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LOANS (Tables)
 6 Months Ended
Jun. 30, 2018
LOANS [Abstract]  
Major Classifications of Loans
Major classifications of loans at June 30, 2018 and December 31, 2017 are summarized as follows:

  
2018
  
2017
 
Residential real estate
 
$
341,157
  
$
338,829
 
Multifamily real estate
  
58,154
   
62,151
 
Commercial real estate:
        
Owner occupied
  
136,795
   
136,048
 
Non-owner occupied
  
223,491
   
230,702
 
Commercial and industrial
  
78,358
   
78,259
 
Consumer
  
27,966
   
28,293
 
Construction and land
  
127,641
   
139,012
 
All other
  
34,091
   
35,758
 
  
$
1,027,653
  
$
1,049,052
 
Activity in the Allowance for Loan Losses by Portfolio Segment
Activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2018 was as follows:

Loan Class
 
Balance
Dec 31,
2017
  
Provision
(credit) for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
June 30,
2018
 
                
Residential real estate
 
$
2,986
  
$
(609
)
 
$
(148
)
 
$
25
  
$
2,254
 
Multifamily real estate
  
978
   
(410
)
  
(11
)
  
-
   
557
 
Commercial real estate:
                    
Owner occupied
  
1,653
   
266
   
(3
)
  
1
   
1,917
 
Non-owner occupied
  
2,313
   
140
   
(16
)
  
-
   
2,437
 
Commercial and industrial
  
1,101
   
976
   
(504
)
  
26
   
1,599
 
Consumer
  
328
   
51
   
(63
)
  
38
   
354
 
Construction and land
  
2,408
   
864
   
(19
)
  
-
   
3,253
 
All other
  
337
   
337
   
(130
)
  
67
   
611
 
Total
 
$
12,104
  
$
1,615
  
$
(894
)
 
$
157
  
$
12,982
 

Activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2017 was as follows:

Loan Class
 
Balance
Dec 31,
2016
  
Provision
(credit) for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
June 30,
2017
 
                
Residential real estate
 
$
2,948
  
$
193
  
$
(199
)
 
$
31
  
$
2,973
 
Multifamily real estate
  
785
   
552
   
-
   
-
   
1,337
 
Commercial real estate:
                    
Owner occupied
  
1,543
   
(166
)
  
-
   
241
   
1,618
 
Non-owner occupied
  
2,350
   
(12
)
  
(4
)
  
-
   
2,334
 
Commercial and industrial
  
1,140
   
9
   
(134
)
  
78
   
1,093
 
Consumer
  
347
   
138
   
(165
)
  
53
   
373
 
Construction and land
  
1,397
   
392
   
(124
)
  
10
   
1,675
 
All other
  
326
   
36
   
(140
)
  
70
   
292
 
Total
 
$
10,836
  
$
1,142
  
$
(766
)
 
$
483
  
$
11,695
 

Activity in the allowance for loan losses by portfolio segment for the three months ended
June 30, 2018 was as follows:

Loan Class
 
Balance
March 31,
2018
  
Provision
(credit) for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
June 30,
2018
 
                
Residential real estate
 
$
2,262
  
$
82
  
$
(99
)
 
$
9
  
$
2,254
 
Multifamily real estate
  
647
   
(90
)
  
-
   
-
   
557
 
Commercial real estate:
                    
Owner occupied
  
1,816
   
102
   
(1
)
  
-
   
1,917
 
Non-owner occupied
  
2,187
   
250
   
-
   
-
   
2,437
 
Commercial and industrial
  
1,651
   
163
   
(237
)
  
22
   
1,599
 
Consumer
  
369
   
2
   
(30
)
  
13
   
354
 
Construction and land
  
3,302
   
(49
)
  
-
   
-
   
3,253
 
All other
  
606
   
40
   
(63
)
  
28
   
611
 
Total
 
$
12,840
  
$
500
  
$
(430
)
 
$
72
  
$
12,982
 

Activity in the allowance for loan losses by portfolio segment for the three months ended
June 30, 2017 was as follows:

Loan Class
 
Balance
March 31,
2017
  
Provision
 (credit) for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
June 30,
2017
 
                
Residential real estate
 
$
2,977
  
$
64
  
$
(94
)
 
$
26
  
$
2,973
 
Multifamily real estate
  
770
   
567
   
-
   
-
   
1,337
 
Commercial real estate:
                    
Owner occupied
  
1,576
   
(198
)
  
