Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2017

Loans Outstanding by Major Lending Classification

Loans outstanding at March 31, 2017 and December 31, 2016, by major lending classification are as follows:

	March 31,			December 31,
	2017			2016
Commercial and industrial	$	399,333		$	386,233
Construction		267,998			245,905
Residential real estate:
1-to-4 family mortgage		302,166			294,924
Residential line of credit		177,928			177,190
Multi-family mortgage		45,244			44,977
Commercial real estate:
Owner occupied		359,120			357,346
Non-owner occupied		273,716			267,902
Consumer and other		75,490			74,307
Gross loans		1,900,995			1,848,784
Less: Allowance for loan losses		(22,898	)		(21,747	)
Net loans	$	1,878,097		$	1,827,037

Allowance for Loan Losses by Portfolio Segment and Related Investment in Loans Net of Unearned Interest

The following provides the allowance for loan losses by portfolio segment and the related investment in loans net of unearned interest for the three months ended March 31, 2017 and 2016:

	Commercial and industrial			Construction			1-to-4 family residential mortgage			Residential line of credit			Multi- family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied			Consumer and other			Total
Three Months Ended March 31, 2017
Beginning balance - December 31, 2016	$	5,309		$	4,940		$	3,197		$	1,613		$	504	$	3,302	$	2,019		$	863		$	21,747
Provision for loan losses		179			635			(239	)		(155	)		4		81		(998	)		236			(257	)
Recoveries of loans previously charged-off		83			29			26			56			—		4		1,639			13			1,850
Loans charged off		(169	)		(6	)		(88	)		—			—		—		—			(179	)		(442	)
Ending balance - March 31, 2017	$	5,402		$	5,598		$	2,896		$	1,514		$	508	$	3,387	$	2,660		$	933		$	22,898

	Commercial and industrial			Construction			1-to-4 family residential mortgage		Residential line of credit			Multi- family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied		Consumer and other			Total
Three Months Ended March 31, 2016
Beginning balance - December 31, 2015	$	5,135		$	5,143		$	4,176	$	2,201		$	311	$	3,682	$	2,622	$	1,190		$	24,460
Provision for loan losses		99			(666	)		42		(163	)		279		325		113		(38	)		(9	)
Recoveries of loans previously charged-off		10			41			62		37			—		6		4		72			232
Loans charged off		(2	)		—			—		—			—		—		—		(250	)		(252	)
Ending balance - March 31, 2016	$	5,242		$	4,518		$	4,280	$	2,075		$	590	$	4,013	$	2,739	$	974		$	24,431

Allocation of Allowance for Loan Losses by Loan Category Broken Out Between Loans Individually and Collectively Evaluated for Impairment

The following table provides the allocation of the allowance for loan losses by loan category broken out between loans individually evaluated for impairment and loans collectively evaluated for impairment as of March 31, 2017 and December 31, 2016:

													March 31, 2017
	Commercial and industrial		Construction		1-to-4 family residential mortgage		Residential line of credit		Multi- family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied		Consumer and other		Total
Amount of allowance allocated to:
Individually evaluated for impairment	$	34	$	—	$	22	$	—	$	—	$	102	$	85	$	—	$	243
Collectively evaluated for impairment		5,368		5,598		2,874		1,514		508		3,285		2,575		933		22,655
Acquired with deteriorated credit quality		—		—		—		—		—		—		—		—		—
Ending balance - March 31, 2017	$	5,402	$	5,598	$	2,896	$	1,514	$	508	$	3,387	$	2,660	$	933	$	22,898

													December 31, 2016
	Commercial and industrial		Construction		1-to-4 family residential mortgage		Residential line of credit		Multi- family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied		Consumer and other		Total
Year-end amount of allowance allocated to:
Individually evaluated for impairment	$	135	$	—	$	23	$	—	$	—	$	113	$	242	$	—	$	513
Collectively evaluated for impairment		5,174		4,940		3,174		1,613		504		3,189		1,777		863		21,234
Acquired with deteriorated credit quality		—		—		—		—		—		—		—		—		—
Ending balance - December 31, 2016	$	5,309	$	4,940	$	3,197	$	1,613	$	504	$	3,302	$	2,019	$	863	$	21,747

Amount of Loans by Loan Category Broken Between Loans Individually and Collectively Evaluated for Impairment

The following table provides the amount of loans by loan category broken between loans individually evaluated for impairment and loans collectively evaluated for impairment as of March 31, 2017 and December 31, 2016:

