Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2017

A summary of the loan portfolio as of September 30, 2017 and December 31, 2016 follows (dollars in thousands):

	September 30, 2017			December 31, 2016
Commercial real estate	$	366,778		$	302,322
Consumer real estate		100,811			97,015
Construction and land development		79,951			94,491
Commercial and industrial		394,600			379,620
Consumer		6,289			5,974
Other		26,460			56,796
Total		974,889			936,218
Less net unearned income		(359	)		(967	)
		974,530			935,251
Allowance for loan losses		(14,122	)		(11,634	)
	$	960,408		$	923,617

Summary of Loans by Risk Rating

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

	Performing Loans
September 30, 2017	Pass/Watch		Special Mention		Substandard		Total Performing		Total Impaired Loans		Total
Commercial real estate	$	365,545	$	—	$	—	$	365,545	$	1,233	$	366,778
Consumer real estate		100,522		—		289		100,811		—		100,811
Construction and land development		79,951		—		—		79,951		—		79,951
Commercial and industrial		370,657		16,443		5,568		392,668		1,932		394,600
Consumer		6,276		—		13		6,289		—		6,289
Other		26,460		—		—		26,460		—		26,460
Total	$	949,411	$	16,443	$	5,870	$	971,724	$	3,165	$	974,889

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 Losses and Loan Portfolio by Loan Category

The following tables detail the changes in the ALL for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Commercial real estate			Consumer real estate			Construction and land development		Commercial and industrial			Consumer			Other			Total
Three Months Ended September 30, 2017
Balance, beginning of period	$	3,533		$	1,081		$	911	$	6,395		$	57		$	477		$	12,454
Charged-off loans		—			—			—		—			—			—			—
Recoveries		3			—			—		1,860			—			—			1,863
Provision for loan losses		(242	)		(97	)		576		(306	)		22			(148	)		(195	)
Balance, end of period	$	3,294		$	984		$	1,487	$	7,949		$	79		$	329		$	14,122

Three Months Ended September 30, 2016
Balance, beginning of period	$	2,596		$	968		$	943	$	5,037		$	104		$	806		$	10,454
Charged-off loans		—			—			—		(645	)		—						(645	)
Recoveries		52			—			—		10			—			—			62
Provision for loan losses		(228	)		4			721		1,166			(18	)		(6	)		1,639
Balance, end of period	$	2,420		$	972		$	1,664	$	5,568		$	86		$	800		$	11,510

	Commercial real estate			Consumer real estate			Construction and land development			Commercial and industrial			Consumer			Other			Total
Nine Months Ended September 30, 2017
Balance, beginning of period	$	2,655		$	1,013		$	1,574		$	5,618		$	76		$	698		$	11,634
Charged-off loans		—			—			—			(12,369	)		—			—			(12,369	)
Recoveries		4			—			—			1,862			91			—			1,957
Provision for loan losses		635			(29	)		(87	)		12,838			(88	)		(369	)		12,900
Balance, end of period	$	3,294		$	984		$	1,487		$	7,949		$	79		$	329		$	14,122

Nine Months Ended September 30, 2016
Balance, beginning of period	$	2,879		$	968		$	914		$	4,693		$	103		$	575		$	10,132
Charged-off loans		(350	)		—			—			(956	)		(146	)		—			(1,452	)
Recoveries		52			—			—			18			1			—			71
Provision for loan losses		(161	)		4			750			1,813			128			225			2,759
Balance, end of period	$	2,420		$	972		$	1,664		$	5,568		$	86		$	800		$	11,510

A breakdown of the ALL and the loan portfolio by loan category at September 30, 2017 and December 31, 2016 follows (dollars in thousands):

	Commercial real estate		Consumer real estate		Construction and land development		Commercial and industrial		Consumer		Other		Total
September 30, 2017
Allowance for Loan Losses:
Collectively evaluated for impairment	$	3,294	$	984	$	1,487	$	7,449	$	79	$	329	$	13,622
Individually evaluated for impairment		—		—		—		500		—		—		500
Balances, end of period	$	3,294	$	984	$	1,487	$	7,949	$	79	$	329	$	14,122
Loans:
Collectively evaluated for impairment	$	365,545	$	100,811	$	79,951	$	392,668	$	6,289	$	26,460	$	971,724
Individually evaluated for impairment		1,233		—		—		1,932		—		—		3,165
Balances, end of period	$	366,778	$	100,811	$	79,951	$	394,600	$	6,289	$	26,460	$	974,889

