Loans (Tables)

6 Months Ended

Jun. 30, 2018

Loans consist of the following:


	June 30, 2018				December 31, 2017
(dollars in thousands)	PCI	All other loans**	Total	% of Gross Loans	Total	% of Gross Loans

Commercial real estate	$ 1,503	$ 826,941	$ 828,445	64.20%	$ 727,314	63.25%
Residential first mortgages	470	162,621	163,090	12.64%	170,374	14.81%
Residential rentals	1,274	126,195	127,469	9.88%	110,228	9.58%
Construction and land development	272	28,375	28,647	2.22%	27,871	2.42%
Home equity and second mortgages	319	36,707	37,026	2.87%	21,351	1.86%
Commercial loans	-	57,519	57,519	4.46%	56,417	4.91%
Consumer loans	-	801	801	0.06%	573	0.05%
Commercial equipment	-	47,418	47,418	3.67%	35,916	3.12%
Gross loans	3,838	1,286,577	1,290,415	100.00%	1,150,044	100.00%
Net deferred costs (fees)	-	1,122	1,122	0.09%	1,086	0.09%
Total loans, net of deferred costs	$ 3,838	$ 1,287,699	$ 1,291,537		$ 1,151,130
Less: allowance for loan losses	-	(10,725)	(10,725)	-0.83%	(10,515)	-0.91%
Net loans	$ 3,838	$ 1,276,974	$ 1,280,812		$ 1,140,615

**All other loans include acquired Non-PCI pools.

Non-accrual loans

Non-accrual loans as of June 30, 2018 and December 31, 2017 were as follows:


	June 30, 2018
(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	$ 9,219	9	$ 800	3	$ 10,019	12
Residential first mortgages	522	2	487	1	1,009	3
Residential rentals	84	1	697	3	781	4
Construction and land development	-	-	-	-	-	-
Home equity and second mortgages	36	1	118	1	154	2
Commercial loans	898	2	-	-	898	2
Consumer loans	-	-	1	1	1	1
Commercial equipment	1,588	5	42	1	1,630	6
	$ 12,347	20	$ 2,145	10	$ 14,492	30


	December 31, 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	$ 1,148	4	$ 839	3	$ 1,987	7
Residential first mortgages	478	3	507	1	985	4
Residential rentals	84	1	741	3	825	4
Construction and land development	-	-	-	-	-	-
Home equity and second mortgages	134	3	123	1	257	4
Commercial loans	172	2	-	-	172	2
Consumer loans	-	-	-	-	-	-
Commercial equipment	467	3	-	-	467	3
	$ 2,483	16	$ 2,210	8	$ 4,693	24

Past Due Financing Receivables

Past due and PCI loans as of June 30, 2018 and December 31, 2017 were as follows:


	June 30, 2018
(dollars in thousands)	31-60 Days	61-89 Days	90 or Greater Days	Total Past Due	PCI Loans	Current	Total Loan Receivables
Commercial real estate	$ 74	$ 85	$ 9,219	$ 9,378	$ 1,503	$ 817,564	$ 828,445
Residential first mortgages	-	71	522	593	470	162,027	163,090
Residential rentals	14	-	84	98	1,274	126,097	127,469
Construction and land dev.	-	-	-	-	272	28,375	28,647
Home equity and second mtg.	202	30	36	268	319	36,439	37,026
Commercial loans	-	-	898	898	-	56,621	57,519
Consumer loans	-	-	-	-	-	801	801
Commercial equipment	58	48	1,588	1,694	-	45,724	47,418
Total	$ 348	$ 234	$ 12,347	$ 12,929	$ 3,838	$ 1,273,648	$ 1,290,415


