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LOANS (Tables)
 6 Months Ended
Jun. 30, 2016
LOANS [Abstract]  
Categorizes total loans
At June 30, 2016 and December 31, 2015, net loans disaggregated by class consisted of the following (in thousands):
 
  
June 30, 2016
  
December 31, 2015
 
Commercial and industrial
 
$
215,960
  
$
189,769
 
Commercial real estate
  
734,586
   
696,787
 
Multifamily
  
426,367
   
426,549
 
Mixed use commercial
  
84,070
   
78,787
 
Real estate construction
  
40,452
   
37,233
 
Residential mortgages
  
178,504
   
186,313
 
Home equity
  
44,655
   
44,951
 
Consumer
  
5,280
   
6,058
 
Gross loans
  
1,729,874
   
1,666,447
 
Allowance for loan losses
  
(20,965
)
  
(20,685
)
Net loans at end of period
 
$
1,708,909
  
$
1,645,762
 
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, 2016
  
Three Months Ended June 30, 2015
 
  
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
  
(Credit)
provision
for loan
losses
  
Balance at
end of
period
 
Commercial and industrial
 
$
1,904
  
$
-
  
$
28
  
$
(118
)
 
$
1,814
  
$
1,998
  
$
-
  
$
693
  
$
(618
)
 
$
2,073
 
Commercial real estate
  
7,290
   
-
   
8
   
448
   
7,746
   
7,352
   
-
   
11
   
(1,363
)
  
6,000
 
Multifamily
  
5,523
   
-
   
-
   
(625
)
  
4,898
   
4,467
   
-
   
-
   
(402
)
  
4,065
 
Mixed use commercial
  
852
   
-
   
-
   
(10
)
  
842
   
273
   
-
   
-
   
192
   
465
 
Real estate construction
  
388
   
-
   
-
   
68
   
456
   
360
   
-
   
-
   
118
   
478
 
Residential mortgages
  
2,210
   
-
   
3
   
(20
)
  
2,193
   
2,618
   
-
   
16
   
(63
)
  
2,571
 
Home equity
  
577
   
(1
)
  
4
   
-
   
580
   
728
   
-
   
5
   
(61
)
  
672
 
Consumer
  
97
   
(8
)
  
1
   
(30
)
  
60
   
155
   
(9
)
  
10
   
(6
)
  
150
 
Unallocated
  
2,089
   
-
   
-
   
287
   
2,376
   
1,374
   
-
   
-
   
2,203
   
3,577
 
Total
 
$
20,930
  
$
(9
)
 
$
44
  
$
-
  
$
20,965
  
$
19,325
  
$
(9
)
 
$
735
  
$
-
  
$
20,051
 
 
  
Six Months Ended June 30, 2016
  
Six Months Ended June 30, 2015
 
  
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
  
(Credit)
provision
for loan
losses
  
Balance at
end of
period
 
Commercial and industrial
 
$
1,875
  
$
-
  
$
73
  
$
(134
)
 
$
1,814
  
$
1,560
  
$
(492
)
 
$
1,036
  
$
(31
)
 
$
2,073
 
Commercial real estate
  
7,019
   
-
   
18
   
709
   
7,746
   
6,777
   
-
   
18
   
(795
)
  
6,000
 
Multifamily
  
4,688
   
-
   
-
   
210
   
4,898
   
4,018
   
-
   
-
   
47
   
4,065
 
Mixed use commercial
  
766
   
-
   
-
   
76
   
842
   
261
   
-
   
-
   
204
   
465
 
Real estate construction
  
386
   
-
   
-
   
70
   
456
   
383
   
-
   
-
   
95
   
478
 
Residential mortgages
  
2,476
   
-
   
5
   
(288
)
  
2,193
   
3,027
   
-
   
27
   
(483
)
  
2,571
 
Home equity
  
639
   
(8
)
  
5
   
(56
)
  
580
   
709
   
-
   
7
   
(44
)
  
672
 
Consumer
  
106
   
(66
)
  
3
   
17
   
60
   
166
   
(10
)
  
15
   
(21
)
  
150
 
Unallocated
  
2,730
   
-
   
-
   
(354
)
  
2,376
   
2,299
   
-
   
-
   
1,278
   
3,577
 
Total
 
$
20,685
  
$
(74
)
 
$
104
  
$
250
  
$
20,965
  
$
19,200
  
$
(502
)
 
$
1,103
  
$
250
  
$
20,051
 
Summary of changes in the allowance for loan losses
At June 30, 2016 and December 31, 2015, 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, 2016 and December 31, 2015 disaggregated by class and impairment methodology (in thousands).
 
