Loans (Tables)

6 Months Ended

Jun. 30, 2017

Loans consist of the following:


(dollars in thousands)	June 30, 2017	%	December 31, 2016	%

Commercial real estate	$ 713,789	62.50%	$ 667,105	61.25%
Residential first mortgages	181,386	15.88%	171,004	15.70%
Residential rentals	103,361	9.05%	101,897	9.36%
Construction and land development	32,603	2.85%	36,934	3.39%
Home equity and second mortgages	20,847	1.83%	21,399	1.97%
Commercial loans	55,023	4.82%	50,484	4.64%
Consumer loans	412	0.04%	422	0.04%
Commercial equipment	34,589	3.03%	39,737	3.65%
	1,142,010	100.00%	1,088,982	100.00%
Less:
Deferred loan fees and premiums	(853)	-0.07%	(397)	-0.04%
Allowance for loan losses	10,434	0.91%	9,860	0.91%
	9,581		9,463
	$ 1,132,429		$ 1,079,519

Non-accrual loans

Non-accrual loans as of June 30, 2017 and December 31, 2016 were as follows:


	June 30, 2017
(dollars in thousands)	90 or Greater Days Delinquent	Number of Loans	Non-accrual Only Loans	Number of Loans	Total Non-accrual Loans	Total Number of Loans

Commercial real estate	$ 2,015	7	$ -	-	$ 2,015	7
Residential first mortgages	288	3	-	-	288	3
Residential rentals	332	3	-	-	332	3
Construction and land development	252	1	-	-	252	1
Home equity and second mortgages	52	2	-	-	52	2
Commercial loans	376	3	660	2	1,036	5
Commercial equipment	467	3	-	-	467	3
	$ 3,782	22	$ 660	2	$ 4,442	24


	December 31, 2016
(dollars in thousands)	90 or Greater Days Delinquent	Number of Loans	Non-accrual Only Loans	Number of Loans	Total Non-accrual Loans	Total Number of Loans

Commercial real estate	$ 2,371	7	$ -	-	$ 2,371	7
Residential first mortgages	623	4	-	-	623	4
Residential rentals	577	4	-	-	577	4
Construction and land development	3,048	2	-	-	3,048	2
Home equity and second mortgages	61	2	-	-	61	2
Commercial loans	375	3	669	2	1,044	5
Commercial equipment	650	5	-	-	650	5
	$ 7,705	27	$ 669	2	$ 8,374	29

Past Due Financing Receivables

Past due loans as of June 30, 2017 and December 31, 2016 were as follows:


	June 30, 2017
(dollars in thousands)	Current	31-60 Days	61-89 Days	90 or Greater Days	Total Past Due	Total Loan Receivables	Loans > 90 Days and Accruing
Commercial real estate	$ 711,317	$ -	$ 457	$ 2,015	$ 2,472	$ 713,789	$ -
Residential first mortgages	180,762	-	336	288	624	181,386	-
Residential rentals	102,945	-	84	332	416	103,361	-
Construction and land dev.	32,351	-	-	252	252	32,603	-
Home equity and second mtg.	20,657	-	138	52	190	20,847	-
Commercial loans	54,647	-	-	376	376	55,023	-
Consumer loans	412	-	-	-	-	412	-
Commercial equipment	34,056	39	27	467	533	34,589	-
Total	$ 1,137,147	$ 39	$ 1,042	$ 3,782	$ 4,863	$ 1,142,010	$ -


	December 31, 2016
(dollars in thousands)	Current	31-60 Days	61-89 Days	90 or Greater Days	Total Past Due	Total Loan Receivables	Loans > 90 Days and Accruing
Commercial real estate	$ 664,250	$ -	$ 484	$ 2,371	$ 2,855	$ 667,105	$ -
Residential first mortgages	170,381	-	-	623	623	171,004	-
Residential rentals	101,309	-	11	577	588	101,897	-
Construction and land dev.	33,886	-	-	3,048	3,048	36,934	-
Home equity and second mtg.	21,175	130	33	61	224	21,399	-
Commercial loans	49,778	331	-	375	706	50,484	-
Consumer loans	420	-	2	-	2	422	-
Commercial equipment	39,044	42	1	650	693	39,737	-
Total	$ 1,080,243	$ 503	$ 531	$ 7,705	$ 8,739	$ 1,088,982	$ -

Impaired Loans, Including TDRs

Impaired Loans and Troubled Debt Restructures (“TDRs”)

Impaired loans, including TDRs, at June 30, 2017 and 2016 and at December 31, 2016 were as follows:


	June 30, 2017
(dollars in thousands)	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Quarter Average Recorded Investment	Quarter Interest Income Recognized	YTD Average Recorded Investment	YTD Interest Income Recognized

Commercial real estate	$ 20,277	$ 13,079	$ 6,987	$ 20,066	$ 693	$ 20,186	$ 198	$ 20,274	$ 417
Residential first mortgages	2,294	1,823	468	2,291	11	2,299	21	2,311	49
Residential rentals	2,758	2,286	400	2,686	23	2,693	27	2,731	56
Construction and land dev.	981	252	729	981	163	980	4	980	7
Home equity and second mtg.	109	109	-	109	-	110	1	111	2
Commercial loans	3,063	2,804	169	2,973	169	2,974	23	2,986	46
Commercial equipment	638	108	491	599	417	617	6	625	11
Total	$ 30,120	$ 20,461	$ 9,244	$ 29,705	$ 1,476	$ 29,859	$ 280	$ 30,018	$ 588


