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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Tables)
 12 Months Ended
Dec. 31, 2015
Receivables [Abstract]  
Summary of Loan Portfolio, Excluding Residential Loans Held for Sale, Broken Out by Classes
The loan portfolio, excluding residential loans held for sale, broken out by classes as of December 31 was as follows:
 
(Dollars in thousands)
2015
 
2014
Commercial real estate:
 
 
 
Owner-occupied
$
103,578

 
$
100,859

Non-owner occupied
145,401

 
144,301

Multi-family
35,109

 
27,531

Non-owner occupied residential
54,175

 
49,315

Acquisition and development:
 
 
 
1-4 family residential construction
9,364

 
5,924

Commercial and land development
41,339

 
24,237

Commercial and industrial
73,625

 
48,995

Municipal
57,511

 
61,191

Residential mortgage:
 
 
 
First lien
126,022

 
126,491

Home equity – term
17,337

 
20,845

Home equity – lines of credit
110,731

 
89,366

Installment and other loans
7,521

 
5,891

 
$
781,713

 
$
704,946
Bank's Ratings Based on its Internal Risk Rating System
The following summarizes the Bank’s ratings based on its internal risk rating system as of December 31, 2015 and 2014:
 
(Dollars in thousands)
Pass
 
Special
Mention
 
Non-Impaired
Substandard
 
Impaired -
Substandard
 
Doubtful
 
Total
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
$
96,715

 
$
1,124

 
$
3,630

 
$
2,109

 
$
0

 
$
103,578

Non-owner occupied
125,043

 
12,394

 
108

 
7,856

 
0

 
145,401

Multi-family
31,957

 
1,779

 
1,140

 
233

 
0

 
35,109

Non-owner occupied residential
50,601

 
1,305

 
1,374

 
895

 
0

 
54,175

Acquisition and development:
 
 
 
 
 
 
 
 
 
 
 
1-4 family residential construction
9,364

 
0

 
0

 
0

 
0

 
9,364

Commercial and land development
40,181

 
219

 
934

 
5

 
0

 
41,339

Commercial and industrial
70,967

 
1,380

 
544

 
734

 
0

 
73,625

Municipal
57,511

 
0

 
0

 
0

 
0

 
57,511

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
 
First lien
121,214

 
0

 
0

 
4,808

 
0

 
126,022

Home equity – term
17,234

 
0

 
0

 
103

 
0

 
17,337

Home equity – lines of credit
109,731

 
230

 
180

 
590

 
0

 
110,731

Installment and other loans
7,504

 
0

 
0

 
17

 
0

 
7,521

 
$
738,022

 
$
18,431

 
$
7,910

 
$
17,350

 
$
0

 
$
781,713

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
$
89,815

 
$
2,686

 
$
5,070

 
$
3,288

 
$
0

 
$
100,859

Non-owner occupied
120,829

 
20,661

 
1,131

 
1,680

 
0

 
144,301

Multi-family
24,803

 
1,086

 
1,322

 
320

 
0

 
27,531

Non-owner occupied residential
43,020

 
2,968

 
1,827

 
1,500

 
0

 
49,315

Acquisition and development:
 
 
 
 
 
 
 
 
 
 
 
1-4 family residential construction
5,924

 
0

 
0

 
0

 
0

 
5,924

Commercial and land development
22,261

 
233

 
1,333

 
410

 
0

 
24,237

Commercial and industrial
43,794

 
850

 
1,914

 
2,437

 
0

 
48,995

Municipal
61,191

 
0

 
0

 
0

 
0

 
61,191

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
 
First lien
121,160

 
9

 
0

 
5,290

 
32

 
126,491

Home equity – term
20,775

 
0

 
0

 
70

 
0

 
20,845

Home equity – lines of credit
88,164

 
630

 
93

 
479

 
0

 
89,366

Installment and other loans
5,865

 
0

 
0

 
26

 
0

 
5,891

 
$
647,601

 
$
29,123

 
$
12,690

 
$
15,500

 
$
32

 
$
704,946
Impaired Loans by Class
The following summarizes impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required as of December 31, 2015 and 2014. The recorded investment in loans excludes accrued interest receivable due to insignificance. Allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending, and the partial charge-off will be recorded when final information is received.
 
