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Loans and Allowance for Loan Losses (Tables)
 9 Months Ended
Sep. 30, 2017
Receivables [Abstract]  
Past Due Financing Receivables
The following table shows outstanding loans by class and payment aging as of September 30, 2017 and December 31, 2016.
Loan Aging Analysis by Loan 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

September 30, 2017
 

 

 

 

 

 

 

 

 30-59 days past due
$
—

$
—

$
—

$
—

$
100

$
—

$
5

$
105

 60-89 days past due
—

—

—

—

307

—

1

308

 90 days or more past due
—

—

—

—

—

—

—

—

Total past due
—

—

—

—

407

—

6

413

Current
218,681

264,732

721,576

76,179

120,959

96,937

24,970

1,524,034

Total loans 3
$
218,681

$
264,732

$
721,576

$
76,179

$
121,366

$
96,937

$
24,976

$
1,524,447

Non-accrual loans 2
$
—

$
—

$
1,024

$
—

$
292

$
—

$
—

$
1,316

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

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 September 30, 2017 and December 31, 2016. Amounts exclude accreting PCI loans of $2.3 million and $2.9 million at September 30, 2017 and December 31, 2016, 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 September 30, 2017 or December 31, 2016.
3 Amounts include net deferred loan origination costs of $798 thousand and $883 thousand at September 30, 2017 and December 31, 2016, respectively. Amounts are also net of unaccreted purchase discounts on non-PCI loans of $1.3 million and $1.8 million at September 30, 2017 and December 31, 2016, respectively.
Financing Receivable Credit Quality Indicators
The following table represents an analysis of the carrying amount in loans, net of deferred fees and costs and purchase premiums or discounts, by internally assigned risk grades, including PCI loans, at September 30, 2017 and December 31, 2016.
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

September 30, 2017
 
 
 
 
 
 
 
 
 
Pass
$
195,500

$
244,100

$
717,760

$
73,210

$
119,856

$
96,937

$
24,739

$
2,272

$
1,474,374

Special Mention
6,153

10,437

—

—

—

—

—

—

16,590

Substandard
16,991

9,055

2,818

2,969

1,413

—

237

—

33,483

Total loans
$
218,644

$
263,592

$
720,578

$
76,179

$
121,269

$
96,937

$
24,976

$
2,272

$
1,524,447

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
Troubled Debt Restructurings on Financing Receivables
The following table summarizes the carrying amount of TDR loans by loan class as of September 30, 2017 and December 31, 2016.
(in thousands)
 
Recorded investment in Troubled Debt Restructurings 1
September 30, 2017

December 31, 2016

Commercial and industrial
$
2,050

$
2,207

Commercial real estate, owner-occupied
6,999

6,993

Commercial real estate, investor
2,193

2,256

Construction
2,969

3,245

Home equity
348

625

Other residential
1,159

1,965

Installment and other consumer
666

877

Total
$
16,384

$
18,168

1 There were no TDR loans on non-accrual status at September 30, 2017 and December 31, 2016.

The following table presents information for loans modified in a TDR during the presented periods, including the 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 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

Troubled Debt Restructurings during the three months ended September 30, 2017:
 
 
 

None
—

$
—

$
—

$
—

Troubled Debt Restructurings during the three months ended September 30, 2016:
 

 

 



None
—

$
—

$
—

$
—

Troubled Debt Restructurings during the nine months ended
September 30, 2017:
 
 
 
 
Installment and consumer
1

$
50

$
50

$
49

Troubled Debt Restructurings during the nine months ended
September 30, 2016:
 

 

 

 
Commercial real estate, investor
2

$
1,830

$
1,826

$
1,808

Home equity 1
1

87

222

222

Total
3

$
1,917

$
2,048

$
2,030


1 The home equity TDR modification during the second quarter of 2016 included debt consolidation, which increased the post-modification balance.
Impaired Financing Receivables
The following tables summarize 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

September 30, 2017
 

 

 

 

 

 

 

Recorded investment in impaired loans:
 
 
 
 
 
 
With no specific allowance recorded
$
311

$
—

$
1,024

$
2,691

$
292

$
998

$
47

$
5,363

With a specific allowance recorded
1,740

6,999

2,193

278

348

160

619

12,337

Total recorded investment in impaired loans
$
2,051

$
6,999

$
3,217

$
2,969

$
640

$
1,158

$
666

$
17,700

Unpaid principal balance of impaired loans
$
2,030

$
6,993

$
3,230

$
2,963

$
637

$
1,157

$
665

$
17,675

Specific allowance
35

84

369

5

6

2

85

586

Average recorded investment in impaired loans during the quarter ended
September 30, 2017
2,063

7,000

3,236

3,104

607

1,164

802

17,976

Interest income recognized on impaired loans during the quarter ended
September 30, 2017 1
27

67

22

39

5

14

9

183

Average recorded investment in impaired loans during the nine months ended
September 30, 2017
2,100

6,998

3,010

3,174

660

1,367

871

18,180

Interest income recognized on impaired loans during the nine months ended
September 30, 2017 1
74

199

65

110

19

48

29

544

Average recorded investment in impaired loans during the quarter ended
September 30, 2016
3,352

7,169

3,146

3,238

1,140

1,981

1,113

21,139

Interest income recognized on impaired loans during the quarter ended
September 30, 2016 1
44

67

1,385

32

38

22

12

1,600

Average recorded investment in impaired loans during the nine months ended
September 30, 2016
3,802