													March 31, 2017
	Commercial and industrial		Construction		1-to-4 family residential mortgage		Residential line of credit		Multi- family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied		Consumer and other		Total
Loans, net of unearned income
Individually evaluated for impairment	$	1,272	$	305	$	2,216	$	—	$	1,014	$	2,459	$	2,128	$	25	$	9,419
Collectively evaluated for impairment		397,583		263,424		297,817		177,928		44,205		352,623		266,436		75,461		1,875,477
Acquired with deteriorated credit quality		478		4,269		2,133		—		25		4,038		5,152		4		16,099
Ending balance - March 31, 2017	$	399,333	$	267,998	$	302,166	$	177,928	$	45,244	$	359,120	$	273,716	$	75,490	$	1,900,995

													December 31, 2016
	Commercial and industrial		Construction		1-to-4 family residential mortgage		Residential line of credit		Multi- family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied		Consumer and other		Total
Loans, net of unearned income
Individually evaluated for impairment	$	1,476	$	2,686	$	2,471	$	311	$	1,027	$	2,752	$	2,201	$	27	$	12,951
Collectively evaluated for impairment		384,279		238,900		290,346		176,879		43,922		350,812		260,361		74,276		1,819,775
Acquired with deteriorated credit quality		478		4,319		2,107		—		28		3,782		5,340		4		16,058
Ending balance - December 31, 2016	$	386,233	$	245,905	$	294,924	$	177,190	$	44,977	$	357,346	$	267,902	$	74,307	$	1,848,784

Credit Quality Indicators by Portfolio Class

The following table shows credit quality indicators by portfolio class at March 31, 2017 and December 31, 2016:

March 31, 2017	Pass		Watch		Substandard		Total
Commercial and industrial	$	362,172	$	34,722	$	2,439	$	399,333
Construction		260,791		2,341		4,866		267,998
Residential real estate:
1-to-4 family mortgage		285,819		6,894		9,453		302,166
Residential line of credit		173,491		2,016		2,421		177,928
Multi-family mortgage		44,058		147		1,039		45,244
Commercial real estate:
Owner occupied		341,784		8,947		8,389		359,120
Non-owner occupied		258,887		6,283		8,546		273,716
Consumer and other		74,742		345		403		75,490
Total	$	1,801,744	$	61,695	$	37,556	$	1,900,995

December 31, 2016	Pass		Watch		Substandard		Total
Commercial and industrial	$	351,046	$	31,074	$	4,113	$	386,233
Construction		236,588		4,612		4,705		245,905
Residential real estate:
1-to-4 family mortgage		277,948		6,945		10,031		294,924
Residential line of credit		173,011		1,875		2,304		177,190
Multi-family mortgage		43,770		152		1,055		44,977
Commercial real estate:
Owner occupied		338,698		10,459		8,189		357,346
Non-owner occupied		249,877		10,273		7,752		267,902
Consumer and other		73,454		417		436		74,307
Total	$	1,744,392	$	65,807	$	38,585	$	1,848,784

Purchased Credit Impaired

Loans acquired in business combinations that exhibited at the date of acquisition evidence of deterioration of credit quality since origination such that it was probable that all contractually required payments would not be collected are considered to be purchased credit impaired and were as follows at March 31, 2017 and December 31, 2016:

	March 31, 2017		December 31, 2016
Commercial and industrial	$	478	$	478
Construction		4,269		4,319
Residential real estate:
1-to-4 family mortgage		2,133		2,107
Residential line of credit		—		—
Multi-family mortgage		25		28
Commercial real estate:
Owner occupied		4,038		3,782
Non-owner occupied		5,152		5,340
Consumer and other		4		4
Total	$	16,099	$	16,058

Current Value of Loans Impaired at the Time of Acquisition

The following table presents the current value of loans determined to be impaired at the time of acquisition at March 31, 2017 and December 31, 2016:

	March 31, 2017			December 31, 2016
Contractually-required principal and interest	$	21,997		$	22,961
Nonaccretable difference		(3,756	)		(4,459	)
Cash flows expected to be collected		18,241			18,502
Accretable yield		(2,142	)		(2,444	)
Carrying value	$	16,099		$	16,058

Changes in Accretable Yield and Nonaccretable Difference of Purchased Loans

Changes in accretable yield and nonaccretable difference of purchased loans were as follows:

	Accretable yield						Nonaccretable Difference
	Purchased Credit Impaired			Purchased Non-impaired			Purchased Credit Impaired			Purchased Non-impaired			Total
Balance at December 31, 2016	$	(2,444	)	$	(1,240	)	$	(4,459	)	$	—		$	(8,143	)
Principal reductions/ pay-offs		(698	)		—			698			—			—
Charge-offs		—			—		5				—			5
Recoveries		(23	)		—			—			—			(23	)
Accretion		1,023			137			—			—			1,160
Balance at March 31, 2017	$	(2,142	)	$	(1,103	)	$	(3,756	)	$	—		$	(7,001	)

