Loans and Allowance for Loan Losses | 6 Months Ended |
Jun. 30, 2014 |
Receivables [Abstract] | ' |
Loans and Allowance for Loan Losses | ' |
3 | Loans and Allowance for Loan Losses | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following table presents the Corporation’s loan portfolio by category of loans as of June 30, 2014, and December 31, 2013. |
|
LOAN PORTFOLIO |
(DOLLARS IN THOUSANDS) |
|
| | June 30, | | December 31, | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | |
| | $ | | $ | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 95,354 | | | | 97,243 | | | | | | | | | | | | | | | | | | | | | |
Agriculture mortgages | | | 129,751 | | | | 114,533 | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 8,507 | | | | 9,399 | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | 233,612 | | | | 221,175 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer real estate (a) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential mortgages | | | 123,039 | | | | 127,253 | | | | | | | | | | | | | | | | | | | | | |
Home equity loans | | | 9,994 | | | | 10,889 | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 24,158 | | | | 21,097 | | | | | | | | | | | | | | | | | | | | | |
Total consumer real estate | | | 157,191 | | | | 159,239 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 27,891 | | | | 28,719 | | | | | | | | | | | | | | | | | | | | | |
Tax-free loans | | | 12,573 | | | | 10,622 | | | | | | | | | | | | | | | | | | | | | |
Agriculture loans | | | 12,757 | | | | 14,054 | | | | | | | | | | | | | | | | | | | | | |
Total commercial and industrial | | | 53,221 | | | | 53,395 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 3,723 | | | | 4,063 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross loans prior to deferred fees | | | 447,747 | | | | 437,872 | | | | | | | | | | | | | | | | | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deferred loan costs, net | | | (403 | ) | | | (348 | ) | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | 6,968 | | | | 7,219 | | | | | | | | | | | | | | | | | | | | | |
Total net loans | | | 441,182 | | | | 431,001 | | | | | | | | | | | | | | | | | | | | | |
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(a) | Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets, totaled $8,138,000 and $4,866,000 as of June 30, 2014, and December 31, 2013, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The Corporation grades commercial credits differently than consumer credits. The following tables represent all of the Corporation’s commercial credit exposures by internally assigned grades as of June 30, 2014 and December 31, 2013. The grading analysis estimates the capability of the borrower to repay the contractual obligations under the loan agreements as scheduled. The Corporation's internal commercial credit risk grading system is based on experiences with similarly graded loans. |
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The Corporation's internally assigned grades for commercial credits are as follows: |
|
| · | Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| · | Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected. | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| · | Substandard – loans that have a well-defined weakness based on objective evidence and characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| · | Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances. | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| · | Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted. | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
COMMERCIAL CREDIT EXPOSURE |
CREDIT RISK PROFILE BY INTERNALLY ASSIGNED GRADE |
(DOLLARS IN THOUSANDS) |
|
30-Jun-14 | | Commercial | | Agriculture | | Construction | | Commercial | | Tax-free | | Agriculture | | Total |
Mortgages | Mortgages | and | Loans | Loans |
| | Industrial | | |
| | $ | | $ | | $ | | $ | | $ | | $ | | $ |
Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 84,690 | | | | 125,996 | | | | 6,142 | | | | 26,578 | | | | 12,573 | | | | 12,201 | | | | 268,180 | |
Special Mention | | | 4,415 | | | | 1,266 | | | | — | | | | 211 | | | | — | | | | 350 | | | | 6,242 | |
Substandard | | | 6,249 | | | | 2,489 | | | | 2,365 | | | | 1,102 | | | | — | | | | 206 | | | | 12,411 | |
