Loans and Allowance for Loan and Lease Losses (Tables)

3 Months Ended

Mar. 31, 2017

A summary of the loan portfolio as of March 31, 2017 and December 31, 2016 follows (in thousands):

	March 31, 2017			December 31, 2016
Commercial real estate	$	360,955		$	302,322
Consumer real estate		99,952			97,015
Construction and land development		74,007			94,491
Commercial and industrial		420,825			379,620
Consumer		4,495			5,974
Other		43,984			56,796
Total		1,004,218			936,218
Less net unearned income		(784	)		(967	)
		1,003,434			935,251
Allowance for loan and lease losses		(13,997	)		(11,634	)
	$	989,437		$	923,617

Summary of Loans by Risk Rating

The following tables present the loan balances by category as well as risk rating (in thousands):

	Performing Loans
March 31, 2017	Pass/Watch		Special Mention		Substandard		Total Performing		Total Impaired Loans		Total
Commercial real estate	$	359,668	$	—	$	—	$	359,668	$	1,287	$	360,955
Consumer real estate		99,661		—		291		99,952		—		99,952
Construction and land development		74,007		—		—		74,007		—		74,007
Commercial and industrial		385,188		16,288		7,012		408,488		12,337		420,825
Consumer		4,480		—		15		4,495		—		4,495
Other		43,984		—		—		43,984		—		43,984
Total	$	966,988	$	16,288	$	7,318	$	990,594	$	13,624	$	1,004,218
December 31, 2016
Commercial real estate	$	301,012	$	—	$	—	$	301,012	$	1,310	$	302,322
Consumer real estate		96,722		—		293		97,015		—		97,015
Construction and land development		94,491		—		—		94,491		—		94,491
Commercial and industrial		349,857		11,035		16,419		377,311		2,309		379,620
Consumer		5,958		—		16		5,974		—		5,974
Other		56,796		—		—		56,796		—		56,796
Total	$	904,836	$	11,035	$	16,728	$	932,599	$	3,619	$	936,218

Summary of Changes and Breakdown of Allowance for Loan and Lease Losses and Loan Portfolio by Loan Category

The following table details the changes in the ALLL for the three months ended March 31, 2017 and 2016 (in thousands):

	Commercial real estate			Consumer real estate			Construction and land development			Commercial and industrial			Consumer			Other			Total
Three Months Ended March 31, 2017
Balance, beginning of year	$	2,655		$	1,013		$	1,574		$	5,618		$	76		$	698		$	11,634
Charged-off loans		—			—			—			(1,124	)		—			—			(1,124	)
Recoveries		—			—			—			2			80			—			82
Provision for loan and lease losses		602			35			(484	)		3,517			(96	)		(169	)		3,405
Balance, end of period	$	3,257		$	1,048		$	1,090		$	8,013		$	60		$	529		$	13,997

Three Months Ended March 31, 2016
Balance, beginning of year	$	2,879		$	968		$	914		$	4,693		$	103		$	575		$	10,132
Charged-off loans		(350	)		—			—			(300	)		(124	)		—			(774	)
Recoveries		—			—			—			4			—			—			4
Provision for loan and lease losses		441			(5	)		(115	)		527			134			(45	)		937
Balance, end of period	$	2,970		$	963		$	799		$	4,924		$	113		$	530		$	10,299

A breakdown of the ALLL and the loan portfolio by loan category at March 31, 2017 and December 31, 2016 follows (in thousands):

	Commercial real estate		Consumer real estate		Construction and land development		Commercial and industrial		Consumer		Other		Total
March 31, 2017
Allowance for Loan and Lease Losses:
Collectively evaluated for impairment	$	3,257	$	1,048	$	1,090	$	5,401	$	60	$	529	$	11,385
Individually evaluated for impairment		—		—		—		2,612		—		—		2,612
Balances, end of period	$	3,257	$	1,048	$	1,090	$	8,013	$	60	$	529	$	13,997
Loans:
Collectively evaluated for impairment	$	359,668	$	99,952	$	74,007	$	408,488	$	4,495	$	43,984	$	990,594
Individually evaluated for impairment		1,287		—		—		12,337		—		—		13,624
Balances, end of period	$	360,955	$	99,952	$	74,007	$	420,825	$	4,495	$	43,984	$	1,004,218

December 31, 2016
Allowance for Loan and Lease Losses:
Collectively evaluated for impairment	$	2,655	$	1,013	$	1,574	$	3,006	$	76	$	698	$	9,022
Individually evaluated for impairment		—		—		—		2,612		—		—		2,612
Balances, end of period	$	2,655	$	1,013	$	1,574	$	5,618	$	76	$	698	$	11,634
Loans:
Collectively evaluated for impairment	$	301,012	$	97,015	$	94,491	$	377,311	$	5,974	$	56,796	$	932,599
Individually evaluated for impairment		1,310		—		—		2,309		—		—		3,619
Balances, end of period	$	302,322	$	97,015	$	94,491	$	379,620	$	5,974	$	56,796	$	936,218

Allocation of ALLL with Corresponding Percentage of ALLL in Each Category to Total Loans, Net of Deferred Fee

The following table presents the allocation of the ALLL for each respective loan category with the corresponding percentage of the ALLL in each category to total loans, net of deferred fees as of March 31, 2017 and December 31, 2016 (dollars in thousands):

