Loans and allowance for loan losses | Note (4)—Loans and allowance for loan losses: Loans outstanding at March 31, 2017 and December 31, 2016, by major lending classification are as follows: March 31, December 31, 2017 2016 Commercial and industrial $ 399,333 $ 386,233 Construction 267,998 245,905 Residential real estate: 1-to-4 family mortgage 302,166 294,924 Residential line of credit 177,928 177,190 Multi-family mortgage 45,244 44,977 Commercial real estate: Owner occupied 359,120 357,346 Non-owner occupied 273,716 267,902 Consumer and other 75,490 74,307 Gross loans 1,900,995 1,848,784 Less: Allowance for loan losses (22,898 ) (21,747 ) Net loans $ 1,878,097 $ 1,827,037 As of March 31, 2017 and December 31, 2016, $287,214 and $525,180, respectively, of 1-to-4 family mortgage loans and loans held for sale were pledged to the Federal Home Loan Bank of Cincinnati securing advances against the Bank’s line. As of March 31, 2017 and December 31, 2016, $31,309 and $40,537, respectively, of multi-family mortgage loans were pledged to the Federal Home Loan Bank of Cincinnati securing advances against the Bank’s line. The following provides the allowance for loan losses by portfolio segment and the related investment in loans net of unearned interest for the three months ended March 31, 2017 and 2016: Commercial and industrial Construction 1-to-4 family residential mortgage Residential line of credit Multi- family residential mortgage Commercial real estate owner occupied Commercial real estate non-owner occupied Consumer and other Total Three Months Ended March 31, 2017 Beginning balance - December 31, 2016 $ 5,309 $ 4,940 $ 3,197 $ 1,613 $ 504 $ 3,302 $ 2,019 $ 863 $ 21,747 Provision for loan losses 179 635 (239 ) (155 ) 4 81 (998 ) 236 (257 ) Recoveries of loans previously charged-off 83 29 26 56 — 4 1,639 13 1,850 Loans charged off (169 ) (6 ) (88 ) — — — — (179 ) (442 ) Ending balance - March 31, 2017 $ 5,402 $ 5,598 $ 2,896 $ 1,514 $ 508 $ 3,387 $ 2,660 $ 933 $ 22,898 Commercial and industrial Construction 1-to-4 family residential mortgage Residential line of credit Multi- family residential mortgage Commercial real estate owner occupied Commercial real estate non-owner occupied Consumer and other Total Three Months Ended March 31, 2016 Beginning balance - December 31, 2015 $ 5,135 $ 5,143 $ 4,176 $ 2,201 $ 311 $ 3,682 $ 2,622 $ 1,190 $ 24,460 Provision for loan losses 99 (666 ) 42 (163 ) 279 325 113 (38 ) (9 ) Recoveries of loans previously charged-off 10 41 62 37 — 6 4 72 232 Loans charged off (2 ) — — — — — — (250 ) (252 ) Ending balance - March 31, 2016 $ 5,242 $ 4,518 $ 4,280 $ 2,075 $ 590 $ 4,013 $ 2,739 $ 974 $ 24,431 The following table provides the allocation of the allowance for loan losses by loan category broken out between loans individually evaluated for impairment and loans collectively evaluated for impairment as of March 31, 2017 and December 31, 2016: March 31, 2017 Commercial and industrial Construction 1-to-4 family residential mortgage Residential line of credit Multi- family residential mortgage Commercial real estate owner occupied Commercial real estate non-owner occupied Consumer and other Total Amount of allowance allocated to: Individually evaluated for impairment $ 34 $ — $ 22 $ — $ — $ 102 $ 85 $ — $ 243 Collectively evaluated for impairment 5,368 5,598 2,874 1,514 508 3,285 2,575 933 22,655 Acquired with deteriorated credit quality — — — — — — — — — Ending balance - March 31, 2017 $ 5,402 $ 5,598 $ 2,896 $ 1,514 $ 508 $ 3,387 $ 2,660 $ 933 $ 22,898 December 31, 2016 Commercial and industrial Construction 1-to-4 family residential mortgage Residential line