Loans and allowance for loan losses
 9 Months Ended
Sep. 30, 2017
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
Note 5 – Loans and allowance for loan losses
 
The following table presents the composition of our loan portfolio (excluding mortgage loans held for sale) at the dates indicated (dollars in thousands):
 
 
 
September 30, 2017
 
December 31, 2016
 
 
 
Amount
 
%
 
Amount
 
%
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
6,327
 
 
1.82
%
$
6,770
 
 
2.01
%
Commercial
 
 
28,721
 
 
8.28
%
 
27,092
 
 
8.04
%
 
 
 
35,048
 
 
10.10
%
 
33,862
 
 
10.05
%
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
71,834
 
 
20.70
%
 
66,021
 
 
19.59
%
Non-owner occupied
 
 
61,831
 
 
17.82
%
 
57,944
 
 
17.19
%
Multifamily
 
 
6,114
 
 
1.76
%
 
8,824
 
 
2.62
%
Farmland
 
 
278
 
 
0.08
%
 
310
 
 
0.09
%
 
 
 
140,057
 
 
40.36
%
 
133,099
 
 
39.49
%
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
20,595
 
 
5.94
%
 
20,691
 
 
6.14
%
Secured by 1-4 family residential,
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
54,820
 
 
15.80
%
 
54,791
 
 
16.25
%
Second deed of trust
 
 
6,293
 
 
1.81
%
 
5,768
 
 
1.71
%
 
 
 
81,708
 
 
23.55
%
 
81,250
 
 
24.10
%
Commercial and industrial loans (except those secured by real estate)
 
 
40,647
 
 
11.71
%
 
39,390
 
 
11.68
%
Guaranteed student loans
 
 
47,643
 
 
13.73
%
 
47,398
 
 
14.06
%
Consumer and other
 
 
1,899
 
 
0.55
%
 
2,101
 
 
0.62
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
 
347,002
 
 
100.0
%
 
337,100
 
 
100.0
%
Deferred loan cost, net
 
 
676
 
 
 
 
 
660
 
 
 
 
Less: allowance for loan losses
 
 
(3,243)
 
 
 
 
 
(3,373)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
344,435
 
 
 
 
$
334,387
 
 
 
 
 
The Bank purchased portfolios of rehabilitated student loans guaranteed by the Department of Education (“DOE”). The guarantee covers approximately 98% of principal and accrued interest. The loans are serviced by a third-party servicer that specializes in handling the special needs of the DOE student loan programs.
 
Loans pledged as collateral with the Federal Home Loan Bank of Atlanta (“FHLB”) as part of their lending arrangement with the Company totaled $25,111,000 and $27,073,000 at September 30, 2017 and December 31, 2016, respectively.
 
The Company assigns risk rating classifications to its loans. These risk ratings are divided into the following groups:
 
·
Risk rated 1 to 4 loans are considered of sufficient quality to preclude an adverse rating. These assets generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral;
·
Risk rated 5 loans are defined as having potential weaknesses that deserve management’s close attention;
·
Risk rated 6 loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any;
·
Risk rated 7 loans have all the weaknesses inherent in substandard loans, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable; and
 
·
Loans rated 6 or 7 are considered “Classified” loans for regulatory classification purposes.
 
The following tables provide information on the risk rating of loans at the dates indicated (dollars in thousands):
 
 
 
Risk Rated
 
Risk Rated
 
Risk Rated
 
Risk Rated
 
Total
 
 
 
1-4
 
5
 
6
 
7
 
Loans
 
September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
6,327
 
$
-
 
$
-
 
$
-
 
$
6,327
 
Commercial
 
 
27,495
 
 
1,129
 
 
97
 
 
-
 
 
28,721
 
 
 
 
33,822
 
 
1,129
 
 
97
 
 
-
 
 
35,048
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
70,657
 
 
798
 
 
379
 
 
-
 
 
71,834
 
Non-owner occupied
 
 
57,095
 
 
1,568
 
 
3,168
 
 
-
 
 
61,831
 
Multifamily
 
 
6,114
 
 
-
 
 
-
 
 
-
 
 
6,114
 
Farmland
 
 
278
 
 
-
 
 
-
 
 
-
 
 
278
 
 
 
 
134,144
 
 
2,366
 
 
3,547
 
 
-
 
 
140,057
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
19,495
 
 
378
 
 
722
 
 
-
 
 
20,595
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
50,626
 
 
2,016
 
 
2,178
 
 
-
 
 
54,820
 
Second deed of trust
 
 
5,944
 
 
206
 
 
143
 
 
-
 
 
6,293
 
 
 
 
76,065
 
 
2,600
 
 
3,043
 
 
-
 
 
81,708
 
Commercial and industrial loans (except those secured by real estate)
 
 
35,440
 
 
3,916
 
 
1,291
 
 
-
 
 
40,647
 
Guaranteed student loans
 
 
47,643
 
 
-
 
 
-
 
 
-
 
 
47,643
 
Consumer and other
 
 
1,659
 
 
222
 
 
18
 
 
-
 
 
1,899
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
328,773
 
$
10,233
 
$
7,996
 
$
-
 
$
347,002
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
6,770
 
$
-
 
$
-
 
$
-
 
$
6,770
 
Commercial
 
 
25,342
 
 
1,648
 
 
102
 
 
-
 
 
27,092
 
 
 
 
32,112
 
 
1,648
 
 
102
 
 
-
 
 
33,862
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
58,788
 
 
3,565
 
 
3,668
 
 
-
 
 
66,021
 
Non-owner occupied
 
 
57,944
 
 
-
 
 
-
 
 
-
 
 
57,944
 
Multifamily
 
 
8,634
 
 
190
 
 
-
 
 
-
 
 
8,824
 
Farmland
 
 
310
 
 
-
 
 
-
 
 
-
 
 
310
 
 
 
