Loans | 6 Months Ended |
Jun. 30, 2014 |
Receivables [Abstract] | ' |
Loans | ' |
-3 | Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The segments of loans are as follows (in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At June 30, | | | At December 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate mortgage loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 48,311 | | | | 44,796 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential and home equity | | | 43,595 | | | | 38,571 | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 14,304 | | | | 12,933 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate mortgage loans | | | 106,210 | | | | 96,300 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | | | 25,759 | | | | 24,651 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer and other loans | | | 1,962 | | | | 2,072 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 133,931 | | | | 123,023 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net deferred loan fees | | | (49 | ) | | | (69 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (2,345 | ) | | | (1,734 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans, net | | $ | 131,537 | | | | 121,220 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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An analysis of the change in the allowance for loan losses follows (in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Real Estate Mortgage Loans | | | Commercial | | | Consumer | | | Total | | | | | | | | | |
Loans | and | | | | | | | | |
| Other | | | | | | | | |
| | Commercial | | | Residential | | | Construction | | | | | Loans | | | | | | | | | |
and Home | | | | | | | | | | |
Equity | | | | | | | | | | |
Three-Month Period Ended June 30, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 617 | | | | 575 | | | | 160 | | | | 401 | | | | 22 | | | | 1,775 | | | | | | | | | |
Provision (credit) for loan losses | | | 432 | | | | (52 | ) | | | 114 | | | | 69 | | | | (1 | ) | | | 562 | | | | | | | | | |
Net recoveries | | | 0 | | | | 0 | | | | 0 | | | | 8 | | | | 0 | | | | 8 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Ending balance | | $ | 1,049 | | | | 523 | | | | 274 | | | | 478 | | | | 21 | | | | 2,345 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Six-Month Period Ended June 30, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | | 604 | | | | 545 | | | | 175 | | | | 387 | | | | 23 | | | | 1,734 | | | | | | | | | |
Provision (credit) for loan losses | | | 445 | | | | (22 | ) | | | 99 | | | | 71 | | | | (2 | ) | | | 591 | | | | | | | | | |
Net recoveries | | | 0 | | | | 0 | | | | 0 | | | | 20 | | | | 0 | | | | 20 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Ending balance | | $ | 1,049 | | | | 523 | | | | 274 | | | | 478 | | | | 21 | | | | 2,345 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Three-Month Period Ended June 30, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 527 | | | | 477 | | | | 119 | | | | 297 | | | | 16 | | | | 1,436 | | | | | | | | | |
Provision for loan losses | | | 22 | | | | 6 | | | | 91 | | | | 6 | | | | 13 | | | | 138 | | | | | | | | | |
Net (charge-offs) recoveries | | | 0 | | | | 0 | | | | (47 | ) | | | 15 | | | | (8 | ) | | | (40 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Ending balance | | $ | 549 | | | | 483 | | | | 163 | | | | 318 | | | | 21 | | | | 1,534 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Six-Month Period Ended June 30, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | | 352 | | | | 226 | | | | 237 | | | | 405 | | | | 23 | | | | 1,243 | | | | | | | | | |
Provision (credit) for loan losses | | | 197 | | | | 257 | | | | (27 | ) | | | (102 | ) | | | (2 | ) | | | 323 | | | | | | | | | |
Net (charge-offs) recoveries | | | 0 | | | | 0 | | | | (47 | ) | | | 15 | | | | 0 | | | | (32 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Ending balance | | $ | 549 | | | | 483 | | | | 163 | | | | 318 | | | | 21 | | | | 1,534 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At June 30, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded investment | | $ | 1,403 | | | | 35 | | | | 0 | | | | 210 | | | | 0 | | | | 1,648 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance in allowance for loan losses | | $ | 504 | | | | 22 | | | | 0 | | | | 72 | | | | 0 | | | | 598 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Collectively evaluated for impairment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded investment | | $ | 46,908 | | | | 43,560 | | | | 14,304 | | | | 25,549 | | | | 1,962 | | | | 132,283 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance in allowance for loan losses | | $ | 545 | | | | 501 | | | | 274 | | | | 406 | | | | 21 | | | | 1,747 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
