LOANS | 12 Months Ended |
Dec. 31, 2013 |
LoansAbstract | ' |
LOANS | ' |
4 | LOANS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following table presents loans outstanding, by type of loan, as of December 31: |
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| | | | | % of Total | | | | | | % of Total | | | | | | | | | | | | | | | | | |
(In thousands) | | 2013 | | | Loans | | | 2012 | | | Loans | | | | | | | | | | | | | | | | | |
Residential mortgage | | $ | 532,911 | | | | 33.85 | % | | $ | 515,014 | | | | 45.47 | % | | | | | | | | | | | | | | | | |
Commercial mortgage | | | 831,997 | | | | 52.85 | | | | 420,086 | | | | 37.09 | | | | | | | | | | | | | | | | | |
Commercial loans | | | 131,795 | | | | 8.37 | | | | 115,372 | | | | 10.19 | | | | | | | | | | | | | | | | | |
Construction loans | | | 5,893 | | | | 0.38 | | | | 9,328 | | | | 0.83 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 47,905 | | | | 3.04 | | | | 49,635 | | | | 4.38 | | | | | | | | | | | | | | | | | |
Consumer loans, including | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
fixed rate home equity loans | | | 21,852 | | | | 1.39 | | | | 21,188 | | | | 1.87 | | | | | | | | | | | | | | | | | |
Other loans | | | 1,848 | | | | 0.12 | | | | 1,961 | | | | 0.17 | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,574,201 | | | | 100 | % | | $ | 1,132,584 | | | | 100 | % | | | | | | | | | | | | | | | | |
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Not included above were $19 million of classified loans that were transferred to loans held for sale in December 2012. Upon transfer, the Corporation recorded a charge-off on these loans totaling $5.4 million. These loans were disclosed as loans held for sale, at lower of cost or fair value, on the consolidated statements of condition as of December 31, 2012 with a balance of $13.7 million. In March 2013, the Corporation sold these loans resulting in a gain of $522 thousand. |
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In determining an appropriate amount for the allowance, the Bank segments and evaluates the loan portfolio based on Federal call report codes. The following portfolio classes have been identified as of December 31: |
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| | | | | % of Total | | | | | | % of Total | | | | | | | | | | | | | | | | | |
(In thousands) | | 2013 | | | Loans | | | 2012 | | | Loans | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 546,827 | | | | 34.82 | % | | $ | 527,803 | | | | 46.74 | % | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 47,905 | | | | 3.05 | | | | 49,635 | | | | 4.4 | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 13,114 | | | | 0.84 | | | | 11,893 | | | | 1.05 | | | | | | | | | | | | | | | | | |
Multifamily property | | | 541,503 | | | | 34.48 | | | | 161,705 | | | | 14.32 | | | | | | | | | | | | | | | | | |
Owner-occupied commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 79,735 | | | | 5.08 | | | | 84,720 | | | | 7.5 | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 267,406 | | | | 17.03 | | | | 242,586 | | | | 21.48 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 51,638 | | | | 3.29 | | | | 25,820 | | | | 2.29 | | | | | | | | | | | | | | | | | |
Farmland | | | 197 | | | | 0.01 | | | | 207 | | | | 0.02 | | | | | | | | | | | | | | | | | |
Agricultural production loans | | | — | | | | N/A | | | | 14 | | | | N/A | | | | | | | | | | | | | | | | | |
Commercial construction | | | 5,893 | | | | 0.37 | | | | 9,323 | | | | 0.83 | | | | | | | | | | | | | | | | | |
Consumer and other | | | 16,212 | | | | 1.03 | | | | 15,480 | | | | 1.37 | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,570,430 | | | | 100 | % | | $ | 1,129,186 | | | | 100 | % | | | | | | | | | | | | | | | | |
Net deferred fees | | | 3,771 | | | | | | | | 3,398 | | | | | | | | | | | | | | | | | | | | | |
Total loans including | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
net deferred fees | | $ | 1,574,201 | | | | | | | $ | 1,132,584 | | | | | | | | | | | | | | | | | | | | | |
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Included in the totals above for December 31, 2013 is $396 thousand of unamortized discount as compared to $543 thousand of unamortized discount for December 31, 2012. |
In the ordinary course of business, the Corporation, through the Bank, may extend credit to officers, directors or their associates. These loans are subject to the Corporation’s normal lending policy and Federal Reserve Bank Regulation O. |
