Loans and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2015 |
Receivables [Abstract] | |
Loans and Allowance for Loan Losses | Loans and Allowance for Loan Losses |
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The following table sets forth the composition of the Company’s loan portfolio in dollar amounts and as a percentage of the total loan |
portfolio at the dates indicated. |
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| March 31, 2015 | | December 31, 2014 | | | | | | | | | | | | | | | | | | |
| Amount | | Percent | | Amount | | Percent | | | | | | | | | | | | | | | | | | |
of Total | of Total | | | | | | | | | | | | | | | | | | |
| (Dollars In Thousands) | | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | $ | 120,096 | | | 22 | % | | $ | 118,692 | | | 22.7 | % | | | | | | | | | | | | | | | | | | |
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Home equity | 34,329 | | | 6.3 | % | | 34,508 | | | 6.6 | % | | | | | | | | | | | | | | | | | | |
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Commercial | 272,060 | | | 50 | % | | 249,632 | | | 47.7 | % | | | | | | | | | | | | | | | | | | |
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Total | 426,485 | | | 78.3 | % | | 402,832 | | | 77 | % | | | | | | | | | | | | | | | | | | |
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Construction-residential | 7,545 | | | 1.4 | % | | 8,129 | | | 1.6 | % | | | | | | | | | | | | | | | | | | |
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Construction-commercial | 36,968 | | | 6.8 | % | | 35,786 | | | 6.8 | % | | | | | | | | | | | | | | | | | | |
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Total | 44,513 | | | 8.2 | % | | 43,915 | | | 8.4 | % | | | | | | | | | | | | | | | | | | |
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Total real estate loans | 470,998 | | | 86.5 | % | | 446,747 | | | 85.4 | % | | | | | | | | | | | | | | | | | | |
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Consumer loans | 2,561 | | | 0.5 | % | | 2,662 | | | 0.5 | % | | | | | | | | | | | | | | | | | | |
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Commercial and industrial loans | 71,093 | | | 13 | % | | 74,331 | | | 14.1 | % | | | | | | | | | | | | | | | | | | |
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Total loans | 544,652 | | | 100 | % | | 523,740 | | | 100 | % | | | | | | | | | | | | | | | | | | |
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Deferred loan origination costs, net | 859 | | | | | | 944 | | | | | | | | | | | | | | | | | | | | | | |
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Allowance for loan losses | (5,184 | ) | | | | | (4,927 | ) | | | | | | | | | | | | | | | | | | | | | |
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Loans, net | $ | 540,327 | | | | | | $ | 519,757 | | | | | | | | | | | | | | | | | | | | | | |
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The Company has transferred a portion of its originated commercial real estate and commercial loans to participating lenders. The amounts transferred have been accounted for as sales and therefore not included in the Company’s consolidated statements of financial condition. The Company and participating lenders share proportionally, based on participating agreements, any gains or losses that may result from the borrowers lack of compliance with the terms of the loan. The Company continues to service the loans on behalf of the participating lenders. At March 31, 2015 and December 31, 2014, the Company was servicing loans for participating lenders totaling $17.0 million and $18.0 million, respectively. |
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In accordance with the Company’s asset/liability management strategy and in an effort to reduce interest rate risk, the Company continues to sell fixed rate, low coupon residential real estate loans to the secondary market. The Company sold $334,000 and $1.6 million in residential real estate loans to the secondary market during the three month periods ended March 31, 2015 and 2014, respectively. The unpaid principal balance of residential real estate loans serviced for others was $89.0 million at March 31, 2015 and $91.3 million at December 31, 2014. Management expects to continue to retain servicing rights on all loans written and sold in the secondary market. |
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Credit Quality |
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To evaluate the risk in the loan portfolio, internal credit risk ratings are used for the following loan classes: commercial real estate, commercial construction and commercial and industrial. The risks evaluated in determining an adequate credit risk rating include the financial strength of the borrower and the collateral securing the loan. Commercial loans, including commercial and industrial, commercial real estate and commercial construction loans, are rated from one through nine. Credit risk ratings one through five are considered pass ratings. Classified assets include credit risk ratings of special mention through loss. At least quarterly, classified assets are reviewed by management and by an independent third party. Credit risk ratings are updated as soon as information is obtained that indicates a change in the credit risk rating may be warranted. |
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Residential real estate and residential construction loans are categorized into performing and nonperforming risk ratings. They are considered nonperforming when they are 90 days past due or have not returned to accrual status. Nonperforming residential loans are individually evaluated for impairment. |
