Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2017

Schedule of Accounts, Notes, Loans and Financing Receivable

At June 30, 2017 and December 31, 2016, loans are summarized as follows (in thousands):



	June 30, 2017								December 31, 2016
	PCI Loans		All Other Loans			Total			PCI Loans		All Other Loans			Total
Commercial real estate	$	14,417	$	430,772		$	445,189		$	14,943	$	400,265		$	415,208
Consumer real estate	8,071		198,596			206,667			9,004		178,798			187,802
Construction and land development	1,474		99,682			101,156			1,678		116,191			117,869
Commercial and industrial	1,249		103,984			105,233			1,568		83,454			85,022
Consumer and other	—		7,176			7,176			—		7,475			7,475
Total loans	25,211		840,210			865,421			27,193		786,183			813,376
Less: Allowance for loan losses	—		(5,498		)	(5,498		)	—		(5,105		)	(5,105		)
Loans, net	$	25,211	$	834,712		$	859,923		$	27,193	$	781,078		$	808,271

Schedule of Impaired and Performing Loans Receivable

The composition of loans by loan classification for impaired and performing loan status at June 30, 2017 and December 31, 2016, is summarized in the tables below (amounts in thousands):



	June 30, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	430,653	$	197,755	$	99,135	$	103,940	$	7,176	$	838,659
Impaired loans	119		841		547		44		—		1,551
	430,772		198,596		99,682		103,984		7,176		840,210
PCI loans	14,417		8,071		1,474		1,249		—		25,211
Total	$	445,189	$	206,667	$	101,156	$	105,233	$	7,176	$	865,421



	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	400,146	$	177,977	$	115,326	$	83,244	$	7,475	$	784,168
Impaired loans	119		821		865		210		—		2,015
	400,265		178,798		116,191		83,454		7,475		786,183
PCI loans	14,943		9,004		1,678		1,568		—		27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

Schedule of Allowance for Loan Losses for Impaired and Performing Loans Receivable

The following tables show the allowance for loan losses allocation by loan classification for impaired, PCI, and performing loans as of June 30, 2017 and December 31, 2016 (amounts in thousands):



	June 30, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,489	$	1,556	$	609	$	644	$	103	$	5,401
Impaired loans	—		97		—		—		—		97
Total	$	2,489	$	1,653	$	609	$	644	$	103	$	5,498



	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,369	$	1,382	$	717	$	516	$	117	$	5,101
Impaired loans	—		—		—		4		—		4
Total	$	2,369	$	1,382	$	717	$	520	$	117	$	5,105

Schedule of Financing Receivable Allowance for Credit Losses

The following tables detail the changes in the allowance for loan losses for the six month period ending June 30, 2017 and year ending December 31, 2016, by loan classification (amounts in thousands):



	June 30, 2017
	Commercial Real Estate		Consumer Real Estate			Construction and Land Development			Commercial and Industrial		Consumer and Other			Total
Beginning balance	$	2,369	$	1,382		$	717		$	520	$	117		$	5,105
Loans charged off	—		(6		)	—			—		(40		)	(46		)
Recoveries of loans charged off	6		47			8			32		36			129
Provision (reallocation) charged to operating expense	114		230			(116		)	92		(10		)	310
Ending balance	$	2,489	$	1,653		$	609		$	644	$	103		$	5,498



	December 31, 2016
	Commercial Real Estate		Consumer Real Estate			Construction and Land Development			Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	1,906	$	1,015		$	627		$	777		$	29		$	4,354
Loans charged off	—		(102		)	(14		)	(35		)	(155		)	(306		)
Recoveries of charge-offs	45		76			22			58			68			269
Provision (reallocation) charged to operating expense	418		393			82			(280		)	175			788
Ending balance	$	2,369	$	1,382		$	717		$	520		$	117		$	5,105

Financing Receivable Credit Quality Indicators

The following tables outline the amount of each loan classification and the amount categorized into each risk rating as of June 30, 2017 and December 31, 2016 (amounts in thousands):

Non PCI Loans



	June 30, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	430,490	$	197,314	$	99,048	$	103,031	$	6,959	$	836,842
Watch	159		509		87		870		—		1,625
Special mention	—		16		—		—		217		233
Substandard	123		757		547		83		—		1,510
Doubtful	—		—		—		—		—		—
Total	$	430,772	$	198,596	$	99,682	$	103,984	$	7,176	$	840,210

PCI Loans



	June 30, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,548	$	6,116	$	816	$	970	$	—	$	19,450
Watch	865		1,221		646		16		—		2,748
Special mention	—		—		—		238		—		238
Substandard	2,004		734		12		—		—		2,750
Doubtful	—		—		—		25		—		25
Total	$	14,417	$	8,071	$	1,474	$	1,249	$	—	$	25,211
Total loans	$	445,189	$	206,667	$	101,156	$	105,233	$	7,176	$	865,421

Non PCI Loans



	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	399,505	$	177,466	$	115,237	$	82,992	$	7,238	$	782,438
Watch	640		550		89		252		—		1,531
Special mention	—		104		—		—		237		341
Substandard	120		678		865		210		—		1,873
Doubtful	—		—		—		—		—		—
Total	$	400,265	$	178,798	$	116,191	$	83,454	$	7,475	$	786,183

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):

