Loans and Leases | Loans and Leases A summary of the balances of loans follows (in thousands): September 30, 2016 December 31, 2015 Construction and Land Development $ 39,836 $ 22,082 Farmland and Agricultural Production 12,985 9,989 Residential 1-4 Family 167,388 135,864 Multifamily 31,880 34,272 Commercial Real Estate 419,958 381,098 Commercial and Industrial 274,889 179,623 Leases, net 739 — Consumer and other 9,286 9,417 956,961 772,345 Net deferred loan fees (6 ) (26 ) Allowance for loan losses (12,284 ) (11,741 ) $ 944,671 $ 760,578 The following table presents the contractual aging of the recorded investment in past due and non-accrual loans by class of loans as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due and Still Accruing Total Accruing Loans Non-accrual Loans Total Loans Construction and Land Development $ 38,587 $ 164 $ — $ — $ 38,751 $ 1,085 $ 39,836 Farmland and Agricultural Production 12,985 — — — 12,985 — 12,985 Residential 1-4 Family 166,551 12 — — 166,563 825 167,388 Multifamily 31,880 — — — 31,880 — 31,880 Commercial Real Estate Retail 97,689 — — — 97,689 — 97,689 Office 53,848 — — — 53,848 — 53,848 Industrial and Warehouse 74,600 — — — 74,600 — 74,600 Health Care 28,737 — — — 28,737 — 28,737 Other 163,042 568 25 91 163,726 1,358 165,084 Commercial and Industrial 269,734 38 — — 269,772 5,117 274,889 Leases, net 739 — — — 739 — 739 Consumer and other 9,236 50 — — 9,286 — 9,286 Total $ 947,628 $ 832 $ 25 $ 91 $ 948,576 $ 8,385 $ 956,961 December 31, 2015 Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due and Still Accruing Total Accruing Loans Non-accrual Loans Total Loans Construction and Land Development $ 21,885 $ — $ 197 $ — $ 22,082 $ — $ 22,082 Farmland and Agricultural Production 9,989 — — — 9,989 — 9,989 Residential 1-4 Family 135,632 182 — — 135,814 50 135,864 Multifamily 34,272 — — — 34,272 — 34,272 Commercial Real Estate Retail 95,570 — — — 95,570 — 95,570 Office 55,151 — — — 55,151 — 55,151 Industrial and Warehouse 65,536 — — — 65,536 — 65,536 Health Care 29,985 — — — 29,985 — 29,985 Other 134,762 — — — 134,762 94 134,856 Commercial and Industrial 178,289 — — 67 178,356 1,267 179,623 Consumer and other 9,417 — — — 9,417 — 9,417 Total $ 770,488 $ 182 $ 197 $ 67 $ 770,934 $ 1,411 $ 772,345 As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt and comply with various terms of their loan agreements. The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends. Generally, all sizable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile. Credits classified as watch generally receive a review more frequently than annually. For special mention, substandard, and doubtful credit classifications, the frequency of review is increased to no less than quarterly in order to determine potential impact on credit loss estimates. The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt: Pass - A pass asset is well protected by the current worth and paying capacity of the borrower (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner. Pass assets also include certain assets considered watch, which are still protected by the worth and paying capacity of the borrower but deserve closer attention and a higher level of credit monitoring. Special Mention - A special mention asset, or risk rating of 5, 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 Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard - A substandard asset, or risk rating of 6 or 7, is an asset with a well-defined weakness that jeopardizes repayment, in whole or in part, of the debt. These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. These assets are characterized by the distinct possibility that the Company will or has sustained some loss of principal and/or interest if the deficiencies are not corrected. Loans rated a 6 are still on accrual status, while loans rated at 7 are placed on nonaccrual. Doubtful - An asset that has all the weaknesses, or risk rating of 8, inherent in the substandard classification, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. These credits have a high probability for loss, yet because certain important and reasonably specific pending factors may work toward the strengthening of the asset, its classification of loss is deferred until its more exact status can be determined. Loss - An asset, or portion thereof, classified as loss, or risk rated 9, is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value but that it is not practical or desirable to defer writing off this basically worthless asset even though a partial recovery may occur in the future. There was no balance to report at September 30, 2016 and December 31, 2015 . Residential 1-4 family, consumer and other loans are assessed for credit quality based on the contractual aging status of the loan and payment