LOANS (Tables)

6 Months Ended

Jun. 30, 2015

At June 30, 2015 and December 31, 2014, net loans disaggregated by class consisted of the following (in thousands):

	June 30, 2015			December 31, 2014
Commercial and industrial	$	196,881		$	177,813
Commercial real estate		598,866			560,524
Multifamily		361,309			309,666
Mixed use commercial		50,372			34,806
Real estate construction		31,628			26,206
Residential mortgages		182,828			187,828
Home equity		48,298			50,982
Consumer		6,444			7,602
Gross loans		1,476,626			1,355,427
Allowance for loan losses		(20,051	)		(19,200	)
Net loans at end of period	$	1,456,575		$	1,336,227

Summary of the activity in the allowance for loan losses by loan class

The following summarizes the activity in the allowance for loan losses disaggregated by class for the periods indicated (in thousands).

	Three Months Ended June 30, 2015												Three Months Ended June 30, 2014
	Balance at beginning of period		Charge-offs			Recoveries		(Credit) provision for loan losses			Balance at end of period		Balance at beginning of period		Charge-offs			Recoveries		Provision (credit) for loan losses			Balance at end of period
Commercial and industrial	$	1,998	$	-		$	693	$	(618	)	$	2,073	$	2,481	$	(200	)	$	210	$	441		$	2,932
Commercial real estate		7,352		-			11		(1,363	)		6,000		7,208		-			485		206			7,899
Multifamily		4,467		-			-		(402	)		4,065		2,640		-			-		(196	)		2,444
Mixed use commercial		273		-			-		192			465		87		-			-		125			212
Real estate construction		360		-			-		118			478		217		-			-		13			230
Residential mortgages		2,618		-			16		(63	)		2,571		2,627		(32	)		4		51			2,650
Home equity		728		-			5		(61	)		672		718		-			18		25			761
Consumer		155		(9	)		10		(6	)		150		186		(2	)		8		(26	)		166
Unallocated		1,374		-			-		2,203			3,577		1,573		-			-		(389	)		1,184
Total	$	19,325	$	(9	)	$	735	$	-		$	20,051	$	17,737	$	(234	)	$	725	$	250		$	18,478

	Six Months Ended June 30, 2015												Six Months Ended June 30, 2014
	Balance at beginning of period		Charge-offs			Recoveries		(Credit) provision for loan losses			Balance at end of period		Balance at beginning of period		Charge-offs			Recoveries		Provision (credit) for loan losses			Balance at end of period
Commercial and industrial	$	1,560	$	(492	)	$	1,036	$	(31	)	$	2,073	$	2,615	$	(315	)	$	503	$	129		$	2,932
Commercial real estate		6,777		-			18		(795	)		6,000		6,572		-			497		830			7,899
Multifamily		4,018		-			-		47			4,065		2,159		-			-		285			2,444
Mixed use commercial		261		-			-		204			465		54		-			-		158			212
Real estate construction		383		-			-		95			478		88		-			-		142			230
Residential mortgages		3,027		-			27		(483	)		2,571		2,463		(32	)		8		211			2,650
Home equity		709		-			7		(44	)		672		745		-			45		(29	)		761
Consumer		166		(10	)		15		(21	)		150		241		(4	)		13		(84	)		166
Unallocated		2,299		-			-		1,278			3,577		2,326		-			-		(1,142	)		1,184
Total	$	19,200	$	(502	)	$	1,103	$	250		$	20,051	$	17,263	$	(351	)	$	1,066	$	500		$	18,478

Summary of changes in the allowance for loan losses

At June 30, 2015 and December 31, 2014, the ending balance in the allowance for loan losses disaggregated by class and impairment methodology is as follows (in thousands). Also in the tables below are total loans at June 30, 2015 and December 31, 2014 disaggregated by class and impairment methodology (in thousands).

	Allowance for Loan Losses						Loan Balances
June 30, 2015	Individually evaluated for impairment		Collectively evaluated for impairment		Ending balance		Individually evaluated for impairment		Collectively evaluated for impairment		Ending balance
Commercial and industrial	$	5	$	2,068	$	2,073	$	2,848	$	194,033	$	196,881
Commercial real estate		-		6,000		6,000		5,357		593,509		598,866
Multifamily		-		4,065		4,065		-		361,309		361,309
Mixed use commercial		-		465		465		-		50,372		50,372
Real estate construction		-		478		478		-		31,628		31,628
Residential mortgages		779		1,792		2,571		5,639		177,189		182,828
Home equity		158		514		672		1,664		46,634		48,298
Consumer		85		65		150		392		6,052		6,444
Unallocated		-		3,577		3,577		-		-		-
Total	$	1,027	$	19,024	$	20,051	$	15,900	$	1,460,726	$	1,476,626

	Allowance for Loan Losses						Loan Balances
December 31, 2014	Individually evaluated for impairment		Collectively evaluated for impairment		Ending balance		Individually evaluated for impairment		Collectively evaluated for impairment		Ending balance
Commercial and industrial	$	16	$	1,544	$	1,560	$	4,889	$	172,924	$	177,813
Commercial real estate		-		6,777		6,777		10,214		550,310		560,524
Multifamily		-		4,018		4,018		-		309,666		309,666
Mixed use commercial		-		261		261		-		34,806		34,806
Real estate construction		-		383		383		-		26,206		26,206
Residential mortgages		809		2,218		3,027		5,422		182,406		187,828
Home equity		92		617		709		1,567		49,415		50,982
Consumer		88		78		166		323		7,279		7,602
Unallocated		-		2,299		2,299		-		-		-
Total	$	1,005	$	18,195	$	19,200	$	22,415	$	1,333,012	$	1,355,427

Summary of impaired loans

The following table presents the Company’s impaired loans disaggregated by class at June 30, 2015 and December 31, 2014 (in thousands).