PCI Loans



	December 31, 2016
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	11,836	$	6,811	$	1,019	$	1,507	$	—	$	21,173
Watch	1,045		1,577		645		22		—		3,289
Special mention	—		—		—		12		—		12
Substandard	2,062		616		14		—		—		2,692
Doubtful	—		—		—		27		—		27
Total	$	14,943	$	9,004	$	1,678	$	1,568	$	—	$	27,193
Total loans	$	415,208	$	187,802	$	117,869	$	85,022	$	7,475	$	813,376

Past Due Financing Receivables

The following tables present the aging of the recorded investment in loans as of June 30, 2017 and December 31, 2016 (amounts in thousands):



	June 30, 2017
	30-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	240	$	—	$	123	$	363	$	14,417	$	430,409	$	445,189
Consumer real estate	1,193		—		414		1,607		8,071		196,989		206,667
Construction and land development	—		—		547		547		1,474		99,135		101,156
Commercial and industrial	9		19		—		28		1,249		103,956		105,233
Consumer and other	40		11		—		51		—		7,125		7,176
Total	$	1,482	$	30	$	1,084	$	2,596	$	25,211	$	837,614	$	865,421

Note 4. Loans and Allowance for Loan Losses, Continued

Past Due Loans (continued):



	December 31, 2016
	30-89 Days Past Due and Accruing		Past Due 90 Days or More and Accruing		Nonaccrual		Total Past Due and NonAccrual		PCI Loans		Current Loans		Total Loans
Commercial real estate	$	395	$	—	$	—	$	395	$	14,943	$	399,870	$	415,208
Consumer real estate	695		699		386		1,780		9,004		177,018		187,802
Construction and land development	690		—		865		1,555		1,678		114,636		117,869
Commercial and industrial	257		—		164		421		1,568		83,033		85,022
Consumer and other	17		—		—		17		—		7,458		7,475
Total	$	2,054	$	699	$	1,415	$	4,168	$	27,193	$	782,015	$	813,376

Impaired Financing Receivables

The following is an analysis of the impaired loan portfolio, excluding PCI loans, detailing the related allowance recorded as of June 30, 2017 and December 31, 2016 (amounts in thoudands):



							For the six months ended
	At June 30, 2017						June 30, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	119	$	124	$	—	$	159	$	6
Consumer real estate	93		93		—		427		5
Construction and land development	547		547		—		682		—
Commercial and industrial	44		44		—		45		1
Consumer and other	—		—		—		—		—
	803		808		—		1,313		12

Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	748		772		97		458		14
Construction and land development	—		—		—		—		—
Commercial and industrial	—		—		—		109		—
Consumer and other	—		—		—		—		—
	748		772		97		567		14
Total impaired loans	$	1,551	$	1,580	$	97	$	1,880	$	26

Note 4. Loans and Allowance for Loan Losses, Continued

Impaired Loans (continued):



							For the year ended
	At December 31, 2016						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	119	$	119	$	—	$	1,311	$	73
Consumer real estate	821		849		—		2,334		100
Construction and land development	865		865		—		967		3
Commercial and industrial	46		46		—		47		4
Consumer and other	—		—		—		—		—
	1,851		1,879		—		4,659		180

Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		—		—
Consumer real estate	—		—		—		—		—
Construction and land development	—		—		—		—		—
Commercial and industrial	164		243		4		306		70
Consumer and other	—		—		—		—		—
	164		243		4		306		70
Total impaired loans	$	2,015	$	2,122	$	4	$	4,965	$	250

Troubled Debt Restructurings on Financing Receivables

The following table presents a summary of loans that were modified as troubled debt restructurings during the twelve month period ended December 31, 2016 (amounts in thousands):



		Pre-Modification Outstanding Recorded		Post-Modification Outstanding Recorded
December 31, 2016	Number of Contracts	Investment		Investment
Construction and land development	1	$	278	$	278
Commercial and industrial	1	$	164	$	164

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period, Carrying Amount of Loans

The Company has acquired loans which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans as of is as follows (amounts in thousands):



	June 30, 2017			December 31, 2016
Commercial real estate	$	17,713		$	18,473
Consumer real estate	11,030			12,111
Construction and land development	1,778			2,553
Commercial and industrial	1,978			2,482
Consumer and other	—			—
Total loans	32,499			35,619
Less remaining purchase discount	(7,288		)	(8,426		)
Total loans, net of purchase discount	25,211			27,193
Less: Allowance for loan losses	—			—
Carrying amount, net of allowance	$	25,211		$	27,193

Schedule of Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement

Activity related to the accretable portion of the purchase discount on loans acquired with deteriorated credit quality is as follows for the three and six months period ended June 30, 2017 and 2016:

Note 4. Loans and Allowance for Loan Losses, Continued

Purchased Credit Impaired Loans (continued):



	Three Months Ended June 30, 2017			Three Months Ended June 30, 2016			Six Months Ended June 30, 2017			Six Months Ended June 30, 2016
Accretable yield, beginning of period	$	8,482		$	9,606		$	8,950		$	10,216
Additions	—			—			—			—
Accretion income	(973		)	(586		)	(1,670		)	(1,215		)
Reclassification to accretable	366			1,378			610			1,337
Other changes, net	600			(189		)	585			(129		)
Accretable yield	$	8,475		$	10,209		$	8,475		$	10,209