Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Accounts, Notes, Loans and Financing Receivable

The following table presents loans at December 31, 2013 and December 31, 2012 by class:



	December 31,			December 31,
	2013			2012
	(Amounts in thousands)
Construction and land development	$	131,035		$	131,981
Commercial real estate:
Owner occupied	382,766			342,962
Non-owner occupied	196,926			211,489
Residential mortgages:
1-4 family	174,072			168,611
Multifamily	41,713			35,337
Home equity lines of credit	194,145			191,888
Commercial	185,443			174,440
Consumer and other	51,667			51,664
Total	1,357,767			1,308,372
Less: Net deferred loan costs	979			1,132
Allowance for loan losses	(18,063		)	(25,149		)
Loans, net	$	1,340,683		$	1,284,355

Sale of loans held-for-investment

Actual loss on the sale of impaired loans recognized in the fourth quarter of 2012 was $21.7 million which represents the difference between the recorded investment of the loan at sale date and the sales price received.



Loan Sales	Recorded Investment of Loans Sold		Charge-offs (Losses) Recorded on the Sales		Additional Provisions Resulting from the Sale of Loans
	(Amounts in thousands)
Construction	$	16,211	$	7,625	$	6,100
Commercial Real Estate:
Owner Occupied	8,871		3,917		4,313
Non-owner Occupied	8,675		4,531		3,755
Mortgages:
1-4 Family	4,557		2,825		2,380
Multifamily	249		113		86
Home Equity Line of Credit	2,204		1,284		746
Commercial	2,291		1,329		1,290
Consumer and other	151		91		57
	$	43,209	$	21,715	$	18,727

Financing Receivable, Allowance for Credit Losses, Writedowns, Other Problem Loans

The following table presents a summary of charge-offs on other problem loans.



Loan Sales	Additional Charge-offs on Other Problem Loans
	(Amounts in thousands)
Construction	$	1,601
Commercial Real Estate:
Owner Occupied	1,599
Non-owner Occupied	2,267
Mortgages:
1-4 Family	291
Multifamily	—
Home Equity Line of Credit	1,309
Commercial	3,908
Consumer and other	24
	$	10,999

Schedule of Related Party Transactions

An analysis of these related party loans for the year ended December 31, 2013 and 2012 is as follows:



	2013			2012
	(Amounts in thousands)
Balance, beginning of year	$	15,550		$	15,783
New loans	3,233			2,436
Repayments	(2,824		)	(2,669		)
Balance, end of year	$	15,959		$	15,550

Financing Receivable Credit Quality Indicators

The following is a summary of credit quality indicators by class at December 31, 2013 and December 31, 2012:



Real Estate Credit Exposure as of December 31, 2013
			Commercial Real Estate
	Construction		Owner occupied		Non-owner occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	—	$	—	$	90	$	—	$	161
Good Quality	356		—		1,587		982		957		6,627
Satisfactory	22,403		125,560		47,453		99,578		7,691		118,339
Merits Attention	90,343		226,320		133,072		62,242		31,686		61,026
Special Mention	14,434		20,284		7,392		5,307		551		5,075
Substandard	1,168		4,244		2,624		3,005		572		1,632
Substandard impaired	2,331		6,358		4,798		2,868		256		1,285
Doubtful	—		—		—		—		—		—
Loss	—		—		—		—		—		—
	$	131,035	$	382,766	$	196,926	$	174,072	$	41,713	$	194,145



Other Credit Exposures as of December 31, 2013
	Commercial		Consumer and other		Total Loans
	(in thousands)
High Quality	$	2,640	$	2,162	$	5,053
Good Quality	5,084		1,160		16,753
Satisfactory	63,674		21,221		505,919
Merits Attention	94,313		26,126		725,128
Special Mention	7,874		676		61,593
Substandard	9,553		32		22,830
Substandard impaired	2,305		290		20,491
Doubtful	—		—		—
Loss	—		—		—
	$	185,443	$	51,667	$	1,357,767



