Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4 Loans and Allowance for Credit Losses The Company makes residential mortgage, commercial and consumer loans to customers primarily in Talbot County, Queen Anne’s County, Kent County, Caroline County and Dorchester County in Maryland and in Kent County, Delaware. June 30, December 31, (Dollars in thousands) 2015 2014 Construction $ 80,715 $ 69,157 Residential real estate 278,598 273,336 Commercial real estate 317,131 305,788 Commercial 57,300 52,671 Consumer 7,286 9,794 Total loans 741,030 710,746 Allowance for credit losses (7,917) (7,695) Total loans, net $ 733,113 $ 703,051 Loans are stated at their principal amount outstanding net of any purchase premiums, deferred fees and costs. Interest income on loans is accrued at the contractual rate based on the principal amount outstanding. Fees charged and costs capitalized for originating loans are being amortized substantially on the interest method over the term of the loan. A loan is placed on nonaccrual (i.e., interest income is no longer accrued) when it is specifically determined to be impaired or when principal or interest is delinquent for 90 days or more, unless the loan is well secured and in the process of collection. Any unpaid interest previously accrued on those loans is reversed from income. Interest payments received on nonaccrual loans are applied as a reduction of the loan principal balance unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. A loan is considered impaired if it is probable that the Company will not collect all principal and interest payments according to the loan’s contractual terms. An impaired loan may show deficiencies in the borrower’s overall financial condition, payment history, support available from financial guarantors and/or the fair market value of collateral. The impairment of a loan is measured at the present value of expected future cash flows using the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. Generally, the Company measures impairment on such loans by reference to the fair value of the collateral. Once the amount of impairment has been determined, the uncollectible portion is charged off. Income on impaired loans is recognized on a cash basis, and payments are first applied against the principal balance outstanding (i.e., placing impaired loans on nonaccrual status). Generally, interest income is not recognized on impaired loans unless the likelihood of further loss is remote. The allowance for credit losses may include specific reserves related to impaired loans. Specific reserves remain until charge offs are made. Impaired loans do not include groups of smaller balance homogenous loans such as residential mortgage and consumer installment loans that are evaluated collectively for impairment. Reserves for probable credit losses related to these loans are based on historical loss ratios and are included in the formula portion of the allowance for credit losses. See additional discussion under the caption “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. A loan is considered a troubled debt restructuring (“TDR”) if a borrower is experiencing financial difficulties and a creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. Loans are identified to be restructured when signs of impairment arise such as borrower interest rate reduction request, slowness to pay, or when an inability to repay becomes evident. The terms being offered are evaluated to determine if they are more liberal than those that would be indicated by policy or industry standards for similar, untroubled credits. In those situations where the terms or the interest rates are considered to be more favorable than industry standards or the current underwriting guidelines of the Company’s banking subsidiaries, the loan is classified as a TDR. All loans designated as TDRs are considered impaired loans and may be on either accrual or nonaccrual status. In instances