Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2014

Summary of Activity in the Loan Balances and the Allowance for Loan Losses by Segment

Activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2014 and 2013 are summarized as follows:



Six Months Ended June 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Losses charged off	(700		)	—			(150		)	(895		)	(177		)	(109		)	(2,031		)
Recoveries	21			2			6			19			97			18			163
Provision charged to expense	501			(23		)	179			1,181			20			(65		)	1,793
Balance, end of period	$	9,944		$	476		$	1,446		$	3,789		$	1,533		$	242		$	17,430

Three Months Ended June 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,244		$	464		$	1,483		$	3,478		$	1,513		$	315		$	17,497
Losses charged off	(155		)	—			(73		)	(672		)	(108		)	(25		)	(1,033		)
Recoveries	14			1			3			8			40			7			73
Provision charged to expense	(159		)	11			33			975			88			(55		)	893
Balance, end of period	$	9,944		$	476		$	1,446		$	3,789		$	1,533		$	242		$	17,430

As of June 30, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	772		$	85		$	—		$	—		$	—		$	—		$	857
Collectively evaluated for impairment	9,172			391			1,446			3,789			1,533			242			16,573
Total ending allowance balance	$	9,944		$	476		$	1,446		$	3,789		$	1,533		$	242		$	17,430
Loans:
Individually evaluated for impairment	$	16,193		$	1,646		$	1,237		$	953		$	165		$	64		$	20,258
Collectively evaluated for impairment	389,392			83,929			66,132			122,295			212,537			12,822			887,107
Total ending loans balance	$	405,585		$	85,575		$	67,369		$	123,248		$	212,702		$	12,886		$	907,365



Six Months Ended June 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
Allowance for loan losses:
Balance, beginning of period	$	11,386		$	835		$	1,559		$	2,357		$	1,230		$	270		$	17,637
Losses charged off	(844		)	(120		)	(643		)	(1,029		)	(350		)	(109		)	(3,095		)
Recoveries	500			5			100			54			171			43			873
Provision charged to expense	(618		)	(282		)	590			2,126			530			54			2,400
Balance, end of period	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815

Three Months Ended June 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,784		$	534		$	1,664		$	2,948		$	1,610		$	266		$	17,806
Losses charged off	(721		)	(58		)	(130		)	(593		)	(134		)	(31		)	(1,667		)
Recoveries	494			1			35			8			77			11			626
Provision charged to expense	(133		)	(39		)	37			1,145			28			12			1,050
Balance, end of period	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815

Year Ended December 31, 2013
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	865		$	73		$	—		$	—		$	—		$	—		$	938
Collectively evaluated for impairment	9,257			$	424		$	1,411		$	3,484		$	1,593		$	398		16,567
Total ending allowance balance	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Loans:
Individually evaluated for impairment	$	17,842		$	472		$	1,731		$	1,111		$	195		$	160		$	21,511
Collectively evaluated for impairment	383,749			88,174			64,776			121,965			206,128			15,996			880,788
Total ending loans balance	$	401,591		$	88,646		$	66,507		$	123,076		$	206,323		$	16,156		$	902,299

Age Analysis of Past Due Loans

Information regarding delinquent loans as of June 30, 2014 and December 31, 2013 is as follows:

Age Analysis of Past Due Loans as of June 30, 2014



(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	761	$	641	$	6,081	$	7,483	$	398,102	$	405,585	$	—
Commercial	20		—		145		165		85,410		85,575		—
Residential real estate	541		508		1,911		2,960		64,409		67,369		—
Home equity loans	434		130		1,563		2,127		121,121		123,248		—
Indirect	269		89		22		380		212,322		212,702
Consumer	77		80		107		264		12,622		12,886		—
Total	$	2,102	$	1,448	$	9,829	$	13,379	$	893,986	$	907,365	$	—

Age Analysis of Past Due Loans as of December 31, 2013



(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	525	$	4	$	7,401	$	7,930	$	393,661	$	401,591	$	—
Commercial	—		18		219		237		88,409		88,646		—
Residential real estate	347		960		2,252		3,559		62,948		66,507		158
Home equity loans	932		707		1,078		2,717		120,359		123,076		43
Indirect	332		30		23		385		205,938		206,323
Consumer	183		25		191		399		15,757		16,156		—
Total	$	2,319	$	1,744	$	11,164	$	15,227	$	887,072	$	902,299	$	201

Impaired Loans

Impaired loans for the Period Ended June 30, 2014, December 31, 2013 and June 30, 2013 are as follows:



	At June 30, 2014						Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	13,276	$	18,712	$	—	$	12,894	$	13,772
Commercial	1,353		1,577		—		778		590
Residential real estate	1,237		1,439		—		1,235		1,401
Home equity loans	953		1,535		—		967		1,015
Indirect	165		231		—		178		183
Consumer	64		103		—		65		97
With allowance recorded:
Commercial real estate	2,917		3,907		772		3,290		2,964
Commercial	293		293		85		275		269
Residential real estate	—		—		—		11		7
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	20,258	$	27,797	$	857	$	19,693	$	20,298

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.