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Consumer loans are considered nonperforming when they are 90 days past due or have not returned to accrual status. Consumer loans are not individually evaluated for impairment. |
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Home equity loans are considered nonperforming when they are 90 days past due or have not returned to accrual status. Each nonperforming home equity loan is individually evaluated for impairment. |
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The following describes the credit risk ratings for classified assets: |
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Special mention. Assets that do not currently expose the Company to sufficient risk to warrant classification in one of the following categories but possess potential weaknesses. |
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Substandard. Assets that have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Non-accruing loans are typically classified as substandard. |
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Doubtful. Assets that have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. |
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Loss. Assets rated in this category are considered uncollectible and are charged off against the allowance for loan losses. |
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The following table presents an analysis of total loans segregated by risk rating and segment as of March 31, 2015: |
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| Commercial Credit Risk Exposure | | | | | | | | | | | | | | | | |
| Commercial and Industrial | | Commercial | | Commercial | | Total | | | | | | | | | | | | | | | | |
Construction | Real Estate | | | | | | | | | | | | | | | | |
| (In Thousands) | | | | | | | | | | | | | | | | |
Pass | $ | 64,371 | | | $ | 28,975 | | | $ | 260,345 | | | $ | 353,691 | | | | | | | | | | | | | | | | | |
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Special mention | 3,775 | | | 5,826 | | | 8,535 | | | 18,136 | | | | | | | | | | | | | | | | | |
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Substandard | 2,947 | | | 2,167 | | | 3,180 | | | 8,294 | | | | | | | | | | | | | | | | | |
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Total commercial loans | $ | 71,093 | | | $ | 36,968 | | | $ | 272,060 | | | $ | 380,121 | | | | | | | | | | | | | | | | | |
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| Residential Credit Risk Exposure | | | | | | | | | | | | | | | | |
| Residential | | Residential | | | | | Total | | | | | | | | | | | | | | | | |
Real Estate | Construction | | | | | | | | | | | | | | | | |
| (In Thousands) | | | | | | | | | | | | | | | | |
Performing | $ | 116,054 | | | $ | 7,545 | | | | | $ | 123,599 | | | | | | | | | | | | | | | | | |
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Nonperforming | 4,042 | | | — | | | | | 4,042 | | | | | | | | | | | | | | | | | |
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Total residential loans (1) | $ | 120,096 | | | $ | 7,545 | | | | | | $ | 127,641 | | | | | | | | | | | | | | | | | |
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| Consumer Credit Risk Exposure | | | | | | | | | | | | | | | | |
| Consumer | | Home Equity | | | | | Total | | | | | | | | | | | | | | | | |
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| (In Thousands) | | | | | | | | | | | | | | | | |
Performing | $ | 2,529 | | | $ | 33,983 | | | | | | $ | 36,512 | | | | | | | | | | | | | | | | | |
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Nonperforming | 32 | | | 346 | | | | | 378 | | | | | | | | | | | | | | | | | |
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Total consumer loans | $ | 2,561 | | | $ | 34,329 | | | | | | $ | 36,890 | | | | | | | | | | | | | | | | | |
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(1) At March 31, 2015, the Company had a total of $481,000 in residential real estate loans in the process of foreclosure. |
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The following table presents an analysis of total loans segregated by risk rating and segment as of December 31, 2014: |
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| Commercial Credit Risk Exposure | | | | | | | | | | | | | | | | |
| Commercial and Industrial | | Commercial | | Commercial | | Total | | | | | | | | | | | | | | | | |
Construction | Real Estate | | | | | | | | | | | | | | | | |
| (In Thousands) | | | | | | | | | | | | | | | | |
Pass | $ | 66,442 | | | $ | 27,547 | | | $ | 234,866 | | | $ | 328,855 | | | | | | | | | | | | | | | | | |
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Special mention | 4,991 | | | 5,843 | | | 10,034 | | | 20,868 | | | | | | | | | | | | | | | | | |
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Substandard | 2,898 | | | 2,396 | | | 4,732 | | | 10,026 | | | | | | | | | | | | | | | | | |
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Total commercial loans | $ | 74,331 | | | $ | 35,786 | | | $ | 249,632 | | | $ | 359,749 | | | | | | | | | | | | | | | | | |
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| Residential Credit Risk Exposure | | | | | | | | | | | | | | | | |
| Residential | | Residential | | | | | Total | | | | | | | | | | | | | | | | |
Real Estate | Construction | | | | | | | | | | | | | | | | |
| (In Thousands) | | | | | | | | | | | | | | | | |
Performing | $ | 114,586 | | | $ | 8,129 | | | | | | $ | 122,715 | | | | | | | | | | | | | | | | | |
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Nonperforming | 4,106 | | | — | | | | | | 4,106 | | | | | | | | | | | | | | | | | |
