Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

The following represents the composition of the loan portfolio for the period ending:

	(Amounts in thousands)
	June 30, 2016				December 31, 2015
	Balance		%		Balance		%
Commercial	$	64,751		16.9	$	84,613		21.5
Commercial real estate		242,437		63.1		237,137		60.1
Residential real estate		50,071		13.0		45,414		11.5
Consumer - home equity		23,838		6.2		23,334		5.9
Consumer - other		2,961		0.8		3,756		1.0
Total loans	$	384,058			$	394,254

Certain Qualitative Factors Considered in Measuring Risk Trends

These factors include, but are not limited to, the following:

Factor Considered:		Risk Trend:
Levels of and trends in charge-offs, classifications and non-accruals		Stable
Trends in volume and terms		Stable
Changes in lending policies and procedures		Stable
Experience, depth and ability of management, including loan review function		Stable
Economic trends, including valuation of underlying collateral		Stable
Concentrations of credit		Stable

Factors Analyzed and Applied to Loans Internally Graded with Higher Credit Risk

The following factors are analyzed and applied to loans internally graded with higher credit risk in addition to the above factors for non-classified loans:

Factor Considered:		Risk Trend:
Levels and trends in classification		Stable
Declining trends in financial performance		Stable
Structure and lack of performance measures		Stable
Migration between risk categories		Stable

Analysis of Changes in the Allowance for Loan Losses

The following is an analysis of changes in the allowance for loan losses for the periods ended:

Three Months Ended
	(Amounts in thousands)
June 30, 2016	Commercial			Commercial real estate			Residential real estate			Consumer - home equity			Consumer - other			Total
Balance at beginning of period	$	1,985		$	2,903		$	154		$	53		$	85		$	5,180
Loan charge-offs		—			(244	)		—			(144	)		(44	)		(432	)
Recoveries		53			34			—			14			11			112
Net loan recoveries (charge-offs)		53			(210	)		—			(130	)		(33	)		(320	)
Provision charged to operations		(660	)		439			(5	)		187			39			—
Balance at end of period	$	1,378		$	3,132		$	149		$	110		$	91		$	4,860

	(Amounts in thousands)
June 30, 2015	Commercial			Commercial real estate			Residential real estate			Consumer - home equity			Consumer - other			Total
Balance at beginning of period	$	1,990		$	2,983		$	231		$	64		$	97		$	5,365
Loan charge-offs		(2	)		(50	)		(3	)		—			(23	)		(78	)
Recoveries		1			10			4			4			18			37
Net loan recoveries (charge-offs)		(1	)		(40	)		1			4			(5	)		(41	)
Provision charged to operations		126			10			(9	)		(5	)		8			130
Balance at end of period	$	2,115		$	2,953		$	223		$	63		$	100		$	5,454

Six Months Ended	(Amounts in thousands)
June 30, 2016	Commercial			Commercial real estate			Residential real estate			Consumer - home equity			Consumer - other			Total
Balance at beginning of period	$	1,977		$	2,926		$	153		$	52		$	86		$	5,194
Loan charge-offs		—			(244	)		—			(144	)		(83	)		(471	)
Recoveries		53			35			—			18			31			137
Net loan recoveries (charge-offs)		53			(209	)		—			(126	)		(52	)		(334	)
Provision charged to operations		(652	)		415			(4	)		184			57			—
Balance at end of period	$	1,378		$	3,132		$	149		$	110		$	91		$	4,860

	(Amounts in thousands)
June 30, 2015	Commercial			Commercial real estate			Residential real estate			Consumer - home equity			Consumer - other			Total
Balance at beginning of period	$	2,064		$	2,754		$	229		$	60		$	95		$	5,202
Loan charge-offs		(2	)		(50	)		(5	)		—			(56	)		(113	)
Recoveries		2			10			15			9			39			75
Net loan recoveries (charge-offs)		—			(40	)		10			9			(17	)		(38	)
Provision charged to operations		51			239			(16	)		(6	)		22			290
Balance at end of period	$	2,115		$	2,953		$	223		$	63		$	100		$	5,454

Allowance for Loan Losses and the Recorded Investment in Loans

The following tables present a full breakdown by portfolio classification of the allowance for loan losses and the recorded investment in loans at June 30, 2016 and December 31, 2015:

	(Amounts in thousands)
June 30, 2016	Commercial		Commercial real estate		Residential real estate		Consumer - home equity		Consumer - other		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	178	$	—	$	—	$	—	$	178
Collectively evaluated for impairment		1,378		2,954		149		110		91		4,682
Total ending allowance balance	$	1,378	$	3,132	$	149	$	110	$	91	$	4,860
Loan Portfolio:
Individually evaluated for impairment	$	126	$	6,918	$	—	$	—	$	—	$	7,044
Collectively evaluated for impairment		64,625		235,519		50,071		23,838		2,961		377,014
Total ending loans balance	$	64,751	$	242,437	$	50,071	$	23,838	$	2,961	$	384,058

	(Amounts in thousands)
December 31, 2015	Commercial		Commercial real estate		Residential real estate		Consumer - home equity		Consumer - other		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	834	$	178	$	—	$	—	$	—	$	1,012
Collectively evaluated for impairment		1,143		2,748		153		52		86		4,182
Total ending allowance balance	$	1,977	$	2,926	$	153	$	52	$	86	$	5,194
Loan Portfolio:
Individually evaluated for impairment	$	1,347	$	8,465	$	—	$	—	$	—	$	9,812
Collectively evaluated for impairment		83,266		228,672		45,414		23,334		3,756		384,442
Total ending loans balance	$	84,613	$	237,137	$	45,414	$	23,334	$	3,756	$	394,254

