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Loans and Allowance for Loan Losses | 3 Months Ended
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Mar. 31, 2019
Loans and Allowance for Loan Losses [Abstract] |
Loans and Allowance for Loan Losses | NOTE 4 – Loans and Allowance for Loan Losses The following table summarizes the composition of our loan portfolio. Total gross loans are recorded net of deferred loan fees and costs, which totaled $2.9 million as of March 31, 2019 and $2.8 million as of December 31, 2018.
|  | March 31, 2019 |  | December 31, 2018
(dollars in thousands) |  | Amount |  |  | % of Total |  | Amount |  |  | % of Total
Commercial |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 386,256 |  |  | 22.3% |  | $ | 367,018 |  |  | 21.9%
Non-owner occupied RE |  |  | 423,953 |  |  | 24.4% |  |  | 404,296 |  |  | 24.1%
Construction |  |  | 80,561 |  |  | 4.7% |  |  | 84,411 |  |  | 5.0%
Business |  |  | 281,502 |  |  | 16.2% |  |  | 272,980 |  |  | 16.3%
Total commercial loans |  |  | 1,172,272 |  |  | 67.6% |  |  | 1,128,705 |  |  | 67.3%
Consumer |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 330,538 |  |  | 19.1% |  |  | 320,943 |  |  | 19.1%
Home equity |  |  | 167,146 |  |  | 9.6% |  |  | 165,937 |  |  | 9.9%
Construction |  |  | 39,838 |  |  | 2.3% |  |  | 37,925 |  |  | 2.3%
Other |  |  | 24,170 |  |  | 1.4% |  |  | 23,822 |  |  | 1.4%
Total consumer loans |  |  | 561,692 |  |  | 32.4% |  |  | 548,627 |  |  | 32.7%
Total gross loans, net of deferred fees |  |  | 1,733,964 |  |  | 100.0% |  |  | 1,677,332 |  |  | 100.0%
Less—allowance for loan losses |  |  | (16,051 | ) |  |  |  |  | (15,762 | ) |  |
Total loans, net |  | $ | 1,717,913 |  |  |  |  | $ | 1,661,570 |  |  |
Maturities and Sensitivity of Loans to Changes in Interest Rates The information in the following tables summarizes the loan maturity distribution by type and related interest rate characteristics based on the contractual maturities of individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below, because borrowers have the right to prepay obligations with or without prepayment penalties.
|  | March 31, 2019
|  |  |  |  | After one |  |  |  |  |
|  | One year |  | but within |  | After five |  |  |
(dollars in thousands) |  | or less |  | five years |  | years |  | Total
Commercial |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 21,648 |  | 165,318 |  | 199,290 |  |  | 386,256
Non-owner occupied RE |  |  | 41,795 |  | 244,292 |  | 137,866 |  |  | 423,953
Construction |  |  | 18,526 |  | 35,798 |  | 26,237 |  |  | 80,561
Business |  |  | 80,049 |  | 141,048 |  | 60,405 |  |  | 281,502
Total commercial loans |  |  | 162,018 |  | 586,456 |  | 423,798 |  |  | 1,172,272
Consumer |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 24,754 |  | 73,030 |  | 232,754 |  |  | 330,538
Home equity |  |  | 8,127 |  | 26,423 |  | 132,596 |  |  | 167,146
Construction |  |  | 15,122 |  | 877 |  | 23,839 |  |  | 39,838
Other |  |  | 7,473 |  | 12,121 |  | 4,576 |  |  | 24,170
Total consumer loans |  |  | 55,476 |  | 112,451 |  | 393,765 |  |  | 561,692
Total gross loans, net of deferred fees |  | $ | 217,494 |  | 698,907 |  | 817,563 |  |  | 1,733,964
Loans maturing after one year with: |  |  |  |  |  |  |  |  |  |
Fixed interest rates |  |  |  |  |  |  |  |  | $ | 1,155,862
Floating interest rates |  |  |  |  |  |  |  |  |  | 360,608
|  | December 31, 2018
|  |  |  |  | After one |  |  |  |  |
|  |  | One year |  | but within |  | After five |  |  |
(dollars in thousands) |  |  | or less |  | five years |  | years |  |  | Total
Commercial |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 20,839 |  | 165,436 |  | 180,743 |  |  | 367,018
Non-owner occupied RE |  |  | 43,000 |  | 227,454 |  | 133,842 |  |  | 404,296
Construction |  |  | 22,941 |  | 33,045 |  | 28,425 |  |  | 84,411
Business |  |  | 80,672 |  | 128,911 |  | 63,397 |  |  | 272,980
Total commercial loans |  |  | 167,452 |  | 554,846 |  | 406,407 |  |  | 1,128,705
