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

  
2018
  
2017
 
Residential real estate
 
$
340,478
  
$
338,829
 
Multifamily real estate
  
54,602
   
62,151
 
Commercial real estate:
        
Owner occupied
  
135,884
   
136,048
 
Non-owner occupied
  
226,710
   
230,702
 
Commercial and industrial
  
85,585
   
78,259
 
Consumer
  
28,129
   
28,293
 
Construction and land
  
132,141
   
139,012
 
All other
  
33,537
   
35,758
 
  
$
1,037,066
  
$
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 nine months ended September 30, 2018 was as follows:

Loan Class
 
Balance
Dec 31,
2017
  
Provision
(credit) for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
Sept 30,
2018
 
                
Residential real estate
 
$
2,986
  
$
(509
)
 
$
(229
)
 
$
30
  
$
2,278
 
Multifamily real estate
  
978
   
(504
)
  
(11
)
  
-
   
463
 
Commercial real estate:
                    
Owner occupied
  
1,653
   
174
   
(21
)
  
1
   
1,807
 
Non-owner occupied
  
2,313
   
500
   
(16
)
  
2
   
2,799
 
Commercial and industrial
  
1,101
   
1,108
   
(525
)
  
40
   
1,724
 
Consumer
  
328
   
90
   
(105
)
  
50
   
363
 
Construction and land
  
2,408
   
651
   
(20
)
  
400
   
3,439
 
All other
  
337
   
380
   
(203
)
  
96
   
610
 
Total
 
$
12,104
  
$
1,890
  
$
(1,130
)
 
$
619
  
$
13,483
 

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

Loan Class
 
Balance
Dec 31,
2016
  
Provision
(credit) for
loan losses
  
Loans charged-
off
  
Recoveries
  
Balance
Sept 30,
2017
 
                
Residential real estate
 
$
2,948
  
$
363
  
$
(362
)
 
$
52
  
$
3,001
 
Multifamily real estate
  
785
   
451
   
-
   
-
   
1,236
 
Commercial real estate:
                    
Owner occupied
  
1,543
   
(161
)
  
(7
)
  
242
   
1,617
 
Non-owner occupied
  
2,350
   
265
   
(8
)
  
-
   
2,607
 
Commercial and industrial
  
1,140
   
3
   
(138
)
  
95
   
1,100
 
Consumer
  
347
   
148
   
(214
)
  
86
   
367
 
Construction and land
  
1,397
   
683
   
(127
)
  
10
   
1,963
 
All other
  
326
   
281
   
(246
)
  
107
   
468
 
Total
 
$
10,836
  
$
2,033
  
$
(1,102
)
 
$
592
  
$
12,359
 

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

Loan Class
 
Balance
June 30,
2018
  
Provision
(credit) for
loan losses
  
Loans charged-
off
  
Recoveries
  
Balance
Sept 30,
2018
 
                
Residential real estate
 
$
2,254
  
$
100
  
$
(81
)
 
$
5
  
$
2,278
 
Multifamily real estate
  
557
   
(94
)
  
-
   
-
   
463
 
Commercial real estate:
                    
Owner occupied
  
1,917
   
(92
)
  
(18
)
  
-
   
1,807
 
Non-owner occupied
  
2,437
   
360
   
-
   
2
   
2,799
 
Commercial and industrial
  
1,599
   
132
   
(21
)
  
14
   
1,724
 
Consumer
  
354
   
39
   
(42
)
  
12
   
363
 
Construction and land
  
3,253
   
(213
)
  
(1
)
  
400
   
3,439
 
All other
  
611
   
43
   
(73
)
  
29
   
610
 
Total
 
$
12,982
  
$
275
  
$
(236
)
 
$
462
  
$
13,483
 

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

Loan Class
 
Balance
June 30,
2017
  
Provision
(credit) for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
Sept 30,
2017
 
                
Residential real estate
 
$
2,973
  
$
170
  
$
(163
)
 
$
21
  
$
3,001
 
Multifamily real estate
  
1,337
   
(101
)
  
-
   
-
   
1,236
 
Commercial real estate:
                    
Owner occupied
  
1,618
   
5
   
(7
)
  
1
   
1,617
 
Non-owner occupied
  
2,334
   
276
   
(3
)
  
-
   
2,607
 
Commercial and industrial
  
1,093
   
(6
)
  
(4
)
  
17
   
1,100
 
Consumer
  
373
   
10
   
(49
)
  
33
   
367
 
Construction and land
  
1,675
   
292
   
(4
)
  
-
   
1,963
 
All other
  
292
   
245
   
(106
)
  
37
   
468
 
Total
 
$
11,695
  
$
891
  
$
(336
)
 
$
109
  
$
12,359
 
Purchased Impaired Loans
The carrying amount of those loans is as follows at September 30, 2018 and December 31, 2017.