Doubtful | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 95,354 | | | | 129,751 | | | | 8,507 | | | | 27,891 | | | | 12,573 | | | | 12,757 | | | | 286,833 | |
|
|
31-Dec-13 | | Commercial | | Agriculture | | Construction | | Commercial | | Tax-free | | Agriculture | | Total |
Mortgages | Mortgages | and | Loans | Loans |
| | Industrial | | |
| | $ | | $ | | $ | | $ | | $ | | $ | | $ |
Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 85,683 | | | | 112,253 | | | | 7,402 | | | | 27,082 | | | | 10,390 | | | | 13,425 | | | | 256,235 | |
Special Mention | | | 4,996 | | | | — | | | | — | | | | 213 | | | | — | | | | 293 | | | | 5,502 | |
Substandard | | | 6,564 | | | | 2,280 | | | | 1,997 | | | | 1,424 | | | | 232 | | | | 336 | | | | 12,833 | |
Doubtful | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 97,243 | | | | 114,533 | | | | 9,399 | | | | 28,719 | | | | 10,622 | | | | 14,054 | | | | 274,570 | |
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For consumer loans, the Corporation evaluates credit quality based on whether the loan is considered performing or non-performing. Non-performing loans consist of those loans greater than 90 days delinquent and nonaccrual loans. The following tables present the balances of consumer loans by classes of the loan portfolio based on payment performance as of June 30, 2014 and December 31, 2013: |
|
CONSUMER CREDIT EXPOSURE |
CREDIT RISK PROFILE BY PAYMENT PERFORMANCE |
(DOLLARS IN THOUSANDS) |
|
30-Jun-14 | | 1-4 Family | | Home Equity | | Home Equity | | Consumer | | Total | | | | | | | | |
Residential | Loans | Lines of | | | | | | | | |
Mortgages | | Credit | | | | | | | | |
Payment performance: | | $ | | $ | | $ | | $ | | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Performing | | | 122,757 | | | | 9,994 | | | | 24,158 | | | | 3,723 | | | | 160,632 | | | | | | | | | |
Non-performing | | | 282 | | | | — | | | | — | | | | — | | | | 282 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 123,039 | | | | 9,994 | | | | 24,158 | | | | 3,723 | | | | 160,914 | | | | | | | | | |
|
31-Dec-13 | | 1-4 Family | | Home Equity | | Home Equity | | Consumer | | Total | | | | | | | | |
Residential | Loans | Lines of | | | | | | | | |
Mortgages | | Credit | | | | | | | | |
Payment performance: | | $ | | $ | | $ | | $ | | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Performing | | | 127,039 | | | | 10,889 | | | | 21,097 | | | | 4,046 | | | | 163,071 | | | | | | | | | |
Non-performing | | | 214 | | | | — | | | | — | | | | 17 | | | | 231 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 127,253 | | | | 10,889 | | | | 21,097 | | | | 4,063 | | | | 163,302 | | | | | | | | | |
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The following tables present an age analysis of the Corporation’s past due loans, segregated by loan portfolio class, as of June 30, 2014 and December 31, 2013: |
|
AGING OF LOANS RECEIVABLE |
(DOLLARS IN THOUSANDS) |
|
| | | | | | | | | | | | | | Loans |
| | | | | | Greater | | | | | | | | Receivable > |
| | 30-59 Days | | 60-89 Days | | than 90 | | Total Past | | | | Total Loans | | 90 Days and |
30-Jun-14 | | Past Due | | Past Due | | Days | | Due | | Current | | Receivable | | Accruing |
| | $ | | $ | | $ | | $ | | $ | | $ | | $ |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | — | | | | 197 | | | | — | | | | 197 | | | | 95,157 | | | | 95,354 | | | | — | |
Agriculture mortgages | | | 62 | | | | — | | | | — | | | | 62 | | | | 129,689 | | | | 129,751 | | | | — | |
Construction | | | — | | | | — | | | | — | | | | — | | | | 8,507 | | | | 8,507 | | | | — | |
Consumer real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential mortgages | | | 921 | | | | 122 | | | | 282 | | | | 1,325 | | | | 121,714 | | | | 123,039 | | | | 282 | |
Home equity loans | | | 18 | | | | — | | | | — | | | | 18 | | | | 9,976 | | | | 9,994 | | | | — | |
Home equity lines of credit | | | 13 | | | | — | | | | — | | | | 13 | | | | 24,145 | | | | 24,158 | | | | — | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 40 | | | | — | | | | 12 | | | | 52 | | | | 27,839 | | | | 27,891 | | | | — | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | 12,573 | | | | 12,573 | | | | — | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | 12,757 | | | | 12,757 | | | | — | |