	December 31, 2017
(dollars in thousands)	31-60 Days	61-89 Days	90 or Greater Days	Total Past Due	PCI Loans	Current	Total Loan Receivables
Commercial real estate	$ -	$ 6,711	$ 1,148	$ 7,859	$ -	$ 719,455	$ 727,314
Residential first mortgages	-	68	478	546	-	169,828	170,374
Residential rentals	-	207	84	291	-	109,937	110,228
Construction and land dev.	-	-	-	-	-	27,871	27,871
Home equity and second mtg.	19	18	134	171	-	21,180	21,351
Commercial loans	892	299	172	1,363	-	55,054	56,417
Consumer loans	-	1	-	1	-	572	573
Commercial equipment	1,012	-	467	1,479	-	34,437	35,916
Total	$ 1,923	$ 7,304	$ 2,483	$ 11,710	$ -	$ 1,138,334	$ 1,150,044

Impaired Loans, Including TDRs

Impaired Loans and Troubled Debt Restructures (“TDRs”)

Impaired loans, including TDRs, at June 30, 2018 and 2017 and at December 31, 2017 were as follows:



	June 30, 2018
(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	$ 26,804	$ 24,923	$ 1,569	$ 26,492	$ 182	$ 26,609	$ 214	$ 26,695	$ 469
Residential first mortgages	2,473	2,434	-	2,434	-	2,480	26	2,490	53
Residential rentals	1,430	1,396	-	1,396	-	1,440	18	1,450	35
Construction and land dev.	729	-	729	729	210	729	10	729	20
Home equity and second mtg.	303	213	86	299	7	304	3	306	7
Commercial loans	2,792	1,892	900	2,792	458	2,793	32	2,793	52
Consumer loans	2	1	1	2	1	2	-	2	-
Commercial equipment	1,645	1,021	622	1,643	508	1,661	13	1,692	29
Total	$ 36,178	$ 31,880	$ 3,907	$ 35,787	$ 1,366	$ 36,018	$ 316	$ 36,157	$ 665


	December 31, 2017
(dollars in thousands)	Unpaid Contractual Principal Balance	Recorded Investment With No Allowance	Recorded Investment With Allowance	Total Recorded Investment	Related Allowance	YTD Average Recorded Investment	YTD Interest Income Recognized

Commercial real estate	$ 33,180	$ 30,921	$ 2,008	$ 32,929	$ 370	$ 33,575	$ 1,379
Residential first mortgages	2,455	1,978	459	2,437	2	2,479	91
Residential rentals	2,389	1,981	395	2,376	18	2,432	111
Construction and land dev.	729	-	729	729	163	729	26
Home equity and second mtg.	317	317	-	317	-	318	12
Commercial loans	3,010	2,783	168	2,951	168	3,048	137
Commercial equipment	1,538	1,048	467	1,515	303	1,578	73
Total	$ 43,618	$ 39,028	$ 4,226	$ 43,254	$ 1,024	$ 44,159	$ 1,829


	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

TDRs, Included in Impaired Loans Schedule

TDRs, included in the impaired loan schedules above, as of June 30, 2018 and December 31, 2017 were as follows:


	June 30, 2018		December 31, 2017
(dollars in thousands)	Dollars	Number of Loans	Dollars	Number of Loans

Commercial real estate	$ 8,396	8	$ 9,273	9
Residential first mortgages	517	2	527	2
Residential rentals	218	1	221	1
Construction and land development	729	2	729	2
Commercial loans	4	1	4	1
Commercial equipment	-	-	36	1
Total TDRs	$ 9,864	14	$ 10,790	16
Less: TDRs included in non-accrual loans	-	-	(769)	(1)
Total accrual TDR loans	$ 9,864	14	$ 10,021	15

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, 2018 and 2017, 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, 2018
(dollars in thousands)	Beginning Balance	Charge-offs	Recoveries	Provisions	Ending Balance
Three Months Ended
Commercial real estate	$ 6,664	$ -	$ 4	$ (105)	$ 6,563
Residential first mortgages	937	(76)	-	(124)	737
Residential rentals	459	-	-	10	469
Construction and land development	482	-	-	16	498
Home equity and second mortgages	118	-	5	(19)	104
Commercial loans	1,045	(88)	-	246	1,203
Consumer loans	7	-	-	-	7
Commercial equipment	759	-	9	376	1,144
	$ 10,471	$ (164)	$ 18	$ 400	$ 10,725