  
Allowance for Loan Losses
  
Loan Balances
 
June 30, 2016
 
Individually
evaluated for
impairment
  
Collectively
evaluated for
impairment
  
Ending balance
  
Individually
evaluated for
impairment
  
Collectively
evaluated for
impairment
  
Ending balance
 
Commercial and industrial
 
$
117
  
$
1,697
  
$
1,814
  
$
4,776
  
$
211,184
  
$
215,960
 
Commercial real estate
  
-
   
7,746
   
7,746
   
3,395
   
731,191
   
734,586
 
Multifamily
  
-
   
4,898
   
4,898
   
-
   
426,367
   
426,367
 
Mixed use commercial
  
-
   
842
   
842
   
-
   
84,070
   
84,070
 
Real estate construction
  
-
   
456
   
456
   
-
   
40,452
   
40,452
 
Residential mortgages
  
450
   
1,743
   
2,193
   
4,997
   
173,507
   
178,504
 
Home equity
  
156
   
424
   
580
   
1,661
   
42,994
   
44,655
 
Consumer
  
26
   
34
   
60
   
218
   
5,062
   
5,280
 
Unallocated
  
-
   
2,376
   
2,376
   
-
   
-
   
-
 
Total
 
$
749
  
$
20,216
  
$
20,965
  
$
15,047
  
$
1,714,827
  
$
1,729,874
 
 
  
Allowance for Loan Losses
  
Loan Balances
 
December 31, 2015
 
Individually
evaluated for
impairment
  
Collectively
evaluated for
impairment
  
Ending balance
  
Individually
evaluated for
impairment
  
Collectively
evaluated for
 impairment
  
Ending balance
 
Commercial and industrial
 
$
-
  
$
1,875
  
$
1,875
  
$
2,872
  
$
186,897
  
$
189,769
 
Commercial real estate
  
-
   
7,019
   
7,019
   
4,334
   
692,453
   
696,787
 
Multifamily
  
-
   
4,688
   
4,688
   
-
   
426,549
   
426,549
 
Mixed use commercial
  
-
   
766
   
766
   
-
   
78,787
   
78,787
 
Real estate construction
  
-
   
386
   
386
   
-
   
37,233
   
37,233
 
Residential mortgages
  
559
   
1,917
   
2,476
   
5,817
   
180,496
   
186,313
 
Home equity
  
170
   
469
   
639
   
1,683
   
43,268
   
44,951
 
Consumer
  
48
   
58
   
106
   
379
   
5,679
   
6,058
 
Unallocated
  
-
   
2,730
   
2,730
   
-
   
-
   
-
 
Total
 
$
777
  
$
19,908
  
$
20,685
  
$
15,085
  
$
1,651,362
  
$
1,666,447
 
Summary of impaired loans
The following table presents the Company’s impaired loans disaggregated by class at June 30, 2016 and December 31, 2015 (in thousands).
 
  
June 30, 2016
  
December 31, 2015
 
  
Unpaid
Principal
Balance
  
Recorded
Balance
  
Allowance
Allocated
  
Unpaid
Principal
Balance
  
Recorded
Balance
  
Allowance
Allocated
 
With no allowance recorded:
                  
Commercial and industrial
 
$
3,429
  
$
3,429
  
$
-
  
$
2,869
  
$
2,869
  
$
-
 
Commercial real estate
  
3,813
   
3,395
   
-
   
4,753
   
4,334
   
-
 
Residential mortgages
  
2,892
   
2,763
   
-
   
3,076
   
2,947
   
-
 
Home equity
  
1,306
   
1,306
   
-
   
1,233
   
1,233
   
-
 
Consumer
  
124
   
124
   
-
   
207
   
207
   
-
 
Subtotal
  
11,564
   
11,017
   
-
   
12,138
   
11,590
   
-
 
                         
With an allowance recorded:
                        
Commercial and industrial
  
1,347
   
1,347
   
117
   
3
   
3
   
-
 
Residential mortgages
  
2,234
   
2,234
   
450
   
2,870
   
2,870
   
559
 
Home equity
  
372
   
355
   
156
   
586
   
450
   
170
 
Consumer
  
94
   
94
   
26
   
172
   
172
   
48
 
Subtotal
  
4,047
   
4,030
   
749
   
3,631
   
3,495
   
777
 
Total
 
$
15,611
  
$
15,047
  
$
749
  
$
15,769
  
$
15,085
  
$
777
 
 
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, 2016 and 2015 (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,
 