The following table shows the changes in loans to officers, directors or their associates: |
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(In thousands) | | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of year | | $ | 1,345 | | | $ | 1,328 | | | | | | | | | | | | | | | | | | | | | | | | | |
New loans | | | 1,301 | | | | 1,636 | | | | | | | | | | | | | | | | | | | | | | | | | |
Repayments | | | (430 | ) | | | (1,619 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, at end of year | | $ | 2,216 | | | $ | 1,345 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following tables present the loan balances by portfolio segment, based on impairment method, and the corresponding balances in the allowance for loan losses as of December 31, 2013 and 2012: |
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31-Dec-13 | | | | | | | | |
| | Total | | | Ending ALLL | | | Total | | | Ending ALLL | | | | | | | | | | | | | | | |
| | Loans | | | Attributable | | | Loans | | | Attributable | | | | | | | | | | | | | | | |
| | Individually | | | to Loans | | | Collectively | | | to Loans | | | | | | | | | | | | | | | |
| | Evaluated | | | Individually | | | Evaluated | | | Collectively | | | | | | Total | | | | | | | | | |
| | for | | | Evaluated for | | | for | | | Evaluated for | | | Total | | | Ending | | | | | | | | | |
(In thousands) | | Impairment | | | Impairment | | | Impairment | | | Impairment | | | Loans | | | ALLL | | | | | | | | | |
Primary residential | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
mortgage | | $ | 3,691 | | | $ | 126 | | | $ | 543,136 | | | $ | 2,235 | | | $ | 546,827 | | | $ | 2,361 | | | | | | | | | |
Home equity lines | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
of credit | | | 111 | | | | — | | | | 47,794 | | | | 181 | | | | 47,905 | | | | 181 | | | | | | | | | |
Junior lien loan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
on residence | | | 260 | | | | — | | | | 12,854 | | | | 156 | | | | 13,114 | | | | 156 | | | | | | | | | |
Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
property | | | — | | | | — | | | | 541,503 | | | | 4,003 | | | | 541,503 | | | | 4,003 | | | | | | | | | |
Owner-occupied | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 3,250 | | | | 464 | | | | 76,485 | | | | 2,099 | | | | 79,735 | | | | 2,563 | | | | | | | | | |
Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 9,949 | | | | 741 | | | | 257,457 | | | | 4,342 | | | | 267,406 | | | | 5,083 | | | | | | | | | |
Commercial and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
industrial | | | 470 | | | | 309 | | | | 51,168 | | | | 516 | | | | 51,638 | | | | 825 | | | | | | | | | |
Secured by | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
farmland | | | — | | | | — | | | | 197 | | | | 3 | | | | 197 | | | | 3 | | | | | | | | | |
Agricultural | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
production | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
construction | | | — | | | | — | | | | 5,893 | | | | 120 | | | | 5,893 | | | | 120 | | | | | | | | | |
Consumer and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
other | | | 13 | | | | 13 | | | | 16,199 | | | | 65 | | | | 16,212 | | | | 78 | | | | | | | | | |
Total ALLL | | $ | 17,744 | | | $ | 1,653 | | | $ | 1,552,686 | | | $ | 13,720 | | | $ | 1,570,430 | | | $ | 15,373 | | | | | | | | | |
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31-Dec-12 |
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| | | | | Ending | | | | | | Ending | | | | | | | | | | | | | |
| | | | | ALLL | | | | | | ALLL | | | | | | | | | | | | | |
| | Total | | | Attributable | | | Total | | | Attributable | | | | | | | | | | | | | |
| | Loans | | | To Loans | | | Loans | | | To Loans | | | | | | Total | | | | | | | |
| | Individually | | | Individually | | | Collectively | | | Collectively | | | | | | Ending | | | Allocation | | | | |
| | Evaluated | | | Evaluated | | | Evaluated | | | Evaluated | | | | | | ALLL | | | Of Previous | | | Total | |
| | For | | | For | | | For | | | For | | | Total | | | Before | | | Unallocated | | | Ending | |
(In thousands) | | Impairment | | | Impairment | | | Impairment | | | Impairment | | | Loans | | | Allocation | | | ALLL | | | ALLL | |
Primary residential | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
mortgage | | $ | 7,155 | | | $ | 148 | | | $ | 520,648 | | | $ | 2,789 | | | $ | 527,803 | | | $ | 2,937 | | | $ | 110 | | | $ | 3,047 | |
Home equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