At December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded investment | | $ | 0 | | | | 36 | | | | 0 | | | | 346 | | | | 0 | | | | 382 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance in allowance for loan losses | | $ | 0 | | | | 23 | | | | 0 | | | | 82 | | | | 0 | | | | 105 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Collectively evaluated for impairment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded investment | | $ | 44,796 | | | | 38,535 | | | | 12,933 | | | | 24,305 | | | | 2,072 | | | | 122,641 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance in allowance for loan losses | | $ | 604 | | | | 522 | | | | 175 | | | | 305 | | | | 23 | | | | 1,629 | | | | | | | | | |
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The Company has divided the loan portfolio into three portfolio segments and five portfolio classes, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten based upon standards set forth in the policies approved by the Company’s Board of Directors. The portfolio segments and classes are identified by the Company as follows: |
Real Estate Mortgage Loans. Real estate mortgage loans are typically divided into three classes: Commercial, residential and home equity and construction loans. The real estate mortgage loans are as follows: |
Commercial Real Estate Loans. Loans of this type are typically our more complex loans. This category of real estate loans is comprised of loans secured by mortgages on commercial property that is typically owner-occupied, but also includes nonowner occupied investment properties. Commercial loans that are secured by owner-occupied commercial real estate are repaid through operating cash flows of the borrower. The maturity for this type of loan is generally limited to three to five years; however, payments may be structured on a longer amortization basis. Typically, interest rates on our commercial real estate loans are fixed for five years or less after which they adjust based upon a predetermined spread over an index. At times, a rate may be fixed for longer than five years. As part of our credit underwriting standards, the Bank typically requires personal guarantees from the principal owners of the business supported by a review of the principal owners’ personal financial statements and tax returns. As part of the enterprise risk management process, it is understood that risks associated with commercial real estate loans include fluctuations in real estate values, the overall strength of the borrower, the overall strength of the economy, new job creation trends, tenant vacancy rates, environmental contamination, and the quality of the borrowers’ management. In order to mitigate and limit these risks, we analyze the borrowers’ cash flow and evaluate collateral value. Currently, the collateral securing our commercial real estate loans include a variety of property types, such as office, warehouse, and retail facilities. Other types include multifamily properties, hotels, mixed-use residential, and commercial properties. Generally, commercial real estate loans present a higher risk profile than our residential real estate loan portfolio. |
Residential Real Estate Loans. We offer first and second one-to-four family mortgage loans and home equity lines of credit; the collateral for these loans is generally on the clients’ owner-occupied residences. Although these types of loans present lower levels of risk than commercial real estate loans, risks do still exist because of possible fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrowers’ financial condition. Borrowers may be affected by numerous factors, including job loss, illness, or other personal hardship. As part of our product mix, the Bank offers both portfolio and secondary market mortgages; portfolio loans generally are based on a 1-year, 3-year or 5-year adjustable rate mortgage; while 15-year or 30-year fixed-rate loans are sold to the secondary market. |
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Construction Loans. Typically, these loans have a term of one to two years and the interest is paid monthly. This portion of our loan portfolio includes loans to small and midsized businesses to construct owner-user properties, loans to developers of commercial real estate investment properties, and residential developments. This type of loan is also made to individual clients for construction of single family homes in our market area. An independent appraisal is used to determine the value of the collateral and confirm that the ratio of the loan principal to the value of the collateral will not exceed policies of the Bank. As the construction project progresses, loan proceeds are requested by the borrower to complete phases of construction and funding is only disbursed after the project has been inspected by a third-party inspector or experienced construction lender. Risks associated with construction loans include fluctuations in the value of real estate, project completion risk, and changes in market trends. The ability of the construction loan borrower to finance the loan or sell the property upon completion of the project is another risk factor that also may be affected by changes in market trends since the initial funding of the loan. |
