LOANS AND ALLOWANCE FOR CREDIT LOSSES (Table)

12 Months Ended

Dec. 31, 2018

The following table provides information about the principal classes of the loan portfolio at December 31, 2018 and 2017.


(Dollars in thousands)	2018		2017
Construction	$	127,572	$	125,746
Residential real estate		429,560		399,190
Commercial real estate		523,427		464,887
Commercial		107,522		97,284
Consumer		7,274		6,407
Total loans		1,195,355		1,093,514
Allowance for credit losses		(10,343)		(9,781)
Total loans, net	$	1,185,012	$	1,083,733

Allowance for Credit Losses on Financing Receivables

The following tables include impairment information relating to loans and the allowance for credit losses as of December 31, 2017 and 2016.


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Total
December 31, 2017
Loans individually
evaluated for impairment	$	6,975	$	6,018	$	4,967	$	337	$	-	$	18,297
Loans collectively
evaluated for impairment		118,771		393,172		459,920		96,947		6,407		1,075,217
Total loans	$	125,746	$	399,190	$	464,887	$	97,284	$	6,407	$	1,093,514

Allowance for credit
losses allocated to:
Loans individually
evaluated for impairment	$	500	$	239	$	33	$	33	$	-	$	805
Loans collectively
evaluated for impairment		1,960		2,045		2,561		2,208		202		8,976
Total loans	$	2,460	$	2,284	$	2,594	$	2,241	$	202	$	9,781


			Residential		Commercial
(Dollars in thousands)	Construction		real estate		real estate		Commercial		Consumer		Total
December 31, 2016
Loans individually
evaluated for impairment	$	8,007	$	7,778	$	6,088	$	-	$	99	$	21,972
Loans collectively
evaluated for impairment		75,995		317,990		376,593		72,435		6,540		849,553
Total loans	$	84,002	$	325,768	$	382,681	$	72,435	$	6,639	$	871,525

Allowance for credit
losses allocated to:
Loans individually
evaluated for impairment	$	1,639	$	317	$	185	$	-	$	-	$	2,141
Loans collectively
evaluated for impairment		1,148		1,636		2,425		1,145		231		6,585
Total loans	$	2,787	$	1,953	$	2,610	$	1,145	$	231	$	8,726

The following tables provide a summary of the activity in the allowance for credit losses allocated by loan class for 2017 and 2016.

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
2017
Allowance for credit losses:
Beginning Balance	$	2,787	$	1,953	$	2,610	$	1,145	$	231	$	-	$	8,726

Charge-offs		(54)		(445)		(100)		(946)		(32)		-		(1,577)
Recoveries		30		40		31		215		25		-		341
Net charge-offs		(24)		(405)		(69)		(731)		(7)		-		(1,236)

Provision		(303)		736		53		1,827		(22)		-		2,291
Ending Balance	$	2,460	$	2,284	$	2,594	$	2,241	$	202	$	-	$	9,781


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

Charge-offs		(615)		(580)		(503)		(497)		(45)		-		(2,240)
Recoveries		35		298		25		428		16		-		802
Net charge-offs		(580)		(282)		(478)		(69)		(29)		-		(1,438)

Provision		1,721		54		89		656		104		(776)		1,848
Ending Balance	$	2,787	$	1,953	$	2,610	$	1,145	$	231	$	-	$	8,726

Impaired Financing Receivables

The following tables provide information on impaired loans and any related allowance by loan class as of December 31, 2018 and 2017. The difference between the unpaid principal balance and the recorded investment is the amount of partial charge-offs that have been taken and interest paid on nonaccrual loans that has been applied to principal.


				Recorded		Recorded
	Unpaid			investment		investment			Average		Interest
	principal			with no		with an	Related		recorded		income
(Dollars in thousands)	balance			allowance		allowance	allowance		investment		recognized
December 31, 2018
Impaired nonaccrual loans:
Construction	$	3,219	$	127	$	2,715	$	320	$	2,988	$	-
Residential real estate		4,281		2,605		1,494		118		1,884		-
Commercial real estate		10,029		9,307		67		67		2,149		-
Commercial		445		-		340		36		336		-
Consumer		-		-		-		-		-		-
Total	$	17,974	$	12,039	$	4,616	$	541	$	7,357	$	-

Impaired accruing TDRs:
Construction	$	51	$	51	$	-	$	-	$	866	$	35
Residential real estate		4,454		1,440		3,014		183		4,606		125
Commercial real estate		4,158		1,286		2,872		37		4,416		149
Commercial		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	8,663	$	2,777	$	5,886	$	220	$	9,888	$	309

