Loans And Allowance For Credit Losses [Text Block] | Note 4: Loans and Allowance for Credit Losses A summary of the major categories of loans outstanding is shown in the following tables. At June 30, 2015 Commercial Commercial Real Estate Construction Residential Real Estate Consumer Total (In thousands) Originated loans $ 370,997 $ 548,610 $ 6,762 $ 134,421 $ 364,257 $ 1,425,047 Purchased covered loans: Gross purchased covered loans - - - 2,520 12,786 15,306 Purchased loan discount - - - (133 ) (64 ) (197 ) Purchased non-covered loans: Gross purchased non-covered loans 16,292 143,722 995 706 37,180 198,895 Purchased loan discount (1,168 ) (5,089 ) - (262 ) (1,261 ) (7,780 ) Total $ 386,121 $ 687,243 $ 7,757 $ 137,252 $ 412,898 $ 1,631,271 At December 31, 2014 Commercial Commercial Construction Residential Consumer Total (In thousands) Originated loans $ 374,005 $ 567,594 $ 11,003 $ 146,925 $ 370,842 $ 1,470,369 Purchased covered loans: Gross purchased covered loans - - - 2,626 14,920 17,546 Purchased loan discount - - - (434 ) (34 ) (468 ) Purchased non-covered loans: Gross purchased non-covered loans 19,166 157,502 2,919 972 41,656 222,215 Purchased loan discount (1,356 ) (6,492 ) (50 ) (262 ) (1,212 ) (9,372 ) Total $ 391,815 $ 718,604 $ 13,872 $ 149,827 $ 426,172 $ 1,700,290 Changes in the carrying amount of impaired purchased loans were as follows: For the For the Year Ended Impaired purchased loans (In thousands) Carrying amount at the beginning of the period $ 4,672 $ 4,936 Reductions during the period (32 ) (264 ) Carrying amount at the end of the period $ 4,640 $ 4,672 Changes in the accretable yield for purchased loans were as follows: For the For the Accretable yield: (In thousands) Balance at the beginning of the period $ 2,261 $ 2,505 Reclassification from nonaccretable difference 1,365 5,016 Accretion (1,835 ) (5,260 ) Balance at the end of the period $ 1,791 $ 2,261 Accretion $ (1,835 ) $ (5,260 ) Change in FDIC indemnification 230 1,110 (Increase) in interest income $ (1,605 ) $ (4,150 ) The following summarizes activity in the allowance for loan losses: Allowance for Loan Losses Commercial Commercial Real Estate Construction Residential Real Estate Consumer Purchased Purchased Unallocated Total (In thousands) Allowance for loan losses: Balance at beginning of period $ 5,470 $ 4,123 $ 730 $ 2,140 $ 7,031 $ 2,339 $ - $ 9,354 $ 31,187 Additions: Provision 1,704 758 (327 ) (82 ) 350 (921 ) - (1,482 ) - Deductions: Chargeoffs (401 ) - - - (576 ) (396 ) - - (1,373 ) Recoveries 334 15 - - 443 222 - - 1,014 Net loan (losses) recoveries (67 ) 15 - - (133 ) (174 ) - - (359 ) Total allowance for loan losses $ 7,107 $ 4,896 $ 403 $ 2,058 $ 7,248 $ 1,244 $ - $ 7,872 $ 30,828 Allowance for Loan Losses Commercial Commercial Real Estate Construction Residential Real Estate Consumer Purchased Purchased Unallocated Total (In thousands) Allowance for loan losses: Balance at beginning of period $ 5,460 $ 4,245 $ 644 $ 2,241 $ 7,717 $ 2,120 $ - $ 9,058 $ 31,485 Additions: Provision 1,594 621 (241 ) (183 ) 69 (674 ) - (1,186 ) - Deductions: Chargeoffs (461 ) - - - (1,571 ) (431 ) - - (2,463 ) Recoveries 514 30 - - 1,033 229 - - 1,806 Net loan recoveries (losses) 53 30 - - (538 ) (202 ) - - (657 ) Total allowance for loan losses $ 7,107 $ 4,896 $ 403 $ 2,058 $ 7,248 $ 1,244 $ - $ 7,872 $ 30,828 Allowance for Credit Losses Commercial Commercial Real Estate Construction Residential Real Estate Consumer Purchased Purchased Unallocated Total (In thousands) Allowance for loan losses: Balance at beginning of period $ 4,243 $ 11,259 $ 445 $ 491 $ 2,813 $ 2,574 $ - $ 10,284 $ 32,109 Additions: Provision 1,085 (610 ) (3 ) (52 ) (75 ) 115 - 540 1,000 Deductions: Chargeoffs (150 ) - - (30 ) (1,301 ) - - - (1,481 ) Recoveries 119 15 - - 618 18 - - 770 Net loan (losses) recoveries (31 ) 15 - (30 ) (683 ) 18 - - (711 ) Balance at