 
125,676
 
 
3,755
 
 
3,668
 
 
-
 
 
133,099
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
19,501
 
 
487
 
 
703
 
 
-
 
 
20,691
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
49,648
 
 
2,847
 
 
2,296
 
 
-
 
 
54,791
 
Second deed of trust
 
 
5,399
 
 
125
 
 
244
 
 
-
 
 
5,768
 
 
 
 
74,548
 
 
3,459
 
 
3,243
 
 
-
 
 
81,250
 
Commercial and industrial loans (except those secured by real estate)
 
 
39,390
 
 
-
 
 
-
 
 
-
 
 
39,390
 
Guaranteed student loans
 
 
46,009
 
 
739
 
 
650
 
 
-
 
 
47,398
 
Consumer and other
 
 
2,043
 
 
52
 
 
6
 
 
-
 
 
2,101
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
319,778
 
$
9,653
 
$
7,669
 
$
-
 
$
337,100
 
 
The following table presents the aging of the recorded investment in past due loans and leases as of the dates indicated (dollars in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded
 
 
 
 
 
 
 
Greater
 
 
 
 
 
 
 
Investment >
 
 
 
30-59 Days
 
60-89 Days
 
Than
 
Total Past
 
 
 
Total
 
90 Days and
 
 
 
Past Due
 
Past Due
 
90 Days
 
Due
 
Current
 
Loans
 
Accruing
 
September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
-
 
$
-
 
$
-
 
$
-
 
$
6,327
 
$
6,327
 
$
-
 
Commercial
 
 
26
 
 
-
 
 
-
 
 
26
 
 
28,695
 
 
28,721
 
 
-
 
 
 
 
26
 
 
-
 
 
-
 
 
26
 
 
35,022
 
 
35,048
 
 
-
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
-
 
 
-
 
 
-
 
 
-
 
 
71,834
 
 
71,834
 
 
-
 
Non-owner occupied
 
 
-
 
 
-
 
 
-
 
 
-
 
 
61,831
 
 
61,831
 
 
-
 
Multifamily
 
 
-
 
 
-
 
 
-
 
 
-
 
 
6,114
 
 
6,114
 
 
-
 
Farmland
 
 
-
 
 
-
 
 
-
 
 
-
 
 
278
 
 
278
 
 
-
 
 
 
 
-
 
 
-
 
 
-
 
 
-
 
 
140,057
 
 
140,057
 
 
-
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
-
 
 
-
 
 
-
 
 
-
 
 
20,595
 
 
20,595
 
 
-
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
271
 
 
150
 
 
-
 
 
421
 
 
54,399
 
 
54,820
 
 
-
 
Second deed of trust
 
 
95
 
 
-
 
 
-
 
 
95
 
 
6,198
 
 
6,293
 
 
-
 
 
 
 
366
 
 
150
 
 
-
 
 
516
 
 
81,192
 
 
81,708
 
 
-
 
Commercial and industrial loans (except those secured by real estate)
 
 
-
 
 
536
 
 
-
 
 
536
 
 
40,111
 
 
40,647
 
 
-
 
Guaranteed student loans
 
 
2,077
 
 
1,597
 
 
8,113
 
 
11,787
 
 
35,856
 
 
47,643
 
 
8,113
 
Consumer and other
 
 
-
 
 
4
 
 
-
 
 
4
 
 
1,895
 
 
1,899
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
2,469
 
$
2,287
 
$
8,113
 
$
12,869
 
$
334,133
 
$
347,002
 
$
8,113
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded
 
 
 
 
 
 
 
Greater
 
 
 
 
 
 
 
Investment >
 
 
 
30-59 Days
 
60-89 Days
 
Than
 
Total Past
 
 
 
Total
 
90 Days and
 
 
 
Past Due
 
Past Due
 
90 Days
 
Due
 
Current
 
Loans
 
Accruing
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
-
 
$
-
 
$
-
 
$
-
 
$
6,770
 
$
6,770
 
$
-
 
Commercial
 
 
-
 
 
-
 
 
-
 
 
-
 
 
27,092
 
 
27,092
 
 
-
 
 
 
 
-
 
 
-
 
 
-
 
 
-
 
 
33,862
 
 
33,862
 
 
-
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
-
 
 
-
 
 
-
 
 
-
 
 
66,021
 
 
66,021
 
 
-
 
Non-owner occupied
 
 
-
 
 
-
 
 
-
 
 
-
 
 
57,944
 
 
57,944
 
 
-
 
Multifamily
 
 
190
 
 
-
 
 
-
 
 
190
 
 
8,634
 
 
8,824
 
 
-
 
Farmland
 
 
-
 
 
-
 
 
-
 
 
-
 
 
310
 
 
310
 
 
-
 
 
 
 
190
 
 
-
 
 
-
 
 
190
 
 
132,909
 
 
133,099
 
 
-
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
-
 
 
-
 
 
-
 
 
-
 
 
20,691
 
 
20,691
 
 
-
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
414
 
 
63
 
 
-
 
 
477
 
 
54,314
 
 
54,791
 
 
-
 
Second deed of trust
 
 
128
 
 
-
 
 
-
 
 
128
 
 
5,640
 
 
5,768
 
 
-
 
 
 
 
542
 
 
63
 
 
-
 
 
605
 
 
80,645
 
 
81,250
 
 
-
 
Commercial and industrial loans (except those secured by real estate)
 
 
15
 
 
62
 
 
  -
 
 
77
 
 
39,313
 
 
39,390
 
 
  -
 
Guaranteed student loans
 
 
2,743
 
 
1,923
 
 
8,174
 
 
12,840
 
 
34,558
 
 
47,398
 
 
8,174
 
Consumer and other
 
 
11
 
 
-
 
 
-
 
 
11
 
 
2,090
 
 
2,101
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
3,501
 
$
2,048
 
$
8,174
 
$
13,723
 
$
323,377
 
$
337,100
 
$
8,174
 
 
Loans greater than 90 days past due are student loans that are guaranteed by the DOE which covers approximately 98% of the principal and interest. Accordingly, these loans will not be placed on nonaccrual status.
 
