Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2016

The following table provides information about the principal classes of the loan portfolio at September 30, 2016 and December 31, 2015.


(Dollars in thousands)	September 30, 2016		December 31, 2015
Construction	$	79,205	$	85,632
Residential real estate		324,473		307,063
Commercial real estate		378,806		330,253
Commercial		70,920		64,911
Consumer		7,149		7,255
Total loans		860,553		795,114
Allowance for credit losses		(8,614)		(8,316)
Total loans, net	$	851,939	$	786,798

Allowance for Credit Losses on Financing Receivables

The following tables provide a summary of the activity in the allowance for credit losses allocated by loan class for the three months and nine months ended September 30, 2016 and 2015. Allocation of a portion of the allowance to one loan class does not preclude its availability to absorb losses in other loan classes.


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Unallocated		Total
For three months ended
September 30, 2016
Allowance for credit losses:
Beginning Balance	$	1,744	$	2,035	$	2,871	$	677	$	206	$	825	$	8,358

Charge-offs		(9)		(407)		-		(139)		(13)		-		(568)
Recoveries		8		121		10		79		1		-		219
Net charge-offs		(1)		(286)		10		(60)		(12)		-		(349)

Provision		348		431		(277)		309		(40)		(166)		605
Ending Balance	$	2,091	$	2,180	$	2,604	$	926	$	154	$	659	$	8,614


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Unallocated		Total
For three months ended
September 30, 2015
Allowance for credit losses:
Beginning Balance	$	1,852	$	2,318	$	2,616	$	505	$	168	$	458	$	7,917

Charge-offs		(479)		(26)		-		(136)		-		-		(641)
Recoveries		9		102		233		60		8		-		412
Net charge-offs		(470)		76		233		(76)		8		-		(229)

Provision		460		(103)		(38)		70		(20)		41		410
Ending Balance	$	1,842	$	2,291	$	2,811	$	499	$	156	$	499	$	8,098


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Unallocated		Total
For nine months ended
September 30, 2016
Allowance for credit losses:
Beginning Balance	$	1,646	$	2,181	$	2,999	$	558	$	156	$	776	$	8,316

Charge-offs		(263)		(525)		(503)		(264)		(23)		-		(1,578)
Recoveries		24		188		20		201		13		-		446
Net charge-offs		(239)		(337)		(483)		(63)		(10)		-		(1,132)

Provision		684		336		88		431		8		(117)		1,430
Ending Balance	$	2,091	$	2,180	$	2,604	$	926	$	154	$	659	$	8,614


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Unallocated		Total
For nine months ended
September 30, 2015
Allowance for credit losses:
Beginning Balance	$	1,303	$	2,834	$	2,379	$	448	$	229	$	502	$	7,695

Charge-offs		(1,058)		(283)		(320)		(285)		(45)		-		(1,991)
Recoveries		116		247		248		142		41		-		794
Net charge-offs		(942)		(36)		(72)		(143)		(4)		-		(1,197)

Provision		1,481		(507)		504		194		(69)		(3)		1,600
Ending Balance	$	1,842	$	2,291	$	2,811	$	499	$	156	$	499	$	8,098

The following tables include impairment information relating to loans and the allowance for credit losses as of September 30, 2016 and December 31, 2015.


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Unallocated		Total
September 30, 2016
Loans individually
evaluated for impairment	$	9,554	$	7,928	$	7,145	$	36	$	99	$	-	$	24,762
Loans collectively
evaluated for impairment		69,651		316,545		371,661		70,884		7,050		-		835,791
Total loans	$	79,205	$	324,473	$	378,806	$	70,920	$	7,149	$	-	$	860,553

Allowance for credit
losses allocated to:
Loans individually
evaluated for impairment	$	831	$	179	$	201	$	-	$	-	$	-	$	1,211
Loans collectively
evaluated for impairment		1,260		2,001		2,403		926		154		659		7,403
Total loans	$	2,091	$	2,180	$	2,604	$	926	$	154	$	659	$	8,614