  
2016
  
2015
  
2016
  
2015
 
  
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
 
$
4,903
  
$
17
  
$
3,170
  
$
226
  
$
3,889
  
$
35
  
$
3,857
  
$
259
 
Commercial real estate
  
4,391
   
41
   
9,461
   
549
   
4,355
   
76
   
9,832
   
599
 
Residential mortgages
  
5,120
   
48
   
5,644
   
41
   
5,406
   
96
   
5,528
   
79
 
Home equity
  
1,646
   
16
   
1,666
   
15
   
1,658
   
31
   
1,664
   
28
 
Consumer
  
259
   
3
   
395
   
3
   
298
   
7
   
389
   
6
 
Total
 
$
16,319
  
$
125
  
$
20,336
  
$
834
  
$
15,606
  
$
245
  
$
21,270
  
$
971
 
Troubled debt restructurings
Outstanding TDRs, disaggregated by class, at June 30, 2016 and December 31, 2015 are as follows (dollars in thousands):
 
  
June 30, 2016
  
December 31, 2015
 
TDRs Outstanding
 
Number of
Loans
  
Outstanding
Recorded
Balance
  
Number of
Loans
  
Outstanding
Recorded
Balance
 
Commercial and industrial
  
14
  
$
847
   
17
  
$
1,116
 
Commercial real estate
  
4
   
2,970
   
5
   
4,131
 
Residential mortgages
  
22
   
4,755
   
22
   
4,653
 
Home equity
  
5
   
1,366
   
5
   
1,362
 
Consumer
  
7
   
218
   
8
   
301
 
Total
  
52
  
$
10,156
   
57
  
$
11,563
 
 
The following presents, disaggregated by class, information regarding TDRs executed during the three and six months ended June 30, 2016 and 2015 (dollars in thousands):

  
Three Months Ended June 30,
 
  
2016
  
2015
 
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
 
Total
  
-
  
$
-
  
$
-
   
1
  
$
323
  
$
323
 
 
  
Six Months Ended June 30,
 
  
2016
  
2015
 
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
 
Residential mortgages
  
-
   
-
   
-
   
2
   
194
   
199
 
Total
  
-
  
$
-
  
$
-
   
4
  
$
529
  
$
534
 
 
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, 2016 and 2015.

  
Three Months Ended June 30,
  
Six Months Ended June 30,
 
  
2016
  
2015
  
2016
  
2015
 
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
 
Consumer
  
-
  
$
-
   
1
  
$
46
   
-
  
$
-
   
1
  
$
46
 
Total
  
-
  
$
-
   
1
  
$
46
   
-
  
$
-
   
1
  
$
46
 
Summarizes non-accrual loans by loan class
At June 30, 2016 and December 31, 2015, non-accrual loans disaggregated by class were as follows (dollars in thousands):
 
  
June 30, 2016
  
December 31, 2015
 
  
Non-
accrual
loans
  
% of
Total
  
Total Loans
  
% of
Total Loans
  
Non-
accrual
loans
  
% of
Total
  
Total Loans
  
% of Total
Loans
 
Commercial and industrial
 
$
4,118
   
59.7
%
 
$
215,960
   
0.2
%
 
$
1,954
   
35.3
%
 
$
189,769
   
0.1
%
Commercial real estate
  
2,174
   
31.5
   
734,586
   
0.1
   
1,733
   
31.4
   
696,787
   
0.1
 
Multifamily
  
-
   
-
   
426,367
   
-
   
-
   
-
   
426,549
   
-
 
Mixed use commercial
  
-
   
-
   
84,070
   
-
   
-
   
-
   
78,787
   
-
 
Real estate construction
  
-
   
-
   
40,452
   
-
   
-
   
-
   
37,233
   
-
 
Residential mortgages
  
421
   
6.1
   
178,504
   
0.1
   
1,358
   
24.6
   
186,313
   
0.1
 
Home equity
  
185
   
2.7
   
44,655
   
-
   
406
   
7.3
   
44,951
   
-
 
Consumer
  
-
   
-
   
5,280
   
-
   
77
   
1.4
   
6,058
   
-
 
Total
 
$
6,898
   
100.0
%
 
$
1,729,874
   
0.4
%
 
$
5,528
   
100.0
%
 
$
1,666,447
   
0.3
%
Summary of current and past due loans
At June 30, 2016 and December 31, 2015, past due loans disaggregated by class were as follows (in thousands).

