Loans and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2015 |
Loans and Allowance for Loan Losses [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 March 31, 2015, and December 31, 2014. |
|
LOAN PORTFOLIO |
(DOLLARS IN THOUSANDS) |
|
|
|
| March 31, | December 31, | | | | | | | | | | | | | | | | | |
| 2015 | 2014 | | | | | | | | | | | | | | | | | |
| $ | $ | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 94,783 | | | 95,914 | | | | | | | | | | | | | | | | | | |
Agriculture mortgages | | 150,005 | | | 140,322 | | | | | | | | | | | | | | | | | | |
Construction | | 8,416 | | | 7,387 | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | 253,204 | | | 243,623 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer real estate (a) | | | | | | | | | | | | | | | | | | | | | | | |
1—4 family residential mortgages | | 122,048 | | | 123,395 | | | | | | | | | | | | | | | | | | |
Home equity loans | | 12,466 | | | 12,563 | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | 28,774 | | | 27,308 | | | | | | | | | | | | | | | | | | |
Total consumer real estate | | 163,288 | | | 163,266 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 32,971 | | | 31,998 | | | | | | | | | | | | | | | | | | |
Tax-free loans | | 12,759 | | | 11,806 | | | | | | | | | | | | | | | | | | |
Agriculture loans | | 16,612 | | | 16,496 | | | | | | | | | | | | | | | | | | |
Total commercial and industrial | | 62,342 | | | 60,300 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 3,326 | | | 3,517 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Gross loans prior to deferred fees | | 482,160 | | | 470,706 | | | | | | | | | | | | | | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | |
Deferred loan costs, net | | (466 | ) | | (462 | ) | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | 7,140 | | | 7,141 | | | | | | | | | | | | | | | | | | |
Total net loans | | 475,486 | | | 464,027 | | | | | | | | | | | | | | | | | | |
|
|
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(a) | Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets, totaled $19,845,000 and $16,670,000 as of March 31, 2015, and December 31, 2014, 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 March 31, 2015 and December 31, 2014. 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: |
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| • | 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) |
|
|
|
| | | | | | | | | | Commercial | | | | | | | | | | | |
| Commercial | Agriculture | | and | Tax-free | Agriculture | | | | | |
31-Mar-15 | Mortgages | Mortgages | Construction | Industrial | Loans | Loans | Total | | |
| $ | $ | $ | $ | $ | $ | $ | | |
Grade: | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | 81,545 | | | 144,516 | | | 5,851 | | | 32,108 | | | 10,273 | | | 16,279 | | | 290,572 | | | |
Special Mention | | 2,661 | | | 3,198 | | | - | | | 28 | | | 2,486 | | | 28 | | | 8,401 | | | |
Substandard | | 10,577 | | | 2,291 | | | 2,565 | | | 835 | | | — | | | 305 | | | 16,573 | | | |
Doubtful | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | |
Loss | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total | | 94,783 | | | 150,005 | | | 8,416 | | | 32,971 | | | 12,759 | | | 16,612 | | | 315,546 | | | |
|
| | | | | | | | | | Commercial | | | | | | | | | | | |
| Commercial | Agriculture | | | | and | Tax-free | Agriculture | | | | | |
31-Dec-14 | Mortgages | Mortgages | Construction | Industrial | Loans | Loans | Total | | |
| $ | $ | $ | $ | $ | $ | $ | | |
Grade: | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | 82,478 | | | 135,298 | | | 5,350 | | | 31,006 | | | 11,806 | | | 16,255 | | | 282,193 | | | |
Special Mention | | 2,649 | | | 3,237 | | | — | | | 29 | | | — | | | 29 | | | 5,944 | | | |
Substandard | | 10,787 | | | 1,787 | | | 2,037 | | | 963 | | | — | | | 212 | | | 15,786 | | | |
Doubtful | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | |
Loss | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total | | 95,914 | | | 140,322 | | | 7,387 | | | 31,998 | | | 11,806 | | | 16,496 | | | 303,923 | | | |
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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 March 31, 2015 and December 31, 2014: |
|
CONSUMER CREDIT EXPOSURE |
CREDIT RISK PROFILE BY PAYMENT PERFORMANCE |