 
Impaired Loans with a Specific Allowance
 
Impaired Loans with No Specific Allowance
(Dollars in thousands)
Recorded
Investment
(Book Balance)
 
Unpaid
Principal Balance
(Legal Balance)
 
Related
Allowance
 
Recorded
Investment
(Book Balance)
 
Unpaid
Principal Balance
(Legal Balance)
December 31, 2015
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
Owner-occupied
$
0

 
$
0

 
$
0

 
$
2,109

 
$
3,344

Non-owner occupied
0

 
0

 
0

 
7,856

 
8,600

Multi-family
0

 
0

 
0

 
233

 
385

Non-owner occupied residential
0

 
0

 
0

 
895

 
1,211

Acquisition and development:
 
 
 
 
 
 
 
 
 
Commercial and land development
0

 
0

 
0

 
5

 
19

Commercial and industrial
0

 
0

 
0

 
734

 
780

Residential mortgage:
 
 
 
 
 
 
 
 
 
First lien
1,952

 
1,984

 
271

 
2,856

 
3,369

Home equity—term
0

 
0

 
0

 
103

 
110

Home equity—lines of credit
22

 
23

 
10

 
568

 
688

Installment and other loans
8

 
9

 
8

 
9

 
35

 
$
1,982

 
$
2,016

 
$
289

 
$
15,368

 
$
18,541

December 31, 2014
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
Owner-occupied
$
0

 
$
0

 
$
0

 
$
3,288

 
$
4,558

Non-owner occupied
0

 
0

 
0

 
1,680

 
3,420

Multi-family
0

 
0

 
0

 
320

 
356

Non-owner occupied residential
198

 
203

 
2

 
1,302

 
1,570

Acquisition and development:
 
 
 
 
 
 
 
 
 
Commercial and land development
0

 
0

 
0

 
410

 
1,077

Commercial and industrial
0

 
0

 
0

 
2,437

 
2,500

Residential mortgage:
 
 
 
 
 
 
 
 
 
First lien
982

 
982

 
149

 
4,340

 
4,968

Home equity—term
0

 
0

 
0

 
70

 
71

Home equity—lines of credit
24

 
40

 
24

 
455

 
655

Installment and other loans
13

 
13

 
13

 
13

 
36

 
$
1,217

 
$
1,238

 
$
188

 
$
14,315

 
$
19,211
Average Recorded Investment in Impaired Loans and Related Interest Income
The following summarizes the average recorded investment in impaired loans and related interest income recognized on loans deemed impaired for the year ended December 31, 2015, 2014 and 2013:
 
 
2015
 
2014
 
2013
(Dollars in thousands)
Average
Impaired
Balance
 
Interest
Income
Recognized
 
Average
Impaired
Balance
 
Interest
Income
Recognized
 
Average
Impaired
Balance
 
Interest
Income
Recognized
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
$
2,613

 
$
0

 
$
3,740

 
$
20

 
$
3,528

 
$
147

Non-owner occupied
3,470

 
0

 
6,711

 
143

 
4,307

 
145

Multi-family
402

 
0

 
274

 
2

 
135

 
16

Non-owner occupied residential
1,020

 
0

 
2,095

 
13

 
4,799

 
77

Acquisition and development:
 
 
 
 
 
 
 
 
 
 
 
1-4 family residential construction
0

 
0

 
0

 
0

 
481

 
0

Commercial and land development
266

 
137

 
1,250

 
34

 
3,009

 
49

Commercial and industrial
1,208

 
0

 
1,700

 
5

 
1,780

 
45

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
 
First lien
4,644

 
37

 
4,226

 
53

 
2,697

 
140

Home equity – term
130

 
0

 
85

 
0

 
59

 
8

Home equity – lines of credit
571

 
0

 
111

 
3

 
305

 
6

Installment and other loans
22

 
0

 
9

 
1

 
1

 
0

 
$
14,346

 
$
174

 
$
20,201

 
$
274

 
$
21,101

 
$
633
Troubled Debt Restructurings
The following table presents impaired loans that are troubled debt restructurings, with the recorded investment as of December 31, 2015 and December 31, 2014.
 
