Loans (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Summary of Loans

Loans consist of the following:

(Dollars in thousands)	June 30, 2016		December 31, 2015
Commercial	$	135,043	$	123,143
Commercial real estate		154,236		148,775
Residential real estate		133,490		125,775
Construction & land development		15,224		15,452
Consumer		12,289		9,268
Total loans before deferred costs		450,282		422,413
Deferred loan costs		507		458
Total Loans	$	450,789	$	422,871

Schedule of Allowances for Loan Losses by Portfolio Segment

The following tables detail activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2016 and 2015. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

The changes in the provision for loan losses for the three and six months ended June 30, 2016 related to commercial loans were due to the increase in specific reserve amounts for two commercial relationships, the downgrade of one commercial relationship and the increase in loan volume. The decrease in the provision related to commercial real estate loans for the six month period in 2016 was primarily due to a recovery of a prior charge-off. The increase in the provision for commercial real estate loans for the three month period of 2016 was due to the downgrade of one commercial relationship.

The changes in the provision for loan losses for the three and six month periods of 2015 related to commercial and commercial real estate loans were primarily due to the increase in loan balances in the first quarter of 2015 and the subsequent decrease in these loan balances in the second quarter of 2015. The increase in the provision related to consumer loans for the six months ended June 30, 2015 was due to charge-offs of loans in that category and increasing loan volumes.

(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate			Construction & Land Development			Consumer			Unallocated			Total
Three months ended June 30, 2016
Beginning balance	$	2,053		$	1,225		$	1,084		$	106		$	94		$	443		$	5,005
Provision for possible loan losses		326			48			11			21			16			(257	)		165
Charge-offs		(6	)		(12	)		—			—			—						(18	)
Recoveries		3			1			—			—			—						4
Net charge-offs		(3	)		(11	)		—			—			—						(14	)
Ending balance	$	2,376		$	1,262		$	1,095		$	127		$	110		$	186		$	5,156
Six months ended June 30, 2016
Beginning balance	$	1,664		$	1,271		$	1,086		$	123		$	86		$	432		$	4,662
Provision for possible loan losses		720			(180	)		7			4			24			(246	)		329
Charge-offs		(15	)		(12	)		—			—			(1	)					(28	)
Recoveries		7			183			2			—			1						193
Net charge-offs		(8	)		171			2			—			—						165
Ending balance	$	2,376		$	1,262		$	1,095		$	127		$	110		$	186		$	5,156
Three months ended June 30, 2015
Beginning balance	$	1,394		$	1,574		$	1,003		$	133		$	69		$	321		$	4,494
Provision for possible loan losses		(43	)		(99	)		8			(8	)		8			329			195
Charge-offs		(3	)		(16	)		(17	)		—			(4	)					(40	)
Recoveries		6			—			—			—			1						7
Net charge-offs		3			(16	)		(17	)		—			(3	)					(33	)
Ending balance	$	1,354		$	1,459		$	994		$	125		$	74		$	650		$	4,656
Six months ended June 30, 2015
Beginning balance	$	1,289		$	1,524		$	1,039		$	142		$	60		$	327		$	4,381
Provision for possible loan losses		58			(35	)		16			(17	)		44			323			389
Charge-offs		(5	)		(40	)		(70	)		—			(34	)					(149	)
Recoveries		12			10			9			—			4						35
Net charge-offs		7			(30	)		(61	)		—			(30	)					(114	)
Ending balance	$	1,354		$	1,459		$	994		$	125		$	74		$	650		$	4,656

Allowances for Loan Losses and Ending Balances by Portfolio Class and Based on Impairment Method

The following table presents the balance in the allowance for loan losses and the ending loan balances by portfolio class and based on the impairment method as of June 30, 2016 and December 31, 2015:

(Dollars in thousands)	Commercial		Commercial Real Estate		Residential Real Estate		Construction		Consumer		Unallocated		Total
June 30, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	709	$	—	$	27	$	—	$	—	$	—	$	736
Collectively evaluated for impairment		1,667		1,262		1,068		127		110		186		4,420
Total ending allowance balance	$	2,376	$	1,262	$	1,095	$	127	$	110	$	186	$	5,156
Loans:
Loans individually evaluated for impairment	$	6,554	$	664	$	1,486	$	—	$	—			$	8,704
Loans collectively evaluated for impairment		128,489		153,572		132,004		15,224		12,289				441,578
Total ending loans balance	$	135,043	$	154,236	$	133,490	$	15,224	$	12,289			$	450,282
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	299	$	64	$	26	$	—	$	—	$	—	$	389
Collectively evaluated for impairment		1,365		1,207		1,060		123		86		432		4,273
Total ending allowance balance	$	1,664	$	1,271	$	1,086	$	123	$	86	$	432	$	4,662
Loans:
Loans individually evaluated for impairment	$	6,127	$	1,064	$	1,533	$	—	$	—			$	8,724
Loans collectively evaluated for impairment		117,016		147,711		124,242		15,452		9,268				413,689
Total ending loans balance	$	123,143	$	148,775	$	125,775	$	15,452	$	9,268			$	422,413

