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Loans and Allowance for Loan Losses (Tables)
 12 Months Ended
Dec. 31, 2016
Receivables [Abstract]  
Past Due Financing Receivables
The following table shows outstanding loans by class and payment aging as of December 31, 2016 and 2015.
Loan Aging Analysis by Class
(in thousands)
Commercial and industrial

Commercial real estate, owner-occupied

Commercial real estate, investor

Construction

Home equity

Other residential 1

Installment and other consumer

Total

December 31, 2016
 
 
 
 
 
 
 
 
30-59 days past due
$
283

$
—

$
—

$
—

$
77

$
—

$
2

$
362

60-89 days past due
—

—

—

—



—

49

49

90 days or more past due
—

—

—

—

91

—

—

91

Total past due
283

—

—

—

168

—

51

502

Current
218,332

247,713

724,228

74,809

117,039

78,549

25,444

1,486,114

Total loans 3
$
218,615

$
247,713

$
724,228

$
74,809

$
117,207

$
78,549

$
25,495

$
1,486,616

Non-accrual loans 2
$
—

$
—

$
—

$
—

$
91

$
—

$
54

$
145

December 31, 2015
 

 

 

 

 

 

 

 

30-59 days past due
$
36

$
—

$
1,096

$
1

$
—

$
—

$
249

$
1,382

60-89 days past due
—

—

—

—

633

—

89

722

90 days or more past due
21

—

—

—

99

—

—

120

Total past due
57

—

1,096

1

732

—

338

2,224

Current
219,395

242,309

714,783

65,494

111,568

73,154

22,301

1,449,004

Total loans 3
$
219,452

$
242,309

$
715,879

$
65,495

$
112,300

$
73,154

$
22,639

$
1,451,228

Non-accrual loans 2
$
21

$
—

$
1,903

$
1

$
171

$
—

$
83

$
2,179

1 Our residential loan portfolio does not include sub-prime loans, nor is it our practice to underwrite loans commonly referred to as "Alt-A mortgages," the characteristics of which are loans lacking full documentation, borrowers having low FICO scores or higher loan-to-value ratios.

2 There were no purchased credit impaired ("PCI") loans that had stopped accreting interest at December 31, 2016. Amounts include $1 thousand of PCI loans that had stopped accreting interest at December 31, 2015. Amounts exclude accreting PCI loans of $2.9 million and $3.7 million at December 31, 2016 and 2015, respectively, as we have a reasonable expectation about future cash flows to be collected and we continue to recognize accretable yield on these loans in interest income. There were no accruing loans past due more than ninety days at December 31, 2016 or 2015.

3 Amounts include net deferred loan origination costs of $883 thousand and $768 thousand at December 31, 2016 and 2015, respectively. Amounts are also net of unaccreted purchase discounts on non-PCI loans of $1.8 million and $3.2 million at December 31, 2016 and 2015, respectively.
Financing Receivable Credit Quality Indicators
The following table represents an analysis of the carrying amount in loans, net of deferred fees or costs and purchase premiums or discounts, by internally assigned risk grades, including PCI loans, at December 31, 2016 and 2015.
Credit Risk Profile by Internally Assigned Risk Grade
(in thousands)
Commercial and industrial

Commercial real estate, owner-occupied

Commercial real estate, investor

Construction

Home equity

Other residential

Installment and other consumer

Purchased credit-impaired

Total

December 31, 2016
 
 
 
 
 
 
 
 
Pass
$
201,987

$
234,849

$
720,417

$
71,564

$
115,680

$
78,549

$
25,083

$
2,920

$
1,451,049

Special Mention
9,197

4,799

607

—

1,334

—

—

—

15,937

Substandard
7,391

6,993

1,498

3,245

91

—

412

—

19,630

Total loans
$
218,575

$
246,641

$
722,522

$
74,809

$
117,105

$
78,549

$
25,495

$
2,920

$
1,486,616

December 31, 2015
 

 

 

 

 

 

 

 

Pass
$
192,560

$
219,060

$
710,042

$
62,255

$
109,959

$
73,154

$
22,307

$
3,260

$
1,392,597

Special Mention
22,457

12,371

372

—

1,100

—

—

—

36,300

Substandard
4,260

9,167

3,739

3,239

1,173

—

332

421

22,331

Total loans
$
219,277

$
240,598

$
714,153

$
65,494

$
112,232

$
73,154

$
22,639

$
3,681

$
1,451,228
Troubled Debt Restructurings on Financing Receivables
The table below summarizes the carrying amount of TDR loans by loan class as of December 31, 2016 and December 31, 2015. The summary includes both TDRs that are on non-accrual status and those that continue to accrue interest.
(in thousands)
As of
Recorded investment in Troubled Debt Restructurings 1
December 31, 2016

