Loans and reserve for credit losses (Tables)

12 Months Ended

Dec. 31, 2015

Loans receivable at December 31, 2015 and 2014 consisted of the following (dollars in thousands):



	2015					2014
	Amount			Percent		Amount			Percent
Originated loans (a):
Commercial real estate:
Owner occupied	$	263,095		18.1	%	$	198,845		16.8	%
Non-owner occupied	431,379			29.7	%	383,287			32.4	%
Total commercial real estate loans	694,474			47.8	%	582,132			49.2	%
Construction	119,723			8.2	%	100,437			8.5	%
Residential real estate	237,084			16.3	%	122,478			10.4	%
Commercial and industrial	363,335			25.0	%	342,746			29.0	%
Consumer	38,362			2.7	%	34,897			2.9	%
Total loans	1,452,978			100.0	%	1,182,690			100.0	%

Less:
Deferred loan fees, net	(1,419		)			(1,703		)
Reserve for loan losses	(24,415		)			(22,053		)
Loans, net	$	1,427,144				$	1,158,934

Acquired loans (b):
Commercial real estate:
Owner occupied	$	45,236		19.3	%	$	60,264		19.4	%
Non-owner occupied and other	95,183			40.5	%	114,256			36.9	%
Total commercial real estate loans	140,419			59.8	%	174,520			56.3	%
Construction	10,629			4.5	%	24,991			8.1	%
Residential real estate	61,306			26.1	%	82,209			26.5	%
Commercial and industrial	21,109			9.0	%	25,729			8.3	%
Consumer	1,488			0.6	%	2,401			0.8	%
Total loans	234,951			100.0	%	309,850			100.0	%

Total loans:
Commercial real estate:
Owner occupied	$	308,331		18.3	%	$	259,109		17.4	%
Non-owner occupied and other	526,562			31.2	%	497,543			33.3	%
Total commercial real estate loans	834,893			49.5	%	756,652			50.7	%
Construction	130,352			7.7	%	125,428			8.4	%
Residential real estate	298,390			17.7	%	204,687			13.7	%
Commercial and industrial	384,444			22.8	%	368,475			24.7	%
Consumer	39,850			2.3	%	37,298			2.5	%
Total loans	1,687,929			100.0	%	1,492,540			100.0	%

Less:
Deferred loan fees	(1,419		)			(1,703		)
Reserve for loan losses	(24,415		)			(22,053		)
Loans, net	$	1,662,095				$	1,468,784

(a) Originated loans are loans organically made through the Company’s normal and customary origination process
(b) Acquired loans are loans acquired in the acquisition of Home, discussed elsewhere in this report.

Changes in loss share payable associated with covered loans

Changes in the loss share payable (receivable) associated with covered loans for the year ended December 31, 2015 were as follows (dollars in thousands):



	Year ended
	December 31, 2015
Balance at beginning of period	$	(449	)
Paid to FDIC	1,408
Increase due to impairment	73
FDIC reimbursement	(1,450		)
Shared loss expenses	232
Adjustments from prior periods	(141		)
OREO loss carryforward	38
Balance at end of period	$	(289	)

Allowance for credit losses on financing receivables

Transactions and allocations in the reserve for loan losses and unfunded loan commitments, by portfolio segment, for the years ended December 31, 2015, 2014 and 2013 were as follows (dollars in thousands):



	Commercial real estate			Construction			Residential real estate			Commercial and industrial			Consumer			Unallocated			Total
2015
Reserve for loan losses
Balance at beginning of year	$	5,614		$	1,133		$	2,121		$	6,844		$	1,047		$	5,294		$	22,053
Loan loss provision (credit)	(5,552		)	(525		)	(494		)	4,682			707			(2,818		)	(4,000		)
Recoveries	4,150			436			850			3,820			618			—			9,874
Loans charged off	(278		)	—			(402		)	(1,377		)	(1,455		)	—			(3,512		)
Balance at end of year	$	3,934		$	1,044		$	2,075		$	13,969		$	917		$	2,476		$	24,415

Reserve for unfunded lending commitments
Balance at beginning of year	$	48		$	268		$	25		$	75		$	24		$	—		$	440
Provision (credit) for unfunded loan commitments	—			—			—			—			—			—			—
Balance at end of year	$	48		$	268		$	25		$	75		$	24		$	—		$	440