Loans are considered impaired when, based on current information and events it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Loans evaluated individually for impairment include non-performing loans, such as loans on non-accrual, loans past due by 90 days or more, restructured loans and other loans selected by management. The evaluations are based upon discounted expected cash flows or collateral valuations. If the evaluation shows that a loan is individually impaired, then a specific reserve is established for the amount of impairment. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. Impaired loans are set forth in the following table as of the dates indicated (in thousands):
 
 
 
September 30, 2017
 
 
 
 
 
Unpaid
 
 
 
 
 
Recorded
 
Principal
 
Related
 
 
 
Investment
 
Balance
 
Allowance
 
With no related allowance recorded
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
Commercial
 
$
97
 
$
164
 
$
-
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
3,512
 
 
3,512
 
 
 
 
Non-owner occupied
 
 
2,176
 
 
2,176
 
 
-
 
 
 
 
5,688
 
 
5,688
 
 
-
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
601
 
 
601
 
 
-
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
3,968
 
 
3,968
 
 
-
 
Second deed of trust
 
 
594
 
 
802
 
 
-
 
 
 
 
5,163
 
 
5,371
 
 
-
 
Commercial and industrial loans (except those secured by real estate)
 
 
463
 
 
693
 
 
-
 
Consumer and other
 
 
3
 
 
3
 
 
 
 
 
 
 
11,414
 
 
11,919
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
With an allowance recorded
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
464
 
 
464
 
 
2
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
1,922
 
 
1,937
 
 
21
 
 
 
 
1,922
 
 
1,937
 
 
21
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
138
 
 
138
 
 
4
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
765
 
 
765
 
 
62
 
Second deed of trust
 
 
86
 
 
86
 
 
5
 
 
 
 
989
 
 
989
 
 
71
 
Commercial and industrial loans (except those secured by real estate)
 
 
785
 
 
901
 
 
233
 
 
 
 
4,160
 
 
4,291
 
 
327
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
561
 
 
628
 
 
2
 
 
 
 
561
 
 
628
 
 
2
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
5,434
 
 
5,449
 
 
21
 
Non-owner occupied
 
 
2,176
 
 
2,176
 
 
-
 
 
 
 
7,610
 
 
7,625
 
 
21
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
739
 
 
739
 
 
4
 
Secured by 1-4 family residential,
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
4,733
 
 
4,733
 
 
62
 
Second deed of trust
 
 
680
 
 
888
 
 
5
 
 
 
 
6,152
 
 
6,360
 
 
71
 
Commercial and industrial loans (except those secured by real estate)
 
 
1,248
 
 
1,594
 
 
233
 
Consumer and other
 
 
3
 
 
3
 
 
-
 
 
 
$
15,574
 
$
16,210
 
$
327
 
 
 
 
December 31, 2016
 
 
 
 
 
Unpaid
 
 
 
 
 
Recorded
 
Principal
 
Related
 
 
 
Investment
 
Balance
 
Allowance
 
With no related allowance recorded
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
Commercial
 
$
102
 
$
169
 
$
-
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
1,487
 
 
1,487
 
 
-
 
Non-owner occupied
 
 
2,236
 
 
2,236
 
 
-
 
 
 
 
3,723
 
 
3,723
 
 
-
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
703
 
 
703
 
 
-
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
3,514
 
 
3,518
 
 
-
 
Second deed of trust
 
 
619
 
 
865
 
 
-
 
 
 
 
4,836
 
 
5,086
 
 
-
 
Commercial and industrial loans (except those secured by real estate)
 
 
538
 
 
768
 
 
-
 
 
 
 
9,199
 
 
9,746
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
With an allowance recorded
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
479
 
 
479
 
 
9
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
4,117
 
 
4,132
 
 
86
 
Non-Owner occupied
 
 
-
 
 
-
 
 
-
 
 
 
 
4,117
 
 
4,132
 
 
86
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
1,550
 
 
1,550
 
 
144
 
Second deed of trust
 
 
90
 
 
90
 
 
90
 
 
 
 
1,640
 
 
1,640
 
 
234
 
Commercial and industrial loans (except those secured by real estate)
 
 
6
 
 
122
 
 
6
 
 
 
 
6,242
 
 
6,373
 
 
335
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
581
 
 
648
 
 
9
 
 
 
 
581
 
 
648
 
 
9
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
5,604
 
 
5,619
 
 
86
 
Non-owner occupied
 
 
2,236
 
 
2,236
 
 
-
 
 
 
 
7,840
 
 
7,855
 
 
86
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
703
 
 
703
 
 
-
 
Secured by 1-4 family residential,
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
5,064
 
 
5,068
 
 
144
 
Second deed of trust
 
 
709
 
 
955
 
 
90
 
 
 
 
6,476
 
 
6,726
 
 
234
 
Commercial and industrial loans (except those secured by real estate)
 
 
544
 
 
890
 
 
6
 
 
 