Purchase Credit Impaired**	$ -	$ -	$ -	$ -	$ -


Six Months Ended
Commercial real estate	$ 6,451	$ (236)	$ 6	$ 342	$ 6,563
Residential first mortgages	1,144	(113)	-	(294)	737
Residential rentals	512	-	-	(43)	469
Construction and land development	462	-	-	36	498
Home equity and second mortgages	162	(7)	14	(65)	104
Commercial loans	1,013	(88)	-	278	1,203
Consumer loans	7	(1)	-	1	7
Commercial equipment	764	(299)	34	645	1,144
	$ 10,515	$ (744)	$ 54	$ 900	$ 10,725

Purchase Credit Impaired**	$ -	$ -	$ -	$ -	$ -

** There is no allowance for loan loss on the PCI portfolios. A more detailed rollforward schedule will be presented if an allowance is required.


	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

The following tables detail loan receivable and allowance balances disaggregated on the basis of the Company’s impairment methodology at June 30, 2018 and 2017 and December 31, 2017.


	June 30, 2018				December 31, 2017			June 30, 2017
(dollars in thousands)	Ending balance: individually evaluated for impairment	Ending balance: collectively evaluated for impairment	Purchase Credit Impaired	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	$ 26,492	$ 800,450	$ 1,503	$ 828,445	$ 32,929	$ 694,385	$ 727,314	$ 20,066	$ 693,723	$ 713,789
Residential first mortgages	2,434	160,186	470	163,090	2,437	167,937	170,374	2,291	179,095	181,386
Residential rentals	1,396	124,799	1,274	127,469	2,376	107,852	110,228	2,686	100,675	103,361
Construction and land development	729	27,646	272	28,647	729	27,142	27,871	981	31,622	32,603
Home equity and second mortgages	299	36,408	319	37,026	317	21,034	21,351	109	20,738	20,847
Commercial loans	2,792	54,727	-	57,519	2,951	53,466	56,417	2,973	52,050	55,023
Consumer loans	2	799	-	801	-	573	573	-	412	412
Commercial equipment	1,643	45,775	-	47,418	1,515	34,401	35,916	599	33,990	34,589
	$ 35,787	$ 1,250,790	$ 3,838	$ 1,290,415	$ 43,254	$ 1,106,790	$ 1,150,044	$ 29,705	$ 1,112,305	$ 1,142,010

Allowance for loan losses:
Commercial real estate	$ 182	$ 6,381	$ -	$ 6,563	$ 370	$ 6,081	$ 6,451	$ 693	$ 5,392	$ 6,085
Residential first mortgages	-	737	-	737	2	1,142	1,144	11	1,289	1,300
Residential rentals	-	469	-	469	18	494	512	23	312	335
Construction and land development	210	288	-	498	163	299	462	163	557	720
Home equity and second mortgages	7	97	-	104	-	162	162	-	112	112
Commercial loans	458	745	-	1,203	168	845	1,013	169	645	814
Consumer loans	1	6	-	7	-	7	7	-	5	5
Commercial equipment	508	636	-	1,144	303	461	764	417	646	1,063
	$ 1,366	$ 9,359	$ -	$ 10,725	$ 1,024	$ 9,491	$ 10,515	$ 1,476	$ 8,958	$ 10,434

Credit Quality Indicators

Credit quality indicators as of June 30, 2018 and December 31, 2017 were as follows:


Credit Risk Profile by Internally Assigned Grade

	Commercial Real Estate		Construction and Land Dev.		Residential Rentals
(dollars in thousands)	6/30/2018	12/31/2017	6/30/2018	12/31/2017	6/30/2018	12/31/2017

Unrated	$ 75,916	$ 75,581	$ 2,175	$ 1,775	$ 30,827	$ 28,428
Pass	725,402	619,604	25,471	25,367	95,246	80,279
Special mention	582	-	272	-	-	-
Substandard	26,545	32,129	729	729	1,396	1,521
Doubtful	-	-	-	-	-	-
Loss	-	-	-	-	-	-
Total	$ 828,445	$ 727,314	$ 28,647	$ 27,871	$ 127,469	$ 110,228