	March 31, 2017					December 31, 2016
	Amount		Percent of total loans, net of deferred fees			Amount		Percent of total loans, net of deferred fees
Commercial real estate	$	3,257		0.32	%	$	2,655		0.28	%
Consumer real estate		1,048		0.10			1,013		0.11
Construction and land development		1,090		0.11			1,574		0.17
Commercial and industrial		8,013		0.80			5,618		0.60
Consumer		60		0.01			76		0.01
Other		529		0.05			698		0.07
Total allowance for loan and lease losses	$	13,997		1.39	%	$	11,634		1.24	%

Summary of Impaired Loans

The following table presents the Company’s impaired loans that were evaluated for specific loss allowance as of March 31, 2017 and December 31, 2016 (in thousands):


	March 31, 2017						December 31, 2016
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
With no related allowance recorded:
Commercial real estate	$	1,287	$	1,682	$	—	$	1,310	$	1,686	$	—
Consumer real estate		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Subtotal		1,287		1,682		—		1,310		1,686		—
With an allowance recorded:
Commercial real estate		—		—		—		—		—		—
Consumer real estate		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		12,337		14,237		2,612		2,309		2,921		500
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Subtotal		12,337		14,237		2,612		2,309		2,921		500
Total	$	13,624	$	15,919	$	2,612	$	3,619	$	4,607	$	500

The following presents information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2017 and 2016 (in thousands):

	Three Months Ended				Three Months Ended
	March 31, 2017				March 31, 2016
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Commercial real estate	$	1,299	$	—	$	—	$	—
Consumer real estate		—		—		240		—
Construction and land development		—		—		—		—
Commercial and industrial		—		—		3,596		—
Consumer		—		—		—		—
Other		—		—		—		—
Subtotal		1,299		—		3,836		—
With an allowance recorded:
Commercial real estate		—		—		1,944		—
Consumer real estate		—		—		—		—
Construction and land development		—		—		—		—
Commercial and industrial		13,106		—		—		—
Consumer		—		—		—		—
Other		—		—		—		—
Subtotal		13,106		—		1,944		—
Total	$	14,405	$	—	$	5,780	$	—

Schedule of Aging of Recorded Investment in Past-due Loans, by Class of Loans

The following table presents the aging of the recorded investment in past-due loans as of March 31, 2017 and December 31, 2016 by class of loans (in thousands):

	30 - 59		60 - 89		Greater Than
	Days		Days		89 Days		Total		Loans Not
March 31, 2017	Past Due		Past Due		Past Due		Past Due		Past Due		Total
Commercial real estate	$	—	$	—	$	—	$	—	$	360,955	$	360,955
Consumer real estate		143		—		—		143		99,809		99,952
Construction and land development		—		—		—		—		74,007		74,007
Commercial and industrial		8,948		—		—		8,948		411,877		420,825
Consumer		—		—		—		—		4,495		4,495
Other		90		—		—		90		43,894		43,984
Total	$	9,181	$	—	$	—	$	9,181	$	995,037	$	1,004,218
December 31, 2016
Commercial real estate	$	—	$	—	$	—	$	—	$	302,322	$	302,322
Consumer real estate		81		282		—		363		96,652		97,015
Construction and land development		—		—		—		—		94,491		94,491
Commercial and industrial		—		—		—		—		379,620		379,620
Consumer		—		—		—		—		5,974		5,974
Other		—		—		—		—		56,796		56,796
Total	$	81	$	282	$	—	$	363	$	935,855	$	936,218

Schedule of Recorded In Non Accrual Loans and Troubled Debt Restructurings

The following table presents the recorded investment in non-accrual loans and troubled debt restructurings (“TDR”) by class of loans as of March 31, 2017 and December 31, 2016 (in thousands):

	Non-Accrual				Troubled Debt Restructurings
	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
Commercial real estate	$	1,287	$	1,310	$	1,256	$	1,272
Consumer real estate		—		—		—		—
Construction and land development		—		—		—		—
Commercial and industrial		12,337		2,309		—		—
Consumer		—		—		—		—
Other		—		—		—		—
Total	$	13,624	$	3,619	$	1,256	$	1,272

Schedule of Presents Loans by Class Modified as TDR

The following table presents loans by class modified as TDR that occurred during the three months ended March 31, 2016 (in thousands).

	Three Months Ended
	March 31,
	Number of contracts		Pre modification outstanding recorded investment		Post modification outstanding recorded investment, net of related allowance
2016
Commercial real estate		1	$	1,948	$	1,170
Consumer real estate		—		—		—
Construction and land development		—		—		—
Commercial and industrial		—		—		—
Consumer		—		—		—
Other		—		—		—
Total		1	$	1,948	$	1,170

Schedule of Loans by Class Modified as TDR for the Payment Default Within Twelve Months

The following table presents loans by class modified as TDR for which there was a payment default within twelve months following the modification during the three months ended March 31, 2016 (in thousands).

	Three Months Ended
	March 31,
	Number of contracts		Recorded investment
2016
Commercial real estate		—	$	—
Consumer real estate		—		—
Construction and land development		—		—
Commercial and industrial		—		—
Consumer		1		124
Other		—		—
Total		1	$	124