$
15,441
 
$
16,119
 
$
335
 
 
The following is a summary of average recorded investment in impaired loans with and without a valuation allowance and interest income recognized on those loans for the periods indicated (dollars in thousands):
 
 
 
For the Three Months
 
For the Nine Months
 
 
 
Ended September 30, 2017
 
Ended September 30, 2017
 
 
 
Average
 
Interest
 
Average
 
Interest
 
 
 
Recorded
 
Income
 
Recorded
 
Income
 
 
 
Investment
 
Recognized
 
Investment
 
Recognized
 
With no related allowance recorded
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
$
99
 
$
1
 
$
100
 
$
3
 
 
 
 
99
 
 
1
 
 
100
 
 
3
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
3,531
 
 
32
 
 
2,539
 
 
90
 
Non-owner occupied
 
 
2,187
 
 
23
 
 
2,206
 
 
82
 
 
 
 
5,718
 
 
55
 
 
4,745
 
 
172
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
751
 
 
16
 
 
761
 
 
17
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
3,737
 
 
24
 
 
3,615
 
 
86
 
Second deed of trust
 
 
555
 
 
9
 
 
563
 
 
27
 
 
 
 
5,043
 
 
49
 
 
4,939
 
 
130
 
Commercial and industrial loans (except those secured by real estate)
 
 
470
 
 
35
 
 
493
 
 
49
 
Consumer and other
 
 
4
 
 
-
 
 
2
 
 
-
 
 
 
 
11,334
 
 
140
 
 
10,279
 
 
354
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
With an allowance recorded
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
467
 
 
5
 
 
472
 
 
17
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
1,929
 
 
17
 
 
2,978
 
 
58
 
 
 
 
1,929
 
 
17
 
 
2,978
 
 
58
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity line
 
 
139
 
 
-
 
 
69
 
 
6
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
815
 
 
8
 
 
1,120
 
 
26
 
Second deed of trust
 
 
129
 
 
1
 
 
131
 
 
3
 
 
 
 
1,083
 
 
9
 
 
1,320
 
 
35
 
Commercial and industrial loans (except those secured by real estate)
 
 
444
 
 
-
 
 
245
 
 
4
 
Consumer and other
 
 
-
 
 
-
 
 
1
 
 
-
 
 
 
 
3,923
 
 
31
 
 
5,016
 
 
114
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
566
 
 
6
 
 
572
 
 
20
 
 
 
 
566
 
 
6
 
 
572
 
 
20
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
5,460
 
 
49
 
 
5,517
 
 
148
 
Non-owner occupied
 
 
2,187
 
 
23
 
 
2,206
 
 
82
 
 
 
 
7,647
 
 
72
 
 
7,723
 
 
230
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
890
 
 
16
 
 
830
 
 
23
 
Secured by 1-4 family residential,
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
4,552
 
 
32
 
 
4,735
 
 
112
 
Second deed of trust
 
 
684
 
 
10
 
 
694
 
 
30
 
 
 
 
6,126
 
 
58
 
 
6,259
 
 
165
 
Commercial and industrial loans (except those secured by real estate)
 
 
915
 
 
35
 
 
738
 
 
53
 
Consumer and other
 
 
4
 
 
-
 
 
3
 
 
-
 
 
 
$
15,257
 
$
171
 
$
15,295
 
$
468
 
 
 
 
For the Three Months
 
For the Nine Months
 
 
 
Ended September 30, 2016
 
Ended September 30, 2016
 
 
 
Average
 
Interest
 
Average
 
Interest
 
 
 
Recorded
 
Income
 
Recorded
 
Income
 
 
 
Investment
 
Recognized
 
Investment
 
Recognized
 
With no related allowance recorded
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
$
92
 
$
-
 
$
211
 
$
40
 
 
 
 
92
 
 
-
 
 
211
 
 
40
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
935
 
 
-
 
 
933
 
 
29
 
Non-owner occupied
 
 
2,546
 
 
28
 
 
2,537
 
 
92
 
 
 
 
3,481
 
 
28
 
 
3,470
 
 
121
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
1,164
 
 
-
 
 
1,246
 
 
1
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
4,137
 
 
42
 
 
4,188
 
 
134
 
Second deed of trust
 
 
839
 
 
9
 
 
950
 
 
32
 
 
 
 
6,140
 
 
51
 
 
6,384
 
 
167
 
Commercial and industrial loans (except those secured by real estate)
 
 
455
 
 
-
 
 
568
 
 
14
 
Consumer and other
 
 
-
 
 
-
 
 
5
 
 
-
 
 
 
 
10,168
 
 
79
 
 
10,638
 
 
342
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
With an allowance recorded
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
1,423
 
 
7
 
 
1,531
 
 
19
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
4,911
 
 
47
 
 
5,272
 
 
157
 
Non-Owner occupied
 
 
158
 
 
-
 
 
174
 
 
9
 
 
 
 
5,069
 
 
47
 
 
5,446
 
 
166
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
1,680
 
 
-
 
 
1,800
 
 
9
 
Second deed of trust
 
 
171
 
 
-
 
 
185
 
 
4
 
 
 
 
1,851
 
 
-
 
 
1,985
 
 
13
 
Commercial and industrial loans (except those secured by real estate)
 
 
99
 
 
-
 
 
122
 
 
-
 
 
 
 
8,442
 
 
54
 
 
9,084
 
 
198
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
1,515
 
 
7
 
 
1,742
 
 
59
 
 
 
 
1,515
 
 
7
 
 
1,742
 
 
59
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
5,846
 
 
47
 
 
6,205
 
 
186
 
Non-owner occupied
 
 
2,704
 
 
28
 
 
2,711
 
 
101
 
 
 
