Loans and reserve for credit losses (Tables)

3 Months Ended

Mar. 31, 2017

Schedule of Accounts, Notes, Loans and Financing Receivable

The composition of the loan portfolio at March 31, 2017 and December 31, 2016 was as follows (dollars in thousands):



	March 31, 2017					December 31, 2016
	Amount			Percent		Amount			Percent
Originated loans (a):
Commercial real estate:
Owner occupied	$	297,105		16.0	%	$	298,721		16.4	%
Non-owner occupied	529,025			28.5	%	514,363			28.3	%
Total commercial real estate loans	826,130			44.5	%	813,084			44.7	%
Construction	212,812			11.5	%	200,654			11.0	%
Residential real estate	387,507			20.9	%	377,374			20.7	%
Commercial and industrial	387,548			20.9	%	386,150			21.2	%
Consumer	41,293			2.2	%	42,072			2.4	%
Total loans	1,855,290			100.0	%	1,819,334			100.0	%

Less:
Deferred loan fees	(2,041		)			(1,764		)
Reserve for loan losses	(25,357		)			(25,290		)
Loans, net	$	1,827,892				$	1,792,280

Acquired loans (b):
Commercial real estate:
Owner occupied	$	84,113		32.4	%	$	92,490		32.5	%
Non-owner occupied	94,863			36.4	%	98,034			34.4	%
Total commercial real estate loans	178,976			68.8	%	190,524			66.9	%
Construction	3,447			1.3	%	10,384			3.6	%
Residential real estate	49,400			19.0	%	54,468			19.1	%
Commercial and industrial	27,187			10.4	%	28,286			9.9	%
Consumer	1,272			0.5	%	1,416			0.5	%
Total loans	$	260,282		100.0	%	$	285,078		100.0	%

Total loans:
Commercial real estate:
Owner occupied	$	381,218		18.0	%	$	391,211		18.6	%
Non-owner occupied	623,888			29.5	%	612,397			29.1	%
Total commercial real estate loans	1,005,106			47.5	%	1,003,608			47.7	%
Construction	216,259			10.2	%	211,038			10.0	%
Residential real estate	436,907			20.7	%	431,842			20.5	%
Commercial and industrial	414,735			19.6	%	414,436			19.7	%
Consumer	42,565			2.0	%	43,488			2.1	%
Total loans	2,115,572			100.0	%	2,104,412			100.0	%

Less:
Deferred loan fees	(2,041		)			(1,764		)
Reserve for loan losses	(25,357		)			(25,290		)
Loans, net	$	2,088,174				$	2,077,358

(a) Loans organically made through the Company’s normal and customary origination process, including adjustable rate mortgage (“ARM”) purchases.
(b) Loans acquired in the acquisition of Home and PPFS.

Changes in Loss Share Payable Associated with Covered Loans

Changes in the loss share payable associated with covered loans for the three months ended March 31, 2017 were as follows (dollars in thousands):



	Three months ended
	March 31, 2017
Balance at beginning of period	$	76
Paid to FDIC	(76		)
FDIC reimbursement	31
Balance at end of period	$	31

Allowance for Credit Losses on Financing Receivables

Transactions and allocations in the reserve for loan losses and unfunded loan commitments, by portfolio segment, for the three months ended March 31, 2017 and 2016 were as follows (dollars in thousands):



	Commercial real estate			Construction		Residential real estate			Commercial and industrial			Consumer			Unallocated			Total
For the three months ended March 31, 2017
Reserve for loan losses
Balance at December 31, 2016	$	6,321		$	2,196	$	3,325		$	10,657		$	1,203		$	1,588		$	25,290
Loan loss provision (credit)	104			132		82			47			178			(543		)	—
Recoveries	2			5		51			401			152			—			611
Loans charged off	(30		)	—		(49		)	(126		)	(339		)	—			(544		)
Balance at end of period	$	6,397		$	2,333	$	3,409		$	10,979		$	1,194		$	1,045		$	25,357

Reserve for unfunded lending commitments
Balance at December 31, 2016	$	48		$	268	$	25		$	75		$	24		$	—		$	440
Provision for unfunded loan commitments	—			—		—			—			—			—			—
Balance at end of period	$	48		$	268	$	25		$	75		$	24		$	—		$	440