  
Past Due
       
June 30, 2016
 
30 - 59 days
  
60 - 89 days
  
90 days and over
  
Total
  
Current
  
Total
 
Commercial and industrial
 
$
138
  
$
-
  
$
4,118
  
$
4,256
  
$
211,704
  
$
215,960
 
Commercial real estate
  
285
   
-
   
2,174
   
2,459
   
732,127
   
734,586
 
Multifamily
  
-
   
-
   
-
   
-
   
426,367
   
426,367
 
Mixed use commercial
  
-
   
-
   
-
   
-
   
84,070
   
84,070
 
Real estate construction
  
-
   
-
   
-
   
-
   
40,452
   
40,452
 
Residential mortgages
  
348
   
643
   
421
   
1,412
   
177,092
   
178,504
 
Home equity
  
-
   
-
   
185
   
185
   
44,470
   
44,655
 
Consumer
  
1
   
4
   
-
   
5
   
5,275
   
5,280
 
Total
 
$
772
  
$
647
  
$
6,898
  
$
8,317
  
$
1,721,557
  
$
1,729,874
 
% of Total Loans
  
0.1
%
  
0.0
%
  
0.4
%
  
0.5
%
  
99.5
%
  
100.0
%
 
  
Past Due
       
December 31, 2015
 
30 - 59 days
  
60 - 89 days
  
90 days and over
  
Total
  
Current
  
Total
 
Commercial and industrial
 
$
21
  
$
-
  
$
1,954
  
$
1,975
  
$
187,794
  
$
189,769
 
Commercial real estate
  
-
   
-
   
1,733
   
1,733
   
695,054
   
696,787
 
Multifamily
  
-
   
-
   
-
   
-
   
426,549
   
426,549
 
Mixed use commercial
  
-
   
-
   
-
   
-
   
78,787
   
78,787
 
Real estate construction
  
-
   
-
   
-
   
-
   
37,233
   
37,233
 
Residential mortgages
  
512
   
175
   
1,358
   
2,045
   
184,268
   
186,313
 
Home equity
  
336
   
-
   
406
   
742
   
44,209
   
44,951
 
Consumer
  
2
   
-
   
77
   
79
   
5,979
   
6,058
 
Total
 
$
871
  
$
175
  
$
5,528
  
$
6,574
  
$
1,659,873
  
$
1,666,447
 
% of Total Loans
  
0.1
%
  
0.0
%
  
0.3
%
  
0.4
%
  
99.6
%
  
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, 2016 and December 31, 2015 (in thousands).

  
June 30, 2016
  
December 31, 2015
 
  
Grade
     
Grade
    
  
Pass
  
Special
mention
  
Substandard
  
Total
  
Pass
  
Special
mention
  
Substandard
  
Total
 
Commercial and industrial
 
$
198,676
  
$
11,174
  
$
6,110
  
$
215,960
  
$
180,024
  
$
3,088
  
$
6,657
  
$
189,769
 
Commercial real estate
  
727,489
   
3,688
   
3,409
   
734,586
   
687,210
   
6,109
   
3,468
   
696,787
 
Multifamily
  
426,367
   
-
   
-
   
426,367
   
426,549
   
-
   
-
   
426,549
 
Mixed use commercial
  
84,070
   
-
   
-
   
84,070
   
78,779
   
-
   
8
   
78,787
 
Real estate construction
  
40,452
   
-
   
-
   
40,452
   
37,233
   
-
   
-
   
37,233
 
Residential mortgages
  
177,912
   
-
   
592
   
178,504
   
184,781
   
-
   
1,532
   
186,313
 
Home equity
  
44,470
   
-
   
185
   
44,655
   
44,545
   
-
   
406
   
44,951
 
Consumer
  
5,280
   
-
   
-
   
5,280
   
5,939
   
-
   
119
   
6,058
 
Total
 
$
1,704,716
  
$
14,862
  
$
10,296
  
$
1,729,874
  
$
1,645,060
  
$
9,197
  
$
12,190
  
$
1,666,447
 
% of Total
  
98.5%
 
  
0.9%
 
  
0.6%
  
100.0%
 
  
98.7%
 
  
0.6%
 
  
0.7%
 
  
100.0%