 
2015
 
2014
(Dollars in thousands)
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
Accruing:
 
 
 
 
 
 
 
Acquisition and development:
 
 
 
 
 
 
 
Commercial and land development
0

 
$
0

 
1

 
$
287

Residential mortgage:
 
 
 
 
 
 
 
First lien
8

 
793

 
8

 
813

Total accruing
8

 
793

 
9

 
1,100

Nonaccruing:
 
 
 
 
 
 
 
Residential mortgage:
 
 
 
 
 
 
 
First lien
12

 
1,153

 
13

 
1,715

Consumer
1

 
10

 
1

 
13

 
13

 
1,163

 
14

 
1,728

 
21

 
$
1,956

 
23

 
$
2,828
Restructured Loans Included in Nonaccrual Status Were Modified as Troubled Debt Restructurings within Previous 12 Months and for Which There was Payment Default
The following table presents restructured loans, included in nonaccrual status, that were modified as troubled debt restructurings within the previous 12 months and for which there was a payment default subsequent to the modification for the years ended December 31, 2015, 2014, and 2013.
 
 
2015
 
2014
 
2013
(Dollars in thousands)
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
Non-owner occupied
0

 
$
0

 
1

 
$
3,495

 
0

 
$
0

Acquisition and development:
 
 
 
 
 
 
 
 
 
 
 
Commercial and land development
0

 
0

 
1

 
544

 
0

 
0

Commercial and industrial
0

 
0

 
0

 
0

 
1

 
199

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
 
First lien
0

 
0

 
2

 
177

 
0

 
0

 
0

 
$
0

 
4

 
$
4,216

 
1

 
$
199
Number of Loans Modified and Their Pre-modification and Post-modification Investment Balances
The following presents the number of loans modified, and their pre-modification and post-modification investment balances for the twelve months ended December 31, 2015, 2014, and 2013:
 
(Dollars in thousands)
Number of
Contracts
 
Pre-
Modification
Investment
Balance
 
Post-
Modification
Investment
Balance
December 31, 2015
 
 
 
 
 
Residential mortgage:
 
 
 
 
 
First lien
1

 
$
59

 
$
59

 
1

 
$
59

 
$
59

December 31, 2014
 
 
 
 
 
Residential mortgage:
 
 
 
 
 
First lien
19

 
$
1,876

 
$
1,810

Installment and other loans
1

 
36

 
14

 
20

 
$
1,912

 
$
1,824

December 31, 2013
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
Owner-occupied
4

 
$
421

 
$
421

Non-owner occupied
2

 
3,457

 
3,457

Acquisition and development:
 
 
 
 
 
Commercial and land development
2

 
1,081

 
1,081

Commercial
1

 
217

 
199

 
9

 
$
5,176

 
$
5,158
Loan Portfolio Summarized by Aging Categories of Performing Loans and Nonaccrual Loans
The following table presents the classes of loan portfolio summarized by aging categories of performing loans and nonaccrual loans as of December 31, 2015 and 2014:
 
 
 
 
Days Past Due
 
 
 
 
 
 
Current
 
30-59
 
60-89
 
90+
(still accruing)
 
Total
Past Due
 
Non-
Accrual
 
Total
Loans
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
$
101,395

 
$
74

 
$
0

 
$
0

 
$
74

 
$
2,109

 
$
103,578

Non-owner occupied
137,545

 
0

 
0

 
0

 
0

 
7,856

 
145,401

Multi-family
34,876

 
0

 
0

 
0

 
0

 
233

 
35,109

Non-owner occupied residential
53,280

 
0

 
0

 
0

 
0

 
895

 
54,175

Acquisition and development:
 
 
 
 
 
 
 
 
 
 
 
 
 