Reserve for credit losses
Reserve for loan losses	$	6,397		$	2,333	$	3,409		$	10,979		$	1,194		$	1,045		$	25,357
Reserve for unfunded lending commitments	48			268		25			75			24			—			440
Total reserve for credit losses	$	6,445		$	2,601	$	3,434		$	11,054		$	1,218		$	1,045		$	25,797



	Commercial real estate			Construction		Residential real estate			Commercial and industrial			Consumer			Unallocated		Total
For the three months ended March 31, 2016
Reserve for loan losses
Balance at December 31, 2015	$	3,934		$	1,044	$	2,075		$	13,969		$	917		$	2,476	$	24,415
Loan loss provision (credit)	(2,776		)	16		204			1,129			265			1,162		—
Recoveries	2,728			38		131			159			264			—		3,320
Loans charged off	(40		)	—		(18		)	(2,760		)	(487		)	—		(3,305		)
Balance at end of period	$	3,846		$	1,098	$	2,392		$	12,497		$	959		$	3,638	$	24,430

Reserve for unfunded lending commitments
Balance at December 31, 2015	$	48		$	268	$	25		$	75		$	24		$	—	$	440
Provision for unfunded loan commitments	—			—		—			—			—			—		—
Balance at end of period	$	48		$	268	$	25		$	75		$	24		$	—	$	440

Reserve for credit losses
Reserve for loan losses	$	3,846		$	1,098	$	2,392		$	12,497		$	959		$	3,638	$	24,430
Reserve for unfunded lending commitments	48			268		25			75			24			—		440
Total reserve for credit losses	$	3,894		$	1,366	$	2,417		$	12,572		$	983		$	3,638	$	24,870

An individual loan is impaired when, based on current information and events, management believes that it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. The following table presents the reserve for loan losses and the recorded investment in loans by portfolio segment and impairment evaluation method at March 31, 2017 and December 31, 2016 (dollars in thousands):



	Reserve for loan losses						Recorded investment in loans
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
March 31, 2017
Commercial real estate	$	—	$	6,397	$	6,397	$	490	$	1,004,616	$	1,005,106
Construction	—		2,333		2,333		—		216,259		216,259
Residential real estate	—		3,409		3,409		—		436,907		436,907
Commercial and industrial	2,000		8,979		10,979		6,902		407,833		414,735
Consumer	—		1,194		1,194		—		42,565		42,565
	$	2,000	$	22,312	24,312		$	7,392	$	2,108,180	$	2,115,572
Unallocated					1,045
					$	25,357

December 31, 2016
Commercial real estate	$	—	$	6,321	$	6,321	$	640	$	1,002,968	$	1,003,608
Construction	—		2,196		2,196		—		211,038		211,038
Residential real estate	—		3,325		3,325		—		431,842		431,842
Commercial and industrial	2,000		8,657		10,657		7,034		407,402		414,436
Consumer	—		1,203		1,203		—		43,488		43,488
	$	2,000	$	21,702	23,702		$	7,674	$	2,096,738	$	2,104,412
Unallocated					1,588
					$	25,290

Financing Receivable Credit Quality Indicators

The following table presents, by portfolio class, the recorded investment in loans by internally assigned grades at March 31, 2017 and December 31, 2016 (dollars in thousands):



	Loan grades
	Acceptable		Pass-Watch		Special Mention		Substandard		Total
March 31, 2017
Originated loans (a):
Commercial real estate:
Owner occupied	$	283,767	$	6,560	$	4,046	$	2,732	$	297,105
Non-owner occupied	520,588		3,307		4,137		993		529,025
Total commercial real estate loans	804,355		9,867		8,183		3,725		826,130
Construction	212,436		—		—		376		212,812
Residential real estate	386,808		—		—		699		387,507
Commercial and industrial	347,597		15,595		3,249		21,107		387,548
Consumer	41,264		—		—		29		41,293
	$	1,792,460	$	25,462	$	11,432	$	25,936	$	1,855,290