Real Estate Credit Exposure as of December 31, 2012
			Commercial Real Estate
	Construction		Owner occupied		Non-owner occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	119	$	—	$	375	$	—	$	111
Good Quality	464		—		—		1,301		—		6,756
Satisfactory	22,284		115,347		58,577		95,727		7,945		118,497
Merits Attention	78,668		191,958		129,283		56,629		25,681		59,568
Special Mention	16,797		23,396		16,084		7,862		571		4,228
Substandard	3,939		4,286		2,136		2,850		601		1,687
Substandard impaired	9,829		7,856		5,409		3,867		539		1,041
Doubtful	—		—		—		—		—		—
Loss	—		—		—		—		—		—
	$	131,981	$	342,962	$	211,489	$	168,611	$	35,337	$	191,888



Other Credit Exposures as of December 31, 2012
	Commercial		Consumer and other		Total Loans
	(in thousands)
High Quality	$	2,430	$	2,289	$	5,324
Good Quality	5,738		1,316		15,575
Satisfactory	62,071		22,459		502,907
Merits Attention	82,243		24,425		648,455
Special Mention	16,809		551		86,298
Substandard	1,009		122		16,630
Substandard impaired	4,140		502		33,183
Doubtful	—		—		—
Loss	—		—		—
	$	174,440	$	51,664	$	1,308,372

Schedule of Financing Receivables, Non Accrual Status

The following is a breakdown of nonaccrual loans as of December 31, 2013 and December 31, 2012:



	December 31, 2013		December 31, 2012
	(in thousands)
Financing Receivables on Nonaccrual status
Construction	$	2,331	$	7,385
Commercial Real Estate:
Owner occupied	4,417		5,787
Non-owner occupied	1,806		1,697
Mortgages:
1-4 Family first lien	2,734		3,123
Multifamily	256		539
Home Equity lines of credit	1,285		1,041
Commercial	2,306		2,790
Consumer and other	258		455
Total	$	15,393	$	22,817

Past Due Financing Receivables

The following table presents the Bank's aged analysis of past due loans:



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans
December 31, 2013	(in thousands)
Construction	$	855	$	207	$	541	$	1,603	$	129,432	$	131,035
Commercial real estate:
Owner occupied	1,973		—		58		2,031		380,735		382,766
Non-owner occupied	1,172		129		432		1,733		195,193		196,926
Commercial	2,029		742		142		2,913		182,530		185,443
Mortgages:
Secured 1-4 family- first lien	2,738		1,190		1,186		5,114		168,958		174,072
Multifamily	—		249		—		249		41,464		41,713
Home equity lines of credit	909		341		75		1,325		192,820		194,145
Consumer and other	322		62		52		436		51,231		51,667
Total	$	9,998	$	2,920	$	2,486	$	15,404	$	1,342,363	$	1,357,767

December 31, 2012
Construction	$	4,395	$	345	$	1,865	$	6,605	$	125,376	$	131,981
Commercial real estate:
Owner occupied	838		114		4,237		5,189		337,773		342,962
Non-owner occupied	1,688		500		1,098		3,286		208,203		211,489
Commercial	2,027		34		2,660		4,721		169,719		174,440
Mortgages:
Secured 1-4 family- first lien	2,767		910		2,226		5,903		162,708		168,611
Multifamily	12		—		10		22		35,315		35,337
Home equity lines of credit	1,980		52		924		2,956		188,932		191,888
Consumer and other	236		45		342		623		51,041		51,664
Total	$	13,943	$	2,000	$	13,362	$	29,305	$	1,279,067	$	1,308,372

Impaired Financing Receivables

The following table presents the Bank's investment in loans individually reviewed for impairment and related information on those impaired loans as of December 31, 2013 and December 31, 2012:



	As of December 31, 2013						Year to Date December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	2,816	$	2,997	$	—	$	4,764	$	107
Commercial real estate:
Owner occupied	5,445		5,981		—		4,449		117
Non-owner occupied	4,469		4,537		—		5,202		210
Commercial	4,095		4,502		—		4,416		171
Mortgages:
Secured 1-4 family real estate	661		731		—		692		29
Multifamily	—		—		—		197		—
Home equity lines of credit	425		477		—		454		—
Consumer and other	—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	200	$	215	$	40	$	915	$	25
Commercial real estate:
Owner occupied	5,131		5,172		201		6,380		237
Non-owner occupied	645		645		50		399		10
Commercial	308		313		105		715		2
Mortgages:
Secured 1-4 family real estate	331		341		161		442		4
Multifamily	—		—		—		—		—
Home equity lines of credit	—		—		—		400		2
Consumer and other	—		—		—		—		—
Total impaired loans
Construction	$	3,016	$	3,212	$	40	$	5,679	$	132
Commercial real estate:
Owner occupied	10,576		11,153		201		10,829		354
Non-owner occupied	5,114		5,182		50		5,601		220
Commercial	4,403		4,815		105		5,131		173
Mortgages:
Secured 1-4 family real estate	992		1,072		161		1,134		33
Multifamily	—		—		—		197		—
Home equity lines of credit	425		477		—		854		2
Consumer and other	—		—		—		—		—
Total impaired loans individually reviewed for impairment	$	24,526	$	25,911	$	557	$	29,425	$	914



	As of December 31, 2012						Year to Date December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	6,212	$	7,676	$	—	$	18,748	$	307
Commercial real estate:
Owner occupied	6,563		7,071		—		15,175		228
Non-owner occupied	4,976		5,358		—		7,399		254
Commercial	4,460		4,482		—		6,350		143
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		2,364		42
Multifamily	530		565		—		701		—
Home equity lines of credit	705		800		—		1,424		13
Consumer and other	—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	1,958	$	2,136	$	191	$	2,929	$	4
Commercial real estate:
Owner occupied	4,961		5,082		189		5,163		326
Non-owner occupied	561		643		89		2,212		63
Commercial	1,193		1,245		928		2,249		8
Mortgages:
Secured 1-4 family real estate	—		—		—		347		10
Multifamily	—		—		—		—		2
Home equity lines of credit	—		—		—		36		—
Consumer and other	—		—		—		51		—
Total impaired loans
Construction	$	8,170	$	9,812	$	191	$	21,677	$	311
Commercial real estate:
Owner occupied	11,524		12,153		189		20,338		554
Non-owner occupied	5,537		6,001		89		9,611		317
Commercial	5,653		5,727		928		8,599		151
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		2,711		52
Multifamily	530		565		—		701		2
Home equity lines of credit	705		800		—		1,460		13
Consumer and other	—		—		—		51		—
Total impaired loan individually reviewed for impairment	$	33,554	$	36,561	$	1,397	$	65,148	$	1,400

Troubled Debt Restructurings on Financing Receivables



	Year ended December 31, 2013					Year ended December 31, 2012
	Number of Loans	Recorded Investment Prior to Modification		Recorded Investment After Modification		Number of Loans	Recorded Investment Prior to Modification		Recorded Investment After Modification
		(in thousands)					(in thousands)
Below market interest rate
Construction	1	$	215	$	200	—	$	—	$	—
Commercial real estate:
Non-owner occupied	2	1,220		1,139		—	—		—
Total	3	1,435		1,339		—	—		—
Extended payment terms
Construction	—	—		—		5	1,231		872
Commercial real estate:
Non-owner occupied	1	167		165		6	5,329		4,990
Owner occupied	4	1,319		1,316		9	2,443		2,379
Commercial	—	—		—		7	2,676		2,286
1-4 Family Residential	—	—		—		4	1,259		1,130
Consumer	—	—		—		1	27		24
Total	5	1,486		1,481		32	12,965		11,681
Principal payment reduction
Commercial real estate:
Owner occupied	—	—		—		2	571		571
Consumer	—	—		—		1	165		9
Total	—	—		—		3	736		580

Total	8	$	2,921	$	2,820	35	$	13,701	$	12,261

The following tables present loans that were modified as troubled debt restructurings during the previous twelve months and for which there was a payment default during the year ended December 31, 2012. There were no loans modified as troubled debt restructurings during the previous twelve months and for which there was a payment default during the year ended December 31, 2013.