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Total residential loans | $ | 118,692 | | | $ | 8,129 | | | | | | $ | 126,821 | | | | | | | | | | | | | | | | | |
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| Consumer Credit Risk Exposure | | | | | | | | | | | | | | | | |
| Consumer | | Home Equity | | | | | Total | | | | | | | | | | | | | | | | |
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| (In Thousands) | | | | | | | | | | | | | | | | |
Performing | $ | 2,630 | | | $ | 34,159 | | | | | | $ | 36,789 | | | | | | | | | | | | | | | | | |
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Nonperforming | 32 | | | 349 | | | | | | 381 | | | | | | | | | | | | | | | | | |
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Total consumer loans | $ | 2,662 | | | $ | 34,508 | | | | | | $ | 37,170 | | | | | | | | | | | | | | | | | |
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Allowance for Loan Losses |
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The allowance for loan losses is established as losses are estimated to have occurred through a 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 allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. |
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The allowance consists of general and allocated components, as further described below. |
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Loans charged off |
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Commercial and industrial loans. Loans past due more than 120 days are considered for one of three options: charge off the balance of the loan, charge off any excess balance over the fair value of the collateral securing the loan, or continue collection efforts subject to a monthly review until either the balance is collected or a charge-off recommendation can be reasonably made. |
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Residential loans. In general, one-to-four family residential loans and home equity loans that are delinquent 90 days or more or are on nonaccrual status are classified nonperforming. An updated appraisal is obtained when the loan is 90 days or more delinquent. Any outstanding balance in excess of the fair value of the property, less cost to sell, is charged-off against the allowance for loan losses. |
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Consumer loans. Generally all loans are automatically considered for charge-off at 90 to 120 days from the contractual due date, unless there is liquid collateral in hand sufficient to repay principal and interest in full. |
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General Component |
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The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following portfolio segments: residential real estate, residential construction, commercial real estate, commercial and industrial, commercial construction, consumer and home equity. Management uses an average of historical losses based on a time frame appropriate to capture relevant loss data for each portfolio segment. Management deems 48 months to be an appropriate time frame on which to base historical losses for each portfolio segment. This historical loss factor is adjusted for qualitative factors for each portfolio segment including, but not limited to: levels/trends in delinquencies; trends in volume and terms of loans; effects of changes in risk selection and changes in lending policies, experience, ability, depth of lending management and staff; and national and local economic conditions. Management follows a similar process to estimate its liability for off-balance-sheet commitments to extend credit. |
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The qualitative factors are determined based on the various risk characteristics of each portfolio segment. Risk characteristics relevant to each portfolio segment are as follows: |
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Residential real estate loans enable the borrower to purchase or refinance existing homes, most of which serve as the primary residence of the owner. Repayment is dependent on the credit quality of the borrower. Factors attributable to failure of repayment may include a weakened economy and/or unemployment, as well as possible personal considerations. While management anticipates adjustable-rate mortgages will better offset the potential adverse effects of an increase in interest rates as compared to fixed-rate mortgages, the increased mortgage payments required of adjustable-rate loan borrowers in a rising interest rate environment could cause an increase in delinquencies and defaults. The marketability of the underlying property also may be adversely affected in a high interest rate environment. |
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Commercial real estate loans are secured by commercial real estate and residential investment real estate and generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans. Risks in commercial real estate and residential investment lending are borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject to a greater extent than residential real estate loans to adverse conditions in the real estate market or the economy. |
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Commercial and residential construction loans are generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost (including interest) of construction. |
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Commercial and industrial loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value. |
