Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4 . L oans The following table summarizes loans receivable, net, by category at March 31, 2016 and December 31, 2015: March 31, December 31, (in thousands) 2016 2015 Residential real estate $ 136,254 $ 130,696 Commercial real estate 247,867 245,198 Construction, land acquisition and development 20,432 30,843 Commercial and industrial 142,511 149,826 Consumer 128,825 128,533 State and political subdivisions 49,759 46,056 Total loans, gross 725,648 731,152 Unearned income (93 ) (98 ) Net deferred loan costs 2,603 2,662 Allowance for loan and lease losses (8,635 ) (8,790 ) Loans, net $ 719,523 $ 724,926 FNCB has granted loans, letters of credit and lines of credit to certain of its executive officers and directors as well as to certain related parties of executive officers and directors. For more information about related party transactions, refer to Note 7 – “Related Party Transactions” to these consolidated financial statements. FNCB originates one- to four-family mortgage loans for sale in the secondary market. During the quarter ended March 31, 2016, one-to four-family mortgages sold on the secondary market were $1.7 million. FNCB retains servicing rights on these mortgages. At March 31, 2016 and December 31, 2015, there were $455 thousand and $683 thousand in one-to four-family residential mortgage loans held for sale, respectively. FNCB does not have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, and bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios. There were no material changes to the risk characteristics of FNCB’s loan segments, loan classification and credit grading systems and methodology for determining the adequacy of the ALLL during the three months ended March 31, 2016. Refer to Note 2 to FNCB’s consolidated financial statements included in the 2015 Annual Report on Form 10-K for information about the risk characteristics related to FNCB’s loan segments, loan classification and credit grading systems and methodology for determing the adequacy of the ALLL. Each quarter, management evaluates the ALLL and adjusts the ALLL as appropriate through a provision or credit for loan losses. While management uses the best information available to make evaluations, future adjustments to the ALLL may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, as an integral part of its examination process, bank regulators periodically review the ALLL. These regulators may require FNCB to adjust the ALLL based on their analysis of information available at the time of examination. The following table summarizes activity in the ALLL by loan category for the three months ended March 31, 2016 and 2015: Real Estate (in thousands) Residential Commercial Construction, Commercial Consumer State and Unallocated Total Three months ended March 31, 2016: Allowance for loan losses: Beginning balance, January 1, 2016 $ 1,333 $ 3,346 $ 853 $ 1,205 $ 1,494 $ 485 $ 74 $ 8,790 Charge-offs (24 ) (251 ) - (568 ) (305 ) - - (1,148 ) Recoveries 1 1 - 94 201 - - 297 Provisions (credits) (100 ) 195 (200 ) 591 (11 ) 295 (74 ) 696 Ending balance, March 31, 2016 $ 1,210 $ 3,291 $ 653 $ 1,322 $ 1,379 $ 780 $ - $ 8,635 Three months ended March 31, 2015: Allowance for loan losses: Beginning balance, January 1, 2015 $ 1,772 $ 4,663 $ 665 $ 2,104 $ 1,673 $ 598 $ 45 $ 11,520 Charge-offs (68 ) - - (70 ) (139 ) - - (277 ) Recoveries 6 2 - 65 122 - - 195 Provisions (credits) (179 ) (334 ) 99 (101 ) 42 (15 ) (6 ) (494 ) Ending balance, March 31, 2015 $ 1,531 $ 4,331 $ 764 $ 1,998 $ 1,698 $ 583 $ 39 $ 10,944 The following table represents the allocation of the ALLL and the related loan balance, by loan category, disaggregated based on the impairment methodology at March 31, 2016 and December 31, 2015: Real Estate (in thousands) Residential Commercial Construction, Commercial Consumer State and Unallocated Total March 31, 2016 Allowance for loan losses: Individually evaluated for impairment $ 54 $ 279 $ - $ - $ 1 $ - $ - $ 334 Collectively evaluated for impairment 1,156 3,012 653 1,322 1,378 780 - 8,301 Total $ 1,210 $ 3,291 $ 