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Unallocated		Total
December 31, 2015
Loans individually
evaluated for impairment	$	11,598	$	7,946	$	7,762	$	161	$	121	$	-	$	27,588
Loans collectively
evaluated for impairment		74,034		299,117		322,491		64,750		7,134		-		767,526
Total loans	$	85,632	$	307,063	$	330,253	$	64,911	$	7,255	$	-	$	795,114

Allowance for credit
losses allocated to:
Loans individually
evaluated for impairment	$	619	$	435	$	340	$	-	$	7	$	-	$	1,401
Loans collectively
evaluated for impairment		1,027		1,746		2,659		558		149		776		6,915
Total loans	$	1,646	$	2,181	$	2,999	$	558	$	156	$	776	$	8,316

Impaired Financing Receivables

The following tables provide information on impaired loans and any related allowance by loan class as of September 30, 2016 and December 31, 2015. The difference between the unpaid principal balance and the recorded investment is the amount of partial charge-offs that have been taken.


				Recorded		Recorded			Quarter-to-date		Year-to-date
	Unpaid			investment		investment			average		average		Interest
	principal			with no		with an	Related		recorded		recorded		income
(Dollars in thousands)	balance			allowance		allowance	allowance		investment		investment		recognized
September 30, 2016
Impaired nonaccrual loans:
Construction	$	10,943	$	2,495	$	2,860	$	810	$	5,361	$	6,022	$	-
Residential real estate		4,152		2,213		1,613		25		4,012		3,406		-
Commercial real estate		2,822		1,974		200		112		2,177		2,265		-
Commercial		48		36		-		-		108		143		-
Consumer		99		99		-		-		99		109		-
Total	$	18,064	$	6,817	$	4,673	$	947	$	11,757	$	11,945	$	-

Impaired accruing TDRs:
Construction	$	4,199	$	3,485	$	714	$	21	$	4,213	$	4,166	$	74
Residential real estate		4,102		2,892		1,210		154		4,100		4,900		149
Commercial real estate		4,971		1,583		3,388		89		4,982		5,137		127
Commercial		-		-		-		-		-		-		-
Consumer		-		-		-		-		-		-		-
Total	$	13,272	$	7,960	$	5,312	$	264	$	13,295	$	14,203	$	350

Total impaired loans:
Construction	$	15,142	$	5,980	$	3,574	$	831	$	9,574	$	10,188	$	74
Residential real estate		8,254		5,105		2,823		179		8,112		8,306		149
Commercial real estate		7,793		3,557		3,588		201		7,159		7,402		127
Commercial		48		36		-		-		108		143		-
Consumer		99		99		-		-		99		109		-
Total	$	31,336	$	14,777	$	9,985	$	1,211	$	25,052	$	26,148	$	350


										September 30, 2015
				Recorded		Recorded			Quarter-to-date		Year-to-date
	Unpaid			investment		investment			average		average		Interest
	principal			with no		with an	Related		recorded		recorded		income
(Dollars in thousands)	balance			allowance		allowance	allowance		investment		investment		recognized
December 31, 2015
Impaired nonaccrual loans:
Construction	$	11,850	$	4,647	$	2,882	$	588	$	8,025	$	8,121	$	-
Residential real estate		2,563		1,773		487		208		3,812		2,710		-
Commercial real estate		2,988		1,813		209		9		2,137		2,511		-
Commercial		175		161		-		-		170		105		-
Consumer		128		98		23		7		123		123		-
Total	$	17,704	$	8,492	$	3,601	$	812	$	14,267	$	13,570	$	-

Impaired accruing TDRs:
Construction	$	4,069	$	3,266	$	803	$	31	$	4,099	$	4,076	$	65
Residential real estate		5,686		2,380		3,306		227		7,520		7,084		250
Commercial real estate		5,740		1,702		4,038		331		5,687		6,065		194
Commercial		-		-		-		-		27		38		1
Consumer		-		-		-		-		-		-		-
Total	$	15,495	$	7,348	$	8,147	$	589	$	17,333	$	17,263	$	510

Total impaired loans:
Construction	$	15,919	$	7,913	$	3,685	$	619	$	12,124	$	12,197	$	65
Residential real estate		8,249		4,153		3,793		435		11,332		9,794		250
Commercial real estate		8,728		3,515		4,247		340		7,824		8,576		194
Commercial		175		161		-		-		197		143		1
Consumer		128		98		23		7		123		123		-
Total	$	33,199	$	15,840	$	11,748	$	1,401	$	31,600	$	30,833	$	510

Troubled Debt Restructurings on Financing Receivables

The following tables provide a roll-forward for troubled debt restructurings as of September 30, 2016 and September 30, 2015.