(DOLLARS IN THOUSANDS) |
|
|
|
| 1-4 Family | | | | Home Equity | | | | | | | | | | | | | | |
31-Mar-15 | Residential | Home Equity | Lines of | | | | | | | | | | | | | | |
| Mortgages | Loans | Credit | Consumer | Total | | | | | | | | |
Payment performance: | $ | $ | $ | $ | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Performing | | 121,644 | | | 12,466 | | | 28,774 | | | 3,323 | | | 166,207 | | | | | | | | | |
Non-performing | | 404 | | | — | | | — | | | 3 | | | 407 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total | | 122,048 | | | 12,466 | | | 28,774 | | | 3,326 | | | 166,614 | | | | | | | | | |
|
|
|
| 1-4 Family | | | | Home Equity | | | | | | | | | | | | | | |
31-Dec-14 | Residential | Home Equity | Lines of | | | | | | | | | | | | | | |
| Mortgages | Loans | Credit | Consumer | Total | | | | | | | | |
Payment performance: | $ | $ | $ | $ | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Performing | | 123,023 | | | 12,551 | | | 27,308 | | | 3,517 | | | 166,399 | | | | | | | | | |
Non-performing | | 372 | | | 12 | | | — | | | — | | | 384 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total | | 123,395 | | | 12,563 | | | 27,308 | | | 3,517 | | | 166,783 | | | | | | | | | |
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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 March 31, 2015 and December 31, 2014: |
|
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 | | |
31-Mar-15 | Past Due | Past Due | Days | Due | Current | Receivable | Accruing | | |
| $ | $ | $ | $ | $ | $ | $ | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 102 | | | 185 | | | — | | | 287 | | | 94,496 | | | 94,783 | | | — | | | |
Agriculture mortgages | | — | | | — | | | — | | | — | | | 150,005 | | | 150,005 | | | — | | | |
Construction | | — | | | — | | | — | | | — | | | 8,416 | | | 8,416 | | | — | | | |
Consumer real estate | | | | | | | | | | | | | | | | | | | | | | | |
1—4 family residential mortgages | | 538 | | | 230 | | | 404 | | | 1,172 | | | 120,876 | | | 122,048 | | | 404 | | | |
Home equity loans | | 67 | | | — | | | — | | | 67 | | | 12,399 | | | 12,466 | | | — | | | |
Home equity lines of credit | | 14 | | | — | | | — | | | 14 | | | 28,760 | | | 28,774 | | | — | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 93 | | | 32 | | | — | | | 125 | | | 32,846 | | | 32,971 | | | — | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | 12,759 | | | 12,759 | | | — | | | |
Agriculture loans | | 3 | | | — | | | — | | | 3 | | | 16,609 | | | 16,612 | | | — | | | |
Consumer | | 23 | | | 11 | | | 3 | | | 37 | | | 3,289 | | | 3,326 | | | 3 | | | |
Total | | 840 | | | 458 | | | 407 | | | 1,705 | | | 480,455 | | | 482,160 | | | 407 | | | |
|
| | | | | | | | | | | | | | | | | | | Loans | | |
| | | | | | | Greater | | | | | | | | | | Receivable > | | |
| 30-59 Days | 60-89 Days | than 90 | Total Past | | | | Total Loans | 90 Days and | | |
31-Dec-14 | Past Due | Past Due | Days | Due | Current | Receivable | Accruing | | |
| $ | $ | $ | $ | $ | $ | $ | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | — | | | 189 | | | 266 | | | 455 | | | 95,459 | | | 95,914 | | | — | | | |
Agriculture mortgages | | — | | | — | | | — | | | — | | | 140,322 | | | 140,322 | | | — | | | |
Construction | | — | | | — | | | — | | | — | | | 7,387 | | | 7,387 | | | — | | | |
Consumer real estate | | | | | | | | | | | | | | | | | | | | | | | |
1—4 family residential mortgages | | 665 | | | 349 | | | 372 | | | 1,386 | | | 122,009 | | | 123,395 | | | 372 | | | |
Home equity loans | | 78 | | | 14 | | | 12 | | | 104 | | | 12,459 | | | 12,563 | | | 12 | | | |
Home equity lines of credit | | 13 | | | — | | | — | | | 13 | | | 27,295 | | | 27,308 | | | — | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 21 | | | 73 | | | — | | | 94 | | | 31,904 | | | 31,998 | | | — | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | 11,806 | | | 11,806 | | | — | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | 16,496 | | | 16,496 | | | — | | | |
Consumer | | 23 | | | 1 | | | — | | | 24 | | | 3,493 | | | 3,517 | | | — | | | |
Total | | 800 | | | 626 | | | 650 | | | 2,076 | | | 468,630 | | | 470,706 | | | 384 | | | |
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The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2015 and December 31, 2014: |
|