Consumer |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 29,301 |  | 70,467 |  | 221,175 |  |  | 320,943
Home equity |  |  | 8,867 |  | 24,618 |  | 132,452 |  |  | 165,937
Construction |  |  | 16,006 |  | 1,646 |  | 20,273 |  |  | 37,925
Other |  |  | 7,681 |  | 11,253 |  | 4,888 |  |  | 23,822
Total consumer |  |  | 61,855 |  | 107,984 |  | 378,788 |  |  | 548,627
Total gross loan, net of deferred fees |  | $ | 229,307 |  | 662,830 |  | 785,195 |  |  | 1,677,332
Loans maturing after one year with : |  |  |  |  |  |  |  |  |  |
Fixed interest rates |  |  |  |  |  |  |  |  | $ | 1,100,854
Floating interest rates |  |  |  |  |  |  |  |  |  | 347,171
Portfolio Segment Methodology Commercial Commercial loans are assessed for estimated losses by grading each loan using various risk factors identified through periodic reviews. The Company applies historic grade-specific loss factors to each loan class. In the development of statistically derived loan grade loss factors, the Company observes historical losses over 20 quarters for each loan grade. These loss estimates are adjusted as appropriate based on additional analysis of external loss data or other risks identified from current economic conditions and credit quality trends. The allowance also includes an amount for the estimated impairment on nonaccrual commercial loans and commercial loans modified in a troubled debt restructuring (“TDR”), whether on accrual or nonaccrual status. Consumer For consumer loans, the Company determines the allowance on a collective basis utilizing historical losses over 20 quarters to represent its best estimate of inherent loss. The Company pools loans, generally by loan class with similar risk characteristics. The allowance also includes an amount for the estimated impairment on nonaccrual consumer loans and consumer loans modified in a TDR, whether on accrual or nonaccrual status. Credit Quality Indicators Commercial We manage a consistent process for assessing commercial loan credit quality by monitoring its loan grading trends and past due statistics. All loans are subject to individual risk assessment. Our risk categories include Pass, Special Mention, Substandard, and Doubtful, each of which is defined by our banking regulatory agencies. Delinquency statistics are also an important indicator of credit quality in the establishment of our allowance for loan losses. We categorize our loans into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. A description of the general characteristics of the risk grades is as follows:
● | Pass—These loans range from minimal credit risk to average credit risk; however, still have acceptable credit risk.
● | Special mention—A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.
● | Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
● | Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.
The tables below provide a breakdown of outstanding commercial loans by risk category.
|  | March 31, 2019
|  | Owner |  | Non-owner |  |  |  |  |  |
(dollars in thousands) |  | occupied RE |  | occupied RE |  | Construction |  | Business |  | Total
Pass |  | $ | 382,553 |  | 415,897 |  | 80,494 |  | 275,450 |  | 1,154,394
Special mention |  |  | 1,495 |  | 4,261 |  | 67 |  | 1,967 |  | 7,790
Substandard |  |  | 2,208 |  | 3,795 |  | - |  | 4,085 |  | 10,088
Doubtful |  |  | - |  | - |  | - |  | - |  | -
|  | $ | 386,256 |  | 423,953 |  | 80,561 |  | 281,502 |  | 1,172,272
|  | December 31, 2018
|  | Owner |  | Non-owner |  |  |  |  |  |
(dollars in thousands) |  | occupied RE |  | occupied RE |  | Construction |  | Business |  | Total
Pass |  | $ | 363,621 |  | 400,266 |  | 84,411 |  | 266,898 |  | 1,115,196
Special mention |  |  | 296 |  | 118 |  | - |  | 2,971 |  | 3,385
Substandard |  |  | 3,101 |  | 3,912 |  | - |  | 3,111 |  | 10,124
Doubtful |  |  | - |  | - |  | - |  | - |  | -
|  | $ | 367,018 |  | 404,296 |  | 84,411 |  | 272,980 |  | 1,128,705
The following tables provide past due information for outstanding commercial loans and include loans on nonaccrual status as well as accruing TDRs.
