Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 5. The following table summarizes loans receivable, net, by category at December 31, 2016 2015: December 31, (in thousands) 2016 2015 Residential real estate $ 144,260 $ 130,696 Commercial real estate 243,830 245,198 Construction, land acquisition and development 18,357 30,843 Commercial and industrial 153,758 149,826 Consumer 127,844 128,533 State and political subdivisions 43,709 46,056 Total loans, gross 731,758 731,152 Unearned income (48 ) (98 ) Net deferred loan costs 2,569 2,662 Allowance for loan and lease losses (8,419 ) (8,790 ) Loans, net $ 725,860 $ 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 of their related parties. For more information about related party transactions, refer to Note 11, For information about credit concentrations within FNCB’s loan portfolio, refer to Note 12, FNCB originates one four secondary December 31, 2016, 2015 2014, $9.5 $7.9 $8.3 one four December 31, 2016, 2015 2014 $340 $292 $292 December 31, 2016 December 31, 2015, $596 $683 one four During the year ended December 31, 2016, three $1.3 $51 December 31, 2016. no December 31, 2015 2014. $103.5 $110.7 December 31, 2016 2015, FNCB sold all of its education loans, which are categorized as consumer loans, to a third December 31, 2014. $2.6 $13 December 31, 2014. 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. FNCB provides for loan losses based on the consistent application of its documented ALLL methodology. Loan losses are charged to the ALLL and recoveries are credited to it. Additions to the ALLL are provided by charges against income based on various factors which, in management’s judgment, deserve current recognition of estimated probable losses. Loan losses are charged-off in the period the loans, or portions thereof, are deemed uncollectible. Generally, FNCB will record a loan charge-off (including a partial charge-off) to reduce a loan to the estimated recoverable amount based on its methodology detailed below. Management regularly reviews the loan portfolio and makes adjustments for loan losses in order to maintain the ALLL in accordance with GAAP. The ALLL consists primarily of the following two (1) Specific allowances are established for impaired loans, which FNCB defines as all loan relationships with an aggregate outstanding balance greater than $100 (2) General allowances are established for loan losses on a portfolio basis for loans that do not meet the definition of impaired. FNCB divides its portfolio into loan segments for loans exhibiting similar characteristics. Loans rated special mention or substandard and accruing , which are embedded in these loan segments , are then separated from these loan segments, as these loans are subject to an analysis that emphasizes the credit risk associated with these loans. An estimated loss rate is then applied to each loan segment, which are based on FNCB’s own historical loss experience for each respective loan segment. In addition , management evaluates and applies to each loan segment certain qualitative or environmental factors that are likely to cause estimated credit losses associated with FNCB’s existing portfolio to differ from historical experience, which are discussed below. For loans that have an internal credit rating of special mention or substandard, the qualitative and environmental factors are further adjusted for the increased risk. As part of its evaluation, management considers qualitative and environmental factors, including, but not limited to: ● changes in national, local, and business economic conditions and developments, including the condition of various market segments; ● changes in the nature and volume of the loan portfolio; ● changes in lending policies and procedures, including underwriting standards, collection, charge-off and recovery practices and results; ● changes in the experience, ability and depth of management and staff; ● changes in the quality of the loan review system and the degree of oversight by the Board of Directors; ● changes in the trend of the volume and severity of past due and classified loans, including trends in the volume of non-accrual loans, TDRs and other loan modifications; ● the existence and effect of any concentrations of credit and changes in the level of such concentrations; ● the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the current loan portfolio; and ● analysis of customers’ credit quality, including knowledge of their operating environment and financial condition. Management evaluates the credit quality