Allowance for Loan Losses | NOTE 5. ALLOWANCE FOR LOAN LOSSES The Company’s accounting method for loans and the corresponding ALL differs depending on whether the loans are New or Acquired. The Company assesses and monitors credit risk and portfolio performance using distinct methodologies for Acquired loans, both ASC 310-30 loans and Non-ASC 310-30 loans, and New loans. Within each of these portfolios, the Company further disaggregates the portfolios into the following segments: Commercial real estate, Owner-occupied commercial real estate, 1-4 single family residential, Construction, land and development, Home equity loans and lines of credit, Commercial and industrial and Consumer. The ALL reflects management’s estimate of probable credit losses inherent in each of the segments. Changes in the ALL by loan portfolio and segment for the years ended December 31, 2015, 2014 and 2013 are as follows: Commercial Owner- 1- 4 Single Construction, Home Commercial Consumer Total (Dollars in thousands) Balance at January 1, 2015 $ 8,206 $ 1,020 $ 4,740 $ 2,456 $ 355 $ 5,745 $ 358 $ 22,880 Provision (credit) for ASC 310-30 loans (1,487 ) — (37 ) (681 ) — (39 ) 175 (2,069 ) Provision (credit) for non-ASC 310-30 loans 589 405 46 (39 ) 138 11 6 1,156 Provision (credit) for New loans 1,012 818 2,066 1,317 122 2,417 (16 ) 7,736 Total provision 114 1,223 2,075 597 260 2,389 165 6,823 Charge-offs for ASC 310-30 loans (270 ) — (436 ) (56 ) — (643 ) (60 ) (1,465 ) Charge-offs for non-ASC 310-30 loans — — (128 ) — (132 ) — (8 ) (268 ) Charge-offs for New loans — — — — — (15 ) — (15 ) Total charge-offs (270 ) — (564 ) (56 ) (132 ) (658 ) (68 ) (1,748 ) Recoveries for ASC 310-30 loans 400 — 174 407 — 177 1 1,159 Recoveries for non-ASC 310-30 loans — — — — — — — — Recoveries for New loans — — — — — 12 — 12 Total recoveries 400 — 174 407 — 189 1 1,171 Ending ALL balance ASC 310-30 loans 1,898 — 26 328 — 453 406 3,111 Non-ASC 310-30 loans 1,084 463 332 36 291 60 4 2,270 New loans 5,468 1,780 6,067 3,040 192 7,152 46 23,745 Balance at December 31, 2015 $ 8,450 $ 2,243 $ 6,425 $ 3,404 $ 483 $ 7,665 $ 456 $ 29,126 Commercial Owner- 1- 4 Single Construction, Home Commercial Consumer Total (Dollars in thousands) Balance at January 1, 2014 $ 4,458 $ 376 $ 1,443 $ 1,819 $ 265 $ 6,198 $ 174 $ 14,733 Provision (credit) for ASC 310-30 loans 735 — 271 107 — (716 ) 245 642 Provision (credit) for non-ASC 310-30 loans 490 53 362 75 442 67 35 1,524 Provision (credit) for New loans 2,678 591 2,695 895 (56 ) 1,229 45 8,077 Total provision 3,903 644 3,328 1,077 386 580 325 10,243 Charge-offs for ASC 310-30 loans (270 ) — (31 ) (1,244 ) — (678 ) (113 ) (2,336 ) Charge-offs for non-ASC 310-30 loans — — — — (296 ) (24 ) (29 ) (349 ) Charge-offs for New loans — — — (6 ) — (348 ) — (354 ) Total charge-offs (270 ) — (31 ) (1,250 ) (296 ) (1,050 ) (142 ) (3,039 ) Recoveries for ASC 310-30 loans 115 — — 810 — 13 1 939 Recoveries for non-ASC 310-30 loans — — — — — — — — Recoveries for New loans — — — — — 4 — 4 Total recoveries 115 — — 810 — 17 1 943 Ending ALL balance ASC 310-30 loans 3,255 — 325 658 — 958 290 5,486 Non-ASC 310-30 loans 495 58 414 75 285 49 6 1,382 New loans 4,456 962 4,001 1,723 70 4,738 62 16,012 Balance at December 31, 2014 $ 8,206 $ 1,020 $ 4,740 $ 2,456 $ 355 $ 5,745 $ 358 $ 22,880 Commercial Owner- 1- 4 Single Construction, Home Commercial Consumer Total (Dollars in thousands) Balance at January 1, 2013 $ 3,734 $ 373 $ 3,049 $ 5,239 $ 67 $ 6,054 $ 433 $ 18,949 Provision (credit) for ASC 310-30 loans 1,263 — (1,558 ) 601 — (1,493 ) 510 (677 ) Provision (credit) for non-ASC 310-30 loans (3 ) (7 ) 30 (3 ) 415 (130 ) (4 ) 298 Provision (credit) for New loans 541 10 684 (141 ) 122 2,120 (43 ) 3,293 Total provision 1,801 3 (844 ) 457 537 497 463 2,914 Charge-offs for ASC 310-30 loans (1,387 ) — (830 ) (4,052 ) — (201 ) (723 ) (7,193 ) Charge-offs for non-ASC 310-30 loans — — — — (339 ) (163 ) — (502 ) Charge-offs for New loans — — — (193 ) — — — (193 ) Total charge-offs (1,387 ) — (830 ) (4,245 ) (339 ) (364 ) (723 ) (7,888 ) Recoveries for ASC 310-30 loans 310 — 68 368 — 11 1 758 Recoveries for non-ASC 310-30 loans — — — — — — — — Recoveries for New loans — — — — — — — — Total recoveries 310 — 68 368 — 11 1 758 Ending ALL balance ASC 310-30 loans 2,675 — 85 985 — 2,339 157 6,241 Non-ASC 310-30 loans 5 5 52 — 139 6 — 207 New loans 1,778 371 1,306 834 126 3,853 17 8,285 Balance at December 31, 2013 $ 4,458 $ 376 $ 1,443 $ 1,819 $ 265 $ 6,198 $ 174 $ 14,733 Credit Quality Indicators In evaluating credit risk, the Company looks at multiple factors; however, management considers delinquency status to be the most meaningful indicator of the credit quality of 1-4 single family residential, home equity loans and lines of credit and consumer loans. Delinquency statistics are updated at least monthly. Internal risk ratings are considered the most meaningful indicator of credit quality for Non-ASC 310-30 and New commercial, construction, land and development and commercial real estate loans. Internal risk ratings are updated on a continuous basis. The following tables present an aging analysis of the recorded investment for delinquent loans by portfolio and segment (excluding loans accounted for under ASC 310-30): Accruing December 31, 2015 30 to 59 60 to 89 90 Days or Non- Accrual Total (Dollars in thousands) New loans: Real estate loans: Commercial real estate $ — $ — $ — $ — $ — Owner-occupied commercial real estate — 113 — — 113 1-4 single family residential 9,439 869 — 1,454 11,762 Construction, land and development 467 — — — 467 Home equity loans and lines of credit 64 — — — 64 Total real estate loans 9,970 982 — 1,454 12,406 Other loans: Commercial and industrial $ — $ — $ — $ — $ — Consumer — — — — — Total other loans — — — — — Total new loans $ 9,970 $ 982 $ — $ 1,454 $ 12,406 Acquired loans: Real estate loans: Commercial real estate $ 63 $ — $ — $ 5,282 $ 5,345 Owner-occupied commercial real estate — 95 — 2,247 2,342 1-4 single family residential 1,393 697 — 3,016 5,106 Construction, land and development — — — — — Home equity loans and lines of credit 490 97 — 2,295 2,882 Total real estate loans 1,946 889 — 12,840 15,675 Other loans: Commercial and industrial $ 90 $ — $ — $ 877 $ 967 Consumer — — — 23 23 Total other loans 90 — — 900 990 Total acquired loans $ 2,036 $ 889 $ — $ 13,740 $ 16,665 Accruing December 31, 2014 30 to 59 60 to 89 90 Days or Non-Accrual Total (Dollars in thousands) New loans: Real estate loans: Commercial real estate $ — $ — $ — $ — $ — Owner-occupied commercial real estate — — — — — 1-4 single family residential 6,206 727 — 116 7,049 Construction, land and development — — — — — Home equity loans and lines of credit — — — — — Total real estate loans 6,206 727 — 116 7,049 Other loans: Commercial and industrial $ — $ — $ — $ — $ — Consumer — — — — — Total other loans — — — — — Total new loans $ 6,206 $ 727 $ — $ 116 $ 7,049 Acquired Loans: Real estate loans: Commercial real estate $ — $ — $ — $ 4,866 $ 4,866 Owner-occupied commercial real estate — — — 211 211 1-4 single family residential 1,877 86 — 1,766 3,729 Construction, land and development — — — — — Home equity loans and lines of credit 384 456 — 3,005 3,845 Total real estate loans 2,261 542 — 9,848 12,651 Other loans: Commercial and industrial $ — $ 192 $ — $ 1,222 $ 1,414 Consumer 14 — — — 14 Total other loans 14 192 — 1,222 1,428 Total acquired loans $ 2,275 $ 734 $ — $ 11,070 $ 14,079 Loans exhibiting potential credit weaknesses that deserve management’s close attention and that if left uncorrected may result in deterioration of the repayment capacity of the borrower are categorized as special mention. Loans with well-defined credit weaknesses including payment defaults, declining collateral values, frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash flow, project cost overruns, unreasonable construction delays, past due real estate taxes or exhausted interest reserves are assigned an internal risk rating of substandard. A loan with a weakness so severe that collection in full is highly questionable or improbable will be assigned an internal risk rating of doubtful. The following table summarizes the Company’s commercial Non-ASC 310-30 and New loans by key indicators of credit quality. Loans accounted for under ASC 310-30 are excluded from the following analysis because their related allowance is determined by loan pool performance: December 31, 2015 Pass Special Substandard Doubtful (Dollars in thousands) New loans: Commercial real estate $ 998,141 $ — $ — $ — Owner-occupied commercial real estate 524,728 — — — Construction, land and development 537,494 — — — Commercial and industrial 972,803 — — — Total new loans $ 3,033,166 $ — $ — $ — Acquired loans: Commercial real estate $ 50,328 $ — $ 5,657 $ — Owner-occupied commercial real estate 18,854 — 2,247 — Construction, land and development 6,338 — — — Commercial and industrial 6,715 1,352 1,245 — Total aquired loans $ 82,235 $ 1,352 $ 9,149 $ — December 31, 2014 Pass Special Substandard Doubtful (Dollars in thousands) New loans: Commercial real estate $ 853,044 $ — $ 30 $ — Owner-occupied commercial real estate 281,703 — — — Construction, land and development 232,601 — — — Commercial and industrial 795,000 — — — Total new loans $ 2,162,348 $ — $ 30 $ — Acquired loans: Commercial real estate $ 65,173 $ 107 $ 4,866 $ — Owner-occupied commercial real estate 13,822 421 599 — Construction, land and development 9,729 — — — Commercial and industrial 9,184 2,147 2,217 — Total acquired loans $ 97,908 $ 2,675 $ 7,682 $ — Internal risk ratings and other credit metrics are key factors in identifying loans to be individually evaluated for impairment and impact management’s estimates of loss factors used in determining the amount of the ALL. The following table shows the Company’s investment in loans disaggregated based on the method of evaluating impairment: Loans - Recorded Investment Allowance for Credit Loss December 31, 2015 Individually Collectively ASC 310- Individually Collectively ASC 310- 30 Loans (Dollars in thousands) New loans: Real estate loans: Commercial real estate $ — $ 998,141 $ — $ — $ 5,468 $ — Owner-occupied commercial real estate — 524,728 — — 1,780 — 1-4 single family residential — 1,541,255 — — 6,067 — Construction, land and development — 537,494 — — 3,040 — Home equity loans and lines of credit — 30,945 — — 192 — Total real estate loans $ — $ 3,632,563 $ — $ — $ 16,547 $ — Other loans Commercial and industrial $ — $ 972,803 $ — $ — $ 7,152 $ — Consumer — 5,397 — — 46 — Total other loans $ — $ 978,200 $ — $ — $ 7,198 $ — Acquired loans: Real estate loans: Commercial real estate $ 5,282 $ 50,703 $ 247,628 $ 829 $ 255 $ 1,898 Owner-occupied commercial real estate 2,244 18,857 — 399 64 — 1-4 single family residential 263 83,848 40,922 — 332 26 Construction, land and development — 6,338 28,017 — 36 328 Home equity loans and lines of credit 916 48,491 — — 291 — Total real estate loans $ 8,705 $ 208,237 $ 316,567 $ 1,228 $ 978 $ 2,252 Other loans Commercial and industrial $ 877 $ 8,435 36,783 $ — $ 60 $ 453 Consumer — 430 2,390 — 4 406 Total other loans $ 877 $ 8,865 $ 39,173 $ — $ 64 $ 859 Loans - Recorded Investment Allowance for Credit Loss December 31, 2014 Individually Collectively ASC 310- Individually Collectively ASC 310- (Dollars in thousands) New loans: Real estate loans: Commercial real estate $ — $ 853,074 $ — $ — $ 4,456 $ — Owner-occupied commercial real estate — 281,703 — — 962 — 1-4 single family residential — 922,657 — — 4,001 — Construction, land and development — 232,601 — — 1,723 — Home equity loans and lines of credit — 11,826 — — 70 — Total real estate loans $ — $ 2,301,861 $ — $ — $ 