Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 5. The following table summarizes loans receivable, net, by category at December 31, 201 8 2017: December 31, (in thousands) 2018 2017 Residential real estate $ 164,833 $ 158,020 Commercial real estate 262,778 261,783 Construction, land acquisition and development 20,813 20,981 Commercial and industrial 150,962 150,103 Consumer 176,784 134,653 State and political subdivisions 59,037 42,529 Total loans, gross 835,207 768,069 Unearned income (70 ) (80 ) Net deferred loan costs 3,963 2,654 Allowance for loan and lease losses (9,519 ) (9,034 ) Loans, net $ 829,581 $ 761,609 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 December 31, 2018 2017 one four $9.6 $12.4 210 2018 304 2017. December 31, 2018 December 31, 2017, 820 $1.1 one four During the year s ended December 31, 2018 and 2017, 5.7 0.9 322 2018 79 2017. $108.4 $103.0 December 31, 2018 2017, FNCB does not 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 allo wances are established for impaired loans, which FNCB defines as all loan relationships with an aggregate outstanding balance greater than $100 - accrual, loans rated doubtful or loss, and all TDRs. The amount of impairment provided for as an allowance is represented by the deficiency, if any, between the carrying value of the loan and either (a) the present value of expected future cash flows discounted at the loan’s effective interest rate, (b) the loan’s observable market price, or (c) the fair value of the underlying collateral, less estimated costs to sell, for collateral dependent loans. Impaired loans that have no not ( 2 General allowances are established for loan losses on a portfolio basis for loans that do not As part of its evaluation, management considers qualitative and environmental factors, including, but not ● 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 loa n 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 lending 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 e xistence 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 portf olio; 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 ’s operating results or financial condition. While management uses the best information available to make its evaluations, future adjustments to the ALLL may may 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, 2018 2017 Allowance for Loan and Lease Losses by Loan Category December 31, 2018 (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, 2018 $ 1,236 $ 3,499 $ 209 $ 2,340 $ 1,395 $ 355 $ - $ 9,034 Charge-offs (63 ) (1,845 ) - (97 ) (1,134 ) - - (3,139 ) Recoveries 135 42 30 291 576 - - 1,074 Provisions (credits) (133 ) 1,411 (51 ) 18 1,214 62 29 2,550 Ending balance, December 31, 2018 $ 1,175 $ 3,107 $ 188 $ 2,552 $ 2,051 $ 417 $ 29 $ 9,519 Specific reserve $ 14 $ 41 $ - $ 600 $ 2 $ - $ - $ 657 General reserve $ 1,161 $ 3,066 $ 188 $ 1,952 $ 2,049 $ 417 $ 29 $ 8,862 Loans receivable: Individually evaluated for impairment $ 1,847 $ 9,408 $ 82 $ 697 $ 383 $ - $ - $ 12,417 Collectively evaluated for impairment 162,986 253,370 20,731 150,265 176,401 59,037 - 822,790 Total loans, gross at December 31, 2018 $ 164,833 $ 262,778 $ 20,813 $ 150,962 $ 176,784 $ 59,037 $ - $ 835,207 Allowance for Loan and Lease Losses by Loan Category December 31, 2017 (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, 2017 $ 1,171 $ 3,297 $ 268 $ 1,736 $ 1,457 $ 490 $ - $ 8,419 Charge-offs (192 ) (159 ) - (495 ) (603 ) - - (1,449 ) Recoveries 29 45 480 360 381 - - 1,295 Provisions (credits) 228 316 (539 ) 739 160 (135 ) - 769 Ending balance, December 31, 2017 $ 1,236 $ 3,499 $ 209 $ 2,340 $ 1,395 $ 355 $ - $ 9,034 Specific reserve $ 33 $ 138 $ - $ 600 $ 2 $ - $ - $ 773 General reserve $ 1,203 $ 3,361 $ 209 $ 1,740 $ 1,393 $ 355 $ - $ 8,261 Loans receivable: Individually evaluated for impairment $ 1,902 $ 8,164 $ 85 $ 795 $ 395 $ - $ - $ 11,341 Collectively evaluated for impairment 156,118 253,619 20,896 149,308 134,258 42,529 - 756,728 Total loans, gross at December 31, 2017 $ 158,020 $ 261,783 $ 20,981 $ 150,103 $ 134,653 $ 42,529 $ - $ 768,069 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 FNCB’s 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 of directors 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 ’s and management’s assessment. 