Loans | LOANS Loans are summarized as follows: Dollars in thousands June 30, December 31, June 30, Commercial $ 176,362 $ 119,088 $ 101,521 Commercial real estate Owner-occupied 239,108 203,047 190,534 Non-owner occupied 455,439 381,921 348,099 Construction and development Land and land development 74,155 72,042 65,702 Construction 22,967 16,584 8,506 Residential real estate Non-jumbo 355,546 265,641 225,919 Jumbo 63,899 65,628 52,105 Home equity 81,192 74,596 75,904 Mortgage warehouse lines 35,068 85,966 80,282 Consumer 37,630 25,534 19,520 Other 9,049 9,489 10,008 Total loans, net of unearned fees 1,550,415 1,319,536 1,178,100 Less allowance for loan losses 12,332 11,674 11,377 Loans, net $ 1,538,083 $ 1,307,862 $ 1,166,723 The outstanding balance and the recorded investment of acquired loans included in the consolidated balance sheet at June 30, 2017 are as follows: Acquired Loans Dollars in thousands Purchased Credit Impaired Purchased Performing Total Outstanding balance $ 6,555 $ 254,721 $ 261,276 Recorded investment Commercial $ 13 $ 34,073 $ 34,086 Commercial real estate Owner-occupied 696 25,073 25,769 Non-owner occupied 1,914 35,967 37,881 Construction and development Land and land development 56 9,895 9,951 Construction — 1,079 1,079 Residential real estate Non-jumbo 1,885 120,704 122,589 Jumbo 1,011 6,591 7,602 Home equity — 3,652 3,652 Consumer — 15,285 15,285 Other — 228 228 Total recorded investment $ 5,575 $ 252,547 $ 258,122 The following table presents a summary of the change in the accretable yield of the PCI loan portfolio for the period from January 1, 2017 to June 30, 2017: Dollars in thousands Accretable yield, January 1, 2017 $ 290 Accretion (86 ) Additions for First Century Bankshares, Inc. acquisition 661 Reclassification of nonaccretable difference due to improvement in expected cash flows — Other changes, net (14 ) Accretable yield, June 30, 2017 $ 851 The following table presents the contractual aging of the recorded investment in past due loans by class as of June 30, 2017 and 2016 and December 31, 2016 . At June 30, 2017 Past Due > 90 days and Accruing Dollars in thousands 30-59 days 60-89 days > 90 days Total Current Commercial $ 372 $ 100 $ 63 $ 535 $ 175,827 $ — Commercial real estate Owner-occupied 300 141 494 935 238,173 — Non-owner occupied 192 343 1,491 2,026 453,413 — Construction and development Land and land development 238 70 3,577 3,885 70,270 — Construction — — — — 22,967 — Residential mortgage Non-jumbo 5,109 2,115 3,752 10,976 344,570 — Jumbo — — — — 63,899 — Home equity 2 343 576 921 80,271 — Mortgage warehouse lines — — — — 35,068 — Consumer 524 135 329 988 36,642 62 Other — — — — 9,049 — Total $ 6,737 $ 3,247 $ 10,282 $ 20,266 $ 1,530,149 $ 62 At December 31, 2016 Past Due > 90 days and Accruing Dollars in thousands 30-59 days 60-89 days > 90 days Total Current Commercial $ 90 $ 86 $ 165 $ 341 $ 118,747 $ — Commercial real estate Owner-occupied 93 — 509 602 202,445 — Non-owner occupied 340 — 65 405 381,516 — Construction and development Land and land development 423 129 3,852 4,404 67,638 — Construction — — — — 16,584 — Residential mortgage Non-jumbo 4,297 1,889 3,287 9,473 256,168 — Jumbo — — — — 65,628 — Home equity — 302 57 359 74,237 — Mortgage warehouse lines — — — — 85,966 — Consumer 308 84 150 542 24,992 — Other — — — — 9,489 — Total $ 5,551 $ 2,490 $ 8,085 $ 16,126 $ 1,303,410 $ — At June 30, 2016 Past Due > 90 days and Accruing Dollars in thousands 30-59 days 60-89 days > 90 days Total Current Commercial $ 318 $ 107 $ 211 $ 636 $ 100,885 $ — Commercial real estate Owner-occupied 157 — 1,278 1,435 189,099 — Non-owner occupied 180 14 — 194 347,905 — Construction and development Land and land development 45 475 4,748 5,268 60,434 — Construction — — — — 8,506 — Residential mortgage Non-jumbo 3,978 950 2,466 7,394 218,525 — Jumbo — — — — 52,105 — Home equity — 77 447 524 75,380 — Mortgage warehouse lines — — — — 80,282 — Consumer 145 52 84 281 19,239 — Other — — — — 10,008 — Total $ 4,823 $ 1,675 $ 9,234 $ 15,732 $ 1,162,368 $ — Nonaccrual loans: The following table presents the nonaccrual loans included in the net balance of loans at June 30, 2017 , December 31, 2016 and June 30, 2016 . June 30, December 31, Dollars in thousands 2017 2016 2016 Commercial $ 786 $ 399 $ 298 Commercial real estate Owner-occupied 495 1,278 509 Non-owner occupied 1,556 4,495 4,336 Construction and development Land & land development 3,613 5,400 4,465 Construction — — — Residential mortgage Non-jumbo 6,155 2,937 4,621 Jumbo — — — Home equity 705 594 194 Mortgage warehouse lines — — — Consumer 329 91 151 Total $ 13,639 $ 15,194 $ 14,574 Impaired loans: Impaired loans include the following: ▪ Loans which we risk-rate (consisting of loan relationships having aggregate balances in excess of $ 2.5 million , or loans exceeding $ 500,000 and exhibiting credit weakness) through our normal loan review procedures and which, based on current information and events, it is probable that we will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement. Risk-rated loans with insignificant delays or insignificant short falls in the amount of payments expected to be collected are not considered to be impaired. ▪ Loans that have been modified in a troubled debt restructuring. Both commercial and consumer loans are deemed impaired upon being contractually modified in a troubled debt restructuring. Troubled debt restructurings typically result from our loss mitigation activities and occur when we grant a concession to a borrower who is experiencing financial difficulty in order to minimize our economic loss and to avoid foreclosure or repossession of collateral. Once restructured, a loan is generally considered impaired until its maturity, regardless of whether the borrower performs under the modified terms. Although such a loan may be returned to accrual status if the criteria set forth in our accounting policy are met, the loan would continue to be evaluated for an asset-specific allowance for loan losses and we would continue to report the loan in the impaired loan table below. The following tables present loans individually evaluated for impairment at June 30, 2017 , December 31, 2016 and June 30, 2016 . June 30, 2017 Dollars in thousands Recorded Investment Unpaid Principal Balance Related Allowance Average Impaired Balance Interest Income Recognized while impaired Without a related allowance Commercial $ 264 $ 264 $ — $ 269 $ 10 Commercial real estate Owner-occupied 498 498 — 504 29 Non-owner occupied 9,848 9,849 — 10,563 518 Construction and development Land & land development 4,601 4,601 — 4,891 94 Construction — — — — — Residential real estate Non-jumbo 4,330 4,340 — 4,093 198 Jumbo 3,610 3,608 — 3,617 172 Home equity 523 523 — 523 25 Mortgage warehouse lines — — — — — Consumer 33 34 — 36 3 Total without a related allowance $ 23,707 $ 23,717 $ — $ 24,496 $ 1,049 With a related allowance Commercial $ 267 $ 267 $ 267 $ 269 $ — Commercial real estate Owner-occupied 6,817 6,817 196 6,832 278 Non-owner occupied — — — — — Construction and development Land & land development 1,475 1,476 531 1,487 56 Construction — — — — — Residential real estate Non-jumbo 2,209 2,211 315 2,127 105 Jumbo 846 846 18 849 42 Home equity — — — — — Mortgage warehouse lines — — — — — Consumer — — — — — Total with a related allowance $ 11,614 $ 11,617 $ 1,327 $ 11,564 $ 481 Total Commercial $ 23,770 $ 23,772 $ 994 $ 24,815 $ 985 Residential real estate 11,518 11,528 333 11,209 542 Consumer 33 34 — 36 3 Total $ 35,321 $ 35,334 $ 1,327 $ 36,060 $ 1,530 December 31, 2016 Dollars in thousands Recorded Investment Unpaid Principal Balance Related Allowance Average Impaired Balance Interest Income Recognized while impaired Without a related allowance Commercial $ 285 $ 285 $ — $ 247 $ 10 Commercial real estate Owner-occupied 520 520 — 534 31 Non-owner occupied 10,203 10,205 — 10,675 294 Construction and development Land & land development 5,227 5,227 — 5,270 80 Construction — — — — — Residential real estate Non-jumbo 4,055 4,065 — 3,910 193 