activity. In certain cases, based upon payment performance, the loan being related with another commercial type loan or for other reasons, a loan may be categorized into one of the risk categories noted above. Such assessment is completed at the end of each reporting period. The following tables present the risk category of loans evaluated by internal asset classification based on the most recent analysis performed and the contractual aging as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Pass Special Mention Substandard Doubtful Total Construction and Land Development $ 36,240 $ 2,511 $ 1,085 $ — $ 39,836 Farmland and Agricultural Production 12,942 — 43 — 12,985 Multifamily 31,101 779 — — 31,880 Commercial Real Estate Retail 86,149 2,501 9,039 — 97,689 Office 50,322 — 3,526 — 53,848 Industrial and Warehouse 73,799 801 — — 74,600 Health Care 28,737 — — — 28,737 Other 156,209 4,353 4,514 8 165,084 Commercial and Industrial 264,091 1,759 7,470 1,569 274,889 Leases, net 739 — — — 739 Total $ 740,329 $ 12,704 $ 25,677 $ 1,577 $ 780,287 September 30, 2016 Performing Non-performing (*) Total Residential 1-4 Family $ 166,563 $ 825 $ 167,388 Consumer and other 9,286 — 9,286 Total $ 175,849 $ 825 $ 176,674 December 31, 2015 Pass Special Mention Substandard Doubtful Total Construction and Land Development $ 19,450 $ 2,632 $ — $ — $ 22,082 Farmland and Agricultural Production 9,989 — — — 9,989 Multifamily 33,598 674 — — 34,272 Commercial Real Estate Retail 87,665 — 7,905 — 95,570 Office 55,151 — — — 55,151 Industrial and Warehouse 64,699 837 — — 65,536 Health Care 29,985 — — — 29,985 Other 128,988 2,664 3,192 12 134,856 Commercial and Industrial 173,324 4,714 355 1,230 179,623 Total $ 602,849 $ 11,521 $ 11,452 $ 1,242 $ 627,064 December 31, 2015 Performing Non-performing* Total Residential 1-4 Family $ 135,814 $ 50 $ 135,864 Consumer and other 9,417 — 9,417 Total $ 145,231 $ 50 $ 145,281 (*) Non-performing loans include those on non-accrual status and those that are 90 days or more past due and still on accrual. The following table provides additional detail of the activity in the allowance for loan losses, by portfolio segment, for the three months ended September 30, 2016 and 2015 (in thousands): September 30, 2016 Construction and Land Development Farmland and Agricultural Production Residential 1-4 Family Multifamily Commercial Real Estate Commercial and Industrial Leases Consumer and Other Total Allowance for loan losses: Beginning balance $ 424 $ 41 $ 1,277 $ 141 $ 4,988 $ 5,125 $ 2 $ 46 $ 12,044 Provision for loan losses 351 4 (9 ) 11 (361 ) 383 2 2 383 Loans charged-off — — (6 ) — — (330 ) — (4 ) (340 ) Recoveries of loans previously charged-off 18 — 1 — 5 172 — 1 197 Ending balance $ 793 $ 45 $ 1,263 $ 152 $ 4,632 $ 5,350 $ 4 $ 45 $ 12,284 September 30, 2015 Allowance for loan losses: Beginning balance $ 798 $ 27 $ 1,047 $ 95 $ 6,394 $ 3,895 $ — $ 164 $ 12,420 Provision for loan losses (135 ) (2 ) 69 (7 ) (760 ) 31 — (9 ) (813 ) Loans charged-off — — — — (444 ) (203 ) — (7 ) (654 ) Recoveries of loans previously charged-off 18 — 41 — 709 29 — 3 800 Ending balance $ 681 $ 25 $ 1,157 $ 88 $ 5,899 $ 3,752 $ — $ 151 $ 11,753 The following table provides additional detail of the activity in the allowance for loan losses, by portfolio segment, for the nine months ended September 30, 2016 and 2015 (in thousands): September 30, 2016 Construction and Land Development Farmland and Agricultural Production Residential 1-4 Family Multifamily Commercial Real Estate Commercial and Industrial Leases Consumer and Other Total Allowance for loan losses: Beginning balance $ 813 $ 43 $ 1,370 $ 141 $ 4,892 $ 4,286 $ — $ 196 $ 11,741 Provision for loan losses (67 ) 2 (123 ) 11 (279 ) 1,482 4 (147 ) 883 Loans charged-off — — (15 ) — — (1,017 ) — (7 ) (1,039 ) Recoveries of loans previously charged-off 47 — 31 — 19 599 — 3 699 Ending balance $ 793 $ 45 $ 1,263 $ 152 $ 4,632 $ 5,350 $ 4 $ 45 $ 12,284 September 30, 2015 Allowance for loan losses: Beginning balance $ 758 $ 459 $ 1,199 $ 67 $ 6,828 $ 4,296 $ — $ 298 $ 13,905 Provision for loan losses (130 ) (434 ) (59 ) 21 (1,108 ) 294 — (146 ) (1,562 ) Loans charged-off — — (195 ) — (548 ) (973 ) — (10 ) (1,726 ) Recoveries of loans previously charged-off 53 — 212 — 727 135 — 9 1,136 Ending balance $ 681 $ 25 $ 1,157 $ 88 $ 5,899 $ 3,752 $ — $ 151 $ 11,753 The following table presents the balance in the allowance for loan losses and the unpaid principal balance of loans by portfolio segment and based on impairment method as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Construction and Land Development Farmland and Agricultural Production Residential 1-4 Family Multifamily Commercial Real Estate Commercial and Industrial Leases Consumer and other Total Period-ended amount allocated to: Individually