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Loans and Allowance for Loan Losses (Tables)
 12 Months Ended
Dec. 31, 2017
Receivables [Abstract]  
Past Due Financing Receivables
The following table shows outstanding loans by class and payment aging as of December 31, 2017 and 2016.
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, 2017
 
 
 
 
 
 
 
 
30-59 days past due
$
—

$
—

$
—

$
—

$
99

$
255

$
330

$
684

60-89 days past due
1,340

—

—

—

—

—

—

1,340

90 days or more past due
—

—

—

—

307

—

—

307

Total past due
1,340

—

—

—

406

255

330

2,331

Current
234,495

300,963

822,984

63,828

132,061

95,271

27,080

1,676,682

Total loans 3
$
235,835

$
300,963

$
822,984

$
63,828

$
132,467

$
95,526

$
27,410

$
1,679,013

Non-accrual loans 2
$
—

$
—

$
—

$
—

$
406

$
—

$
—

$
406

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 three purchased credit impaired ("PCI") loans with unpaid balances totaling $131 thousand and no carrying values that had stopped accreting interest at December 31, 2017. There were no PCI loans that had stopped accreting interest at December 31, 2016. Amounts exclude accreting PCI loans of $2.1 million and $2.9 million at December 31, 2017 and 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 December 31, 2017 or 2016.

3 Amounts include net deferred loan origination costs of $818 thousand and $883 thousand at December 31, 2017 and 2016, respectively. Amounts are also net of unaccreted purchase discounts on non-PCI loans of $1.2 million and $1.8 million at December 31, 2017 and 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 December 31, 2017 and 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

December 31, 2017
 
 
 
 
 
 
 
 
Pass
$
214,636

$
281,104

$
818,570

$
60,859

$
130,558

$
95,526

$
27,287

$
1,325

$
1,629,865

Special Mention
9,318

9,284

1,850

—

—

—

—

790

21,242

Substandard
11,816

9,409

1,774

2,969

1,815

—

123

—

27,906

Total loans
$
235,770

$
299,797

$
822,194

$
63,828

$
132,373

$
95,526

$
27,410

$
2,115

$
1,679,013

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 December 31, 2017 and December 31, 2016.
(in thousands)
As of
Recorded investment in Troubled Debt Restructurings 1
December 31, 2017

December 31, 2016

Commercial and industrial
$
2,165

$
2,207

Commercial real estate, owner-occupied
6,999

6,993

Commercial real estate, investor
2,171

2,256

Construction
2,969

3,245

Home equity
347

625

Other residential
1,148

1,965

Installment and other consumer
721

877

Total
$
16,520

$
18,168

1 There were no TDR loans on non-accrual status at December 31, 2017 or December 31, 2016. Includes no acquired TDR loans as of December 31, 2017 or 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 at period end 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

TDRs modified during 2017:
 

 

 

 
Installment and other consumer
1

$
50

$
50

$
47

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
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

December 31, 2017
 
 
 
 
 
 
 
Recorded investment in impaired loans:
 
 
 
 
 
 
With no specific allowance recorded
$
309

$
—

$
—

$
2,689

$
406

$
995

$
46

$
4,445

With a specific allowance recorded
1,856

6,999

2,171

280

347

153

675

12,481

Total recorded investment in impaired loans
$
2,165

$
6,999

$
2,171

$
2,969

$
753

$
1,148

$
721

$
16,926

Unpaid principal balance of impaired loans
$
2,278

$
6,993

$
2,168

$
2,963

$
750

$
1,147

$
720

$
17,019

Specific allowance
$
50

$
188

$
159

$
7

$
6

$
1

$
102

$
513

Average recorded investment in impaired loans during 2017
$
2,113

$
6,998

$
2,842

$
3,132

$
679

$
1,324

$
841

$
17,929

Interest income recognized on impaired loans during 2017 1
$
202

$
266

$
87

$
147

$
24

$
62

$
37

$
825

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

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

1 Interest income recognized on a cash basis totaled $100 thousand in 2017 and was primarily related to the pay-off of a commercial non-accrual PCI loan in the fourth quarter. 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 income on impaired loans was recognized on a cash basis in 2015.
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 Year Ended
(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, 2017
 
 
 
 
 
 
 