December 31, 2015

Commercial and industrial
$
2,207

$
4,698

Commercial real estate, owner-occupied
6,993

6,993

Commercial real estate, investor
2,256

514

Construction 2
3,245

3,238

Home equity
625

460

Other residential
1,965

2,010

Installment and other consumer
877

1,168

Total
$
18,168

$
19,081


1 There were no TDR loans on non-accrual status at December 31, 2016 and $72 thousand in TDR loans on non-accrual status as of December 31, 2015. Includes no acquired loans as of December 31, 2016 and $137 thousand in acquired loans at December 31, 2015.

2 In 2015, one TDR loan was transferred to loans held-for-sale at fair value totaling $1.5 million, net of an $839 thousand charge-off to the allowance for loan losses. The loan was subsequently sold in 2015 for no additional gain or loss.

The table below presents the following information for loans modified in a TDR during the presented periods: number of contracts modified, the recorded investment in the loans prior to modification, and the recorded investment in the loans after being restructured. The table below excludes fully charged-off TDR loans and loans modified in a TDR and subsequently paid-off during the years presented.
(dollars in thousands)
Number of Contracts Modified

Pre-Modification Outstanding Recorded Investment

Post-Modification Outstanding Recorded Investment

Post-Modification Outstanding Recorded Investment at Period End

TDRs modified during 2016:
 

 

 

 
Commercial real estate, investor
2

$
1,830

$
1,826

$
1,752

Home equity 1
1

$
87

$
222

$
245

Installment and other consumer
1

$
68

$
67

$
66

Total
4

$
1,985

$
2,115

$
2,063

1 The home equity line of credit modified in 2016 included debt consolidation, which increased the post-modification balance.
TDRs modified during 2015:
 

 

 

 
Commercial and industrial
7

$
3,271

$
3,251

$
2,811

TDRs modified during 2014:
 
 
 
 
Commercial and industrial
6

$
1,039

$
1,258

$
1,251

Commercial real estate, owner occupied
1

4,226

4,216

4,175

Commercial real estate, investor
2

224

224

220

Construction
2

964

1,312

1,309

Installment and other consumer
6

281

278

268

Total
17

$
6,734

$
7,288

$
7,223
Impaired Financing Receivables
The table below summarizes information by class on impaired loans and their related allowances. Total impaired loans include non-accrual loans, accruing TDR loans and accreting PCI loans that have experienced post-acquisition declines in cash flows expected to be collected.
(in thousands)
Commercial and industrial

Commercial real estate, owner-occupied

Commercial real estate, investor

Construction

Home equity

Other residential

Installment and other consumer

Total

December 31, 2016
 
 
 
 
 
 
 
Recorded investment in impaired loans:
 
 
 
 
 
 
With no specific allowance recorded
$
315

$
—

$
—

$
2,692

$
91

$
1,008

$
103

$
4,209

With a specific allowance recorded
1,892

6,993

2,256

553

624

957

829

14,104

Total recorded investment in impaired loans
$
2,207

$
6,993

$
2,256

$
3,245

$
715

$
1,965

$
932

$
18,313

Unpaid principal balance of impaired loans
$
2,177

$
6,993

$
2,252

$
3,238

$
713

$
1,965

$
932

$
18,270

Specific allowance
$
285

$
163

$
375

$
8

$
7

$
55

$
98

$
991

Average recorded investment in impaired loans during 2016
$
3,514

$
7,069

$
2,950

$
3,242

$
945

$
1,988

$
1,127

$
20,835

Interest income recognized on impaired loans during 2016 1
$
175

$
199

$
1,514

$
137

$
60

$
90

$
48

$
2,223

December 31, 2015
 

 

 

 

 

 

 

Recorded investment in impaired loans:
 

 

 

 

 

 