Schedule of Impairment by Class of Loans

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2016 and December 31, 2015:

(Dollars in thousands)	Unpaid Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance
June 30, 2016
Commercial	$	6,984	$	5,376	$	1,198	$	6,574	$	709
Commercial real estate		821		641		24		665		—
Residential real estate		1,653		975		513		1,488		27
Total impaired loans	$	9,458	$	6,992	$	1,735	$	8,727	$	736
December 31, 2015
Commercial	$	6,541	$	5,832	$	301	$	6,133	$	299
Commercial real estate		1,265		670		393		1,063		64
Residential real estate		1,689		967		568		1,535		26
Total impaired loans	$	9,495	$	7,469	$	1,262	$	8,731	$	389

Schedule of Average Recorded Investment in Impaired Loans and Related Interest Income Recognized

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated.

	Three months ended June 30,				Six months ended June 30,
(Dollars in thousands)	2016		2015		2016		2015
Average recorded investment:
Commercial	$	6,579	$	6,137	$	6,360	$	5,998
Commercial real estate		746		1,606		865		1,655
Residential real estate		1,497		1,729		1,518		1,674
Average recorded investment in impaired loans	$	8,822	$	9,472	$	8,743	$	9,327
Interest income recognized:
Commercial	$	56	$	54	$	122	$	105
Commercial real estate		2		4		6		9
Residential real estate		14		19		29		35
Interest income recognized on a cash basis on impaired loans	$	72	$	77	$	157	$	149

Schedule of Aging of Past Due and Nonaccrual Loans

The following table presents the aging of past due loans and nonaccrual loans as of June 30, 2016 and December 31, 2015 by class of loans:

(Dollars in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days + Past Due		Non- Accrual		Total Past Due and Non- Accrual		Total Loans
June 30, 2016
Commercial	$	133,401	$	254	$	23	$	—	$	1,365	$	1,642	$	135,043
Commercial real estate		153,474		60		—		122		580		762		154,236
Residential real estate		132,345		374		104		114		553		1,145		133,490
Construction & land development		15,224		—		—		—		—		—		15,224
Consumer		12,150		120		19		—		—		139		12,289
Total Loans	$	446,594	$	808	$	146	$	236	$	2,498	$	3,688	$	450,282

Summary of Troubled Debt Restructurings

The following table presents loans restructured during the three and six month period ended June 30, 2015.

(Dollars in thousands)	Number of loans restructured		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
For the three months ended June 30, 2016
Commercial		3	$	327	$	327
Total Restructured Loans		3	$	327	$	327

Summary of Loans by Credit Quality Indicator

homogeneous loans. Based on the most recent analysis performed, the risk category of loans by class is as follows as of June 30, 2016 and December 31, 2015:

(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Not Rated		Total
June 30, 2016
Commercial	$	119,145	$	2,523	$	12,476	$	—	$	899	$	135,043
Commercial real estate		144,549		2,811		5,969		—		907		154,236
Residential real estate		221		—		200		—		133,069		133,490
Construction & land development		11,766		829		374		—		2,255		15,224
Consumer		—		—		—		—		12,289		12,289
Total	$	275,681	$	6,163	$	19,019	$	—	$	149,419	$	450,282

Schedule of Loans Not Rated by Class of Loans

The following table presents loans that are not rated by class of loans as of June 30, 2016 and December 31, 2015. Nonperforming loans include loans past due 90 days or more and loans on nonaccrual of interest status.

(Dollars in thousands)	Performing		Non-Performing		Total
June 30, 2016
Commercial	$	899	$	—	$	899
Commercial real estate		824		83		907
Residential real estate		132,432		637		133,069
Construction & land development		2,255		—		2,255
Consumer		12,289		—		12,289
Total	$	148,699	$	720	$	149,419