Allowance for Credit Losses [Text Block] | Note 5: Credit Quality Assessment Allowance for Credit Losses March 31, 2018 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance for credit losses: Beginning balance $ 735 $ 668 $ 177 $ 617 $ 1,410 $ 2,529 $ 23 $ 6,159 Charge-offs (202) (99) (89) (1) (534) (269) (4) (1,198) Recoveries - - - - 2 61 4 67 Provision for credit losses 30 167 98 82 592 151 - 1,120 Ending balance $ 563 $ 736 $ 186 $ 698 $ 1,470 $ 2,472 $ 23 $ 6,148 March 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance for credit losses: Beginning balance $ 511 $ 454 $ 89 $ 327 $ 1,120 $ 3,800 $ 127 $ 6,428 Charge-offs - (50) (23) - - (1,112) (108) (1,293) Recoveries - - - - 1 12 12 25 Provision for credit losses 23 100 33 68 (23) (39) 38 200 Ending balance $ 534 $ 504 $ 99 $ 395 $ 1,098 $ 2,661 $ 69 $ 5,360 The following table provides additional information on the allowance for credit losses at March 31, 2018 and December 31, 2017: March 31, 2018 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance allocated to: individually evaluated for impairment $ - $ - $ - $ - $ - $ 380 $ - $ 380 collectively evaluated for impairment $ 563 $ 736 $ 186 $ 698 $ 1,470 $ 2,092 $ 23 $ 5,786 Loans: Legacy Loans: Ending balance $ 67,713 $ 193,146 $ 40,408 $ 139,367 $ 299,069 $ 214,614 $ 4,172 $ 958,489 individually evaluated for impairment $ 559 $ 5,182 $ 56 $ 508 $ 8,401 $ 3,164 $ - $ 17,870 collectively evaluated for impairment $ 67,154 $ 187,964 $ 40,352 $ 138,859 $ 290,668 $ 211,450 $ 4,172 $ 940,619 Acquired Loans: Ending balance $ 41,706 $ 182,311 $ 56,326 $ 32,605 $ 169,039 $ 124,069 $ 40,933 $ 646,989 purchased credit impaired loans $ 849 $ 9,760 $ 724 $ 1,049 $ - $ 17 $ 153 $ 12,252 collectively evaluated for impairment $ 40,857 $ 172,551 $ 55,602 $ 31,556 $ 169,039 $ 124,052 $ 40,780 $ 634,437 Acquired loans were evaluated for impairment subsequent to the merger. No allowance was required on these loans due to the recently assigned credit marks on these loans. December 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance allocated to: individually evaluated for impairment $ 202 $ - $ 29 $ - $ 11 $ 668 $ - $ 910 collectively evaluated for impairment $ 533 $ 668 $ 148 $ 617 $ 1,399 $ 1,861 $ 23 $ 5,249 Loans: Ending balance $ 74,398 $ 194,896 $ 43,047 $ 170,408 $ 260,802 $ 188,729 $ 4,328 $ 936,608 individually evaluated for impairment $ 761 $ 2,009 $ 396 $ 508 $ 5,867 $ 3,724 $ - $ 13,265 collectively evaluated for impairment $ 73,637 $ 192,887 $ 42,651 $ 169,900 $ 254,935 $ 185,005 $ 4,328 $ 923,343 When potential losses are identified, a specific provision and/or charge-off may be taken, based on the then current likelihood of repayment, that is at least in the amount of the collateral deficiency, and any potential collection costs, as determined by the independent third party appraisal. All loans that are considered impaired are subject to the completion of an impairment analysis. This analysis highlights any potential collateral deficiencies. A specific amount of impairment is established based on the Bank’s calculation of the probable loss inherent in the individual loan. The actual occurrence and severity of losses involving impaired credits can differ substantially from estimates. March 31, 2018 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Credit quality indicators: Legacy Loans: Not classified $ 67,279 $ 188,249 $ 40,352 $ 138,772 $ 290,668 $ 211,191 $ 4,172 $ 940,683 Special mention - - - - - - - - Substandard 434 4,897 56 595 8,401 3,405 - 17,788 Doubtful - - - - - 18 - 18 Total $ 67,713 $ 193,146 $ 40,408 $ 139,367 $ 299,069 $ 214,614 $ 4,172 $ 958,489 Acquired Loans: Not classified $ 39,774 $ 182,311 $ 56,326 $ 17,932 $ 166,492 $ 119,644 $ 40,933 $ 623,412 Special mention - - - 8,834 972 1,632 - 11,438 Substandard 814 4,283 1,269 1,587 - 7,953 Doubtful 1,118 - - 1,556 306 1,206 - 4,186 Total $ 41,706 $ 182,311 $ 56,326 $ 32,605 $ 169,039 $ 124,069 $ 40,933 $ 646,989 December 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Credit quality indicators: Not classified $ 73,761 $ 193,174 $ 42,651 $ 169,900 $ 253,255 $ 184,858 $ 4,328 $ 921,927 Special mention - - - - 