Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Loans Receivable

The following table presents loans at March 31, 2014 and December 31, 2013 by class:

	March 31,			December 31,
	2014			2013
	(in thousands)
Construction and land development	$	124,946		$	131,035
Commercial real estate:
Owner occupied	389,887			382,766
Non-owner occupied	202,972			196,926
Residential mortgages:
Secured 1-4 family	180,106			174,072
Multifamily	62,332			41,713
Home equity lines of credit	192,801			194,145
Commercial	183,825			185,443
Consumer and other	44,687			51,667
Total	1,381,556			1,357,767
Less: Net deferred loan origination fees	1,142			979
Allowance for loan losses	(16,522		)	(18,063		)
Loans, net	$	1,366,176		$	1,340,683

Credit Quality Indicators

The following is a summary of credit quality indicators by class at March 31, 2014 and December 31, 2013:

Real Estate Credit Exposure as of March 31, 2014
			Commercial Real Estate
	Construction		Owner Occupied		Non-owner Occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	—	$	—	$	89	$	—	$	149
Good Quality	348		—		1,576		854		954		6,460
Satisfactory	21,660		119,648		50,588		102,924		7,368		117,385
Merits Attention	86,973		238,119		140,036		65,039		53,152		61,649
Special Mention	13,244		20,166		7,335		5,715		286		4,948
Substandard	540		3,781		1,784		2,714		565		1,306
Substandard impaired	2,181		8,173		1,653		2,771		7		904
Doubtful	—		—		—		—		—		—
Loss	—		—		—		—		—		—
	$	124,946	$	389,887	$	202,972	$	180,106	$	62,332	$	192,801

Other Credit Exposures as of March 31, 2014
	Commercial		Consumer and Other		Total Loans
	(in thousands)
High Quality	$	2,718	$	1,975	$	4,931
Good Quality	4,956		1,181		16,329
Satisfactory	58,671		21,777		500,021
Merits Attention	101,754		18,735		765,457
Special Mention	6,897		691		59,282
Substandard	7,584		30		18,304
Substandard impaired	1,245		298		17,232
Doubtful	—		—		—
Loss	—		—		—
	$	183,825	$	44,687	$	1,381,556

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

Nonaccrual Loans

The following is a breakdown of nonaccrual loans as of March 31, 2014 and December 31, 2013:

	March 31, 2014		December 31, 2013
	(in thousands)
Financing Receivables on Nonaccrual status
Construction	$	2,181	$	2,331
Commercial real estate:
Owner occupied	6,172		4,417
Non-owner occupied	1,619		1,806
Mortgages:
Secured 1-4 family first lien	2,682		2,734
Multifamily	6		256
Home equity lines of credit	904		1,285
Commercial	1,245		2,306
Consumer and other	272		258
Total	$	15,081	$	15,393

Past Due Loan Aging

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
March 31, 2014	(in thousands)
Construction	$	260	$	735	$	790	$	1,785	$	123,161	$	124,946
Commercial real estate:
Owner occupied	3,715		3,166		571		7,452		382,435		389,887
Non-owner occupied	783		836		518		2,137		200,835		202,972
Commercial	1,221		379		612		2,212		181,613		183,825
Mortgages:
Secured 1-4 family- first lien	3,247		1,470		994		5,711		174,395		180,106
Multifamily	—		—		—		—		62,332		62,332
Home equity lines of credit	344		153		—		497		192,304		192,801
Consumer and other	203		7		40		250		44,437		44,687
Total	$	9,773	$	6,746	$	3,525	$	20,044	$	1,361,512	$	1,381,556
December 31, 2013
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

Impaired Loans

The following table presents the Bank's investment in loans considered to be impaired and related information on those impaired loans as of March 31, 2014 and December 31, 2013:

	March 31, 2014						Quarter to Date March 31, 2014
	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	$	3,041	$	3,447	$	—	$	3,806	$	27
Commercial real estate:
Owner occupied	8,437		9,047		—		7,184		70
Non-owner occupied	1,186		1,294		—		2,031		4
Commercial	775		775		—		1,691		12
Mortgages:
Secured 1-4 family real estate	617		727		—		665		7
Multifamily	—		—		—		65		—
Home equity lines of credit	—		—		—		116		—
Consumer and other	—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	—	$	—	$	—	$	50	$	—
Commercial real estate:
Owner occupied	4,996		4,996		127		5,038		61
Non-owner occupied	644		644		41		644		8
Commercial	366		366		366		352		—
Mortgages:
Secured 1-4 family real estate	326		341		156		329		—
Multifamily	—		—		—		—		—
Home equity lines of credit	—		—		—		—		—
Consumer and other	—		—		—		—		—
Total impaired loans
Construction	$	3,041	$	3,447	$	—	$	3,856	$	27
Commercial real estate:
Owner occupied	13,433		14,043		127		12,222		131
Non-owner occupied	1,830		1,938		41		2,675		12
Commercial	1,141		1,141		366		2,043		12
Mortgages:
Secured 1-4 family real estate	943		1,068		156		994		7
Multifamily	—		—		—		65		—
Home equity lines of credit	—		—		—		116		—
Consumer and other	—		—		—		—		—
Total impaired loans individually reviewed for impairment	$	20,388	$	21,637	$	690	$	21,971	$	189