Commercial Loans. The Bank offers a wide range of commercial loans, including business term loans, equipment financing, and lines of credit to small and midsized businesses. Small-to-medium sized businesses, retail, and professional establishments, make up our target market for commercial loans. Our Relationship Managers primarily underwrite these loans based on the borrower’s ability to service the loan from cash flow. Lines of credit and loans secured by accounts receivable and/or inventory are monitored periodically by our staff. Loans secured by “all business assets,” or a “blanket lien” are typically only made to highly qualified borrowers due to the nonspecific nature of the collateral. Valuation of business collateral is generally supported by an appraisal, purchase order, or third party physical inspection. Personal guarantees of the principals of business borrowers are usually required. |
Equipment loans generally have a term of five years or less and may have a fixed or variable rate; we use conservative margins when pricing these loans. Working capital loans generally do not exceed one year and typically, they are secured by accounts receivable, inventory, and personal guarantees of the principals of the business. Significant factors affecting a commercial borrower’s creditworthiness include the quality of management and the ability both to evaluate changes in the supply and demand characteristics affecting the business’ markets for products and services and to respond effectively to such changes. These loans may be made unsecured or secured, but most are made on a secured basis. Risks associated with our commercial loan portfolio include local, regional, and national market conditions. Other factors of risk could include changes in the borrower’s management and fluctuations in collateral value. Additionally, there may be refinancing risk if a commercial loan includes a balloon payment which must be refinanced or paid off at loan maturity. |
In reference to our risk management process, our commercial loan portfolio presents a higher risk profile than our consumer real estate and consumer loan portfolios. Therefore, we require that all loans to businesses must have a clearly stated and reasonable payment plan to allow for timely retirement of debt, unless secured by liquid collateral or as otherwise justified. |
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Consumer Loans and Other. These loans are made for various consumer purposes, such as the financing of automobiles, boats, and recreational vehicles. The payment structure of these loans is normally on an installment basis. The risk associated with this category of loans stems from the reduced collateral value for a defaulted loan; the collateral may not provide an adequate source of repayment of the principal. The underwriting on these loans is primarily based on the borrower’s financial condition. In many cases, these are unsecured credits that subject us to risk when the borrower’s financial condition declines or deteriorates. Based upon our current trend in consumer loans, management does not anticipate consumer loans will become a substantial component of our loan portfolio at any time in the foreseeable future. Consumer loans are made at fixed- and variable-interest rates and are based on the appropriate amortization for the asset and purpose. |
The following summarizes the loan credit quality (in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pass | | | Special | | | Substandard | | | Doubtful | | | Loss | | | Total | | | | | | | | | |
Mentioned | | | | | | | | |
At June 30, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate mortgage loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 44,468 | | | | 390 | | | | 3,453 | | | | 0 | | | | 0 | | | | 48,311 | | | | | | | | | |
Residential and home equity | | | 39,733 | | | | 3,059 | | | | 803 | | | | 0 | | | | 0 | | | | 43,595 | | | | | | | | | |
Construction | | | 14,220 | | | | 76 | | | | 8 | | | | 0 | | | | 0 | | | | 14,304 | | | | | | | | | |
Commercial loans | | | 24,676 | | | | 392 | | | | 691 | | | | 0 | | | | 0 | | | | 25,759 | | | | | | | | | |
Consumer and other loans | | | 1,887 | | | | 32 | | | | 43 | | | | 0 | | | | 0 | | | | 1,962 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Total | | $ | 124,984 | | | | 3,949 | | | | 4,998 | | | | 0 | | | | 0 | | | | 133,931 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
At December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate mortgage loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 40,901 | | | | 1,804 | | | | 2,091 | | | | 0 | | | | 0 | | | | 44,796 | | | | | | | | | |