 
8,550
 
 
75
 
 
8,916
 
 
287
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
1,164
 
 
-
 
 
1,246
 
 
1
 
Secured by 1-4 family residential,
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
5,817
 
 
42
 
 
5,987
 
 
143
 
Second deed of trust
 
 
1,010
 
 
9
 
 
1,135
 
 
36
 
 
 
 
7,991
 
 
51
 
 
8,368
 
 
180
 
Commercial and industrial loans (except those secured by real estate)
 
 
554
 
 
-
 
 
690
 
 
14
 
Consumer and other
 
 
-
 
 
-
 
 
5
 
 
-
 
 
 
$
18,610
 
$
133
 
$
19,722
 
$
540
 
 
Included in impaired loans are loans classified as troubled debt restructurings (“TDRs”). A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrower’s financial difficulties that it would not otherwise consider. For loans classified as impaired TDRs, the Company further evaluates the loans as performing or nonaccrual. To restore a nonaccrual loan that has been formally restructured in a TDR to accrual status, we perform a current, well documented credit analysis supporting a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms. Otherwise, the TDR must remain in nonaccrual status. The analysis considers the borrower’s sustained historical repayment performance for a reasonable period to the return-to-accrual date, but may take into account payments made for a reasonable period prior to the restructuring if the payments are consistent with the modified terms. A sustained period of repayment performance generally would be a minimum of six months and would involve payments in the form of cash or cash equivalents.
 
An accruing loan that is modified in a TDR can remain in accrual status if, based on a current well-documented credit analysis, collection of principal and interest in accordance with the modified terms is reasonably assured, and the borrower has demonstrated sustained historical repayment performance for a reasonable period before modification. The following is a summary of performing and nonaccrual TDRs and the related specific valuation allowance by portfolio segment for the periods indicated (dollars in thousands).
 
 
 
 
 
 
 
 
 
Specific
 
 
 
 
 
 
 
 
 
Valuation
 
 
 
Total
 
Performing
 
Nonaccrual
 
Allowance
 
September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development Commercial
 
$
464
 
$
464
 
$
-
 
$
2
 
 
 
 
464
 
 
464
 
 
-
 
 
2
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
4,232
 
 
4,037
 
 
195
 
 
21
 
Non-owner occupied
 
 
2,176
 
 
2,176
 
 
-
 
 
-
 
 
 
 
6,408
 
 
6,213
 
 
195
 
 
21
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First deeds of trust
 
 
3,432
 
 
2,733
 
 
699
 
 
60
 
Second deeds of trust
 
 
597
 
 
530
 
 
67
 
 
5
 
 
 
 
4,029
 
 
3,263
 
 
766
 
 
65
 
Commercial and industrial loans (except those secured by real estate)
 
 
351
 
 
230
 
 
121
 
 
-
 
 
 
$
11,252
 
$
10,170
 
$
1,082
 
$
88
 
 
 
 
 
 
 
 
 
 
Specific
 
 
 
 
 
 
 
 
 
Valuation
 
 
 
Total
 
Performing
 
Nonaccrual
 
Allowance
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development Commercial
 
$
479
 
$
479
 
$
-
 
$
9
 
 
 
 
479
 
 
479
 
 
-
 
 
9
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
4,342
 
 
4,117
 
 
225
 
 
86
 
Non-owner occupied
 
 
2,236
 
 
2,236
 
 
-
 
 
-
 
 
 
 
6,578
 
 
6,353
 
 
225
 
 
86
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First deeds of trust
 
 
3,853
 
 
3,012
 
 
841
 
 
139
 
Second deeds of trust
 
 
547
 
 
547
 
 
-
 
 
-
 
 
 
 
4,400
 
 
3,559
 
 
841
 
 
139
 
Commercial and industrial loans (except those secured by real estate)
 
 
397
 
 
-
 
 
397
 
 
-
 
 
 
$
11,854
 
$
10,391
 
$
1,463
 
$
234
 
 
The following table provides information about TDRs identified during the indicated period (dollars in thousands):
 
 
 
Nine Months Ended
 
 
 
September 30, 2017
 
 
 
 
 
Pre-
 
Post-
 
 
 
 
 
Modification
 
Modification
 
 
 
Number of
 
Recorded
 
Recorded
 
 
 
Loans
 
Balance
 
Balance
 
 
 
 
 
 
 
 
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
1
 
$
190
 
$
190
 
Second deed of trust
 
 
1
 
 
68
 
 
68
 
 
 
 
2
 
 
258
 
 
258
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
 
$
258
 
$
258
 
 
There were no TDRs identified during the nine months ended September 30, 2016.
 
The following table summarizes defaults on TDRs identified for the indicated periods (dollars in thousands):
 
 
 
Nine Months Ended
 
Nine Months Ended
 
 
 
September 30, 2017
 
September 30, 2016
 
 
 
Number of
 
Recorded
 
Number of
 
Recorded
 
 
 
Loans
 
Balance
 
Loans
 
Balance
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
3
 
$
2,309
 
 
2
 
$
390
 
Non-owner occupied
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
3
 
 
2,309
 
 
2
 
 
390
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
10
 
 
1,049
 
 
7
 
 
692
 
Second deed of trust
 
 
2
 
 
75
 
 
2
 
 
86
 
 
 
 
12
 
 
1,124
 
 
9
 
 
778
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial (except those secured by real estate)
 
 
2
 
 
44
 
 
1
 
 
103
 
 
 
 
17
 
$
3,477
 
 
12
 
$
1,271
 
 
Activity in the allowance for loan losses is as follows for the periods indicated (dollars in thousands):
 