653 $ 1,322 $ 1,379 $ 780 $ - $ 8,635 Loans receivable: Individually evaluated for impairment $ 2,741 $ 3,749 $ 443 $ 199 $ 301 $ - $ - $ 7,433 Collectively evaluated for impairment 133,513 244,118 19,989 142,312 128,524 49,759 - 718,215 Total $ 136,254 $ 247,867 $ 20,432 $ 142,511 $ 128,825 $ 49,759 $ - $ 725,648 December 31, 2015 Allowance for loan losses: Individually evaluated for impairment $ 92 $ 287 $ 1 $ - $ 1 $ - $ - $ 381 Collectively evaluated for impairment 1,241 3,059 852 1,205 1,493 485 74 8,409 Total $ 1,333 $ 3,346 $ 853 $ 1,205 $ 1,494 $ 485 $ 74 $ 8,790 Loans receivable: Individually evaluated for impairment $ 2,930 $ 3,831 $ 646 $ 203 $ 351 $ - $ - $ 7,961 Collectively evaluated for impairment 127,766 241,367 30,197 149,623 128,182 46,056 - 723,191 Total $ 130,696 $ 245,198 $ 30,843 $ 149,826 $ 128,533 $ 46,056 $ - $ 731,152 Credit Quality Indicators – Commercial Loans Management continuously monitors the credit quality of FNCB’s commercial loans by regularly reviewing certain credit quality indicators. Management utilizes credit risk ratings as the key credit quality indicator for evaluating the credit quality of FNCB’s loan receivables. FNCB’s loan rating system assigns a degree of risk to commercial loans 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. Management analyzes these non-homogeneous loans individually by grading the loans as to credit risk and probability of collection for each type of loan. Commercial and industrial loans include commercial indirect auto loans which are not individually risk rated, and construction, land acquisition and development loans include residential construction loans which are also not individually risk rated. These loans are monitored on a pool basis due to their homogeneous nature as described in “Credit Quality Indicators – Other Loans” below. FNCB risk rates certain residential real estate loans and consumer loans that are part of a larger commercial relationship using its credit grading system as described in “Credit Quality Indicators – Commercial Loans.” The grading system contains the following basic risk categories: 1. Minimal Risk 2. Above Average Credit Quality 3. Average Risk 4. Acceptable Risk 5. Pass - Watch 6. Special Mention 7. Substandard - Accruing 8. Substandard - Non-Accrual 9. Doubtful 10. Loss This analysis is performed on a quarterly basis using the following definitions for risk ratings: Pass - Assets rated 1 through 5 are considered pass ratings. These assets show no current or potential problems and are considered fully collectible. All such loans are considered collectively for ALLL calculation purposes. However, accruing TDRs that have been performing for an extended period of time, do not represent a higher risk of loss, and have been upgraded to a pass rating are evaluated individually for impairment. Special Mention – Assets classified as special mention do not currently expose FNCB to a sufficient degree of risk to warrant an adverse classification but do possess credit deficiencies or potential weaknesses deserving close attention. Special Mention assets have a potential weakness or pose an unwarranted financial risk which, if not corrected, could weaken the asset and increase risk in the future. Substandard - Assets classified as substandard have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that FNCB will sustain some loss if the deficiencies are not corrected. Doubtful - Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable based on current circumstances. Loss - Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Credit Quality Indicators – Other Loans Certain residential real estate loans, consumer loans, and commercial indirect auto loans are monitored on a pool basis due to their homogeneous nature. Loans that are delinquent 90 days or more are placed on non-accrual status unless collection of the loan is in process and reasonably assured. FNCB utilizes accruing versus non-accrual status as the credit quality indicator for these loan pools. The following tables present the recorded investment in loans receivable by loan category and