Residential and home equity | | | 36,461 | | | | 1,346 | | | | 764 | | | | 0 | | | | 0 | | | | 38,571 | | | | | | | | | |
Construction | | | 12,528 | | | | 396 | | | | 9 | | | | 0 | | | | 0 | | | | 12,933 | | | | | | | | | |
Commercial loans | | | 23,919 | | | | 509 | | | | 223 | | | | 0 | | | | 0 | | | | 24,651 | | | | | | | | | |
Consumer and other loans | | | 1,914 | | | | 38 | | | | 120 | | | | 0 | | | | 0 | | | | 2,072 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Total | | $ | 115,723 | | | | 4,093 | | | | 3,207 | | | | 0 | | | | 0 | | | | 123,023 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. |
The Company analyzes loans individually by classifying the loans as to credit risk. Loans classified as substandard or special mention are reviewed quarterly by the Company for further deterioration or improvement to determine if they are appropriately classified and whether there is any impairment. All loans are graded upon initial issuance. Further construction and nonowner occupied commercial real estate loans are reviewed at least annually and commercial relationships in excess of $500,000. In addition, during the renewal process of any loan, as well as if a loan becomes past due, the Company will determine the appropriate loan grade. |
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Loans excluded from the review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of a deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Company for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard or even charged-off. The Company uses the following definitions for risk ratings: |
Pass – A Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. |
Special Mention – A Special Mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. |
Substandard – A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. |
Doubtful – A loan classified Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. |
Loss – A loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not necessarily preclude the potential for recovery, but rather signifies it is no longer practical to defer writing off the asset. |
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Age analysis of past-due loans is as follows (in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Accruing Loans | | | | | | | | | | | |
| | 30-59 | | | 60-89 | | | Greater | | | Total | | | Current | | | Nonaccrual | | | Total | | | | | |
Days | Days | Than 90 | Past | Loans | Loans | | | | |
Past Due | Past Due | Days | Due | | | | | | |
| | Past Due | | | | | | | |
At June 30, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate mortgage loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 46,908 | | | | 1,403 | | | | 48,311 | | | | | |
Residential and home equity | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 43,595 | | | | 0 | | | | 43,595 | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 14,304 | | | | 0 | | | | 14,304 | | | | | |
Commercial loans | | | 127 | | | | 0 | | | | 0 | | | | 127 | | | | 25,632 | | | | 0 | | | | 25,759 | | | | | |
Consumer and other loans | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 1,962 | | | | 0 | | | | 1,962 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | | $ | 127 | | | | 0 | | | | 0 | | | | 127 | | | | 132,401 | | | | 1,403 | | | | 133,931 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
At December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate mortgage loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 44,796 | | | | 0 | | | | 44,796 | | | | | |
Residential and home equity | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 38,571 | | | | 0 | | | | 38,571 | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 12,933 | | | | 0 | | | | 12,933 | | | | | |
Commercial loans | | | 38 | | | | 0 | | | | 0 | | | | 38 | | | | 24,613 | | | | 0 | | | | 24,651 | | | | | |
Consumer and other loans | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 2,072 | | | | 0 | | | | 2,072 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | | $ | 38 | | | | 0 | | | | 0 | | | | 38 | | | | 122,985 | | | | 0 | | | | 123,023 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following summarizes the amount of impaired loans (in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | With No Related | | | With an Allowance Recorded | | | Total | |
Allowance Recorded |
| | Recorded | | | Unpaid | | | Recorded | | | Unpaid | | | Related | | | Recorded | | | Unpaid | | | Related | |
Investment | Contractual | Investment | Contractual | Allowance | Investment | Contractual | Allowance |
| Principal | | Principal | | | Principal | |
| Balance | | Balance | | | Balance | |
At June 30, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | $ | 0 | | | | 0 | | | | 1,403 | | | | 1,403 | | | | 504 | | | | 1,403 | | | | 1,403 | | | | 504 | |