 
 
 
 
Provision for
 
 
 
 
 
 
 
 
 
Beginning
 
(Recovery of)
 
 
 
 
 
Ending
 
 
 
Balance
 
Loan Losses
 
Charge-offs
 
Recoveries
 
Balance
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
38
 
$
-
 
$
-
 
$
-
 
$
38
 
Commercial
 
 
213
 
 
(40)
 
 
-
 
 
2
 
 
175
 
 
 
 
251
 
 
(40)
 
 
-
 
 
2
 
 
213
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
515
 
 
9
 
 
-
 
 
-
 
 
524
 
Non-owner occupied
 
 
416
 
 
18
 
 
-
 
 
-
 
 
434
 
Multifamily
 
 
40
 
 
(1)
 
 
-
 
 
-
 
 
39
 
Farmland
 
 
3
 
 
-
 
 
-
 
 
-
 
 
3
 
 
 
 
974
 
 
26
 
 
-
 
 
-
 
 
1,000
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
250
 
 
(3)
 
 
-
 
 
-
 
 
247
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
462
 
 
(10)
 
 
-
 
 
7
 
 
459
 
Second deed of trust
 
 
127
 
 
(89)
 
 
-
 
 
7
 
 
45
 
 
 
 
839
 
 
(102)
 
 
-
 
 
14
 
 
751
 
Commercial and industrial loans (except those secured by real estate)
 
 
302
 
 
140
 
 
-
 
 
3
 
 
445
 
Student loans
 
 
99
 
 
45
 
 
(45)
 
 
-
 
 
99
 
Consumer and other
 
 
9
 
 
(4)
 
 
-
 
 
2
 
 
7
 
Unallocated
 
 
793
 
 
(65)
 
 
-
 
 
-
 
 
728
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,267
 
$
-
 
$
(45)
 
$
21
 
$
3,243
 
 
 
 
 
 
Provision for
 
 
 
 
 
 
 
 
 
Beginning
 
(Recovery of)
 
 
 
 
 
Ending
 
 
 
Balance
 
Loan Losses
 
Charge-offs
 
Recoveries
 
Balance
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
31
 
$
12
 
$
-
 
$
-
 
$
43
 
Commercial
 
 
259
 
 
22
 
 
(10)
 
 
5
 
 
276
 
 
 
 
290
 
 
34
 
 
(10)
 
 
5
 
 
319
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
711
 
 
(17)
 
 
(57)
 
 
 
 
 
637
 
Non-owner occupied
 
 
437
 
 
53
 
 
(1)
 
 
51
 
 
540
 
Multifamily
 
 
54
 
 
2
 
 
-
 
 
-
 
 
56
 
Farmland
 
 
2
 
 
1
 
 
-
 
 
-
 
 
3
 
 
 
 
1,204
 
 
39
 
 
(58)
 
 
51
 
 
1,236
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
259
 
 
4
 
 
-
 
 
1
 
 
264
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
490
 
 
79
 
 
(113)
 
 
6
 
 
462
 
Second deed of trust
 
 
133
 
 
(11)
 
 
 
 
 
6
 
 
128
 
 
 
 
882
 
 
72
 
 
(113)
 
 
13
 
 
854
 
Commercial and industrial loans (except those secured by real estate)
 
 
226
 
 
(46)
 
 
(15)
 
 
46
 
 
211
 
Guaranteed student loans
 
 
191
 
 
13
 
 
(16)
 
 
 
 
 
188
 
Consumer and other
 
 
8
 
 
7
 
 
(12)
 
 
5
 
 
8
 
Unallocated
 
 
722
 
 
(119)
 
 
-
 
 
-
 
 
603
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,523
 
$
-
 
$
(224)
 
$
120
 
$
3,419
 
 
 
 
 
 
Provision for
 
 
 
 
 
 
 
 
 
Beginning
 
(Recovery of)
 
 
 
 
 
Ending
 
 
 
Balance
 
Loan Losses
 
Charge-offs
 
Recoveries
 
Balance
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
41
 
$
(4)
 
$
-
 
$
1
 
$
38
 
Commercial
 
 
300
 
 
(127)
 
 
-
 
 
2
 
 
175
 
 
 
 
341
 
 
(131)
 
 
-
 
 
3
 
 
213
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
611
 
 
(100)
 
 
-
 
 
13
 
 
524
 
Non-owner occupied
 
 
406
 
 
28
 
 
-
 
 
-
 
 
434
 
Multifamily
 
 
56
 
 
(17)
 
 
-
 
 
-
 
 
39
 
Farmland
 
 
3
 
 
-
 
 
-
 
 
-
 
 
3
 
 
 
 
1,076
 
 
(89)
 
 
-
 
 
13
 
 
1,000
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
271
 
 
(25)
 
 
-
 
 
1
 
 
247
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
447
 
 
90
 
 
(107)
 
 
29
 
 
459
 
Second deed of trust
 
 
136
 
 
(120)
 
 
-
 
 
29
 
 
45
 
 
 
 
854
 
 
(55)
 
 
(107)
 
 
59
 
 
751
 
Commercial and industrial loans (except those secured by real estate)
 
 
223
 
 
209
 
 
-
 
 
13
 
 
445
 
Student loans
 
 
158
 
 
56
 
 
(115)
 
 
-
 
 
99
 
Consumer and other
 
 
8
 
 
(5)
 
 
(2)
 
 
6
 
 
7
 
Unallocated
 
 
713
 
 
15
 
 
-
 
 
-
 
 
728
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,373
 
$
-
 
$
(224)
 
$
94
 
$
3,243
 
 
 
 
 