Beginning balance
$
3,248

$
1,753

$
6,320

$
781

$
973

$
454

$
372

$
1,541

$
15,442

Provision (reversal)
584

541

155

(100
)
58

82

3

(823
)
500

Charge-offs
(289
)
—

—

—

—

—

(4
)
—

(293
)
Recoveries
111

—

—

—

—

—

7

—

118

Ending balance
$
3,654

$
2,294

$
6,475

$
681

$
1,031

$
536

$
378

$
718

$
15,767

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

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, 2017
 
 
 
 
 
 
 
 
 
Ending ALLL related to loans collectively evaluated for impairment
$
3,604

$
2,106

$
6,316

$
674

$
1,025

$
535

$
276

$
718

$
15,254

Ending ALLL related to loans individually evaluated for impairment
50

188

159

7

6

1

102

—

513

Ending ALLL related to purchased credit-impaired loans
—

—

—

—

—

—

—

—

—

Ending balance
$
3,654

$
2,294

$
6,475

$
681

$
1,031

$
536

$
378

$
718

$
15,767

Recorded Investment:
 

 

 

 

 

 

 

 

 

Collectively evaluated for impairment
$
233,605

$
292,798

$
820,023

$
60,859

$
131,620

$
94,378

$
26,689

$
—

$
1,659,972

Individually evaluated for impairment
2,165

6,999

2,171

2,969

753

1,148

721

—

16,926

Purchased credit-impaired
65

1,166

790

—

94

—

—

—

2,115

Total
$
235,835

$
300,963

$
822,984

$
63,828

$
132,467

$
95,526

$
27,410

$
—

$
1,679,013

Ratio of allowance for loan losses to total loans
1.55
%
0.76
%
0.79
%
1.07
%
0.78
%
0.56
%
1.38
%
NM

0.94
%
Allowance for loan losses to non-accrual loans
NM

NM

NM

NM

254
%
NM

NM

NM

3,883
%
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

Loans outstanding:
 

 

 

 

 

 

 

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
December 31, 2017
December 31, 2016

(in thousands)
Unpaid Principal Balance

Carrying Value

Unpaid Principal Balance

Carrying Value

Commercial and industrial
$
276

$
65

$
45

$
40

Commercial real estate, owner occupied
1,297

1,166

1,344

1,072

Commercial real estate, investor
1,064

790

1,713

1,706

Construction
—

—

—

—

Home equity
231

94

248

102

Total purchased credit-impaired loans
$
2,868

$
2,115

$
3,350

$
2,920

The following table presents the fair value of loans acquired from Bank of Napa for PCI loans as of the acquisition date (November 21, 2017):
(in thousands)
PCI loans
Contractually required payments including interest
$
1,769

Less: contractual cash flows not expected to be collected (nonaccretable difference)
805

Cash flows expected to be collected (undiscounted)
964

Less: interest component of cash flows expected to be collected (accretable yield)
109

Fair value of PCI loans
$
855


The following table presents the fair value of loans acquired from Bank of Napa for non-PCI loans as of the acquisition date (November 21, 2017):
(in thousands)
Non-PCI loans
Contractually required payments including interest
$
183,833

Contractual cash flows not expected to be collected
$
14,227

Fair value of non-PCI loans
$
133,865


The following table reflects the outstanding balance and related fair value of PCI loans as of the acquisition date:
PCI Loans (in thousands)
Unpaid principal balance

Fair value

Commercial
$
417

$
70

Commercial real estate
1,070

785

Total purchased credit-impaired loans
$
1,487

$
855
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, 2017

December 31, 2016

December 31, 2015

Balance at beginning of period
$
1,476

$
2,618

$
4,027

Additions
109

—

—

Removals 1
—

(778
)
(914
)
Accretion
(331
)
(364
)
(495
)
Balance at end of period
$
1,254

$
1,476

$
2,618

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.
Schedule of Related Party Transactions
An analysis of net loans to related parties for each of the three years ended December 31, 2017, 2016 and 2015 is as follows:
(in thousands)
2017

2016

2015

Balance at beginning of year
$
1,988

$
2,562

$
3,329

Additions
3,186

—

—

Advances
74

—

165

Repayments
(128
)
(574
)
(390
)
Reclassified due to a change in borrower status
6,732

—

(542
)
Balance at end of year
$
11,852

$
1,988

$
2,562