Reserve for credit losses
Reserve for loan losses	$	3,934		$	1,044		$	2,075		$	13,969		$	917		$	2,476		$	24,415
Reserve for unfunded lending commitments	48			268			25			75			24			—			440
Total reserve for credit losses	$	3,982		$	1,312		$	2,100		$	14,044		$	941		$	2,476		$	24,855



	Commercial real estate			Construction			Residential real estate			Commercial and industrial			Consumer			Unallocated		Total
2014
Reserve for loan losses
Balance at beginning of year	$	9,565		$	535		$	2,381		$	6,261		$	1,401		$	714	$	20,857
Loan loss provision (credit)	(4,484		)	(348		)	(315		)	(12		)	579			4,580		—
Recoveries	1,801			1,242			929			2,158			309			—		6,439
Loans charged off	(1,268		)	(296		)	(874		)	(1,563		)	(1,242		)	—		(5,243		)
Balance at end of year	$	5,614		$	1,133		$	2,121		$	6,844		$	1,047		$	5,294	$	22,053

Reserve for unfunded lending commitments
Balance at beginning of year	$	48		$	268		$	25		$	75		$	24		$	—	$	440
Provision (credit) for unfunded loan commitments	—			—			—			—			—			—		—
Balance at end of year	$	48		$	268		$	25		$	75		$	24		$	—	$	440

Reserve for credit losses
Reserve for loan losses	$	5,614		$	1,133		$	2,121		$	6,844		$	1,047		$	5,294	$	22,053
Reserve for unfunded lending commitments	48			268			25			75			24			—		440
Total reserve for credit losses	$	5,662		$	1,401		$	2,146		$	6,919		$	1,071		$	5,294	$	22,493



	Commercial real estate			Construction			Residential real estate			Commercial and industrial			Consumer			Unallocated			Total
2013
Reserve for loan losses
Balance at beginning of year	$	11,596		$	1,583		$	3,551		$	7,267		$	2,177		$	1,087		$	27,261
Loan loss provision (credit)	203			159			(1,013		)	1,808			216			(373		)	1,000
Recoveries	1,034			708			433			2,694			263			—			5,132
Loans charged off	(3,268		)	(1,915		)	(590		)	(5,508		)	(1,255		)	—			(12,536		)
Balance at end of year	$	9,565		$	535		$	2,381		$	6,261		$	1,401		$	714		$	20,857

Reserve for unfunded lending commitments
Balance at beginning of year	$	48		$	268		$	25		$	75		$	24		$	—		$	440
Provision (credit) for unfunded loan commitments	—			—			—			—			—			—			—
Balance at end of year	$	48		$	268		$	25		$	75		$	24		$	—		$	440

Reserve for credit losses
Reserve for loan losses	$	9,565		$	535		$	2,381		$	6,261		$	1,401		$	714		$	20,857
Reserve for unfunded lending commitments	48			268			25			75			24			—			440
Total reserve for credit losses	$	9,613		$	803		$	2,406		$	6,336		$	1,425		$	714		$	21,297

The following table presents the reserve for loan losses and the recorded investment in loans by portfolio segment and impairment evaluation method at December 31, 2015 and 2014 (dollars in thousands). As the acquired loan portfolio is covered by the valuation adjustment taken at the time of acquisition and as the original mark continues to be more than sufficient, impaired acquired loans are excluded from the individually evaluated for impairment amounts below.



	Reserve for loan losses						Recorded investment in loans
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
2015
Commercial real estate	$	78	$	3,856	$	3,934	$	3,835	$	831,058	$	834,893
Construction	—		1,044		1,044		365		129,987		130,352
Residential real estate	—		2,075		2,075		18		298,372		298,390
Commercial and industrial	164		13,805		13,969		2,724		381,720		384,444
Consumer	—		917		917		—		39,850		39,850
	$	242	$	21,697	21,939		$	6,942	$	1,680,987	$	1,687,929
Unallocated					2,476
					$	24,415

2014
Commercial real estate	$	60	$	5,554	$	5,614	$	28,947	$	727,705	$	756,652
Construction	—		1,133		1,133		963		124,465		125,428
Residential real estate	—		2,121		2,121		317		204,370		204,687
Commercial and industrial	25		6,819		6,844		3,495		364,980		368,475
Consumer	—		1,047		1,047		—		37,298		37,298
	$	85	$	16,674	16,759		$	33,722	$	1,458,818	$	1,492,540
Unallocated					5,294
					$	22,053