lines of credit | | | 110 | | | | — | | | | 49,525 | | | | 257 | | | | 49,635 | | | | 257 | | | | 10 | | | | 267 | |
Junior lien loan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
on residence | | | 562 | | | | 240 | | | | 11,331 | | | | 71 | | | | 11,893 | | | | 311 | | | | 3 | | | | 314 | |
Multifamily | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
property | | | — | | | | — | | | | 161,705 | | | | 1,255 | | | | 161,705 | | | | 1,255 | | | | 50 | | | | 1,305 | |
Owner-occupied | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 4,724 | | | | — | | | | 79,996 | | | | 2,413 | | | | 84,720 | | | | 2,413 | | | | 96 | | | | 2,509 | |
Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 5,173 | | | | 384 | | | | 237,413 | | | | 3,627 | | | | 242,586 | | | | 4,011 | | | | 144 | | | | 4,155 | |
Commercial and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
industrial | | | 423 | | | | 41 | | | | 25,397 | | | | 733 | | | | 25,820 | | | | 774 | | | | 29 | | | | 803 | |
Secured by | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
farmland | | | — | | | | — | | | | 207 | | | | 3 | | | | 207 | | | | 3 | | | | — | | | | 3 | |
Agricultural | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
production | | | — | | | | — | | | | 14 | | | | — | | | | 14 | | | | — | | | | — | | | | — | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
construction | | | — | | | | — | | | | 9,323 | | | | 231 | | | | 9,323 | | | | 231 | | | | 9 | | | | 240 | |
Consumer and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
other | | | — | | | | — | | | | 15,480 | | | | 89 | | | | 15,480 | | | | 89 | | | | 3 | | | | 92 | |
Unallocated | | | — | | | | — | | | | — | | | | 454 | | | | — | | | | 454 | | | | (454 | ) | | | — | |
Total ALLL | | $ | 18,147 | | | $ | 813 | | | $ | 1,111,039 | | | $ | 11,922 | | | $ | 1,129,186 | | | $ | 12,735 | | | $ | — | | | $ | 12,735 | |
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Prior to December 31, 2012, the Company utilized the sum of all allowance amounts derived combined with a nominal unallocated allowance, as the primary indicator of the appropriate level of allowance for loan and lease losses. During the fourth quarter of 2012, the Company refined its allowance calculation whereby it pro-ratably “allocated” the portion of the allowance that was previously deemed to be unallocated allowance to identified loan classes. |
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Impaired loans include nonaccrual loans of $6.6 million at December 31, 2013 and $11.7 million at December 31, 2012. Impaired loans also include performing troubled debt restructured loans of $11.1 million at December 31, 2013 and $6.4 million at December 31, 2012. At December 31, 2013, the allowance allocated to troubled debt restructured loans totaled $1.7 million of which $740 thousand was allocated to nonaccrual loans. At December 31, 2012, the allowance allocated to troubled debt restructured loans totaled $813 thousand of which $240 thousand was allocated to nonaccrual loans. All accruing troubled debt restructured loans were paying in accordance with restructured terms as of December 31, 2013. The Corporation has not committed to lend additional amounts as of December 31, 2013 to customers with outstanding loans that are classified as loan restructurings. |
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The following tables present loans individually evaluated for impairment by class of loans as of December 31, 2013 and 2012: |
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| | 31-Dec-13 | | | | | | | | | | | | | |
| | Unpaid | | | | | | | | | Average | | | Interest | | | | | | | | | | | | | |
| | Principal | | | Recorded | | | Specific | | | Impaired | | | Income | | | | | | | | | | | | | |
(In thousands) | | Balance | | | Investment | | | Reserves | | | Loans | | | Recognized | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 3,777 | | | $ | 2,984 | | | $ | — | | | $ | 4,813 | | | $ | 55 | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 1,346 | | | | 1,193 | | | | — | | | | 1,893 | | | | 36 | | | | | | | | | | | | | |
Investment commercial real estate | | | 5,000 | | | | 5,000 | | | | — | | | | 314 | | | | 4 | | | | | | | | | | | | | |
Commercial and industrial | | | 176 | | | | 161 | | | | — | | | | 121 | | | | 4 | | | | | | | | | | | | | |
Home equity lines of credit | | | 111 | | | | 111 | | | | — | | | | 119 | | | | 5 | | | | | | | | | | | | | |
Junior lien loan on residence | | | 370 | | | | 260 | | | | — | | | | 312 | | | | 5 | | | | | | | | | | | | | |