|  | March 31, 2019
|  | Owner |  | Non-owner |  |  |  |  |  |
(dollars in thousands) |  | occupied RE |  | occupied RE |  | Construction |  | Business |  | Total
Current |  | $ | 386,146 |  | 423,953 |  | 80,561 |  | 281,430 |  | 1,172,090
30-59 days past due |  |  | 110 |  | - |  | - |  | - |  | 110
60-89 days past due |  |  | - |  | - |  | - |  | - |  | -
Greater than 90 Days |  |  | - |  | - |  | - |  | 72 |  | 72
|  | $ | 386,256 |  | 423,953 |  | 80,561 |  | 281,502 |  | 1,172,272
|  | December 31, 2018
|  | Owner |  | Non-owner |  |  |  |  |  |
|  | occupied RE |  | occupied RE |  | Construction |  | Business |  | Total
Current |  | $ | 367,018 |  | 404,179 |  | 84,411 |  | 272,864 |  | 1,128,472
30-59 days past due |  |  | - |  | 117 |  | - |  | 36 |  | 153
60-89 days past due |  |  | - |  | - |  | - |  | - |  | -
Greater than 90 Days |  |  | - |  | - |  | - |  | 80 |  | 80
|  | $ | 367,018 |  | 404,296 |  | 84,411 |  | 272,980 |  | 1,128,705
Consumer The Company manages a consistent process for assessing consumer loan credit quality by monitoring its loan grading trends and past due statistics. All loans are subject to individual risk assessment. The Company’s categories include Pass, Special Mention, Substandard, and Doubtful, which are defined above. Delinquency statistics are also an important indicator of credit quality in the establishment of the allowance for loan losses. The tables below provide a breakdown of outstanding consumer loans by risk category.
|  | March 31, 2019
(dollars in thousands) |  | Real estate |  | Home equity |  | Construction |  | Other |  | Total
Pass |  | $ | 324,421 |  | 163,989 |  | 39,838 |  | 24,007 |  | 552,255
Special mention |  |  | 2,428 |  | 415 |  | - |  | 127 |  | 2,970
Substandard |  |  | 3,689 |  | 2,742 |  | - |  | 36 |  | 6,467
Doubtful |  |  | - |  | - |  | - |  | - |  | -
|  | $ | 330,538 |  | 167,146 |  | 39,838 |  | 24,170 |  | 561,692
|  | December 31, 2018
(dollars in thousands) |  | Real estate |  | Home equity |  | Construction |  | Other |  | Total
Pass |  | $ | 314,586 |  | 162,626 |  | 37,925 |  | 23,586 |  | 538,723
Special mention |  |  | 1,792 |  | 864 |  | - |  | 139 |  | 2,795
Substandard |  |  | 4,565 |  | 2,447 |  | - |  | 97 |  | 7,109
Doubtful |  |  | - |  | - |  | - |  | - |  | -
|  | $ | 320,943 |  | 165,937 |  | 37,925 |  | 23,822 |  | 548,627
The following tables provide past due information for outstanding consumer loans and include loans on nonaccrual status as well as accruing TDRs.
