CREDIT QUALITY ASSESSMENT | Note 4 – CREDIT QUALITY ASSESSMENT Allowance for Loan Losses Summary information on t he allowance for loan loss activity for the period indicated is provided in the following table: Three Months Ended March 31, (In thousands) 2019 2018 Balance at beginning of year $ 53,486 $ 45,257 Provision (credit) for loan losses (128) 1,997 Loan charge-offs (356) (477) Loan recoveries 87 154 Net charge-offs (269) (323) Balance at period end $ 53,089 $ 46,931 The following tables provide information on the activity in t he allowance for loan losses by the respective loan portfolio segment for the period indicated: For the Three Months Ended March 31, 2019 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Commercial Owner Residential Residential (Dollars in thousands) Business AD&C Investor R/E Occupied R/E Consumer Mortgage Construction Total Balance at beginning of year $ 11,377 $ 5,944 $ 17,603 $ 6,307 $ 2,113 $ 8,881 $ 1,261 $ 53,486 Provision (credit) (422) 497 (329) (139) 212 253 (200) (128) Charge-offs (17) - - - (226) (113) - (356) Recoveries 10 - 7 - 44 24 2 87 Net recoveries (charge-offs) (7) - 7 - (182) (89) 2 (269) Balance at end of period $ 10,948 $ 6,441 $ 17,281 $ 6,168 $ 2,143 $ 9,045 $ 1,063 $ 53,089 Total loans $ 769,660 $ 688,939 $ 1,962,879 $ 1,216,713 $ 505,443 $ 1,249,968 $ 176,388 $ 6,569,990 Allowance for loans losses to total loans ratio 1.42% 0.93% 0.88% 0.51% 0.42% 0.72% 0.60% 0.81% Balance of loans specifically evaluated for impairment $ 8,286 $ 3,306 $ 6,845 $ 5,992 na. $ 1,711 $ - $ 26,140 Allowance for loans specifically evaluated for impairment $ 3,624 $ 151 $ 1,315 $ 251 na. $ - $ - $ 5,341 Specific allowance to specific loans ratio 43.74% - 19.21% 4.19% na. - - 20.43% Balance of loans collectively evaluated $ 754,019 $ 685,633 $ 1,945,061 $ 1,210,721 $ 504,219 $ 1,248,247 $ 176,388 $ 6,524,288 Allowance for loans collectively evaluated $ 7,324 $ 6,290 $ 15,966 $ 5,917 $ 2,143 $ 9,045 $ 1,063 $ 47,748 Collective allowance to collective loans ratio 0.97% 0.92% 0.82% 0.49% 0.43% 0.72% 0.60% 0.73% Balance of loans acquired with deteriorated credit quality $ 7,355 $ - $ 10,973 $ - $ 1,224 $ 10 $ - $ 19,562 Allowance for loans acquired with deteriorated credit quality $ - $ - $ - $ - $ - $ - $ - $ - Allowance to loans acquired with deteriorated credit quality ratio na. na. na. na. na. na. na. na. For the Year Ended December 31, 2018 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Commercial Owner Residential Residential (Dollars in thousands) Business AD&C Investor R/E Occupied R/E Consumer Mortgage Construction Total Balance at beginning of year $ 8,711 $ 3,501 $ 14,970 $ 7,178 $ 2,383 $ 7,268 $ 1,246 $ 45,257 Provision (credit) 2,857 2,381 2,677 (871) 203 1,776 - 9,023 Charge-offs (449) - (131) - (611) (225) - (1,416) Recoveries 258 62 87 - 138 62 15 622 Net recoveries (charge-offs) (191) 62 (44) - (473) (163) 15 (794) Balance at end of period $ 11,377 $ 5,944 $ 17,603 $ 6,307 $ 2,113 $ 8,881 $ 1,261 $ 53,486 Total loans $ 796,264 $ 681,201 $ 1,958,395 $ 1,202,903 $ 517,839 $ 1,228,247 $ 186,785 $ 6,571,634 Allowance for loan losses to total loans ratio 1.43% 0.87% 0.90% 0.52% 0.41% 0.72% 0.68% 0.81% Balance of loans specifically evaluated for impairment $ 7,586 $ 3,306 $ 5,355 $ 4,234 na. $ 1,729 $ - $ 22,210 Allowance for loans specifically evaluated for impairment $ 3,594 $ - $ 1,207 $ 123 na. $ - $ - $ 4,924 Specific allowance to specific loans ratio 47.38% - 22.54% 2.91% na. - - 22.17% Balance of loans collectively evaluated $ 780,523 $ 677,895 $ 1,938,712 $ 1,196,487 $ 516,567 $ 1,226,508 $ 186,785 $ 6,523,477 Allowance for loans collectively evaluated $ 7,783 $ 5,944 $ 16,396 $ 6,184 $ 2,113 $ 8,881 $ 1,261 $ 48,562 Collective allowance to