Total loans with no related allowance | | $ | 10,780 | | | $ | 9,709 | | | $ | — | | | $ | 7,572 | | | $ | 109 | | | | | | | | | | | | | |
With related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 707 | | | $ | 707 | | | $ | 126 | | | $ | 636 | | | $ | 29 | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 2,190 | | | | 2,057 | | | | 464 | | | | 2,100 | | | | 16 | | | | | | | | | | | | | |
Investment commercial real estate | | | 4,949 | | | | 4,949 | | | | 741 | | | | 4,949 | | | | 618 | | | | | | | | | | | | | |
Commercial and industrial | | | 323 | | | | 309 | | | | 309 | | | | 269 | | | | 4 | | | | | | | | | | | | | |
Junior lien loan on residence | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer and other | | | 13 | | | | 13 | | | | 13 | | | | — | | | | — | | | | | | | | | | | | | |
Total loans with related allowance | | $ | 8,182 | | | $ | 8,035 | | | $ | 1,653 | | | $ | 7,954 | | | $ | 667 | | | | | | | | | | | | | |
Total loans individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | $ | 18,962 | | | $ | 17,744 | | | $ | 1,653 | | | $ | 15,526 | | | $ | 776 | | | | | | | | | | | | | |
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| | 31-Dec-12 | | | | | | | | | | | | | |
| | Unpaid | | | | | | | | | Average | | | Interest | | | | | | | | | | | | | |
| | Principal | | | Recorded | | | Specific | | | Impaired | | | Income | | | | | | | | | | | | | |
(In thousands) | | Balance | | | Investment | | | Reserves | | | Loans | | | Recognized | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 8,605 | | | $ | 6,148 | | | $ | — | | | $ | 8,110 | | | $ | 384 | | | | | | | | | | | | | |
Multifamily property | | | — | | | | — | | | | — | | | | 185 | | | | 16 | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 4,971 | | | | 4,724 | | | | — | | | | 9,575 | | | | 570 | | | | | | | | | | | | | |
Investment commercial real estate | | | 336 | | | | — | | | | — | | | | 796 | | | | 51 | | | | | | | | | | | | | |
Commercial and industrial | | | 432 | | | | 345 | | | | — | | | | 640 | | | | 47 | | | | | | | | | | | | | |
Home equity lines of credit | | | 110 | | | | 110 | | | | — | | | | 221 | | | | 11 | | | | | | | | | | | | | |
Junior lien loan on residence | | | 429 | | | | 235 | | | | — | | | | 439 | | | | 30 | | | | | | | | | | | | | |
Total loans with no related allowance | | $ | 14,883 | | | $ | 11,562 | | | $ | — | | | $ | 19,966 | | | $ | 1,109 | | | | | | | | | | | | | |
With related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 1,056 | | | $ | 1,007 | | | $ | 148 | | | $ | 851 | | | $ | 38 | | | | | | | | | | | | | |
Multifamily property | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Investment commercial real estate | | | 5,183 | | | | 5,173 | | | | 384 | | | | 5,013 | | | | 251 | | | | | | | | | | | | | |
Commercial and industrial | | | 78 | | | | 78 | | | | 41 | | | | 92 | | | | 74 | | | | | | | | | | | | | |
Junior lien loan on residence | | | 327 | | | | 327 | | | | 240 | | | | — | | | | 8 | | | | | | | | | | | | | |
Commercial construction | | | — | | | | — | | | | — | | | | 194 | | | | — | | | | | | | | | | | | | |
Total loans with related allowance | | $ | 6,644 | | | $ | 6,585 | | | $ | 813 | | | $ | 6,150 | | | $ | 371 | | | | | | | | | | | | | |
Total loans individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | $ | 21,527 | | | $ | 18,147 | | | $ | 813 | | | $ | 26,116 | | | $ | 1,480 | | | | | | | | | | | | | |
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Cash basis interest income recognized during 2013, 2012 and 2011 was not material. |
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The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2013 and 2012: |
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| | 31-Dec-13 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Loans Past Due Over | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | 90 Days and Still | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Nonaccrual | | | Accruing Interest | | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 2,641 | | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 111 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 260 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily property | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 3,250 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 355 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer and other | | | 13 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 6,630 | | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | 31-Dec-12 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Loans Past Due Over | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | 90 Days and Still | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Nonaccrual | | | Accruing Interest | | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 6,519 | | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 110 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 562 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily property | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 4,317 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 224 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer and other | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 11,732 | | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following tables present the recorded investment in past due loans as of December 31, 2013 and 2012 by class of loans, excluding nonaccrual loans: |
|
| | 31-Dec-13 | | | | | | | | | | | | | | | | | |
| | 30-59 | | | 60-89 | | | Greater Than | | | | | | | | | | | | | | | | | | | | |
| | Days | | | Days | | | 90 Days | | | Total | | | | | | | | | | | | | | | | | |
(In thousands) | | Past Due | | | Past Due | | | Past Due | | | Past Due | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 1,443 | | | $ | 677 | | | $ | — | | | $ | 2,120 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 12 | | | | — | | | | — | | | | 12 | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 703 | | | | — | | | | — | | | | 703 | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 118 | | | | — | | | | — | | | | 118 | | | | | | | | | | | | | | | | | |
Total | | $ | 2,276 | | | $ | 677 | | | $ | — | | | $ | 2,953 | | | | | | | | | | | | | | | | | |
|
| | 31-Dec-12 | | | | | | | | | | | | | | | | | |
| | 30-59 | | | 60-89 | | | Greater Than | | | | | | | | | | | | | | | | | | | | |
| | Days | | | Days | | | 90 Days | | | Total | | | | | | | | | | | | | | | | | |
(In thousands) | | Past Due | | | Past Due | | | Past Due | | | Past Due | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 2,513 | | | $ | 203 | | | $ | — | | | $ | 2,716 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 25 | | | | — | | | | — | | | | 25 | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 31 | | | | — | | | | — | | | | 31 | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 407 | | | | — | | | | — | | | | 407 | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 592 | | | | — | | | | — | | | | 592 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 15 | | | | — | | | | — | | | | 15 | | | | | | | | | | | | | | | | | |
Total | | $ | 3,583 | | | $ | 203 | | | $ | — | | | $ | 3,786 | | | | | | | | | | | | | | | | | |
|
Credit Quality Indicators: |
|
The Corporation places all commercial loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt. The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends. This credit risk rating analysis is performed when the loan is initially underwritten. The credit risk rating is re-evaluated annually by credit underwriters for all loans $500,000 and over; annually through a limited review by Portfolio Managers with the Chief Credit Officer for loans in an amount of $250,000 up to $500,000; annually by an external independent loan review firm for all loans $3,000,000 and over, on a proportional basis by the review firm for loans from $500,000 up to $3,000,000, and on a random sampling basis by the review firm for loans under $500,000; or whenever Management otherwise identifies a positive or negative trend or issue relating to a borrower. The Corporation uses the following definitions for risk ratings: |
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Special Mention: Loans subject to special mention have a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date. |
Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. |
Doubtful: Loans classified as doubtful have all the weakness inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. |
The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loans, the Corporation evaluated credit quality primarily based on the delinquency status of the loan, which was previously presented. |
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. |
The table below presents, based on the most recent analysis performed, the risk category of loans by class of loans for December 31, 2013 and 2012. |
31-Dec-13 |
