Loans Receivable and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Summary of Loan Portfolio, Excluding Residential Loans Held for Sale, Broken Out by Classes

The loan portfolio, excluding residential loans held for sale, broken out by classes, as of September 30, 2014 and December 31, 2013 was as follows:

(Dollars in thousands)	September 30, 2014		December 31, 2013
Commercial real estate:
Owner-occupied	$	97,401	$	111,290
Non-owner occupied	142,146		135,953
Multi-family	26,801		22,882
Non-owner occupied residential	48,559		55,272
Acquisition and development:
1-4 family residential construction	5,297		3,338
Commercial and land development	15,480		19,440
Commercial and industrial	45,125		33,446
Municipal	62,385		60,996
Residential mortgage:
First lien	126,552		124,728
Home equity - term	20,833		20,131
Home equity - lines of credit	83,673		77,377
Installment and other loans	6,122		6,184
	$	680,374	$	671,037

Bank's Ratings Based on its Internal Risk Rating System

The following summarizes the Bank’s ratings based on its internal risk rating system as of September 30, 2014 and December 31, 2013:

(Dollars in thousands)	Pass		Special Mention		Non-Impaired Substandard		Impaired - Substandard		Doubtful		Total
September 30, 2014
Commercial real estate:
Owner-occupied	$	84,959	$	3,367	$	5,915	$	3,160	$	0	$	97,401
Non-owner occupied	121,406		17,034		1,287		2,378		41		142,146
Multi-family	24,367		1,108		1,230		96		0		26,801
Non-owner occupied residential	38,590		6,117		2,212		1,640		0		48,559
Acquisition and development:
1-4 family residential construction	5,297		0		0		0		0		5,297
Commercial and land development	11,801		1,082		1,348		1,249		0		15,480
Commercial and industrial	41,568		1,742		1,121		575		119		45,125
Municipal	62,385		0		0		0		0		62,385
Residential mortgage:
First lien	121,583		0		0		4,936		33		126,552
Home equity - term	20,761		0		0		72		0		20,833
Home equity - lines of credit	83,132		315		184		42		0		83,673
Installment and other loans	6,105		0		0		17		0		6,122
	$	621,954	$	30,765	$	13,297	$	14,165	$	193	$	680,374
December 31, 2013
Commercial real estate:
Owner-occupied	$	92,063	$	3,305	$	11,360	$	4,107	$	455	$	111,290
Non-owner occupied	107,113		6,904		14,819		7,117		0		135,953
Multi-family	20,091		2,132		337		322		0		22,882
Non-owner occupied residential	42,007		4,982		3,790		4,493		0		55,272
Acquisition and development:
1-4 family residential construction	3,292		0		46		0		0		3,338
Commercial and land development	14,118		1,433		712		3,177		0		19,440
Commercial and industrial	28,933		2,129		383		1,878		123		33,446
Municipal	60,996		0		0		0		0		60,996
Residential mortgage:
First lien	121,353		0		0		3,327		48		124,728
Home equity - term	20,024		0		0		94		13		20,131
Home equity - lines of credit	77,187		0		9		181		0		77,377
Installment and other loans	6,184		0		0		0		0		6,184
	$	593,361	$	20,885	$	31,456	$	24,696	$	639	$	671,037

Impaired Loans by Class

The following summarizes impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required as of September 30, 2014 and December 31, 2013. The recorded investment in loans excludes accrued interest receivable due to insignificance. Allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending, and the partial charge-off will be recorded when final information is received.

	Impaired Loans with a Specific Allowance						Impaired Loans with No Specific Allowance
(Dollars in thousands)	Recorded Investment (Book Balance)		Unpaid Principal Balance (Legal Balance)		Related Allowance		Recorded Investment (Book Balance)		Unpaid Principal Balance (Legal Balance)
September 30, 2014
Commercial real estate:
Owner-occupied	$	0	$	0	$	0	$	3,160	$	4,345
Non-owner occupied	686		728		41		1,733		3,499
Multi-family	0		0		0		96		128
Non-owner occupied residential	222		243		28		1,418		1,846
Acquisition and development:
Commercial and land development	0		0		0		1,249		1,929
Commercial and industrial	0		0		0		694		766
Residential mortgage:
First lien	851		851		134		4,118		4,707
Home equity - term	0		0		0		72		73
Home equity - lines of credit	0		0		0		42		43
Installment and other loans	0		0		0		17		39
	$	1,759	$	1,822	$	203	$	12,599	$	17,375
December 31, 2013
Commercial real estate:
Owner-occupied	$	615	$	1,099	$	552	$	3,947	$	4,575
Non-owner occupied	0		0		0		7,117		7,670
Multi-family	0		0		0		322		415
Non-owner occupied residential	0		0		0		4,493		4,836
Acquisition and development:
Commercial and land development	0		0		0		3,177		3,812
Commercial and industrial	0		0		0		2,001		2,143
Residential mortgage:
First lien	48		48		48		3,327		3,619
Home equity - term	13		13		13		94		96
Home equity - lines of credit	0		0		0		181		183
	$	676	$	1,160	$	613	$	24,659	$	27,349