of credit Multi- family residential mortgage Commercial real estate owner occupied Commercial real estate non-owner occupied Consumer and other Total Year-end amount of allowance allocated to: Individually evaluated for impairment $ 135 $ — $ 23 $ — $ — $ 113 $ 242 $ — $ 513 Collectively evaluated for impairment 5,174 4,940 3,174 1,613 504 3,189 1,777 863 21,234 Acquired with deteriorated credit quality — — — — — — — — — Ending balance - December 31, 2016 $ 5,309 $ 4,940 $ 3,197 $ 1,613 $ 504 $ 3,302 $ 2,019 $ 863 $ 21,747 The following table provides the amount of loans by loan category broken between loans individually evaluated for impairment and loans collectively evaluated for impairment as of March 31, 2017 and December 31, 2016: March 31, 2017 Commercial and industrial Construction 1-to-4 family residential mortgage Residential line of credit Multi- family residential mortgage Commercial real estate owner occupied Commercial real estate non-owner occupied Consumer and other Total Loans, net of unearned income Individually evaluated for impairment $ 1,272 $ 305 $ 2,216 $ — $ 1,014 $ 2,459 $ 2,128 $ 25 $ 9,419 Collectively evaluated for impairment 397,583 263,424 297,817 177,928 44,205 352,623 266,436 75,461 1,875,477 Acquired with deteriorated credit quality 478 4,269 2,133 — 25 4,038 5,152 4 16,099 Ending balance - March 31, 2017 $ 399,333 $ 267,998 $ 302,166 $ 177,928 $ 45,244 $ 359,120 $ 273,716 $ 75,490 $ 1,900,995 December 31, 2016 Commercial and industrial Construction 1-to-4 family residential mortgage Residential line of credit Multi- family residential mortgage Commercial real estate owner occupied Commercial real estate non-owner occupied Consumer and other Total Loans, net of unearned income Individually evaluated for impairment $ 1,476 $ 2,686 $ 2,471 $ 311 $ 1,027 $ 2,752 $ 2,201 $ 27 $ 12,951 Collectively evaluated for impairment 384,279 238,900 290,346 176,879 43,922 350,812 260,361 74,276 1,819,775 Acquired with deteriorated credit quality 478 4,319 2,107 — 28 3,782 5,340 4 16,058 Ending balance - December 31, 2016 $ 386,233 $ 245,905 $ 294,924 $ 177,190 $ 44,977 $ 357,346 $ 267,902 $ 74,307 $ 1,848,784 The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. The Company’s risk rating definitions include: Watch. Loans rated as watch includes loans in which management believes conditions have occurred, or may occur, which could result in the loan being downgraded to a worse rated category. Also included in watch are loans rated as special mention, which have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans rated as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so rated have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Also included in this category are loans considered doubtful, which have all the weaknesses previously described and management believes those weaknesses may make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans not meeting the criteria above are considered to be pass rated loans. The following table shows credit quality indicators by portfolio class at March 31, 2017 and December 31, 2016: March 31, 2017 Pass Watch Substandard Total Commercial and industrial $ 362,172 $ 34,722 $ 2,439 $ 399,333 Construction 260,791 2,341 4,866 267,998 Residential real estate: 1-to-4 family mortgage 285,819 6,894 9,453 302,166 Residential line of credit 173,491 2,016 2,421 177,928 Multi-family mortgage 44,058 147 1,039 45,244 Commercial real estate: Owner occupied 341,784 8,947 8,389 359,120 Non-owner occupied 258,887 6,283 8,546 273,716 Consumer and other 74,742 345 403 75,490 Total $ 1,801,744 $ 61,695 $ 37,556 $ 1,900,995 December 31, 