Financing receivable credit quality indicators

The following table presents, by portfolio class, the recorded investment in loans by internally assigned grades at December 31, 2015 and 2014 (dollars in thousands):



	Loan grades
	Acceptable		Pass-Watch		Special Mention		Substandard		Total
2015
Originated loans (a):
Commercial real estate:
Owner occupied	$	243,113	$	8,623	$	1,426	$	9,933	$	263,095
Non-owner occupied	411,137		9,825		4,522		5,895		431,379
Total commercial real estate loans	654,250		18,448		5,948		15,828		694,474
Construction	118,752		—		971		—		119,723
Residential real estate	236,574		—		—		510		237,084
Commercial and industrial	328,934		11,220		13,729		9,452		363,335
Consumer	38,350		—		—		12		38,362
	$	1,376,860	$	29,668	$	20,648	$	25,802	$	1,452,978
Acquired loans (b):
Commercial real estate:
Owner occupied	$	34,081	$	3,480	$	7,341	$	334	$	45,236
Non-owner occupied	71,334		2,751		9,386		11,712		95,183
Total commercial real estate loans	105,415		6,231		16,727		12,046		140,419
Construction	10,597		—		—		32		10,629
Residential real estate	60,151		—		—		1,155		61,306
Commercial and industrial	17,034		153		3,461		461		21,109



Consumer	1,485		—		—		3		1,488
	$	194,682	$	6,384	$	20,188	$	13,697	$	234,951
Total loans:
Commercial real estate:
Owner occupied	$	277,194	$	12,103	$	8,767	$	10,267	$	308,331
Non-owner occupied	482,471		12,576		13,908		17,607		526,562
Total commercial real estate loans	759,665		24,679		22,675		27,874		834,893
Construction	129,349		—		971		32		130,352
Residential real estate	296,725		—		—		1,665		298,390
Commercial and industrial	345,968		11,373		17,190		9,913		384,444
Consumer	39,835		—		—		15		39,850
	$	1,571,542	$	36,052	$	40,836	$	39,499	$	1,687,929

2014
Originated (a):
Commercial real estate:
Owner occupied	$	167,509	$	8,749	$	4,035	$	18,552	$	198,845
Non-owner occupied	350,420		10,383		16,145		6,339		383,287
Total commercial real estate loans	517,929		19,132		20,180		24,891		582,132
Construction	95,440		3,086		1,850		61		100,437
Residential real estate	119,280		1,380		552		1,266		122,478
Commercial and industrial	306,030		18,721		14,676		3,319		342,746
Consumer	34,852		—		—		45		34,897
	$	1,073,531	$	42,319	$	37,258	$	29,582	$	1,182,690
Acquired loans (b):
Commercial real estate:
Owner occupied	$	53,036	$	1,125	$	5,400	$	703	$	60,264
Non-owner occupied	81,008		11,380		16,906		4,962		114,256
Total commercial real estate loans	134,044		12,505		22,306		5,665		174,520
Construction	22,496		2,332		—		163		24,991
Residential real estate	79,603		—		—		2,606		82,209
Commercial and industrial	25,015		151		—		563		25,729
Consumer	2,345		—		—		56		2,401
	$	263,503	$	14,988	$	22,306	$	9,053	$	309,850
Total loans:
Commercial real estate:
Owner occupied	$	220,545	$	9,874	$	9,435	$	19,255	$	259,109
Non-owner occupied	431,428		21,763		33,051		11,301		497,543
Total commercial real estate loans	651,973		31,637		42,486		30,556		756,652
Construction	117,936		5,418		1,850		224		125,428
Residential real estate	198,883		1,380		552		3,872		204,687
Commercial and industrial	331,045		18,872		14,676		3,882		368,475
Consumer	37,197		—		—		101		37,298
	$	1,337,034	$	57,307	$	59,564	$	38,635	$	1,492,540

(a) Originated loans are loans organically made through the Company’s normal and customary origination process
(b) Acquired loans are loans acquired in the acquisition of Home, discussed elsewhere in this report.