	Year ended December 31, 2013			Year ended December 31, 2012
	Number of loans	Recorded investment		Number of loans	Recorded investment
Extended payment terms
Commercial real estate:
Non-owner occupied	—	$	—	1	$	—
Owner occupied	—	—		1	93
Secured 1-4 family mortgages	—	—		1	170
Consumer	—	—		1	24
Total	—	—		4	287

Total	—	$	—	4	$	287

Allowance for Credit Losses on Financing Receivables

The following table presents changes in the allowance for loan losses for the years ended December 31, 2013 and 2012:



	December 31, 2012		Charge-offs		Recoveries		Provision (Recovery)			December 31, 2013
	(Amounts in thousands)
Construction	$	4,269	$	2,104	$	1,007	$	(3	)	$	3,169
Commercial real estate:
Owner occupied	4,374		383		120		(1,022		)	3,089
Non-owner occupied	3,935		224		134		(1,764		)	2,081
Commercial	4,291		2,923		1,287		1,078			3,733
Mortgages:
Secured 1-4 family- first lien	3,191		871		253		(205		)	2,368
Multifamily	594		—		—		(158		)	436
Home equity lines of credit	3,822		1,037		568		(697		)	2,656
Consumer and other	673		330		102		86			531
	$	25,149	$	7,872	$	3,471	$	(2,685	)	$	18,063

	December 31, 2011		Charge-offs		Recoveries		Provision			December 31, 2012
	(Amounts in thousands)
Construction	$	8,214	$	17,825	$	1,138	$	12,742		$	4,269
Commercial real estate:
Owner occupied	5,792		7,334		165		5,751			4,374
Non-owner occupied	4,668		9,830		664		8,433			3,935
Commercial	5,712		7,796		956		5,419			4,291
Mortgages:
Secured 1-4 family- first lien	3,726		3,512		215		2,762			3,191
Multifamily	805		347		—		136			594
Home equity lines of credit	3,310		4,360		186		4,686			3,822
Consumer and other	621		752		359		445			673
	$	32,848	$	51,756	$	3,683	$	40,374		$	25,149

The following tables provide the breakdown of allowance for loan losses for collectively evaluated and individually evaluated loans by type as of December 31, 2013 and December 31, 2012.



	Reserves for loans individually evaluated for impairment		Loans individually evaluated for impairment		Reserves for loans collectively evaluated for impairment		Loans collectively evaluated for impairment
As of December 31, 2013	(Amounts in thousands)
Construction	$	40	$	3,016	$	3,129	$	128,019
Commercial real estate:
Owner occupied	201		10,576		2,888		372,190
Non-owner occupied	50		5,114		2,031		191,812
Commercial	105		4,403		3,628		181,040
Mortgages:
Secured 1-4 family- first lien	161		992		2,207		173,080
Multifamily	—		—		436		41,713
Home equity lines of credit	—		425		2,656		193,720
Consumer and other	—		—		531		51,667
	$	557	$	24,526	$	17,506	$	1,333,241

	Reserves for loans individually evaluated for impairment		Loans individually evaluated for impairment		Reserves for loans collectively evaluated for impairment		Loans collectively evaluated for impairment
As of December 31, 2012	(Amounts in thousands)
Construction	$	191	$	8,170	$	4,078	$	123,811
Commercial real estate:
Owner occupied	189		11,524		4,185		331,438
Non-owner occupied	89		5,537		3,846		205,952
Commercial	928		5,653		3,363		168,787
Mortgages:
Secured 1-4 family- first lien	—		1,435		3,191		167,176
Multifamily	—		530		594		34,807
Home equity lines of credit	—		705		3,822		191,183
Consumer and other	—		—		673		51,664
	$	1,397	$	33,554	$	23,752	$	1,274,818