2016 Pass Watch Substandard Total Commercial and industrial $ 351,046 $ 31,074 $ 4,113 $ 386,233 Construction 236,588 4,612 4,705 245,905 Residential real estate: 1-to-4 family mortgage 277,948 6,945 10,031 294,924 Residential line of credit 173,011 1,875 2,304 177,190 Multi-family mortgage 43,770 152 1,055 44,977 Commercial real estate: Owner occupied 338,698 10,459 8,189 357,346 Non-owner occupied 249,877 10,273 7,752 267,902 Consumer and other 73,454 417 436 74,307 Total $ 1,744,392 $ 65,807 $ 38,585 $ 1,848,784 Loans acquired in business combinations that exhibited at the date of acquisition evidence of deterioration of credit quality since origination such that it was probable that all contractually required payments would not be collected are considered to be purchased credit impaired and were as follows at March 31, 2017 and December 31, 2016: March 31, 2017 December 31, 2016 Commercial and industrial $ 478 $ 478 Construction 4,269 4,319 Residential real estate: 1-to-4 family mortgage 2,133 2,107 Residential line of credit — — Multi-family mortgage 25 28 Commercial real estate: Owner occupied 4,038 3,782 Non-owner occupied 5,152 5,340 Consumer and other 4 4 Total $ 16,099 $ 16,058 The following table presents the current value of loans determined to be impaired at the time of acquisition at March 31, 2017 and December 31, 2016: March 31, 2017 December 31, 2016 Contractually-required principal and interest $ 21,997 $ 22,961 Nonaccretable difference (3,756 ) (4,459 ) Cash flows expected to be collected 18,241 18,502 Accretable yield (2,142 ) (2,444 ) Carrying value $ 16,099 $ 16,058 Changes in accretable yield and nonaccretable difference of purchased loans were as follows: Accretable yield Nonaccretable Difference Purchased Credit Impaired Purchased Non-impaired Purchased Credit Impaired Purchased Non-impaired Total Balance at December 31, 2016 $ (2,444 ) $ (1,240 ) $ (4,459 ) $ — $ (8,143 ) Principal reductions/ pay-offs (698 ) — 698 — — Charge-offs — — 5 — 5 Recoveries (23 ) — — — (23 ) Accretion 1,023 137 — — 1,160 Balance at March 31, 2017 $ (2,142 ) $ (1,103 ) $ (3,756 ) $ — $ (7,001 ) Balance at December 31, 2015 $ (1,637 ) $ (2,008 ) $ (8,369 ) $ (209 ) $ (12,223 ) Principal reductions/ pay-offs (231 ) — 231 — — Charge-offs — — 440 — 440 Sale of credit card portfolio — — — 70 70 Accretion 408 418 — — 826 Balance at March 31, 2016 $ (1,460 ) $ (1,590 ) $ (7,698 ) $ (139 ) $ (10,887 ) Nonperforming loans include loans that are no longer accruing interest (non-accrual loans) and loans past due ninety or more days and still accruing interest. Nonperforming loans and impaired loans are defined differently. Some loans may be included in both categories, whereas other loans may only be included in one category. Loans acquired with deteriorated credit quality amounting to $16,099 and $16,058, respectively, at March 31, 2017 and December 31, 2016 have been excluded from the tables below in accordance with ASC-310-10-50, Receivables- Overall- Disclosure The following table provides the period-end amounts of loans that are past due thirty to eighty-nine days, past due ninety or more days and still accruing interest, loans not accruing interest and loans current on payments accruing interest by category at March 31, 2017 and December 31, 2016: March 31, 2017 30-89 days past due 90 days or more and accruing interest Non-accrual loans Loans current on payments and accruing interest Total Commercial and industrial $ 436 $ 123 $ 1,092 $ 397,204 $ 398,855 Construction 174 194 248 263,113 263,729 Residential real estate: 1-to-4 family mortgage 3,601 346 1,950 294,136 300,033 Residential line