	December 31, 2016
(dollars in thousands)	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Average Recorded Investment	Interest Income Recognized

Commercial real estate	$ 22,195	$ 14,896	$ 7,081	$ 21,977	$ 806	$ 22,303	$ 908
Residential first mortgages	2,436	1,938	475	2,413	7	2,445	90
Residential rentals	3,440	2,850	178	3,028	36	3,486	134
Construction and land dev.	4,304	2,926	851	3,777	178	3,867	16
Home equity and second mtg.	170	170	-	170	-	176	7
Commercial loans	3,285	3,004	200	3,204	123	3,442	137
Commercial equipment	855	652	139	791	139	815	17
Total	$ 36,685	$ 26,436	$ 8,924	$ 35,360	$ 1,289	$ 36,534	$ 1,309


	June 30, 2016
(dollars in thousands)	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	Quarter Average Recorded Investment	Quarter Interest Income Recognized	YTD Average Recorded Investment	YTD Interest Income Recognized

Commercial real estate	$ 22,444	$ 20,010	$ 2,404	$ 22,414	$ 582	$ 22,503	$ 243	$ 22,724	$ 420
Residential first mortgages	2,957	2,472	485	2,957	20	2,982	23	2,990	51
Residential rentals	3,987	3,352	239	3,591	53	3,747	42	3,798	67
Construction and land dev.	4,443	3,939	431	4,370	398	4,317	4	4,264	7
Home equity and second mtg.	109	109	-	109	-	109	1	108	2
Commercial loans	4,551	4,222	5	4,227	5	4,237	36	4,238	69
Commercial equipment	839	623	193	816	165	828	5	840	11
Total	$ 39,330	$ 34,727	$ 3,757	$ 38,484	$ 1,223	$ 38,723	$ 354	$ 38,962	$ 627

TDRs, Included in Impaired Loans Schedule

TDRs, included in the impaired loan schedules above, as of June 30, 2017 and December 31, 2016 were as follows:


	June 30, 2017		December 31, 2016
(dollars in thousands)	Dollars	Number of Loans	Dollars	Number of Loans

Commercial real estate	$ 9,466	9	$ 9,587	8
Residential first mortgages	537	2	545	2
Residential rentals	224	1	227	1
Construction and land development	981	3	3,777	4
Commercial loans	665	3	872	5
Commercial equipment	108	2	113	2
Total TDRs	$ 11,981	20	$ 15,121	22
Less: TDRs included in non-accrual loans	(1,753)	(4)	(4,673)	(6)
Total accrual TDR loans	$ 10,228	16	$ 10,448	16

Allowance for Credit Losses on Financing Receivables

The following tables detail activity in the allowance for loan losses at and for the three and six months ended June 30, 2017 and 2016, respectively. An allocation of the allowance to one category of loans does not prevent the Company from using that allowance to absorb losses in a different category.


	June 30, 2017
(dollars in thousands)	Beginning Balance	Charge-offs	Recoveries	Provisions	Ending Balance
Three Months Ended
Commercial real estate	$ 5,179	$ -	$ 4	$ 902	$ 6,085
Residential first mortgages	1,428	-	-	(128)	1,300
Residential rentals	354	(42)	-	23	335
Construction and land development	891	(25)	-	(146)	720
Home equity and second mortgages	76	(1)	-	37	112
Commercial loans	789	-	-	25	814
Consumer loans	5	-	-	-	5
Commercial equipment	1,387	-	13	(337)	1,063
	$ 10,109	$ (68)	$ 17	$ 376	$ 10,434

Six Months Ended
Commercial real estate	$ 5,212	$ -	$ 9	$ 864	$ 6,085
Residential first mortgages	1,406	-	-	(106)	1,300
Residential rentals	362	(42)	-	15	335
Construction and land development	941	(25)	-	(196)	720
Home equity and second mortgages	138	(1)	-	(25)	112
Commercial loans	794	-	1	19	814
Consumer loans	3	(2)	-	4	5
Commercial equipment	1,004	(146)	24	181	1,063
	$ 9,860	$ (216)	$ 34	$ 756	$ 10,434


	June 30, 2016
(dollars in thousands)	Beginning Balance	Charge-offs	Recoveries	Provisions	Ending Balance
Three Months Ended
Commercial real estate	$ 3,838	$ -	$ 3	$ 539	$ 4,380
Residential first mortgages	591	-	-	344	935
Residential rentals	590	-	-	23	613
Construction and land development	1,129	-	-	(85)	1,044
Home equity and second mortgages	134	-	-	7	141
Commercial loans	1,046	(69)	8	(276)	709
Consumer loans	1	-	-	1	2
Commercial equipment	1,262	-	9	11	1,282
	$ 8,591	$ (69)	$ 20	$ 564	$ 9,106

Six Months Ended
Commercial real estate	$ 3,465	$ -	$ 5	$ 910	$ 4,380
Residential first mortgages	584	-	-	351	935
Residential rentals	538	-	-	75	613
Construction and land development	1,103	(73)	1	13	1,044
Home equity and second mortgages	142	-	5	(6)	141
Commercial loans	1,477	(394)	11	(385)	709
Consumer loans	2	(1)	-	1	2
Commercial equipment	1,229	-	21	32	1,282
	$ 8,540	$ (468)	$ 43	$ 991	$ 9,106

The following tables detail loan receivable and allowance balances disaggregated on the basis of the Company’s impairment methodology at June 30, 2017 and 2016 and December 31, 2016.