Summary of Credit Quality Indicators by Internally Assigned Grade

The following table is a summary of credit quality indicators by internally assigned grades as of June 30, 2016 and December 31, 2015:

	(Amounts in thousands)
	Commercial		Commercial real estate
June 30, 2016
Pass	$	58,989	$	218,135
Special Mention		2,564		16,486
Substandard		3,198		7,816
Doubtful		—		—
Ending Balance	$	64,751	$	242,437

	(Amounts in thousands)
	Commercial		Commercial real estate
December 31, 2015
Pass	$	77,095	$	219,958
Special Mention		4,216		7,707
Substandard		3,302		9,472
Doubtful		—		—
Ending Balance	$	84,613	$	237,137

Summary of Consumer Credit Exposure

The following table is a summary of consumer credit exposure as of June 30, 2016 and December 31, 2015:

	(Amounts in thousands)
	Residential real estate		Consumer - home equity		Consumer - other
June 30, 2016
Performing	$	48,799	$	23,609	$	2,961
Nonperforming		1,272		229		—
Total	$	50,071	$	23,838	$	2,961

	(Amounts in thousands)
	Residential real estate		Consumer - home equity		Consumer - other
December 31, 2015
Performing	$	44,162	$	23,072	$	3,756
Nonperforming		1,252		262		—
Total	$	45,414	$	23,334	$	3,756

Summary of Classes of Loans on Non-Accrual Status

The following table is a summary of classes of loans on non-accrual status as of June 30, 2016 and December 31, 2015:

	(Amounts in thousands)
	June 30, 2016		December 31, 2015
Commercial	$	—	$	1,196
Commercial real estate		940		2,176
Residential real estate		1,272		1,252
Consumer:
Consumer - home equity		229		262
Consumer - other		—		—
Total	$	2,441	$	4,886

Aging Analysis of the Recorded Investment of Past Due Loans

The following table is an aging analysis of the recorded investment of past due loans as of June 30, 2016 and December 31, 2015:

	(Amounts in thousands)
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
June 30, 2016
Commercial	$	—	$	—	$	—	$	—	$	64,751	$	64,751	$	—
Commercial real estate		1,191		924		586		2,701		239,736		242,437		—
Residential real estate		80		108		1,170		1,358		48,713		50,071		—
Consumer:
Consumer - home equity		—		—		229		229		23,609		23,838		—
Consumer - other		7		—		—		7		2,954		2,961		—
Total	$	1,278	$	1,032	$	1,985	$	4,295	$	379,763	$	384,058	$	—

	(Amounts in thousands)
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
December 31, 2015
Commercial	$	178	$	—	$	1,196	$	1,374	$	83,239	$	84,613	$	—
Commercial real estate		248		1,480		2,055		3,783		233,354		237,137		—
Residential real estate		163		131		1,240		1,534		43,880		45,414		—
Consumer:
Consumer - home equity		29		117		262		408		22,926		23,334		—
Consumer - other		10		—		—		10		3,746		3,756		—
Total	$	628	$	1,728	$	4,753	$	7,109	$	387,145	$	394,254	$	—

Recorded Investment, Unpaid Principal Balances, Average Recorded Investments and Interest Recognized on Impaired Loans, Excluding Homogenous Loans for Which Impaired Analyses are Not Necessarily Performed

The following table presents the recorded investment and unpaid principal balances for impaired loans, excluding homogenous loans for which impaired analyses are not necessarily performed, with the associated allowance amount, if applicable, at June 30, 2016 and December 31, 2015. Also presented are the average recorded investments in the impaired balances and interest income recognized after impairment for the three and six months ended June 30, 2016 and 2015.

	(Amounts in thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance
June 30, 2016
With no related allowance recorded:
Commercial	$	126	$	126	$	—
Commercial real estate		5,707		5,947		—
With an allowance recorded:
Commercial		—		—		—
Commercial real estate		1,211		1,211		178
Total:
Commercial	$	126	$	126	$	—
Commercial real estate	$	6,918	$	7,158	$	178

	(Amounts in thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance
December 31, 2015
With no related allowance recorded:
Commercial	$	232	$	264	$	—
Commercial real estate		7,222		7,424		—
With an allowance recorded:
Commercial		1,115		1,552		834
Commercial real estate		1,243		1,243		178
Total:
Commercial	$	1,347	$	1,816	$	834
Commercial real estate	$	8,465	$	8,667	$	178

	(Amounts in thousands)
	Three Months Ended				Six Months Ended
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
June 30, 2016
With no related allowance recorded:
Commercial	$	131	$	2	$	177	$	5
Commercial real estate		5,788		79		6,485		162
With an allowance recorded:
Commercial		1		—		557		—
Commercial real estate		1,215		26		1,224		50
Total:
Commercial	$	132	$	2	$	734	$	5
Commercial real estate	$	7,003	$	105	$	7,709	$	212

	(Amounts in thousands)
	Three Months Ended				Six Months Ended
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
June 30, 2015
With no related allowance recorded:
Commercial	$	341	$	2	$	348	$	6
Commercial real estate		4,140		37		4,344		84
With an allowance recorded:
Commercial		1,515		—		1,539		—
Commercial real estate		1,272		29		1,246		44
Total:
Commercial	$	1,856	$	2	$	1,887	$	6
Commercial real estate	$	5,412	$	66	$	5,590	$	128