With no specific allowance recorded
$
2,198

$
4,111

$
2,416

$
2,687

$
171

$
1,214

$
131

$
12,928

With a specific allowance recorded
2,522

2,882

—

551

388

797

1,120

8,260

Total recorded investment in impaired loans
$
4,720

$
6,993

$
2,416

$
3,238

$
559

$
2,011

$
1,251

$
21,188

Unpaid principal balance of impaired loans
$
4,763

$
6,993

$
4,408

$
3,424

$
559

$
2,011

$
1,251

$
23,409

Specific allowance
$
912

$
70

$
—

$
1

$
3

$
67

$
116

$
1,169

Average recorded investment in impaired loans during 2015
$
4,237

$
7,886

$
2,833

$
4,164

$
602

$
2,028

$
1,523

$
23,273

Interest income recognized on impaired loans during 2015 1
$
238

$
295

$
33

$
86

$
18

$
92

$
64

$
826

Average recorded investment in impaired loans during 2014
$
5,354

$
6,604

$
3,138

$
6,471

$
741

$
1,744

$
1,857

$
25,909

Interest income recognized on impaired loans during 2014 1
$
378

$
288

$
28

$
85

$
19

$
74

$
76

$
948

1 Interest income recognized on a cash basis totaled $1.4 million in 2016 and was primarily related to the interest recovery upon the pay-off of a partially charged off non-accrual commercial real estate loan during the third quarter. No interest interest income on impaired loans was recognized on a cash basis in 2015 and 2014.
Allowance for Credit Losses on Financing Receivables
The following tables disclose activity in the ALLL and the recorded investment in loans by class, as well as the related ALLL disaggregated by impairment evaluation method.
Allowance for Loan Losses Rollforward for the Period
(in thousands)
Commercial and industrial

Commercial real estate, owner-occupied

Commercial real estate, investor

Construction

Home equity

Other residential

Installment and other consumer

Unallocated

Total

Year ended December 31, 2016
 
 
 
 
 
 
 
Beginning balance
$
3,023

$
2,249

$
6,178

$
724

$
910

$
394

$
425

$
1,096

$
14,999

Provision (reversal)
93

(476
)
(2,014
)
57

60

60

(75
)
445

(1,850
)
Charge-offs
(11
)
(20
)
—

—

—

—

(5
)
—

(36
)
Recoveries
143

—

2,156

—

3

—

27

—

2,329

Ending balance
$
3,248

$
1,753

$
6,320

$
781

$
973

$
454

$
372

$
1,541

$
15,442

Year ended December 31, 2015
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,837

$
1,924

$
6,672

$
839

$
859

$
433

$
566

$
969

$
15,099

Provision (reversal)
(45
)
325

(517
)
724

48

(39
)
(123
)
127

500

Charge-offs
(5
)
—

—

(839
)
—

—

(20
)
—

(864
)
Recoveries
236

—

23

—

3

—

2

—

264

Ending balance
$
3,023

$
2,249

$
6,178

$
724

$
910

$
394

$
425

$
1,096

$
14,999

Year ended December 31, 2014
 
 
 
 
 
 
 
 
 
Beginning balance
$
3,056

$
2,012

$
6,196

$
633

$
875

$
317

$
629

$
506

$
14,224

Provision (reversal)
(321
)
(93
)
431

314

(19
)
116

(141
)
463

750

Charge-offs
(66
)
—

—

(204
)
—

—

(7
)
—

(277
)
Recoveries
168

5

45

96

3

—

85

—

402

Ending balance
$
2,837

$
1,924

$
6,672

$
839

$
859

$
433

$
566

$
969

$
15,099

Allowance for Loan Losses and Recorded Investment In Loans
(dollars in thousands)
Commercial and industrial

Commercial real estate, owner-occupied

Commercial real estate, investor

Construction

Home equity

Other residential

Installment and other consumer

Unallocated

Total

December 31, 2016
 
 
 
 
 
 
 
 
 
Ending ALLL related to loans collectively evaluated for impairment
$
2,963

$
1,590

$
5,945

$
773

$
966

$
399

$
274

$
1,541

$
14,451

Ending ALLL related to loans  individually evaluated for impairment
285

163

375

8

7

55

98

—

991

Ending ALLL related to purchased  credit-impaired loans
—

—

—

—

—

—

—

—

—

Ending balance
$
3,248

$
1,753

$
6,320

$
781

$
973

$
454

$
372

$
1,541

$
15,442

Recorded Investment:
 

 

 

 

 

 

 

 

 