where the loan has been placed on nonaccrual status, six consecutive months of timely payments are required prior to returning the loan to accrual status. All loans classified as TDRs which are restructured and accrue interest under revised terms require a full and comprehensive review of the borrower’s financial condition, capacity for repayment, realistic assessment of collateral values, and the assessment of risk entered into any workout agreement. Current financial information on the borrower, guarantor, and underlying collateral is analyzed to determine if it supports the ultimate collection of principal and interest. For commercial loans, the cash flows are analyzed, both for the underlying project and globally. For consumer loans, updated salary, credit history and cash flow information is obtained. Current market conditions are also considered. Following a full analysis, the determination of the appropriate loan structure is made. Residential Commercial (Dollars in thousands) Construction real estate real estate Commercial Consumer Unallocated Total June 30, 2015 Loans individually evaluated for impairment $ 12,400 $ 10,726 $ 8,896 $ 217 $ 123 $ - $ 32,362 Loans collectively evaluated for impairment 68,315 267,872 308,235 57,083 7,163 - 708,668 Total loans $ 80,715 $ 278,598 $ 317,131 $ 57,300 $ 7,286 $ - $ 741,030 Allowance for credit losses allocated to: Loans individually evaluated for impairment $ 696 $ 336 $ 21 $ 9 $ - $ - $ 1,062 Loans collectively evaluated for impairment 1,156 1,982 2,595 496 168 458 6,855 Total allowance for credit losses $ 1,852 $ 2,318 $ 2,616 $ 505 $ 168 $ 458 $ 7,917 (Dollars in thousands) Construction Residential Commercial Commercial Consumer Unallocated Total December 31, 2014 Loans individually evaluated for impairment $ 10,067 $ 10,403 $ 9,359 $ 188 $ 124 $ - $ 30,141 Loans collectively evaluated for impairment 59,090 262,933 296,429 52,483 9,670 - 680,605 Total loans $ 69,157 $ 273,336 $ 305,788 $ 52,671 $ 9,794 $ - $ 710,746 Allowance for credit losses allocated to: Loans individually evaluated for impairment $ 41 $ 1,099 $ 129 $ 1 $ 3 $ - $ 1,273 Loans collectively evaluated for impairment 1,262 1,735 2,250 447 226 502 6,422 Total allowance for credit losses $ 1,303 $ 2,834 $ 2,379 $ 448 $ 229 $ 502 $ 7,695 Recorded Recorded Quarter-to- Year-to-date Unpaid investment investment date average average principal with no with an Related recorded recorded (Dollars in thousands) balance allowance allowance allowance investment investment June 30, 2015 Impaired nonaccrual loans: Construction $ 12,101 $ 2,657 $ 5,618 $ 661 $ 8,478 $ 8,169 Residential real estate 3,124 2,697 69 69 2,041 2,159 Commercial real estate 4,460 2,668 - - 2,707 2,698 Commercial 187 155 22 9 95 72 Consumer 129 123 - - 123 123 Total 20,001 8,300 5,709 739 13,444 13,221 Impaired accruing TDRs: Construction 4,125 3,312 813 35 4,109 4,064 Residential real estate 7,960 2,396 5,564 267 7,393 6,866 Commercial real estate 6,228 4,731 1,497 21 6,238 6,255 Commercial 40 40 - - 41 43 Consumer - - - - - - Total 18,353 10,479 7,874 323 17,781 17,228 Total impaired loans: Construction 16,226 5,969 6,431 696 12,587 12,233 Residential real estate 11,084 5,093 5,633 336 9,434 9,025 Commercial real estate 10,688 7,399 1,497 21 8,945 8,953 Commercial 227 195 22 9 136 115 Consumer 129 123 - - 123 123 Total $ 38,354 $ 18,779 $ 13,583 $ 1,062 $ 31,225 $ 30,449 June 30, 2014 Recorded Recorded Quarter-to- Year-to-date Unpaid investment investment date average average principal with no with an Related recorded recorded (Dollars in thousands) balance allowance allowance allowance investment investment December 31, 2014 Impaired nonaccrual loans: Construction $ 9,277 $ 6,045 $ - $ - $ 8,040 $ 8,131 Residential real estate 4,664 1,053 2,982 799 3,299 4,719 Commercial real estate 4,703 2,842 280 100 5,034 5,098 Commercial 1,372 136 5 1 598 642 Consumer 129 99 25 3 28 21 Total 20,145 10,175 3,292 903 16,999 18,611 Impaired