Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 3. Loans and Allowance for Loan Losses The Company’s loan and allowance for loan loss policies are as follows: Loans are stated at unpaid principal balances, less net deferred loan fees and the allowance for loan losses. The Company grants real estate mortgage, commercial business and consumer loans. A substantial portion of the loan portfolio is represented by mortgage loans to customers in the Louisville, Kentucky metropolitan statistical area (MSA). The ability of the Company’s customers to honor their loan agreements is dependent upon the real estate and general economic conditions in this area. Loan origination and commitment fees, as well as certain direct costs of underwriting and closing loans, are deferred and amortized as a yield adjustment to interest income over the lives of the related loans using the interest method. Amortization of net deferred loan fees is discontinued when a loan is placed on nonaccrual status. The recognition of income on a loan is discontinued and previously accrued interest is reversed, when interest or principal payments become ninety (90) A loan is restored to accrual status when all principal and interest payments are brought current and the borrower has demonstrated the ability to make future payments of principal and interest as scheduled, which generally requires that the borrower demonstrate a period of performance of at least six For portfolio segments other than consumer loans, the Company’s practice is to charge-off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, the loan’s classification as a loss by regulatory examiners, or for other reasons. A partial charge-off is recorded on a loan when the uncollectibility of a portion of the loan has been confirmed, such as when a loan is discharged in bankruptcy, the collateral is liquidated, a loan is restructured at a reduced principal balance, or other identifiable events that lead management to determine the full principal balance of the loan will not be repaid. A specific reserve is recognized as a component of the allowance for estimated losses on loans individually evaluated for impairment. Partial charge-offs on nonperforming and impaired loans are included in the Company’s historical loss experience used to estimate the general component of the allowance for loan losses as discussed below. Specific reserves are not considered charge-offs in management’s analysis of the allowance for loan losses because they are estimates and the outcome of the loan relationship is undetermined. At March 31, 2017, six $200,000 Consumer loans not secured by real estate are typically charged off at 90 45 The allowance for loan losses reflects management’s judgment of probable loan losses inherent in the loan portfolio at the balance sheet date. Additions to the allowance for loan losses are made by the provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The Company uses a disciplined process and methodology to evaluate the allowance for loan losses on at least a quarterly basis that is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may The allowance consists of specific and general components. The specific component relates to loans that are individually evaluated for impairment or loans otherwise classified as doubtful, substandard, or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and classified loans that are found, upon individual evaluation, to not be impaired. Such loans are pooled by segment and losses are modeled using annualized historical loss experience adjusted for qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent twenty Management also applies additional loss factor multiples to loans classified as watch, special mention and substandard that are not individually evaluated for impairment. The loss factor multiples for classified loans are based on management’s assessment of historical trends regarding losses experienced on classified loans in prior periods. See below for additional discussion of the overall loss factor and loss factor multiples for classified loans as of March 31, 2017 December 31, 2016. Management exercises significant judgment in evaluating the relevant historical loss experience and the qualitative factors. Management also monitors the differences between estimated and actual incurred loan losses for loans considered impaired in order to evaluate the effectiveness of the estimation process and make any changes in the methodology as necessary. Management utilizes the following portfolio segments in its analysis of the allowance for loan losses: residential real estate, land, construction, commercial real estate, commercial business, home equity and second 10 December 31, 2016. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Values for collateral dependent loans are generally based on appraisals obtained from independent licensed real estate appraisers, with adjustments applied for estimated costs to sell the property, costs to complete unfinished or repair damaged property and other factors. New appraisals are generally obtained for all significant properties when a loan is identified as impaired, and a property is considered significant if the value of the property is estimated to exceed $200,000. At March 31, 2017 December 31, 2016, $738,000 $793,000, Loans at March 31, 2017 December 31, 2016 (In thousands) March 31, December 31, Real estate mortgage loans: Residential $ 136,714 $ 137,842 Land 16,252 13,895 Residential construction 30,207 29,561 Commercial real estate 92,825 96,462 Commercial real estate contruction 8,626 8,921 Commercial business loans 26,097 24,056 Consumer loans: Home equity and second mortgage loans 44,456 42,908 Automobile loans 34,657 34,279 Loans secured by savings accounts 1,853 1,879 Unsecured loans 3,661 3,912 Other consumer loans 8,446 9,025 Gross loans 403,794 402,740 Less undisbursed portion of loans in process (16,187 ) (19,037 ) Principal loan balance 387,607 383,703 Deferred loan origination fees, net 895 837 Allowance for loan losses (3,418 ) (3,386 ) Loans, net $ 385,084 $ 381,154 The following table provides the components of the Company’s recorded investment in loans at March 31, 2017: Residential Land Construction Commercial Commercial Home Equity & Other Total (In thousands) Recorded Investment in Loans: Principal loan balance $ 136,714 $ 16,252 $ 22,646 $ 92,825 $ 26,097 $ 44,456 $ 48,617 $ 387,607 Accrued interest receivable 437 37 56 230 69 137 184 1,150 Net deferred loan origination fees and costs 83 16 1 (33 ) 3 825 0 895 Recorded investment in loans $ 137,234 $ 16,305 $ 22,703 $ 93,022 $ 26,169 $ 45,418 $ 48,801 $ 389,652 Recorded Investment in Loans as Evaluated for Impairment: Individually evaluated for impairment $ 2,236 $ 0 $ 0 $ 1,082 $ 123 $ 242 $ 27 $ 3,710 Collectively evaluated for impairment 134,604 16,305 22,703 91,738 26,046 45,176 48,774 385,346 Acquired with deteriorated credit quality 394 0 0 202 0 0 0 596 Ending balance $ 137,234 $ 16,305 $ 22,703 $ 93,022 $ 26,169 $ 45,418 $ 48,801 $ 389,652 The following table provides the components of the Company’s recorded investment in loans at December 31, 2016: Residential Land Construction Commercial Commercial Home Equity & Other Total (In thousands) Recorded Investment in Loans: Principal loan balance $ 137,842 $ 13,895 $ 19,445 $ 96,462 $ 24,056 $ 42,908 $ 49,095 $ 383,703 Accrued interest receivable 455 42 44 249 67 141 226 1,224 Net deferred loan origination fees and costs 80 14 0 (42 ) 3 782 0 837 Recorded investment in loans $ 138,377 $ 13,951 $ 19,489 $ 96,669 $ 24,126 $ 43,831 $ 49,321 $ 385,764 Recorded Investment in Loans as Evaluated for Impairment: Individually evaluated for impairment $ 2,083 $ 0 $ 0 $ 1,217 $ 143 $ 244 $ 20 $ 3,707 Collectively evaluated for impairment 135,904 13,951 19,489 95,212 23,983 43,587 49,301 381,427 Acquired with deteriorated credit quality 390 0 0 240 0 0 0 630 Ending balance $ 138,377 $ 13,951 $ 19,489 $ 96,669 $ 24,126 $ 43,831 $ 49,321 $ 385,764 An analysis of the allowance for loan losses as of March 31, 2017 Residential Land Construction Commercial Commercial Home Equity & Other Total (In thousands) Ending allowance balance attributable to loans: Individually evaluated for impairment $ 19 $ 0 $ 0 $ 0 $ 40 $ 13 $ 2 $ 74 Collectively evaluated for impairment 252 109 223 1,585 204 685 286 3,344 Acquired with deteriorated credit quality 0 0 0 0 0 0 0 0 Ending balance $ 271 $ 109 $ 223 $ 1,585 $ 244 $ 698 $ 288 $ 3,418 An analysis of the allowance for loan losses as of December 31, 2016 Residential Land Construction Commercial Commercial Home Equity & Other Total (In thousands) Ending allowance balance attributable to loans: Individually evaluated for impairment $ 23 $ 0 $ 0 $ 0 $ 43 $ 13 $ 6 $ 85 Collectively evaluated for impairment 357 56 80 1,670 155 670 313 3,301 Acquired with deteriorated credit quality 0 0 0 0 0 0 0 0 Ending balance $ 380 $ 56 $ 80 $ 1,670 $ 198 $ 683 $ 319 $ 3,386 An analysis of the changes in the allowance for loan losses for the three March 31, 2017 Residential Land Construction Commercial