Allowance for Credit Losses [Text Block] | Note 4: Credit Quality Assessment Allowance for Credit Losses The following table provides information on the activity in the allowance for credit losses by the respective loan portfolio segment for the three month periods ended March 31, 2017 and 2016: March 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance for credit losses: Beginning balance $ 511 $ 454 $ 89 $ 327 $ 1,120 $ 3,800 $ 127 $ 6,428 Charge-offs - (50 ) (23 ) - - (1,112 ) (108 ) (1,293 ) Recoveries - - - - 1 12 12 25 Provision for credit losses 23 100 33 68 (23 ) (39 ) 38 200 Ending balance $ 534 $ 504 $ 99 $ 395 $ 1,098 $ 2,661 $ 69 $ 5,360 March 31, 2016 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance for credit losses: Beginning balance $ 265 $ 300 $ 47 $ 309 $ 728 $ 3,094 $ 126 $ 4,869 Charge-offs - - - - - (7 ) (11 ) (18 ) Recoveries - - - - 2 9 9 20 Provision for credit losses 97 49 9 234 108 (53 ) (59 ) 385 Ending balance $ 362 $ 349 $ 56 $ 543 $ 838 $ 3,043 $ 65 $ 5,256 The following table provides additional information on the allowance for credit losses at March 31, 2017 and December 31, 2016: March 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance allocated to: individually evaluated for impairment $ - $ 7 $ - $ - $ - $ 633 $ - $ 640 collectively evaluated for impairment 534 497 99 395 1,098 2,028 69 4,720 Loans: Ending balance $ 79,051 $ 191,997 $ 37,236 $ 149,871 $ 212,516 $ 170,855 $ 4,419 $ 845,945 individually evaluated for impairment 125 1,551 14 739 3,473 3,838 - 9,740 collectively evaluated for impairment 78,926 190,446 37,222 149,132 209,043 167,017 4,419 836,205 December 31, 2016 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Allowance allocated to: individually evaluated for impairment $ - $ 7 $ - $ - $ - $ 2,076 $ 72 $ 2,155 collectively evaluated for impairment 511 447 89 327 1,120 1,724 55 4,273 Loans: Ending balance $ 72,973 $ 195,032 $ 35,009 $ 134,213 $ 216,781 $ 162,715 $ 4,801 $ 821,524 individually evaluated for impairment 125 785 37 509 3,148 5,142 167 9,913 collectively evaluated for impairment 72,848 194,247 34,972 133,704 213,633 157,573 4,634 811,611 When potential losses are identified, a specific provision and/or charge-off may be taken, based on the then current likelihood of repayment, that is at least in the amount of the collateral deficiency, and any potential collection costs, as determined by the independent third party appraisal. All loans that are considered impaired are subject to the completion of an impairment analysis. This analysis highlights any potential collateral deficiencies. A specific amount of impairment is established based on the Bank’s calculation of the probable loss inherent in the individual loan. The actual occurrence and severity of losses involving impaired credits can differ substantially from estimates. Credit risk profile by portfolio segment based upon internally assigned risk assignments are presented below: March 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Credit quality indicators: Not classified $ 79,051 $ 190,161 $ 37,222 $ 149,132 $ 208,283 $ 166,314 $ 4,419 $ 834,582 Special mention - - - - - - - - Substandard - 1,596 14 739 4,233 2,749 - 9,331 Doubtful - 240 - - - 1,792 - 2,032 Total $ 79,051 $ 191,997 $ 37,236 $ 149,871 $ 212,516 $ 170,855 $ 4,419 $ 845,945 December 31, 2016 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Credit quality indicators: Not classified $ 72,973 $ 193,748 $ 34,972 $ 133,704 $ 212,765 $ 157,567 $ 4,634 $ 810,363 Special mention - - - - - 524 - 524 Substandard - 793 - - 2,941 - - 3,734 Doubtful - 491 37 509 1,075 4,624 167 6,903 Total $ 72,973 $ 195,032 $ 35,009 $ 134,213 $ 216,781 $ 162,715 $ 4,801 $ 821,524 · Special Mention · Substandard · Doubtful Loans classified Special Mention, Substandard, Doubtful or Loss are reviewed at least quarterly to determine their appropriate classification. All commercial loan relationships are reviewed annually. Non-classified residential mortgage loans and consumer loans are not evaluated unless a specific event occurs to raise the awareness of possible credit deterioration. An aged analysis of past due loans are as follows: March 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Analysis of past due loans: Accruing loans current $ 79,051 $ 187,906 $ 36,947 $ 148,856 $ 208,054 $ 166,827 $ 4,388 $ 832,029 Accruing loans past due: 31-59 days past due - 2,663 275 - 2,759 105 31 5,833 60-89 days past due - 169 - - - 575 - 744 Greater than 90 days past due - - - 276 302 5 - 583 Total past due - 2,832 275 276 3,061 685 31 7,160 