11,212 $ — Other loans Commercial and industrial $ — $ 795,000 $ — $ — $ 4,738 $ — Consumer — 6,556 — — 62 — Total other loans $ — $ 801,556 $ — $ — $ 4,800 $ — Acquired Loans: Real estate loans: Commercial real estate $ 4,754 $ 65,392 $ 336,935 $ 174 $ 321 $ 3,255 Owner-occupied commercial real estate — 14,842 — — 58 — 1-4 single family residential — 102,279 86,308 — 414 325 Construction, land and development — 9,729 66,700 — 75 658 Home equity loans and lines of credit — 54,704 — — 285 — Total real estate loans $ 4,754 $ 246,946 $ 489,943 $ 174 $ 1,153 $ 4,238 Other loans Commercial and industrial $ — $ 13,548 $ 67,498 $ — $ 49 $ 958 Consumer — 681 2,803 — 6 290 Total other loans $ — $ 14,229 $ 70,301 $ — $ 55 $ 1,248 The following tables set forth certain information regarding the Company’s impaired loans (excluding loans accounted for under ASC 310-30) that were evaluated for specific reserves: Impaired Loans - With Allowance Impaired Loans - With no December 31, 2015 Recorded Unpaid Related Recorded Unpaid (Dollars in thousands) New loans: Real estate loans: Commercial real estate $ — $ — $ — $ — $ — Owner-occupied commercial real estate — — — — — 1-4 single family residential — — — — — Construction, land and development — — — — — Home equity loans and lines of credit — — — — — Total real estate loans $ — $ — $ — $ — $ — Other loans Commercial and industrial $ — $ — $ — $ — $ — Consumer — — — — — Total other loans $ — $ — $ — $ — $ — Acquired loans: Real estate loans: Commercial real estate $ 4,555 $ 4,924 $ 829 $ 727 $ 750 Owner-occupied commercial real estate 2,244 2,310 399 — — 1-4 single family residential — — — $ 263 $ 264 Construction, land and development — — — — — Home equity loans and lines of credit — — — $ 916 $ 1,048 Total real estate loans $ 6,799 $ 7,234 $ 1,228 $ 1,906 $ 2,062 Other loans Commercial and industrial $ — $ — $ — $ 877 $ 1,825 Consumer — — — — — Total other loans $ — $ — $ — $ 877 $ 1,825 Impaired Loans - With Allowance Impaired Loans - With no December 31, 2014 Recorded Unpaid Related Recorded Unpaid (Dollars in thousands) New loans: Real estate loans: Commercial real estate $ — $ — $ — $ — $ — Owner-occupied commercial real estate — — — — — 1-4 single family residential — — — — — Construction, land and development — — — — — Home equity loans and lines of credit — — — — — Total real estate loans $ — $ — $ — $ — $ — Other loans Commercial and industrial $ — $ — $ — $ — $ — Consumer — — — — — Total other loans $ — $ — $ — $ — $ — Acquired loans: Real estate loans: Commercial real estate $ 354 $ 354 $ 174 $ 4,400 $ 4,595 Owner-occupied commercial real estate — — — — — 1-4 single family residential — — — — — Construction, land and development — — — — — Home equity loans and lines of credit — — — — — Total real estate loans $ 354 $ 354 $ 174 $ 4,400 $ 4,595 Other loans Commercial and industrial $ — $ — $ — $ — $ — Consumer — — — — — Total other loans $ — $ — $ — $ — $ — Years Ended December 31, 2015 2014 Average Interest Average Interest (Dollars in thousands) Impaired loans with no related allowance: Real estate loans: Commercial real estate $ 414 $ — $ 4,636 $ — Owner-occupied commercial real estate — — — — 1-4 single family residential 133 — — — Construction, land and development — — — — Home equity loans and lines of credit 925 — — — Total real estate loans $ 1,472 $ — $ 4,636 $ — Other loans: Commercial and industrial $ 627 $ — $ — $ — Consumer — — — — Total other loans $ 627 $ — $ — $ — Impaired loans with an allowance: Real estate loans: Commercial real estate $ 4,789 $ — $ 355 $ — Owner-occupied commercial real estate 1,144 — — — 1-4 single family residential — — — — Construction, land and development — — — — Home equity loans and lines of credit — — — — Total real estate loans $ 5,933 $ — $ 355 $ — Other loans: Commercial and industrial $ — $ — $ — $ — Consumer — — — — Total other loans $ — $ — $ — $ — |