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Consumer and home equity loans may entail greater risk than do residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. In addition, consumer loan collections depend on the borrower’s continuing financial stability, and therefore are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans. |
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The Company does not disaggregate its portfolio segments into loan classes. |
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Allocated Component |
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The allocated component relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis for residential real estate, home equity loans, commercial real estate and commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows or collateral value of the impaired loan is lower than the carrying value of that loan. The Company recognizes the change in present value attributable to the passage of time as provision for loan losses. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment, and the resulting allowance is reported as the general component, as described above. |
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Loans are 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. |
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The Company may periodically agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring ("TDR"). All TDRs are classified as impaired. |
Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer loans for impairment evaluation, except for home equity loans. |
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During the three months ended March 31, 2015, there were no changes in the Company's allowance methodology related to the qualitative or quantitative factors. |
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The following table presents the allowance for loan losses and select loan information as of and for the three months ended March 31, 2015: |
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| Residential | | Residential | | Commercial | | Commercial | | Commercial and Industrial | | Consumer | | Home | | Total |
Real Estate | Construction | Real Estate | Construction | Loans | Equity |
Allowance for loan losses | (In Thousands) |
Balance as of December 31, 2014 | $ | 486 | | | $ | 107 | | | $ | 2,699 | | | $ | 568 | | | $ | 879 | | | $ | 35 | | | $ | 153 | | | $ | 4,927 | |
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Provision for (reduction of) loan losses | 145 | | | (7 | ) | | 152 | | | 83 | | | 24 | | | 5 | | | (2 | ) | | 400 | |
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Recoveries | — | | | — | | | 1 | | | — | | | — | | | 7 | | | 1 | | | 9 | |
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Loans charged off | (85 | ) | | — | | | (3 | ) | | — | | | (53 | ) | | (11 | ) | | — | | | (152 | ) |
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Balance as of March 31, 2015 | $ | 546 | | | $ | 100 | | | $ | 2,849 | | | $ | 651 | | | $ | 850 | | | $ | 36 | | | $ | 152 | | | $ | 5,184 | |
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Allowance for loan losses | | | | | | | | | | | | | | | | | | | | | |
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Collectively evaluated for impairment | $ | 499 | | | $ | 100 | | | $ | 2,816 | | | $ | 651 | | | $ | 818 | | | $ | 36 | | | $ | 149 | | | $ | 5,069 | |
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Individually evaluated for impairment | 47 | | | — | | | 33 | | | — | | | 32 | | | — | | | 3 | | | 115 | |
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Total ending balance | $ | 546 | | | $ | 100 | | | $ | 2,849 | | | $ | 651 | | | $ | 850 | | | $ | 36 | | | $ | 152 | | | $ | 5,184 | |
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Total loans | | | | | | | | | | | | | | | | | | | | | | | |
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Collectively evaluated for impairment | $ | 116,054 | | | $ | 7,545 | | | $ | 270,053 | | | $ | 34,801 | | | $ | 69,313 | | | $ | 2,561 | | | $ | 33,983 | | | $ | 534,310 | |
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Individually evaluated for impairment | 4,042 | | | — | | | 2,007 | | | 2,167 | | | 1,780 | | | — | | | 346 | | | 10,342 | |
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Total ending balance | $ | 120,096 | | | $ | 7,545 | | | $ | 272,060 | | | $ | 36,968 | | | $ | 71,093 | | | $ | 2,561 | | | $ | 34,329 | | | $ | 544,652 | |
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The following table presents the allowance for loan losses and select loan information as of and for the year ended December 31, 2014: |
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| Residential | | Residential | | Commercial | | Commercial | | Commercial and Industrial | | Consumer | | Home | | Total |
Real Estate | Construction | Real Estate | Construction | Loans | Equity |
Allowance for loan losses | (In Thousands) |
Balance as of December 31, 2013 | $ | 650 | | | $ | 94 | | | $ | 2,121 | | | $ | 435 | | | $ | 1,110 | | | $ | 35 | | | $ | 151 | | | $ | 4,596 | |
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Provision for loan losses | 139 | | | 13 | | | 1,479 | | | 1,672 | | | 1,867 | | | 43 | | | 58 | | | 5,271 | |
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Recoveries | — | | | — | | | 74 | | | — | | | 83 | | | 23 | | | 1 | | | 181 | |
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Loans charged off | (303 | ) | | — | | | (975 | ) | | (1,539 | ) | | (2,181 | ) | | (66 | ) | | (57 | ) | | (5,121 | ) |
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Balance as of December 31, 2014 | $ | 486 | | | $ | 107 | | | $ | 2,699 | | | $ | 568 | | | $ | 879 | | | $ | 35 | | | $ | 153 | | | $ | 4,927 | |