7,081

3,397

3,238

1,098

1,993

1,179

21,788

Interest income recognized on impaired loans during the nine months ended
September 30, 2016 1
142

133

1,489

105

48

67

37

2,021

1 No interest income on impaired loans was recognized on a cash basis during the three and nine months ended September 30, 2017. Interest income recognized on a cash basis totaled $1.4 million for the three and nine months ended September 30, 2016 and was primarily related to an interest recovery upon the pay-off of a partially charged-off non-accrual commercial real estate loan during the third quarter.
(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
Allowance for Credit Losses on Financing Receivables
The following tables disclose activity in the allowance for loan losses ("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

Three months ended September 30, 2017







Beginning balance
$
3,932

$
2,082

$
6,065

$
411

$
981

$
509

$
340

$
912

$
15,232

Provision (reversal)
612

(56
)
33

217

21

33

(5
)
(855
)
—

Charge-offs
(5
)
—

—

—

—

—

(1
)
—

(6
)
Recoveries
21

—

—

—

—

—

1

—

22

Ending balance
$
4,560

$
2,026

$
6,098

$
628

$
1,002

$
542

$
335

$
57

$
15,248

Three months ended September 30, 2016
 
 
 
 
 
 
 
Beginning balance
$
2,637

$
1,631

$
6,595

$
831

$
1,076

$
426

$
437

$
1,454

$
15,087

Provision (reversal)
828

(10
)
(2,416
)
105

(125
)
22

(73
)
119

(1,550
)
Charge-offs
—

—

—

—

—

—

—

—

—

Recoveries
29

—

2,146

—

1

—

—

—

2,176

Ending balance
$
3,494

$
1,621

$
6,325

$
936

$
952

$
448

$
364

$
1,573

$
15,713

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

Nine months ended September 30, 2017
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
Beginning balance
$
3,248

$
1,753

$
6,320

$
781

$
973

$
454

$
372

$
1,541

$
15,442

Provision (reversal)
1,509

273

(222
)
(153
)
29

88

(40
)
(1,484
)
—

Charge-offs
(289
)
—

—

—

—

—

(3
)
—

(292
)
Recoveries
92

—

—

—

—

—

6

—

98

Ending balance
$
4,560

$
2,026

$
6,098

$
628

$
1,002

$
542

$
335

$
57

$
15,248

Nine months ended September 30, 2016
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
Beginning balance
$
3,023

$
2,249

$
6,178

$
724

$
910

$
394

$
425

$
1,096

$
14,999

Provision (reversal)
388

(628
)
(2,009
)
212

40

54

(84
)
477

(1,550
)
Charge-offs
(9
)
—

—

—

—

—

(4
)
—

(13
)
Recoveries
92

—

2,156

—

2

—

27

—

2,277

Ending balance
$
3,494

$
1,621

$
6,325

$
936

$
952

$
448

$
364

$
1,573

$
15,713

 
 
 
 
 
 
 
 
 
 
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

September 30, 2017
Ending ALLL related to loans collectively evaluated for impairment
$
4,525

$
1,942

$
5,729

$
623

$
996

$
540

$
250

$
57

$
14,662

Ending ALLL related to loans individually evaluated for impairment
35

84

369

5

6

2

85

—

586

Ending ALLL related to purchased credit-impaired loans
—

—

—

—

—

—

—

—

—

Ending balance
$
4,560

$
2,026

$
6,098

$
628

$
1,002

$
542

$
335

$
57

$
15,248

Recorded Investment:
 

 

 

 

 

 
 

Collectively evaluated for impairment
$
216,594

$
256,593

$
717,361

$
73,210

$
120,629

$
95,778

$
24,310

$
—

$
1,504,475

Individually evaluated for impairment
2,050

6,999

3,217

2,969

640

1,159

666

—

17,700

Purchased credit-impaired
37

1,140

998

—

97

—

—

—

2,272

Total
$
218,681

$
264,732

$
721,576

$
76,179

$
121,366

$
96,937

$
24,976

$
—

$
1,524,447

Ratio of allowance for loan losses to total loans
2.09
%
0.77
%
0.85
%
0.82
%
0.83
%
0.56
%
1.34
%
NM

1.00
%
Allowance for loan losses to non-accrual loans
NM

NM

596
%
NM

343
%
NM

NM

NM

1,159
%

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, 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
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
September 30, 2017
December 31, 2016

(in thousands)
Unpaid Principal Balance

Carrying Value

Unpaid Principal Balance

Carrying Value

Commercial and industrial
$
37

$
37

$
45

$
40

Commercial real estate, owner occupied
1,309

1,140

1,344

1,072

Commercial real estate, investor
998

998

1,713

1,706

Home equity
236

97

248

102

Total purchased credit-impaired loans
$
2,580

$
2,272

$
3,350

$
2,920
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
Three months ended
Nine months ended
(in thousands)
September 30, 2017
September 30, 2016
September 30, 2017
September 30, 2016
Balance at beginning of period
$
1,306

$
1,655

$
1,476

$
2,618

Removals 1
—

—

—

(778
)
Accretion
(76
)
(89
)
(246
)
(274
)
Reclassifications from nonaccretable difference 2
—

—

—

—

Balance at end of period
$
1,230

$
1,566

$
1,230

$
1,566

1 Represents the accretable difference that is relieved when a loan exits the PCI population due to pay-off, 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.