December 31, 2016
Allowance for Loan Losses:
Collectively evaluated for impairment	$	2,655	$	1,013	$	1,574	$	5,118	$	76	$	698	$	11,134
Individually evaluated for impairment		—		—		—		500		—		—		500
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 ALL with Corresponding Percentage of ALL in Each Category to Total Loans, Net of Deferred Fee

The following table presents the allocation of the ALL for each respective loan category with the corresponding percentage of the ALL in each category to total loans, net of deferred fees as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 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	$	3,294		0.34	%	$	2,655		0.28	%
Consumer real estate		984		0.10			1,013		0.11
Construction and land development		1,487		0.15			1,574		0.17
Commercial and industrial		7,949		0.82			5,618		0.60
Consumer		79		0.01			76		0.01
Other		329		0.03			698		0.07
Total allowance for loan losses	$	14,122		1.45	%	$	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 September 30, 2017 and December 31, 2016 (dollars in thousands):


	September 30, 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	$	1,233	$	1,660	$	—	$	1,310	$	1,686	$	—
Consumer real estate		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Subtotal		1,233		1,660		—		1,310		1,686		—
With an allowance recorded:
Commercial real estate		—		—		—		—		—		—
Consumer real estate		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—
Commercial and industrial		1,932		2,770		500		2,309		2,921		500
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Subtotal		1,932		2,770		500		2,309		2,921		500
Total	$	3,165	$	4,430	$	500	$	3,619	$	4,607	$	500

The following table presents information related to the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):

	Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended
	September 30, 2017				September 30, 2016				September 30, 2017				September 30, 2016
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Commercial real estate	$	1,245	$	—	$	—	$	—	$	1,272	$	—	$	—	$	—
Consumer real estate		—		—		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—		—
Subtotal		1,245		—		—		—		1,272		—		—		—
With an allowance recorded:
Commercial real estate		—		—		1,685		—		—		—		1,742		—
Consumer real estate		—		—		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—		—		—
Commercial and industrial		1,941		—		3,411		—		2,141		—		3,534		30
Consumer		—		—		—		—		—		—		—		—
Other		—		—		—		—		—		—		—		—
Subtotal		1,941		—		5,096		—		2,141		—		5,276		30
Total	$	3,186	$	—	$	5,096	$	—	$	3,413	$	—	$	5,276	$	30

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 September 30, 2017 and December 31, 2016 by class of loans (dollars in thousands):

	30 - 59		60 - 89		Greater Than
	Days		Days		89 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Past Due		Total
September 30, 2017
Commercial real estate	$	—	$	—	$	—	$	—	$	366,778	$	366,778
Consumer real estate		506		279		—		785		100,026		100,811
Construction and land development		—		—		—		—		79,951		79,951
Commercial and industrial		1,154		218		27		1,398		393,202		394,600
Consumer		—		1		—		1		6,288		6,289
Other		—		—		—		—		26,460		26,460
Total	$	1,660	$	497	$	27	$	2,184	$	972,705	$	974,889

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, Past Due Loans over 90 Days Outstanding and Accruing and Troubled Debt Restructurings

The following table presents the recorded investment in non-accrual loans, past due loans over 90 days outstanding and accruing and troubled debt restructurings (“TDR”) by class of loans as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	Non-Accrual		Past Due Over 90 Days and Accruing		Troubled Debt Restructurings
September 30, 2017
Commercial real estate	$	1,233	$	—	$	1,222
Consumer real estate		—		—		—
Construction and land development		—		—		—
Commercial and industrial		1,932		27		—
Consumer		—		—		—
Other		—		—		—
Total	$	3,165	$	27	$	1,222

December 31, 2016
Commercial real estate	$	1,310	$	—	$	1,272
Consumer real estate		—		—		—
Construction and land development		—		—		—
Commercial and industrial		2,309		—		—
Consumer		—		—		—
Other		—		—		—
Total	$	3,619	$	—	$	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 and nine months ended September 30, 2016 (dollars in thousands).

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	Number of contracts		Pre modification outstanding recorded investment		Post modification outstanding recorded investment, net of related allowance		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 and nine months ended September 30, 2016 (dollars in thousands).

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	Number of contracts		Recorded investment		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