of the loan portfolio on an ongoing basis, and performs a formal review of the adequacy of the ALLL on a quarterly basis. This evaluation is inherently subjective, as it requires material estimates that may may While management uses the best information available to make its evaluations, future adjustments to the ALLL may may Based on its evaluation of the ALLL, management had established an unallocated reserve of $74 December 31, 2015. twelve December 31, 2015. December 31, 2016, The following tables present, by loan category, the activity in the ALLL and the allocation of the ALLL and related loan balance disaggregated based on impairment methodology at December 31, 2016, 2015 2014. Allowance for Loan and Lease Losses by Loan Category December 31, 2016 Real Estate (in thousands) Residential Real Estate Commercial Real Estate Construction, Land Acquisition and Development Commercial and Industrial Consumer State and Political Subdivisions Unallocated Total Allowance for loan losses: Beginning balance, January 1, 2016 $ 1,333 $ 3,346 $ 853 $ 1,205 $ 1,494 $ 485 $ 74 $ 8,790 Charge-offs (153 ) (398 ) - (1,107 ) (960 ) - - (2,618 ) Recoveries 4 6 9 507 568 - - 1,094 Provisions (credits) (13 ) 343 (594 ) 1,131 355 5 (74 ) 1,153 Ending balance, December 31, 2016 $ 1,171 $ 3,297 $ 268 $ 1,736 $ 1,457 $ 490 $ - $ 8,419 Ending balance, December 31, 2016: Specific reserve $ 29 $ 254 $ - $ 18 $ 1 $ - $ - $ 302 Ending balance, December 31, 2016: General reserve $ 1,142 $ 3,043 $ 268 $ 1,718 $ 1,456 $ 490 $ - $ 8,117 Loans receivable: Ending balance, December 31, 2016 $ 144,260 $ 243,830 $ 18,357 $ 153,758 $ 127,844 $ 43,709 $ - $ 731,758 Ending balance, December 31, 2016: Individually evaluated for impairment $ 1,929 $ 2,937 $ 350 $ 91 $ 297 $ - $ - $ 5,604 Ending balance, December 31, 2016: Collectively evaluated for impairment $ 142,331 $ 240,893 $ 18,007 $ 153,667 $ 127,547 $ 43,709 $ - $ 726,154 Allowance for Loan and Lease Losses by Loan Category December 31, 2015 Real Estate (in thousands) Residential Real Estate Commercial Real Estate Construction, Land Acquisition and Development Commercial and Industrial Consumer State and Political Subdivisions Unallocated Total Allowance for loan losses: Beginning balance, January 1, 2015 $ 1,772 $ 4,663 $ 665 $ 2,104 $ 1,673 $ 598 $ 45 $ 11,520 Charge-offs (139 ) (912 ) (688 ) (180 ) (716 ) - - (2,635 ) Recoveries 58 307 - 400 485 - - 1,250 Provisions (credits) (358 ) (712 ) 876 (1,119 ) 52 (113 ) 29 (1,345 ) Ending balance, December 31, 2015 $ 1,333 $ 3,346 $ 853 $ 1,205 $ 1,494 $ 485 $ 74 $ 8,790 Ending balance, December 31, 2015: Specific reserve $ 92 $ 287 $ 1 $ - $ 1 $ - $ - $ 381 Ending balance, December 31, 2015: General reserve $ 1,241 $ 3,059 $ 852 $ 1,205 $ 1,493 $ 485 $ 74 $ 8,409 Loans receivable: Ending balance, December 31, 2015 $ 130,696 $ 245,198 $ 30,843 $ 149,826 $ 128,533 $ 46,056 $ - $ 731,152 Ending balance, December 31, 2015: Individually evaluated for impairment $ 2,930 $ 3,831 $ 646 $ 203 $ 351 $ - $ - $ 7,961 Ending balance, December 31, 2015: Collectively evaluated for impairment $ 127,766 $ 241,367 $ 30,197 $ 149,623 $ 128,182 $ 46,056 $ - $ 723,191 Allowance for Loan and Lease Losses by Loan Category December 31, 2014 Real Estate (in thousands) Residential Real Estate Commercial Real Estate Construction, Land Acquisition and Development Commercial and Industrial Consumer State and Political Subdivisions Unallocated Total Allowance for loan losses: Beginning balance, January 1, 2014 $ 2,287 $ 6,017 $ 924 $ 2,321 $ 1,789 $ 679 $ - $ 14,017 Charge-offs (204 ) - (45 ) (217 ) (922 ) - - (1,388 ) Recoveries 90 362 3,538 262 508 - - 4,760 Provisions (credits) (401 ) (1,716 ) (3,752 ) (262 ) 298 (81 ) 45 (5,869 ) Ending balance, December 31, 2014 $ 1,772 $ 4,663 $ 665 $ 2,104 $ 1,673 $ 598 $ 45 $ 11,520 Ending balance, December 31, 2014: Specific reserve $ 51 $ 331 $ 1 $ - $ 1 $ - $ - $ 384 Ending balance, December 31, 2014: General reserve $ 1,721 $ 4,332 $ 664 $ 2,104 $ 1,672 $ 598 $ 45 $ 11,136 Loans receivable: Ending balance, December 31, 2014 $ 122,832 $ 233,473 $ 18,835 $ 132,057 $ 122,092 $ 40,205 $ - $ 669,494 Ending balance, December 31, 2014: Individually evaluated for impairment $ 2,487 $ 6,660 $ 256 $ 32 $ 361 $ - $ - $ 9,796 Ending balance, December 31, 2014: Collectively evaluated for impairment $ 120,345 $ 226,813 $ 18,579 $ 132,025 $ 121,731 $ 40,205 $ - $ 659,698 Credit Quality Indicators – Commercial Loans Management continuously monitors and evaluates 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 these loan