 
Provision for
 
 
 
 
 
 
 
 
 
Beginning
 
(Recovery of)
 
 
 
 
 
Ending
 
 
 
Balance
 
Loan Losses
 
Charge-offs
 
Recoveries
 
Balance
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
30
 
$
12
 
$
-
 
$
1
 
$
43
 
Commercial
 
 
291
 
 
(10)
 
 
(10)
 
 
5
 
 
276
 
 
 
 
321
 
 
2
 
 
(10)
 
 
6
 
 
319
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
1,167
 
 
(464)
 
 
(66)
 
 
-
 
 
637
 
Non-owner occupied
 
 
460
 
 
27
 
 
-
 
 
53
 
 
540
 
Multifamily
 
 
51
 
 
5
 
 
-
 
 
-
 
 
56
 
Farmland
 
 
17
 
 
(139)
 
 
-
 
 
125
 
 
3
 
 
 
 
1,695
 
 
(571)
 
 
(66)
 
 
178
 
 
1,236
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
448
 
 
(134)
 
 
(53)
 
 
3
 
 
264
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
602
 
 
(20)
 
 
(140)
 
 
20
 
 
462
 
Second deed of trust
 
 
111
 
 
23
 
 
(25)
 
 
19
 
 
128
 
 
 
 
1,161
 
 
(131)
 
 
(218)
 
 
42
 
 
854
 
Commercial and industrial loans (except those secured by real estate)
 
 
94
 
 
42
 
 
(15)
 
 
90
 
 
211
 
Guaranteed student loans
 
 
230
 
 
101
 
 
(143)
 
 
-
 
 
188
 
Consumer and other
 
 
2
 
 
13
 
 
(14)
 
 
7
 
 
8
 
Unallocated
 
 
59
 
 
544
 
 
-
 
 
-
 
 
603
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,562
 
$
-
 
$
(466)
 
$
323
 
$
3,419
 
 
 
 
 
 
Provision for
 
 
 
 
 
 
 
 
 
Beginning
 
(Recovery of)
 
 
 
 
 
Ending
 
 
 
Balance
 
Loan Losses
 
Charge-offs
 
Recoveries
 
Balance
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
30
 
$
10
 
$
-
 
$
1
 
$
41
 
Commercial
 
 
291
 
 
9
 
 
(10)
 
 
10
 
 
300
 
 
 
 
321
 
 
19
 
 
(10)
 
 
11
 
 
341
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
1,167
 
 
(490)
 
 
(66)
 
 
-
 
 
611
 
Non-owner occupied
 
 
460
 
 
(106)
 
 
(1)
 
 
53
 
 
406
 
Multifamily
 
 
51
 
 
5
 
 
-
 
 
-
 
 
56
 
Farmland
 
 
17
 
 
(139)
 
 
-
 
 
125
 
 
3
 
 
 
 
1,695
 
 
(730)
 
 
(67)
 
 
178
 
 
1,076
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
448
 
 
(127)
 
 
(53)
 
 
3
 
 
271
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
602
 
 
(40)
 
 
(140)
 
 
25
 
 
447
 
Second deed of trust
 
 
111
 
 
21
 
 
(25)
 
 
29
 
 
136
 
 
 
 
1,161
 
 
(146)
 
 
(218)
 
 
57
 
 
854
 
Commercial and industrial loans (except those secured by real estate)
 
 
94
 
 
44
 
 
(15)
 
 
100
 
 
223
 
Student loans
 
 
230
 
 
149
 
 
(221)
 
 
-
 
 
158
 
Consumer and other
 
 
2
 
 
10
 
 
(13)
 
 
9
 
 
8
 
Unallocated
 
 
59
 
 
654
 
 
-
 
 
-
 
 
713
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,562
 
$
-
 
$
(544)
 
$
355
 
$
3,373
 
 
The allowance for loan losses at each of the periods presented includes an amount that could not be identified to individual types of loans referred to as the unallocated portion of the allowance. We recognize the inherent imprecision in estimates of losses due to various uncertainties and variability related to the factors used, and therefore a reasonable range around the estimate of losses is derived and used to ascertain whether the allowance is too high. We concluded that the unallocated portion of the allowance was acceptable given the continued higher level of classified assets and was within a reasonable range around the estimate of losses. The allowance for loan losses included an unallocated portion of approximately $728,000, $713,000, and $603,000 at September 30, 2017, December 31, 2016, and September 30, 2016, respectively.
 
Discussion of the provision for (recovery of) loan losses related to specific loan types are provided following:
 
·
The recovery of loan losses totaling $102,000 for the consumer real estate portfolio for the three months ended September 30, 2017 was attributed to a decline in the general component of the allowance for loan losses as a result of a decrease in the historical loss experience from 0.16% as of June 30, 2017 to 0.13% as of September 30, 2017.
 
·
The provision for loan losses totaling $140,000 for the commercial and industrial loans (except those secured by real estate) for the three months ended September 30, 2017 was attributed to an increase of $172,000 in the specific reserve associated with loans evaluated individually for impairment.
 
·
The recovery of loan losses totaling $131,000 for the construction and land development portfolio for the nine months ended September 30, 2017 was attributed to a decline in the general component of the allowance for loan losses as a result of a decrease in the historical loss experience from 0.38% as of December 31, 2016 to 0.01% as of September 30, 2017.
 
·
The recovery of loan losses totaling $89,000, $730,000 and $571,000 for the commercial real estate portfolio for the nine months ended September 30, 2017, year ended December 31, 2016, and nine months ended September 30, 2016, respectively, was attributable to a decline in the general component of the allowance for loan losses as a result of decreases in the historical loss experience from 0.20% as of September 30, 2016 to a net recovery of 0.04% as of September 30, 2017. In addition, the portfolio was in a net-recovery position of $13,000 and $111,000 for the nine months ended September 30, 2017 and year ended December 31, 2016, respectively.
 