Collectively evaluated for impairment
$
216,368

$
239,648

$
720,266

$
71,564

$
116,390

$
76,584

$
24,563

$
—

$
1,465,383

Individually evaluated for impairment
2,207

6,993

2,256

3,245

715

1,965

932

—

18,313

Purchased credit-impaired
40

1,072

1,706

—

102

—

—

—

2,920

Total
$
218,615

$
247,713

$
724,228

$
74,809

$
117,207

$
78,549

$
25,495

$
—

$
1,486,616

Ratio of allowance for loan losses to total loans
1.49
%
0.71
%
0.87
%
1.04
%
0.83
%
0.58
%
1.46
%
NM

1.04
%
Allowance for loan losses to non-accrual loans
NM

NM

NM

NM

1,071
%
NM

683
%
NM

10,650
%
NM - Not Meaningful
Allowance for Loan Losses and Recorded Investment In Loans
(dollars in thousands)
Commercial and industrial

Commercial real estate, owner-occupied

Commercial real estate, investor

Construction

Home equity

Other residential

Installment and other consumer

Unallocated

Total

December 31, 2015
 
 
 
 
 
 
 
 
 
Ending ALLL related to loans collectively evaluated for impairment
$
2,111

$
2,179

$
6,178

$
723

$
907

$
327

$
309

$
1,096

$
13,830

Ending ALLL related to loans  individually evaluated for impairment
904

70

—

—

3

67

116

—

1,160

Ending ALLL related to purchased  credit-impaired loans
8

—

—

1

—

—

—

—

9

Ending balance
$
3,023

$
2,249

$
6,178

$
724

$
910

$
394

$
425

$
1,096

$
14,999

Loans outstanding:
 

 

 

 

 

 

 

Collectively evaluated for impairment
$
214,695

$
233,605

$
711,737

$
62,256

$
111,673

$
71,143

$
21,388

$
—

$
1,426,497

Individually evaluated for impairment1
4,582

6,993

2,416

3,238

559

2,011

1,251

—

21,050

Purchased credit-impaired
175

1,711

1,726

1

68

—

—

—

3,681

Total
$
219,452

$
242,309

$
715,879

$
65,495

$
112,300

$
73,154

$
22,639

$
—

$
1,451,228

Ratio of allowance for loan losses to total loans
1.38
%
0.93
%
0.86
%
1.11
%
0.81
%
0.54
%
1.88
%
NM

1.03
%
Allowance for loan losses to non-accrual loans
14,395
%
NM

325
%
72,400
%
532
%
NM

512
%
NM

688
%
1 Totals exclude $138 thousand in PCI loans that have experienced credit deterioration post-acquisition, which are included in the "purchased credit-impaired" amount in the next line below.
NM - Not Meaningful
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period
The following table reflects the unpaid principal balance and related carrying value of PCI loans:
PCI Loans
December 31, 2016
December 31, 2015

(in thousands)
Unpaid Principal Balance

Carrying Value

Unpaid Principal Balance

Carrying Value

Commercial and industrial
$
45

$
40

$
237

$
175

Commercial real estate, owner occupied
1,344

1,072

2,573

1,711

Commercial real estate, investor
1,713

1,706

1,756

1,726

Construction
—

—

187

1

Home equity
248

102

224

68

Total purchased credit-impaired loans
$
3,350

$
2,920

$
4,977

$
3,681
Accretable Yield Activity
The activities in the accretable yield, or income expected to be earned over the remaining lives of the PCI loans were as follows: 
Accretable Yield
Years ended
(in thousands)
December 31, 2016

December 31, 2015

December 31, 2014

Balance at beginning of period
$
2,618

$
4,027

$
3,649

Additions
—

—

—

Removals 1
(778
)
(914
)
(273
)
Accretion
(364
)
(495
)
(613
)
Reclassifications from nonaccretable difference 2
—

—

1,264

Balance at end of period
$
1,476

$
2,618

$
4,027

1 Represents the accretable difference that is relieved when a loan exits the PCI population due to payoff, full charge-off, or transfer to repossessed assets, etc.
2 Primarily relates to changes in expected credit performance and changes in expected timing of cash flows.
Schedule of Related Party Transactions
An analysis of net loans to related parties for each of the three years ended December 31, 2016, 2015 and 2014 is as follows:
(in thousands)
2016

2015

2014

Balance at beginning of year
$
2,562

$
3,329

$
3,749

Additions
—

—

—

Advances
—

165

—

Repayments
(574
)
(390
)
(420
)
Reclassified as unrelated-party loan due to a change in borrower status
—

(542
)
—

Balance at end of year
$
1,988

$
2,562

$
3,329