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Allowance for loan losses | | | | | | | | | | | | | | | | | | | | | |
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Collectively evaluated for impairment | $ | 481 | | | $ | 107 | | | $ | 2,634 | | | $ | 568 | | | $ | 879 | | | $ | 35 | | | $ | 150 | | | $ | 4,854 | |
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Individually evaluated for impairment | 5 | | | — | | | 65 | | | — | | | — | | | — | | | 3 | | | 73 | |
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Total ending balance | $ | 486 | | | $ | 107 | | | $ | 2,699 | | | $ | 568 | | | $ | 879 | | | $ | 35 | | | $ | 153 | | | $ | 4,927 | |
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Total loans | | | | | | | | | | | | | | | | | | | | | | | |
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Collectively evaluated for impairment | $ | 114,586 | | | $ | 8,129 | | | $ | 246,123 | | | $ | 33,391 | | | $ | 73,286 | | | $ | 2,662 | | | $ | 34,160 | | | $ | 512,337 | |
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Individually evaluated for impairment | 4,106 | | | — | | | 3,509 | | | 2,395 | | | 1,045 | | | — | | | 348 | | | 11,403 | |
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Total ending balance | $ | 118,692 | | | $ | 8,129 | | | $ | 249,632 | | | $ | 35,786 | | | $ | 74,331 | | | $ | 2,662 | | | $ | 34,508 | | | $ | 523,740 | |
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The following table presents the allowance for loan losses and select loan information as of and for the three months ended March 31, 2014: |
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| Residential | | Residential | | Commercial | | Commercial | | Commercial and Industrial | | Consumer | | Home | | Total |
Real Estate | Construction | Real Estate | Construction | Loans | Equity |
Allowance for loan losses | (In Thousands) |
Balance as of December 31, 2013 | $ | 650 | | | $ | 94 | | | $ | 2,121 | | | $ | 435 | | | $ | 1,110 | | | $ | 35 | | | $ | 151 | | | $ | 4,596 | |
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Provision for (reduction of) loan losses | (6 | ) | | 16 | | | 148 | | | 61 | | | 1,929 | | | 13 | | | 40 | | | 2,201 | |
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Recoveries | — | | | — | | | — | | | — | | | 1 | | | 5 | | | — | | | 6 | |
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Loans charged off | (233 | ) | | — | | | — | | | — | | | (2,033 | ) | | (19 | ) | | (56 | ) | | (2,341 | ) |
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Balance as of March 31, 2014 | $ | 411 | | | $ | 110 | | | $ | 2,269 | | | $ | 496 | | | $ | 1,007 | | | $ | 34 | | | $ | 135 | | | $ | 4,462 | |
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Allowance for loan losses | | | | | | | | | | | | | | | | | | | | | |
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Collectively evaluated for impairment | $ | 407 | | | $ | 110 | | | $ | 2,129 | | | $ | 496 | | | $ | 997 | | | $ | 34 | | | $ | 135 | | | $ | 4,308 | |
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Individually evaluated for impairment | 4 | | | — | | | 140 | | | — | | | 10 | | | — | | | — | | | 154 | |
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Total ending balance | $ | 411 | | | $ | 110 | | | $ | 2,269 | | | $ | 496 | | | $ | 1,007 | | | $ | 34 | | | $ | 135 | | | $ | 4,462 | |
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Total loans | | | | | | | | | | | | | | | | | | | | | | | |
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Collectively evaluated for impairment | $ | 110,092 | | | $ | 7,109 | | | $ | 208,845 | | | $ | 39,341 | | | $ | 77,238 | | | $ | 2,358 | | | $ | 31,196 | | | $ | 476,179 | |
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Individually evaluated for impairment | 3,165 | | | — | | | 6,358 | | | 4,098 | | | 1,674 | | | — | | | 240 | | | 15,535 | |
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Total ending balance | $ | 113,257 | | | $ | 7,109 | | | $ | 215,203 | | | $ | 43,439 | | | $ | 78,912 | | | $ | 2,358 | | | $ | 31,436 | | | $ | 491,714 | |
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Impairment |
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The following table presents a summary of information pertaining to impaired loans by segment as of and for the three months ended March 31, 2015: |
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| Recorded | | Unpaid | | Average | | Related | | Interest Income | | | | | | | | | | | | |
Investment | Balance | Recorded | Allowance | Recognized | | | | | | | | | | | | |
| | Investment | | | | | | | | | | | | | | |
| (In Thousands) | | | | | | | | | | | | |
Impaired loans without a valuation allowance: | | | | | | | | | | | | | | | | | | | | |
Residential real estate | $ | 3,182 | | | $ | 3,389 | | | $ | 3,338 | | | $ | — | | | $ | 34 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 1,454 | | | 1,491 | | | 2,077 | | | — | | | 29 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial construction | 2,167 | | | 3,706 | | | 2,281 | | | — | | | 4 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | 1,343 | | | 1,375 | | | 1,194 | | | — | | | 7 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Home equity | 299 | | | 362 | | | 300 | | | — | | | 1 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | $ | 8,445 | | | $ | 10,323 | | | $ | 9,190 | | | $ | — | | | $ | 75 | | | | | | | | | | | | | |
