Allowance for Loan Losses

12 Months Ended

Dec. 31, 2018

Note 7 – Allowance for Loan Losses

The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior one to five years. Management believes using the highest of the one, two or five-year historical loss experience is an appropriate methodology in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. The actual allowance for loan loss activity is provided below.

	Years Ended December 31
	2018			2017			2016
Balance at beginning of the period	$	16,394		$	14,837		$	14,534
Loans charged-off:
Commercial
Owner occupied real estate		112			68			181
Non-owner occupied real estate		—			20			471
Residential spec homes		—			—			—
Development & spec land		—			1			—
Commercial and industrial		361			540			106
Total commercial		473			629			758
Real estate
Residential mortgage		76			89			213
Residential construction		—			—			—
Mortgage warehouse		—			—			—
Total real estate		76			89			213
Consumer
Direct installment		154			137			329
Indirect installment		1,673			1,193			1,051
Home equity		176			205			309
Total consumer		2,003			1,535			1,689
Total loans charged-off		2,552			2,253			2,660
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		59			9			31
Non-owner occupied real estate		29			32			55
Residential spec homes		8			8			8
Development & spec land		—			—			—
Commercial and industrial		80			249			116
Total commercial		176			298			210
Real estate
Residential mortgage		27			44			97
Residential construction		—			—			—
Mortgage warehouse		—			—			—
Total real estate		27			44			97
Consumer
Direct installment		53			501			81
Indirect installment		505			497			529
Home equity		311			—			204
Total consumer		869			998			814
Total loan recoveries		1,072			1,340			1,121
Net loans charged-off		1,480			913			1,539
Provision charged to operating expense
Commercial		1,699			2,164			(68	)
Real estate		(487	)		(81	)		(23	)
Consumer		1,694			387			1,933
Total provision charged to operating expense		2,906			2,470			1,842
Balance at the end of the period	$	17,820		$	16,394		$	14,837

Certain loans are individually evaluated for impairment, and the Company’s general practice is to proactively charge down impaired loans to the fair value, which is the appraised value less estimated selling costs, of the underlying collateral.

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down or specific allocation of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the value is known but no later than when a loan is 180 days past due. Pursuant to such guidelines, the Company also charges-off unsecured open-end loans when the loan is contractually 90 days past due, and charges down to the net realizable value other secured loans when they are contractually 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection in full will occur regardless of delinquency status, are not charged off.

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 analysis:

	December 31, 2018
	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,035	$	—	$	—	$	—	$	1,035
Collectively evaluated for impairment		9,460		1,676		1,006		4,643		16,785
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending allowance balance	$	10,495	$	1,676	$	1,006	$	4,643	$	17,820
Loans:
Individually evaluated for impairment	$	6,708	$	—	$	—	$	—	$	6,708
Collectively evaluated for impairment		1,718,661		670,166		74,120		547,116		3,010,063
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending loans balance	$	1,725,369	$	670,166	$	74,120	$	547,116	$	3,016,771

	December 31, 2017
	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	184	$	—	$	—	$	—	$	184
Collectively evaluated for impairment		8,909		2,188		1,030		4,083		16,210
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending allowance balance	$	9,093	$	2,188	$	1,030	$	4,083	$	16,394
Loans:
Individually evaluated for impairment	$	7,187	$	—	$	—	$	—	$	7,187
Collectively evaluated for impairment		1,668,408		612,114		94,508		459,256		2,834,286
Loans acquired with deteriorated credit quality		—		—		—		—		—
Total ending loans balance	$	1,675,595	$	612,114	$	94,508	$	459,256	$	2,841,473