of credit 1,307 780 285 175,556 177,928 Multi-family mortgage — — — 45,219 45,219 Commercial real estate: Owner occupied 217 81 1,933 352,851 355,082 Non-owner occupied 81 — 2,170 266,313 268,564 Consumer and other 355 66 28 75,037 75,486 Total $ 6,171 $ 1,590 $ 7,706 $ 1,869,429 $ 1,884,896 December 31, 2016 30-89 days past due 90 days or more and accruing interest Non-accrual loans Loans current on payments and accruing interest Total Commercial and industrial $ 262 $ 127 $ 1,297 $ 384,069 $ 385,755 Construction 441 17 254 240,874 241,586 Residential real estate: 1-to-4 family mortgage 3,130 697 2,289 286,701 292,817 Residential line of credit 1,139 433 601 175,017 177,190 Multi-family mortgage — — — 44,949 44,949 Commercial real estate: Owner occupied 186 — 2,007 351,371 353,564 Non-owner occupied 158 — 2,251 260,153 262,562 Consumer and other 433 55 30 73,785 74,303 Total $ 5,749 $ 1,329 $ 8,729 $ 1,816,919 $ 1,832,726 Impaired loans recognized in conformity with ASC 310 at March 31, 2017 and December 31, 2016, segregated by class, were as follows: March 31, 2017 Recorded investment Unpaid principal Related allowance With a related allowance recorded: Commercial and industrial $ 727 $ 869 $ 34 Construction — — — Residential real estate: 1-to-4 family mortgage 99 365 22 Residential line of credit — — — Multi-family mortgage — — — Commercial real estate: Owner occupied 623 654 102 Non-owner occupied 521 1,048 85 Consumer and other — — — Total $ 1,970 $ 2,936 $ 243 With no related allowance recorded Commercial and industrial $ 545 $ 676 $ — Construction 305 317 — Residential real estate: 1-to-4 family mortgage 2,117 2,118 — Residential line of credit — — — Multi-family mortgage 1,014 1,014 — Commercial real estate: Owner occupied 1,836 2,943 — Non-owner occupied 1,607 2,339 — Consumer and other 25 26 — Total $ 7,449 $ 9,433 $ — Total impaired loans $ 9,419 $ 12,369 $ 243 December 31, 2016 Recorded investment Unpaid principal Related allowance With a related allowance recorded: Commercial and industrial $ 854 $ 854 $ 135 Construction — — — Residential real estate: 1-to-4 family mortgage 103 369 23 Residential line of credit — — — Multi-family mortgage — — — Commercial real estate: Owner occupied 635 654 113 Non-owner occupied 1,151 1,678 242 Consumer and other 1 1 — Total $ 2,744 $ 3,556 $ 513 With no related allowance recorded: Commercial and industrial $ 622 $ 746 $ — Construction 2,686 2,694 — Residential real estate: 1-to-4 family mortgage 2,368 2,370 — Residential line of credit 311 321 — Multi-family mortgage 1,027 1,027 — Commercial real estate: Owner occupied 2,117 3,205 — Non-owner occupied 1,050 1,781 — Consumer and other 26 26 — Total $ 10,207 $ 12,170 $ — Total impaired loans $ 12,951 $ 15,726 $ 513 Average recorded investment and interest income on a cash basis recognized during the three months ended March 31, 2017 and 2016 on impaired loans, segregated by class, were as follows: Three Months Ended March 31, 2017 Average recorded investment Interest income recognized (cash basis) With a related allowance recorded: Commercial and industrial $ 791 $ 5 Construction — — Residential real estate: 1-to-4 family mortgage 101 — Residential line of credit — — Multi-family mortgage — — Commercial real estate: Owner occupied 629 12 Non-owner occupied 836 — Consumer and other 1 — Total $ 2,357 $ 17 With no related allowance recorded Commercial and industrial 584 $ 9 Construction 1,496 5 Residential real estate: 1-to-4 family mortgage 2,243 17 Residential line of credit 156 — Multi-family mortgage 1,021 11 Commercial real estate: Owner occupied 1,977 38 Non-owner occupied 1,329 — Consumer