NONACCRUAL LOANS BY LOAN CLASS |
(DOLLARS IN THOUSANDS) |
|
|
|
| March 31, | December 31, | | | | | | | | | | | | | | | | | |
| 2015 | 2014 | | | | | | | | | | | | | | | | | |
| $ | $ | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 585 | | | 894 | | | | | | | | | | | | | | | | | | |
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 | | 60 | | | 73 | | | | | | | | | | | | | | | | | | |
Tax-free loans | | — | | | — | | | | | | | | | | | | | | | | | | |
Agriculture loans | | — | | | — | | | | | | | | | | | | | | | | | | |
Consumer | | — | | | — | | | | | | | | | | | | | | | | | | |
Total | | 645 | | | 967 | | | | | | | | | | | | | | | | | | |
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As of March 31, 2015 and December 31, 2014, all of the Corporation's commercial loans on nonaccrual status were also considered impaired. Information with respect to impaired loans for the three months ended March 31, 2015 and March 31, 2014, is as follows: |
|
IMPAIRED LOANS |
(DOLLARS IN THOUSANDS) |
|
|
|
| Three months ended March 31, | | | | | | | | | | | | | | | | | |
| 2015 | 2014 | | | | | | | | | | | | | | | | | |
| $ | $ | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Average recorded balance of impaired loans | | 2,111 | | | 2,655 | | | | | | | | | | | | | | | | | | |
Interest income recognized on impaired loans | | 24 | | | 27 | | | | | | | | | | | | | | | | | | |
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Interest income on impaired loans would have increased by approximately $7,000 for the three months ended March 31, 2015, compared to $12,000 for the three months ended March 31, 2014, had these loans performed in accordance with their original terms. |
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During the three months ended March 31, 2015 and 2014, 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 March 31, 2015, December 31, 2014, and March 31, 2014: |
|
IMPAIRED LOAN ANALYSIS |
(DOLLARS IN THOUSANDS) |
|
|
|
| | | | Unpaid | | | | Average | Interest | | | | | | | | |
| Recorded | Principal | Related | Recorded | Income | | | | | | | | |
31-Mar-15 | Investment | Balance | Allowance | Investment | Recognized | | | | | | | | |
| $ | $ | $ | $ | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 585 | | | 1,157 | | | — | | | 665 | | | — | | | | | | | | | |
Agriculture mortgages | | 1,372 | | | 1,372 | | | — | | | 1,383 | | | 23 | | | | | | | | | |
Construction | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial real estate | | 1,957 | | | 2,529 | | | — | | | 2,048 | | | 23 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 60 | | | 67 | | | — | | | 63 | | | 1 | | | | | | | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial and industrial | | 60 | | | 67 | | | — | | | 63 | | | 1 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total with no related allowance | | 2,017 | | | 2,596 | | | — | | | 2,111 | | | 24 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
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 | | 585 | | | 1,157 | | | — | | | 665 | | | — | | | | | | | | | |
Agriculture mortgages | | 1,372 | | | 1,372 | | | — | | | 1,383 | | | 23 | | | | | | | | | |
Construction | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial real estate | | 1,957 | | | 2,529 | | | — | | | 2,048 | | | 23 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 60 | | | 67 | | | — | | | 63 | | | 1 | | | | | | | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial and industrial | | 60 | | | 67 | | | — | | | 63 | | | 1 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total | | 2,017 | | | 2,596 | | | — | | | 2,111 | | | 24 | | | | | | | | | |
|
IMPAIRED LOAN ANALYSIS |
(DOLLARS IN THOUSANDS) |
|
|
|
| | | | Unpaid | | | | Average | Interest | | | | | | | | |
31-Dec-14 | Recorded | Principal | Related | Recorded | Income | | | | | | | | |
| Investment | Balance | Allowance | Investment | Recognized | | | | | | | | |
| $ | $ | $ | $ | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 745 | | | 931 | | | — | | | 931 | | | — | | | | | | | | | |
Agriculture mortgages | | 1,391 | | | 1,391 | | | — | | | 1,539 | | | 104 | | | | | | | | | |