credit quality indicator at March 31, 2016 and December 31, 2015: Credit Quality Indicators March 31, 2016 Commercial Loans Other Loans Special Subtotal Accruing Non-accrual Subtotal Total Pass Mention Substandard Doubtful Loss Commercial Loans Loans Other Loans Residential real estate $ 24,378 $ 390 $ 1,015 $ - $ - $ 25,783 $ 109,545 $ 926 $ 110,471 $ 136,254 Commercial real estate 229,731 9,989 8,147 - - 247,867 - - - 247,867 Construction, land acquisition and development 13,496 355 4,799 - - 18,650 1,782 - 1,782 20,432 Commercial and industrial 134,559 998 2,025 - - 137,582 4,924 5 4,929 142,511 Consumer 4,904 5 39 - - 4,948 123,580 297 123,877 128,825 State and political subdivisions 43,374 5,947 438 - - 49,759 - - - 49,759 Total $ 450,442 $ 17,684 $ 16,463 $ - $ - $ 484,589 $ 239,831 $ 1,228 $ 241,059 $ 725,648 Credit Quality Indicators December 31, 2015 Commercial Loans Other Loans Special Subtotal Accruing Non-accrual Subtotal Total Pass Mention Substandard Doubtful Loss Commercial Loans Loans Other Loans Residential real estate $ 21,018 $ 449 $ 984 $ - $ - $ 22,451 $ 107,204 $ 1,041 $ 108,245 $ 130,696 Commercial real estate 225,850 11,356 7,992 - - 245,198 - - - 245,198 Construction, land acquisition and development 23,946 358 5,137 - - 29,441 1,402 - 1,402 30,843 Commercial and industrial 142,242 595 2,209 - - 145,046 4,775 5 4,780 149,826 Consumer 2,747 9 39 - - 2,795 125,392 346 125,738 128,533 State and political subdivisions 45,464 120 472 - - 46,056 - - - 46,056 Total $ 461,267 $ 12,887 $ 16,833 $ - $ - $ 490,987 $ 238,773 $ 1,392 $ 240,165 $ 731,152 Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The recorded investment in these non-accrual loans was $3.6 million and $3.8 million at March 31, 2016 and December 31, 2015, respectively. Generally, loans are placed on non-accrual status when they become 90 days or more delinquent, and remain on non-accrual status until they are brought current, have six months of performance under the loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on a non-accrual status. There were no loans past due 90 days or more and still accruing at March 31, 2016 and December 31, 2015. The following tables present the delinquency status of past due and non-accrual loans at March 31, 2016 and December 31, 2015: March 31, 2016 Delinquency Status 0-29 Days 30-59 Days 60-89 Days >/= 90 Days (in thousands) Past Due Past Due Past Due Past Due Total Performing (accruing) loans: Real estate: Residential real estate $ 134,780 $ 333 $ - $ - $ 135,113 Commercial real estate 245,591 28 610 - 246,229 Construction, land acquisition and development 20,095 6 - - 20,101 Total real estate 400,466 367 610 - 401,443 Commercial and industrial 141,876 473 - - 142,349 Consumer 127,637 725 166 - 128,528 State and political subdivisions 49,759 - - - 49,759 Total performing (accruing) loans 719,738 1,565 776 - 722,079 Non-accrual loans: Real estate: Residential real estate 277 146 108 610 1,141 Commercial real estate 1,496 30 112 - 1,638 Construction, land aquisition and development 331 - - - 331 Total real estate 2,104 176 220 610 3,110 Commercial and industrial 97 - - 65 162 Consumer 106 35 47 109 297 State and political subdivisions - - - - - Total non-accrual loans 2,307 211 267 784 3,569 Total loans receivable $ 722,045 $ 1,776 $ 1,043 $ 784 $ 725,648 December 31, 2015 Delinquency Status 0-29 Days 30-59 Days 60-89 Days >/= 90 Days (in thousands) Past Due Past Due Past Due Past Due Total Performing (accruing) loans: Real estate: Residential real estate $ 129,206 $ 51 $ 225 $ - $ 129,482 Commercial real estate 243,168 53 286 - 243,507 Construction, land acquisition and development 30,475 26 - - 30,501 Total real estate 402,849 130 511 - 403,490 Commercial and industrial 149,329 236 66 - 149,631 Consumer 126,760 994 433 - 128,187 State and political subdivisions 46,056 - - - 46,056 Total peforming (accruing) loans 724,994 1,360 1,010 - 727,364 Non-accrual loans: Real estate: Residential real estate 923 99 44 148 1,214 Commercial real estate 1,576 - 115 - 1,691 Construction, land acquisition and development 342 - - - 342 Total