|  | March 31, 2019
(dollars in thousands) |  | Real estate |  | Home equity |  | Construction |  | Other |  | Total
Current |  | $ | 328,378 |  | 166,632 |  | 39,838 |  | 24,140 |  | 558,988
30-59 days past due |  |  | 656 |  | 246 |  | - |  | 30 |  | 932
60-89 days past due |  |  | 862 |  | - |  | - |  | - |  | 862
Greater than 90 Days |  |  | 642 |  | 268 |  | - |  | - |  | 910
|  | $ | 330,538 |  | 167,146 |  | 39,838 |  | 24,170 |  | 561,692
|  |  |  |  |  |  |  |  | December 31, 2018
(dollars in thousands) |  |  | Real estate |  | Home equity |  | Construction |  | Other |  | Total
Current |  | $ | 317,267 |  | 165,727 |  | 37,925 |  | 23,603 |  | 544,522
30-59 days past due |  |  | 2,555 |  | 30 |  | - |  | 106 |  | 2,691
60-89 days past due |  |  | 923 |  | - |  | - |  | 113 |  | 1,036
Greater than 90 Days |  |  | 198 |  | 180 |  | - |  | - |  | 378
|  | $ | 320,943 |  | 165,937 |  | 37,925 |  | 23,822 |  | 548,627
As of March 31, 2019 and December 31, 2018, loans 30 days or more past due represented 0.17% and 0.26% of the Company’s total loan portfolio, respectively. Commercial loans 30 days or more past due were 0.01% of the Company’s total loan portfolio as of March 31, 2019 and December 31, 2018, while consumer loans 30 days or more past due were 0.16% and 0.25% of total loans as of March 31, 2019 and December 31, 2018, respectively. Nonperforming assets The following table shows the nonperforming assets and the related percentage of nonperforming assets to total assets and gross loans. Generally, a loan is placed on nonaccrual status when it becomes 90 days past due as to principal or interest, or when the Company believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. A payment of interest on a loan that is classified as nonaccrual is recognized as a reduction in principal when received. Following is a summary of our nonperforming assets, including nonaccruing TDRs.
(dollars in thousands) |  | March 31, 2019 |  | December 31, 2018
Commercial |  |  |  |  |
Owner occupied RE |  | $ | - |  | -
Non-owner occupied RE |  |  | 403 |  | 210
Construction |  |  | - |  | -
Business |  |  | 72 |  | 81
Consumer |  |  |  |  |
Real estate |  |  | 1,840 |  | 1,980
Home equity |  |  | 1,249 |  | 1,006
Construction |  |  | - |  | -
Other |  |  | - |  | 12
Nonaccruing troubled debt restructurings |  |  | 2,485 |  | 2,541
Total nonaccrual loans, including nonaccruing TDRs |  |  | 6,049 |  | 5,830
Other real estate owned |  |  | - |  | -
Total nonperforming assets |  | $ | 6,049 |  | 5,830
Nonperforming assets as a percentage of: |  |  |  |  |
Total assets |  |  | 0.30% |  | 0.31%
Gross loans |  |  | 0.35% |  | 0.35%
Total loans over 90 days past due |  |  | 982 |  | 458
Loans over 90 days past due and still accruing |  |  | - |  | -
Accruing troubled debt restructurings |  | $ | 6,839 |  | 6,742
Impaired Loans The table below summarizes key information for impaired loans. The Company’s impaired loans include loans on nonaccrual status and loans modified in a TDR, whether on accrual or nonaccrual status. These impaired loans may have estimated impairment which is included in the allowance for loan losses. The Company’s commercial and consumer impaired loans are evaluated individually to determine the related allowance for loan losses.
|  |  |  |  | March 31, 2019
|  |  |  |  | Recorded investment |  |
|  |  |  |  |  |  | Impaired loans |  |
|  | Unpaid |  |  |  | with related |  | Related
|  | Principal |  | Impaired |  | allowance for |  | allowance for
(dollars in thousands) |  | Balance |  | loans |  | loan losses |  | loan losses
Commercial |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 2,816 |  | 2,751 |  | 449 |  | 75
Non-owner occupied RE |  |  | 2,977 |  | 2,953 |  | 1,773 |  | 546
Construction |  |  | - |  | - |  | - |  | -
Business |  |  | 3,242 |  | 2,615 |  | 1,998 |  | 946