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Impaired loans with a valuation allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Residential real estate | $ | 860 | | | $ | 860 | | | $ | 736 | | | $ | 47 | | | $ | 12 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 553 | | | 599 | | | 681 | | | 33 | | | 6 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | 437 | | | 437 | | | 219 | | | 32 | | | 2 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Home equity | 47 | | | 47 | | | 47 | | | 3 | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | $ | 1,897 | | | $ | 1,943 | | | $ | 1,683 | | | $ | 115 | | | $ | 20 | | | | | | | | | | | | | |
| | | | | | | | | | | |
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Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Residential real estate | $ | 4,042 | | | $ | 4,249 | | | $ | 4,074 | | | $ | 47 | | | $ | 46 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 2,007 | | | 2,090 | | | 2,758 | | | 33 | | | 35 | | | | | | | | | | | | | |
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Commercial construction | 2,167 | | | 3,706 | | | 2,281 | | | — | | | 4 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | 1,780 | | | 1,812 | | | 1,413 | | | 32 | | | 9 | | | | | | | | | | | | | |
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Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Home equity | 346 | | | 409 | | | 347 | | | 3 | | | 1 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | $ | 10,342 | | | $ | 12,266 | | | $ | 10,873 | | | $ | 115 | | | $ | 95 | | | | | | | | | | | | | |
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The $10.3 million of impaired loans include $8.8 million of non-accrual loans. The remaining impaired loans are TDRs or loans for which the Company believes, 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. |
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The following table presents a summary of information pertaining to impaired loans by segment as of and for the year ended December 31, 2014: |
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| Recorded | | Unpaid | | Average | | Related | | Interest Income | | | | | | | | | | | | |
Investment | Balance | Recorded | Allowance | Recognized | | | | | | | | | | | | |
| | Investment | | | | | | | | | | | | | | |
| (In Thousands) | | | | | | | | | | | | |
Impaired loans without a valuation allowance: | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | $ | 3,495 | | | $ | 3,617 | | | $ | 2,634 | | | $ | — | | | $ | 105 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 2,700 | | | 3,317 | | | 3,535 | | | — | | | 55 | | | | | | | | | | | | | |
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Commercial construction | 2,395 | | | 3,934 | | | 3,270 | | | — | | | 111 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | 1,045 | | | 1,057 | | | 1,300 | | | — | | | 43 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Home equity | 301 | | | 366 | | | 238 | | | — | | | 10 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | $ | 9,936 | | | $ | 12,291 | | | $ | 10,977 | | | $ | — | | | $ | 324 | | | | | | | | | | | | | |
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Impaired loans with a valuation allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential real estate | $ | 611 | | | $ | 611 | | | $ | 859 | | | $ | 5 | | | $ | 32 | | | | | | | | | | | | | |
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Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 809 | | | 809 | | | 694 | | | 65 | | | 23 | | | | | | | | | | | | | |
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Commercial construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
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Commercial and industrial | — | | | — | | | 47 | | | — | | | 1 | | | | | | | | | | | | | |
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Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
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Home equity | 47 | | | 47 | | | 65 | | | 3 | | | 1 | | | | | | | | | | | | | |
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Total | $ | 1,467 | | | $ | 1,467 | | | $ | 1,665 | | | $ | 73 | | | $ | 57 | | | | | | | | | | | | | |
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Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential real estate | $ | 4,106 | | | $ | 4,228 | | | $ | 3,493 | | | $ | 5 | | | $ | 137 | | | | | | | | | | | | | |
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Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
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Commercial real estate | 3,509 | | | 4,126 | | | 4,229 | | | 65 | | | 78 | | | | | | | | | | | | | |
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Commercial construction | 2,395 | | | 3,934 | | | 3,270 | | | — | | | 111 | | | | | | | | | | | | | |
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Commercial and industrial | 1,045 | | | 1,057 | | | 1,347 | | | — | | | 44 | | | | | | | | | | | | | |
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Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Home equity | 348 | | | 413 | | | 303 | | | 3 | | | 11 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | $ | 11,403 | | | $ | 13,758 | | | $ | 12,642 | | | $ | 73 | | | $ | 381 | | | | | | | | | | | | | |
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The $11.4 million of impaired loans include $11.2 million of non-accrual loans. The remaining impaired loans are TDRs or loans for which the Company believes, 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. |
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The following table presents a summary of information pertaining to impaired loans by segment as of and for the three months ended March 31, 2014: |
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| Recorded | | Unpaid | | Average | | Related | | Interest Income | | | | | | | | | | | | |