Past due financing receivables

The following table presents, by portfolio class, an age analysis of past due loans, including loans placed on non-accrual at December 31, 2015 and 2014 (dollars in thousands):



	30-89 days past due		90 days or more past due		Total past due		Current		Total loans
2015
Originated loans (a):
Commercial real estate:
Owner occupied	$	1,020	$	719	$	1,739	$	261,356	$	263,095
Non-owner occupied	593		—		593		430,786		431,379
Total commercial real estate loans	1,613		719		2,332		692,142		694,474
Construction	—		—		—		119,723		119,723
Residential real estate	196		—		196		236,888		237,084
Commercial and industrial	346		239		585		362,750		363,335
Consumer	209		12		221		38,141		38,362
	$	2,364	$	970	$	3,334	$	1,449,644	$	1,452,978

Acquired loans (b):
Commercial real estate:
Owner occupied	$	—	$	—	$	—	$	45,236	$	45,236
Non-owner occupied	2,049		—		2,049		93,134		95,183
Total commercial real estate loans	2,049		—		2,049		138,370		140,419
Construction	46		—		46		10,583		10,629
Residential real estate	748		534		1,282		60,024		61,306
Commercial and industrial	6		5		11		21,098		21,109
Consumer	53		—		53		1,435		1,488
	$	2,902	$	539	$	3,441	$	231,510	$	234,951

Total loans:
Commercial real estate:
Owner occupied	$	1,020	$	719	$	1,739	$	306,592	$	308,331
Non-owner occupied	2,642		—		2,642		523,920		526,562
Total commercial real estate loans	3,662		719		4,381		830,512		834,893
Construction	46		—		46		130,306		130,352
Residential real estate	944		534		1,478		296,912		298,390
Commercial and industrial	352		244		596		383,848		384,444
Consumer	262		12		274		39,576		39,850
	$	5,266	$	1,509	$	6,775	$	1,681,154	$	1,687,929

2014
Originated loans (a):
Commercial real estate:
Owner occupied	$	732	$	3,716	$	4,448	$	194,397	$	198,845
Non-owner occupied	1,718		971		2,689		380,598		383,287
Total commercial real estate loans	2,450		4,687		7,137		574,995		582,132
Construction	—		100		100		100,337		100,437
Residential real estate	662		110		772		121,706		122,478
Commercial and industrial	288		334		622		342,124		342,746
Consumer	139		45		184		34,713		34,897



	$	3,539	$	5,276	$	8,815	$	1,173,875	$	1,182,690

Acquired loans (b):
Commercial real estate:
Owner occupied	$	24	$	—	$	24	$	60,240	$	60,264
Non-owner occupied	—		147		147		114,109		114,256
Total commercial real estate loans	24		147		171		174,349		174,520
Construction	—		—		—		24,991		24,991
Residential real estate	1,736		288		2,024		80,185		82,209
Commercial and industrial	—		—		—		25,729		25,729
Consumer	66		—		66		2,335		2,401
	$	1,826	$	435	$	2,261	$	307,589	$	309,850

Total loans:
Commercial real estate:
Owner occupied	$	756	$	3,716	$	4,472	$	254,637	$	259,109
Non-owner occupied	1,718		1,118		2,836		494,707		497,543
Total commercial real estate loans	2,474		4,834		7,308		749,344		756,652
Construction	—		100		100		125,328		125,428
Residential real estate	2,398		398		2,796		201,891		204,687
Commercial and industrial	288		334		622		367,853		368,475
Consumer	205		45		250		37,048		37,298
	$	5,365	$	5,711	$	11,076	$	1,481,464	$	1,492,540

(a) Originated loans are loans organically made through the Company’s normal and customary origination process
(b) Acquired loans are loans acquired in the acquisition of Home, discussed elsewhere in this report.