Construction | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial real estate | | 2,136 | | | 2,322 | | | — | | | 2,470 | | | 104 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 73 | | | 73 | | | — | | | 86 | | | 6 | | | | | | | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial and industrial | | 73 | | | 73 | | | — | | | 86 | | | 6 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total with no related allowance | | 2,209 | | | 2,395 | | | — | | | 2,556 | | | 110 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 149 | | | 264 | | | 1 | | | 68 | | | — | | | | | | | | | |
Agriculture mortgages | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Construction | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial real estate | | 149 | | | 264 | | | 1 | | | 68 | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial and industrial | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total with a related allowance | | 149 | | | 264 | | | 1 | | | 68 | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total by loan class: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 894 | | | 1,195 | | | 1 | | | 999 | | | — | | | | | | | | | |
Agriculture mortgages | | 1,391 | | | 1,391 | | | — | | | 1,539 | | | 104 | | | | | | | | | |
Construction | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial real estate | | 2,285 | | | 2,586 | | | 1 | | | 2,538 | | | 104 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 73 | | | 73 | | | — | | | 86 | | | 6 | | | | | | | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial and industrial | | 73 | | | 73 | | | — | | | 86 | | | 6 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total | | 2,358 | | | 2,659 | | | 1 | | | 2,624 | | | 110 | | | | | | | | | |
|
IMPAIRED LOAN ANALYSIS |
(DOLLARS IN THOUSANDS) |
|
| | | | Unpaid | | | | Average | Interest | | | | | | | | |
31-Mar-14 | Recorded | Principal | Related | Recorded | Income | | | | | | | | |
| Investment | Balance | Allowance | Investment | Recognized | | | | | | | | |
| $ | $ | $ | $ | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgages | | 939 | | | 1,036 | | | — | | | 966 | | | — | | | | | | | | | |
Agriculture mortgages | | 1,580 | | | 1,580 | | | — | | | 1,586 | | | 27 | | | | | | | | | |
Construction | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial real estate | | 2,519 | | | 2,616 | | | — | | | 2,552 | | | 27 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 97 | | | 97 | | | — | | | 103 | | | — | | | | | | | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial and industrial | | 97 | | | 97 | | | — | | | 103 | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total with no related allowance | | 2,616 | | | 2,713 | | | — | | | 2,655 | | | 27 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
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 | | 939 | | | 1,036 | | | — | | | 966 | | | — | | | | | | | | | |
Agriculture mortgages | | 1,580 | | | 1,580 | | | — | | | 1,586 | | | 27 | | | | | | | | | |
Construction | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial real estate | | 2,519 | | | 2,616 | | | — | | | 2,552 | | | 27 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 97 | | | 97 | | | — | | | 103 | | | — | | | | | | | | | |
Tax-free loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Agriculture loans | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
Total commercial and industrial | | 97 | | | 97 | | | — | | | 103 | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total | | 2,616 | | | 2,713 | | | — | | | 2,655 | | | 27 | | | | | | | | | |
The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2015: |
|
ALLOWANCE FOR CREDIT LOSSES |
(DOLLARS IN THOUSANDS) |
|
|
|
| Commercial | | Consumer | | Commercial | | | | | | |
| Real Estate | | Real Estate | | and Industrial | | Consumer | | Unallocated | | Total |
| $ | | $ | | $ | | $ | | $ | | $ |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance - December 31, 2014 | | 3,834 | | | | 1,367 | | | | 1,301 | | | | 66 | | | | 573 | | | | 7,141 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | (272 | ) | | | — | | | | — | | | | (1 | ) | | | — | | | | (273 | ) |
Recoveries | | 2 | | | | — | | | | 70 | | | | — | | | | — | | | | 72 | |
Provision | | 623 | | | | (283 | ) | | | (147 | ) | | | (11 | ) | | | 18 | | | | 200 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Balance - March 31, 2015 | | 4,187 | | | | 1,084 | | | | 1,224 | | | | 54 | | | | 591 | | | | 7,140 | |
