Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2018

Schedule of Accounts, Notes, Loans and Financing Receivable

At March 31, 2018 and December 31, 2017, loans are summarized as follows (in thousands):



	March 31, 2018								December 31, 2017
	PCI Loans¹		All Other Loans			Total			PCI Loans¹			All Other Loans			Total
Commercial real estate	$	16,236	$	647,458		$	663,694		$	17,903		$	625,085		$	642,988
Consumer real estate	6,985		292,162			299,147			7,450			286,007			293,457
Construction and land development	5,003		137,701			142,704			5,120			130,289			135,409
Commercial and industrial	649		255,684			256,333			858			237,229			238,087
Consumer and other	963		11,416			12,379			1,463			11,854			13,317
Total loans	29,836		1,344,421			1,374,257			32,794			1,290,464			1,323,258
Less: Allowance for loan losses	—		(6,477		)	(6,477		)	(16		)	(5,844		)	(5,860		)
Loans, net	$	29,836	$	1,337,944		$	1,367,780		$	32,778		$	1,284,620		$	1,317,398

¹ Purchased Credit Impaired loans (“PCI loans”) are loans with evidence of credit deterioration at purchase.

Schedule of Impaired and Performing Loans Receivable

The composition of loans by loan classification for impaired and performing loan status at March 31, 2018 and December 31, 2017, is summarized in the tables below (in thousands):



	March 31, 2018
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	646,908	$	290,556	$	137,154	$	255,472	$	11,304	$	1,341,394
Impaired loans	550		1,606		547		212		112		3,027
	647,458		292,162		137,701		255,684		11,416		1,344,421
PCI loans	16,236		6,985		5,003		649		963		29,836
Total	$	663,694	$	299,147	$	142,704	$	256,333	$	12,379	$	1,374,257



	December 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	624,638	$	284,585	$	129,742	$	237,016	$	11,842	$	1,287,823
Impaired loans	447		1,422		547		213		12		2,641
	625,085		286,007		130,289		237,229		11,854		1,290,464
PCI loans	17,903		7,450		5,120		858		1,463		32,794
Total loans	$	642,988	$	293,457	$	135,409	$	238,087	$	13,317	$	1,323,258

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 March 31, 2018 and December 31, 2017 (in thousands):



	March 31, 2018
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,925	$	1,327	$	627	$	1,111	$	118	$	6,108
Impaired loans	—		192		—		99		78		369
Total	$	2,925	$	1,519	$	627	$	1,210	$	196	$	6,477



	December 31, 2017
	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Performing loans	$	2,444	$	1,340	$	521	$	890	$	204	$	5,399
PCI loans	16		—		—		—		—		16
Impaired loans	5		256		—		172		12		445
Total	$	2,465	$	1,596	$	521	$	1,062	$	216	$	5,860

Schedule of Financing Receivable Allowance for Credit Losses

The following tables detail the changes in the allowance for loan losses for the three month period ending March 31, 2018 and year ending December 31, 2017, by loan classification (in thousands):



	March 31, 2018
	Commercial Real Estate			Consumer Real Estate			Construction and Land Development		Commercial and Industrial			Consumer and Other			Total
Beginning balance	$	2,465		$	1,596		$	521	$	1,062		$	216		$	5,860
Loans charged off	(38		)	—			—		(78		)	(42		)	(158		)
Recoveries of loans charged off	—			23			2		40			21			86
Provision (reallocation) charged to expense	498			(100		)	104		186			1			689
Ending balance	$	2,925		$	1,519		$	627	$	1,210		$	196		$	6,477



	December 31, 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	—		(111		)	—			(24		)	(141		)	(276		)
Recoveries of charge-offs	8		99			13			67			61			248
Provision (reallocation) charged to expense	88		226			(209		)	499			179			783
Ending balance	$	2,465	$	1,596		$	521		$	1,062		$	216		$	5,860

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 March 31, 2018 and December 31, 2017 (in thousands):



	March 31, 2018
Non PCI Loans	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	645,238	$	287,350	$	137,154	$	254,341	$	11,150	$	1,335,233
Watch	1,660		3,227		—		1,154		127		6,168
Special mention	—		12		—		—		—		12
Substandard	560		1,573		547		169		114		2,963
Doubtful	—		—		—		20		25		45
Total	$	647,458	$	292,162	$	137,701	$	255,684	$	11,416	$	1,344,421



PCI Loans
Pass	$	13,474	$	4,257	$	4,008	$	99	$	843	$	22,681
Watch	1,590		1,281		651		3		21		3,546
Special mention	—		—		—		59		—		59
Substandard	1,172		1,447		344		475		99		3,537
Doubtful	—		—		—		13		—		13
Total	$	16,236	$	6,985	$	5,003	$	649	$	963	$	29,836
Total loans	$	663,694	$	299,147	$	142,704	$	256,333	$	12,379	$	1,374,257

Note 4. Loans and Allowance for Loan Losses, Continued

Credit Risk Management (continued):



