Loans and Leases | Loans and Leases A summary of the balances of loans follows (in thousands): March 31, 2017 December 31, 2016 Construction and Land Development $ 51,085 $ 47,338 Farmland and Agricultural Production 11,892 12,628 Residential 1-4 Family 181,426 175,978 Multifamily 36,040 36,703 Commercial Real Estate 474,035 425,985 Commercial and Industrial 296,309 281,804 Leases, net 3,381 3,290 Consumer and other 9,852 7,967 1,064,020 991,693 Net deferred loan fees (188 ) (75 ) Allowance for loan losses (11,951 ) (11,684 ) $ 1,051,881 $ 979,934 The following table presents the contractual aging of the recorded investment in past due and non-accrual loans by class of loans as of March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 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 $ 51,085 $ — $ — $ — $ 51,085 $ — $ 51,085 Farmland and Agricultural Production 11,892 — — — 11,892 — 11,892 Residential 1-4 Family 180,756 16 — — 180,772 654 181,426 Multifamily 36,040 — — — 36,040 — 36,040 Commercial Real Estate Retail 100,650 — — — 100,650 3,316 103,966 Office 63,101 — — — 63,101 183 63,284 Industrial and Warehouse 81,355 — — — 81,355 — 81,355 Health Care 29,322 — — — 29,322 — 29,322 Other 191,066 4,411 — — 195,477 631 196,108 Commercial and Industrial 295,298 349 5 — 295,652 657 296,309 Leases, net 3,381 — — — 3,381 — 3,381 Consumer and other 9,783 69 — — 9,852 — 9,852 Total $ 1,053,729 $ 4,845 $ 5 $ — $ 1,058,579 $ 5,441 $ 1,064,020 December 31, 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 $ 47,338 $ — $ — $ — $ 47,338 $ — $ 47,338 Farmland and Agricultural Production 12,628 — — — 12,628 — 12,628 Residential 1-4 Family 175,178 27 — — 175,205 773 175,978 Multifamily 36,703 — — — 36,703 — 36,703 Commercial Real Estate Retail 89,525 — — — 89,525 3,525 93,050 Office 62,876 — — — 62,876 — 62,876 Industrial and Warehouse 75,351 — — — 75,351 — 75,351 Health Care 30,232 — — — 30,232 — 30,232 Other 163,732 92 584 — 164,408 68 164,476 Commercial and Industrial 280,282 32 — — 280,314 1,490 281,804 Leases, net 3,290 — — — 3,290 — 3,290 Consumer and other 7,957 10 — — 7,967 — 7,967 Total $ 985,092 $ 161 $ 584 $ — $ 985,837 $ 5,856 $ 991,693 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 March 31, 2017 and December 31, 2016 . 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 March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Pass Special Mention Substandard Doubtful Total Construction and Land Development $ 50,888 $ 197 $ — $ — $ 51,085 Farmland and Agricultural Production 11,892 — — — 11,892 Multifamily 35,400 640 — — 36,040 Commercial Real Estate Retail 92,998 — 9,142 1,826 103,966 Office 59,826 — 3,458 — 63,284 Industrial and Warehouse 80,685 670 — — 81,355 Health Care 29,322 — — — 29,322 Other 188,006 2,699 5,397 6 196,108 Commercial and Industrial 285,409 6,480 3,836 584 296,309 Leases, net 3,381 — — — 3,381 Total $ 837,807 $ 10,686 $ 21,833 $ 2,416 $ 872,742 March 31, 2017 Performing Non-performing (*) Total Residential 1-4 Family $ 180,772 $ 654 $ 181,426 Consumer and other 9,852 — 9,852 Total $ 190,624 $ 654 $ 191,278 December 31, 2016 Pass Special Mention Substandard Doubtful Total Construction and Land Development $ 44,862 $ 2,476 $ — $ — $ 47,338 Farmland and Agricultural Production 12,628 — — — 12,628 Multifamily 35,934 769 — — 36,703 Commercial Real Estate Retail 81,821 — 9,148 2,081 93,050 Office 59,384 — 3,492 — 62,876 Industrial and Warehouse 74,669 682 — — 75,351 Health Care 30,232 — — — 30,232 Other 157,618 2,898 3,953 7 164,476 Commercial and Industrial 274,578 2,321 3,503 1,402 281,804 Lease, net 3,290 — — — 3,290 Total $ 775,016 $ 9,146 $ 20,096 $ 3,490 $ 807,748 December 31, 2016 Performing Non-performing* Total Residential 1-4 Family $ 175,205 $ 773 $ 175,978 Consumer and other 7,967 — 7,967 Total $ 183,172 $ 773 $ 183,945 (*) 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 March 31, 2017 and 2016 (in thousands): March 31, 2017 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 $ 1,549 $ 43 $ 948 $ 254 $ 4,496 $ 4,343 $ 17 $ 34 $ 11,684 Provision