Non-accrual loans - 1,259 14 739 1,401 3,343 - 6,756 Total loans $ 79,051 $ 191,997 $ 37,236 $ 149,871 $ 212,516 $ 170,855 $ 4,419 $ 845,945 December 31, 2016 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Analysis of past due loans: Accruing loans current $ 72,775 $ 191,216 $ 34,634 $ 133,638 $ 212,537 $ 157,464 $ 4,631 $ 806,895 Accruing loans past due: 31-59 days past due - 2,653 334 66 466 593 1 4,113 60-89 days past due 197 374 4 - - 34 1 610 Greater than 90 days past due 1 298 - - 2,703 - 1 3,003 Total past due 198 3,325 338 66 3,169 627 3 7,726 Non-accrual loans - 491 37 509 1,075 4,624 167 6,903 Total loans $ 72,973 $ 195,032 $ 35,009 $ 134,213 $ 216,781 $ 162,715 $ 4,801 $ 821,524 Total loans either in non-accrual status or in excess of 90 days delinquent totaled $7.3 million or 0.9% of total loans outstanding at March 31, 2017, which represents a decrease from $9.9 million or 1.2% at December 31, 2016. March 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) & land first lien junior lien occupied occupied and leases loans Total Impaired loans: Recorded investment $ 125 $ 1,551 $ 14 $ 739 $ 3,473 $ 3,838 $ - $ 9,740 With an allowance recorded - 212 - - - 1,594 - 1,806 With no related allowance recorded 125 1,339 14 739 3,473 2,244 - 7,934 Related allowance - 7 - - - 633 - 640 Unpaid principal 125 1,591 15 740 3,606 5,475 - 11,552 Average balance of impaired loans 125 1,621 15 750 3,770 6,004 - 12,285 Interest income recognized 1 7 - - 38 28 - 74 December 31, 2016 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) & land first lien junior lien occupied occupied and leases loans Total Impaired loans: Recorded investment $ 125 $ 785 $ 37 $ 509 $ 3,148 $ 5,142 $ 167 $ 9,913 With an allowance recorded - 214 - - - 3,477 140 3,831 With no related allowance recorded 125 571 37 509 3,148 1,665 27 6,082 Related allowance - 7 - - - 2,076 72 2,155 Unpaid principal 125 1,323 38 509 3,286 5,694 174 11,149 Average balance of impaired loans 378 835 38 536 3,452 6,455 176 11,870 Interest income recognized 4 29 - 24 47 234 1 339 March 31, 2016 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) & land first lien junior lien occupied occupied and leases loans Total Impaired loans: Average balance of impaired loans - 325 - - 2,667 4,244 - 7,236 Interest income recognized - 5 - - - 34 - 39 Included in the total impaired loans above were non-accrual loans of $6.8 million and $6.9 million at March 31, 2017 and December 31, 2016, respectively. Interest income that would have been recorded if non-accrual loans had been current and in accordance with their original terms was $213 thousand and $60 thousand for the first three months of 2017 and 2016, respectively. March 31, 2017 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Acquired Impaired Loans: Substandard Contractual payment receivable $ - $ - $ - $ - $ 464 $ - $ - $ 464 Non-Accretable adjustment - - - - - - - - Cash flow expected - - - - 464 - - 464 Accretable yield - - - - 18 - - 18 Loan receivable $ - $ - $ - $ - $ 446 $ - $ - $ 446 Doubtful Contractual payment receivable $ - $ - $ - $ - $ 611 $ 1,051 $ - $ 1,662 Non-Accretable adjustment - - - - 125 479 - 604 Cash flow expected - - - - 486 572 - 1,058 Accretable yield - - - - 7 28 - 35 Loan receivable $ - $ - $ - $ - $ 479 $ 544 $ - $ 1,023 December 31, 2016 Commercial Commercial Commercial Construction Residential Residential owner non-owner loans Consumer (in thousands) and land first lien junior lien occupied occupied and leases loans Total Acquired Impaired Loans: Substandard Contractual payment receivable $ - $ - $ - $ - $ 466 $ - $ - $ 466 Non-Accretable adjustment - - - - - - - - Cash flow expected - - - - 466 - - 466 Accretable yield - - - - 18 - - 18 Loan receivable $ - $ - $ - $ - $ 448 $ - $ - $ 448 Doubtful Contractual payment receivable $ - $ - $ - $ - $ 619 $ 1,777 $ - $ 2,396 Non-Accretable adjustment - - - - 125 486 - 611 Cash flow expected - - - - 494 1,291 - 1,785 Accretable yield - - - - 13 65 - 78 Loan receivable $ - $ - $ - $ - $ 481 $ 1,226 $ - $ 1,707 Loans may have their terms restructured (e.g., interest rates, loan maturity date, payment and amortization period, etc.) in circumstances that provide payment relief to a borrower experiencing financial difficulty. Such restructured loans are considered trouble debt restructured loans (“TDRs”) that may either be impaired loans that may either be in accruing status or non-accruing status. Non-accruing restructured loans may return to accruing status provided there is a sufficient period of payment performance in accordance with the restructure