·
The recovery of loan losses totaling $55,000 for the consumer real estate portfolio for the nine months ended September 30, 2017 was attributed to a decrease of $104,000 in the specific reserve associated with loans evaluated individually for impairment. This decrease was offset by an increase in the general component allocated to this portfolio as a result of increases in the historical loss experience from 0.0022% as of year end December 31, 2016 to 0.13% for the nine months ended September 30, 2017. In addition, the portfolio was in a net charge-off position of $48,000 for the nine months ended September 30, 2017.
 
·
The recovery of loan losses totaling $146,000 and $131,000 for the consumer real estate portfolio for the year ended December 31, 2016 and nine months ended September 30, 2016, respectively, was attributable to a decline in the general component of the allowance for loan losses as a result of decreases in the historical loss experience from 0.07% as of September 30, 2016 to 0.0022% as of December 31, 2016. In addition, the portfolio was in a net-charge off position of $161,000 and $176,000 for the year ended December 31, 2016 and the nine months ended September 30, 2016.
 
·
The provision for loan losses totaling $209,000 for the commercial and industrial loans (except those secured by real estate) for the nine months ended September 30, 2017 was attributed to an increase of $227,000 in the specific reserve associated with loans evaluated individually for impairment.
 
Loans were evaluated for impairment as follows for the periods indicated (dollars in thousands):
 
 
 
Recorded Investment in Loans
 
 
 
Allowance
 
Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending
 
 
 
 
 
Ending
 
 
 
 
 
 
 
Balance
 
Individually
 
Collectively
 
Balance
 
Individually
 
Collectively
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
38
 
$
-
 
$
38
 
$
6,327
 
$
-
 
$
6,327
 
Commercial
 
 
175
 
 
2
 
 
173
 
 
28,721
 
 
561
 
 
28,160
 
 
 
 
213
 
 
2
 
 
211
 
 
35,048
 
 
561
 
 
34,487
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
524
 
 
21
 
 
503
 
 
71,834
 
 
5,434
 
 
66,400
 
Non-owner occupied
 
 
434
 
 
-
 
 
434
 
 
61,831
 
 
2,176
 
 
59,655
 
Multifamily
 
 
39
 
 
-
 
 
39
 
 
6,114
 
 
-
 
 
6,114
 
Farmland
 
 
3
 
 
-
 
 
3
 
 
278
 
 
-
 
 
278
 
 
 
 
1,000
 
 
21
 
 
979
 
 
140,057
 
 
7,610
 
 
132,447
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
247
 
 
4
 
 
243
 
 
20,595
 
 
739
 
 
19,856
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
459
 
 
62
 
 
397
 
 
54,820
 
 
4,733
 
 
50,087
 
Second deed of trust
 
 
45
 
 
5
 
 
40
 
 
6,293
 
 
680
 
 
5,613
 
 
 
 
751
 
 
71
 
 
680
 
 
81,708
 
 
6,152
 
 
75,556
 
Commercial and industrial loans (except those secured by real estate)
 
 
445
 
 
233
 
 
212
 
 
40,647
 
 
1,248
 
 
39,399
 
Student loans
 
 
99
 
 
-
 
 
99
 
 
47,643
 
 
-
 
 
47,643
 
Consumer and other
 
 
735
 
 
-
 
 
735
 
 
1,899
 
 
3
 
 
1,896
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,243
 
$
327
 
$
2,916
 
$
347,002
 
$
15,574
 
$
331,428
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
 
$
41
 
$
-
 
$
41
 
$
6,770
 
$
-
 
$
6,770
 
Commercial
 
 
300
 
 
9
 
 
291
 
 
27,092
 
 
581
 
 
26,511
 
 
 
 
341
 
 
9
 
 
332
 
 
33,862
 
 
581
 
 
33,281
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
611
 
 
86
 
 
525
 
 
66,021
 
 
5,604
 
 
60,417
 
Non-owner occupied
 
 
406
 
 
-
 
 
406
 
 
57,944
 
 
2,236
 
 
55,708
 
Multifamily
 
 
56
 
 
-
 
 
56
 
 
8,824
 
 
-
 
 
8,824
 
Farmland
 
 
3
 
 
-
 
 
3
 
 
310
 
 
-
 
 
310
 
 
 
 
1,076
 
 
86
 
 
990
 
 
133,099
 
 
7,840
 
 
125,259
 
Consumer real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity lines
 
 
271
 
 
-
 
 
271
 
 
20,691
 
 
703
 
 
19,988
 
Secured by 1-4 family residential
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First deed of trust
 
 
447
 
 
144
 
 
303
 
 
54,791
 
 
5,064
 
 
49,727
 
Second deed of trust
 
 
136
 
 
90
 
 
46
 
 
5,768
 
 
709
 
 
5,059
 
 
 
 
854
 
 
234
 
 
620
 
 
81,250
 
 
6,476
 
 
74,774
 
Commercial and industrial loans (except those secured by real estate)
 
 
223
 
 
6
 
 
217
 
 
39,390
 
 
544
 
 
38,846
 
Student loans
 
 
158
 
 
-
 
 
158
 
 
47,398
 
 
-
 
 
47,398
 
Consumer and other
 
 
721
 
 
-
 
 
721
 
 
2,101
 
 
-
 
 
2,101
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,373
 
$
335
 
$
3,038
 
$
337,100
 
$
15,441
 
$
321,659