Average Recorded Investment in Impaired Loans and Related Interest Income

The following summarizes the average recorded investment in impaired loans and related interest income recognized on loans deemed impaired, generally on a cash basis, for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,
	2014				2013
(Dollars in thousands)	Average Impaired Balance		Interest Income Recognized		Average Impaired Balance		Interest Income Recognized
Commercial real estate:
Owner-occupied	$	3,681	$	1	$	4,249	$	41
Non-owner occupied	7,361		46		3,980		50
Multi-family	98		0		168		16
Non-owner occupied residential	1,905		0		5,108		45
Acquisition and development:
1-4 family residential construction	0		0		345		0
Commercial and land development	1,286		9		2,613		0
Commercial and industrial	1,263		0		1,875		0
Residential mortgage:
First lien	4,772		15		2,421		29
Home equity - term	72		0		47		2
Home equity - lines of credit	49		0		116		4
Installment and other loans	10		1		1		0
	$	20,497	$	72	$	20,923	$	187

	Nine Months Ended September 30,
	2014				2013
(Dollars in thousands)	Average Impaired Balance		Interest Income Recognized		Average Impaired Balance		Interest Income Recognized
Commercial real estate:
Owner-occupied	$	3,965	$	9	$	3,270	$	99
Non-owner occupied	7,205		137		3,605		86
Multi-family	234		0		89		16
Non-owner occupied residential	2,603		2		4,875		60
Acquisition and development:
1-4 family residential construction	0		0		602		0
Commercial and land development	1,787		20		2,967		2
Commercial and industrial	1,676		2		1,724		65
Residential mortgage:
First lien	4,068		45		2,528		31
Home equity - term	90		0		47		2
Home equity - lines of credit	85		0		336		4
Installment and other loans	5		1		1		0
	$	21,718	$	216	$	20,044	$	365

Troubled Debt Restructurings

The following presents impaired loans that are troubled debt restructurings, with the recorded investment as of September 30, 2014 and December 31, 2013.

	September 30, 2014			December 31, 2013
(Dollars in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Accruing:
Commercial real estate:
Owner-occupied	0	$	0	1	$	200
Non-owner occupied	0	0		2	4,268
Acquisition and development:
Commercial and land development	2	917		2	1,071
Residential mortgage:
First lien	8	818		1	449
	10	1,735		6	5,988
Nonaccruing:
Commercial real estate:
Owner-occupied	1	49		1	71
Non-owner occupied	1	686		1	694
Non-owner occupied residential	0	0		1	193
Commercial and industrial	0	0		2	310
Residential mortgage:
First lien	12	1,669		1	279
Consumer	1	14		0	0
	15	2,418		6	1,547
	25	$	4,153	12	$	7,535

Number of Loans Modified and Their Pre-Modification and Post-Modification Investment Balances

The following table presents the number of loans modified, and their pre-modification and post-modification investment balances for the three and nine months ended September 30, 2014 and 2013:

	2014					2013
(Dollars in thousands)	Number of Contracts	Pre- Modification Recorded Investment		Post Modification Recorded Investment		Number of Contracts	Pre- Modification Recorded Investment		Post Modification Recorded Investment
Three Months Ended September 30,
Commercial real estate:
Owner occupied	0	$	0	$	0	2	$	150	$	150
Non-owner occupied	0	0		0		2	3,457		3,457
Residential mortgage:
First lien	4	285		285		0	0		0
Installment and other loans	1	36		14		0	0		0
	5	$	321	$	299	4	$	3,607	$	3,607
Nine Months Ended September 30,
Commercial real estate:
Owner occupied	0	$	0	$	0	2	$	150	$	150
Non-owner occupied	0	0		0		2	3,457		3,457
Acquisition and development:
Commercial and land development	0	0		0		1	524		524
Residential mortgage:
First lien	18	1,808		1,741		0	0		0
Installment and other loans	1	36		14		0	0		0
	19	$	1,844	$	1,755	5	$	4,131	$	4,131

