Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2014

Receivables [Abstract]

Loans Receivable

The following table presents loans at June 30, 2014 and December 31, 2013 by class:

	June 30,			December 31,
	2014			2013
	(in thousands)
Construction and land development	$	127,553		$	131,035
Commercial real estate:
Owner occupied	417,340			382,766
Non-owner occupied	203,250			196,926
Residential mortgages:
Secured 1-4 family	178,288			174,072
Multifamily	64,805			41,713
Home equity lines of credit	197,095			194,145
Commercial	184,438			185,443
Consumer and other	45,975			51,667
Total	1,418,744			1,357,767
Less: Net deferred loan origination fees	1,124			979
Allowance for loan losses	(16,449		)	(18,063		)
Loans, net	$	1,403,419		$	1,340,683

Credit Quality Indicators

The following is a summary of credit quality indicators by class at June 30, 2014 and December 31, 2013:

Real Estate Credit Exposure as of June 30, 2014
			Commercial Real Estate
	Construction		Owner Occupied		Non-owner Occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	—	$	—	$	88	$	—	$	145
Good Quality	340		750		1,565		810		946		6,256
Satisfactory	21,120		121,367		49,414		101,975		7,854		120,062
Merits Attention	91,877		258,125		142,141		63,600		55,163		62,853
Special Mention	11,231		24,904		7,214		4,394		280		5,473
Substandard	780		3,807		1,144		2,756		556		1,294
Substandard impaired	2,205		8,387		1,772		4,665		6		1,012
Doubtful	—		—		—		—		—		—
Loss	—		—		—		—		—		—
	$	127,553	$	417,340	$	203,250	$	178,288	$	64,805	$	197,095

Other Credit Exposures as of June 30, 2014
	Commercial		Consumer and Other		Total Loans
	(in thousands)
High Quality	$	2,002	$	1,785	$	4,020
Good Quality	4,748		1,360		16,775
Satisfactory	56,526		22,178		500,496
Merits Attention	107,531		19,590		800,880
Special Mention	5,168		783		59,447
Substandard	5,676		2		16,015
Substandard impaired	2,787		277		21,111
Doubtful	—		—		—
Loss	—		—		—
	$	184,438	$	45,975	$	1,418,744

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 June 30, 2014 and December 31, 2013:

	June 30, 2014		December 31, 2013
	(in thousands)
Financing Receivables on Nonaccrual status
Construction	$	2,205	$	2,331
Commercial real estate:
Owner occupied	6,403		4,417
Non-owner occupied	1,740		1,806
Mortgages:
Secured 1-4 family first lien	4,576		2,734
Multifamily	6		256
Home equity lines of credit	1,011		1,285
Commercial	2,787		2,306
Consumer and other	254		258
Total	$	18,982	$	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
June 30, 2014	(in thousands)
Construction	$	1,271	$	—	$	847	$	2,118	$	125,435	$	127,553
Commercial real estate:
Owner occupied	1,080		77		3,507		4,664		412,676		417,340
Non-owner occupied	681		—		863		1,544		201,706		203,250
Commercial	484		1,153		2,092		3,729		180,709		184,438
Mortgages:
Secured 1-4 family- first lien	975		224		3,144		4,343		173,945		178,288
Multifamily	—		—		—		—		64,805		64,805
Home equity lines of credit	523		96		160		779		196,316		197,095
Consumer and other	151		58		37		246		45,729		45,975
Total	$	5,165	$	1,608	$	10,650	$	17,423	$	1,401,321	$	1,418,744
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 June 30, 2014 and December 31, 2013:

	June 30, 2014						Quarter to Date June 30, 2014				Year to Date June 30, 2014
	Recorded  Investment		Unpaid  Principal  Balance		Related  Allowance		Average  Recorded  Investment		Interest Income Recognized		Average  Recorded  Investment		Interest Income Recognized
	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	1,154	$	1,252	$	—	$	1,628	$	8	$	2,671	$	36
Commercial real estate:
Owner occupied	7,725		8,386		—		7,861		40		7,392		110
Non-owner occupied	1,470		1,541		—		1,534		4		1,868		8
Commercial	769		769		—		771		12		1,296		23
Mortgages:
Secured 1-4 family real estate	606		683		—		611		7		641		14
Multifamily	—		—		—		—		—		37		—
Home equity lines of credit	—		—		—		—		—		66		—
Consumer and other	—		—		—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	826	$	937	$	191	$	669	$	—	$	383	$	—
Commercial real estate:
Owner occupied	5,581		5,582		134		5,474		65		5,274		126
Non-owner occupied	642		642		42		643		8		643		16
Commercial	1,617		1,617		908		1,290		12		894		12
Mortgages:
Secured 1-4 family real estate	1,798		1,824		720		1,434		3		960		3
Multifamily	—		—		—		—		—		—		—
Home equity lines of credit	—		—		—		—		—		—		—
Consumer and other	—		—		—		—		—		—		—
Total impaired loans
Construction	$	1,980	$	2,189	$	191	$	2,297	$	8	$	3,054	$	36
Commercial real estate:
Owner occupied	13,306		13,968		134		13,335		105		12,666		236
Non-owner occupied	2,112		2,183		42		2,177		12		2,511		24
Commercial	2,386		2,386		908		2,061		24		2,190		35
Mortgages:
Secured 1-4 family real estate	2,404		2,507		720		2,045		10		1,601		17
Multifamily	—		—		—		—		—		37		—
Home equity lines of credit	—		—		—		—		—		66		—
Consumer and other	—		—		—		—		—		—		—
Total impaired loans individually reviewed for impairment	$	22,188	$	23,233	$	1,995	$	21,915	$	159	$	22,125	$	348

	December 31, 2013						Quarter to Date June 30, 2013				Year to Date June 30, 2013
	Recorded Investment		Unpaid  Principal  Balance		Related  Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	2,816	$	2,997	$	—	$	5,665	$	60	$	3,938	$	36
Commercial real estate:
Owner occupied	5,445		5,981		—		3,282		49		2,443		24
Non-owner occupied	4,469		4,537		—		5,417		113		3,907		53
Commercial	4,095		4,502		—		4,433		79		3,317		40
Mortgages:
Secured 1-4 family real estate	661		731		—		710		14		514		7
Multifamily	—		—		—		258		—		192		—
Home equity lines of credit	425		477		—		468		—		345		—
Consumer and other	—		—		—		—		—		1		—
Impaired loans with a related allowance for loan losses
Construction	$	200	$	215	$	40	$	1,613	$	25	$	846	$	3
Commercial real estate:
Owner occupied	5,131		5,172		201		7,679		116		7,655		58
Non-owner occupied	645		645		50		464		2		426		—
Commercial	308		313		105		1,193		—		1,193		—
Mortgages:
Secured 1-4 family real estate	331		341		161		401		3		396		—
Multifamily	—		—		—		—		—		—		—
Home equity lines of credit	—		—		—		743		2		741		—
Consumer and other	—		—		—		—		—		—		—
Total impaired loans
Construction	$	3,016	$	3,212	$	40	$	7,278	$	85	$	4,784	$	39
Commercial real estate:
Owner occupied	10,576		11,153		201		10,961		165		10,098		82
Non-owner occupied	5,114		5,182		50		5,881		115		4,333		53
Commercial	4,403		4,815		105		5,626		79		4,510		40
Mortgages:
Secured 1-4 family real estate	992		1,072		161		1,111		17		910		7
Multifamily	—		—		—		258		—		192		—
Home equity lines of credit	425		477		—		1,211		2		1,086		—
Consumer and other	—		—		—		—		—		1		—
Total impaired loan individually reviewed for impairment	$	24,526	$	25,911	$	557	$	32,326	$	463	$	25,914	$	221

Troubled Debt Restructurings

	Three Months Ended June 30, 2014			Six Months Ended June 30, 2014
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
		(in thousands)			(in thousands)
Principal payment reduction
Commercial real estate:
Non-owner occupied	—	$	—	1	$	477
Total	—	$	—	1	$	477

	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
	Number of loans	Recorded investment		Number of loans	Recorded investment
Extended payment terms		(In thousands)
Commercial real estate:
Owner occupied	1	$	499	2	724
Non-owner occupied	—	—		1	165
Total extended payment terms	1	$	499	3	$	889
Total	1	$	499	4	$	889

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 and six months ended June 30, 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 and six months ended June 30, 2014.