receivables. FNCB’s commercial loan classification and credit grading processes are part of the lending, underwriting, and credit administration functions to ensure an ongoing assessment of credit quality. FNCB maintains a formal, written loan classification and credit grading system that includes a discussion of the factors used to assign appropriate classifications of credit grades to loans. The risk grade groupings provide a mechanism to identify risk within the loan portfolio and provide management and the Board with periodic reports by risk category. The process also identifies groups of loans that warrant the special attention of management. Accurate and timely loan classification and credit grading is a critical component of loan portfolio management. Loan officers are required to review their loan portfolio risk ratings regularly for accuracy. In addition, the credit risk ratings play an important role in the loan review function, as well as the establishment and evaluation of the provision for loan and lease losses and the ALLL. The loan review function uses the same risk rating system in the loan review process. Quarterly, FNCB engages an independent third 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. 2. 3. 4. 5. 6. 7. 8. 9. 10. This analysis is performed on a quarterly basis using the following definitions for risk ratings: Pass - Assets rated 1 5 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 The following tables present the recorded investment in loans receivable by loan category and credit quality indicator at December 31, 2016 2015: Credit Quality Indicators December 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 $ 25,506 $ 394 $ 466 $ - $ - $ 26,366 $ 117,286 $ 608 $ 117,894 $ 144,260 Commercial real estate 233,523 4,911 5,396 - - 243,830 - - - 243,830 Construction, land acquisition and development 14,101 346 448 - - 14,895 3,462 - 3,462 18,357 Commercial and industrial 145,794 2,794 1,128 - - 149,716 4,042 - 4,042 153,758 Consumer 2,699 - 37 - - 2,736 124,935 173 125,108 127,844 State and political subdivisions 40,424 2,964 321 - - 43,709 - - - 43,709 Total $ 462,047 $ 11,409 $ 7,796 $ - $ - $ 481,252 $ 249,725 $ 781 $ 250,506 $ 731,758 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 $2.2 $3.8 December 31, 2016 2015, 90 six may may 90 no 90 December 31, 2016 2015. The following tables present the delinquency status of past due and non-accrual loans at December 31, 2016 2015: December 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 $ 143,142 $ 229 $ 107 $ - $ 143,478 Commercial real estate 241,477 830 553 - 242,860 Construction, land acquisition and development 17,766 346 - - 18,112 Total real estate 402,385 1,405 660 - 404,450 Commercial and industrial 153,378 307 9 - 153,694 Consumer 126,341 1,030 300 - 127,671 State and political subdivisions 43,709 - - - 43,709 Total performing (accruing) loans 725,813 2,742 969 - 729,524 Non-accrual loans: Real estate: Residential real estate 176 202 17 387 782 Commercial real estate 201 23 - 746 970 Construction, land acquisition and development - 245 - - 245 Total real estate 377 470 17 1,133 1,997 Commercial and industrial - - - 64 64 Consumer 56 25 2 90 173 State and political subdivisions - - - - - Total non-accrual loans 433 495 19 1,287 2,234 Total loans receivable $ 726,246 $ 3,237 $ 988 $ 1,287 $ 731,758 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, December 31, 2016 2015. $100 450. $100 450 $ 0.8 December 31, 2016 2015. December 31, 2016 (in thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no allowance recorded: Real estate: Residential real estate $ 386 $ 477 $ - Commercial real estate 1,066 1,143 - Construction, land acquisition and development 350 766 - Total real estate 1,802 2,386 - Commercial and industrial 73 105 - Consumer - - - State and political subdivisions - - - Total impaired loans with no related allowance recorded 1,875 2,491 - With a related allowance recorded: Real estate: Residential real estate 1,543 1,543 29 Commercial real estate 1,871 1,871 254 Construction, land acquisition and development - - - Total real estate 3,414 3,414 283 Commercial and industrial 18 18 18 Consumer 297 297 1 State and political subdivisions - - - Total impaired loans with a related allowance recorded 3,729 3,729 302 Total of impaired loans Real estate: Residential real estate 1,929 2,020 29 Commercial real estate 2,937 3,014 254 Construction, land acquisition and development 350 766 - Total real estate 5,216 5,800 283 Commercial and industrial 91 123 18 Consumer 297 297 1 State