	1/1/2016												9/30/2016
	TDR		New		Disbursements		Charge		Reclassifications/				TDR		Related
(Dollars in thousands)	Balance		TDRs		(Payments)		offs		Transfer In/(Out)		Payoffs		Balance		Allowance
For nine months ended
September 30, 2016
Accruing TDRs
Construction	$	4,069	$	-	$	130	$	-	$	-	$	-	$	4,199	$	21
Residential real estate		5,686		565		(375)		-		(1,595)		(179)		4,102		154
Commercial real estate		5,740		495		(689)		(117)		(458)		-		4,971		89
Commercial		-		-		-		-		-		-		-		-
Consumer		-		-		-		-		-		-		-		-
Total	$	15,495	$	1,060	$	(934)	$	(117)	$	(2,053)	$	(179)	$	13,272	$	264

Nonaccrual TDRs
Construction	$	4,960	$	2,570	$	(2,012)	$	(263)	$	-	$	-	$	5,255	$	810
Residential real estate		445		-		(294)		-		1,595		-		1,746		25
Commercial real estate		-		-		-		(258)		458		-		200		112
Commercial		-		-		-		-		-		-		-		-
Consumer		23		-		(23)		-		-		-		-		-
Total	$	5,428	$	2,570	$	(2,329)	$	(521)	$	2,053	$	-	$	7,201	$	947

Total	$	20,923	$	3,630	$	(3,263)	$	(638)	$	-	$	(179)	$	20,473	$	1,211


	1/1/2015												9/30/2015
	TDR		New		Disbursements		Charge		Reclassifications/				TDR		Related
(Dollars in thousands)	Balance		TDRs		(Payments)		offs		Transfer In/(Out)		Payoffs		Balance		Allowance
For nine months ended
September 30, 2015
Accruing TDRs
Construction	$	4,022	$	-	$	(83)	$	-	$	142	$	-	$	4,081	$	33
Residential real estate		6,368		1,837		(206)		-		(1,324)		-		6,675		207
Commercial real estate		6,237		-		(562)		-		-		-		5,675		180
Commercial		47		-		(6)		-		(41)		-		-		-
Consumer		-		-		-		-		-		-		-		-
Total	$	16,674	$	1,837	$	(857)	$	-	$	(1,223)	$	-	$	16,431	$	420

Nonaccrual TDRs
Construction	$	3,321	$	-	$	(207)	$	(1,058)	$	2,911	$	-	$	4,967	$	643
Residential real estate		3,382		-		(21)		-		(2,911)		-		450		89
Commercial real estate		346		-		(4)		(40)		(302)		-		-		-
Commercial		-		-		-		-		-		-		-		-
Consumer		25		-		(2)		-		-		-		23		-
Total	$	7,074	$	-	$	(234)	$	(1,098)	$	(302)	$	-	$	5,440	$	732

Total	$	23,748	$	1,837	$	(1,091)	$	(1,098)	$	(1,525)	$	-	$	21,871	$	1,152

The following tables provide information on loans that were modified and considered TDRs during the nine months ended September 30, 2016 and September 30, 2015.