Consumer | | | 3 | | | | 5 | | | | — | | | | 8 | | | | 3,715 | | | | 3,723 | | | | — | |
Total | | | 1,057 | | | | 324 | | | | 294 | | | | 1,675 | | | | 446,072 | | | | 447,747 | | | | 282 | |
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| | | | | | | | | | | | | | Loans |
| | | | | | Greater | | | | | | | | Receivable > |
| | 30-59 Days | | 60-89 Days | | than 90 | | Total Past | | | | Total Loans | | 90 Days and |
31-Dec-13 | | Past Due | | Past Due | | Days | | Due | | Current | | Receivable | | Accruing |
| | $ | | $ | | $ | | $ | | $ | | $ | | $ |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | — | | | | 205 | | | | — | | | | 205 | | | | 97,038 | | | | 97,243 | | | | — | |
Agriculture mortgages | | | 69 | | | | — | | | | — | | | | 69 | | | | 114,464 | | | | 114,533 | | | | — | |
Construction | | | — | | | | — | | | | — | | | | — | | | | 9,399 | | | | 9,399 | | | | — | |
Consumer real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential mortgages | | | 1,089 | | | | 401 | | | | 214 | | | | 1,704 | | | | 125,549 | | | | 127,253 | | | | 214 | |
Home equity loans | | | 57 | | | | — | | | | — | | | | 57 | | | | 10,832 | | | | 10,889 | | | | — | |
Home equity lines of credit | | | 15 | | | | 13 | | | | — | | | | 28 | | | | 21,069 | | | | 21,097 | | | | — | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 20 | | | | — | | | | — | | | | 20 | | | | 28,699 | | | | 28,719 | | | | — | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | 10,622 | | | | 10,622 | | | | — | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | 14,054 | | | | 14,054 | | | | — | |
Consumer | | | 10 | | | | 13 | | | | 17 | | | | 40 | | | | 4,023 | | | | 4,063 | | | | 17 | |
Total | | | 1,260 | | | | 632 | | | | 231 | | | | 2,123 | | | | 435,749 | | | | 437,872 | | | | 231 | |
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The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2014 and December 31, 2013: |
|
NONACCRUAL LOANS BY LOAN CLASS |
(DOLLARS IN THOUSANDS) |
|
| | June 30, | | December 31, | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | |
| | $ | | $ | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 888 | | | | 992 | | | | | | | | | | | | | | | | | | | | | |
Agriculture mortgages | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Consumer real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential mortgages | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Home equity loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 81 | | | | 109 | | | | | | | | | | | | | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Total | | | 969 | | | | 1,101 | | | | | | | | | | | | | | | | | | | | | |
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As of June 30, 2014 and December 31, 2013, all of the Corporation’s commercial loans on nonaccrual status were also considered impaired. Information with respect to impaired loans for the three and six months ended June 30, 2014 and June 30, 2013, is as follows: |
|
IMPAIRED LOANS |
(DOLLARS IN THOUSANDS) |
|
| | Three months ended June 30, | | Six months ended June 30, | | | | | | | | | | | | |
| | 2014 | | 2013 | | 2014 | | 2013 | | | | | | | | | | | | |
| | $ | | $ | | $ | | $ | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Average recorded balance of impaired loans | | | 2,580 | | | | 2,843 | | | | 2,617 | | | | 2,866 | | | | | | | | | | | | | |
Interest income recognized on impaired loans | | | 27 | | | | 28 | | | | 55 | | | | 56 | | | | | | | | | | | | | |
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Interest income on impaired loans would have increased by approximately $10,000 and $22,000 for the three and six months ended June 30, 2014, respectively, compared to $21,000 and $42,000 for the three and six months ended June 30, 2013, had these loans performed in accordance with their original terms. |