and political subdivisions - - - Total impaired loans $ 5,604 $ 6,220 $ 302 December 31, 2015 (in thousands) Recorded Investment Unpaid Principal Balance Related 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 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 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 of 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 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 $5.6 $8.0 December 31, 2016 2015, $0.3 $0.4 December 31, 2016 2015, The following table presents the average balance and the interest income recognized on impaired loans for the years ended December 31, 2016, 2015 2014: Year Ended December 31, 2016 2015 2014 (in thousands) Average Balance Interest Income (1) Average Balance Interest Income (1) Average Balance Interest Income (1) Real estate: Residential real estate $ 2,428 $ 91 $ 3,157 $ 121 $ 2,226 $ 91 Commercial real estate 3,489 92 6,830 106 6,616 118 Construction, land acquisition and development 428 7 570 18 284 15 Total real estate 6,345 190 10,557 245 9,126 224 Commercial and industrial 283 2 174 2 76 - Consumer 300 10 356 11 343 11 State and political subdivisions - - - - - - Total impaired loans $ 6,928 $ 202 $ 11,087 $ 258 $ 9,545 $ 235 (1) 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 $0.2 December 31, 2016, $0.4 December 31, 2015 2014. Troubled Debt Restructured Loans TDRs at December 31, 2016 2015 $4.3 $5.8 $4.2 $0.1 December 31, 2016 $5.0 $0.8 December 31, 2015. $261 $295 December 31, 2016 2015, not December 31, 2016 2015. The modification of the terms of such loans included one The following tables show the pre- and post-modification recorded investment in loans modified as TDRs during the years ended December 31, 2016 2015: For the Year Ended December 31, 2016 For the Year Ended December 31, 2015 Pre-Modification Post-Modification Pre-Modification Post-Modification Number Outstanding Outstanding Number Outstanding Outstanding of Recorded Recorded of Recorded Recorded (in thousands) Contracts Investments Investments Contracts Investments Investments Troubled debt restructurings: Residential real estate 2 $ 254 $ 258 5 $ 810 $ 827 Commercial real estate - - - 1 1,654 742 Construction, land acquisition and development - - - 1 96 96 Commercial and industrial 2 52 52 1 79 79 Consumer - - - - - - State and political subdivisions - - - - - - Total new troubled debt restructurings 4 $ 306 $ 310 8 $ 2,639 $ 1,744 The following table presents the type of modifications made during the years ended December 31, 2016 2015: For the Year Ended December 31, 2016 (in thousands) Extension of Term Extension of Term and Capitalization of Taxes Principal Forbearance Total Modifications Type of modification: Residential real estate $ 159 $ 95 $ - $ 254 Commercial real estate - - - - Construction, land acquisition and development - - - - Commercial and industrial 52 - - 52 Consumer - - - - State and political subdivisions - - - - Total modifications $ 211 $ 95 $ - $ 306 For the Year Ended December 31, 2015 (in thousands) Extension of Term Extension of Term and Capitalization of Taxes Principal Forbearance Total Modifications Type of modification: Residential real estate $ 710 $ 100 $ - $ 810 Commercial real estate - - 1,654 1,654 Construction, land acquisition and development 96 - - 96 Commercial and industrial - - 79 79 Consumer - - - - State and political subdivisions - - - - Total modifications $ 806 $ 100 $ 1,733 $ 2,639 The TDRs described above increased the allowance for loan losses by $1 $2 December 31, 2016 2015, December 31, 2015, one $1.7 $912 December 31, 2015 $912 no December 31, 2016. The following table presents the number and recorded investment of TDRs that were modified within the previous 12 90 December 31, 2016: For the Year Ended December 31, 2016 (in thousands) Number of Contracts Recorded Investment Type of modification: Residential real estate 3 $ 107 Commercial real estate 1 680 Construction, land acquisition and development - - Commercial and industrial - - Consumer - - State and political subdivisions - - Total modifications 4 $ 787 For impairment determination purposes, the three December 31, 2016 three $37 December 31, 2016. one $680 December 31, 2016, third 2016. There were no TDRs that were modified during the previous twelve December 31, 2015 2014. one $3.5 December 31, 2015, 12 fourth 2015. Residential Real Estate Loan Foreclosures There were five three December 31, 2016 2015, $92 December 31, 2016 $340 December 31, 2015. one $237 December 31, 2016. two $ 41 December 31, 2016 2015. |