Balance at December 31, 2015	$	(1,637	)	$	(2,008	)	$	(8,369	)	$	(209	)	$	(12,223	)
Principal reductions/ pay-offs		(231	)		—			231			—			—
Charge-offs		—			—			440			—			440
Sale of credit card portfolio		—			—			—			70			70
Accretion		408			418			—			—			826
Balance at March 31, 2016	$	(1,460	)	$	(1,590	)	$	(7,698	)	$	(139	)	$	(10,887	)

Past Due Loans

Nonperforming loans include loans that are no longer accruing interest (non-accrual loans) and loans past due ninety or more days and still accruing interest. Nonperforming loans and impaired loans are defined differently. Some loans may be included in both categories, whereas other loans may only be included in one category. Loans acquired with deteriorated credit quality amounting to $16,099 and $16,058, respectively, at March 31, 2017 and December 31, 2016 have been excluded from the tables below in accordance with ASC-310-10-50, Receivables- Overall- Disclosure.

The following table provides the period-end amounts of loans that are past due thirty to eighty-nine days, past due ninety or more days and still accruing interest, loans not accruing interest and loans current on payments accruing interest by category at March 31, 2017 and December 31, 2016:

March 31, 2017	30-89 days past due		90 days or more and accruing interest		Non-accrual loans		Loans current on payments and accruing interest		Total
Commercial and industrial	$	436	$	123	$	1,092	$	397,204	$	398,855
Construction		174		194		248		263,113		263,729
Residential real estate:
1-to-4 family mortgage		3,601		346		1,950		294,136		300,033
Residential line of credit		1,307		780		285		175,556		177,928
Multi-family mortgage		—		—		—		45,219		45,219
Commercial real estate:
Owner occupied		217		81		1,933		352,851		355,082
Non-owner occupied		81		—		2,170		266,313		268,564
Consumer and other		355		66		28		75,037		75,486
Total	$	6,171	$	1,590	$	7,706	$	1,869,429	$	1,884,896

December 31, 2016	30-89 days past due		90 days or more and accruing interest		Non-accrual loans		Loans current on payments and accruing interest		Total
Commercial and industrial	$	262	$	127	$	1,297	$	384,069	$	385,755
Construction		441		17		254		240,874		241,586
Residential real estate:
1-to-4 family mortgage		3,130		697		2,289		286,701		292,817
Residential line of credit		1,139		433		601		175,017		177,190
Multi-family mortgage		—		—		—		44,949		44,949
Commercial real estate:
Owner occupied		186		—		2,007		351,371		353,564
Non-owner occupied		158		—		2,251		260,153		262,562
Consumer and other		433		55		30		73,785		74,303
Total	$	5,749	$	1,329	$	8,729	$	1,816,919	$	1,832,726

Impaired Loans Recognized, Segregated by Class

Impaired loans recognized in conformity with ASC 310 at March 31, 2017 and December 31, 2016, segregated by class, were as follows:

March 31, 2017	Recorded investment		Unpaid principal		Related allowance
With a related allowance recorded:
Commercial and industrial	$	727	$	869	$	34
Construction		—		—		—
Residential real estate:
1-to-4 family mortgage		99		365		22
Residential line of credit		—		—		—
Multi-family mortgage		—		—		—
Commercial real estate:
Owner occupied		623		654		102
Non-owner occupied		521		1,048		85
Consumer and other		—		—		—
Total	$	1,970	$	2,936	$	243
With no related allowance recorded
Commercial and industrial	$	545	$	676	$	—
Construction		305		317		—
Residential real estate:
1-to-4 family mortgage		2,117		2,118		—
Residential line of credit		—		—		—
Multi-family mortgage		1,014		1,014		—
Commercial real estate:
Owner occupied		1,836		2,943		—
Non-owner occupied		1,607		2,339		—
Consumer and other		25		26		—
Total	$	7,449	$	9,433	$	—
Total impaired loans	$	9,419	$	12,369	$	243