accruing TDRs: Construction 4,022 3,196 826 41 2,157 1,749 Residential real estate 6,368 668 5,700 300 16,080 16,102 Commercial real estate 6,237 4,774 1,463 29 7,023 7,509 Commercial 47 47 - - 59 66 Consumer - - - - - - Total 16,674 8,685 7,989 370 25,319 25,426 Total impaired loans: Construction 13,299 9,241 826 41 10,197 9,880 Residential real estate 11,032 1,721 8,682 1,099 19,379 20,821 Commercial real estate 10,940 7,616 1,743 129 12,057 12,607 Commercial 1,419 183 5 1 657 708 Consumer 129 99 25 3 28 21 Total $ 36,819 $ 18,860 $ 11,281 $ 1,273 $ 42,318 $ 44,037 1/1/15 Reclassification/ 6/30/15 TDR New Disbursements Charge Transfers TDR Related (Dollars in thousands) Balance TDRs (Payments) offs In/(Out) Payoffs Balance Allowance For the six months ended 6/30/2015 Accruing TDRs Construction $ 4,022 $ - $ (39) $ - $ 142 $ - $ 4,125 $ 35 Residential Real Estate 6,368 1,837 (245) - (78) - 7,882 267 Commercial Real Estate 6,237 - (9) - - - 6,228 21 Commercial 47 - (7) - - - 40 - Consumer - - - - - - - - Total $ 16,674 $ 1,837 $ (300) $ - $ 64 $ - $ 18,275 $ 323 Nonaccrual TDRs Construction $ 3,321 $ - $ (100) $ (579) $ 2,911 $ - $ 5,553 $ 661 Residential Real Estate 3,382 - (18) - (2,911) - 453 - Commercial Real Estate 346 - (4) (40) (302) - - - Commercial - - - - - - - - Consumer 25 - (1) - - - 24 - Total $ 7,074 $ - $ (123) $ (619) $ (302) $ - $ 6,030 $ 661 Total TDRs $ 23,748 $ 1,837 $ (423) $ (619) $ (238) $ - $ 24,305 $ 984 1/1/14 Reclassification/ 6/30/14 TDR New Disbursements Transfers TDR Related (Dollars in thousands) Balance TDRs (Payments) Charge offs In/(Out) Payoffs Balance Allowance For the six months Accruing TDRs Construction $ 1,620 $ - $ (51) $ (314) $ 2,643 $ - $ 3,898 $ 1 Residential Real Estate 14,582 - 1,373 - 398 (158) 16,195 185 Commercial Real Estate 9,791 - (48) (549) (2,844) (1,097) 5,253 6 Commercial 95 - (15) - - (24) 56 - Consumer - - - - - - - - Total $ 26,088 $ - $ 1,259 $ (863) $ 197 $ (1,279) $ 25,402 $ 192 Nonaccrual TDRs Construction $ 3,561 $ - $ (5) $ (35) $ 760 $ - $ 4,281 $ - Residential Real Estate 1,884 - (31) (203) (957) (73) 620 - Commercial Real Estate 842 - (81) (65) - - 696 - Commercial - - - - - - - - Consumer 26 - (1) - - - 25 - Total $ 6,313 $ - $ (118) $ (303) $ (197) $ (73) $ 5,622 $ - Total TDRs $ 32,401 $ - $ 1,141 $ (1,166) $ - $ (1,352) $ 31,024 $ 192 Postmodification outstanding outstanding Number of recorded recorded Related (Dollars in thousands) contracts investment investment allowance TDRs: For the six months ended June 30, 2015 Construction - $ - $ - $ - Residential real estate 10 1,835 1,837 19 Commercial real estate - - - - Commercial - - - - Consumer - - - - Total 10 $ 1,835 $ 1,837 $ 19 For the six months ended June 30, 2014 Construction - $ - $ - $ - Residential real estate - - - - Commercial real estate - - - - Commercial - - - - Consumer - - - - Total - $ - $ - $ - Number of Recorded Related (Dollars in thousands) contracts investment allowance TDRs that subsequently defaulted: For the six months ended June 30, 2015 Construction - $ - $ - Residential real estate - - - Commercial real estate 2 279 - Commercial - - - Consumer - - - Total 2 $ 279 $ - TDRs that subsequently defaulted: For the six months ended June 30, 2014 Construction - $ - $ - Residential real estate - - - Commercial real estate - - - Commercial - - - Consumer - - - Total - $ - $ - Management uses risk ratings as part of its monitoring of the credit quality in the Company’s loan portfolio. Loans that are identified as special mention, substandard or doubtful are adversely rated. They are assigned higher risk ratings than favorably rated loans in the calculation of the formula portion of the allowance for credit losses. Special (Dollars in thousands) Pass/Performing mention Substandard Doubtful Total June 30, 2015 Construction $ 64,209 $ 4,164 $ 12,342 $ - $ 80,715 Residential real estate 257,937 9,905 10,756 - 278,598 Commercial real estate 285,881 21,487 9,029 