	December 31, 2017
Non PCI Loans	Commercial Real Estate		Consumer Real Estate		Construction and Land Development		Commercial and Industrial		Consumer and Other		Total
Pass	$	616,028	$	279,464	$	129,359	$	233,942	$	11,624	$	1,270,417
Watch	7,673		2,543		383		3,007		62		13,668
Special mention	1,006		2,627		—		64		155		3,852
Substandard	378		1,159		547		157		—		2,241
Doubtful	—		214		—		59		13		286
Total	$	625,085	$	286,007	$	130,289	$	237,229	$	11,854	$	1,290,464



PCI Loans
Pass	$	14,386	$	4,151	$	4,134	$	68	$	819	$	23,558
Watch	261		1,345		649		120		262		2,637
Special mention	—		456		—		58		24		538
Substandard	3,084		1,192		337		588		107		5,308
Doubtful	172		306		—		24		251		753
Total	$	17,903	$	7,450	$	5,120	$	858	$	1,463	$	32,794
Total loans	$	642,988	$	293,457	$	135,409	$	238,087	$	13,317	$	1,323,258

Past Due Financing Receivables

The following tables present the aging of the recorded investment in loans as of March 31, 2018 and December 31, 2017 (in thousands):



	March 31, 2018
	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	$	1,039	$	165	$	6	$	1,210	$	16,236	$	646,248	$	663,694
Consumer real estate	458		130		1,085		1,673		6,985		290,489		299,147
Construction and land development	238		334		547		1,119		5,003		136,582		142,704
Commercial and industrial	315		138		83		536		649		255,148		256,333
Consumer and other	103		31		90		224		963		11,192		12,379
Total	$	2,153	$	798	$	1,811	$	4,762	$	29,836	$	1,339,659	$	1,374,257

Note 4. Loans and Allowance for Loan Losses, Continued

Past Due Loans (continued):



	December 31, 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	$	517	$	728	$	128	$	1,373	$	17,903	$	623,712	$	642,988
Consumer real estate	963		33		991		1,987		7,450		284,020		293,457
Construction and land development	65		326		547		938		5,120		129,351		135,409
Commercial and industrial	286		131		85		502		858		236,727		238,087
Consumer and other	165		291		13		469		1,463		11,385		13,317
Total	$	1,996	$	1,509	$	1,764	$	5,269	$	32,794	$	1,285,195	$	1,323,258

Impaired Financing Receivables

The following is an analysis of the impaired loan portfolio, excluding PCI loans, detailing the related allowance recorded as of March 31, 2018 and December 31, 2017 (in thousands):



							For the three months ended
	At March 31, 2018						March 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	550	$	565	$	—	$	487	$	10
Consumer real estate	889		929		—		652		5
Construction and land development	547		547		—		547		—
Commercial and industrial	52		51		—		47		1
Consumer and other	—		—		—		—		—
	2,038		2,092		—		1,733		16

Impaired loans with a valuation allowance:
Commercial real estate	—		—		—		12		—
Consumer real estate	716		729		192		862		11
Construction and land development	—		—		—		—		—
Commercial and industrial	161		162		99		167		1
Consumer and other	112		113		78		62		1
	989		1,004		369		1,103		13
Total impaired loans	$	3,027	$	3,096	$	369	$	2,836	$	29

Note 4. Loans and Allowance for Loan Losses, Continued

Impaired Loans (continued):



							For the year ended
	At December 31, 2017						December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Commercial real estate	$	424	$	454	$	—	$	204	$	44
Consumer real estate	415		420		—		401		16
Construction and land development	547		547		—		628		—
Commercial and industrial	41		41		—		44		3
Consumer and other	—		—		—		—		—
	1,427		1,462		—		1,277		63

Impaired loans with a valuation allowance:
Commercial real estate	23		23		5		5		1
Consumer real estate	1,007		1,033		256		601		38
Construction and land development	—		—		—		—		—
Commercial and industrial	172		172		172		117		10
Consumer and other	12		13		12		2		1
	1,214		1,241		445		725		50

PCI loans:
Commercial real estate	16		123		16		3		16

Total impaired loans	$	2,657	$	2,826	$	461	$	2,005	$	129

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 (in thousands):



	March 31, 2018			December 31, 2017
Commercial real estate	$	21,866		$	23,366
Consumer real estate	9,849			10,764
Construction and land development	6,109			6,285
Commercial and industrial	1,191			1,452
Consumer and other	1,277			1,710
Total loans	40,292			43,577
Less remaining purchase discount	(10,456		)	(10,783		)
Total loans, net of purchase discount	29,836			32,794
Less: Allowance for loan losses	—			(16		)
Carrying amount, net of allowance	$	29,836		$	32,778

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

Activity related to the accretable yield on loans acquired with deteriorated credit quality is as follows for the three months period ended March 31, 2018 and 2017 (in thousands):



	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017
Accretable yield, beginning of period	$	9,287		$	8,950
Additions	—			—
Accretion income	(1,101		)	(697		)
Reclassification to accretable	262			244
Other changes, net	(668		)	(15		)
Accretable yield	$	7,780		$	8,482