	June 30, 2017			December 31, 2016			June 30, 2016
(dollars in thousands)	Ending balance: individually evaluated for impairment	Ending balance: collectively evaluated for impairment	Total	Ending balance: individually evaluated for impairment	Ending balance: collectively evaluated for impairment	Total	Ending balance: individually evaluated for impairment	Ending balance: collectively evaluated for impairment	Total
Loan Receivables:
Commercial real estate	$ 20,066	$ 693,723	$ 713,789	$ 21,977	$ 645,128	$ 667,105	$ 22,414	$ 585,966	$ 608,380
Residential first mortgages	2,291	179,095	181,386	2,413	168,591	171,004	2,957	145,181	148,138
Residential rentals	2,686	100,675	103,361	3,028	98,869	101,897	3,591	96,611	100,202
Construction and land development	981	31,622	32,603	3,777	33,157	36,934	4,370	31,190	35,560
Home equity and second mortgages	109	20,738	20,847	170	21,229	21,399	109	21,995	22,104
Commercial loans	2,973	52,050	55,023	3,204	47,280	50,484	4,227	52,940	57,167
Consumer loans	-	412	412	-	422	422	-	332	332
Commercial equipment	599	33,990	34,589	791	38,946	39,737	816	32,369	33,185
	$ 29,705	$ 1,112,305	$ 1,142,010	$ 35,360	$ 1,053,622	$ 1,088,982	$ 38,484	$ 966,584	$ 1,005,068

Allowance for loan losses:
Commercial real estate	$ 693	$ 5,392	$ 6,085	$ 806	$ 4,406	$ 5,212	$ 582	$ 3,798	$ 4,380
Residential first mortgages	11	1,289	1,300	7	1,399	1,406	20	915	935
Residential rentals	23	312	335	36	326	362	53	560	613
Construction and land development	163	557	720	178	763	941	398	646	1,044
Home equity and second mortgages	-	112	112	-	138	138	-	141	141
Commercial loans	169	645	814	123	671	794	5	704	709
Consumer loans	-	5	5	-	3	3	-	2	2
Commercial equipment	417	646	1,063	139	865	1,004	165	1,117	1,282
	$ 1,476	$ 8,958	$ 10,434	$ 1,289	$ 8,571	$ 9,860	$ 1,223	$ 7,883	$ 9,106

Credit Quality Indicators

Credit quality indicators as of June 30, 2017 and December 31, 2016 were as follows:


Credit Risk Profile by Internally Assigned Grade

	Commercial Real Estate		Construction and Land Dev.		Residential Rentals
(dollars in thousands)	6/30/2017	12/31/2016	6/30/2017	12/31/2016	6/30/2017	12/31/2016

Unrated	$ 53,423	$ 51,503	$ 1,820	$ 1,632	$ 26,256	$ 25,563
Pass	639,970	594,768	29,801	31,525	76,063	74,989
Special mention	1,019	-	-	-	-	-
Substandard	19,377	20,834	982	3,777	1,042	1,345
Doubtful	-	-	-	-	-	-
Loss	-	-	-	-	-	-
Total	$ 713,789	$ 667,105	$ 32,603	$ 36,934	$ 103,361	$ 101,897

	Commercial Loans		Commercial Equipment		Total Commercial Portfolios
(dollars in thousands)	6/30/2017	12/31/2016	6/30/2017	12/31/2016	6/30/2017	12/31/2016

Unrated	$ 11,586	$ 11,266	$ 10,068	$ 11,769	$ 103,153	$ 101,733
Pass	40,503	36,221	24,030	27,290	810,367	764,793
Special mention	-	-	-	-	1,019	-
Substandard	2,934	2,997	491	541	24,826	29,494
Doubtful	-	-	-	137	-	137
Loss	-	-	-	-	-	-
Total	$ 55,023	$ 50,484	$ 34,589	$ 39,737	$ 939,365	$ 896,157


Credit Risk Profile Based on Payment Activity

	Residential First Mortgages		Home Equity and Second Mtg.		Consumer Loans
(dollars in thousands)	6/30/2017	12/31/2016	6/30/2017	12/31/2016	6/30/2017	12/31/2016

Performing	$ 181,098	$ 170,381	$ 20,795	$ 21,338	$ 412	$ 422
Nonperforming	288	623	52	61	-	-
Total	$ 181,386	$ 171,004	$ 20,847	$ 21,399	$ 412	$ 422