734 317,131 Commercial 55,280 1,790 230 - 57,300 Consumer 7,126 38 122 - 7,286 Total $ 670,433 $ 37,384 $ 32,479 $ 734 $ 741,030 Special (Dollars in thousands) Pass/Performing mention Substandard Doubtful Total December 31, 2014 Construction $ 52,241 $ 5,643 $ 11,273 $ - $ 69,157 Residential real estate 252,643 6,675 14,018 - 273,336 Commercial real estate 275,573 20,040 10,175 - 305,788 Commercial 50,583 1,885 114 89 52,671 Consumer 9,658 13 123 - 9,794 Total $ 640,698 $ 34,256 $ 35,703 $ 89 $ 710,746 Accruing 30-59 60-89 90 days days days past or more Total past (Dollars in thousands) Current past due due past due due Nonaccrual Total June 30, 2015 Construction $ 72,440 $ - $ - $ - $ - $ 8,275 $ 80,715 Residential real estate 271,659 2,874 1,264 35 4,173 2,766 278,598 Commercial real estate 313,958 - 505 - 505 2,668 317,131 Commercial 57,019 104 - - 104 177 57,300 Consumer 7,095 68 - - 68 123 7,286 Total $ 722,171 $ 3,046 $ 1,769 $ 35 $ 4,850 $ 14,009 $ 741,030 Percent of total loans 97.5 % 0.4 % 0.2 % - % 0.6 % 1.9 % Accruing 30-59 60-89 90 days or days days past more past Total past (Dollars in thousands) Current past due due due due Nonaccrual Total December 31, 2014 Construction $ 61,325 $ 1,786 $ - $ - $ 1,786 $ 6,046 $ 69,157 Residential real estate 263,165 3,351 2,702 83 6,136 4,035 273,336 Commercial real estate 301,695 459 513 - 972 3,121 305,788 Commercial 52,352 47 131 - 178 141 52,671 Consumer 9,619 11 37 4 52 123 9,794 Total $ 688,156 $ 5,654 $ 3,383 $ 87 $ 9,124 $ 13,466 $ 710,746 Percent of total loans 96.8 % 0.8 % 0.5 % - % 1.3 % 1.9 % Management evaluates the adequacy of the allowance for credit losses at least quarterly and adjusts the provision for credit losses based on this analysis. The following tables provide a summary of the activity in the allowance for credit losses allocated by loan class for the three months and six months ended June 30, 2015 and 2014. Residential Commercial (Dollars in thousands) Construction real estate real estate Commercial Consumer Unallocated Total For the three months ended June Allowance for credit losses: Beginning balance $ 1,884 $ 2,124 $ 2,339 $ 441 $ 180 $ 830 $ 7,798 Charge-offs (216) (142) (280) (25) (35) - (698) Recoveries 104 121 2 35 15 - 277 Net charge-offs (112) (21) (278) 10 (20) - (421) Provision 80 215 555 54 8 (372) 540 Ending balance $ 1,852 $ 2,318 $ 2,616 $ 505 $ 168 $ 458 $ 7,917 Residential Commercial (Dollars in thousands) Construction real estate real estate Commercial Consumer Unallocated Total For the three months ended June Allowance for credit losses: Beginning balance $ 1,997 $ 2,086 $ 4,584 $ 677 $ 308 $ 417 $ 10,069 Charge-offs (224) (315) (1,523) (95) (20) - (2,177) Recoveries 1 63 7 157 6 - 234 Net charge-offs (223) (252) (1,516) 62 (14) - (1,943) Provision 474 520 (416) 119 12 241 950 Ending balance $ 2,248 $ 2,354 $ 2,652 $ 858 $ 306 $ 658 $ 9,076 Residential Commercial (Dollars in thousands) Construction real estate real estate Commercial Consumer Unallocated Total For the six months ended June Allowance for credit losses: Beginning balance $ 1,303 $ 2,834 $ 2,379 $ 448 $ 229 $ 502 $ 7,695 Charge-offs (579) (257) (320) (149) (45) - (1,350) Recoveries 107 145 15 82 33 - 382 Net charge-offs (472) (112) (305) (67) (12) - (968) Provision 1,021 (404) 542 124 (49) (44) 1,190 Ending balance $ 1,852 $ 2,318 $ 2,616 $ 505 $ 168 $ 458 $ 7,917 Residential Commercial (Dollars in thousands) Construction real estate real estate Commercial Consumer Unallocated Total For the six months ended June Allowance for credit losses: Beginning balance $ 1,960 $ 3,854 $ 3,029 $ 1,266 $ 243 $ 373 $ 10,725 Charge-offs (241) (987) (1,613) (937) (147) - (3,925) Recoveries 11 106 13 207 14 - 351 Net charge-offs (230) (881) (1,600) (730) (133) - (3,574) Provision 518 (619) 1,223 322 196 285 1,925 Ending balance $ 2,248 $ 2,354 $ 2,652 $ 858 $ 306 $ 658 $ 9,076 Foreclosure Proceedings Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $ 514 |