| | | | | Special | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Pass | | | Mention | | | Substandard | | | Doubtful | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 540,609 | | | $ | 1,510 | | | $ | 4,708 | | | $ | — | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 47,794 | | | | — | | | | 111 | | | | — | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 12,854 | | | | — | | | | 260 | | | | — | | | | | | | | | | | | | | | | | |
Multifamily property | | | 540,993 | | | | 510 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 70,218 | | | | 619 | | | | 8,898 | | | | — | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 238,722 | | | | 9,573 | | | | 19,111 | | | | — | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 51,144 | | | | 23 | | | | 471 | | | | — | | | | | | | | | | | | | | | | | |
Secured by farmland | | | 197 | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Commercial construction | | | 4,340 | | | | 1,553 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Consumer and other loans | | | 15,106 | | | | 837 | | | | 269 | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 1,521,977 | | | $ | 14,625 | | | $ | 33,828 | | | $ | — | | | | | | | | | | | | | | | | | |
|
31-Dec-12 |
| | | | | Special | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Pass | | | Mention | | | Substandard | | | Doubtful | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 517,336 | | | $ | 3,152 | | | $ | 7,315 | | | $ | — | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 49,525 | | | | — | | | | 110 | | | | — | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 11,294 | | | | 37 | | | | 562 | | | | — | | | | | | | | | | | | | | | | | |
Multifamily property | | | 161,229 | | | | 476 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 73,809 | | | | 334 | | | | 10,577 | | | | — | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 216,394 | | | | 13,237 | | | | 12,955 | | | | — | | | | | | | | | | | | | | | | | |
Agricultural production loans | | | 14 | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 25,191 | | | | 134 | | | | 495 | | | | — | | | | | | | | | | | | | | | | | |
Secured by farmland | | | 207 | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Commercial construction | | | 3,999 | | | | 5,324 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Consumer and other loans | | | 15,480 | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 1,074,478 | | | $ | 22,694 | | | $ | 32,014 | | | $ | — | | | | | | | | | | | | | | | | | |
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At December 31, 2013, $17.7 million of the $33.8 million of the substandard loans were also considered impaired as compared to December 31, 2012, when $18.1 million of the $32.0 million of the substandard loans were also considered impaired. |
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The tables below present a rollforward of the allowance for loan losses for the years ended December 31, 2013, 2012 and 2011. |
|
| | January 1, | | | | | | | | | | | | December 31, | | | | | | | | | | | | | |
| | 2013 | | | | | | | | | | | | 2013 | | | | | | | | | | | | | |
| | Beginning | | | | | | | | | | | | Ending | | | | | | | | | | | | | |
(In thousands) | | ALLL | | | Charge-Offs | | | Recoveries | | | Provision | | | ALLL | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 3,047 | | | $ | (611 | ) | | $ | 48 | | | $ | (123 | ) | | $ | 2,361 | | | | | | | | | | | | | |
Home equity lines of credit | | | 267 | | | | — | | | | — | | | | (86 | ) | | | 181 | | | | | | | | | | | | | |
Junior lien loan on residence | | | 314 | | | | (346 | ) | | | 17 | | | | 171 | | | | 156 | | | | | | | | | | | | | |
Multifamily property | | | 1,305 | | | | — | | | | 11 | | | | 2,687 | | | | 4,003 | | | | | | | | | | | | | |
Owner-occupied commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 2,509 | | | | — | | | | 77 | | | | (23 | ) | | | 2,563 | | | | | | | | | | | | | |
Investment commercial real estate | | | 4,155 | | | | (56 | ) | | | 26 | | | | 958 | | | | 5,083 | | | | | | | | | | | | | |
Commercial and industrial | | | 803 | | | | (16 | ) | | | 64 | | | | (26 | ) | | | 825 | | | | | | | | | | | | | |
Secured by farmland | | | 3 | | | | — | | | | — | | | | — | | | | 3 | | | | | | | | | | | | | |
Commercial construction | | | 240 | | | | — | | | | 1 | | | | (121 | ) | | | 120 | | | | | | | | | | | | | |
Consumer and other | | | 92 | | | | (11 | ) | | | 9 | | | | (12 | ) | | | 78 | | | | | | | | | | | | | |
Total ALLL | | $ | 12,735 | | | $ | (1,040 | ) | | $ | 253 | | | $ | 3,425 | | | $ | 15,373 | | | | | | | | | | | | | |