	December 31, 2013						Quarter to Date March 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	$	—	$	5,976	$	24
Commercial real estate:
Owner occupied	5,445		5,981		—		3,300		25
Non-owner occupied	4,469		4,537		—		5,573		60
Commercial	4,095		4,502		—		4,440		40
Mortgages:
Secured 1-4 family real estate	661		731		—		730		7
Multifamily	—		—		—		260		—
Home equity lines of credit	425		477		—		473		—
Consumer and other	—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	200	$	215	$	40	$	2,634	$	21
Commercial real estate:
Owner occupied	5,131		5,172		201		7,705		58
Non-owner occupied	645		645		50		497		2
Commercial	308		313		105		1,193		—
Mortgages:
Secured 1-4 family real estate	331		341		161		448		3
Multifamily	—		—		—		—		—
Home equity lines of credit	—		—		—		745		2
Consumer and other	—		—		—		—		—
Total impaired loans
Construction	$	3,016	$	3,212	$	40	$	8,610	$	45
Commercial real estate:
Owner occupied	10,576		11,153		201		11,005		83
Non-owner occupied	5,114		5,182		50		6,070		62
Commercial	4,403		4,815		105		5,633		40
Mortgages:
Secured 1-4 family real estate	992		1,072		161		1,178		10
Multifamily	—		—		—		260		—
Home equity lines of credit	425		477		—		1,218		2
Consumer and other	—		—		—		—		—
Total impaired loan individually reviewed for impairment	$	24,526	$	25,911	$	557	$	33,974	$	242

Troubled Debt Restructurings

	Three Months Ended March 31, 2014
	Number of Loans	Recorded Investment
		(in thousands)
Principal payment reduction
Commercial real estate:
Non-owner occupied	1	$	489
Total	1	$	489

	Three Months Ended March 31, 2013
	Number of loans	Recorded investment
Extended payment terms		(In thousands)
Commercial real estate:
Owner occupied	1	$	224
Non-owner occupied	1	166
Total extended payment terms	2	$	390
Total	2	$	390

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 three months ended March 31, 2013. There were no loans modified as troubled debt restructurings during the previous twelve months for which there was a payment default during the three months ended March 31, 2014.

	Three Months Ended March 31, 2013
	Number of loans	Recorded investment
Extended payment terms		(In thousands)
Construction	1	$	500
Commercial real estate:
Owner occupied	1	93
Non-owner occupied	2	211
Total extended payment terms	4	$	804
Total	4	$	804

Allowance for Loan Losses

The following tables present changes in the allowance for loan losses for the three months ended March 31, 2014 and 2013:

	December 31, 2013		Charge-offs		Recoveries		Provision (Recovery)			March 31, 2014
	(Amounts in thousands)
Construction	$	3,169	$	258	$	92	$	(600	)	$	2,403
Commercial real estate:
Owner occupied	3,089		—		22		(123		)	2,988
Non-owner occupied	2,081		809		581		118			1,971
Commercial	3,733		745		319		765			4,072
Mortgages:
Secured 1-4 family- first lien	2,368		232		7		(32		)	2,111
Multifamily	436		79		—		72			429
Home equity lines of credit	2,656		130		169		(587		)	2,108
Consumer and other	531		38		20		(73		)	440
	$	18,063	$	2,291	$	1,210	$	(460	)	$	16,522
	December 31, 2012		Charge-offs		Recoveries		Provision			March 31, 2013
	(Amounts in thousands)
Construction	$	4,269	$	646	$	516	$	(105	)	$	4,034
Commercial real estate:
Owner occupied	4,374		10		24		25			4,413
Non-owner occupied	3,935		175		6		45			3,811
Commercial	4,291		399		86		27			4,005
Mortgages:
Secured 1-4 family- first lien	3,191		251		21		(83		)	2,878
Multifamily	594		—		—		(15		)	579
Home equity lines of credit	3,822		81		84		309			4,134
Consumer and other	673		89		20		34			638
	$	25,149	$	1,651	$	757	$	237		$	24,492

The following tables provide a breakdown of allowance for loan losses for collectively evaluated and individually evaluated loans by type as of March 31, 2014 and December 31, 2013.

	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 March 31, 2014	(Amounts in thousands)
Construction	$	—	$	3,041	$	2,403	$	121,905
Commercial real estate:
Owner occupied	127		13,433		2,862		376,454
Non-owner occupied	41		1,829		1,929		201,143
Commercial	366		1,142		3,706		182,683
Mortgages:
Secured 1-4 family- first lien	156		943		1,955		179,163
Multifamily	—		—		429		62,332
Home equity lines of credit	—		—		2,107		192,801
Consumer and other	—		—		440		44,687
	$	690	$	20,388	$	15,831	$	1,361,168
	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