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During the six months ended June 30, 2014 and 2013, there were no loan modifications made that would cause a loan to be considered a troubled debt restructuring (TDR). A TDR is a loan where management has granted a concession to the borrower from the original terms. A concession is generally granted in order to improve the financial condition of the borrower and improve the likelihood of full collection by the lender. A concession is generally defined as more favorable payment or credit terms granted to a borrower in an effort to improve the likelihood of the lender collecting principal in its entirety. Concessions usually are in the form of interest only for a period of time, or a lower interest rate offered in an effort to enable the borrower to continue to make normally scheduled payments. |
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The following tables summarize information in regards to impaired loans by loan portfolio class as of June 30, 2014, December 31, 2013, and June 30, 2013: |
|
IMPAIRED LOAN ANALYSIS |
(DOLLARS IN THOUSANDS) |
|
30-Jun-14 | | Recorded | | Unpaid | | Related | | Average | | Interest | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | | | | | | | | |
| Balance | | Investment | Recognized | | | | | | | | |
| | $ | | $ | | $ | | $ | | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 888 | | | | 985 | | | | — | | | | 940 | | | | — | | | | | | | | | |
Agriculture mortgages | | | 1,569 | | | | 1,569 | | | | — | | | | 1,580 | | | | 55 | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | 2,457 | | | | 2,554 | | | | — | | | | 2,520 | | | | 55 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 81 | | | | 81 | | | | — | | | | 97 | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | 81 | | | | 81 | | | | — | | | | 97 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total with no related allowance | | | 2,538 | | | | 2,635 | | | | — | | | | 2,617 | | | | 55 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture mortgages | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total with a related allowance | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total by loan class: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 888 | | | | 985 | | | | — | | | | 940 | | | | — | | | | | | | | | |
Agriculture mortgages | | | 1,569 | | | | 1,569 | | | | — | | | | 1,580 | | | | 55 | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | 2,457 | | | | 2,554 | | | | — | | | | 2,520 | | | | 55 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 81 | | | | 81 | | | | — | | | | 97 | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | 81 | | | | 81 | | | | — | | | | 97 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 2,538 | | | | 2,635 | | | | — | | | | 2,617 | | | | 55 | | | | | | | | | |
|
IMPAIRED LOAN ANALYSIS |
(DOLLARS IN THOUSANDS) |
|
31-Dec-13 | | Recorded | | Unpaid | | Related | | Average | | Interest | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | | | | | | | | |
| Balance | | Investment | Recognized | | | | | | | | |
| | $ | | $ | | $ | | $ | | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 992 | | | | 1,088 | | | | — | | | | 1,119 | | | | 1 | | | | | | | | | |
Agriculture mortgages | | | 1,592 | | | | 1,592 | | | | — | | | | 1,609 | | | | 112 | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | 2,584 | | | | 2,680 | | | | — | | | | 2,728 | | | | 113 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 109 | | | | 109 | | | | — | | | | 99 | | | | | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | 109 | | | | 109 | | | | — | | | | 99 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total with no related allowance | | | 2,693 | | | | 2,789 | | | | — | | | | 2,827 | | | | 113 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture mortgages | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total with a related allowance | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total by loan class: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 992 | | | | 1,088 | | | | — | | | | 1,119 | | | | 1 | | | | | | | | | |
Agriculture mortgages | | | 1,592 | | | | 1,592 | | | | — | | | | 1,609 | | | | 112 | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | 2,584 | | | | 2,680 | | | | — | | | | 2,728 | | | | 113 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 109 | | | | 109 | | | | — | | | | 99 | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | 109 | | | | 109 | | | | — | | | | 99 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 2,693 | | | | 2,789 | | | | — | | | | 2,827 | | | | 113 | | | | | | | | | |
|
IMPAIRED LOAN ANALYSIS |
(DOLLARS IN THOUSANDS) |
|