Total commercial |  |  | 9,035 |  | 8,319 |  | 4,220 |  | 1,567
Consumer |  |  |  |  |  |  |  |  |
Real estate |  |  | 2,755 |  | 2,748 |  | 1,264 |  | 414
Home equity |  |  | 1,704 |  | 1,665 |  | 268 |  | 95
Construction |  |  | - |  | - |  | - |  | -
Other |  |  | 156 |  | 156 |  | 156 |  | 18
Total consumer |  |  | 4,615 |  | 4,569 |  | 1,688 |  | 527
Total |  | $ | 13,650 |  | 12,888 |  | 5,908 |  | 2,094
|  |  |  |  | December 31, 2018
|  |  |  |  | Recorded investment |  |
|  |  |  |  |  |  | Impaired loans |  |
|  |  | Unpaid |  |  |  | with related |  | Related
|  |  | Principal |  | Impaired |  | allowance for |  | allowance for
(dollars in thousands) |  |  | Balance |  | loans |  | loan losses |  | loan losses
Commercial |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 2,827 |  | 2,762 |  | 451 |  | 75
Non-owner occupied RE |  |  | 3,321 |  | 2,807 |  | 2,204 |  | 558
Construction |  |  | - |  | - |  | - |  | -
Business |  |  | 3,745 |  | 2,520 |  | 2,005 |  | 895
Total commercial |  |  | 9,893 |  | 8,089 |  | 4,660 |  | 1,528
Consumer |  |  |  |  |  |  |  |  |
Real estate |  |  | 2,993 |  | 2,892 |  | 1,398 |  | 456
Home equity |  |  | 1,935 |  | 1,421 |  | - |  | -
Construction |  |  | - |  | - |  | - |  | -
Other |  |  | 170 |  | 170 |  | 170 |  | 30
Total consumer |  |  | 5,098 |  | 4,483 |  | 1,568 |  | 486
Total |  | $ | 14,991 |  | 12,572 |  | 6,228 |  | 2,014
The following table provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans after impairment by portfolio segment and class.
|  | Three months ended |  | Three months ended |  | Year ended
|  | March 31, 2019 |  | March 31, 2018 |  | December 31, 2018
|  | Average |  | Recognized |  | Average |  | Recognized |  | Average |  | Recognized
|  | recorded |  | interest |  | recorded |  | interest |  | recorded |  | interest
(dollars in thousands) |  | investment |  | income |  | investment |  | income |  | investment |  | income
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 2,757 |  | 30 |  | 2,231 |  | 17 |  | 2,784 |  | 142
Non-owner occupied RE |  |  | 2,977 |  | 49 |  | 3,758 |  | 50 |  | 2,860 |  | 174
Construction |  |  | - |  | - |  | - |  | - |  | - |  | -
Business |  |  | 2,567 |  | 40 |  | 1,886 |  | 21 |  | 2,883 |  | 162
Total commercial |  |  | 8,301 |  | 119 |  | 7,875 |  | 88 |  | 8,527 |  | 478
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 2,761 |  | 25 |  | 2,814 |  | 41 |  | 2,930 |  | 151
Home equity |  |  | 1,677 |  | 30 |  | 2,203 |  | 28 |  | 1,453 |  | 99
Construction |  |  | - |  | - |  | - |  | - |  | - |  | -
Other |  |  | 157 |  | 1 |  | 168 |  | 1 |  | 174 |  | 5
Total consumer |  |  | 4,595 |  | 56 |  | 5,185 |  | 70 |  | 4,557 |  | 255
Total |  | $ | 12,896 |  | 175 |  | 13,060 |  | 158 |  | 13,084 |  | 733
Allowance for Loan Losses The allowance for loan loss is management’s estimate of credit losses inherent in the loan portfolio. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The Company has an established process to determine the adequacy of the allowance for loan losses that assesses the losses inherent in the portfolio. While the Company attributes portions of the allowance to specific portfolio segments, the entire allowance is available to absorb credit losses inherent in the total loan portfolio. The Company’s process involves procedures to appropriately consider the unique risk characteristics of the commercial and consumer loan portfolio segments. For each portfolio segment, impairment is measured individually for each impaired loan. The Company’s allowance levels are influenced by loan volume, loan grade or delinquency status, historic loss experience and other economic conditions. The following table summarizes the activity related to the allowance for loan losses by commercial and consumer portfolio segments:
|  | Three months ended March 31, 2019
