Loans and allowance for credit losses (Tables)

3 Months Ended

Mar. 31, 2020

Loans Outstanding by Major Lending Classification

Loans outstanding at March 31, 2020 and December 31, 2019, by class of financing receivable are as follows:



	March 31,			December 31,
	2020			2019
Commercial and industrial	$	1,020,484		$	1,034,036
Construction	599,479			551,101
Residential real estate:
1-to-4 family mortgage	743,336			710,454
Residential line of credit	246,527			221,530
Multi-family mortgage	94,638			69,429
Commercial real estate:
Owner occupied	686,543			630,270
Non-owner occupied	910,822			920,744
Consumer and other	266,209			272,078
Gross loans	4,568,038			4,409,642
Less: Allowance for credit losses	(89,141		)	(31,139		)
Net loans	$	4,478,897		$	4,378,503

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

The following provides the changes in the allowance for credit losses by class of financing receivable for the three months ended March 31, 2020 and 2019:



	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, 2020
Beginning balance - December 31, 2019	$	4,805		$	10,194	$	3,112		$	752		$	544	$	4,109		$	4,621	$	3,002		$	31,139
Impact of adopting ASC 326 on non-purchased credit deteriorated loans	5,300			1,533		7,920			3,461			340		1,879			6,822		3,633			30,888
Impact of adopting ASC 326 on purchased credit deteriorated loans	82			150		421			(3		)	—		162			184		(438		)	558
Provision for credit losses	1,829			10,954		1,664			1,985			1,444		3,038			5,935		1,115			27,964
Recoveries of loans previously charged-off	88			—		24			15			—		14			—		193			334
Loans charged off	(1,234		)	—		(242		)	—			—		(209		)	—		(726		)	(2,411		)
Initial allowance on loans purchased with deteriorated credit quality	11			11		107			3			—		54			443		40			669
Ending balance - March 31, 2020	$	10,881		$	22,842	$	13,006		$	6,213		$	2,328	$	9,047		$	18,005	$	6,819		$	89,141



	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, 2019
Beginning balance - December 31, 2018	$	5,348		$	9,729	$	3,428		$	811		$	566		$	3,132		$	4,149	$	1,769		$	28,932
Provision for credit losses	333			28		(65		)	(73		)	(27		)	(121		)	434		882			1,391
Recoveries of loans previously charged-off	12			1		13			25			—			87			—		224			362
Loans charged off	(179		)	—		(81		)	(32		)	—			—			—		(579		)	(871		)
Ending balance - March 31, 2019	$	5,514		$	9,758	$	3,295		$	731		$	539		$	3,098		$	4,583	$	2,296		$	29,814

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

The following table provides the amount of the allowance for credit losses by class of financing receivable for loans individually evaluated for impairment, loans collectively evaluated for impairment and loans acquired with deteriorated credit quality as of December 31, 2019 :



	December 31, 2019
	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	$	241	$	—	$	8	$	9	$	—	$	238	$	399	$	—	$	895
Collectively evaluated for impairment	4,457		10,192		2,940		743		544		3,853		3,909		1,933		28,571
Acquired with deteriorated credit quality	107		2		164		—		—		18		313		1,069		1,673
Ending balance - December 31, 2019	$	4,805	$	10,194	$	3,112	$	752	$	544	$	4,109	$	4,621	$	3,002	$	31,139

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

The following table provides the amount of loans by class of financing receivable for loans individually evaluated for impairment, loans collectively evaluated for impairment and loans acquired with deteriorated credit quality as of December 31, 2019:



	December 31, 2019
	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	$	9,026	$	2,061	$	1,347	$	579	$	—	$	2,993	$	7,755	$	49	$	23,810
Collectively evaluated for impairment	1,023,326		546,156		689,769		220,878		69,429		621,386		902,792		254,944		4,328,680
Acquired with deteriorated credit quality	1,684		2,884		19,338		73		—		5,891		10,197		17,085		57,152
Ending balance - December 31, 2019	$	1,034,036	$	551,101	$	710,454	$	221,530	$	69,429	$	630,270	$	920,744	$	272,078	$	4,409,642

Financing Receivable, Amortized Costs Basis By Origination Year

The following table presents the credit quality of our loan portfolio by year of origination as of March 31, 2020. Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the table below.