30-Jun-13 | | Recorded | | Unpaid | | Related | | Average | | Interest | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | | | | | | | | |
| Balance | | Investment | Recognized | | | | | | | | |
| | $ | | $ | | $ | | $ | | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 1,105 | | | | 1,202 | | | | — | | | | 1,164 | | | | — | | | | | | | | | |
Agriculture mortgages | | | 1,607 | | | | 1,607 | | | | — | | | | 1,618 | | | | 56 | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | 2,712 | | | | 2,809 | | | | — | | | | 2,782 | | | | 56 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 45 | | | | 45 | | | | — | | | | 49 | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | 45 | | | | 45 | | | | — | | | | 49 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total with no related allowance | | | 2,757 | | | | 2,854 | | | | — | | | | 2,831 | | | | 56 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 20 | | | | 20 | | | | 2 | | | | 20 | | | | — | | | | | | | | | |
Agriculture mortgages | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | 20 | | | | 20 | | | | 2 | | | | 20 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 105 | | | | 105 | | | | 11 | | | | 15 | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | 105 | | | | 105 | | | | 11 | | | | 15 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total with a related allowance | | | 125 | | | | 125 | | | | 13 | | | | 35 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total by loan class: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | | 1,125 | | | | 1,222 | | | | 2 | | | | 1,184 | | | | — | | | | | | | | | |
Agriculture mortgages | | | 1,607 | | | | 1,607 | | | | — | | | | 1,618 | | | | 56 | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial real estate | | | 2,732 | | | | 2,829 | | | | 2 | | | | 2,802 | | | | 56 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 150 | | | | 150 | | | | 11 | | | | 64 | | | | — | | | | | | | | | |
Tax-free loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Total commercial and industrial | | | 150 | | | | 150 | | | | 11 | | | | 64 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 2,882 | | | | 2,979 | | | | 13 | | | | 2,866 | | | | 56 | | | | | | | | | |
|
The following table details activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2014: |
|
ALLOWANCE FOR CREDIT LOSSES |
(DOLLARS IN THOUSANDS) |
|
| | Commercial | | Consumer | | Commercial | | Consumer | | Unallocated | | Total | | | | |
Real Estate | Real Estate | and Industrial | | | | |
| | $ | | $ | | $ | | $ | | $ | | $ | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance - December 31, 2013 | | | 3,657 | | | | 1,346 | | | | 1,416 | | | | 102 | | | | 698 | | | | 7,219 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | | — | | | | — | | | | — | | | | (15 | ) | | | — | | | | (15 | ) | | | | |
Recoveries | | | 4 | | | | 5 | | | | 43 | | | | — | | | | — | | | | 52 | | | | | |
Provision | | | (150 | ) | | | 51 | | | | (117 | ) | | | 17 | | | | (1 | ) | | | (200 | )(1) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - March 31, 2014 | | | 3,511 | | | | 1,402 | | | | 1,342 | | | | 104 | | | | 697 | | | | 7,056 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Recoveries | | | 3 | | | | — | | | | 9 | | | | — | | | | — | | | | 12 | | | | | |
Provision | | | (106 | ) | | | 44 | | | | 12 | | | | (24 | ) | | | (26 | ) | | | (100 | )(1) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance - June 30, 2014 | | | 3,408 | | | | 1,446 | | | | 1,363 | | | | 80 | | | | 671 | | | | 6,968 | | | | | |
|
-1 | The Corporation recognized a $200,000 credit provision in the first quarter of 2014 and a $100,000 credit provision in the second quarter of 2014 as a result of lower levels of substandard loans, and continued low levels of total classified loans, impaired loans, non-accrual loans, recoveries in excess of charge-offs, continuing declines in historic loss ratios, and improving qualitative factors. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
