Loans (Tables)

12 Months Ended

Dec. 31, 2018

The following is a summary of loans:



(Dollars in thousands)	December 31, 2018				December 31, 2017
	Amount		%		Amount		%
Commercial:
Commercial real estate (1)		$1,392,408	38	%		$1,210,495	36	%
Commercial & industrial (2)	620,704		17		612,334		18
Total commercial	2,013,112		55		1,822,829		54
Residential Real Estate:
Residential real estate (3)	1,360,387		37		1,227,248		36
Consumer:
Home equity	280,626		8		292,467		9
Other (4)	26,235		—		31,527		1
Total consumer	306,861		8		323,994		10
Total loans (5)		$3,680,360	100	%		$3,374,071	100	%


(1)	Consists of commercial mortgages primarily secured by income-producing property, as well as construction and development loans. Construction and development loans are made to businesses for land development or the on-site construction of industrial, commercial, or residential buildings.


(2)	Consists of loans to businesses and individuals, a substantial portion of which are fully or partially collateralized by real estate.


(3)	Consists of mortgage and homeowner construction loans secured by one- to four- family residential properties.


(4)	Consists of loans to individuals secured by general aviation aircraft and other personal installment loans.


(5)	Includes net unamortized loan origination costs of $4.7 million and $3.8 million, respectively, at December 31, 2018 and 2017 and net unamortized premiums on purchased loans of $703 thousand and $878 thousand, respectively, at December 31, 2018 and 2017.

Past Due Loans

The following tables present an aging analysis of past due loans, segregated by class of loans:



(Dollars in thousands)	Days Past Due
December 31, 2018	30-59		60-89		Over 90		Total Past Due		Current		Total Loans
Commercial:
Commercial real estate		$155		$925		$—		$1,080		$1,391,328		$1,392,408
Commercial & industrial	—		—		—		—		620,704		620,704
Total commercial	155		925		—		1,080		2,012,032		2,013,112
Residential Real Estate:
Residential real estate	6,318		2,693		1,509		10,520		1,349,867		1,360,387
Consumer:
Home equity	1,281		156		552		1,989		278,637		280,626
Other	33		—		—		33		26,202		26,235
Total consumer	1,314		156		552		2,022		304,839		306,861
Total loans		$7,787		$3,774		$2,061		$13,622		$3,666,738		$3,680,360



(Dollars in thousands)	Days Past Due
December 31, 2017	30-59		60-89		Over 90		Total Past Due		Current		Total Loans
Commercial:
Commercial real estate		$6		$—		$4,954		$4,960		$1,205,535		$1,210,495
Commercial & industrial	3,793		2		281		4,076		608,258		612,334
Total commercial	3,799		2		5,235		9,036		1,813,793		1,822,829
Residential Real Estate:
Residential real estate	1,678		2,274		3,903		7,855		1,219,393		1,227,248
Consumer:
Home equity	2,798		75		268		3,141		289,326		292,467
Other	29		—		14		43		31,484		31,527
Total consumer	2,827		75		282		3,184		320,810		323,994
Total loans		$8,304		$2,351		$9,420		$20,075		$3,353,996		$3,374,071

Impaired Loans

The following is a summary of impaired loans:



(Dollars in thousands)	Recorded Investment (1)				Unpaid Principal				Related Allowance
December 31,	2018		2017		2018		2017		2018		2017
No Related Allowance Recorded
Commercial:
Commercial real estate		$925		$—		$926		$—		$—		$—
Commercial & industrial	4,681		4,986		4,732		5,081		—		—
Total commercial	5,606		4,986		5,658		5,081		—		—
Residential Real Estate:
Residential real estate	9,347		9,069		9,695		9,256		—		—
Consumer:
Home equity	1,360		557		1,360		557		—		—
Other	—		14		—		14		—		—
Total consumer	1,360		571		1,360		571		—		—
Subtotal	16,313		14,626		16,713		14,908		—		—
With Related Allowance Recorded
Commercial:
Commercial real estate		$—		$4,954		$—		$9,910		$—		$1,018
Commercial & industrial	52		191		73		212		—		1
Total commercial	52		5,145		73		10,122		—		1,019
Residential Real Estate:
Residential real estate	364		715		390		741		100		104
Consumer:
Home equity	85		—		85		—		24		—
Other	22		133		22		132		3		6
Total consumer	107		133		107		132		27		6
Subtotal	523		5,993		570		10,995		127		1,129
Total impaired loans		$16,836		$20,619		$17,283		$25,903		$127		$1,129
Total:
Commercial		$5,658		$10,131		$5,731		$15,203		$—		$1,019
Residential real estate	9,711		9,784		10,085		9,997		100		104
Consumer	1,467		704		1,467		703		27		6
Total impaired loans		$16,836		$20,619		$17,283		$25,903		$127		$1,129

(1)

The recorded investment in impaired loans consists of unpaid principal balance, net of charge-offs, interest payments received applied to principal and unamortized deferred loan origination fees and costs. For accruing impaired loans (troubled debt restructurings for which management has concluded that the collectability of the loan is not in doubt), the recorded investment also includes accrued interest.