	Commercial Loans		Commercial Equipment		Total Commercial Portfolios
(dollars in thousands)	6/30/2018	12/31/2017	6/30/2018	12/31/2017	6/30/2018	12/31/2017

Unrated	$ 14,441	$ 14,356	$ 12,273	$ 10,856	$ 135,632	$ 130,996
Pass	40,296	39,118	33,544	23,581	919,959	787,949
Special mention	-	-	-	-	854	-
Substandard	2,782	2,943	1,498	1,479	32,950	38,801
Doubtful	-	-	103	-	103	-
Loss	-	-	-	-	-	-
Total	$ 57,519	$ 56,417	$ 47,418	$ 35,916	$ 1,089,498	$ 957,746

	Non-Commercial Portfolios **		Total All Portfolios
(dollars in thousands)	6/30/2018	12/31/2017	6/30/2018	12/31/2017

Unrated	$ 148,482	$ 152,616	$ 284,114	$ 283,612
Pass	50,826	38,081	970,785	826,030
Special mention	-	96	854	96
Substandard	1,609	1,505	34,559	40,306
Doubtful	-	-	103	-
Loss	-	-	-	-
Total	$ 200,917	$ 192,298	$ 1,290,415	$ 1,150,044

** Non-commercial portfolios are generally evaluated based on payment activity but may be risk graded if part if a larger commercial relationship or are credit impaired (e.g., non-accrual loans, TDRs).


Credit Risk Profile Based on Payment Activity

	Residential First Mortgages		Home Equity and Second Mtg.		Consumer Loans
(dollars in thousands)	6/30/2018	12/31/2017	6/30/2018	12/31/2017	6/30/2018	12/31/2017

Performing	$ 162,569	$ 169,896	$ 36,990	$ 21,217	$ 801	$ 573
Nonperforming	521	478	36	134	-	-
Total	$ 163,090	$ 170,374	$ 37,026	$ 21,351	$ 801	$ 573

Accounting for Certain Loans and Debt Securities Acquired In Transfer Table [Text Block]

In conjunction with the acquisition of County First, the PCI loan portfolio was accounted for at the fair values as follows:


(dollars in thousands)		January 1, 2018

Contractual principal and interest at acquisition		$ 6,126
Nonaccretable difference		(1,093)
Expected cash flows at acquisition		5,033
Accretable yield		(517)
Basis in PCI loans at acquisition - estimated fair value		$ 4,517

Certain Loans Acquired In Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Table [Text Block]

A summary of changes in the accretable yield for PCI loans for the three and six months ended June 30, 2018 follows:


	Three Months Ended	Six Months Ended
(dollars in thousands)	June 30, 2018	June 30, 2018
Accretable yield, beginning of period	$ 459	$ -
Additions	-	517
Accretion	(58)	(116)
Reclassification from (to) nonaccretable difference	-	-
Other changes, net	-	-
Accretable yield, end of period	$ 401	$ 401

Summary Of Acquired And Non Acquired Loans Table [Text Block]

The following is a summary of acquired and non-acquired loans as of June 30, 2018 and December 31, 2017:



BY ACQUIRED AND NON-ACQUIRED	June 30, 2018	%	December 31, 2017	%

Acquired loans - performing	$ 115,157	8.92%	$ -	0.00%
Acquired loans - purchase credit impaired ("PCI")	3,838	0.30%	-	0.00%
Total acquired loans	118,995	9.22%	-	0.00%
Non-acquired loans**	1,171,420	90.78%	1,150,044	100.00%
Gross loans	1,290,415		1,150,044
Net deferred costs (fees)	1,122	0.09%	1,086	0.09%
Total loans, net of deferred costs	$ 1,291,537		$ 1,151,130


** Non-acquired loans include loans transferred from acquired pools following release of acquisition accounting FMV adjustments.