	June 30, 2015						December 31, 2014
	Unpaid Principal Balance		Recorded Balance		Allowance Allocated		Unpaid Principal Balance		Recorded Balance		Allowance Allocated
With no allowance recorded:
Commercial and industrial	$	2,808	$	2,808	$	-	$	4,833	$	4,833	$	-
Commercial real estate		5,775		5,357		-		10,632		10,214		-
Residential mortgages		2,084		1,955		-		1,645		1,516		-
Home equity		1,402		1,402		-		1,377		1,377		-
Consumer		212		212		-		137		137		-
Subtotal		12,281		11,734		-		18,624		18,077		-

With an allowance recorded:
Commercial and industrial		41		40		5		57		56		16
Residential mortgages		3,684		3,684		779		3,906		3,906		809
Home equity		398		262		158		326		190		92
Consumer		180		180		85		185		186		88
Subtotal		4,303		4,166		1,027		4,474		4,338		1,005
Total	$	16,584	$	15,900	$	1,027	$	23,098	$	22,415	$	1,005

The following table presents the Company’s average recorded investment in impaired loans and the related interest income recognized disaggregated by class for the three and six months ended June 30, 2015 and 2014 (in thousands). No interest income was recognized on a cash basis on impaired loans for any of the periods presented. The interest income recognized on accruing impaired loans is shown in the following table.

	Three Months Ended June 30,								Six Months Ended June 30,
	2015				2014				2015				2014
	Average recorded investment in impaired loans		Interest income recognized on impaired loans		Average recorded investment in impaired loans		Interest income recognized on impaired loans		Average recorded investment in impaired loans		Interest income recognized on impaired loans		Average recorded investment in impaired loans		Interest income recognized on impaired loans
Commercial and industrial	$	3,170	$	226	$	7,290	$	292	$	3,857	$	259	$	7,428	$	551
Commercial real estate		9,461		549		11,167		56		9,832		599		11,361		155
Residential mortgages		5,644		41		5,021		40		5,528		79		5,028		76
Home equity		1,666		15		720		3		1,664		28		745		20
Consumer		395		3		204		5		389		6		188		7
Total	$	20,336	$	834	$	24,402	$	396	$	21,270	$	971	$	24,750	$	809

Troubled debt restructurings

Outstanding TDRs, disaggregated by class, at June 30, 2015 and December 31, 2014 are as follows (dollars in thousands):

	June 30, 2015				December 31, 2014
TDRs Outstanding	Number of Loans		Outstanding Recorded Balance		Number of Loans		Outstanding Recorded Balance
Commercial and industrial		24	$	1,885		31	$	3,683
Commercial real estate		6		5,126		8		10,179
Residential mortgages		20		4,444		19		4,314
Home equity		5		1,204		5		1,216
Consumer		7		273		7		281
Total		62	$	12,932		70	$	19,673

The following presents, disaggregated by class, information regarding TDRs executed during the three and six months ended June 30, 2015 and 2014 (dollars in thousands):

	Three Months Ended June 30,
	2015						2014
New TDRs	Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial and industrial		1	$	323	$	323		7	$	1,500	$	1,500
Commercial real estate		-		-		-		2		5,161		5,161
Residential mortgages		-		-		-		3		273		273
Home equity		-		-		-		2		109		109
Consumer		-		-		-		3		99		99
Total		1	$	323	$	323		17	$	7,142	$	7,142

	Six Months Ended June 30,
	2015						2014
New TDRs	Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance		Number of Loans		Pre-Modification Outstanding Recorded Balance		Post-Modification Outstanding Recorded Balance
Commercial and industrial		2	$	335	$	335		10	$	1,877	$	1,877
Commercial real estate		-		-		-		2		5,161		5,161
Residential mortgages		2		194		199		3		273		273
Home equity		-		-		-		2		109		109
Consumer		-		-		-		3		99		99
Total		4	$	529	$	534		20	$	7,519	$	7,519

Presented below and disaggregated by class is information regarding loans modified as TDRs that had payment defaults of 90 days or more within twelve months of restructuring during the three and six months ended June 30, 2015 and 2014 (dollars in thousands).