Commercial Home Equity & Other Total (In thousands) Allowance for loan losses: Beginning balance $ 380 $ 56 $ 80 $ 1,670 $ 198 $ 683 $ 319 $ 3,386 Provisions for loan losses (85 ) 53 143 (128 ) 85 14 129 211 Charge-offs (40 ) 0 0 (1 ) (43 ) 0 (204 ) (288 ) Recoveries 16 0 0 44 4 1 44 109 Ending balance $ 271 $ 109 $ 223 $ 1,585 $ 244 $ 698 $ 288 $ 3,418 An analysis of the changes in the allowance for loan losses for the three March 31, 2016 Residential Land Construction Commercial Commercial Home Equity & Other Total (In thousands) Allowance for loan losses: Beginning balance $ 527 $ 157 $ 47 $ 1,541 $ 261 $ 626 $ 256 $ 3,415 Provisions for loan losses (29 ) (64 ) (2 ) (63 ) 10 126 97 75 Charge-offs (40 ) (9 ) 0 (14 ) 0 (35 ) (125 ) (223 ) Recoveries 12 0 0 4 2 4 30 52 Ending balance $ 470 $ 84 $ 45 $ 1,468 $ 273 $ 721 $ 258 $ 3,319 At March 31, 2017 December 31, 2016, 0.33% 20% $2.2 March 31, 2017 $1.8 December 31, 2016. March 31, 2017 December 31, 2016. At March 31, 2017 December 31, 2016, 1.18 four 1.18 March 31, 2017 December 31, 2016. $518,000 $501,000 March 31, 2017 December 31, 2016, 10 December 31, 2016. December 31, 2016 March 31, 2017. Management also adjusts the historical loss factors for loans classified as watch, special mention and substandard that are not individually evaluated for impairment. The adjustments consider the increased likelihood of loss on classified loans based on the Company’s separate historical experience for classified loans. The effect of the adjustments for classified loans was to increase the estimated allowance for loan losses by $589,000 $559,000 March 31, 2017 December 31, 2016, December 31, 2016 March 31, 2017, The following table summarizes the Company’s impaired loans as of March 31, 2017 three March 31, 2017 2016. three March 31, 2017 2016. At March 31, 2017 Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 Recorded Unpaid Related Average Interest Average Interest (In thousands) Loans with no related allowance recorded: Residential $ 2,148 $ 2,351 $ 0 $ 2,010 $ 8 $ 1,845 $ 6 Land 0 0 0 0 0 12 0 Construction 0 0 0 0 0 0 0 Commercial real estate 1,082 1,379 0 1,150 3 3,259 19 Commercial business 73 80 0 74 0 65 0 Home equity/2nd mortgage 229 235 0 230 0 56 0 Other consumer 11 11 0 6 0 0 0 3,543 4,056 0 3,470 11 5,237 25 Loans with an allowance recorded: Residential 88 92 19 150 0 134 0 Land 0 0 0 0 0 0 0 Construction 0 0 0 0 0 0 0 Commercial real estate 0 0 0 0 0 233 0 Commercial business 50 50 40 59 0 100 0 Home equity/2nd mortgage 13 14 13 13 0 47 0 Other consumer 16 16 2 18 0 24 0 167 172 74 240 0 538 0 Total: Residential 2,236 2,443 19 2,160 8 1,979 6 Land 0 0 0 0 0 12 0 Construction 0 0 0 0 0 0 0 Commercial real estate 1,082 1,379 0 1,150 3 3,492 19 Commercial business 123 130 40 133 0 165 0 Home equity/2nd mortgage 242 249 13 243 0 103 0 Other consumer 27 27 2 24 0 24 0 $ 3,710 $ 4,228 $ 74 $ 3,710 $ 11 $ 5,775 $ 25 The following table summarizes the Company’s impaired loans as of December 31, 2016: Recorded Unpaid Related (In thousands) Loans with no related allowance recorded: Residential $ 1,871 $ 2,223 $ 0 Land 0 0 0 Construction 0 0 0 Commercial real estate 1,217 1,540 0 Commercial business 75 81 0 Home equity/2nd mortgage 231 237 0 Other consumer 0 0 0 3,394 4,081 0 Loans with an allowance recorded: Residential 212 217 23 Land 0 0 0 Construction 0 0 0 Commercial real estate 0 0 0 Commercial business 68 68 43 Home equity/2nd mortgage 13 14 13 Other consumer 20 20 6 313 319 85 Total: Residential 2,083 2,440 23 Land 0 0 0 Construction 0 0 0 Commercial real estate 1,217 1,540 0 Commercial business 143 149 43 Home equity/2nd mortgage 244 251 13 Other consumer 20 20 6 $ 3,707 $ 4,400 $ 85 Nonperforming loans consists of nonaccrual loans and loans over 90 March 31, 2017 December 31, 2016: March 31, 2017 December 31, 2016 Nonaccrual Loans 90+ Days Total Nonaccrual Loans 90+ Days Total (In thousands) Residential $ 1,789 $ 132 $ 1,921 $ 1,634 $ 55 $ 1,689 Land 0 0 0 0 0 0 Construction 0 0 0 0 0 0 Commercial real estate 903 0 903 924 0 924 Commercial business 123 0 123 142 0 142 Home equity/2nd mortgage 225 0 225 226 0 226 Other consumer 27 11 38 20 23 43 Total $ 3,067 $ 143 $ 3,210 $ 2,946 $ 78 $ 3,024 The following table presents the aging of the recorded investment in loans at March 31, 2017: 30-59 Days 60-89 Days 90 Days or More Total Current Credit Total (In thousands) Residential $ 3,176 $ 563 $ 843 $ 4,582 $ 132,258 $ 394 $ 137,234 Land 75 0 0 75 16,230 0 16,305 Construction 0 0 0 0 22,703 0 22,703 Commercial real estate 420 0 