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 not 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 no not Special Mention – Assets classified as special mention do not not 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 Doubtful – Assets classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that such weaknesses 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 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 qualit y indicator at December 31, 2018 2017: Credit Quality Indicators December 31, 2018 Commercial Loans Other Loans Special Subtotal Accruing Non-accrual Subtotal Total Pass Mention Substandard Doubtful Loss Commercial Loans Loans Other Loans Residential real estate $ 33,573 $ 291 $ 154 $ - $ - $ 34,018 $ 130,132 $ 683 $ 130,815 $ 164,833 Commercial real estate 250,674 1,858 10,246 - - 262,778 - - - 262,778 Construction, land acquisition and development 17,704 - 757 - - 18,461 2,352 - 2,352 20,813 Commercial and industrial 137,888 4,193 2,448 - - 144,529 6,421 12 6,433 150,962 Consumer 2,024 - - - - 2,024 174,373 387 174,760 176,784 State and political subdivisions 57,345 1,665 27 - - 59,037 - - - 59,037 Total $ 499,208 $ 8,007 $ 13,632 $ - $ - $ 520,847 $ 313,278 $ 1,082 $ 314,360 $ 835,207 Credit Quality Indicators December 31, 2017 Commercial Loans Other Loans Special Subtotal Accruing Non-accrual Subtotal Total Pass Mention Substandard Doubtful Loss Commercial Loans Loans Other Loans Residential real estate $ 27,186 $ 421 $ 62 $ - $ - $ 27,669 $ 129,887 $ 464 $ 130,351 $ 158,020 Commercial real estate 245,779 2,461 13,543 - - 261,783 - - - 261,783 Construction, land acquisition and development 18,280 330 6 - - 18,616 2,365 - 2,365 20,981 Commercial and industrial 142,019 479 1,597 - - 144,095 6,008 - 6,008 150,103 Consumer 1,731 - 34 - - 1,765 132,584 304 132,888 134,653 State and political subdivisions 42,040 - 396 - - 42,436 93 - 93 42,529 Total $ 477,035 $ 3,691 $ 15,638 $ - $ - $ 496,364 $ 270,937 $ 768 $ 271,705 $ 768,069 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 $4.7 million at December 31, 2018 $2.6 December 31, 201 7 90 six no may may 90 no 90 December 31, 2018 2017. The following tables present the delinquency status of past due and non-accrual loans at December 31, 2018 2017: December 31, 2018 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: Residential real estate $ 163,690 $ 319 $ 136 $ - $ 164,145 Commercial real estate 259,904 - - - 259,904 Construction, land acquisition and development 20,813 - - - 20,813 Commercial and industrial 150,108 87 20 - 150,215 Consumer 173,890 2,221 286 - 176,397 State and political subdivisions 59,037 - - - 59,037 Total performing (accruing) loans 827,442 2,627 442 - 830,511 Non-accrual loans: Residential real estate 443 - 136 109 688 Commercial real estate 1,061 - - 1,813 2,874 Construction, land acquisition and development - - - - - Commercial and industrial 677 50 - 20 747 Consumer 91 61 74 161 387 State and political subdivisions - - - - - Total non-accrual loans 2,272 111 210 2,103 4,696 Total loans receivable $ 829,714 $ 2,738 $ 652 $ 2,103 $ 835,207 December 31, 2017 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: Residential real estate $ 156,701 $ 793 $ - $ - $ 157,494 Commercial real estate 260,276 70 473 - 260,819 Construction, land acquisition and development 20,954 27 - - 20,981 Commercial and industrial 149,046 185 88 - 149,319 Consumer 133,034 1,028 287 - 134,349 State and political subdivisions 42,529 - - - 42,529 Total performing (accruing) loans 762,540 2,103 848 - 765,491 Non-accrual loans: Residential real estate 342 63 - 120 525 Commercial real estate - - - 964 964 Construction, land acquisition and development - - - - - Commercial and industrial 750 - - 35 785 Consumer 25 92 53 134 304 State and political subdivisions - - - - - Total non-accrual loans 1,117 155 53 1,253 2,578 Total loans receivable $ 763,657 $ 2,258 $ 901 $ 1,253 $ 768,069 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, 2018 2017. $100 not not 450. $100 450 $0.7 December 31, 2018 2017. December 31, 2018 Recorded Unpaid Principal Related (in thousands) Investment Balance Allowance With no allowance recorded: Residential real estate $ 313 $ 375 $ - Commercial real estate 7,149 8,795 - Construction, land acquisition and development 82 82 - Commercial and industrial - - - Consumer 26 28 - State and political