|
|
During the first quarter of 2015, provision expense was recorded for the commercial real estate segment with credit provisions recorded in all other loan categories. There were $272,000 of commercial real estate loan charge-offs during the first quarter of 2015, which increased the historical loss rates and ultimately resulted in a higher required reserve amount for the commercial real estate category. Qualitative factors have been shifting, with more factors declining than increasing. The consumer real estate area had declines in five of nine qualitative factors resulting in a lower required provision. To a lesser degree, the historic loss experience on commercial and industrial loans has been very favorable with more recoveries than charge-offs and one qualitative factor was reduced, resulting in a lower required provision. The consumer loan area saw three qualitative factors reduced with one increased, resulting in a lower required provision on a much smaller loan amount. The higher commercial loan charge-offs and loan growth during the first quarter of 2015 overshadowed the reduction in provisions in the other areas, resulting in a higher total provision. |
|
The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2014: |
|
ALLOWANCE FOR CREDIT LOSSES |
(DOLLARS IN THOUSANDS) |
|
|
|
| Commercial | | Consumer | | Commercial | | | | | | |
| Real Estate | | Real Estate | | and Industrial | | Consumer | | Unallocated | | Total |
| $ | | $ | | $ | | $ | | $ | | $ |
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 | |
|
|
|
-1 | The Corporation recognized a $200,000 credit provision in the first quarter of 2014 as a result of lower 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 first quarter of 2014, credit provisions were recorded for the commercial real estate and commercial and industrial loan categories while there was provision expense required for the consumer real estate loan category. There were no commercial loan charge-offs since the prior year, which reduced the three-year weighted average charge-off ratio and ultimately resulted in a lower required reserve amount for the commercial loan categories. Conversely, factors in the allowance calculation related to consumer real estate were increased in the first quarter of 2014 as a result of the mortgage initiative and focus on increasing volume in this area. |
|
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 March 31, 2015 and December 31, 2014: |
|
ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE |
(DOLLARS IN THOUSANDS) |
|
|
|
| Commercial | | Consumer | | Commercial | | | | | | |
As of March 31, 2015: | Real Estate | | Real Estate | | and Industrial | | Consumer | | Unallocated | | Total |
| $ | | $ | | $ | | $ | | $ | | $ |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | 4,187 | | | | 1,084 | | | | 1,224 | | | | 54 | | | | 591 | | | | 7,140 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable: | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | 253,204 | | | | 163,288 | | | | 62,342 | | | | 3,326 | | | | | | | | 482,160 | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | 1,957 | | | | — | | | | 60 | | | | — | | | | | | | | 2,017 | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | 251,247 | | | | 163,288 | | | | 62,282 | | | | 3,326 | | | | | | | | 480,143 | |
|
|
| Commercial | | Consumer | | Commercial | | | | | | |
As of December 31, 2014: | Real Estate | | Real Estate | | and Industrial | | Consumer | | Unallocated | | Total |
| $ | | $ | | $ | | $ | | $ | | $ |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | 1 | | | | — | | | | — | | | | — | | | | — | | | | 1 | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | 3,833 | | | | 1,367 | | | | 1,301 | | | | 66 | | | | 573 | | | | 7,140 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable: | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | 243,623 | | | | 163,266 | | | | 60,300 | | | | 3,517 | | | | | | | | 470,706 | |
Ending balance: individually evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | 2,285 | | | | — | | | | 73 | | | | — | | | | | | | | 2,358 | |
Ending balance: collectively evaluated | | | | | | | | | | | | | | | | | | | | | | | |
for impairment | | 241,338 | | | | 163,266 | | | | 60,227 | | | | 3,517 | | | | | | | | 468,348 | |
|