|
| | January 1, | | | | | | | | | | | | December 31, | | | | | | | | | | | | | |
| | 2012 | | | | | | | | | | | | 2012 | | | | | | | | | | | | | |
| | Beginning | | | | | | | | | | | | Ending | | | | | | | | | | | | | |
(In thousands) | | ALLL | | | Charge-Offs | | | Recoveries | | | Provision | | | ALLL | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 2,414 | | | $ | (1,676 | ) | | $ | 3 | | | $ | 2,306 | | | $ | 3,047 | | | | | | | | | | | | | |
Home equity lines of credit | | | 204 | | | | (91 | ) | | | — | | | | 154 | | | | 267 | | | | | | | | | | | | | |
Junior lien loan on residence | | | 64 | | | | (57 | ) | | | 6 | | | | 301 | | | | 314 | | | | | | | | | | | | | |
Multifamily property | | | 705 | | | | (492 | ) | | | — | | | | 1,092 | | | | 1,305 | | | | | | | | | | | | | |
Owner-occupied commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 3,108 | | | | (4,047 | ) | | | 299 | | | | 3,149 | | | | 2,509 | | | | | | | | | | | | | |
Investment commercial real estate | | | 4,181 | | | | (2,448 | ) | | | 17 | | | | 2,405 | | | | 4,155 | | | | | | | | | | | | | |
Agricultural production | | | 1 | | | | — | | | | — | | | | (1 | ) | | | — | | | | | | | | | | | | | |
Commercial and industrial | | | 1,291 | | | | (233 | ) | | | 60 | | | | (315 | ) | | | 803 | | | | | | | | | | | | | |
Secured by farmland | | | — | | | | — | | | | — | | | | 3 | | | | 3 | | | | | | | | | | | | | |
Commercial construction | | | 669 | | | | (72 | ) | | | — | | | | (357 | ) | | | 240 | | | | | | | | | | | | | |
Consumer and other | | | 78 | | | | (43 | ) | | | 11 | | | | 46 | | | | 92 | | | | | | | | | | | | | |
Unallocated | | | 508 | | | | — | | | | — | | | | (508 | ) | | | — | | | | | | | | | | | | | |
Total ALLL | | $ | 13,223 | | | $ | (9,159 | ) | | $ | 396 | | | $ | 8,275 | | | $ | 12,735 | | | | | | | | | | | | | |
|
| | January 1, | | | | | | | | | | | | December 31, | | | | | | | | | | | | | |
| | 2011 | | | | | | | | | | | | 2011 | | | | | | | | | | | | | |
| | Beginning | | | | | | | | | | | | Ending | | | | | | | | | | | | | |
(In thousands) | | ALLL | | | Charge-Offs | | | Recoveries | | | Provision | | | ALLL | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 1,502 | | | $ | (763 | ) | | $ | — | | | $ | 1,675 | | | $ | 2,414 | | | | | | | | | | | | | |
Home equity lines of credit | | | 160 | | | | (89 | ) | | | — | | | | 133 | | | | 204 | | | | | | | | | | | | | |
Junior lien loan on residence | | | 228 | | | | (13 | ) | | | 14 | | | | (165 | ) | | | 64 | | | | | | | | | | | | | |
Multifamily property | | | 303 | | | | (75 | ) | | | 8 | | | | 469 | | | | 705 | | | | | | | | | | | | | |
Owner-occupied commercial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 2,777 | | | | (3,405 | ) | | | 40 | | | | 3,696 | | | | 3,108 | | | | | | | | | | | | | |
Investment commercial real estate | | | 4,759 | | | | (3,287 | ) | | | 48 | | | | 2,661 | | | | 4,181 | | | | | | | | | | | | | |
Agricultural production | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | | | | | | | | | | |
Commercial and industrial | | | 2,719 | | | | (272 | ) | | | 108 | | | | (1,264 | ) | | | 1,291 | | | | | | | | | | | | | |
Commercial construction | | | 1,246 | | | | (607 | ) | | | 11 | | | | 19 | | | | 669 | | | | | | | | | | | | | |
Consumer and other | | | 66 | | | | (28 | ) | | | 1 | | | | 39 | | | | 78 | | | | | | | | | | | | | |
Unallocated | | | 522 | | | | — | | | | — | | | | (14 | ) | | | 508 | | | | | | | | | | | | | |
Total ALLL | | $ | 14,282 | | | $ | (8,539 | ) | | $ | 230 | | | $ | 7,250 | | | $ | 13,223 | | | | | | | | | | | | | |
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Troubled Debt Restructurings: The Corporation has allocated $1.6 million and $723 thousand of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2013 and December 31, 2012, respectively. There were no unfunded commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings. |
During the period ended December 31, 2013, 2012 and 2011, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the followings: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. |
The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2013: |
|
| | | | | Pre-Modification | | | Post-Modification | | | | | | | | | | | | | | | | | | | | | |
| | | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | Investment | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | | 4 | | | $ | 760 | | | $ | 760 | | | | | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 1 | | | | 5,000 | | | | 5,000 | | | | | | | | | | | | | | | | | | | | | |