Total impaired loans:
Construction	$	3,270	$	178	$	2,715	$	320	$	3,854	$	35
Residential real estate		8,735		4,045		4,508		301		6,490		125
Commercial real estate		14,187		10,593		2,939		104		6,565		149
Commercial		445		-		340		36		336		-
Consumer		-		-		-		-		-		-
Total	$	26,637	$	14,816	$	10,502	$	761	$	17,245	$	309



				Recorded		Recorded
	Unpaid			investment		investment			Average		Interest
	principal			with no		with an	Related		recorded		income
(Dollars in thousands)	balance			allowance		allowance	allowance		investment		recognized
December 31, 2017
Impaired nonaccrual loans:
Construction	$	3,100	$	182	$	2,821	$	459	$	3,181	$	-
Residential real estate		1,620		1,482		-		-		3,191		-
Commercial real estate		795		149		-		-		542		-
Commercial		425		-		337		33		200		-
Consumer		-		-		-		-		41		-
Total	$	5,940	$	1,813	$	3,158	$	492	$	7,155	$	-

Impaired accruing TDRs:
Construction	$	3,972	$	3,038	$	934	$	41	$	4,067	$	101
Residential real estate		4,536		2,042		2,494		239		3,831		161
Commercial real estate		4,818		4,084		734		33		4,860		185
Commercial		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	13,326	$	9,164	$	4,162	$	313	$	12,758	$	447

Total impaired loans:
Construction	$	7,072	$	3,220	$	3,755	$	500	$	7,248	$	101
Residential real estate		6,156		3,524		2,494		239		7,022		161
Commercial real estate		5,613		4,233		734		33		5,402		185
Commercial		425		-		337		33		200		-
Consumer		-		-		-		-		41		-
Total	$	19,266	$	10,977	$	7,320	$	805	$	19,913	$	447

Troubled Debt Restructurings on Financing Receivables

The following tables provide a roll-forward for troubled debt restructurings as of December 31, 2018 and December 31, 2017.


	1/1/2018												12/31/2018
	TDR		New		Disbursements		Charge		Reclassifications/				TDR		Related
(Dollars in thousands)	Balance		TDRs		(Payments)		offs		Transfer In/(Out)		Payoffs		Balance		Allowance
For the year ended
December 31, 2018
Accruing TDRs
Construction	$	3,972	$	-	$	(229)	$	(397)	$	(695)	$	(2,600)	$	51	$	-
Residential real estate		4,536		-		(85)		-		541		(538)		4,454		183
Commercial real estate		4,818		-		(441)		-		-		(219)		4,158		37
Commercial		-		-		-		-		-		-		-		-
Consumer		-		-		-		-		-		-		-		-
Total	$	13,326	$	-	$	(755)	$	(397)	$	(154)	$	(3,357)	$	8,663	$	220

Nonaccrual TDRs
Construction	$	2,878	$	-	$	(163)	$	-	$	83	$	-	$	2,798	$	320
Residential real estate		-		-		-		(80)		80		-		-		-
Commercial real estate		83		-		-		-		(83)		-		-		-
Commercial		337		-		(17)		-		-		-		320		16
Consumer		-		-		-		-		-		-		-		-
Total	$	3,298	$	-	$	(180)	$	(80)	$	80	$	-	$	3,118	$	336

Total	$	16,624	$	-	$	(935)	$	(477)	$	(74)	$	(3,357)	$	11,781	$	556


	1/1/2017												12/31/17
	TDR		New		Disbursements		Charge		Reclassifications/				TDR		Related
(Dollars in thousands)	Balance		TDRs		(Payments)		offs		Transfer In/(Out)		Payoffs		Balance		Allowance
For the year ended
December 31, 2017
Accruing TDRs
Construction	$	4,189	$	-	$	(25)	$	-	$	(58)	$	(134)	$	3,972	$	41
Residential real estate		3,875		-		(333)		(89)		1,535		(452)		4,536		239
Commercial real estate		4,936		-		(118)		-		-		-		4,818		33
Commercial		-		-		-		-		-		-		-		-
Consumer		-		-		-		-		-		-		-		-
Total	$	13,000	$	-	$	(476)	$	(89)	$	1,477	$	(586)	$	13,326	$	313

Nonaccrual TDRs
Construction	$	3,818	$	-	$	(890)	$	-	$	(50)	$	-	$	2,878	$	459
Residential real estate		1,603		-		(68)		-		(1,535)		-		-		-
Commercial real estate		83		-		-		-		-		-		83		-
Commercial		-		345		(8)		-		-		-		337		33
Consumer		-		-		-		-		-		-		-		-
Total	$	5,504	$	345	$	(966)	$	-	$	(1,585)	$	-	$	3,298	$	492

Total	$	18,504	$	345	$	(1,442)	$	(89)	$	(108)	$	(586)	$	16,624	$	805

The following tables provide information on loans that were modified and considered TDRs during 2018 and 2017.