real estate 2,841 99 159 148 3,247 Commercial and industrial 98 - - 97 195 Consumer 69 21 3 253 346 State and political subdivisions - - - - - Total non-accrual loans 3,008 120 162 498 3,788 Total loans receivable $ 728,002 $ 1,480 $ 1,172 $ 498 $ 731,152 The following tables present a distribution of the recorded investment, unpaid principal balance and the related allowance for FNCB’s impaired loans, which have been analyzed for impairment under ASC 310, at March 31, 2016 and December 31, 2015. Non-accrual loans, other than TDRs, with balances less than the $100 thousand loan relationship threshold are not evaluated individually for impairment and are accordingly not included in the following tables. However, these loans are evaluated collectively for impairment as homogenous pools in the general allowance under ASC Topic 450. Total non-accrual loans, other than TDRs, with balances less than the $100 thousand loan relationship threshold that were evaluated under ASC Topic 450 amounted to $0.8 million at March 31, 2016 and December 31, 2015. March 31, 2016 Unpaid Recorded Principal Related (in thousands) Recorded Investment Balance Related Allowance With no allowance recorded: Real estate: Residential real estate $ 1,301 $ 1,400 $ - Commercial real estate 1,802 2,841 - Construction, land acquisition and development 443 826 - Total real estate loans 3,546 5,067 - Commercial and industrial 199 232 - Consumer - - - State and political subdivisions - - - Total impaired loans with no related allowance recorded 3,745 5,299 - With a related allowance recorded: Real estate: Residential real estate 1,440 1,440 54 Commercial real estate 1,947 1,947 279 Construction, land acquisition and development - - - Total real estate loans 3,387 3,387 333 Commercial and industrial - - - Consumer 301 301 1 State and political subdivisions - - - Total impaired loans with a related allowance recorded 3,688 3,688 334 Total impaired loans: Real estate: Residential real estate 2,741 2,840 54 Commercial real estate 3,749 4,788 279 Construction, land acquisition and development 443 826 - Total real estate loans 6,933 8,454 333 Commercial and industrial 199 232 - Consumer 301 301 1 State and political subdivisions - - - Total impaired loans $ 7,433 $ 8,987 $ 334 December 31, 2015 Unpaid Recorded Principal Related (in thousands) Investment Balance Allowance With no allowance recorded: Real estate: Residential real estate $ 1,042 $ 1,138 $ - Commercial real estate 1,850 2,868 - Construction, land acquisition and development 470 844 - Total real estate loans 3,362 4,850 - Commercial and industrial 124 156 - Consumer - - - State and political subdivisions - - - Total impaired loans with no related allowance recorded 3,486 5,006 - With a related allowance recorded: Real estate: Residential real estate 1,888 1,888 92 Commercial real estate 1,981 1,981 287 Construction, land acquisition and development 176 176 1 Total real estate loans 4,045 4,045 380 Commercial and industrial 79 79 - Consumer 351 351 1 State and political subdivisions - - - Total impaired loans with a related allowance recorded 4,475 4,475 381 Total impaired loans: Real estate: Residential real estate 2,930 3,026 92 Commercial real estate 3,831 4,849 287 Construction, land acquisition and development 646 1,020 1 Total real estate loans 7,407 8,895 380 Commercial and industrial 203 235 - Consumer 351 351 1 State and political subdivisions - - - Total impaired loans $ 7,961 $ 9,481 $ 381 The total recorded investment in impaired loans, which consists of non-accrual loans with an aggregate loan relationship greater than $100,000 and TDRs, amounted to $7.4 million and $8.0 million at March 31, 2016 and December 31, 2015, respectively. The related allowance recorded on impaired loans was $0.3 million at March 31, 2016 and $0.4 million at December 31, 2015. The following table presents the average balance and interest income by loan category recognized on impaired loans for the three months ended March 31, 2016 and 2015: Three Months Ended March 31, 2016 2015 (in thousands) Average Balance Interest Income (1) Average Balance