LOANS AND LEASES

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

LOANS AND LEASES

Note 4 – LOANS

Outstanding loan balances at March 31, 2018 and December 31, 2017 are net of unearned income including net deferred loan costs of $1.2 million and $1.8 million, respectively. The loan portfolio segment balances at the dates indicated are presented in the following table:

(In thousands)		March 31, 2018		December 31, 2017
Residential real estate:
	Residential mortgage	$	992,287	$	921,435
	Residential construction		215,445		176,687
Commercial real estate:
	Commercial owner occupied real estate		1,174,739		857,196
	Commercial investor real estate		1,928,439		1,112,710
	Commercial AD&C		564,871		292,443
Commercial business			652,797		497,948
Consumer			532,973		455,829
	Total loans	$	6,061,551	$	4,314,248

The fair value of the financial assets acquired in the WashingtonFirst transaction included loans receivable with a gross amortized cost basis of $1.7 billion. The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired. Interest and credit fair value adjustments related to loans acquired without evidence of credit quality deterioration are accreted or amortized into interest income over the remaining expected lives of the loans. The specific credit adjustment on acquired credit impaired loans includes accretable and non-accretable components. Of the $7.3 million specific credit mark on acquired credit impaired loans, approximately $2.5 million is estimated to be an accretable adjustment recognized over the remaining expected lives of the loans and $4.7 million non-accretable adjustment.

In conjunction with the WashingtonFirst Bank merger, the acquired loan portfolio was accounted for at fair value as follows:

(Dollars in thousands)	January 1, 2018
Gross amortized cost basis at January 1, 2018	$	1,697,760
Interest rate fair value adjustment		15,591
Credit fair value adjustment on pools of homogeneous loans		(22,421)
Credit fair value adjustment on purchased credit impaired loans		(7,247)
Fair value of acquired loan portfolio at January 1, 2018	$	1,683,683

The following table presents the acquired credit impaired loans receivable as of the Acquisition Date:

(Dollars in thousands)	January 1, 2018
Contractual principal and interest at acquisition	$	28,502
Contractual cash flows not expected to be collected (Nonaccretable yield)		(9,027)
Expected cash flows at acquisition		19,475
Interest component of expected cash flows (Accretable yield)		(2,511)
Fair value of purchased credit impaired loans	$	16,964

The outstanding balance of purchased credit impaired loans receivable totaled $24.2 million and $23.1 million at January 1, 2018 and March 31, 2018, respectively. The fair value of purchased credit impaired loans was $17.3 million at March 31, 2018.

Activity for the accretable yield since the Acquisition Date was as follows:

	Three Months Ended March 31, 2018
(Dollars in thousands)
Accretable yield at the beginning of the period	$	-
Addition of accretable yield due to acquisitions		2,511
Accretion into interest income		(341)
Accretable yield at the end of the period.	$	2,170