collective loans ratio 1.00% 0.88% 0.85% 0.52% 0.41% 0.72% 0.68% 0.74% Balance of loans acquired with deteriorated credit quality $ 8,155 $ - $ 14,328 $ 2,182 $ 1,272 $ 10 $ - $ 25,947 Allowance for loans acquired with deteriorated credit quality $ - $ - $ - $ - $ - $ - $ - $ - Allowance to loan acquired with deteriorated credit quality ratio na. na. na. na. na. na. na. na. The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended: (In thousands) March 31, 2019 December 31, 2018 Impaired loans with a specific allowance $ 17,848 $ 12,876 Impaired loans without a specific allowance 8,292 9,334 Total impaired loans $ 26,140 $ 22,210 Allowance for loan losses related to impaired loans $ 5,341 $ 4,924 Allowance for loan losses related to loans collectively evaluated 47,748 48,562 Total allowance for loan losses $ 53,089 $ 53,486 Average impaired loans for the period $ 24,175 $ 20,211 Contractual interest income due on impaired loans during the period $ 646 $ 2,513 Interest income on impaired loans recognized on a cash basis $ 110 $ 506 Interest income on impaired loans recognized on an accrual basis $ 42 $ 138 The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated: March 31, 2019 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Impaired loans with a specific allowance Non-accruing $ 4,706 $ 1,261 $ 5,117 $ 2,950 $ - $ 14,034 Restructured accruing 105 - - - - 105 Restructured non-accruing 2,151 - 789 769 - 3,709 Balance $ 6,962 $ 1,261 $ 5,906 $ 3,719 $ - $ 17,848 Allowance $ 3,624 $ 151 $ 1,315 $ 251 $ - $ 5,341 Impaired loans without a specific allowance Non-accruing $ 214 $ 1,910 $ 165 $ 840 $ - $ 3,129 Restructured accruing 168 - 774 - 1,432 2,374 Restructured non-accruing 942 135 - 1,433 279 2,789 Balance $ 1,324 $ 2,045 $ 939 $ 2,273 $ 1,711 $ 8,292 Total impaired loans Non-accruing $ 4,920 $ 3,171 $ 5,282 $ 3,790 $ - $ 17,163 Restructured accruing 273 - 774 - 1,432 2,479 Restructured non-accruing 3,093 135 789 2,202 279 6,498 Balance $ 8,286 $ 3,306 $ 6,845 $ 5,992 $ 1,711 $ 26,140 Unpaid principal balance in total impaired loans $ 11,421 $ 4,419 $ 11,397 $ 8,434 $ 3,066 $ 38,737 March 31, 2019 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Average impaired loans for the period $ 7,936 $ 3,306 $ 6,100 $ 5,113 $ 1,720 $ 24,175 Contractual interest income due on impaired loans during the period $ 127 $ 184 $ 179 $ 122 $ 34 Interest income on impaired loans recognized on a cash basis $ 49 $ - $ 4 $ 52 $ 5 Interest income on impaired loans recognized on an accrual basis $ 13 $ - $ 10 $ - $ 19 December 31, 2018 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Impaired loans with a specific allowance Non-accruing $ 4,126 $ - $ 5,117 $ 767 $ - $ 10,010 Restructured accruing 328 - - - - 328 Restructured non-accruing 1,766 - - 772 - 2,538 Balance $ 6,220 $ - $ 5,117 $ 1,539 $ - $ 12,876 Allowance $ 3,594 $ - $ 1,207 $ 123 $ - $ 4,924 Impaired loans without a specific allowance Non-accruing $ 220 $ 3,170 $ 238 $ 1,216 $ - $ 4,844 Restructured accruing 172 - - - 1,442 1,614 Restructured non-accruing 974 136 - 1,479 287 2,876 Balance $ 1,366 $ 3,306 $ 238 $ 2,695 $ 1,729 $ 9,334 Total impaired loans Non-accruing $ 4,346 $ 3,170 $ 5,355 $ 1,983 $ - $ 14,854 Restructured accruing 500 - - - 1,442 1,942 Restructured non-accruing 2,740 136 - 2,251 287 5,414 Balance $ 7,586 $ 3,306 $ 5,355 $ 4,234 $ 1,729 $ 22,210 Unpaid principal balance in total impaired loans $ 11,056 $ 4,419 $ 9,909 $ 6,656 $ 3,081 $ 35,121 December 31, 2018 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Average impaired loans for the period $ 7,685 $ 770 $ 5,696 $ 3,823 $ 2,237 $ 20,211 Contractual interest income due on impaired loans during the period $ 858 $ 495 $ 610 $ 407 $ 143 Interest income on impaired loans recognized