Restructured Loans Included in Nonaccrual Status were Modified as Troubled Debt Restructurings within Previous 12 Months and for which There was Payment Default

The following table presents restructured loans, included in nonaccrual status, that were modified as TDRs within the previous 12 months and for which there was a payment default during the three and nine months ended September 30, 2014 and 2013:

	2014			2013
(Dollars in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Three Months Ended September 30,
Acquisition and development:
Commercial and land development	1	$	544	0	$	0
Residential mortgage:
First lien	2	180		0	0
	3	$	724	0	$	0
Nine Months Ended September 30,
Commercial real estate:
Non-owner occupied	1	$	3,495	0	$	0
Acquisition and development:
Commercial and land development	1	544		0	0
Residential mortgage:
First lien	2	180		0	0
	4	$	4,219	0	$	0

Loan Portfolio Summarized by Aging Categories of Performing Loans and Nonaccrual Loans

The following table presents the classes of the loan portfolio summarized by aging categories of performing loans and nonaccrual loans as of September 30, 2014 and December 31, 2013:

			Days Past Due
	Current		30-59		60-89		90+ (still accruing)		Total Past Due		Non- Accrual		Total Loans
September 30, 2014
Commercial real estate:
Owner-occupied	$	94,034	$	207	$	0	$	0	$	207	$	3,160	$	97,401
Non-owner occupied	139,612		115		0		0		115		2,419		142,146
Multi-family	26,705		0		0		0		0		96		26,801
Non-owner occupied residential	46,806		113		0		0		113		1,640		48,559
Acquisition and development:
1-4 family residential construction	5,297		0		0		0		0		0		5,297
Commercial and land development	14,604		544		0		0		544		332		15,480
Commercial and industrial	44,431		0		0		0		0		694		45,125
Municipal	62,385		0		0		0		0		0		62,385
Residential mortgage:
First lien	121,750		626		25		0		651		4,151		126,552
Home equity - term	20,651		110		0		0		110		72		20,833
Home equity - lines of credit	83,516		115		0		0		115		42		83,673
Installment and other loans	6,071		27		7		0		34		17		6,122
	$	665,862	$	1,857	$	32	$	0	$	1,889	$	12,623	$	680,374
December 31, 2013
Commercial real estate:
Owner-occupied	$	106,078	$	742	$	108	$	0	$	850	$	4,362	$	111,290
Non-owner occupied	132,913		191		0		0		191		2,849		135,953
Multi-family	22,560		0		0		0		0		322		22,882
Non-owner occupied residential	50,554		225		0		0		225		4,493		55,272
Acquisition and development:
1-4 family residential construction	3,338		0		0		0		0		0		3,338
Commercial and land development	17,289		45		0		0		45		2,106		19,440
Commercial and industrial	31,111		334		0		0		334		2,001		33,446
Municipal	60,996		0		0		0		0		0		60,996
Residential mortgage:
First lien	119,845		1,380		577		0		1,957		2,926		124,728
Home equity - term	19,966		56		2		0		58		107		20,131
Home equity - lines of credit	76,982		214		0		0		214		181		77,377
Installment and other loans	6,095		77		12		0		89		0		6,184
	$	647,727	$	3,264	$	699	$	0	$	3,963	$	19,347	$	671,037

Activity in Allowance for Loan Losses

Activity in the allowance for loan losses for the three months ended September 30, 2014 and 2013 is as follows:

	Commercial															Consumer
(Dollars in thousands)	Commercial Real Estate			Acquisition and Development			Commercial and Industrial			Municipal			Total			Residential Mortgage			Installment and Other			Total			Unallocated		Total
September 30, 2014
Balance, beginning of period	$	14,053		$	852		$	993		$	178		$	16,076		$	2,362		$	186		$	2,548		$	1,801	$	20,425
Provision for loan losses	(2,593		)	(284		)	(387		)	9			(3,255		)	72			66			138			217		(2,900		)
Charge-offs	(1,840		)	(33		)	(1		)	0			(1,874		)	(286		)	(78		)	(364		)	0		(2,238		)
Recoveries	382			0			317			0			699			6			27			33			0		732
Balance, end of period	$	10,002		$	535		$	922		$	187		$	11,646		$	2,154		$	201		$	2,355		$	2,018	$	16,019
September 30, 2013
Balance, beginning of period	$	11,288		$	1,946		$	875		$	254		$	14,363		$	3,796		$	134		$	3,930		$	1,805	$	20,098
Provision for loan losses	3,495			(1,117		)	(2,651		)	(12		)	(285		)	2			11			13			272		0
Charge-offs	(1,767		)	(2		)	0			0			(1,769		)	0			(46		)	(46		)	0		(1,815		)
Recoveries	45			267			2,530			0			2,842			100			27			127			0		2,969
Balance, end of period	$	13,061		$	1,094		$	754		$	242		$	15,151		$	3,898		$	126		$	4,024		$	2,077	$	21,252