December 31, 2016	Recorded investment		Unpaid principal		Related allowance
With a related allowance recorded:
Commercial and industrial	$	854	$	854	$	135
Construction		—		—		—
Residential real estate:
1-to-4 family mortgage		103		369		23
Residential line of credit		—		—		—
Multi-family mortgage		—		—		—
Commercial real estate:
Owner occupied		635		654		113
Non-owner occupied		1,151		1,678		242
Consumer and other		1		1		—
Total	$	2,744	$	3,556	$	513
With no related allowance recorded:
Commercial and industrial	$	622	$	746	$	—
Construction		2,686		2,694		—
Residential real estate:
1-to-4 family mortgage		2,368		2,370		—
Residential line of credit		311		321		—
Multi-family mortgage		1,027		1,027		—
Commercial real estate:
Owner occupied		2,117		3,205		—
Non-owner occupied		1,050		1,781		—
Consumer and other		26		26		—
Total	$	10,207	$	12,170	$	—
Total impaired loans	$	12,951	$	15,726	$	513

Average recorded investment and interest income on a cash basis recognized during the three months ended March 31, 2017 and 2016 on impaired loans, segregated by class, were as follows:

Three Months Ended March 31, 2017	Average recorded investment		Interest income recognized (cash basis)
With a related allowance recorded:
Commercial and industrial	$	791	$	5
Construction		—		—
Residential real estate:
1-to-4 family mortgage		101		—
Residential line of credit		—		—
Multi-family mortgage		—		—
Commercial real estate:
Owner occupied		629		12
Non-owner occupied		836		—
Consumer and other		1		—
Total	$	2,357	$	17
With no related allowance recorded
Commercial and industrial		584	$	9
Construction		1,496		5
Residential real estate:
1-to-4 family mortgage		2,243		17
Residential line of credit		156		—
Multi-family mortgage		1,021		11
Commercial real estate:
Owner occupied		1,977		38
Non-owner occupied		1,329		—
Consumer and other		26		1
Total	$	8,828	$	81
Total impaired loans	$	11,185	$	98
Three Months Ended March 31, 2016
With a related allowance recorded:
Commercial and industrial	$	1,051	$	5
Construction		154		—
Residential real estate:
1-to-4 family mortgage		2,187		16
Residential line of credit		163		—
Multi-family mortgage		—		—
Commercial real estate:
Owner occupied		1,310		—
Non-owner occupied		2,905		6
Consumer and other		—		—
Total	$	7,770	$	27
With no related allowance recorded
Commercial and industrial	$	573	$	1
Construction		2,685		31
Residential real estate:
1-to-4 family mortgage		1,749		42
Residential line of credit		—		—
Multi-family mortgage		1,066		1
Commercial real estate:
Owner occupied		1,095		30
Non-owner occupied		1,112		—
Consumer and other		—		—
Total	$	8,280	$	105
Total impaired loans	$	16,050	$	132

December 31, 2016	Recorded investment		Unpaid principal		Related allowance		Average recorded investment		Interest income recognized (cash basis)
With a related allowance recorded:
Commercial and industrial	$	854	$	854	$	135	$	994	$	17
Construction		—		—		—		154		—
Residential real estate:
1-to-4 family mortgage		103		369		23		1,750		1
Residential line of credit		—		—		—		—		—
Multi-family mortgage		—		—		—		1,756		—
Commercial real estate:
Owner occupied		635		654		113		1,777		25
Non-owner occupied		1,151		1,678		242		1		—
Consumer and other		1		1		—		—		—
Total	$	2,744	$	3,556	$	513	$	6,432	$	43
With no related allowance recorded:
Commercial and industrial	$	622	$	746	$	—	$	494	$	20
Construction		2,686		2,694		—		2,622		132
Residential real estate:
1-to-4 family mortgage		2,368		2,370		—		1,329		137
Residential line of credit		311		321		—		156		10
Multi-family mortgage		1,027		1,027		—		1,051		37
Commercial real estate:
Owner occupied		2,117		3,205		—		1,120		119
Non-owner occupied		1,050		1,781		—		1,050		—
Consumer and other		26		26		—		13		—
Total	$	10,207	$	12,170	$	—	$	7,835	$	455
Total impaired loans	$	12,951	$	15,726	$	513	$	14,267	$	498

Financial Effect of TDRs

The following table presents the financial effect of TDRs recorded during the periods indicated:

Three Months Ended March 31, 2017	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Charge offs and specific reserves
Commercial and industrial	1	$	5	$	5	$	—
Commercial real estate:
Owner occupied	1		377		377		—
Non-owner occupied	2		711		711		—
Total	4	$	1,093	$	1,093	$	—


Three Months Ended March 31, 2016	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Charge offs and specific reserves
Residential real estate:
1-to-4 family mortgage	2	$	443	$	433	$	39
Total	2	$	443	$	433	$	39