During the six months ended June 30, 2014, credit provisions were recorded for the commercial real estate, commercial and industrial, and consumer loan categories while there was provision expense required for the consumer real estate loan category. There have been no commercial loan charge-offs during the past year, which reduced the historical loss rates and ultimately resulted in a lower required reserve amount for the commercial loan categories. Qualitative factors have been shifting, with some increasing and some decreasing, but overall, qualitative factors across the board have been declining. Conversely, factors in the allowance calculation related to consumer real estate were increased in the first half of 2014 as a result of the mortgage initiative and focus on increasing volume in this area. |
The following table details activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2013: |
|
ALLOWANCE FOR CREDIT LOSSES |
(DOLLARS IN THOUSANDS) |
|
| | Commercial | | Consumer | | Commercial | | Consumer | | Unallocated | | Total | | | | |
Real Estate | Real Estate | and Industrial | | | | |
| | $ | | $ | | $ | | $ | | $ | | $ | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance - December 31, 2012 | | | 3,575 | | | | 1,510 | | | | 1,640 | | | | 61 | | | | 730 | | | | 7,516 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | | — | | | | (78 | ) | | | (41 | ) | | | (6 | ) | | | — | | | | (125 | ) | | | | |
Recoveries | | | — | | | | — | | | | 16 | | | | — | | | | — | | | | 16 | | | | | |
Provision | | | (355 | ) | | | 48 | | | | 281 | | | | 7 | | | | (31 | ) | | | (50 | )(1) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - March 31, 2013 | | | 3,220 | | | | 1,480 | | | | 1,896 | | | | 62 | | | | 699 | | | | 7,357 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Recoveries | | | — | | | | — | | | | 16 | | | | — | | | | — | | | | 16 | | | | | |
Provision | | | 8 | | | | (22 | ) | | | (107 | ) | | | 19 | | | | 2 | | | | (100 | )(1) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance - June 30, 2013 | | | 3,228 | | | | 1,458 | | | | 1,805 | | | | 81 | | | | 701 | | | | 7,273 | | | | | |
|
-1 | The Corporation recognized a $50,000 credit provision in the first quarter of 2013, and a $100,000 credit provision in the second quarter of 2013, for a total year-to-date credit provision of $150,000, as a result of lower levels of non-performing and delinquent loans, minimum charge-offs, and no material changes in gross loans. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
During the six months ended June 30, 2013, a large commercial real estate (CRE) loan was upgraded and was no longer considered substandard, reducing the required provision for this loan type. Conversely, a commercial and industrial (C&I) loan moved from pass to substandard increasing the related required provision. |
The following tables present the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on impairment method as of June 30, 2014 and December 31, 2013: |
|
ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE |
(DOLLARS IN THOUSANDS) |
|
As of June 30, 2014: | | Commercial | | Consumer | | Commercial | | Consumer | | Unallocated | | Total | | | | |
Real Estate | Real Estate | and Industrial | | | | |
| | $ | | $ | | $ | | $ | | $ | | $ | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | 3,408 | | | | 1,446 | | | | 1,363 | | | | 80 | | | | 671 | | | | 6,968 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | | 233,612 | | | | 157,191 | | | | 53,221 | | | | 3,723 | | | | | | | | 447,747 | | | | | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | 2,457 | | | | — | | | | 81 | | | | — | | | | | | | | 2,538 | | | | | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | 231,155 | | | | 157,191 | | | | 53,140 | | | | 3,723 | | | | | | | | 445,209 | | | | | |
|
|
As of December 31, 2013: | | Commercial | | Consumer | | Commercial | | Consumer | | Unallocated | | Total | | | | |
Real Estate | Real Estate | and Industrial | | | | |
| | $ | | $ | | $ | | $ | | $ | | $ | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | 3,657 | | | | 1,346 | | | | 1,416 | | | | 102 | | | | 698 | | | | 7,219 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | | 221,175 | | | | 159,239 | | | | 53,395 | | | | 4,063 | | | | | | | | 437,872 | | | | | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | 2,584 | | | | — | | | | 109 | | | | — | | | | | | | | 2,693 | | | | | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | | 218,591 | | | | 159,239 | | | | 53,286 | | | | 4,063 | | | | | | | | 435,179 | | | | | |
|