Loans and allowance for loan losses | Loans and allowance for loan losses: Loans outstanding at March 31, 2019 and December 31, 2018 , by major lending classification are as follows: March 31, December 31, 2019 2018 Commercial and industrial $ 888,345 $ 867,083 Construction 539,065 556,051 Residential real estate: 1-to-4 family mortgage 552,239 555,815 Residential line of credit 187,415 190,480 Multi-family mortgage 71,532 75,457 Commercial real estate: Owner occupied 499,123 493,524 Non-owner occupied 816,880 700,248 Consumer and other 232,192 228,853 Gross loans 3,786,791 3,667,511 Less: Allowance for loan losses (29,814 ) (28,932 ) Net loans $ 3,756,977 $ 3,638,579 As of March 31, 2019 and December 31, 2018 , $ 681,154 and $ 618,976 , respectively, of qualifying residential mortgage loans (including loans held for sale) and $ 439,831 and $ 608,735 , respectively, of qualifying commercial mortgage loans were pledged to the Federal Home Loan Bank of Cincinnati securing advances against the Bank’s line of credit. As of March 31, 2019 and December 31, 2018 , $ 1,365,193 and $ 1,336,092 , respectively, of qualifying loans were pledged to the Federal Reserve Bank under the Borrower-in-Custody program. As of March 31, 2019 and December 31, 2018 , the carrying value of purchased credit impaired loans (“PCI”) loans accounted for under ASC 310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality , were $ 62,564 and $ 68,999 , respectively. The following table presents changes in the value of the accretable yield for PCI loans for the periods indicated. Three Months Ended March 31, 2019 2018 Balance at the beginning of period $ (16,587 ) $ (17,682 ) Principal reductions and other reclassifications from nonaccretable difference 220 (1,294 ) Accretion 2,183 2,201 Changes in expected cash flows (630 ) (180 ) Balance at end of period $ (14,814 ) $ (16,955 ) Included in the ending balance of the accretable yield on PCI loans at March 31, 2019 and December 31, 2018, is a purchase accounting liquidity discount of $ 2,093 and $2,436 , respectively. There is also a purchase accounting nonaccretable credit discount of $3,480 and $4,355 related to the PCI loan portfolio at March 31, 2019 and December 31, 2018, respectively and an accretable credit and liquidity discount on non-PCI loans of $ 7,025 and $7,527 and $ 1,907 and $2,197 , respectively. Interest revenue, through accretion of the difference between the recorded investment of the loans and the expected cash flows, is being recognized on all PCI loans. Accretion of interest income amounting to $ 2,183 and $ 2,201 was recognized on purchased credit impaired loans during the three months ended March 31, 2019 and 2018 , respectively. This includes both the contractual interest income recognized and the purchase accounting contribution through accretion of the liquidity discount and credit mark for changes in estimated cash flows. The total purchase accounting contribution through accretion excluding contractual interest collected for all purchased loans was $ 1,831 and $1,687 for the three months ended March 31, 2019 and 2018 , respectively. 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, 2019 and 2018 : 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, 2019 Beginning balance - December 31, 2018 $ 5,348 $ 9,729 $ 3,428 $ 811 $ 566 $ 3,132 $ 4,149 $ 1,769 $ 28,932 Provision for loan losses 333 28 (65 ) (73 ) (27 ) (121 ) 434 882 1,391 Recoveries of loans previously charged-off 12 1 13 25 — 87 — 224 362 Loans charged off (179 ) — (81 ) (32 ) — — — (579 ) (871 ) Ending balance - March 31, 2019 $ 5,514 $ 9,758 $ 3,295 $ 731 $ 539 $ 3,098 $ 4,583 $ 2,296 $ 29,814 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, 2018 Beginning balance - December 31, 2017 $ 4,461 $ 7,135 $ 3,197 $ 944 $ 434 $ 3,558 $ 2,817 $ 1,495 $ 24,041 Provision for loan losses 202 479 (30 ) 214 15 (567 ) (115 ) 119 317 Recoveries of loans previously charged-off 135 252 15 27 — 23 51 206 709 Loans charged off (220 ) — (60 ) (20 ) — — — (361 ) (661 ) Ending balance - $ 4,578 $ 7,866 $ 3,122 $ 1,165 $ 449 $ 3,014 $ 2,753 $ 1,459 $ 24,406 The following tables provides the allocation of the allowance for loan losses by loan category broken out between loans individually evaluated for impairment, loans collectively evaluated for impairment and loans acquired with deteriorated credit quality as of March 31, 2019 and December 31, 2018 : March 31, 2019 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 $ 709 $ — $ 136 $ — $ — $ 42 $ 299 $ — $ 1,186 Collectively evaluated for impairment 4,697 9,711 3,027 731 539 3,039 4,068 1,551 27,363 Acquired with deteriorated credit quality 108 47 132 — — 17 216 745 1,265 Ending balance - March 31, 2019 $ 5,514 $ 9,758 $ 3,295 $ 731 $ 539 $ 3,098 $ 4,583 $ 2,296 $ 29,814 December 31, 2018 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 $ 3 $ — $ 7 $ — $ — $ 53 $ 205 $ — $ 268 Collectively evaluated for impairment 5,247 9,677 3,205 811 566 3,066 3,628 1,583 27,783 Acquired with deteriorated credit quality 98 52 216 — — 13 316 186 881 Ending balance - December 31, 2018 $ 5,348 $ 9,729 $ 3,428 $ 811 $ 566 $ 3,132 $ 4,149 $ 1,769 $ 28,932 The following tables provides the amount of loans by loan category broken between loans individually evaluated for impairment, loans collectively evaluated for impairment and loans acquired with deteriorated credit quality as of March 31, 2019 and December 31, 2018 : March 31, 2019 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 $ 4,045 $ 1,220 $ 874 $ 605 $ — $ 2,054 $ 6,699 $ 71 $ 15,568 Collectively evaluated for impairment 882,989 533,238 533,293 186,810 71,532 491,093 796,644 213,060 3,708,659 Acquired with deteriorated credit quality 1,311 4,607 18,072 — — 5,976 13,537 19,061 62,564 Ending balance - March 31, 2019 $ 888,345 $ 539,065 $ 552,239 $ 187,415 $ 71,532 $ 499,123 $ 816,880 $ 232,192 $ 3,786,791 December 31, 2018 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 $ 1,847 $ 1,221 $ 987 $ 245 $ — $ 2,608 $ 6,735 $ 73 $ 13,716 Collectively evaluated for impairment 863,788 549,075 535,451 190,235 75,457 484,900 677,247 208,643 3,584,796 Acquired with deteriorated credit quality 1,448 5,755 19,377 — — 6,016 16,266 20,137 68,999 Ending balance - December 31, 2018 $ 867,083 $ 556,051 $ 555,815 $ 190,480 $ 75,457 $ 493,524 $ 700,248 $ 228,853 $ 3,667,511 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 uses the following definitions for risk ratings: 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 tables show credit quality indicators by portfolio class at March 31, 2019 and December 31, 2018 : March 31, 2019 Pass Watch Substandard Total Loans, excluding purchased credit impaired loans Commercial and industrial $ 830,017 $ 49,599 $ 7,418 $ 887,034 Construction 528,421 4,717 1,320 534,458 Residential real estate: 1-to-4 family mortgage 519,688 6,046 8,433 534,167 Residential line of credit 183,448 1,337 2,630 187,415 Multi-family mortgage 71,460 72 — 71,532 Commercial real estate: Owner occupied 463,724 15,857 13,566 493,147 Non-owner occupied 785,933 10,301 7,109 803,343 Consumer and other 208,442 2,982 1,707 213,131 Total loans, excluding purchased credit impaired loans $ 3,591,133 $ 90,911 $ 42,183 $ 3,724,227 Purchased credit impaired loans Commercial and industrial $ — $ 828 $ 483 $ 1,311 Construction — 3,719 888 4,607 Residential real estate: 1-to-4 family mortgage — 13,644 4,428 18,072 Residential line of credit — — — — Multi-family mortgage — — — — Commercial real estate: Owner occupied — 4,080 1,896 5,976 Non-owner occupied — 5,608 7,929 13,537 Consumer and other — 16,122 2,939 19,061 Total purchased credit impaired loans $ — $ 44,001 $ 18,563 $ 62,564 Total loans $ 3,591,133 $ 134,912 $ 60,746 $ 3,786,791 December 31, 2018 Pass Watch Substandard Total Loans, excluding purchased credit impaired loans Commercial and industrial $ 804,447 $ 52,624 $ 8,564 $ 865,635 Construction 543,953 5,012 1,331 550,296 Residential real estate: 1-to-4 family mortgage 519,541 8,697 8,200 536,438 Residential line