-
   
240
   
1,618
 
Non-owner occupied
  
2,422
   
(88
)
  
-
   
-
   
2,334
 
Commercial and industrial
  
1,129
   
43
   
(134
)
  
55
   
1,093
 
Consumer
  
370
   
22
   
(48
)
  
29
   
373
 
Construction and land
  
1,313
   
358
   
-
   
-
   
1,675
 
All other
  
332
   
9
   
(81
)
  
32
   
292
 
Total
 
$
10,894
  
$
776
  
$
(357
)
 
$
382
  
$
11,695
 
Purchased Impaired Loans
The carrying amount of those loans is as follows at June 30, 2018 and December 31, 2017.

  
2018
  
2017
 
Residential real estate
 
$
1,109
  
$
1,321
 
Commercial real estate
        
Owner occupied
  
1,410
   
1,508
 
Commercial and industrial
  
6
   
211
 
Construction and land
  
1,305
   
1,450
 
All other
  
286
   
286
 
Total carrying amount
 
$
4,116
  
$
4,776
 
Contractual principal balance
 
$
5,765
  
$
6,728
 
         
Carrying amount, net of allowance
 
$
4,116
  
$
4,676
 
Purchase Loans Accretable Yield, or Income Expected to be Collected
The accretable yield, or income expected to be collected, on the purchased loans above is as follows at June 30, 2018 and June 30, 2017.

  
2018
  
2017
 
Balance at January 1
 
$
754
  
$
1,208
 
New loans purchased
  
-
   
-
 
Accretion of income
  
(80
)
  
(206
)
Loans placed on non-accrual
  
(41
)
  
-
 
Income recognized upon full repayment
  
(38
)
  
(197
)
Reclassifications from non-accretable difference
  
-
   
-
 
Disposals
  
-
   
-
 
Balance at June 30
 
$
595
  
$
805
 
Past Due and Non-performing Loans
The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2018 and December 31, 2017.  The recorded investment in non-accrual loans is less than the principal owed on non-accrual loans due to discounts applied to the carrying value of the loan at time of their acquisition and interest payments made by the borrower which have been used to reduce the recorded investment in the loan rather than recognized as interest income.

June 30, 2018
 
Principal
Owed on
Non-accrual
Loans
  
Recorded
Investment in
Non-accrual
Loans
  
Loans Past
Due Over 90
Days, still
accruing
 
          
Residential real estate
 
$
3,907
  
$
3,246
  
$
686
 
Multifamily real estate
  
1,984
   
1,972
   
-
 
Commercial real estate
            
Owner occupied
  
4,063
   
3,887
   
-
 
Non-owner occupied
  
1,635
   
1,573
   
2,889
 
Commercial and industrial
  
1,017
   
438
   
47
 
Consumer
  
233
   
205
   
-
 
Construction and land
  
4,803
   
4,711
   
27
 
All other
  
185
   
185
   
6
 
Total
 
$
17,827
  
$
16,217
  
$
3,655
 

December 31, 2017
 
Principal
Owed on
Non-accrual
Loans
  
Recorded
Investment in
Non-accrual
Loans
  
Loans Past
Due Over 90
Days, still
accruing
 
          
Residential real estate
 
$
2,944
  
$
2,422
  
$
869
 
Multifamily real estate
  
2,128
   
2,128
   
334
 
Commercial real estate
            
Owner occupied
  
2,623
   
2,483
   
134
 
Non-owner occupied
  
1,862
   
1,755
   
85
 
Commercial and industrial
  
1,313
   
544
   
1,139
 
Consumer
  
268
   
241
   
-
 
Construction and land
  
5,824
   
5,673
   
830
 
Total
 
$
16,962
  
$
15,246
  
$
3,391
 
Aging of Recorded Investment in Past Due Loans by Loan Class
The following table presents the aging of the recorded investment in past due loans as of June 30, 2018 by class of loans:

Loan Class
 
Total
Loans
  
30-89 Days
Past Due
  
Greater
than 90
days past
due
  
Total Past
Due
  
Loans Not
Past Due
 
                
Residential real estate
 
$
341,157
  
$
5,730
  
$
2,145
  
$
7,875
  
$
333,282
 
Multifamily real estate
  
58,154
   
106
   
1,972
   
2,078
   
56,076
 
Commercial real estate:
                    