subdivisions - - - Total impaired loans with no related allowance recorded 7,570 9,280 - With a related allowance recorded: Residential real estate 1,534 1,534 14 Commercial real estate 2,259 2,259 41 Construction, land acquisition and development - - - Commercial and industrial 697 697 600 Consumer 357 357 2 State and political subdivisions - - - Total impaired loans with a related allowance recorded 4,847 4,847 657 Total of impaired loans: Residential real estate 1,847 1,909 14 Commercial real estate 9,408 11,054 41 Construction, land acquisition and development 82 82 - Commercial and industrial 697 697 600 Consumer 383 385 2 State and political subdivisions - - - Total impaired loans $ 12,417 $ 14,127 $ 657 December 31, 2017 Recorded Unpaid Principal Related (in thousands) Investment Balance Allowance With no allowance recorded: Residential real estate $ 190 $ 216 $ - Commercial real estate 5,174 5,295 - Construction, land acquisition and development 85 85 - Commercial and industrial 21 53 - Consumer 30 30 - State and political subdivisions - - - Total impaired loans with no related allowance recorded 5,500 5,679 - With a related allowance recorded: Residential real estate 1,712 1,751 33 Commercial real estate 2,990 2,990 138 Construction, land acquisition and development - - - Commercial and industrial 774 774 600 Consumer 365 365 2 State and political subdivisions - - - Total impaired loans with a related allowance recorded 5,841 5,880 773 Total of impaired loans: Residential real estate 1,902 1,967 33 Commercial real estate 8,164 8,285 138 Construction, land acquisition and development 85 85 - Commercial and industrial 795 827 600 Consumer 395 395 2 State and political subdivisions - - - Total impaired loans $ 11,341 $ 11,559 $ 773 The following table presents the average balance of, and interest income recognized on, impaired loans summarized by loan category for the years ended December 31, 2018 2017 Year Ended December 31, 2018 2017 Average Interest Average Interest (in thousands) Balance Income (1) Balance Income (1) Residential real estate $ 1,827 $ 83 $ 2,017 $ 84 Commercial real estate 8,580 311 7,391 276 Construction, land acquisition and development 83 5 104 4 Commercial and industrial 759 1 1,028 15 Consumer 388 17 363 13 State and political subdivisions - - - - Total impaired loans $ 11,637 $ 417 $ 10,903 $ 392 ( 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, 2018 and 2017. Troubled Debt Restructured Loans TDRs at December 31, 2018 and 2017 $9.2 $10.2 $8.5 $0.7 December 31, 2018 $9.3 $0.9 December 31, 2017. $651 $750 December 31, 2018 2017, not December 31, 2018 2017. The modification of the terms of loans classified as TDRs may one There were no December 31, 2018. December 31, 2017 : Year Ended December 31, 2017 Pre-Modification Outstanding Recorded Investment by Type of Modification (in thousands) Number of Contracts Extension of Term Extension of Term and Capitalization of Taxes Extension of Term and Forbearance Forbearance Total Post-Modification Outstanding Recorded Investment Loan category: Residential real estate 2 $ 190 $ - $ - $ - $ 190 $ 190 Commercial real estate 8 - - - 5,250 5,250 5,250 Construction, land acquisition and development - - - - - - - Commercial and industrial 4 - - 25 1,820 1,845 1,575 Consumer 2 - 85 - - 85 104 State and political subdivisions - - - - - - - Total modifications 16 $ 190 $ 85 $ 25 $ 7,070 $ 7,370 $ 7,119 There were nine December 31, 2017, sixteen three eight $5.3 two four $1.8 December 31, 2017. two $85 two $190 one $4.0 seven two $1.2 four $0.3 three $1.8 one third 2017, two four $0.8 There were no 12 December 31, 2018. one $10 12 December 31, 2017. Residential Real Estate Loan Foreclosures There were two in the process of foreclosure at December 31, 2018. There was no aggregate recorded investment to FNCB for these two loans at December 31, 2018. The balance of one loan was previously charged-off in entirety and the other loan was sold to an investor on the secondary market. no December 31, 2018, and there was one residential real estate property with a carrying value of $45 thousand included in OREO at December 31, 2018. There were three in the process of foreclosure with an aggregate recorded investment of $14 December 31, 2017. two $125 December 31, 2017. two 2017, one fourth 2017. two $92 December 31, 2017. |