Investment | Balance | Recorded | Allowance | Recognized | | | | | | | | | | | | |
| | Investment | | | | | | | | | | | | | | |
| (In Thousands) | | | | | | | | | | | | |
Impaired loans without a valuation allowance: | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | $ | 2,640 | | | $ | 2,870 | | | $ | 2,088 | | | $ | — | | | $ | 28 | | | | | | | | | | | | | |
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Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 4,914 | | | 5,036 | | | 4,506 | | | — | | | 17 | | | | | | | | | | | | | |
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Commercial construction | 4,098 | | | 4,098 | | | 3,993 | | | — | | | 46 | | | | | | | | | | | | | |
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Commercial and industrial | 1,560 | | | 3,593 | | | 1,407 | | | — | | | 16 | | | | | | | | | | | | | |
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Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
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Home equity | 240 | | | 296 | | | 185 | | | — | | | 3 | | | | | | | | | | | | | |
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Total | $ | 13,452 | | | $ | 15,893 | | | $ | 12,179 | | | $ | — | | | $ | 110 | | | | | | | | | | | | | |
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Impaired loans with a valuation allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential real estate | $ | 525 | | | $ | 525 | | | $ | 824 | | | $ | 4 | | | $ | 7 | | | | | | | | | | | | | |
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Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
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Commercial real estate | 1,444 | | | 1,444 | | | 846 | | | 140 | | | 3 | | | | | | | | | | | | | |
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Commercial construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
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Commercial and industrial | 114 | | | 114 | | | 116 | | | 10 | | | 1 | | | | | | | | | | | | | |
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Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
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Home equity | — | | | — | | | 81 | | | — | | | — | | | | | | | | | | | | | |
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Total | $ | 2,083 | | | $ | 2,083 | | | $ | 1,867 | | | $ | 154 | | | $ | 11 | | | | | | | | | | | | | |
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Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential real estate | $ | 3,165 | | | $ | 3,395 | | | $ | 2,912 | | | $ | 4 | | | $ | 35 | | | | | | | | | | | | | |
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Residential construction | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 6,358 | | | 6,480 | | | 5,352 | | | 140 | | | 20 | | | | | | | | | | | | | |
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Commercial construction | 4,098 | | | 4,098 | | | 3,993 | | | — | | | 46 | | | | | | | | | | | | | |
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Commercial and industrial | 1,674 | | | 3,707 | | | 1,523 | | | 10 | | | 17 | | | | | | | | | | | | | |
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Consumer | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | |
Home equity | 240 | | | 296 | | | 266 | | | — | | | 3 | | | | | | | | | | | | | |
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Total | $ | 15,535 | | | $ | 17,976 | | | $ | 14,046 | | | $ | 154 | | | $ | 121 | | | | | | | | | | | | | |
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The $15.5 million of impaired loans include $10.3 million of non-accrual loans. The remaining impaired loans are TDRs or loans for which the Company believes, 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. |
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Delinquency and Nonaccrual |
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All loan segments greater than 30 days past due are considered delinquent. The Company calculates the number of days past due based on a 30 day month. Management continuously monitors delinquency and nonaccrual levels and trends. It is the Company’s policy to discontinue the accrual of interest on all loan classes when principal or interest payments are delinquent 90 days or more. The accrual of interest is also discontinued for impaired loans that are delinquent 90 days or more or at management’s discretion. |
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All interest accrued, but not collected, for all loan classes, including impaired loans that are placed on nonaccrual or charged off, is reversed against interest income. Interest recognized on these loans is limited to interest payments received until qualifying for return to accrual. All loan classes are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
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The following table presents an aging analysis of past due loans and non-accrual loans at March 31, 2015: |
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| 31-59 Days | | 60-89 Days | | 90 Days or Greater Past Due | | Total | | Current | | Total | | Loans on Nonaccrual | | | | |
Past Due | Past Due | Past Due | Loans | | | | |
| (In Thousands) | | | | |
Residential real estate | $ | 2,078 | | | $ | 176 | | | $ | 807 | | | $ | 3,061 | | | $ | 117,035 | | | $ | 120,096 | | | $ | 4,239 | | | | | |
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Residential construction | — | | | — | | | — | | | — | | | 7,545 | | | 7,545 | | | — | | | | | |
| | | |
Commercial real estate | 423 | | | 68 | | | 81 | | | 572 | | | 271,488 | | | 272,060 | | | 907 | | | | | |