Total | | | 5 | | | $ | 5,760 | | | $ | 5,760 | | | | | | | | | | | | | | | | | | | | | |
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The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2012: |
|
| | | | | Pre-Modification | | | Post-Modification | | | | | | | | | | | | | | | | | | | | | |
| | | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | Investment | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | | 3 | | | $ | 553 | | | $ | 553 | | | | | | | | | | | | | | | | | | | | | |
Junior lien on residence | | | 1 | | | | 274 | | | | 274 | | | | | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 1 | | | | 2,648 | | | | 2,648 | | | | | | | | | | | | | | | | | | | | | |
Total | | | 5 | | | $ | 3,475 | | | $ | 3,475 | | | | | | | | | | | | | | | | | | | | | |
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The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2011: |
|
| | | | | Pre-Modification | | | Post-Modification | | | | | | | | | | | | | | | | | | | | | |
| | | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | Investment | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | | 3 | | | $ | 1,410 | | | $ | 1,410 | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 1 | | | | 412 | | | | 412 | | | | | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 1 | | | | 4,949 | | | | 4,949 | | | | | | | | | | | | | | | | | | | | | |
Total | | | 5 | | | $ | 6,771 | | | $ | 6,771 | | | | | | | | | | | | | | | | | | | | | |
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The identification of the troubled debt restructured loans did not have a significant impact on the allowance for loan losses. In addition, there were no charge-offs as a result of the classification of these loans as troubled debt restructuring during the years ended December 31, 2013, 2012 and 2011. |
|
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The following table presents loans by class modified as troubled debt restructurings during the year ended December 31, 2013 for which there was a payment default during the same period: |
|
| | Number of | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | | 1 | | | $ | 59 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1 | | | $ | 59 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following table presents loans by class modified as troubled debt restructurings during the year ended December 31, 2012 for which there was a payment default during the same period: |
|
| | Number of | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
Junior lien on residence | | | 1 | | | $ | 240 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1 | | | $ | 240 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following table presents loans by class modified as troubled debt restructurings during the year ended December 31, 2011 for which there was a payment default during the same period: |
|
| | Number of | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied commercial real estate | | | 1 | | | $ | 412 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1 | | | $ | 412 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The defaults described above did not have a material impact on the allowance for loan losses during 2013, 2012 and 2011. |
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In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Corporation’s internal underwriting policy. At the time a loan is restructured, the Bank performs a full re-underwriting analysis, which includes, at a minimum, obtaining current financial statements and tax returns, copies of all leases, and an updated independent appraisal of the property. A loan will continue to accrue interest if it can be reasonably determined that the borrower should be able to perform under the modified terms, that the loan has not been chronically delinquent (both to debt service and real estate taxes) or in nonaccrual status since its inception, and that there have been no charge-offs on the loan. Restructured loans with previous charge-offs would not accrue interest at the time of the troubled debt restructuring. At a minimum, six months of contractual payments would need to be made on a restructured loan before returning a loan to accrual status. Once a loan is classified as a TDR, the loan is reported as a TDR until the loan is paid in full, sold or charged-off. In rare circumstances, a loan may be removed from TDR status, if it meets the requirements of ASC 310-40-50-2. |