		Premodification		Postmodification
		outstanding		outstanding
	Number of	recorded		recorded		Related
(Dollars in thousands)	contracts	investment		investment		allowance
TDRs:
For nine months ended
September 30, 2016
Construction	-	$	-	$	-	$	-
Residential real estate	3		667		699		-
Commercial real estate	1		495		495		-
Commercial	-		-		-		-
Consumer	-		-		-		-
Total	4	$	1,162	$	1,194	$	-

For nine months ended
September 30, 2015
Construction	-	$	-	$	-	$	-
Residential real estate	10		1,835		1,837		19
Commercial real estate	-		-		-		-
Commercial	-		-		-		-
Consumer	-		-		-		-
Total	10	$	1,835	$	1,837	$	19

During the nine months ended September 30, 2016, there were four TDRs which were modified. The modifications to these TDRs consisted of reductions in principal, interest and rate as well as payment frequency for one of the TDRs.

The following tables provide information on TDRs that defaulted during the nine months ended September 30, 2016 and September 30, 2015. Generally, a loan is considered in default when principal or interest is past due 90 days or more.


	Number of	Recorded		Related
(Dollars in thousands)	contracts	investment		allowance
TDRs that subsequently defaulted:
For nine months ended
September 30, 2016
Construction	1	$	241	$	-
Residential real estate	-		-		-
Commercial real estate	2		375		-
Commercial	-		-		-
Consumer	-		-		-
Total	3	$	616	$	-

For nine months ended
September 30, 2015
Construction	-	$	-	$	-
Residential real estate	-		-		-
Commercial real estate	2		279		-
Commercial	-		-		-
Consumer	-		-		-
Total	2	$	279	$	-

Financing Receivable Credit Quality Indicators

The following tables provide information on loan risk ratings as of September 30, 2016 and December 31, 2015.


			Special
(Dollars in thousands)	Pass/Performing		Mention		Substandard		Doubtful		Total
September 30, 2016
Construction	$	66,025	$	3,905	$	9,275	$	-	$	79,205
Residential real estate		309,936		7,542		6,995		-		324,473
Commercial real estate		354,866		14,590		9,350		-		378,806
Commercial		69,869		761		290		-		70,920
Consumer		7,050		-		99		-		7,149
Total	$	807,746	$	26,798	$	26,009	$	-	$	860,553


			Special
(Dollars in thousands)	Pass/Performing		Mention		Substandard		Doubtful		Total
December 31, 2015
Construction	$	70,214	$	3,903	$	11,515	$	-	$	85,632
Residential real estate		290,857		8,837		7,369		-		307,063
Commercial real estate		302,438		18,699		9,116		-		330,253
Commercial		63,628		1,075		208		-		64,911
Consumer		7,107		26		122		-		7,255
Total	$	734,244	$	32,540	$	28,330	$	-	$	795,114

Past Due Financing Receivables

The following tables provide information on the aging of the loan portfolio as of September 30, 2016 and December 31, 2015.


		Accruing
				30-59 days			60-89 days			Greater than			Total
(Dollars in thousands)	Current			past due			past due			90 days			past due			Nonaccrual			Total
September 30, 2016
Construction	$	73,850		$	-		$	-		$	-		$	-		$	5,355		$	79,205
Residential real estate		317,245			2,164			1,180			58			3,402			3,826			324,473
Commercial real estate		375,039			260			1,333			-			1,593			2,174			378,806
Commercial		70,840			27			12			5			44			36			70,920
Consumer		7,012			33			4			1			38			99			7,149
Total	$	843,986		$	2,484		$	2,529		$	64		$	5,077		$	11,490		$	860,553
Percent of total loans		98.1	%		0.3	%		0.3	%		-	%		0.6	%		1.3	%		100.0	%


		Accruing
				30-59 days			60-89 days			Greater than			Total
(Dollars in thousands)	Current			past due			past due			90 days			past due			Nonaccrual			Total
December 31, 2015
Construction	$	78,082		$	21		$	-		$	-		$	21		$	7,529		$	85,632
Residential real estate		300,562			2,139			2,102			-			4,241			2,260			307,063
Commercial real estate		327,370			-			861			-			861			2,022			330,253
Commercial		64,670			49			31			-			80			161			64,911
Consumer		7,108			13			6			7			26			121			7,255
Total	$	777,792		$	2,222		$	3,000		$	7		$	5,229		$	12,093		$	795,114
Percent of total loans		97.8	%		0.3	%		0.4	%		-	%		0.7	%		1.5	%		100.0	%