and other 26 1 Total $ 8,828 $ 81 Total impaired loans $ 11,185 $ 98 Three Months Ended March 31, 2016 With a related allowance recorded: Commercial and industrial $ 1,051 $ 5 Construction 154 — Residential real estate: 1-to-4 family mortgage 2,187 16 Residential line of credit 163 — Multi-family mortgage — — Commercial real estate: Owner occupied 1,310 — Non-owner occupied 2,905 6 Consumer and other — — Total $ 7,770 $ 27 With no related allowance recorded Commercial and industrial $ 573 $ 1 Construction 2,685 31 Residential real estate: 1-to-4 family mortgage 1,749 42 Residential line of credit — — Multi-family mortgage 1,066 1 Commercial real estate: Owner occupied 1,095 30 Non-owner occupied 1,112 — Consumer and other — — Total $ 8,280 $ 105 Total impaired loans $ 16,050 $ 132 December 31, 2016 Recorded investment Unpaid principal Related allowance Average recorded investment Interest income recognized (cash basis) With a related allowance recorded: Commercial and industrial $ 854 $ 854 $ 135 $ 994 $ 17 Construction — — — 154 — Residential real estate: 1-to-4 family mortgage 103 369 23 1,750 1 Residential line of credit — — — — — Multi-family mortgage — — — 1,756 — Commercial real estate: Owner occupied 635 654 113 1,777 25 Non-owner occupied 1,151 1,678 242 1 — Consumer and other 1 1 — — — Total $ 2,744 $ 3,556 $ 513 $ 6,432 $ 43 With no related allowance recorded: Commercial and industrial $ 622 $ 746 $ — $ 494 $ 20 Construction 2,686 2,694 — 2,622 132 Residential real estate: 1-to-4 family mortgage 2,368 2,370 — 1,329 137 Residential line of credit 311 321 — 156 10 Multi-family mortgage 1,027 1,027 — 1,051 37 Commercial real estate: Owner occupied 2,117 3,205 — 1,120 119 Non-owner occupied 1,050 1,781 — 1,050 — Consumer and other 26 26 — 13 — Total $ 10,207 $ 12,170 $ — $ 7,835 $ 455 Total impaired loans $ 12,951 $ 15,726 $ 513 $ 14,267 $ 498 As of March 31, 2017 and December 31, 2016, the Company has a recorded investment in troubled debt restructurings of $8,681 and $8,802, respectively. The modifications included extensions of the maturity date and/or a stated rate of interest to one lower than the current market rate. The Company has allocated $234 and $402 of specific reserves for those loans at March 31, 2017 and December 31, 2016, respectively, and has committed to lend additional amounts totaling up to $0 and $1, respectively to these customers. Of these loans, $4,262 and $4,265 were classified as non-accrual loans as of March 31, 2017 and December 31, 2016. The following table presents the financial effect of TDRs recorded during the periods indicated: Three Months Ended March 31, 2017 Number of loans Pre-modification outstanding recorded investment Post-modification outstanding recorded investment Charge offs and specific reserves Commercial and industrial 1 $ 5 $ 5 $ — Commercial real estate: Owner occupied 1 377 377 — Non-owner occupied 2 711 711 — Total 4 $ 1,093 $ 1,093 $ — Three Months Ended March 31, 2016 Number of loans Pre-modification outstanding recorded investment Post-modification outstanding recorded investment Charge offs and specific reserves Residential real estate: 1-to-4 family mortgage 2 $ 443 $ 433 $ 39 Total 2 $ 443 $ 433 $ 39 There were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three months ended March 31, 2017 or 2016. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. The terms of certain other loans were modified during the three months ended March 31, 2017 and 2016 that did not meet the definition of a troubled debt restructuring. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the company’s internal underwriting policy. |