Impaired financing receivables

The following table presents information related to impaired loans, by portfolio class, at December 31, 2015 and 2014 (dollars in thousands):



	Impaired loans
	With a related allowance		Without a related allowance		Total recorded balance		Unpaid principal balance		Related allowance
2015
Commercial real estate:
Owner occupied	$	1,032	$	2,157	$	3,189	$	4,285	$	73
Non-owner occupied	646		—		646		646		5
Total commercial real estate loans	1,678		2,157		3,835		4,931		78
Construction	—		365		365		365		—
Residential real estate	—		18		18		18		—
Commercial and industrial	2,539		185		2,724		3,366		164
Consumer	—		—		—		—		—
	$	4,217	$	2,725	$	6,942	$	8,680	$	242

2014
Commercial real estate:
Owner occupied	$	436	$	5,624	$	6,060	$	8,699	$	41
Non-owner occupied	1,087		21,800		22,887		22,943		19
Total commercial real estate loans	1,523		27,424		28,947		31,642		60
Construction	—		963		963		963		—
Residential real estate	—		317		317		353		—
Commercial and industrial	2,702		793		3,495		3,962		25
Consumer	—		—		—		—		—
	$	4,225	$	29,497	$	33,722	$	36,920	$	85

The following table presents, by portfolio class, the average recorded investment in impaired loans for the years ended December 31, 2015, 2014 and 2013 (dollars in thousands):



	2015		2014		2013
Commercial real estate:
Owner occupied	$	3,216	$	6,115	$	12,922
Non-owner occupied	6,384		22,699		25,655
Total commercial real estate loans	9,600		28,814		38,577
Construction	499		1,157		2,283
Residential real estate	54		381		1,596
Commercial and industrial	2,793		4,015		7,039
Consumer	—		—		485
	$	12,946	$	34,367	$	49,980

Schedule of financing receivables, non accrual status

Information with respect to the Company’s non-accrual loans, by portfolio class, at December 31, 2015 and 2014 is as follows (dollars in thousands):



	2015		2014
Commercial real estate:
Owner occupied	$	2,742	$	5,564
Non-owner occupied	434		1,940
Total commercial real estate loans	3,176		7,504
Construction	—		216
Residential real estate	1,427		3,165
Commercial and industrial	447		744
Consumer	3		56
Total non-accrual loans	$	5,053	$	11,685

Accruing loans which are contractually past due 90 days or more:
Commercial and industrial	56		9
Consumer	12		45
Total accruing loans which are contractually past due 90 days or more	$	68	$	54

Troubled debt restructuring on financing receivables

The following table presents, by portfolio segment, the post modification recorded investment for TDRs restructured during the years ended December 31, 2015 and 2013 and by the primary type of concession granted (dollars in thousands). There were no restructured TDRs in 2014.



2015	Rate reduction		Term extension		Rate reduction and term extension		Total
Commercial real estate	$	—	$	—	$	—	$	—
Construction	—		—		—		—
Residential real estate	—		—		—		—
Commercial and industrial	—		25		—		25
Consumer	—		—		—		—
	$	—	$	25	$	—	$	25

2013	Rate reduction		Term extension		Rate reduction and term extension		Total
Commercial real estate	$	3,809	$	2,368	$	21,500	$	27,677
Construction	—		1,243		—		1,243
Residential real estate	—		—		—		—
Commercial and industrial	174		1,063		—		1,237
Consumer	—		—		—		—
	$	3,983	$	4,674	$	21,500	$	30,157

The following table presents, by portfolio segment, the TDRs which had payment defaults during the years ended December 31, 2013 that had been previously restructured within the last twelve months prior to December 31, 2013 (dollars in thousands). There were no TDRs which had payment defaults during the year ended December 31, 2015 and 2014 that had been previously restructured within the last twelve months prior to December 31, 2015 and 2014.



	2013
	Number of loans	TDRs restructured in the period with a payment default
Commercial real estate	2	$	3,500
Construction	—	—
Residential real estate	—	—
Commercial and industrial	—	—
Consumer loans	—	—
	2	$	3,500

The following table presents, by portfolio segment, information with respect to the Company’s loans that were modified and recorded as TDRs during the years ended December 31, 2015, 2014 and 2013 (dollars in thousands):



	2015			2014			2013
	Number of loans	TDR outstanding recorded investment		Number of loans	TDR outstanding recorded investment		Number of loans	TDR outstanding recorded investment
Commercial real estate	—	$	—	—	$	—	5	$	27,677
Construction	—	—		—	—		1	1,243
Residential real estate	—	—		—	—		—	—
Commercial and industrial	1	25		—	—		4	1,237
Consumer	—	—		—	—		—	—
	1	$	25	—	$	—	10	$	30,157