on a cash basis $ 215 $ - $ 20 $ 175 $ 96 Interest income on impaired loans recognized on an accrual basis $ 63 $ - $ - $ - $ 75 Credit Quality The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated: March 31, 2019 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Consumer Mortgage Construction Total Non-performing loans and assets: Non-accrual loans (1) $ 8,013 $ 3,306 $ 6,071 $ 5,992 $ 4,081 $ 9,704 $ 156 $ 37,323 Loans 90 days past due - - - 90 - 221 - 311 Restructured loans 273 - 774 - - 1,432 - 2,479 Total non-performing loans 8,286 3,306 6,845 6,082 4,081 11,357 156 40,113 Other real estate owned 39 315 409 - - 647 - 1,410 Total non-performing assets $ 8,325 $ 3,621 $ 7,254 $ 6,082 $ 4,081 $ 12,004 $ 156 $ 41,523 (1) Includes $5.4 million of loans acquired from WashingtonFirst considered performing at the Acquisition Date, the majority of which are collateralized by real estate properties. December 31, 2018 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Consumer Mortgage Construction Total Non-performing loans and assets: Non-accrual loans (1) $ 7,086 $ 3,306 $ 5,355 $ 4,234 $ 4,107 $ 9,336 $ 159 $ 33,583 Loans 90 days past due 49 - - - 219 221 - 489 Restructured loans 500 - - - - 1,442 - 1,942 Total non-performing loans 7,635 3,306 5,355 4,234 4,326 10,999 159 36,014 Other real estate owned 39 315 409 - - 821 - 1,584 Total non-performing assets $ 7,674 $ 3,621 $ 5,764 $ 4,234 $ 4,326 $ 11,820 $ 159 $ 37,598 (1) Includes $4.8 million of loans acquired from WashingtonFirst considered performing at the Acquisition Date, the majority of which are collateralized by real estate properties. March 31, 2019 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Consumer Mortgage Construction Total Past due loans 31-60 days $ 1,417 $ 277 $ 3,669 $ 1,506 $ 1,863 $ 12,508 $ 1,219 $ 22,459 61-90 days 2,682 - 1,815 - 1,572 2,612 477 9,158 > 90 days - - - 90 - 221 - 311 Total past due 4,099 277 5,484 1,596 3,435 15,341 1,696 31,928 Non-accrual loans (1) 8,013 3,306 6,071 5,992 4,081 9,704 156 37,323 Loans acquired with deteriorated credit quality 7,355 - 10,973 - 1,224 10 - 19,562 Current loans 750,193 685,356 1,940,351 1,209,125 496,703 1,224,913 174,536 6,481,177 Total loans $ 769,660 $ 688,939 $ 1,962,879 $ 1,216,713 $ 505,443 $ 1,249,968 $ 176,388 $ 6,569,990 (1) Includes $5.4 million of loans acquired from WashingtonFirst considered performing at the Acquisition Date, the majority of which are collateralized by real estate properties. December 31, 2018 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Consumer Mortgage Construction Total Past due loans 31-60 days $ 2,737 $ 474 $ 3,041 $ 433 $ 3,871 $ 8,181 $ 3,226 $ 21,963 61-90 days - - 789 - 1,477 2,517 - 4,783 > 90 days 49 - - - 219 221 - 489 Total past due 2,786 474 3,830 433 5,567 10,919 3,226 27,235 Non-accrual loans (1) 7,086 3,306 5,355 4,234 4,107 9,336 159 33,583 Loans acquired with deteriorated credit quality 8,155 - 14,328 2,182 1,272 10 - 25,947 Current loans 778,237 677,421 1,934,882 1,196,054 506,893 1,207,982 183,400 6,484,869 Total loans $ 796,264 $ 681,201 $ 1,958,395 $ 1,202,903 $ 517,839 $ 1,228,247 $ 186,785 $ 6,571,634 (1) Includes $4.8 million of loans acquired from WashingtonFirst considered performing at the Acquisition Date, majority of which are collateralized by real estate properties. The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated: March 31, 2019 Commercial Real Estate Commercial Commercial Commercial Owner (In thousands) Commercial AD&C Investor R/E Occupied R/E Total Pass $ 747,335 $ 685,313 $ 1,942,814 $ 1,204,269 $ 4,579,731 Special Mention (1) 2,162 320 1,980 2,140 6,602 Substandard (2) 20,163 3,306 18,085 10,304 51,858 Doubtful - - - - - Total $ 769,660 $ 688,939 $ 1,962,879 $ 1,216,713 $ 4,638,191 (1) Includes $2.0 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date. (2) Includes $17.9 million of purchased credit impaired loans acquired from WashingtonFirst and $9.