1-4 family residential construction
9,364

 
0

 
0

 
0

 
0

 
0

 
9,364

Commercial and land development
41,236

 
0

 
98

 
0

 
98

 
5

 
41,339

Commercial and industrial
72,846

 
24

 
21

 
0

 
45

 
734

 
73,625

Municipal
57,511

 
0

 
0

 
0

 
0

 
0

 
57,511

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
 
 
 
First lien
120,119

 
1,844

 
44

 
0

 
1,888

 
4,015

 
126,022

Home equity – term
17,200

 
34

 
0

 
0

 
34

 
103

 
17,337

Home equity – lines of credit
109,740

 
286

 
91

 
24

 
401

 
590

 
110,731

Installment and other loans
7,488

 
16

 
0

 
0

 
16

 
17

 
7,521

 
$
762,600

 
$
2,278

 
$
254

 
$
24

 
$
2,556

 
$
16,557

 
$
781,713

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner-occupied
$
97,571

 
$
0

 
$
0

 
$
0

 
$
0

 
$
3,288

 
$
100,859

Non-owner occupied
142,621

 
0

 
0

 
0

 
0

 
1,680

 
144,301

Multi-family
27,211

 
0

 
0

 
0

 
0

 
320

 
27,531

Non-owner occupied residential
47,706

 
109

 
0

 
0

 
109

 
1,500

 
49,315

Acquisition and development:
 
 
 
 
 
 
 
 
 
 
 
 
 
1-4 family residential construction
5,924

 
0

 
0

 
0

 
0

 
0

 
5,924

Commercial and land development
24,114

 
0

 
0

 
0

 
0

 
123

 
24,237

Commercial and industrial
46,558

 
0

 
0

 
0

 
0

 
2,437

 
48,995

Municipal
61,191

 
0

 
0

 
0

 
0

 
0

 
61,191

Residential mortgage:
 
 
 
 
 
 
 
 
 
 
 
 
 
First lien
120,806

 
776

 
400

 
0

 
1,176

 
4,509

 
126,491

Home equity – term
20,640

 
135

 
0

 
0

 
135

 
70

 
20,845

Home equity – lines of credit
88,745

 
142

 
0

 
0

 
142

 
479

 
89,366

Installment and other loans
5,815

 
41

 
9

 
0

 
50

 
26

 
5,891

 
$
688,902

 
$
1,203

 
$
409

 
$
0

 
$
1,612

 
$
14,432

 
$
704,946
Activity in Allowance for Loan Losses
Activity in the allowance for loan losses for the years ended December 31, 2015, 2014 and 2013 is as follows:
 
 
Commercial
 
Consumer
 
 
 
 
(Dollars in thousands)
Commercial
Real Estate
 
Acquisition
and
Development
 
Commercial
and
Industrial
 
Municipal
 
Total
 
Residential
Mortgage
 
Installment
and Other
 
Total
 
Unallocated
 
Total
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
9,462

 
$
697

 
$
806

 
$
183

 
$
11,148

 
$
2,262

 
$
119

 
$
2,381

 
$
1,218

 
$
14,747

Provision for loan losses
(1,020
)
 
(440
)
 
249

 
(125
)
 
(1,336
)
 
1,122

 
55

 
1,177

 
(444
)
 
(603
)
Charge-offs
(711
)
 
(22
)
 
(115
)
 
0

 
(848
)
 
(592
)
 
(62
)
 
(654
)
 
0

 
(1,502
)
Recoveries
152

 
615

 
72

 
0

 
839

 
78

 
9

 
87

 
0

 
926

Balance, end of year
$
7,883

 
$
850

 
$
1,012

 
$
58

 
$
9,803

 
$
2,870

 
$
121

 
$
2,991

 
$
774

 
$
13,568

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
13,215

 
$
670

 
$
864

 
$
244

 
$
14,993

 
$
3,780

 
$
124

 
$
3,904

 
$
2,068

 
$
20,965

Provision for loan losses
(1,674
)
 
92

 
(554
)
 
(61
)
 
(2,197
)
 
(960
)
 
107

 
(853
)
 
(850
)
 
(3,900
)
Charge-offs
(2,637
)
 