Jumbo 3,640 3,639 — 3,693 175 Home equity 524 523 — 523 22 Mortgage warehouse lines — — — — — Consumer 44 44 — 50 5 Total without a related allowance $ 24,498 $ 24,508 $ — $ 24,902 $ 810 With a related allowance Commercial $ — $ — $ — $ — $ — Commercial real estate Owner-occupied 6,864 6,864 347 6,879 269 Non-owner occupied 1,311 1,311 197 1,327 43 Construction and development Land & land development 2,066 2,066 585 2,074 80 Construction — — — — — Residential real estate Non-jumbo 2,055 2,057 251 1,851 78 Jumbo 853 853 24 862 44 Home equity — — — — — Mortgage warehouse lines — — — — — Consumer — — — — — Total with a related allowance $ 13,149 $ 13,151 $ 1,404 $ 12,993 $ 514 Total Commercial $ 26,476 $ 26,478 $ 1,129 $ 27,006 $ 807 Residential real estate 11,127 11,137 275 10,839 512 Consumer 44 44 — 50 5 Total $ 37,647 $ 37,659 $ 1,404 $ 37,895 $ 1,324 June 30, 2016 Dollars in thousands Recorded Investment Unpaid Principal Balance Related Allowance Average Impaired Balance Interest Income Recognized while impaired Without a related allowance Commercial $ 798 $ 798 $ — $ 199 $ 9 Commercial real estate Owner-occupied 5,305 5,305 — 5,375 208 Non-owner occupied 10,469 10,470 — 10,912 297 Construction and development Land & land development 7,364 7,365 — 7,408 162 Construction — — — — — Residential real estate Non-jumbo 3,866 3,880 — 3,780 169 Jumbo 3,713 3,711 — 3,725 177 Home equity 709 709 — 709 21 Mortgage warehouse lines — — — — — Consumer 53 53 — 57 5 Total without a related allowance $ 32,277 $ 32,291 $ — $ 32,165 $ 1,048 With a related allowance Commercial $ 19 $ 19 $ 19 $ — $ — Commercial real estate Owner-occupied 2,882 2,882 13 2,906 112 Non-owner occupied 1,859 1,859 144 1,850 72 Construction and development Land & land development 1,153 1,153 141 1,152 — Construction — — — — — Residential real estate Non-jumbo 2,331 2,332 179 2,335 112 Jumbo 864 864 28 866 43 Home equity — — — — — Mortgage warehouse lines — — — — — Consumer — — — — — Total with a related allowance $ 9,108 $ 9,109 $ 524 $ 9,109 $ 339 Total Commercial $ 29,849 $ 29,851 $ 317 $ 29,802 $ 860 Residential real estate 11,483 11,496 207 11,415 522 Consumer 53 53 — 57 5 Total $ 41,385 $ 41,400 $ 524 $ 41,274 $ 1,387 Included in impaired loans are TDRs of $26.9 million , of which $26.5 million were current with respect to restructured contractual payments at June 30, 2017 , and $28.6 million , of which $28.1 million were current with respect to restructured contractual payments at December 31, 2016 . There were no commitments to lend additional funds under these restructurings at either balance sheet date. The following table presents by class the TDRs that were restructured during the three and six months ended June 30, 2017 and June 30, 2016 . Generally, the modifications were extensions of term, modifying the payment terms from principal and interest to interest only for an extended period, or reduction in interest rate. All TDRs are evaluated individually for allowance for loan loss purposes. For the Three Months Ended For the Three Months Ended Dollars in thousands Number of Modifications Pre-modification Recorded Investment Post-modification Recorded Investment Number of Modifications Pre-modification Recorded Investment Post-modification Recorded Investment Residential real estate Non-jumbo 1 206 206 2 145 145 Consumer — — — 1 2 2 Total 1 $ 206 $ 206 3 $ 147 $ 147 For the Six Months Ended For the Six Months Ended Dollars in thousands Number of Modifications Pre-modification Recorded Investment Post-modification Recorded Investment Number of Modifications Pre-modification Recorded Investment Post-modification Recorded Investment Residential real estate Non-jumbo 5 1,087 1,087 3 395 395 Consumer — — — 1 2 2 Total 5 $ 1,087 $ 1,087 4 $ 397 $ 397 During the three months and six months ended June 30, 2017, three non-jumbo residential real estate loans that had been restructured within the past twelve months defaulted. A default is considered as either the loan was past due 30 days or more at any time