1,592 - - 1,592 Substandard 637 1,103 5 508 3,725 801 - 6,779 Doubtful - 619 391 - 2,230 3,070 - 6,310 Total $ 74,398 $ 194,896 $ 43,047 $ 170,408 $ 260,802 $ 188,729 $ 4,328 $ 936,608 · Special Mention - A Special Mention asset 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 asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. · Substandard - Substandard loans are 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 jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. · Doubtful - Loans classified Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. Loans classified Special Mention, Substandard, Doubtful or Loss are reviewed at least quarterly to determine their appropriate classification. All commercial loan relationships are reviewed annually. Non-classified residential mortgage loans and consumer loans are not evaluated unless a specific event occurs to raise the awareness of possible credit deterioration. March 31, 2018 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Analysis of past due loans: Legacy Loans: Accruing loans current $ 67,184 $ 182,791 $ 40,009 $ 138,859 $ 290,477 $ 211,639 $ 4,162 $ 935,121 Accruing loans past due: 30-59 days past due - 5,346 343 - 74 35 10 5,808 60-89 days past due - 64 - - 43 46 - 153 Greater than 90 days past due 95 48 - - 74 - - 217 Total past due 95 5,458 343 - 191 81 10 6,178 Non-accrual loans 434 4,897 56 508 8,401 2,894 - 17,190 Total loans $ 67,713 $ 193,146 $ 40,408 $ 139,367 $ 299,069 $ 214,614 $ 4,172 $ 958,489 Acquired Loans: Accruing loans current $ 40,857 $ 166,916 $ 53,685 $ 31,556 $ 168,624 $ 123,977 $ 40,749 $ 626,364 Accruing loans past due: 30-59 days past due - 5,140 905 - 210 27 31 6,313 60-89 days past due - 900 - 46 - 946 Greater than 90 days past due - 495 112 - 205 2 - 814 Total past due - 5,635 1,917 - 415 75 31 8,073 Non-accrual loans 1 849 9,760 724 1,049 - 17 153 12,552 Total loans $ 41,706 $ 182,311 $ 56,326 $ 32,605 $ 169,039 $ 124,069 $ 40,933 $ 646,989 (1) Included are purchased credit impaired loans where the Company amortizes the accreatable discount December 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Analysis of past due loans: Accruing loans current $ 73,386 $ 185,135 $ 42,491 $ 169,596 $ 251,608 $ 185,239 $ 4,328 $ 911,783 Accruing loans past due: 30-59 days past due 279 6,381 110 173 - 52 - 6,995 60-89 days past due 96 1,330 - - 364 - - 1,790 Greater than 90 days past due - 328 50 131 2,963 - - 3,472 Total past due 375 8,039 160 304 3,327 52 - 12,257 Non-accrual loans 637 1,722 396 508 5,867 3,438 - 12,568 Total loans $ 74,398 $ 194,896 $ 43,047 $ 170,408 $ 260,802 $ 188,729 $ 4,328 $ 936,608 Total loans either in non-accrual status or in excess of 90 days delinquent totaled $ 30.8 1.9 16.0 1.7 The impaired loans at March 31, 2018 and December 31, 2017 are as follows: March 31, 2018 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) & land first lien junior lien occupied occupied and leases loans Total Impaired loans: Legacy Loans: Recorded investment $ 559 $ 5,182 $ 56 $ 508 $ 8,401 $ 3,164 $ - $ 17,870 With an allowance recorded - - - - - 1,531 - 1,531 With no related allowance recorded 559 5,182 56 508 8,401 1,633 - 16,339 Related allowance - - - - - 380 - 380 Unpaid principal 761 5,307 56 508 8,947 5,045 - 20,624 Average balance of impaired loans 761 5,379 56 519 8,987 5,845 - 21,547 Interest income recognized - 21 1 - 1 24 - 47 Acquired Loans: Recorded investment 1 849 9,760 724 1,049 - 17 153 12,552 Unpaid principal 1,118 11,309 1,181 1,351 305 1,239 165 16,668 Average balance of impaired loans 1,118 11,309 1,181 1,351 305 1,239 165 16,668 Interest income recognized - - - - - - - - (1) Included are purchased credit impaired loans where the Company amortizes the accretable discount into interest income, however these loans do not accrue interest based on the terms of the loan. December 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) & land first lien junior lien occupied occupied and leases loans Total Impaired loans: Recorded investment $ 761 $ 2,009 $ 396 $ 508 $ 5,867 $ 3,724 $ - $ 13,265 With an allowance recorded 637 - 391 - 2,230 2,883 - 6,141 With no related allowance recorded 