As of March 31, 2020
	Term Loans
	Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial and industrial
Pass	$	29,008	$	178,014	$	82,142	$	46,942	$	38,723	$	34,087	$	502,092	$	911,008
Watch	—		10,643		29,243		6,647		5,766		4,691		32,191		89,181
Substandard	—		2,385		4,649		1,474		1,386		3,765		6,636		20,295
Doubtful	—		—		—		—		—		—		—		—
Total	29,008		191,042		116,034		55,063		45,875		42,543		540,919		1,020,484

Construction
Pass	22,601		180,870		103,731		59,843		33,080		81,213		98,582		579,920
Watch	—		529		825		10,099		769		2,877		—		15,099
Substandard	—		854		—		34		—		3,241		212		4,341
Doubtful	—		101		—		—		18		—		—		119
Total	22,601		182,354		104,556		69,976		33,867		87,331		98,794		599,479

Residential real estate:
1-to-4 family mortgage
Pass	46,111		183,701		149,607		97,244		68,876		156,697		—		702,236
Watch	325		3,425		1,195		2,286		3,921		13,358		—		24,510
Substandard	—		978		1,584		3,848		1,636		8,020		—		16,066
Doubtful	—		—		—		16		68		440		—		524
Total	46,436		188,104		152,386		103,394		74,501		178,515		—		743,336

Residential line of credit
Pass	88		586		426		333		608		4,404		236,775		243,220
Watch	—		—		—		14		—		—		858		872
Substandard	—		—		—		—		—		79		1,836		1,915
Doubtful	—		—		—		—		—		—		520		520
Total	88		586		426		347		608		4,483		239,989		246,527

Multi-family mortgage
Pass	18,706		13,848		6,819		23,602		2,972		28,629		—		94,576
Watch	—		—		—		—		—		62		—		62
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	18,706		13,848		6,819		23,602		2,972		28,691		—		94,638



	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial real estate
Owner occupied
Pass	23,592		143,780		86,554		74,223		68,452		169,360		59,507		625,468
Watch	—		2,930		1,530		23,001		3,915		15,473		3,263		50,112
Substandard	—		1,804		321		982		60		6,555		1,241		10,963
Doubtful	—		—		—		—		—		—		—		—
Total	23,592		148,514		88,405		98,206		72,427		191,388		64,011		686,543

Non-owner occupied
Pass	27,593		144,200		192,928		131,450		178,873		182,983		24,904		882,931
Watch	—		—		1,716		312		214		11,705		133		14,080
Substandard	—		32		208		—		385		13,186		—		13,811
Doubtful	—		—		—		—		—		—		—		—
Total	27,593		144,232		194,852		131,762		179,472		207,874		25,037		910,822

Consumer and other loans
Pass	13,197		65,905		49,483		31,174		44,369		32,513		7,591		244,232
Watch	—		551		1,034		1,611		3,321		9,062		588		16,167
Substandard	20		79		592		691		650		2,036		352		4,420
Doubtful	—		146		373		421		104		346		—		1,390
Total	13,217		66,681		51,482		33,897		48,444		43,957		8,531		266,209

Total Loans
Pass	180,896		910,904		671,690		464,811		435,953		689,886		929,451		4,283,591
Watch	325		18,078		35,543		43,970		17,906		57,228		37,033		210,083
Substandard	20		6,132		7,354		7,029		4,117		36,882		10,277		71,811
Doubtful	—		247		373		437		190		786		520		2,553
Total	$	181,241	$	935,361	$	714,960	$	516,247	$	458,166	$	784,782	$	977,281	$	4,568,038

Credit Quality Indicators by Portfolio Class

The following table shows credit quality indicators by class of financing receivable at December 31, 2019.



