100

Changes in allowance for loan losses for the six months ended June 30, 2018
Beginning balance	$	1,066	$	202	$	2,283	$	1,433	$	751	$	1,552	$	7,287
Provision for (recovery of) credit losses		(132)		25		(326)		(234)		(125)		605		(187)
Charge-offs		—		—		—		—		—		—		—
Recoveries		—		—		—		—		—		—		—
Ending balance	$	934	$	227	$	1,957	$	1,199	$	626	$	2,157	$	7,100

Allowance for loan losses at December 31, 2018 allocated to loans evaluated for impairment:
Individually	$	—	$	—	$	—	$	—	$	—	$	940	$	940
Collectively		764		232		2,552		1,264		789		910		6,511
Ending balance	$	764	$	232	$	2,552	$	1,264	$	789	$	1,850	$	7,451

Loans at December 31, 2018, evaluated for impairment:
Individually	$	11,252	$	—	$	—	$	—	$	—	$	6,583	$	17,835
Collectively		102,913		31,897		350,852		173,741		108,480		107,077		874,960
Ending balance	$	114,165	$	31,897	$	350,852	$	173,741	$	108,480	$	113,660	$	892,795

Summary of recorded investment in the Company’s loans by class and by credit quality indicator


			Special
June 30, 2019	Pass		Mention		Substandard			Total
Cash, Securities and Other	$	144,396	$	—	$	5,107	$	149,503
Construction and Development		40,826		—		—		40,826
1-4 Family Residential		366,577		6,046		1,213		373,836
Non-Owner Occupied CRE		151,020		1,184		460		152,664
Owner Occupied CRE		112,660		—		—		112,660
Commercial and Industrial		96,114		—		12,402		108,516
Total	$	911,593	$	7,230	$	19,182	$	938,005


			Special
December 31, 2018	Pass		Mention		Substandard			Total
Cash, Securities and Other	$	102,913	$	—	$	11,252	$	114,165
Construction and Development		31,897		—		—		31,897
1-4 Family Residential		349,635		—		1,217		350,852
Non-Owner Occupied CRE		165,164		8,117		460		173,741
Owner Occupied CRE		108,480		—		—		108,480
Commercial and Industrial		100,929		—		12,731		113,660
Total	$	859,018	$	8,117	$	25,660	$	892,795