	At December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	15,530	$	20,438	$	—	$	16,705
Commercial	214		267		—		186
Residential real estate	1,731		1,940		—		1,832
Home equity loans	1,111		1,623		—		847
Indirect	195		268		—		178
Consumer	160		204		—		111
With allowance recorded:
Commercial real estate	2,312		2,319		865		4,374
Commercial	258		258		73		346
Residential real estate	—		—		—		—
Home equity loans	—		—		—		—
Indirect	—		—		—		—
Consumer	—		—		—		—
Total	$	21,511	$	27,317	$	938	$	24,579

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.



	At June 30, 2013							Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	17,629	$	24,502	$	—		$	18,332	$	17,347
Commercial	161		213		—			142		141
Residential real estate	1,991		2,298		—			1,991		1,864
Home equity loans	686		870		—			584		522
Indirect	225		248		—			162		108
Consumer	74		74		—			67		65
With allowance recorded:
Commercial real estate	4,754		5,173		1,566		Commercial real estate	4,830		5,867
Commercial	342		342		103			392		414
Residential real estate	—		—		—			—		60
Home equity loans	—		—		—			—		—
Indirect	—		—		—			—		—
Consumer	—		—		—			—		—
Total	$	25,862	$	33,720	$	1,669		$	26,500	$	26,388

*Impaired loans shown in the tables above included loans that were classified as troubled debt restructurings ("TDRs"). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

Troubled Debt Restructuring Loan Information

The following table provides the number of loans modified in a TDR and the recorded investment and unpaid principal balance by loan segment as of June 30, 2014 and June 30, 2013.



	Three Months Ended As of June 30, 2014			Six Months Ended As of June 30, 2014
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	1	$500	$500	19	$6,630	$8,940
Commercial	—	—	—	1	—	170
Residential real estate	—	—	—	13	948	1,052
Home equity loans	—	—	—	28	761	1,296
Indirect Loans	—	—	—	39	164	231
Consumer Loans	—	—	—	1	64	64
Total	1	$500	$500	101	$8,567	$11,753

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.



	Three Months Ended As of June 30, 2013			Six Months Ended As of June 30, 2013
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	4	$104	$110	4	$104	$110
Residential real estate	1	109	109	2	132	143
Home equity loans	8	233	325	16	476	686
Indirect Loans	19	173	188	32	272	349
Total	32	$619	$732	54	$984	$1,288

Note 1: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

Loans on Nonaccrual Status

Nonaccrual loan balances at June 30, 2014 and December 31, 2013 are as follows:



Loans On Nonaccrual Status	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Commercial real estate	$	9,853	$	11,241
Commercial	1,412		289
Residential real estate	4,234		5,231
Home equity loans	3,838		4,464
Indirect	367		443
Consumer	203		318
Total Nonaccrual Loans	$	19,907	$	21,986

Summary of Recorded Investment Based on Delinquency Status

The following tables present the recorded investment of commercial real estate, commercial and residential real estate loans by internal credit risk grade and the recorded investment of residential real estate, home equity, indirect and consumer loans based on delinquency status as of June 30, 2014 and December 31, 2013:



Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
Commercial Credit Exposure	June 30, 2014
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	71	$	—	$	—	$	—	$	—	$	71
Grade 2 — Modest	—		39		—		—		—		—		39
Grade 3 — Better than average	1,229		—		—		—		—		—		1,229
Grade 4 — Average	80,085		20,425		400		—		—		—		100,910
Grade 5 — Acceptable	300,734		62,030		5,443		—		—		—		368,207
Total Pass Credits	382,048		82,565		5,843		—		—		—		470,456
Grade 6 — Special mention	2,788		81		239		—		—		—		3,108
Grade 7 — Substandard	20,749		2,929		775		—		—		—		24,453
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	405,585		85,575		6,857		—		—		—		498,017
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		57,775		121,121		212,322		12,622		403,840
30-59 days past due loans not internally risk graded	—		—		333		434		269		77		1,113
60-89 days past due loans not internally risk graded	—		—		508		130		89		80		807
90+ days past due loans not internally risk graded	—		—		1,896		1,563		22		107		3,588
Total loans not internally credit risk graded	—		—		60,512		123,248		212,702		12,886		409,348
Total loans internally and not internally credit risk graded	$	405,585	$	85,575	$	67,369	$	123,248	$	212,702	$	12,886	$	907,365


*	Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.



Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
Commercial Credit Exposure	December 31, 2013
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	52	$	—	$	—	$	—	$	—	$	52
Grade 2 — Modest	—		37		—		—		—		—		37
Grade 3 — Better than average	857		—		—		—		—		—		857
Grade 4 — Average	22,580		271		613		—		—		—		23,464
Grade 5 — Acceptable	352,781		84,979		5,589		—		—		—		443,349
Total Pass Credits	376,218		85,339		6,202		—		—		—		467,759
Grade 6 — Special mention	2,146		2,891		35		—		—		—		5,072
Grade 7 — Substandard	23,227		416		625		—		—		—		24,268
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	401,591		88,646		6,862		—		—		—		497,099
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		56,390		120,359		205,938		15,757		398,444
30-59 days past due loans not internally risk graded	—		—		64		932		332		183		1,511
60-89 days past due loans not internally risk graded	—		—		960		707		30		25		1,722
90+ days past due loans not internally risk graded	—		—		2,231		1,078		23		191		3,523
Total loans not internally credit risk graded	—		—		59,645		123,076		206,323		16,156		405,200
Total loans internally and not internally credit risk graded	$	401,591	$	88,646	$	66,507	$	123,076	$	206,323	$	16,156	$	902,299

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.