December 31, 2019	Pass		Watch		Substandard		Total
Loans, excluding purchased credit impaired loans
Commercial and industrial	$	946,247	$	66,910	$	19,195	$	1,032,352
Construction	541,201		4,790		2,226		548,217
Residential real estate:
1-to-4 family mortgage	666,177		11,380		13,559		691,116
Residential line of credit	218,086		1,343		2,028		221,457
Multi-family mortgage	69,366		63		—		69,429
Commercial real estate:
Owner occupied	576,737		30,379		17,263		624,379
Non-owner occupied	876,670		24,342		9,535		910,547
Consumer and other	248,632		3,304		3,057		254,993
Total loans, excluding purchased credit impaired loans	$	4,143,116	$	142,511	$	66,863	$	4,352,490
Purchased credit impaired loans
Commercial and industrial	$	—	$	1,224	$	460	$	1,684
Construction	—		2,681		203		2,884
Residential real estate:
1-to-4 family mortgage	—		15,091		4,247		19,338
Residential line of credit	—		—		73		73
Multi-family mortgage	—		—		—		—
Commercial real estate:
Owner occupied	—		4,535		1,356		5,891
Non-owner occupied	—		6,617		3,580		10,197
Consumer and other	—		13,521		3,564		17,085
Total purchased credit impaired loans	$	—	$	43,669	$	13,483	$	57,152
Total loans	$	4,143,116	$	186,180	$	80,346	$	4,409,642

Past Due Loans

The following table represents an analysis of the aging by class of financing receivable as of March 31, 2020:



March 31, 2020	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	$	5,015	$	728	$	3,584	$	1,011,157	$	1,020,484
Construction	6,770		183		1,439		591,087		599,479
Residential real estate:
1-to-4 family mortgage	9,569		3,975		5,153		724,639		743,336
Residential line of credit	450		652		600		244,825		246,527
Multi-family mortgage	415		—		—		94,223		94,638
Commercial real estate:
Owner occupied	2,008		1		1,903		682,631		686,543
Non-owner occupied	2,931		32		9,735		898,124		910,822
Consumer and other	2,852		888		2,133		260,336		266,209
Total	$	30,010	$	6,459	$	24,547	$	4,507,022	$	4,568,038

The following table provides the amortized cost basis of loans on non-accrual status by class of financing receivable as of March 31, 2020:



March 31, 2020	Beginning of period non-accrual amortized cost		End of period non-accrual amortized cost		Related allowance		Non-accrual with no related allowance		Interest income on non-accrual loans

Commercial and industrial	$	5,586	$	3,584	$	185	$	2,496	$	152
Construction	1,254		1,439		14		1,226		27
Residential real estate:
1-to-4 family mortgage	4,585		5,153		54		176		7
Residential line of credit	489		600		6		151		1
Multi-family mortgage	—		—		—		—		—
Commercial real estate:
Owner occupied	2,285		1,903		79		1,098		21
Non-owner occupied	9,460		9,735		442		2,339		19
Consumer and other	1,623		2,133		84		—		—
Total	$	25,282	$	24,547	$	864	$	7,486	$	227

The following table provides the period-end amounts of loans that are past due, loans not accruing interest and loans current on payments accruing interest by category at December 31, 2019:



December 31, 2019	30-89 days past due		90 days or more and accruing interest		Non-accrual loans		Purchased Credit Impaired loans		Loans current on payments and accruing interest		Total
Commercial and industrial	$	1,918	$	291	$	5,587	$	1,684	$	1,024,556	$	1,034,036
Construction	1,021		42		1,087		2,884		546,067		551,101
Residential real estate:
1-to-4 family mortgage	10,738		3,965		3,332		19,338		673,081		710,454
Residential line of credit	658		412		416		73		219,971		221,530
Multi-family mortgage	63		—		—		—		69,366		69,429
Commercial real estate:
Owner occupied	1,375		—		1,793		5,891		621,211		630,270
Non-owner occupied	327		—		7,880		10,197		902,340		920,744
Consumer and other	2,377		833		967		17,085		250,816		272,078
Total	$	18,477	$	5,543	$	21,062	$	57,152	$	4,307,408	$	4,409,642