27 447 92,373 202 93,022 Commercial business 70 0 65 135 26,034 0 26,169 Home equity/2nd mortgage 145 60 114 319 45,099 0 45,418 Other consumer 199 24 37 260 48,541 0 48,801 Total $ 4,085 $ 647 $ 1,086 $ 5,818 $ 383,238 $ 596 $ 389,652 The following table presents the aging of the recorded investment in loans at December 31, 2016: 30-59 Days 60-89 Days 90 Days or More Total Current Purchased Total (In thousands) Residential $ 2,444 $ 707 $ 1,021 $ 4,172 $ 133,815 $ 390 $ 138,377 Land 0 52 0 52 13,899 0 13,951 Construction 0 0 0 0 19,489 0 19,489 Commercial real estate 0 0 27 27 96,402 240 96,669 Commercial business 155 0 83 238 23,888 0 24,126 Home equity/2nd mortgage 352 0 13 365 43,466 0 43,831 Other consumer 319 66 43 428 48,893 0 49,321 Total $ 3,270 $ 825 $ 1,187 $ 5,282 $ 379,852 $ 630 $ 385,764 The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, public information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings: Special Mention: may Substandard: Doubtful: Loss: Loans not meeting the criteria above that are analyzed individually as part of the described process are considered to be pass rated loans. The following table presents the recorded investment in loans by risk category as of the date indicated: Residential Land Construction Commercial Commercial Home Equity & Other Total (In thousands) March 31, 2017 Pass $ 133,720 $ 16,150 $ 22,703 $ 84,487 $ 25,320 $ 45,190 $ 48,758 $ 376,328 Special Mention 394 85 0 1,843 648 0 16 2,986 Substandard 1,038 70 0 5,709 78 3 0 6,898 Doubtful 2,082 0 0 983 123 225 27 3,440 Loss 0 0 0 0 0 0 0 0 Total $ 137,234 $ 16,305 $ 22,703 $ 93,022 $ 26,169 $ 45,418 $ 48,801 $ 389,652 December 31, 2016 Pass $ 135,328 $ 13,795 $ 19,489 $ 87,782 $ 23,246 $ 43,601 $ 49,256 $ 372,497 Special Mention 403 86 0 1,892 661 0 45 3,087 Substandard 721 70 0 5,991 77 4 0 6,863 Doubtful 1,925 0 0 1,004 142 226 20 3,317 Loss 0 0 0 0 0 0 0 0 Total $ 138,377 $ 13,951 $ 19,489 $ 96,669 $ 24,126 $ 43,831 $ 49,321 $ 385,764 Troubled Debt Restructurings The following table summarizes the Company’s troubled debt restructurings (TDRs) by accrual status as of March 31, 2017 December 31, 2016: March 31, 2017 December 31, 2016 Accruing Nonaccrual Total Related Allowance Accruing Nonaccrual Total Related Allowance (In thousands) Troubled debt restructurings: Residential real estate $ 333 $ 199 $ 532 $ 0 $ 433 $ 229 $ 662 $ 0 Commercial real estate 178 165 343 0 291 168 459 0 Home equity and 2nd mortgage 17 0 17 0 18 0 18 0 Total $ 528 $ 364 $ 892 $ 0 $ 742 $ 397 $ 1,139 $ 0 At March 31, 2017 December 31, 2016, There were no TDRs that were restructured during the three March 31, 2017 2016. There were no principal charge-offs recorded as a result of TDRs and there was no specific allowance for loan losses related to TDRs modified during the three March 31, 2017 2016. There were no TDRs modified within the previous 12 90 three March 31, 2017 2016. may may Purchased Credit Impaired (PCI) Loans Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan and lease losses. Such loans are accounted for individually or aggregated into pools of loans based on common risk characteristics such as credit score, loan type and date of origination. In determining the estimated fair value of purchased loans or pools, management considers a number of factors including the remaining life, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, and net present value of cash flows expected to be received, among others. Purchased loans that have evidence of credit deterioration since origination for which it is deemed probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 310 30. The following table presents the carrying amount of PCI loans accounted for under ASC 310 30 March 31, 2017 December 31, 2016: (In thousands) March 31 , December 31 , 2016 Residential real estate $ 392 $ 390 Commercial real estate 204 240 Carrying amount 596 630 The outstanding balance of PCI loans accounted for under ASC 310 30, $711,000 $754,000 March 31, 2017 December 31, 2016, There was no allowance for loan losses related to PCI loans at March 31, 2017 December 31, 2016. three March 31, 2017. $6,000 three March 31, 2016. three March 31, 2017 2016. Accretable yield, or income expected to be collected, is as follows for the three March 31, 2017 2016: (In thousands) 2017 2016 Balance at beginning of period $ 252 $ 319 New loans purchased - - Accretion to income (14 ) (25 ) Disposals and other adjustments - (53 ) Reclassification (to) from nonaccretable difference 6 (96 ) Balance at end of period $ 244 $ 145 |