The following table presents the average recorded investment balance of impaired loans and interest income recognized on impaired loans segregated by loan class:



(Dollars in thousands)
	Average Recorded Investment						Interest Income Recognized
Years ended December 31,	2018		2017		2016		2018		2017		2016
Commercial:
Commercial real estate		$1,050		$8,425		$13,201		$—		$79		$239
Commercial & industrial	5,403		6,445		3,540		259		281		99
Total commercial	6,453		14,870		16,741		259		360		338
Residential real estate:
Residential real estate	9,645		14,571		12,848		393		444		322
Consumer:
Home equity	1,182		685		1,587		52		31		48
Other	69		143		147		5		10		11
Total consumer	1,251		828		1,734		57		41		59
Totals		$17,349		$30,269		$31,323		$709		$845		$719

Nonaccrual Loans

The following is a summary of nonaccrual loans, segregated by class of loans:



(Dollars in thousands)
December 31,	2018		2017
Commercial:
Commercial real estate		$925		$4,954
Commercial & industrial	—		283
Total commercial	925		5,237
Residential Real Estate:
Residential real estate	9,346		9,414
Consumer:
Home equity	1,436		544
Other	—		16
Total consumer	1,436		560
Total nonaccrual loans		$11,707		$15,211
Accruing loans 90 days or more past due		$—		$—

Credit Quality Indicators - Commercial

The following table presents the commercial loan portfolio, segregated by category of credit quality indicator:



(Dollars in thousands)	Pass				Special Mention				Classified
December 31,	2018		2017		2018		2017		2018		2017
Commercial:
Commercial real estate		$1,387,666		$1,205,381		$205		$—		$4,537		$5,114
Commercial & industrial	559,019		592,749		50,426		9,804		11,259		9,781
Total commercial		$1,946,685		$1,798,130		$50,631		$9,804		$15,796		$14,895

Credit Quality Indicators - Residential & Consumer

The following table presents the residential and consumer loan portfolios, segregated by loan type and credit quality indicator:



(Dollars in thousands)	Current				Past Due
December 31,	2018		2017		2018		2017
Residential Real Estate:
Self-originated mortgages		$1,238,402		$1,091,291		$9,079		$6,413
Purchased mortgages	111,465		128,102		1,441		1,442
Total residential real estate		$1,349,867		$1,219,393		$10,520		$7,855
Consumer:
Home equity		$278,637		$289,326		$1,989		$3,141
Other	26,202		31,484		33		43
Total consumer		$304,839		$320,810		$2,022		$3,184

Analysis of Loan Servicing Rights

The following table presents an analysis of loan servicing rights:



(Dollars in thousands)	Loan Servicing Rights			Valuation Allowance			Total
Balance at December 31, 2015		$3,348			($1	)		$3,347
Loan servicing rights capitalized	1,412			—			1,412
Amortization	(1,267		)	—			(1,267		)
Decrease in impairment reserve	—			1			1
Balance at December 31, 2016	3,493			—			3,493
Loan servicing rights capitalized	1,104			—			1,104
Amortization	(984		)	—			(984		)
Balance at December 31, 2017	3,613			—			3,613
Loan servicing rights capitalized	905			—			905
Amortization	(867		)	—			(867		)
Balance at December 31, 2018		$3,651			$—			$3,651

Amortization Expense Related to Loan Servicing Assets

The following table presents estimated aggregate amortization expense related to loan servicing assets:



(Dollars in thousands)
Years ending December 31:	2019		$768
	2020	606
	2021	479
	2022	378
	2023	299
	2024 and thereafter	1,121
Total estimated amortization expense			$3,651

Loans Serviced for Others, by Type of Loan

The following table presents the balance of loans serviced for others by type of loan:



(Dollars in thousands)
December 31,	2018		2017
Residential mortgages		$588,534		$568,311
Commercial loans	142,218		108,539
Total		$730,752		$676,850