  
2018
  
2017
 
Residential real estate
 
$
1,099
  
$
1,321
 
Commercial real estate
        
Owner occupied
  
1,385
   
1,508
 
Commercial and industrial
  
3
   
211
 
Construction and land
  
1,274
   
1,450
 
All other
  
284
   
286
 
Total carrying amount
 
$
4,045
  
$
4,776
 
Contractual principal balance
 
$
5,646
  
$
6,728
 
         
Carrying amount, net of allowance
 
$
4,045
  
$
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 September 30, 2018 and September 30, 2017.

  
2018
  
2017
 
Balance at January 1
 
$
754
  
$
1,208
 
New loans purchased
  
-
   
-
 
Accretion of income
  
(141
)
  
(201
)
Loans placed on non-accrual
  
(52
)
  
-
 
Income recognized upon full repayment
  
(38
)
  
(197
)
Reclassifications from non-accretable difference
  
-
   
-
 
Disposals
  
-
   
-
 
Balance at September 30
 
$
523
  
$
810
 
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 September 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.

September 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
 
$
4,015
  
$
3,265
  
$
917
 
Multifamily real estate
  
2,118
   
2,012
   
-
 
Commercial real estate
            
Owner occupied
  
3,114
   
3,063
   
-
 
Non-owner occupied
  
4,373
   
4,285
   
75
 
Commercial and industrial
  
1,043
   
481
   
-
 
Consumer
  
373
   
342
   
-
 
Construction and land
  
4,842
   
4,669
   
-
 
All other
  
176
   
176
   
-
 
Total
 
$
20,054
  
$
18,293
  
$
992
 

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 September 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
 
$
340,478
  
$
5,366
  
$
1,697
  
$
7,063
  
$
333,415
 
Multifamily real estate
  
54,602
   
-
   
1,165
   
1,165
   
53,437
 
Commercial real estate:
                    
Owner occupied
  
135,884
   
1,719
   
1,343
   
3,062
   
132,822
 
Non-owner occupied
  
226,710
   
281
   
2,889
   
3,170
   
223,540
 
Commercial and industrial
  
85,585
   
328
   
237
   
565
   
85,020
 
Consumer
  
28,129
   
198
   
163
   
361
   
27,768
 
Construction and land
  
132,141
   
1,869
   
4,657
   
6,526
   
125,615
 
All other
  
33,537
   
9
   
176
   
185
   
33,352
 
Total
 
$
1,037,066
  
$
9,770
  
$
12,327
  
$
22,097
  
$
1,014,969
 

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 September 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
 
$
-
  
$
2,278
  
$
-
  
$
2,278
  
$
298
  
$
339,081
  
$
1,099
  
$
340,478
 
Multifamily real estate
  
6
   
457
   
-
   
463
   
1,906
   
52,696
   
-
   
54,602
 
Commercial real estate:
                                
Owner occupied
  
385
   
1,422
   
-
   
1,807
   
3,029
   
131,470
   
1,385
   
135,884
 
Non-owner occupied
  
256
   
2,543
   
-
   
2,799
   
7,415
   
219,295
   
-
   
226,710
 
Commercial and industrial
  
111
   
1,613
   
-
   
1,724
   
525
   
85,057
   
3
   
85,585
 
Consumer
  
-
   
363
   
-
   
363
   
-
   
28,129
   
-
   
28,129
 
Construction and land
  
1,195
   
2,244
       
3,439
   
4,423
   
126,444
   
1,274
   
132,141
 
All other
  
-
   
610
   
-
   
610
   
-
   
33,253
   
284
   
33,537
 
Total
 
$
1,953
  
$
11,530
  
$
-
  
$
13,483
  
$
17,596
  
$
1,015,425
  
$
4,045
  
$
1,037,066
 

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 September 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
 
$
430
  
$
298
  
$
-
 
Commercial real estate
            
Owner occupied
  
2,184
   
2,175
   
-
 
Non-owner occupied
  
4,022
   
4,022
   
-
 
Commercial and industrial
  
801
   
270
   
-
 
Construction and land
  
578
   
578
   
-
 
   
8,015
   
7,343
   
-
 
With an allowance recorded:
            