	Three Months Ended June 30,								Six Months Ended June 30,
	2015				2014				2015				2014
Defaulted TDRs	Number of Loans		Outstanding Recorded Balance		Number of Loans		Outstanding Recorded Balance		Number of Loans		Outstanding Recorded Balance		Number of Loans		Outstanding Recorded Balance
Commercial real estate		-	$	-		-	$	-		-	$	-		2	$	1,566
Consumer		1		46		-		-		1		46		-		-
Total		1	$	46		-	$	-		1	$	46		2	$	1,566

Summary of impaired and non-accrual loans

The following table presents a summary of non-performing assets for each period (in thousands):

	June 30, 2015		December 31, 2014
Non-accrual loans	$	5,529	$	12,981
Non-accrual loans held for sale		-		-
Loans 90 days past due and still accruing		-		-
OREO		-		-
Total non-performing assets	$	5,529	$	12,981
TDRs accruing interest	$	10,091	$	9,380
TDRs non-accruing	$	2,841	$	10,293

Summarizes non-accrual loans by loan class

At June 30, 2015 and December 31, 2014, non-accrual loans disaggregated by class were as follows (dollars in thousands):

	June 30, 2015										December 31, 2014
	Non-accrual loans		% of Total			Total Loans		% of Total Loans			Non-accrual loans		% of Total			Total Loans		% of Total Loans
Commercial and industrial	$	1,785		32.3	%	$	196,881		0.1	%	$	4,060		31.3	%	$	177,813		0.3	%
Commercial real estate		1,759		31.8			598,866		0.1			6,556		50.5			560,524		0.5
Multifamily		-		-			361,309		-			-		-			309,666		-
Mixed use commercial		-		-			50,372		-			-		-			34,806		-
Real estate construction		-		-			31,628		-			-		-			26,206		-
Residential mortgages		1,465		26.5			182,828		0.1			2,020		15.6			187,828		0.1
Home equity		355		6.4			48,298		0.1			303		2.3			50,982		0.1
Consumer		165		3.0			6,444		-			42		0.3			7,602		-
Total	$	5,529		100.0	%	$	1,476,626		0.4	%	$	12,981		100.0	%	$	1,355,427		1.0	%

Summary of current and past due loans

At June 30, 2015 and December 31, 2014, past due loans disaggregated by class were as follows (in thousands).

	Past Due
June 30, 2015	30 - 59 days			60 - 89 days			90 days and over			Total			Current			Total
Commercial and industrial	$	-		$	2,578		$	1,785		$	4,363		$	192,518		$	196,881
Commercial real estate		-			-			1,759			1,759			597,107			598,866
Multifamily		-			-			-			-			361,309			361,309
Mixed use commercial		-			-			-			-			50,372			50,372
Real estate construction		-			-			-			-			31,628			31,628
Residential mortgages		1,196			348			1,465			3,009			179,819			182,828
Home equity		496			-			355			851			47,447			48,298
Consumer		-			-			165			165			6,279			6,444
Total	$	1,692		$	2,926		$	5,529		$	10,147		$	1,466,479		$	1,476,626
% of Total Loans		0.1	%		0.2	%		0.4	%		0.7	%		99.3	%		100.0	%

	Past Due
December 31, 2014	30 - 59 days			60 - 89 days			90 days and over			Total			Current			Total
Commercial and industrial	$	52		$	241		$	4,060		$	4,353		$	173,460		$	177,813
Commercial real estate		-			-			6,556			6,556			553,968			560,524
Multifamily		-			-			-			-			309,666			309,666
Mixed use commercial		-			-			-			-			34,806			34,806
Real estate construction		-			-			-			-			26,206			26,206
Residential mortgages		822			-			2,020			2,842			184,986			187,828
Home equity		-			112			303			415			50,567			50,982
Consumer		59			77			42			178			7,424			7,602
Total	$	933		$	430		$	12,981		$	14,344		$	1,341,083		$	1,355,427
% of Total Loans		0.1	%		0.0	%		1.0	%		1.1	%		98.9	%		100.0	%

Credit risk profile by internally assigned grade

The following presents the Company’s loan portfolio credit risk profile by internally assigned grade disaggregated by class of loan at June 30, 2015 and December 31, 2014 (in thousands).

	June 30, 2015												December 31, 2014
	Grade												Grade
	Pass			Special mention			Substandard			Total			Pass			Special mention			Substandard			Total
Commercial and industrial	$	182,614		$	3,898		$	10,369		$	196,881		$	167,922		$	1,225		$	8,666		$	177,813
Commercial real estate		582,851			11,568			4,447			598,866			536,536			9,182			14,806			560,524
Multifamily		361,309			-			-			361,309			309,666			-			-			309,666
Mixed use commercial		50,356			-			16			50,372			34,806			-			-			34,806
Real estate construction		31,628			-			-			31,628			26,206			-			-			26,206
Residential mortgages		180,564			-			2,264			182,828			183,263			-			4,565			187,828
Home equity		47,943			-			355			48,298			49,569			-			1,413			50,982
Consumer		6,279			-			165			6,444			7,279			-			323			7,602
Total	$	1,443,544		$	15,466		$	17,616		$	1,476,626		$	1,315,247		$	10,407		$	29,773		$	1,355,427
% of Total		97.8	%		1.0	%		1.2	%		100.0	%		97.0	%		0.8	%		2.2	%		100.0	%