for loan losses (1,265 ) 7 126 157 1,118 221 1 10 375 Loans charged-off — — (26 ) — (177 ) — — (3 ) (206 ) Recoveries of loans previously charged-off 20 — 5 — 6 66 — 1 98 Ending balance $ 304 $ 50 $ 1,053 $ 411 $ 5,443 $ 4,630 $ 18 $ 42 $ 11,951 March 31, 2016 Allowance for loan losses: Beginning balance $ 813 $ 43 $ 1,370 $ 141 $ 4,892 $ 4,286 $ — $ 196 $ 11,741 Provision for loan losses (449 ) (6 ) (126 ) (15 ) (376 ) 1,054 — (82 ) — Loans charged-off — — (9 ) — — (496 ) — (1 ) (506 ) Recoveries of loans previously charged-off 17 — 27 — 8 48 — — 100 Ending balance $ 381 $ 37 $ 1,262 $ 126 $ 4,524 $ 4,892 $ — $ 113 $ 11,335 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 March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 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 $ — $ — $ 29 $ — $ — $ 38 $ — $ — $ 67 Collectively evaluated for impairment 304 50 1,024 411 5,443 4,592 18 42 11,884 Ending balance $ 304 $ 50 $ 1,053 $ 411 $ 5,443 $ 4,630 $ 18 $ 42 $ 11,951 Loans: Individually evaluated for impairment $ — $ — $ 1,161 $ — $ 7,788 $ 2,973 $ — $ — $ 11,922 Collectively evaluated for impairment 51,085 11,892 180,265 36,040 466,247 293,336 3,381 9,852 1,052,098 Ending balance $ 51,085 $ 11,892 $ 181,426 $ 36,040 $ 474,035 $ 296,309 $ 3,381 $ 9,852 $ 1,064,020 December 31, 2016 Period-ended amount allocated to: Individually evaluated for impairment $ — $ — $ 27 $ — $ — $ 417 $ — $ — $ 444 Collectively evaluated for impairment 1,549 43 921 254 4,496 3,926 17 34 11,240 Ending balance $ 1,549 $ 43 $ 948 $ 254 $ 4,496 $ 4,343 $ 17 $ 34 $ 11,684 Loans: Individually evaluated for impairment $ — $ — $ 1,285 $ — $ 7,267 $ 3,912 $ — $ — $ 12,464 Collectively evaluated for impairment 47,338 12,628 174,693 36,703 418,718 277,892 3,290 7,967 979,229 Ending balance $ 47,338 $ 12,628 $ 175,978 $ 36,703 $ 425,985 $ 281,804 $ 3,290 $ 7,967 $ 991,693 The following tables present additional detail regarding impaired loans, segregated by class, as of and for the three months ended March 31, 2017 and the year ended December 31, 2016 (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. March 31, 2017 Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated Average Recorded Investment Interest Income Recognized With no related allowance recorded: Residential 1-4 Family $ 743 $ 704 $ — $ 766 $ 1 Commercial Real Estate Retail 3,963 3,316 — 3,420 — Office 183 183 — 92 — Other 4,354 4,289 — 4,016 26 Commercial and Industrial 3,364 2,935 — 2,995 32 With an allowance recorded: Residential 1-4 Family 457 457 29 458 5 Commercial and Industrial 38 38 38 448 — Total $ 13,102 $ 11,922 $ 67 $ 12,195 $ 64 December 31, 2016 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 $ — $ — $ — $ 217 $ — Residential 1-4 Family 865 826 — 1,278 61 Commercial Real Estate Retail 3,995 3,524 — 1,362 — Other 3,808 3,743 — 3,808 127 Commercial and Industrial 4,504 3,054 — 3,532 130 With an allowance recorded: Residential 1-4 Family 459 459 27 463 23 Commercial Real Estate Commercial and Industrial 1,058 858 417 1,319 — Total $ 14,689 $ 12,464 $ 444 $ 11,979 $ 341 During the three months ended March 31, 2017 and 2016, there were no troubled debt restructurings added. Troubled debt restructurings that were accruing were $2.2 million as of March 31, 2017 and December 31, 2016 . Troubled debt restructurings that were non-accruing were $1.9 million and $2.2 million as of March 31, 2017 and December 31, 2016 , respectively. The following presents a rollfoward activity of troubled debt restructurings (in thousands, except number of loans): Three months ended March 31, 2017 Recorded Investment Number of Loans Balance, beginning $ 4,377 7 Additions to troubled debt restructurings — — Removal of troubled debt restructurings — — Charge-off related to troubled debt restructurings (119 ) — Transfers to other real estate owned — — Repayments and other reductions (154 ) — Balance, ending $ 4,104 7 Restructured loans are evaluated for impairment at each reporting date as part of the Company’s determination of the allowance for loan losses. |