Residential and home equity | | | 0 | | | | 0 | | | | 35 | | | | 35 | | | | 22 | | | | 35 | | | | 35 | | | | 22 | |
Commercial loans | | | 50 | | | | 50 | | | | 160 | | | | 160 | | | | 72 | | | | 210 | | | | 210 | | | | 72 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Total | | $ | 50 | | | | 50 | | | | 1,598 | | | | 1,598 | | | | 598 | | | | 1,648 | | | | 1,648 | | | | 598 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
At December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential and home equity | | | 0 | | | | 0 | | | | 36 | | | | 36 | | | | 23 | | | | 36 | | | | 36 | | | | 23 | |
Commercial loans | | | 27 | | | | 27 | | | | 319 | | | | 319 | | | | 82 | | | | 346 | | | | 346 | | | | 82 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Total | | $ | 27 | | | | 27 | | | | 355 | | | | 355 | | | | 105 | | | | 382 | | | | 382 | | | | 105 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | |
| | Average | | | Interest | | | Interest | | | Average | | | Interest | | | Interest | | | | | | | | | |
Recorded | Income | Income | Recorded | Income | Income | | | | | | | | |
Investment | Recognized | Received | Investment | Recognized | Received | | | | | | | | |
| | | | | | | | | | | | | | |
Commercial real estate | | $ | 1,403 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Residential and home equity | | | 36 | | | | 1 | | | | 1 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Commercial loans | | | 213 | | | | 2 | | | | 3 | | | | 129 | | | | 2 | | | | 2 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Total | | $ | 1,652 | | | | 3 | | | | 4 | | | | 129 | | | | 2 | | | | 2 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended June 30, | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | |
| | Average | | | Interest | | | Interest | | | Average | | | Interest | | | Interest | | | | | | | | | |
Recorded | Income | Income | Recorded | Income | Income | | | | | | | | |
Investment | Recognized | Received | Investment | Recognized | Received | | | | | | | | |
| | | | | | | | | | | | | | |
Commercial real estate | | $ | 775 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Residential and home equity | | | 36 | | | | 1 | | | | 1 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Construction | | | 0 | | | | 0 | | | | 0 | | | | 315 | | | | 4 | | | | 4 | | | | | | | | | |
Commercial loans | | | 216 | | | | 6 | | | | 7 | | | | 129 | | | | 2 | | | | 2 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Total | | $ | 1,027 | | | | 7 | | | | 8 | | | | 444 | | | | 6 | | | | 6 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
There were no loans measured at fair value on a nonrecurring basis at December 31, 2013. Impaired collateral-dependent loans measured at fair value on a nonrecurring basis by loan class at June 30, 2014 are as follows (in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Losses | | | | | | | | | |
At Year End | Recorded | | | | | | | | |
| During | | | | | | | | |
| | Fair | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | | the Year | | | | | | | | |
Value | Losses | | | | | | | | | |
Commercial real estate loans | | $ | 899 | | | | — | | | | — | | | | 899 | | | | 504 | | | | 504 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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There were no loans determined to be troubled debt restructuring (“TDR”) entered into during the three months ended June 30, 2014 and 2013 and the six months ended June 30, 2013. The following is a summary of loans determined to be TDR’s entered into during the six months ended June 30, 2014: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number | | | Pre- | | | Post- | | | | | | | | | | | | | | | | | | | | | |
of | Modification | Modification | | | | | | | | | | | | | | | | | | | | |
Contracts | Outstanding | Outstanding | | | | | | | | | | | | | | | | | | | | |
| Recorded | Recorded | | | | | | | | | | | | | | | | | | | | |
| Investment | Investment | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | (in thousands) | | | | | | | | | | | | | | | | | | | | |
Residential and home equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Modified payment schedule for six months | | | 1 | | | $ | 35 | | | | 35 | | | | | | | | | | | | | | | | | | | | | |
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The allowance for loan losses on all loans that have been restructured and are considered TDR’s is included in the Bank’s specific reserve. The specific reserve is determined on a loan by loan basis 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. TDR’s that have subsequently defaulted are considered collateral-dependent. There were no TDR’s that subsequently defaulted during the three and six months ended June 30, 2014, which were restructured during the same period. |
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