Acquired loans (b):
Commercial real estate:
Owner occupied	$	77,254	$	3,222	$	1,641	$	1,996	$	84,113
Non-owner occupied	78,459		4,327		6,712		5,365		94,863
Total commercial real estate loans	155,713		7,549		8,353		7,361		178,976
Construction	3,414		—		—		33		3,447
Residential real estate	47,909		814		—		677		49,400
Commercial and industrial	26,546		56		—		585		27,187
Consumer	1,272		—		—		—		1,272
	$	234,854	$	8,419	$	8,353	$	8,656	$	260,282

Total loans:
Commercial real estate:
Owner occupied	$	361,021	$	9,782	$	5,687	$	4,728	$	381,218
Non-owner occupied	599,047		7,634		10,849		6,358		623,888
Total commercial real estate loans	960,068		17,416		16,536		11,086		1,005,106
Construction	215,850		—		—		409		216,259
Residential real estate	434,717		814		—		1,376		436,907
Commercial and industrial	374,143		15,651		3,249		21,692		414,735
Consumer	42,536		—		—		29		42,565
	$	2,027,314	$	33,881	$	19,785	$	34,592	$	2,115,572

(a) Loans organically made through the Company’s normal and customary origination process, including ARM purchases.
(b) Loans acquired in the acquisition of Home and PPFS.



	Loan grades
	Acceptable		Pass-Watch		Special Mention		Substandard		Total
December 31, 2016
Originated loans (a):
Commercial real estate:
Owner occupied	$	282,438	$	9,007	$	1,302	$	5,974	$	298,721
Non-owner occupied	506,946		2,234		4,180		1,003		514,363
Total commercial real estate loans	789,384		11,241		5,482		6,977		813,084
Construction	200,278		—		—		376		200,654
Residential real estate	376,713		—		—		661		377,374
Commercial and industrial	351,914		11,472		5,452		17,312		386,150
Consumer	42,060		—		—		12		42,072
	$	1,760,349	$	22,713	$	10,934	$	25,338	$	1,819,334

Acquired loans (b):
Commercial real estate:
Owner occupied	$	85,868	$	3,222	$	1,663	$	1,737	$	92,490
Non-owner occupied	81,494		3,967		7,962		4,611		98,034
Total commercial real estate loans	167,362		7,189		9,625		6,348		190,524
Construction	10,331		—		—		53		10,384
Residential real estate	51,489		1,988		—		991		54,468
Commercial and industrial	27,636		64		—		586		28,286
Consumer	1,416		—		—		—		1,416
	$	258,234	$	9,241	$	9,625	$	7,978	$	285,078

Total loans:
Commercial real estate:
Owner occupied	$	368,306	$	12,229	$	2,965	$	7,711	$	391,211
Non-owner occupied	588,440		6,201		12,142		5,614		612,397
Total commercial real estate loans	956,746		18,430		15,107		13,325		1,003,608
Construction	210,609		—		—		429		211,038
Residential real estate	428,202		1,988		—		1,652		431,842
Commercial and industrial	379,550		11,536		5,452		17,898		414,436
Consumer	43,476		—		—		12		43,488
	$	2,018,583	$	31,954	$	20,559	$	33,316	$	2,104,412

(a) Loans organically made through the Company’s normal and customary origination process, including ARM purchases.
(b) Loans acquired in the acquisition of Home and PPFS.

Past Due Financing Receivables

The following table presents, by portfolio class, an age analysis of past due loans, including loans placed on non-accrual at March 31, 2017 and December 31, 2016 (dollars in thousands):



	30-89 days past due		90 days or more past due		Total past due		Current		Total loans
March 31, 2017
Originated loans (a):
Commercial real estate:
Owner occupied	$	244	$	490	$	734	$	296,371	$	297,105
Non-owner occupied	—		—		—		529,025		529,025
Total commercial real estate loans	244		490		734		825,396		826,130
Construction	41		376		417		212,395		212,812
Residential real estate	351		140		491		387,016		387,507
Commercial and industrial	740		342		1,082		386,466		387,548
Consumer	198		29		227		41,066		41,293
	$	1,574	$	1,377	$	2,951	$	1,852,339	$	1,855,290