124 2,009 5 508 3,637 841 - 7,124 Related allowance 202 - 29 - 11 668 - 910 Unpaid principal 762 2,034 403 509 5,884 5,293 - 14,885 Average balance of impaired loans 756 2,100 403 519 5,956 5,988 - 15,722 Interest income recognized 19 60 12 - 132 150 - 373 Included in the total impaired loans above were non-accrual loans of $ 29.7 12.6 358 213 Loans may have their terms restructured (e.g., interest rates, loan maturity date, payment and amortization period, etc.) in circumstances that provide payment relief to a borrower experiencing financial difficulty. Such restructured loans are considered trouble debt restructured loans (“TDRs”) that may either be impaired loans that may either be in accruing status or non-accruing status. Non-accruing restructured loans may return to accruing status provided there is a sufficient period of payment performance in accordance with the restructure terms. Loans may be removed from the restructured category in the year subsequent to the restructuring if: a) the restructuring agreement specifies an interest rate equal to or greater than the rate that the creditor was willing to accept at the time of restructuring for a new loan with comparable risk; and b) the loan is not impaired based on the terms specified by the restructuring agreement. March 31, 2018 Number Non-Accrual Number Accrual Total (dollars in thousands) of Loans Status of Loans Status TDRs Construction and land - $ - 1 $ 125 $ 125 Residential real estate - first lien 2 880 1 285 1,165 Commercial - non-owner occupied 2 2,815 - - 2,815 Commercial loans and leases 2 596 1 202 798 6 $ 4,291 3 $ 612 $ 4,903 December 31, 2017 Number Non-Accrual Number Accrual Total (dollars in thousands) of Loans Status of Loans Status TDRs Construction and land - $ - 1 $ 125 $ 125 Residential real estate - first lien 2 886 1 287 1,173 Residential real estate - junior lien 1 398 - - 398 Commercial - non-owner occupied 2 2,815 - - 2,815 Commercial loans and leases 2 599 1 208 807 7 $ 4,698 3 $ 620 $ 5,318 March 31, 2018 Not Performing Performing Related to Modified to Modified Total (in thousands) Allowance Terms Terms TDRs Construction and land Extension or other modification $ - $ - $ 125 $ 125 Residential real estate - first lien Extension or other modification - 880 285 1,165 Commercial RE - non-owner occupied Rate modification - 2,815 - 2,815 Commercial loans Extension or other modification - 83 202 285 Forbearance 24 513 - 513 Total troubled debt restructured loans $ 24 $ 4,291 $ 612 $ 4,903 December 31, 2017 Not Performing Performing Related to Modified to Modified Total (in thousands) Allowance Terms Terms TDRs Construction and land Extension or other modification $ - $ - $ 125 $ 125 Residential real estate - first lien Extension or other modification - 886 287 1,173 Residential real estate - junior lien Forbearance 30 398 - 398 Commercial RE - non-owner occupied Rate modification - 2,815 - 2,815 Commercial loans Extension or other modification - 85 208 293 Forbearance 32 514 - 514 Total troubled debt restructured loans $ 62 $ 4,698 $ 620 $ 5,318 There were no new loans restructured during the three months ended March 31, 2018. As a part of the modification of the land development loan restructured during 2017, the Bank agreed to forgive $ 215 340 125 Performing TDRs were in compliance with their modified terms and there are no further commitments associated with these loans. During the three months ended March 31, 2018 there were no TDRs that subsequently defaulted within twelve months of their modification dates. Management routinely evaluates other real estate owned (“OREO”) based upon periodic appraisals. For the three months ended March 31, 2018 and 2017 there were no additional valuation allowances recorded as the current appraised value, less estimated cost to sell, was sufficient to cover the recorded OREO amount. For the three months ended March 31, 2018 and 2017 there were no new loans transferred from loans to OREO. The Company did not sell any properties held as OREO during the first three months of 2018 or 2017. In conjunction with the First Mariner acquisition the Bank’s OREO balances increased $ 3.9 184 |