Allowance for Loan Losses

12 Months Ended

Dec. 31, 2019

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
	2019			2018			2017
Balance at beginning of the period	$	17,820		$	16,394		$	14,837
Loans charged-off:
Commercial
Owner occupied real estate		41			109			12
Non-owner occupied real estate		64			—			75
Residential spec homes		3			—			—
Development & spec land		—			—			1
Commercial and industrial		755			364			541

Total commercial		863			473			629
Real estate
Residential mortgage		93			76			89
Residential construction		—			—			—
Mortgage warehouse		—			—			—

Total real estate		93			76			89
Consumer
Direct installment		208			154			137
Indirect installment		1,785			1,673			1,193
Home equity		319			176			205

Total consumer		2,312			2,003			1,535

Total loans charged-off		3,268			2,552			2,253
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		—			55			8
Non-owner occupied real estate		15			33			32
Residential spec homes		5			8			8
Development & spec land		—			—			—
Commercial and industrial		179			80			250

Total commercial		199			176			298
Real estate
Residential mortgage		46			27			44
Residential construction		—			—			—
Mortgage warehouse		—			—			—

Total real estate		46			27			44
Consumer
Direct installment		97			53			501
Indirect installment		661			505			497
Home equity		136			311			—

Total consumer		894			869			998

Total loan recoveries		1,139			1,072			1,340

Net loans charged-off		2,129			1,480			913

Provision charged to operating expense
Commercial		2,165			1,699			2,164
Real estate		(635	)		(487	)		(81	)
Consumer		446			1,694			387

Total provision charged to operating expense		1,976			2,906			2,470

Balance at the end of the period	$	17,667		$	17,820		$	16,394

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, 2019
	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	541	$	—	$	—	$	—	$	541
Collectively evaluated for impairment		11,455		923		1,077		3,671		17,126
Loans acquired with deteriorated credit quality		—		—		—		—		—

Total ending allowance balance	$	11,996	$	923	$	1,077	$	3,671	$	17,667

Loans:
Individually evaluated for impairment	$	7,347	$	—	$	—	$	—	$	7,347
Collectively evaluated for impairment		2,040,299		770,705		150,293		665,952		3,627,249
Loans acquired with deteriorated credit quality		—		—		—		—		—

Total ending loans balance	$	2,047,646	$	770,705	$	150,293	$	665,952	$	3,634,596


	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	$	6,696	$	—	$	—	$	—	$	6,696
Collectively evaluated for impairment		1,715,856		668,124		74,120		546,774		3,004,874
Loans acquired with deteriorated credit quality		—		—		—		—		—

Total ending loans balance	$	1,722,552	$	668,124	$	74,120	$	546,774	$	3,011,570