|  | Commercial |  | Consumer |  |  |
|  | Owner |  | Non-owner |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | occupied |  | occupied |  |  |  |  |  |  | Real |  | Home |  |  |  |  |  |  |  |
(dollars in thousands) |  | RE |  | RE |  | Construction |  | Business |  | Estate |  | equity |  | Construction |  | Other |  | Total
Balance, beginning of period |  | $ | 2,726 |  | 3,811 |  | 615 |  |  | 3,616 |  | 3,081 |  |  | 1,348 |  | 275 |  | 290 |  |  | 15,762 |
Provision for loan losses |  |  | 57 |  | 74 |  | (43 | ) |  | 171 |  | (56 | ) |  | 61 |  | 7 |  | 29 |  |  | 300 |
Loan charge-offs |  |  | - |  | - |  | - |  |  | - |  | - |  |  | - |  | - |  | (41 | ) |  | (41 | )
Loan recoveries |  |  | - |  | 1 |  | - |  |  | 9 |  | 16 |  |  | 1 |  | - |  | 3 |  |  | 30 |
Net loan charge-offs |  |  | - |  | 1 |  | - |  |  | 9 |  | 16 |  |  | 1 |  | - |  | (38 | ) |  | (11 | )
Balance, end of period |  | $ | 2,783 |  | 3,886 |  | 572 |  |  | 3,796 |  | 3,041 |  |  | 1,410 |  | 282 |  | 281 |  |  | 16,051 |
Net charge-offs to average loans (annualized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0.00% |
Allowance for loan losses to gross loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0.93% |
Allowance for loan losses to nonperforming loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 265.35% |
|  | Three months ended March 31, 2018
|  | Commercial |  | Consumer |  |  |
|  | Owner |  | Non-owner |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | occupied |  | occupied |  |  |  |  |  |  | Real |  | Home |  |  |  |  |  |  |  |
(dollars in thousands) |  | RE |  | RE |  | Construction |  | Business |  | Estate |  | equity |  | Construction |  | Other |  | Total
Balance, beginning of period |  | $ | 2,534 |  | 3,230 |  | 325 |  | 3,848 |  |  | 3,495 |  |  | 1,600 |  |  | 210 |  | 281 |  |  | 15,523 |
Provision for loan losses |  |  | 146 |  | 135 |  | 90 |  | (294 | ) |  | (105 | ) |  | 451 |  |  | 46 |  | 31 |  |  | 500 |
Loan charge-offs |  |  | - |  | - |  | - |  | (119 | ) |  | - |  |  | (140 | ) |  | - |  | (34 | ) |  | (293 | )
Loan recoveries |  |  | - |  | 1 |  | - |  | 118 |  |  | 1 |  |  | - |  |  | - |  | 2 |  |  | 122 |
Net loan charge-offs |  |  | - |  | 1 |  | - |  | (1 | ) |  | 1 |  |  | (140 | ) |  | - |  | (32 | ) |  | (171 | )
Balance, end of period |  | $ | 2,680 |  | 3,366 |  | 415 |  | 3,553 |  |  | 3,391 |  |  | 1,911 |  |  | 256 |  | 280 |  |  | 15,852 |
Net charge-offs to average loans (annualized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0.05% |
Allowance for loan losses to gross loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1.09% |
Allowance for loan losses to nonperforming loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 217.92% |
The following table disaggregates the allowance for loan losses and recorded investment in loans by impairment methodology.
|  | March 31, 2019
|  | Allowance for loan losses |  | Recorded investment in loans
(dollars in thousands) |  | Commercial |  | Consumer |  | Total |  | Commercial |  | Consumer |  | Total
Individually evaluated |  | $ | 1,567 |  | 527 |  | 2,094 |  | 8,319 |  | 4,569 |  | 12,888
Collectively evaluated |  |  | 9,470 |  | 4,487 |  | 13,957 |  | 1,163,953 |  | 557,123 |  | 1,721,076
Total |  | $ | 11,037 |  | 5,014 |  | 16,051 |  | 1,172,272 |  | 561,692 |  | 1,733,964
|  | December 31, 2018
|  | Allowance for loan losses |  | Recorded investment in loans
(dollars in thousands) |  | Commercial |  | Consumer |  | Total |  | Commercial |  | Consumer |  | Total
Individually evaluated |  | $ | 1,528 |  | 486 |  | 2,014 |  | 8,089 |  | 4,483 |  | 12,572
Collectively evaluated |  |  | 9,240 |  | 4,508 |  | 13,748 |  | 1,120,616 |  | 544,144 |  | 1,664,760
Total |  | $ | 10,768 |  | 4,994 |  | 15,762 |  | 1,128,705 |  | 548,627 |  | 1,677,332

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