| | | |
Commercial construction | 396 | | | — | | | 1,483 | | | 1,879 | | | 35,089 | | | 36,968 | | | 2,167 | | | | | |
| | | |
Commercial and industrial | 374 | | | 537 | | | 547 | | | 1,458 | | | 69,635 | | | 71,093 | | | 1,150 | | | | | |
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Consumer | 20 | | | 32 | | | — | | | 52 | | | 2,509 | | | 2,561 | | | 32 | | | | | |
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Home equity | 108 | | | — | | | 260 | | | 368 | | | 33,961 | | | 34,329 | | | 261 | | | | | |
| | | |
Total | $ | 3,399 | | | $ | 813 | | | $ | 3,178 | | | $ | 7,390 | | | $ | 537,262 | | | $ | 544,652 | | | $ | 8,756 | | | | | |
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The following table presents an aging analysis of past due loans and non-accrual loans at December 31, 2014: |
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| 31-59 Days | | 60-89 Days | | 90 Days or Greater Past Due | | Total | | Current | | Total | | Loans on Nonaccrual | | | | |
Past Due | Past Due | Past Due | Loans | | | | |
| (In Thousands) | | | | |
Residential real estate | $ | 3,396 | | | $ | 542 | | | $ | 1,212 | | | $ | 5,150 | | | $ | 113,542 | | | $ | 118,692 | | | $ | 4,308 | | | | | |
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Residential construction | — | | | — | | | — | | | — | | | 8,129 | | | 8,129 | | | — | | | | | |
| | | |
Commercial real estate | 913 | | | — | | | 2,385 | | | 3,298 | | | 246,334 | | | 249,632 | | | 3,000 | | | | | |
| | | |
Commercial construction | 550 | | | — | | | 1,558 | | | 2,108 | | | 33,678 | | | 35,786 | | | 2,396 | | | | | |
| | | |
Commercial and industrial | 218 | | | 434 | | | 513 | | | 1,165 | | | 73,166 | | | 74,331 | | | 1,196 | | | | | |
| | | |
Consumer | 28 | | | — | | | 13 | | | 41 | | | 2,621 | | | 2,662 | | | 32 | | | | | |
| | | |
Home equity | 77 | | | 30 | | | 263 | | | 370 | | | 34,138 | | | 34,508 | | | 261 | | | | | |
| | | |
Total | $ | 5,182 | | | $ | 1,006 | | | $ | 5,944 | | | $ | 12,132 | | | $ | 511,608 | | | $ | 523,740 | | | $ | 11,193 | | | | | |
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Troubled Debt Restructuring (TDR) |
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TDR loans consist of loans where the Company, for economic or legal reasons related to the borrower’s financial difficulties, granted a concession to the borrower that the Company would not otherwise consider. TDR loans can take the form of a reduction in the stated interest rate, receipts of assets from a debtor in partial or full satisfaction of a loan, the extension of the maturity date, or the reduction of either the interest or principal. Once a loan has been identified as a TDR, it is classified as impaired and will continue to be reported as a TDR until the loan is paid in full. |
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In the normal course of business, the Company may modify a loan for a credit worthy borrower where the modified loan is not considered a TDR. In these cases, the modified terms are consistent with loan terms available to credit worthy borrowers and within normal loan pricing. The modifications to such loans are done according to existing underwriting standards which include review of historical financial statements, including current interim information if available, and an analysis of the borrower’s performance and projections to assess repayment ability going forward. |
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During the three months ended March 31, 2015, the Company had no TDRs that had defaulted and had been modified within the previous twelve month period. During the three months ended March 31, 2014, the Company had one TDR totaling $201,000 that had defaulted and had been modified within the previous twelve month period. TDR loans are considered defaulted at 90 days past due. |
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The Company did not have any new TDR activity during the three months ended March 31, 2015 and 2014. |
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The following is a summary of TDR loans by segment as of the dates indicated: |
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| | As of March 31, 2015 | | As of December 31, 2014 | | | | | | | | | | | | | | | | | |
| | Number of | | Recorded Investment | | Number of Loans | | Recorded Investment | | | | | | | | | | | | | | | | | |
Loans | | | | | | | | | | | | | | | | | |
| | (Dollars In Thousands) | | | | | | | | | | | | | | | | | |
Residential real estate | | 4 | | | $ | 862 | | | 4 | | | $ | 865 | | | | | | | | | | | | | | | | | | |
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Residential construction | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | |
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Commercial real estate | | 4 | | | 572 | | | 4 | | | 575 | | | | | | | | | | | | | | | | | | |
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Commercial construction | | 2 | | | 1,879 | | | 2 | | | 2,108 | | | | | | | | | | | | | | | | | | |
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Commercial and industrial | | 4 | | | 128 | | | 4 | | | 141 | | | | | | | | | | | | | | | | | | |
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Consumer | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | |
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Home equity | | 1 | | | 33 | | | 1 | | | 33 | | | | | | | | | | | | | | | | | | |
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Total | | 15 | | | $ | 3,474 | | | 15 | | | $ | 3,722 | | | | | | | | | | | | | | | | | | |
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