terms. Loans may be removed from the restructured category in the year subsequent to the restructuring if: a) the restructuring agreement specifies an interest rate equal to or greater than the rate that the creditor was willing to accept at the time of restructuring for a new loan with comparable risk; and b) the loan is not impaired based on the terms specified by the restructuring agreement. TDRs at March 31, 2017 and December 31, 2016 are as follows: March 31, 2017 Number Non-Accrual Number Accrual Total (dollars in thousands) of Loans Status of Loans Status TDRs Construction and land - $ - 1 $ 125 $ 125 Residential real estate - first lien 1 212 1 292 504 Commercial - non-owner occupied 1 594 1 2,073 2,667 Commercial loans and leases 1 514 1 169 683 3 $ 1,320 4 $ 2,659 $ 3,979 December 31, 2016 Number Non-Accrual Number Accrual Total (dollars in thousands) of Loans Status of Loans Status TDRs Construction and land - $ - 1 $ 125 $ 125 Residential real estate - first lien 1 214 1 294 508 Commercial - non-owner occupied 1 594 1 2,073 2,667 Commercial loans and leases 1 913 1 183 1,096 Consumer 1 140 - - 140 4 $ 1,861 4 $ 2,675 $ 4,536 A summary of TDR modifications outstanding and performing under modified terms are as follows: March 31, 2017 Not Performing Performing Related to Modified to Modified Total (in thousands) Allowance Terms Terms TDRs Construction and land Extension or other modification $ - $ - $ 125 $ 125 Residential real estate - first lien Extension or other modification 7 212 292 504 Commercial RE - non-owner occupied Rate modification - 594 2,073 2,667 Commercial loans Forbearance - 514 169 683 Total troubled debt restructure loans $ 7 $ 1,320 $ 2,659 $ 3,979 December 31, 2016 Not Performing Performing Related to Modified to Modified Total (in thousands) Allowance Terms Terms TDRs Construction and land Extension or other modification $ - $ - $ 125 $ 125 Residential real estate - first lien Extension or other modification 7 214 294 508 Commercial RE - non-owner occupied Rate modification - 594 2,073 2,667 Commercial loans Extension or other modification 913 913 183 1,096 Consumer Extension or other modification 72 140 - 140 Total troubled debt restructure loans $ 992 $ 1,861 $ 2,675 $ 4,536 There were no new loans restructured during the three months ended March 31, 2017, however, there were four loans totaling $1.4 million restructured in 2016 consisting of the following: · One commercial loan in the amount of $183 thousand for which the Bank extended the maturity and allowed for a principal and interest payment over time. · One land development loan in the amount of $125 thousand that included a paydown from the guarantor, partial debt forgiveness by the Bank and a reduction of the interest rate on the remaining balance of the loan, which the Bank anticipates will be fully repaid. · One residential first lien mortgage in the amount of $214 thousand that was restructured with an extension of the original term. · The restructuring of a $913 thousand commercial loan through a forbearance agreement that deferred payments. As a part of the modification of the land development loan restructured during 2016, the Bank agreed to forgive $215 thousand in debt, and recorded this amount as a loss. The pre-modification principal amount on this loan was $340 thousand, while the post-modification principal amount was reduced to $125 thousand. The other modifications have been only interest rate concessions and payment term extensions, not principal reductions that resulted in the recordation of a loss. Thus, the pre-modification and post-modification recorded investment amounts are the same for these TDRs. Performing TDRs were in compliance with their modified terms and there are no further commitments associated with these loans. During the three months ended March 31, 2017 there were no TDRs that subsequently defaulted within twelve months of their modification dates. There was one consumer loan restructured in 2015 in the amount of $150 thousand that defaulted during the first three months of 2017. Management routinely evaluates other real estate owned (“OREO”) based upon periodic appraisals. For the three months ended March 31, 2017 and 2016 there were no additional valuation allowances recorded as the current appraised value, less estimated cost to sell, was sufficient to cover the recorded OREO amount. For the three months ended March 31, 2017 and 2016 there were no new loans transferred from loans to OREO. The Company did not sell any properties held as OREO during the first three months of 2017 or 2016. |