		Premodification		Postmodification
		outstanding		outstanding
	Number of	recorded		recorded		Related
(Dollars in thousands)	contracts	investment		investment		allowance
TDRs:
For the year ended
December 31, 2018
Construction	-	$	-	$	-	$	-
Residential real estate	-		-		-		-
Commercial real estate	-		-		-		-
Commercial	-		-		-		-
Consumer	-		-		-		-
Total	-	$	-	$	-	$	-

For the year ended
December 31, 2017
Construction	-	$	-	$	-	$	-
Residential real estate	-		-		-		-
Commercial real estate	1		760		755		-
Commercial	1		462		345		-
Consumer	-		-		-		-
Total	2	$	1,222	$	1,100	$	-

Troubled Debt Restructurings That Defaulted On Financing Receivables

During the year ended December 31, 2018, there were no new TDR’s or previously recorded TDR’s which were modified.

The following tables provide information on TDRs that defaulted during 2018 and 2017 within 12 months of their restructuring. Generally, a loan is considered in default when principal or interest is past due 90 days or more, the loan is placed on nonaccrual, charged-off, or there is a transfer to OREO or repossessed assets.


	Number of	Recorded		Related
(Dollars in thousands)	contracts	investment		allowance
TDRs that subsequently defaulted:
For the year ended
December 31, 2018
Construction	-	$	-	$	-
Residential real estate	-		-		-
Commercial real estate	-		-		-
Commercial	-		-		-
Consumer	-		-		-
Total	-	$	-	$	-

For the year ended
December 31, 2017
Construction	-	$	-	$	-
Residential real estate	-		-		-
Commercial real estate	-		-		-
Commercial	-		-		-
Consumer	-		-		-
Total	-	$	-	$	-

Financing Receivable Credit Quality Indicators

The following tables provide information on loan risk ratings as of December 31, 2018 and 2017.


					Special
(Dollars in thousands)	Pass/Performing		Pass/Watch		Mention		Substandard		Doubtful		Total
December 31, 2018
Construction	$	93,977	$	30,735	$	-	$	2,860	$	-	$	127,572
Residential real estate		386,553		33,739		3,769		5,499		-		429,560
Commercial real estate		389,219		113,873		4,515		15,820		-		523,427
Commercial		90,777		15,727		642		376		-		107,522
Consumer		6,805		466		-		3		-		7,274
Total	$	967,331	$	194,540	$	8,926	$	24,558	$	-	$	1,195,355


					Special
(Dollars in thousands)	Pass/Performing		Pass/Watch		Mention		Substandard		Doubtful		Total
December 31, 2017
Construction	$	88,836	$	30,674	$	-	$	6,236	$	-	$	125,746
Residential real estate		355,575		34,973		4,456		4,186		-		399,190
Commercial real estate		342,051		109,041		7,420		6,375		-		464,887
Commercial		72,440		24,102		308		434		-		97,284
Consumer		5,260		1,147		-		-		-		6,407
Total	$	864,162	$	199,937	$	12,184	$	17,231	$	-	$	1,093,514

Past Due Financing Receivables

The following tables provide information on the aging of the loan portfolio as of December 31, 2018 and 2017.


		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, 2018
Construction	$	124,535		$	195		$	-		$	-		$	195		$	2,842		$	127,572
Residential real estate		423,732			1,384			206			139			1,729			4,099			429,560
Commercial real estate		512,252			253			1,548			-			1,801			9,374			523,427
Commercial		107,089			83			10			-			93			340			107,522
Consumer		7,238			30			6			-			36			-			7,274
Total	$	1,174,846		$	1,945		$	1,770		$	139		$	3,854		$	16,655		$	1,195,355
Percent of total loans		98.3	%		0.2	%		0.1	%		-	%		0.3	%		1.4	%		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, 2017
Construction	$	122,475		$	268		$	-		$	-		$	268		$	3,003		$	125,746
Residential real estate		394,653			1,589			1,045			421			3,055			1,482			399,190
Commercial real estate		460,998			1,061			2,461			218			3,740			149			464,887
Commercial		96,774			173			-			-			173			337			97,284
Consumer		6,395			6			6			-			12			-			6,407
Total	$	1,081,295		$	3,097		$	3,512		$	639		$	7,248		$	4,971		$	1,093,514
Percent of total loans		98.8	%		0.3	%		0.3	%		0.1	%		0.7	%		0.5	%		100.0	%