(70
)
 
(270
)
 
0

 
(2,977
)
 
(587
)
 
(177
)
 
(764
)
 
0

 
(3,741
)
Recoveries
558

 
5

 
766

 
0

 
1,329

 
29

 
65

 
94

 
0

 
1,423

Balance, end of year
$
9,462

 
$
697

 
$
806

 
$
183

 
$
11,148

 
$
2,262

 
$
119

 
$
2,381

 
$
1,218

 
$
14,747

December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
13,719

 
$
3,502

 
$
1,635

 
$
223

 
$
19,079

 
$
2,275

 
$
85

 
$
2,360

 
$
1,727

 
$
23,166

Provision for loan losses
4,109

 
(6,087
)
 
(3,478
)
 
21

 
(5,435
)
 
1,845

 
99

 
1,944

 
341

 
(3,150
)
Charge-offs
(4,767
)
 
(193
)
 
(132
)
 
0

 
(5,092
)
 
(491
)
 
(144
)
 
(635
)
 
0

 
(5,727
)
Recoveries
154

 
3,448

 
2,839

 
0

 
6,441

 
151

 
84

 
235

 
0

 
6,676

Balance, end of year
$
13,215

 
$
670

 
$
864

 
$
244

 
$
14,993

 
$
3,780

 
$
124

 
$
3,904

 
$
2,068

 
$
20,965
Summary of Allowance for Loan Loss Allocation
The following summarizes the ending loan balance individually evaluated for impairment based upon loan segment, as well as the related allowance for loan loss allocation for each at December 31, 2015 and 2014:
 
 
Commercial
 
Consumer
 
 
 
 
(Dollars in thousands)
Commercial
Real Estate
 
Acquisition
and
Development
 
Commercial
and
Industrial
 
Municipal
 
Total
 
Residential
Mortgage
 
Installment
and Other
 
Total
 
Unallocated
 
Total
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans allocated by:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
11,093

 
$
5

 
$
734

 
$
0

 
$
11,832

 
$
5,501

 
$
17

 
$
5,518

 
$
0

 
$
17,350

Collectively evaluated for impairment
327,170

 
50,698

 
72,891

 
57,511

 
508,270

 
248,589

 
7,504

 
256,093

 
0

 
764,363

 
$
338,263

 
$
50,703

 
$
73,625

 
$
57,511

 
$
520,102

 
$
254,090

 
$
7,521

 
$
261,611

 
$
0

 
$
781,713

Allowance for loan losses allocated by:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
0

 
$
0

 
$
0

 
$
0

 
$
0

 
$
281

 
$
8

 
$
289

 
$
0

 
$
289

Collectively evaluated for impairment
7,883

 
850

 
1,012

 
58

 
9,803

 
2,589

 
113

 
2,702

 
774

 
13,279

 
$
7,883

 
$
850

 
$
1,012

 
$
58

 
$
9,803

 
$
2,870

 
$
121

 
$
2,991

 
$
774

 
$
13,568

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans allocated by:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
6,788

 
$
410

 
$
2,437

 
$
0

 
$
9,635

 
$
5,871

 
$
26

 
$
5,897

 
$
0

 
$
15,532

Collectively evaluated for impairment
315,218

 
29,751

 
46,558

 
61,191

 
452,718

 
230,831

 
5,865

 
236,696

 
0

 
689,414

 
$
322,006

 
$
30,161

 
$
48,995

 
$
61,191

 
$
462,353

 
$
236,702

 
$
5,891

 
$
242,593

 
$
0

 
$
704,946

Allowance for loan losses allocated by:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2

 
$
0

 
$
0

 
$
0

 
$
2

 
$
173

 
$
13

 
$
186

 
$
0

 
$
188

Collectively evaluated for impairment
9,460

 
697

 
806

 
183

 
11,146

 
2,089

 
106

 
2,195

 
1,218

 
14,559

 
$
9,462

 
$
697

 
$
806

 
$
183

 
$
11,148

 
$
2,262

 
$
119

 
$
2,381

 
$
1,218

 
$
14,747