Impaired Loans Recognized

Impaired loans recognized in conformity with ASC 310 at December 31, 2019 segregated by class, were as follows:



December 31, 2019	Recorded investment		Unpaid principal		Related allowance
With a related allowance recorded:
Commercial and industrial	$	6,080	$	8,350	$	241
Construction	—		—		—
Residential real estate:
1-to-4 family mortgage	264		324		8
Residential line of credit	320		320		9
Multi-family mortgage	—		—		—
Commercial real estate:
Owner occupied	756		1,140		238
Non-owner occupied	6,706		6,747		399
Consumer and other	—		—		—
Total	$	14,126	$	16,881	$	895
With no related allowance recorded:
Commercial and industrial	$	2,946	$	3,074	$	—
Construction	2,061		2,499		—
Residential real estate:
1-to-4 family mortgage	1,083		1,449		—
Residential line of credit	259		280		—
Multi-family mortgage	—		—		—
Commercial real estate:
Owner occupied	2,237		2,627		—
Non-owner occupied	1,049		1,781		—
Consumer and other	49		49		—
Total	$	9,684	$	11,759	$	—
Total impaired loans	$	23,810	$	28,640	$	895

Average recorded investment and interest income on a cash basis recognized during the three months ended March 31, 2019 on impaired loans, segregated by class, were as follows:



Three months ended March 31, 2019	Average recorded investment		Interest income recognized (cash basis)
With a related allowance recorded:
Commercial and industrial	$	1,902	$	38
Construction	—		—
Residential real estate:
1-to-4 family mortgage	275		2
Residential line of credit	—		—
Multi-family mortgage	—		—
Commercial real estate:
Owner occupied	375		2
Non-owner occupied	5,668		—
Consumer and other	—		—
Total	$	8,220	$	42
With no related allowance recorded:
Commercial and industrial	1,044		14
Construction	1,221		48
Residential real estate:
1-to-4 family mortgage	656		8
Residential line of credit	425		2
Multi-family mortgage	—		—
Commercial real estate:
Owner occupied	1,957		28
Non-owner occupied	1,049		—
Consumer and other	72		2
Total	$	6,424	$	102
Total impaired loans	$	14,644	$	144

Schedule of Changes Value of Accretable Yield of PCI Loans

The following table presents changes in the value of the accretable yield for PCI loans for the periods indicated.



	Three Months Ended March 31,
	2019
Balance at the beginning of period	$	(16,587	)
Principal reductions and other reclassifications from nonaccretable difference	220
Accretion	2,183
Changes in expected cash flows	(630		)
Balance at end of period	$	(14,814	)

Financial Effect of TDRs

The following tables present the financial effect of TDRs recorded during the periods indicated.



Three Months Ended March 31, 2020	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	1	$	64	$	64	$	—
Total	1	$	64	$	64	$	—



Three Months Ended March 31, 2019	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Charge offs and specific reserves
Commercial and industrial	2	$	3,188	$	3,188	$	—
Total	2	$	3,188	$	3,188	$	—

Allowance for Credit Losses, Individually Assessed Allowance

For loans for which the repayment (based on the Company's assessment) is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, the following table presents the loans and the corresponding individually assessed allowance for credit losses by class of financing receivable.



	March 31, 2020
	Type of Collateral
	Real Estate		Land		Farmland		Equipment		Individually assessed allowance for credit loss
Commercial and industrial	$	—	$	—	$	—	$	36	$	—
Construction	—		1,024		—		—		—
Residential real estate:
1-to-4 family mortgage	125		—		—		—		—
Residential line of credit	320		—		—		—		9
Multi-family mortgage	—		—		—		—		—
Commercial real estate:
Owner occupied	744		—		—		—		41
Non-owner occupied	2,391		—		—		—		81
Consumer and other	—		—		332		—		—
Total	$	3,580	$	1,024	$	332	$	36	$	131