Acquired loans (b):
Commercial real estate:
Owner occupied	$	—	$	600	$	600	$	83,513	$	84,113
Non-owner occupied	786		—		786		94,077		94,863
Total commercial real estate loans	786		600		1,386		177,590		178,976
Construction	—		—		—		3,447		3,447
Residential real estate	1,763		820		2,583		46,817		49,400
Commercial and industrial	511		579		1,090		26,097		27,187
Consumer	5		—		5		1,267		1,272
	$	3,065	$	1,999	$	5,064	$	255,218	$	260,282

Total loans:
Commercial real estate:
Owner occupied	$	244	$	1,090	$	1,334	$	379,884	$	381,218
Non-owner occupied	786		—		786		623,102		623,888
Total commercial real estate loans	1,030		1,090		2,120		1,002,986		1,005,106
Construction	41		376		417		215,842		216,259
Residential real estate	2,114		960		3,074		433,833		436,907
Commercial and industrial	1,251		921		2,172		412,563		414,735
Consumer	203		29		232		42,333		42,565
	$	4,639	$	3,376	$	8,015	$	2,107,557	$	2,115,572

December 31, 2016
Originated loans (a):
Commercial real estate:
Owner occupied	$	205	$	490	$	695	$	298,026	$	298,721
Non-owner occupied	100		—		100		514,263		514,363
Total commercial real estate loans	305		490		795		812,289		813,084
Construction	97		376		473		200,181		200,654
Residential real estate	1,488		—		1,488		375,886		377,374
Commercial and industrial	290		338		628		385,522		386,150
Consumer	322		12		334		41,738		42,072
	$	2,502	$	1,216	$	3,718	$	1,815,616	$	1,819,334




Acquired loans (b):
Commercial real estate:
Owner occupied	$	317	$	—	$	317	$	92,173	$	92,490
Non-owner occupied	—		—		—		98,034		98,034
Total commercial real estate loans	317		—		317		190,207		190,524
Construction	—		17		17		10,367		10,384
Residential real estate	2,053		543		2,596		51,872		54,468
Commercial and industrial	257		—		257		28,029		28,286
Consumer	9		—		9		1,407		1,416
	$	2,636	$	560	$	3,196	$	281,882	$	285,078

Total loans:
Commercial real estate:
Owner occupied	$	522	$	490	$	1,012	$	390,199	$	391,211
Non-owner occupied	100		—		100		612,297		612,397
Total commercial real estate loans	622		490		1,112		1,002,496		1,003,608
Construction	97		393		490		210,548		211,038
Residential real estate	3,541		543		4,084		427,758		431,842
Commercial and industrial	547		338		885		413,551		414,436
Consumer	331		12		343		43,145		43,488
	$	5,138	$	1,776	$	6,914	$	2,097,498	$	2,104,412

(a) Loans organically made through the Company’s normal and customary origination process, including ARM purchases.
(b) Loans acquired in the acquisition of Home and PPFS.

Impaired Financing Receivables, By Portfolio Class

The following table presents information related to impaired loans, by portfolio class, at March 31, 2017 and December 31, 2016 (dollars in thousands):



	Impaired loans
	With a related allowance		Without a related allowance		Total recorded balance		Unpaid principal balance		Related allowance
March 31, 2017
Commercial real estate:
Owner occupied	$	—	$	490	$	490	$	490	$	—
Non-owner occupied	—		—		—		—		—
Total commercial real estate loans	—		490		490		490		—
Construction	—		—		—		—		—
Residential real estate	—		—		—		—		—
Commercial and industrial	6,565		337		6,902		10,425		2,000
Consumer	—		—		—		—		—
	$	6,565	$	827	$	7,392	$	10,915	$	2,000

December 31, 2016
Commercial real estate:
Owner occupied	$	—	$	640	$	640	$	1,077	$	—
Non-owner occupied	—		—		—		—		—
Total commercial real estate loans	—		640		640		1,077		—
Construction	—		—		—		—		—
Residential real estate	—		—		—		—		—
Commercial and industrial	6,701		333		7,034		10,359		2,000
Consumer	—		—		—		—		—
	$	6,701	$	973	$	7,674	$	11,436	$	2,000

The following table presents, by portfolio class, the average recorded investment in impaired loans for the three months ended March 31, 2017 and 2016 (dollars in thousands):