Interest Income (1) Real estate: Residential real estate $ 2,876 $ 26 $ 2,897 $ 33 Commercial real estate 3,782 23 6,567 30 Construction, land acquisition and development 566 3 349 4 Total real estate 7,224 52 9,813 67 Commercial and industrial 201 1 31 - Consumer 350 3 359 3 State and political subdivisions - - - - Total impaired loans $ 7,775 $ 56 $ 10,203 $ 70 (1) Interest income represents income recognized on performing TDRs. The additional interest income that would have been earned on non-accrual and restructured loans had these loans performed in accordance with their original terms approximated $67 thousand and $91 thousand for the three months ended March 31, 2016 and 2015, respectively. Troubled Debt Restructured Loans TDRs at March 31, 2016 and December 31, 2015 were $5.5 million and $5.8 million, respectively. Accruing and non-accruing TDRs were $4.6 million and $0.9 million, respectively at March 31, 2016 and $5.0 million and $0.8 million, respectively at December 31, 2015. Approximately $284 thousand and $295 thousand in specific reserves have been established for TDRs as of March 31, 2016 and December 31, 2015, respectively. FNCB was not committed to lend additional funds to any loan classified as a TDR at March 31, 2016. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan, an extension of the maturity date, capitalization of real estate taxes, or a permanent reduction of the recorded investment in the loan. The following table shows the pre- and post- modification recorded investment in loans modified as TDRs during the three months ended March 31, 2016 and 2015: Three Months Ended March 31, 2016 2015 Pre-Modification Post-Modification Pre-Modification Post-Modification Outstanding Outstanding Outstanding Outstanding Number of Recorded Recorded Number of Recorded Recorded (dollars in thousands) Contracts Investments Investments Contracts Investments Investments Troubled debt restructurings: Residential real estate - $ - $ - 2 $ 656 $ 656 Commercial real estate - - - - - - Construction, land acquisition and development - - - 1 96 96 Commercial and industrial - - - - - - Consumer - - - - - - States and political subdivisions - - - - - - Total new troubled debt restructurings - $ - $ - 3 $ 752 $ 752 There were no loans modified as TDRs during the three months ended March 31, 2016. The following table presents the types of modifications made during the three months ended March 31, 2015: Three months ended March 31, 2015 (in thousands) Extension of Term Extension of Term and Capitalization of Taxes Capitalization of Taxes Principal Forbearance Total Modifications Types of modification: Residential real estate $ 656 $ - $ - $ - $ 656 Commercial real estate - - - - - Construction, land acquisition and development 96 - - - 96 Commercial and industrial - - - - - Consumer - - - - - State and political subdivisions - - - - - Total modifications $ 752 $ - $ - $ - $ 752 The three loans modified as TDRs during the three months ended March 31, 2015 increased the ALLL by $94 thousand. There were two TDRs with recorded investments totaling $108 thousand which re-defaulted (defined as past due 90 days) during the three months ended March 31, 2016 that were restructured within the twelve months prior to such re-default. There were no TDRs which re-defaulted during the three months ended March 31, 2015. As of March 31, 2016, there were two TDRs with a recorded investment of $62 thousand that were delinquent between 30 and 89 days. There were five consumer mortgage loans secured by residential real estate properties with an aggregate recorded investment of $163 thousand that were in the process of foreclosure at March 31, 2016. There was one residential real estate property with a carrying value of $237 thousand that was foreclosed upon during the three months ended March 31, 2016. There were three residential real estate properties with an aggregate carrying value of $278 thousand included in OREO at March 31, 2016, and two residential real estate properties with an aggregate carrying value of $41 thousand included in OREO at December 31, 2015. |