of credit 186,753 1,039 2,688 190,480 Multi-family mortgage 75,381 76 — 75,457 Commercial real estate: Owner occupied 456,694 16,765 14,049 487,508 Non-owner occupied 667,447 8,881 7,654 683,982 Consumer and other 204,279 2,763 1,674 208,716 Total loans, excluding purchased credit impaired loans $ 3,458,495 $ 95,857 $ 44,160 $ 3,598,512 Purchased credit impaired loans Commercial and industrial $ — $ 964 $ 484 $ 1,448 Construction — 3,229 2,526 5,755 Residential real estate: 1-to-4 family mortgage — 14,681 4,696 19,377 Residential line of credit — — — — Multi-family mortgage — — — — Commercial real estate: Owner occupied — 4,110 1,906 6,016 Non-owner occupied — 8,266 8,000 16,266 Consumer and other — 15,422 4,715 20,137 Total purchased credit impaired loans $ — $ 46,672 $ 22,327 $ 68,999 Total loans $ 3,458,495 $ 142,529 $ 66,487 $ 3,667,511 Nonperforming loans include loans that are no longer accruing interest (nonaccrual 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. PCI loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. However, these loans are considered to be performing, even though they may be contractually past due, as any non-payment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period covered loan loss provision or future period yield adjustments. The accrual of interest is discontinued on PCI loans if management can no longer reliably estimate future cash flows on the loan. No PCI loans were classified as nonaccrual at March 31, 2019 or December 31, 2018 as the carrying value of the respective loan or pool of loans cash flows were considered estimable and probable of collection. The following tables provide 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, 2019 and December 31, 2018 : March 31, 2019 30-89 days past due 90 days or more and accruing interest Non-accrual loans Loans current on payments and accruing interest Purchased Credit Impaired loans Total Commercial and industrial $ 2,998 $ 37 $ 342 $ 883,657 $ 1,311 $ 888,345 Construction 1,014 — 275 533,169 4,607 539,065 Residential real estate: 1-to-4 family mortgage 1,470 648 3,107 528,942 18,072 552,239 Residential line of credit 730 487 973 185,225 — 187,415 Multi-family mortgage — — — 71,532 — 71,532 Commercial real estate: Owner occupied 162 117 1,671 491,197 5,976 499,123 Non-owner occupied 795 57 6,973 795,518 13,537 816,880 Consumer and other 1,875 539 380 210,337 19,061 232,192 Total $ 9,044 $ 1,885 $ 13,721 $ 3,699,577 $ 62,564 $ 3,786,791 December 31, 2018 30-89 days past due 90 days or more and accruing interest Non-accrual loans Loans current on payments and accruing interest Purchased Credit Impaired loans Total Commercial and industrial $ 999 $ 65 $ 438 $ 864,133 $ 1,448 $ 867,083 Construction 109 — 283 549,904 5,755 556,051 Residential real estate: 1-to-4 family mortgage 4,919 737 2,704 528,078 19,377 555,815 Residential line of credit 726 957 804 187,993 — 190,480 Multi-family mortgage — — — 75,457 — 75,457 Commercial real estate: Owner occupied 407 197 2,423 484,481 6,016 493,524 Non-owner occupied 61 77 6,885 676,959 16,266 700,248 Consumer and other 1,987 1,008 148 205,573 20,137 228,853 Total $ 9,208 $ 3,041 $ 13,685 $ 3,572,578 $ 68,999 $ 3,667,511 Impaired loans recognized in conformity with ASC 310 at March 31, 2019 and December 31, 2018 , segregated by class, were as follows: March 31, 2019 Recorded investment Unpaid principal Related allowance With a related allowance recorded: Commercial and industrial $ 3,186 $ 3,186 $ 709 Construction — — — Residential real estate: 1-to-4 family mortgage 405 405 136 Residential line of credit — — — Multi-family mortgage — — — Commercial real estate: Owner occupied 189 218 42 Non-owner occupied 5,650 5,650 299 Consumer and other — — — Total $ 9,430 $ 9,459 $ 1,186 With no related allowance recorded Commercial and industrial $ 859 $ 1,022 $ — Construction 1,220 1,264 — Residential real estate: 1-to-4 family mortgage 469 779 — Residential line of credit 605 613 — Multi-family mortgage — — — Commercial real estate: Owner occupied 1,865 2,619 — Non-owner occupied 1,049 1,781 — Consumer and other 71 71 — Total $ 6,138 $ 8,149 $ — Total impaired loans $ 15,568 $ 17,608 $ 1,186 December 31, 2018 Recorded investment Unpaid principal Related allowance With a related allowance recorded: Commercial and industrial $ 618 $ 732 $ 3 Construction — — — Residential real estate: 1-to-4 family mortgage 145 145 7 Residential line of credit — — — Multi-family mortgage — — — Commercial real estate: Owner occupied 560 641 53 Non-owner occupied 5,686 5,686 205 Consumer and other — — — Total $ 7,009 $ 7,204 $ 268 With no related allowance recorded: Commercial and industrial $ 1,229 $ 1,281 $ — Construction 1,221 1,262 — Residential real estate: 1-to-4 family mortgage 842 1,151 — Residential line of credit 245 249 — Multi-family mortgage — — — Commercial real estate: Owner occupied 2,048 2,780 — Non-owner occupied 1,049 1,781 — Consumer and other 73 73 — Total $ 6,707 $ 8,577 $ — Total impaired loans $ 13,716 $ 15,781 $ 268 Average recorded investment and interest income on a cash basis recognized during the three months ended March 31, 2019 and 2018 on impaired loans, segregated by class, were as follows: Three months ended March 31, 2019 Average recorded investment Interest income recognized (cash basis) With a related allowance recorded: Commercial and industrial $ 1,902 $ 38 Construction — — Residential real estate: 1-to-4 family mortgage 275 2 Residential line of credit — — Multi-family mortgage — — Commercial real estate: Owner occupied 375 2 Non-owner occupied 5,668 — Consumer and other — — Total $ 8,220 $ 42 With no related allowance recorded: Commercial and industrial $ 1,044 $ 14 Construction 1,221 48 Residential real estate: 1-to-4 family mortgage 656 8 Residential line of credit 425 2 Multi-family mortgage — — Commercial real estate: Owner occupied 1,957 28 Non-owner occupied 1,049 — Consumer and other 72 2 Total $ 6,424 $ 102 Total impaired loans $ 14,644 $ 144 Three months ended March 31, 2018 With a related allowance recorded: Commercial and industrial $ 53 $ 1 Construction — — Residential real estate: 1-to-4 family mortgage 193 2 Residential line of credit — — Multi-family mortgage — — Commercial real estate: Owner occupied 715 6 Non-owner occupied 143 2 Consumer and other — — Total $ 1,104 $ 11 With no related allowance recorded: Commercial and industrial $ 1,430 $ 16 Construction 1,287 30 Residential real estate: 1-to-4 family mortgage 1,185 13 Residential line of credit — — Multi-family mortgage 971 12 Commercial real estate: Owner occupied 1,621 32 Non-owner occupied 1,574 7 Consumer and other 27 — Total $ 8,095 $ 110 Total impaired loans $ 9,199 $ 121 As of March 31, 2019 and December 31, 2018 , the Company has a recorded investment in troubled debt restructurings of $8,953 and $ 6,794 , 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 $63 of specific reserves for those loans at March 31, 2019 and December 31, 2018 and had not committed to lend any additional amounts to these customers for either period end. Of these loans, $2,568 and $ 2,703 were classified as non-accrual loans as of March 31, 2019 and December 31, 2018 , respectively. The following tables present the financial effect of TDRs recorded during the periods indicated: Three Months Ended March 31, 2019 Number of loans Pre-modification outstanding recorded investment Post-modification outstanding recorded investment Charge offs and specific reserves Commercial and industrial 2 $ 3,188 $ 3,188 $ — Total 2 $ 3,188 $ 3,188 $ — Three Months Ended March 31, 2018 Number of loans Pre-modification outstanding recorded investment Post-modification outstanding recorded investment Charge offs and specific reserves Residential real estate: 1-4 family mortgage 1 $ 249 $ 249 — Consumer and other 1 5 5 — Total 2 $ 254 $ 254 $ — 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, 2019 and 2018 . 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, 2019 and 2018 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. |