	Three Months Ended March 31,
	2017		2016
Commercial real estate:
Owner occupied	$	565	$	2,876
Non-owner occupied	—		1,607
Total commercial real estate loans	565		4,483
Construction	—		183
Residential real estate	—		9
Commercial and industrial	6,968		5,201
Consumer	—		—
	$	7,533	$	9,876

Average Recorded Investment In Impaired Loans

The following table presents information related to impaired loans, by portfolio class, at March 31, 2017 and December 31, 2016 (dollars in thousands):



	Impaired loans
	With a related allowance		Without a related allowance		Total recorded balance		Unpaid principal balance		Related allowance
March 31, 2017
Commercial real estate:
Owner occupied	$	—	$	490	$	490	$	490	$	—
Non-owner occupied	—		—		—		—		—
Total commercial real estate loans	—		490		490		490		—
Construction	—		—		—		—		—
Residential real estate	—		—		—		—		—
Commercial and industrial	6,565		337		6,902		10,425		2,000
Consumer	—		—		—		—		—
	$	6,565	$	827	$	7,392	$	10,915	$	2,000

December 31, 2016
Commercial real estate:
Owner occupied	$	—	$	640	$	640	$	1,077	$	—
Non-owner occupied	—		—		—		—		—
Total commercial real estate loans	—		640		640		1,077		—
Construction	—		—		—		—		—
Residential real estate	—		—		—		—		—
Commercial and industrial	6,701		333		7,034		10,359		2,000
Consumer	—		—		—		—		—
	$	6,701	$	973	$	7,674	$	11,436	$	2,000

The following table presents, by portfolio class, the average recorded investment in impaired loans for the three months ended March 31, 2017 and 2016 (dollars in thousands):



	Three Months Ended March 31,
	2017		2016
Commercial real estate:
Owner occupied	$	565	$	2,876
Non-owner occupied	—		1,607
Total commercial real estate loans	565		4,483
Construction	—		183
Residential real estate	—		9
Commercial and industrial	6,968		5,201
Consumer	—		—
	$	7,533	$	9,876

Schedule of Financing Receivables, Non Accrual Status

Information with respect to the Company’s non-performing loans, by portfolio class, at March 31, 2017 and December 31, 2016 is as follows (dollars in thousands):



	March 31, 2017		December 31, 2016
Commercial real estate:
Owner occupied	$	2,337	$	1,739
Non-owner occupied	278		2,659
Total commercial real estate loans	2,615		4,398
Construction	409		429
Residential real estate	1,411		1,598
Commercial and industrial	7,706		7,270
Consumer	—		—
Total non-accrual loans	$	12,141	$	13,695

Accruing loans which are contractually past due 90 days or more:
Residential real estate	583		—
Commercial and industrial	12		5
Consumer	29		12
Total accruing loans which are contractually past due 90 days or more	$	624	$	17

Troubled Debt Restructurings on Financing Receivables

The following table presents, by portfolio segment, the post modification recorded investment for TDRs restructured during the three months ended March 31, 2017 and 2016.

Three months ended March 31, 2017

Rate
reduction

Term
extension

Rate reduction
and term
extension

Total

Commercial real estate

—

Construction

—

Residential real estate

—

Commercial and industrial

—

Consumer

—



Three months ended March 31, 2016	Rate reduction		Term extension		Rate reduction and term extension		Total
Commercial real estate	$	—	$	—	$	—	$	—
Construction	—		—		—		—
Residential real estate	—		—		—		—
Commercial and industrial	—		22		—		22
Consumer	—		—		—		—
	$	—	$	22	$	—	$	22

The following table presents, by portfolio segment, the information with respect to the Company’s loans that were modified and recorded as TDRs during the three months ended March 31, 2017 and 2016 (dollars in thousands).



	Three months ended March 31,
	2017			2016
	Number of loans	TDR outstanding recorded investment		Number of loans	TDR outstanding recorded investment
Commercial real estate	—	$	—	—	$	—
Construction	—	—		—	—
Residential real estate	—	—		—	—
Commercial and industrial	—	—		1	22
Consumer	—	—		—	—
	—	$	—	1	$	22

Post Modification Troubled Debt Restructurings on Financing Receivables