Activity in the allowance for loan losses for the nine months ended September 30, 2014 and 2013 is as follows:

	Commercial															Consumer
(Dollars in thousands)	Commercial Real Estate			Acquisition and Development			Commercial and Industrial			Municipal			Total			Residential Mortgage			Installment and Other			Total			Unallocated			Total
September 30, 2014
Balance, beginning of period	$	13,215		$	670		$	864		$	244		$	14,993		$	3,780		$	124		$	3,904		$	2,068		$	20,965
Provision for loan losses	(1,210		)	(73		)	(552		)	(57		)	(1,892		)	(1,150		)	192			(958		)	(50		)	(2,900		)
Charge-offs	(2,514		)	(67		)	(64		)	0			(2,645		)	(495		)	(200		)	(695		)	0			(3,340		)
Recoveries	511			5			674			0			1,190			19			85			104			0			1,294
Balance, end of period	$	10,002		$	535		$	922		$	187		$	11,646		$	2,154		$	201		$	2,355		$	2,018		$	16,019
September 30, 2013
Balance, beginning of period	$	13,719		$	3,502		$	1,635		$	223		$	19,079		$	2,275		$	85		$	2,360		$	1,727		$	23,166
Provision for loan losses	3,653			(3,943		)	(3,309		)	19			(3,580		)	1,750			80			1,830			350			(1,400		)
Charge-offs	(4,444		)	(146		)	(114		)	0			(4,704		)	(263		)	(92		)	(355		)	0			(5,059		)
Recoveries	133			1,681			2,542			0			4,356			136			53			189			0			4,545
Balance, end of period	$	13,061		$	1,094		$	754		$	242		$	15,151		$	3,898		$	126		$	4,024		$	2,077		$	21,252

Summary of Allowance for Loan Loss Allocation

The following summarizes the ending loan balance individually evaluated for impairment based upon loan segment, as well as the related allowance for loan losses allocation for each at September 30, 2014 and December 31, 2013:

	Commercial										Consumer
(Dollars in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Municipal		Total		Residential Mortgage		Installment and Other		Total		Unallocated		Total
September 30, 2014
Loans allocated by:
Individually evaluated for impairment	$	7,315	$	1,249	$	694	$	0	$	9,258	$	5,083	$	17	$	5,100	$	0	$	14,358
Collectively evaluated for impairment	307,592		19,528		44,431		62,385		433,936		225,975		6,105		232,080		0		666,016
	$	314,907	$	20,777	$	45,125	$	62,385	$	443,194	$	231,058	$	6,122	$	237,180	$	0	$	680,374
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	69	$	0	$	0	$	0	$	69	$	134	$	0	$	134	$	0	$	203
Collectively evaluated for impairment	9,933		535		922		187		11,577		2,020		201		2,221		2,018		15,816
	$	10,002	$	535	$	922	$	187	$	11,646	$	2,154	$	201	$	2,355	$	2,018	$	16,019
December 31, 2013
Loans allocated by:
Individually evaluated for impairment	$	16,494	$	3,177	$	2,001	$	0	$	21,672	$	3,663	$	0	$	3,663	$	0	$	25,335
Collectively evaluated for impairment	308,903		19,601		31,445		60,996		420,945		218,573		6,184		224,757		0		645,702
	$	325,397	$	22,778	$	33,446	$	60,996	$	442,617	$	222,236	$	6,184	$	228,420	$	0	$	671,037
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	552	$	0	$	0	$	0	$	552	$	61	$	0	$	61	$	0	$	613
Collectively evaluated for impairment	12,663		670		864		244		14,441		3,719		124		3,843		2,068		20,352
	$	13,215	$	670	$	864	$	244	$	14,993	$	3,780	$	124	$	3,904	$	2,068	$	20,965