Owner occupied
  
136,795
   
249
   
1,512
   
1,761
   
135,034
 
Non-owner occupied
  
223,491
   
989
   
2,889
   
3,878
   
219,613
 
Commercial and industrial
  
78,358
   
56
   
239
   
295
   
78,063
 
Consumer
  
27,966
   
347
   
82
   
429
   
27,537
 
Construction and land
  
127,641
   
4,001
   
813
   
4,814
   
122,827
 
All other
  
34,091
   
-
   
191
   
191
   
33,900
 
Total
 
$
1,027,653
  
$
11,478
  
$
9,843
  
$
21,321
  
$
1,006,332
 

The following table presents the aging of the recorded investment in past due loans as of December 31, 2017 by class of loans:

Loan Class
 
Total
Loans
  
30-89 Days
Past Due
  
Greater
than 90
days past
due
  
Total Past
Due
  
Loans Not
Past Due
 
                
Residential real estate
 
$
338,829
  
$
5,242
  
$
1,835
  
$
7,077
  
$
331,752
 
Multifamily real estate
  
62,151
   
-
   
334
   
334
   
61,817
 
Commercial real estate:
                    
Owner occupied
  
136,048
   
311
   
1,784
   
2,095
   
133,953
 
Non-owner occupied
  
230,702
   
12
   
225
   
237
   
230,465
 
Commercial and industrial
  
78,259
   
123
   
1,611
   
1,734
   
76,525
 
Consumer
  
28,293
   
492
   
87
   
579
   
27,714
 
Construction and land
  
139,012
   
144
   
2,508
   
2,652
   
136,360
 
All other
  
35,758
   
-
   
-
   
-
   
35,758
 
Total
 
$
1,049,052
  
$
6,324
  
$
8,384
  
$
14,708
  
$
1,034,344
 
Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2018:
 
  
Allowance for Loan Losses
  
Loan Balances
 
Loan Class
 
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
  
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
 
                         
Residential real estate
 
$
-
  
$
2,254
  
$
-
  
$
2,254
  
$
298
  
$
339,750
  
$
1,109
  
$
341,157
 
Multifamily real estate
  
72
   
485
   
-
   
557
   
1,972
   
56,182
   
-
   
58,154
 
Commercial real estate:
                                
Owner occupied
  
400
   
1,517
   
-
   
1,917
   
3,054
   
132,331
   
1,410
   
136,795
 
Non-owner occupied
  
79
   
2,358
   
-
   
2,437
   
7,564
   
215,927
   
-
   
223,491
 
Commercial and industrial
  
64
   
1,535
   
-
   
1,599
   
539
   
77,813
   
6
   
78,358
 
Consumer
  
-
   
354
   
-
   
354
   
-
   
27,966
   
-
   
27,966
 
Construction and land
  
990
   
2,263
       
3,253
   
4,511
   
121,825
   
1,305
   
127,641
 
All other
  
-
   
611
   
-
   
611
   
283
   
33,522
   
286
   
34,091
 
Total
 
$
1,605
  
$
11,377
  
$
-
  
$
12,982
  
$
18,221
  
$
1,005,316
  
$
4,116
  
$
1,027,653
 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2017:
 
  
Allowance for Loan Losses
  
Loan Balances
 
Loan Class
 
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
  
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
 
                         
Residential real estate
 
$
-
  
$
2,986
  
$
-
  
$
2,986
  
$
308
  
$
337,200
  
$
1,321
  
$
338,829
 
Multifamily real estate
  
218
   
760
   
-
   
978
   
2,462
   
59,689
   
-
   
62,151
 
Commercial real estate:
                                
Owner occupied
  
307
   
1,346
   
-
   
1,653
   
3,314
   
131,226
   
1,508
   
136,048
 
Non-owner occupied
  
88
   
2,225
   
-
   
2,313
   
11,578
   
219,124
   
-
   
230,702
 
Commercial and industrial
  
104
   
897
   
100
   
1,101
   
1,304
   
76,744
   
211
   
78,259
 
Consumer
  
-
   
328
   
-
   
328
   
-
   
28,293
   
-
   
28,293
 
Construction and land
  
685
   
1,723
   
-
   
2,408
   
5,672
   
131,890
   
1,450
   
139,012
 
All other
  
-
   
337
   
-
   
337
   
293
   
35,179
   
286
   
35,758
 
Total
 
$
1,402
  
$
10,602
  
$
100
  
$
12,104
  
$
24,931
  
$
1,019,345
  
$
4,776
  
$
1,049,052
 
Loans Individually Evaluated for Impairment by Class of Loans
The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2018.  The table does not include any loans acquired with deteriorated credit quality.