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date. December 31, 2018 Commercial Real Estate Commercial Commercial Commercial Owner (In thousands) Commercial AD&C Investor R/E Occupied R/E Total Pass $ 773,958 $ 677,574 $ 1,934,886 $ 1,189,903 $ 4,576,321 Special Mention (1) 1,942 321 3,826 2,738 8,827 Substandard (2) 20,364 3,306 19,683 10,262 53,615 Doubtful - - - - - Total $ 796,264 $ 681,201 $ 1,958,395 $ 1,202,903 $ 4,638,763 (1) Includes $4.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date. (2) Includes $24.3 million of purchased credit impaired loans acquired from WashingtonFirst and $7.2 million of loans acquired from WashingtonFirst and considered performing at the Acquisition Date. Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated: March 31, 2019 Residential Real Estate Residential Residential (In thousands) Consumer Mortgage Construction Total Performing $ 501,362 $ 1,238,611 $ 176,232 $ 1,916,205 Non-performing: 90 days past due - 221 - 221 Non-accruing (1) 4,081 9,704 156 13,941 Restructured loans - 1,432 - 1,432 Total $ 505,443 $ 1,249,968 $ 176,388 $ 1,931,799 (1) Includes $1.1 million of consumer loans acquired from WashingtonFirst considered performing at the Acquisition Date. December 31, 2018 Residential Real Estate Residential Residential (In thousands) Consumer Mortgage Construction Total Performing $ 513,513 $ 1,217,248 $ 186,626 $ 1,917,387 Non-performing: 90 days past due 219 221 - 440 Non-accruing (1) 4,107 9,336 159 13,602 Restructured loans - 1,442 - 1,442 Total $ 517,839 $ 1,228,247 $ 186,785 $ 1,932,871 (1) Includes $1.3 million of consumer loans acquired from WashingtonFirst considered performing at the Acquisition Date. During the three months ended March 31, 2019 , the Company restructured $1.8 million in loans that were designated as troubled debt restructurings . No modifications resulted in the redu ction of the principal in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans r estructured during the three months ended March 31, 2019 had specific reserves of $0.3 million . For the year ended December 31, 2018 , the Company restructured $1.6 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2018 had specific reserves of $0.6 million at December 31, 2018 . The commitments to lend additional funds on loans th at have been restructured at March 31, 2019 and December 31, 2018 were not significant. The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated: For the Three Months Ended March 31, 2019 Commercial Real Estate Commercial All Commercial Commercial Owner Other (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Total Troubled debt restructurings Restructured accruing $ - $ - $ 775 $ - $ - $ 775 Restructured non-accruing 261 - 789 - - 1,050 Balance $ 261 $ - $ 1,564 $ - $ - $ 1,825 Specific allowance $ 184 $ - $ 108 $ - $ - $ 292 Restructured and subsequently defaulted $ - $ - $ - $ - $ - $ - For the Year Ended December 31, 2018 Commercial Real Estate Commercial All Commercial Commercial Owner Other (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Total Troubled debt restructurings Restructured accruing $ - $ - $ - $ - $ - $ - Restructured non-accruing 1,464 - - 158 - 1,622 Balance $ 1,464 $ - $ - $ 158 $ - $ 1,622 Specific allowance $ 563 $ - $ - $ - $ - $ 563 Restructured and subsequently defaulted $ - $ - $ - $ - $ - $ - Other Real Estate Owned Other real estate owned totaled $1 .4 million and $1 .6 million at March 31, 2019 and December 31, 2018 , respectively . There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of March 31, 2019 . |