Multifamily real estate
  
2,012
   
1,906
   
6
 
Commercial real estate
            
Owner occupied
  
887
   
854
   
385
 
Non-owner occupied
  
3,474
   
3,393
   
256
 
Commercial and industrial
  
263
   
255
   
111
 
Construction and land
  
4,017
   
3,845
   
1,195
 
   
10,653
   
10,253
   
1,953
 
Total
 
$
18,668
  
$
17,596
  
$
1,953
 

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 nine months ended September 30, 2018 and September 30, 2017.  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Nine months ended Sept 30, 2018
  
Nine months ended Sept 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
 
$
301
  
$
-
  
$
-
  
$
339
  
$
1
  
$
1
 
Multifamily real estate
  
2,192
   
11
   
11
   
13,605
   
196
   
181
 
Commercial real estate:
                        
Owner occupied
  
3,163
   
54
   
54
   
3,340
   
49
   
49
 
Non-owner occupied
  
9,005
   
327
   
327
   
2,955
   
124
   
124
 
Commercial and industrial
  
990
   
21
   
21
   
1,474
   
114
   
114
 
Consumer
  
-
   
-
   
-
   
5
   
-
   
-
 
Construction and land
  
4,633
   
12
   
12
   
8,337
   
328
   
327
 
All other
  
216
   
10
   
10
   
304
   
14
   
14
 
Total
 
$
20,500
  
$
435
  
$
435
  
$
30,359
  
$
826
  
$
810
 

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 September 30, 2018 and September 30, 2017.  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Three months ended Sept 30, 2018
  
Three months ended Sept 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
  
$
-
  
$
-
  
$
323
  
$
-
  
$
-
 
Multifamily real estate
  
1,939
   
-
   
-
   
13,590
   
66
   
60
 
Commercial real estate:
                        
Owner occupied
  
3,041
   
3
   
3
   
3,910
   
27
   
27
 
Non-owner occupied
  
7,489
   
86
   
86
   
3,749
   
63
   
63
 
Commercial and industrial
  
532
   
5
   
5
   
1,390
   
13
   
13
 
Consumer
  
-
   
-
   
-
   
9
   
-
   
-
 
Construction and land
  
4,467
   
9
   
9
   
6,884
   
48
   
48
 
All other
  
142
   
6
   
6
   
299
   
5
   
5
 
Total
 
$
17,909
  
$
109
  
$
109
  
$
30,154
  
$
222
  
$
216
 
Troubled Debt Restructurings
The following table presents TDR’s as of September 30, 2018 and December 31, 2017:

September 30, 2018
 
TDR’s on
Non-accrual
  
Other
TDR’s
  
Total TDR’s
 
          
Residential real estate
 
$
351
  
$
100
  
$
451
 
Multifamily real estate
  
1,906
   
-
   
1,906
 
Commercial real estate
            
Owner occupied
  
1,949
   
226
   
2,175
 
Non-owner occupied
  
-
   
5,981
   
5,981
 
Commercial and industrial
  
191
   
270
   
461
 
Construction and land
  
3,846
   
-
   
3,846
 
Total
 
$
8,243
  
$
6,577
  
$
14,820
 

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 nine months ended September 30, 2017.

  
Three months ended Sept 30, 2017
  
Nine months ended Sept 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
 
Non owner occupied
  
2
   
3,875
   
3,875
   
2
   
3,875
   
3,875
 
Commercial & industrial
  
-
   
-
   
-
   
1
   
191
   
191
 
Total
  
2
  
$
3,875
  
$
3,875
   
5
  
$
5,591
  
$
5,591
 
Risk Category of Loans by Class of Loans
As of September 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
 
$
330,283
  
$
1,107
  
$
9,088
  
$
-
  
$
340,478
 
Multifamily real estate
  
47,634
   
4,956
   
2,012
   
-
   
54,602
 
Commercial real estate:
                    
Owner occupied
  
124,609
   
4,950
   
6,325
   
-
   
135,884
 
Non-owner occupied
  
209,611
   
6,223
   
10,876
   
-
   
226,710
 
Commercial and industrial
  
78,626
   
4,224
   
2,735
   
-
   
85,585
 
Consumer
  
27,649
   
-
   
480
   
-
   
28,129
 
Construction and land
  
106,328
   
20,441
   
5,372
   
-
   
132,141
 
All other
  
32,343
   
440
   
754
   
-
   
33,537
 
Total
 
$
957,083
  
$
42,341
  
$
37,642
  
$
-
  
$
1,037,066
 

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