	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
	Number of loans	Recorded investment		Number of loans	Recorded investment
Extended payment terms		(In thousands)			(In thousands)
Construction	—	$	—	2	$	593
Commercial real estate:
Non-owner occupied	—	—		1	121
Total extended payment terms	—	$	—	3	$	714

Allowance for Loan Losses

The following tables present changes in the allowance for loan losses for the three and six months ended June 30, 2014 and 2013:

	March 31, 2014		Charge-offs		Recoveries		Provision (Recovery)			June 30, 2014
	(Amounts in thousands)
Construction	$	2,403	$	69	$	71	$	(100	)	$	2,305
Commercial real estate:
Owner occupied	2,988		—		763		(903		)	2,848
Non-owner occupied	1,971		80		116		(412		)	1,595
Commercial	4,072		81		111		606			4,708
Mortgages:
Secured 1-4 family- first lien	2,111		8		8		392			2,503
Multifamily	429		—		—		(57		)	372
Home equity lines of credit	2,108		19		40		(409		)	1,720
Consumer and other	440		90		56		(8		)	398
	$	16,522	$	347	$	1,165	$	(891	)	$	16,449
	March 31, 2013		Charge-offs		Recoveries		Provision (Recovery)			June 30, 2013
	(Amounts in thousands)
Construction	$	4,034	$	1,188	$	82	$	737		$	3,665
Commercial real estate:
Owner occupied	4,413		234		18		(37		)	4,160
Non-owner occupied	3,811		—		18		(370		)	3,459
Commercial	4,005		224		236		(32		)	3,985
Mortgages:
Secured 1-4 family- first lien	2,878		387		79		74			2,644
Multifamily	579		—		—		(66		)	513
Home equity lines of credit	4,134		—		31		(322		)	3,843
Consumer and other	638		82		28		71			655
	$	24,492	$	2,115	$	492	$	55		$	22,924

	December 31, 2013		Charge-offs		Recoveries		Provision (Recovery)			June 30, 2014
	(Amounts in thousands)
Construction	$	3,169	$	326	$	163	$	(701	)	$	2,305
Commercial real estate:
Owner occupied	3,089		—		784		(1,025		)	2,848
Non-owner occupied	2,081		889		697		(294		)	1,595
Commercial	3,733		826		430		1,371			4,708
Mortgages:
Secured 1-4 family- first lien	2,368		240		15		360			2,503
Multifamily	436		80		—		16			372
Home equity lines of credit	2,656		149		210		(997		)	1,720
Consumer and other	531		128		76		(81		)	398
	$	18,063	$	2,638	$	2,375	$	(1,351	)	$	16,449
	December 31, 2012		Charge-offs		Recoveries		Provision (Recovery)			June 30, 2013
	(Amounts in thousands)
Construction	$	4,269	$	1,834	$	598	$	632		$	3,665
Commercial real estate:
Owner occupied	4,374		244		42		(12		)	4,160
Non-owner occupied	3,935		175		24		(325		)	3,459
Commercial	4,291		622		321		(5		)	3,985
Mortgages:
Secured 1-4 family- first lien	3,191		639		100		(8		)	2,644
Multifamily	594		—		—		(81		)	513
Home equity lines of credit	3,822		81		116		(14		)	3,843
Consumer and other	673		172		49		105			655
	$	25,149	$	3,767	$	1,250	$	292		$	22,924

The following tables provide a breakdown of allowance for loan losses for collectively evaluated and individually evaluated loans by type as of June 30, 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 June 30, 2014	(Amounts in thousands)
Construction	$	191	$	1,980	$	2,115	$	125,573
Commercial real estate:
Owner occupied	134		13,306		2,714		404,034
Non-owner occupied	42		2,112		1,552		201,138
Commercial	908		2,386		3,801		182,052
Mortgages:
Secured 1-4 family- first lien	720		2,404		1,783		175,884
Multifamily	—		—		372		64,805
Home equity lines of credit	—		—		1,719		197,095
Consumer and other	—		—		398		45,975
	$	1,995	$	22,188	$	14,454	$	1,396,556
	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