  
Unpaid
Principal
Balance
  
Recorded
Investment
  
Allowance
for Loan
Losses
Allocated
 
With no related allowance recorded:
         
Residential real estate
 
$
434
  
$
298
  
$
-
 
Commercial real estate
            
Owner occupied
  
2,187
   
2,186
   
-
 
Non-owner occupied
  
5,611
   
5,557
   
-
 
Commercial and industrial
  
1,005
   
474
   
-
 
All other
  
284
   
284
   
-
 
   
9,521
   
8,799
   
-
 
With an allowance recorded:
            
Multifamily real estate
  
1,984
   
1,972
   
72
 
Commercial real estate
            
Owner occupied
  
894
   
868
   
400
 
Non-owner occupied
  
2,007
   
2,007
   
79
 
Commercial and industrial
  
72
   
64
   
64
 
Construction and land
  
4,602
   
4,511
   
990
 
   
9,559
   
9,422
   
1,605
 
Total
 
$
19,080
  
$
18,221
  
$
1,605
 
 
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2017.  The table includes $199,000 of loans acquired with deteriorated credit quality for which the Company cannot reasonably estimate cash flows such that they are accounted for on the cost recovery method and are still individually evaluated for impairment.

  
Unpaid
Principal
Balance
  
Recorded
Investment
  
Allowance
for Loan
Losses
Allocated
 
With no related allowance recorded:
         
Residential real estate
 
$
446
  
$
308
  
$
-
 
Multifamily real estate
  
334
   
334
   
-
 
Commercial real estate
            
Owner occupied
  
2,451
   
2,439
   
-
 
Non-owner occupied
  
9,602
   
9,506
   
-
 
Commercial and industrial
  
1,719
   
1,188
   
-
 
Construction and land
  
1,798
   
1,678
   
-
 
All other
  
293
   
293
   
-
 
   
16,643
   
15,746
   
-
 
With an allowance recorded:
            
Multifamily real estate
 
$
2,128
  
$
2,128
  
$
218
 
Commercial real estate
            
Owner occupied
  
895
   
875
   
307
 
Non-owner occupied
  
2,072
   
2,072
   
88
 
Commercial and industrial
  
466
   
315
   
204
 
Construction and land
  
4,024
   
3,994
   
685
 
   
9,585
   
9,384
   
1,502
 
Total
 
$
26,228
  
$
25,130
  
$
1,502
 
Average Balance of Loans Individually Evaluated for Impairment and Interest Income Recognized
The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the six months ended June 30, 2018 and June 30, 2017.  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Six months ended June 30, 2018
  
Six months ended June 30, 2017
 
Loan Class
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
 
                   
Residential real estate
 
$
302
  
$
-
  
$
-
  
$
345
  
$
1
  
$
1
 
Multifamily real estate
  
2,287
   
11
   
11
   
13,611
   
130
   
121
 
Commercial real estate:
                        
Owner occupied
  
3,208
   
51
   
51
   
3,211
   
22
   
22
 
Non-owner occupied
  
9,535
   
241
   
241
   
2,079
   
61
   
61
 
Commercial and industrial
  
1,145
   
16
   
16
   
1,523
   
101
   
101
 
Construction and land
  
4,703
   
3
   
3
   
8,822
   
280
   
277
 
All other
  
288
   
4
   
4
   
307
   
9
   
9
 
Total
 
$
21,468
  
$
326
  
$
326
  
$
29,898
  
$
604
  
$
592
 

The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the three months ended June 30, 2018 and June 30, 2017.  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Three months ended June 30, 2018
  
Three months ended June 30, 2017
 
Loan Class
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
 
                   
Residential real estate
 
$
299
  
$
-
  
$
-
  
$
328
  
$
-
  
$
-
 
Multifamily real estate
  
2,199
   
1
   
1
   
13,596
   
65
   
59
 
Commercial real estate:
                        
Owner occupied
  
3,154
   
26
   
26
   
3,417
   
16
   
16
 
Non-owner occupied
  
8,514
   
105
   
105
   
1,932
   
29
   
29
 
Commercial and industrial
  
966
   
8
   
8
   
1,471
   
27
   
27
 
Construction and land
  
4,218
   
3
   
3
   
6,900
   
48
   
46
 
All other
  
286
   
-
   
-
   
305
   
9
   
9
 
Total
 
$
19,636
  
$
143
  
$
143
  
$
27,949
  
$
194
  
$
186
 
Troubled Debt Restructurings
The following table presents TDR’s as of June 30, 2018 and December 31, 2017:

June 30, 2018
 
TDR’s on
Non-accrual
  
Other
TDR’s
  
Total TDR’s
 
          
Residential real estate
 
$
357
  
$
117
  
$
474
 
Multifamily real estate
  
1,972
   
-
   
1,972
 
Commercial real estate
            
Owner occupied
  
402
   
1,784
   
2,186
 
Non-owner occupied
  
-
   
6,029
   
6,029
 
Commercial and industrial
  
-
   
474
   
474
 
Construction and land
  
3,925
   
-
   
3,925
 
All other
  
-
   
284
   
284
 
Total
 
$
6,656
  
$
8,688
  
$
15,344
 

December 31, 2017
 
TDR’s on
Non-accrual
  
Other
TDR’s
  
Total TDR’s
 
          
Residential real estate
 
$
393
  
$
107
  
$
500
 
Multifamily real estate
  
2,128
   
-
   
2,128
 
Commercial real estate
            
Owner occupied
  
601
   
1,783
   
2,384
 
Non-owner occupied
  
-
   
9,904
   
9,904
 
Commercial and industrial
  
56
   
497
   
553
 
Construction and land
  
3,994
   
-
   
3,994
 
All other
  
-
   
293
   
293
 
Total
 
$
7,172
  
$
12,584
  
$
19,756
 
Troubled Debt Restructuring During the Period
The following table presents TDR’s that occurred during the three and six months ended June 30, 2017.

  
Three months ended June 30, 2017
  
Six months ended June 30, 2017
 
Loan Class
 
Number of
Loans
  
Pre-
Modification
Outstanding
Recorded
Investment
  
Post-
Modification
Outstanding
Recorded
Investment
  
Number of
Loans
  
Pre-
Modification
Outstanding
Recorded
Investment
  
Post-
Modification
Outstanding
Recorded
Investment
 
                   
Commercial real estate
                  
Owner occupied
  
2
  
$
1,525
  
$
1,525
   
2
  
$
1,525
  
$
1,525
 
Commercial & industrial
  
1
   
191
   
191
   
1
   
191
   
191
 
Total
  
3
  
$
1,716
  
$
1,716
   
3
  
$
1,716
  
$
1,716
 
Risk Category of Loans by Class of Loans
As of June 30, 2018, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
 
Pass
  
Special
Mention
  
Substandard
  
Doubtful
  
Total Loans
 
                
Residential real estate
 
$
331,254
  
$
1,120
  
$
8,783
  
$
-
  
$
341,157
 
Multifamily real estate
  
51,196
   
4,986
   
1,972
   
-
   
58,154
 
Commercial real estate:
                    
Owner occupied
  
125,261
   
5,060
   
6,474
   
-
   
136,795
 
Non-owner occupied
  
212,252
   
3,018
   
8,221
   
-
   
223,491
 
Commercial and industrial
  
71,370
   
4,234
   
2,754
   
-
   
78,358
 
Consumer
  
27,616
   
-
   
350
   
-
   
27,966
 
Construction and land
  
112,956
   
8,647
   
6,038
   
-
   
127,641
 
All other
  
32,783
   
838
   
470
   
-
   
34,091
 
Total
 
$
964,688
  
$
27,903
  
$
35,062
  
$
-
  
$
1,027,653
 

As of December 31, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
 
Pass
  
Special
Mention
  
Substandard
  
Doubtful
  
Total Loans
 
                
Residential real estate
 
$
327,185
  
$
667
  
$
10,976
  
$
1
  
$
338,829
 
Multifamily real estate
  
55,084
   
4,605
   
2,462
   
-
   
62,151
 
Commercial real estate:
                    
Owner occupied
  
124,244
   
4,937
   
6,867
   
-
   
136,048
 
Non-owner occupied
  
216,079
   
2,428
   
12,195
   
-
   
230,702
 
Commercial and industrial
  
70,078
   
5,851
   
2,330
   
-
   
78,259
 
Consumer
  
27,889
   
-
   
404
   
-
   
28,293
 
Construction and land
  
126,323
   
5,460
   
7,229
       
139,012
 
All other
  
34,468
   
795
   
495
   
-
   
35,758
 
Total
 
$
981,350
  
$
24,743
  
$
42,958
  
$
1
  
$
1,049,052