evaluated for impairment $ — $ — $ 30 $ — $ — $ 937 $ — $ — $ 967 Collectively evaluated for impairment 793 45 1,233 152 4,632 4,413 4 45 11,317 Ending balance $ 793 $ 45 $ 1,263 $ 152 $ 4,632 $ 5,350 $ 4 $ 45 $ 12,284 Loans: Individually evaluated for impairment $ 1,084 $ — $ 2,015 $ — $ 7,055 $ 7,562 $ — $ — $ 17,716 Collectively evaluated for impairment 38,752 12,985 165,373 31,880 412,903 267,327 739 9,286 939,245 Ending balance $ 39,836 $ 12,985 $ 167,388 $ 31,880 $ 419,958 $ 274,889 $ 739 $ 9,286 $ 956,961 December 31, 2015 Period-ended amount allocated to: Individually evaluated for impairment $ — $ — $ 30 $ — $ — $ 441 $ — $ — $ 471 Collectively evaluated for impairment 813 43 1,340 141 4,892 3,845 — 196 11,270 Ending balance $ 813 $ 43 $ 1,370 $ 141 $ 4,892 $ 4,286 $ — $ 196 $ 11,741 Loans: Individually evaluated for impairment $ — $ — $ 1,661 $ — $ 4,381 $ 3,777 $ — $ — $ 9,819 Collectively evaluated for impairment 22,082 9,989 134,203 34,272 376,717 175,846 — 9,417 762,526 Ending balance $ 22,082 $ 9,989 $ 135,864 $ 34,272 $ 381,098 $ 179,623 $ — $ 9,417 $ 772,345 The following tables present additional detail regarding impaired loans, segregated by class, as of and for the three and nine months ended September 30, 2016 and year ended December 31, 2015 (dollars in thousands). The unpaid principal balance represents the recorded balance prior to any partial charge-offs. The recorded investment represents customer balances net of any partial charge-offs recognized on the loans. The interest income recognized column represents all interest income reported after the loan became impaired. September 30, 2016 Three Months Ended Nine Months Ended Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Construction and Land Development $ 1,085 $ 1,085 $ — $ 543 $ — $ 271 $ — Farmland and Agricultural Production — — — — — — — Residential 1-4 Family 1,593 1,553 — 1,612 15 1,391 30 Multifamily — — — — — — — Commercial Real Estate Retail 3,288 3,288 — 1,644 20 822 81 Office — — — — — 165 — Industrial and Warehouse — — — — — — — Health Care — — — — — — Other 3,831 3,767 — 3,786 14 3,823 43 Commercial and Industrial 5,937 4,888 — 4,090 — 3,652 — Consumer and other — — — — — — — With an allowance recorded: Construction and Land Development — — — — — — — Farmland and Agricultural Production — — — — — — — Residential 1-4 Family 461 461 30 462 6 465 17 Multifamily — — — — — — — Commercial Real Estate Retail — — — — — — — Office — — — — — — — Industrial and Warehouse — — — — — — — Health Care — — — — — — — Other — — — — — — — Commercial and Industrial 2,874 2,674 937 1,926 — 1,434 — Consumer and other — — — — — — — Total $ 19,069 $ 17,716 $ 967 $ 14,063 $ 55 $ 12,023 $ 171 December 31, 2015 Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Income Recognized With no related allowance recorded: Construction and Land Development $ — $ — $ — $ — $ — Farmland and Agricultural Production — — — — — Residential 1-4 Family 1,232 1,193 — 1,280 61 Multifamily — — — — — Commercial Real Estate Retail — — — — — Office 494 494 — 502 26 Industrial and Warehouse — — — 1,441 — Health Care — — — — — Other 3,952 3,887 — 5,015 127 Commercial and Industrial 3,331 3,131 — 3,640 130 Consumer and other — — — 4 — With an allowance recorded: Construction and Land Development — — — — — Farmland and Agricultural Production — — — — — Residential 1-4 Family 468 468 30 473 23 Multifamily — — — — — Commercial Real Estate Retail — — — — — Office — — — — — Industrial and Warehouse — — — — — Health Care — — — — — Other — — — 64 — Commercial and Industrial 1,109 646 441 491 — Consumer and other — — — — — Total $ 10,586 $ 9,819 $ 471 $ 12,910 $ 367 During the nine months ended September 30, 2016 , there was one troubled debt restructurings added as a result of the payment of real estate taxes. There were no troubled debt restructurings added during the nine months ended September 30, 2015. Troubled debt restructurings that were accruing were $4.2 million and $2.7 million as of September 30, 2016 and December 31, 2015 , respectively. Troubled debt restructurings that were non-accruing were $75,000 and $94,000 as of September 30, 2016 and December 31, 2015 . The following presents a rollfoward activity of troubled debt restructurings (in thousands, except number of loans): Nine months ended September 30, 2016 Recorded Investment Number of Loans Balance, beginning $ 2,832 6 Additions to troubled debt restructurings 2,006 1 Removal of troubled debt restructurings (519 ) (2 ) Charge-off related to troubled debt restructurings — — Transfers to other real estate owned — — Repayments and other reductions (55 ) — Balance, ending $ 4,264 5 Restructured loans are evaluated for impairment at each reporting date as part of the Company’s determination of the allowance for loan losses. |