during the period, or the loan was fully or partially charged off during the period. The following table details the activity regarding TDRs by loan type for the three months and six months ended June 30, 2017 , and the related allowance on TDRs. For the Three Months Ended June 30, 2017 Construction & Land Development Commercial Real Estate Residential Real Estate Dollars in thousands Land & Land Develop- ment Construc- tion Commer- cial Owner Occupied Non- Owner Occupied Non- jumbo Jumbo Home Equity Mortgage Warehouse Lines Con- sumer Other Total Troubled debt restructurings Balance April 1, 2017 $ 3,514 $ — $ 178 $ 7,355 $ 6,591 $ 6,214 $ 4,478 $ 523 $ — $ 40 $ — $ 28,893 Additions — — — — — 206 — — — — — 206 Charge-offs — — — — — — — — — — — — Net (paydowns) advances (607 ) — (7 ) (40 ) (1,346 ) (220 ) (22 ) — — (6 ) — (2,248 ) Transfer into foreclosed properties — — — — — — — — — — — — Refinance out of TDR status — — — — — — — — — — — — Balance, June 30, 2017 $ 2,907 $ — $ 171 $ 7,315 $ 5,245 $ 6,200 $ 4,456 $ 523 $ — $ 34 $ — $ 26,851 Allowance related to troubled debt restructurings $ 733 $ — $ — $ 196 $ — $ 315 $ 18 $ — $ — $ — $ — $ 1,262 For the Six Months Ended June 30, 2017 Construction & Land Development Commercial Real Estate Residential Real Estate Dollars in thousands Land & Land Develop- ment Construc- tion Commer- cial Owner Occupied Non- Owner Occupied Non- jumbo Jumbo Home Equity Mortgage Warehouse Lines Con- sumer Other Total Troubled debt restructurings Balance January 1, 2017 $ 3,866 $ — $ 183 $ 7,383 $ 6,714 $ 5,417 $ 4,493 $ 523 $ — $ 44 $ — $ 28,623 Additions — — — — — 1,087 — — — — — 1,087 Charge-offs — — — — (65 ) — — — — — — (65 ) Net (paydowns) advances (959 ) — (12 ) (68 ) (1,404 ) (304 ) (37 ) — — (10 ) — (2,794 ) Transfer into foreclosed properties — — — — — — — — — — — — Refinance out of TDR status — — — — — — — — — — — — Balance, June 30, 2017 $ 2,907 $ — $ 171 $ 7,315 $ 5,245 $ 6,200 $ 4,456 $ 523 $ — $ 34 $ — $ 26,851 Allowance related to troubled debt restructurings $ 733 $ — $ — $ 196 $ — $ 315 $ 18 $ — $ — $ — $ — $ 1,262 The following table presents the recorded investment in construction and development, commercial, and commercial real estate loans which are generally evaluated based upon our internal risk ratings. Loan Risk Profile by Internal Risk Rating Construction and Development Commercial Real Estate Land and Land Development Construction Commercial Owner Occupied Non-Owner Occupied Mortgage Warehouse Lines Dollars in thousands 6/30/2017 12/31/2016 6/30/2017 12/31/2016 6/30/2017 12/31/2016 6/30/2017 12/31/2016 6/30/2017 12/31/2016 6/30/2017 12/31/2016 Pass $ 67,205 $ 64,144 $ 22,967 $ 16,584 $ 171,525 $ 117,214 $ 231,047 $ 201,113 $ 446,434 $ 375,181 $ 35,068 $ 85,966 OLEM (Special Mention) 1,893 2,097 — — 4,040 1,471 5,671 567 2,040 1,381 — — Substandard 5,057 5,801 — — 797 403 2,390 1,367 6,965 5,359 — — Doubtful — — — — — — — — — — — — Loss — — — — — — — — — — — — Total $ 74,155 $ 72,042 $ 22,967 $ 16,584 $ 176,362 $ 119,088 $ 239,108 $ 203,047 $ 455,439 $ 381,921 $ 35,068 $ 85,966 The following table presents the recorded investment in consumer, residential real estate, and home equity loans, which are generally evaluated based on the aging status of the loans, which was previously presented, and payment activity. Performing Nonperforming Dollars in thousands 6/30/2017 12/31/2016 6/30/2016 6/30/2017 12/31/2016 6/30/2016 Residential real estate Non-jumbo $ 349,391 $ 261,020 $ 222,982 $ 6,155 $ 4,621 $ 2,937 Jumbo 63,899 65,628 52,105 — — — Home Equity 80,487 74,402 75,310 705 194 594 Consumer 37,190 25,368 19,418 440 166 102 Other 9,049 9,489 10,008 — — — Total $ 540,016 $ 435,907 $ 379,823 $ 7,300 $ 4,981 $ 3,633 Loan commitments: ASC Topic 815, Derivatives and Hedging, requires that commitments to make mortgage loans should be accounted for as derivatives if the loans are to be held for sale, because the commitment represents a written option and accordingly is recorded at the fair value of the option liability. |