end of period 5,297 10,664 442 409 2,055 2,707 - 10,824 32,398 Liability for off-balance sheet credit exposure 1,733 24 165 - 465 243 23 40 2,693 Total allowance for credit losses $ 7,030 $ 10,688 $ 607 $ 409 $ 2,520 $ 2,950 $ 23 $ 10,864 $ 35,091 FDIC indemnification expired February 6, 2014 for County Bank non-single-family residential collateralized purchased loans; accordingly, such loans have been reclassified from purchased covered loans to purchased non-covered loans as well as the related allowance for credit losses. Allowance for Credit Losses Commercial Commercial Construction Residential Consumer Purchased Purchased Unallocated Total (In thousands) Allowance for loan losses: Balance at beginning of period $ 4,005 $ 12,070 $ 602 $ 405 $ 3,198 $ - $ 1,561 $ 9,852 $ 31,693 Additions: Provision 1,215 (1,584 ) (163 ) 34 139 1,387 - 972 2,000 Deductions: Chargeoffs (210 ) - - (30 ) (2,300 ) (260 ) - - (2,800 ) Recoveries 287 178 3 - 1,018 19 - - 1,505 Net loan recoveries (losses) 77 178 3 (30 ) (1,282 ) (241 ) - - (1,295 ) Indemnification expiration - - - - - 1,561 (1,561 ) - - Balance at end of period 5,297 10,664 442 409 2,055 2,707 - 10,824 32,398 Liability for off-balance sheet credit exposure 1,733 24 165 - 465 243 23 40 2,693 Total allowance for credit losses $ 7,030 $ 10,688 $ 607 $ 409 $ 2,520 $ 2,950 $ 23 $ 10,864 $ 35,091 The allowance for credit losses and recorded investment in loans were evaluated for impairment as follows: Allowance for Loan Losses and Recorded Investment in Loans Evaluated for Impairment Commercial Commercial Real Estate Construction Residential Real Estate Consumer Installment and Other Purchased Non-covered Loans Purchased Covered Loans Unallocated Total (In thousands) Allowance for loan losses: Individually evaluated for impairment $ 2,533 $ 1,034 $ - $ - $ - $ - $ - $ - $ 3,567 Collectively evaluated for impairment 4,574 3,862 403 2,058 7,248 1,244 - 7,872 27,261 Purchased loans with evidence of credit deterioration - - - - - - - - - Total $ 7,107 $ 4,896 $ 403 $ 2,058 $ 7,248 $ 1,244 $ - $ 7,872 $ 30,828 Carrying value of loans: Individually evaluated for impairment $ 12,417 $ 5,806 $ - $ - $ - $ 11,712 $ - $ - $ 29,935 Collectively evaluated for impairment 358,580 542,804 6,762 134,421 364,257 174,980 14,892 - 1,596,696 Purchased loans with evidence of credit deterioration - - - - - 4,423 217 - 4,640 Total $ 370,997 $ 548,610 $ 6,762 $ 134,421 $ 364,257 $ 191,115 $ 15,109 $ - $ 1,631,271 Allowance for Credit Losses and Recorded Investment in Loans Evaluated for Impairment Commercial Commercial Real Estate Construction Residential Real Estate Consumer Installment and Other Purchased Non-covered Loans Purchased Covered Loans Unallocated Total (In thousands) Allowance for credit losses: Individually evaluated for impairment $ 496 $ - $ - $ - $ - $ - $ - $ - $ 496 Collectively evaluated for impairment 7,372 4,245 988 2,241 8,154 2,120 - 8,562 33,682 Purchased loans with evidence of credit deterioration - - - - - - - - - Total $ 7,868 $ 4,245 $ 988 $ 2,241 $ 8,154 $ 2,120 $ - $ 8,562 $ 34,178 Carrying value of loans: Individually evaluated for impairment $ 11,811 $ 2,970 $ - $ 574 $ 599 $ 12,364 $ - $ - $ 28,318 Collectively evaluated for impairment 362,194 564,624 11,003 146,351 370,243 196,034 16,851 - 1,667,300 Purchased loans with evidence of credit deterioration - - - - - 4,445 227 - 4,672 Total $ 374,005 $ 567,594 $ 11,003 $ 146,925 $ 370,842 $ 212,843 $ 17,078 $ - $ 1,700,290 The Bank’s customers are small businesses, professionals and consumers. Given the scale of these borrowers, corporate credit rating agencies do not evaluate the borrowers’ financial condition. The Bank maintains a Loan Review Department which reports directly to the Board of Directors. The Loan Review Department performs independent evaluations of loans and assigns credit risk grades to evaluated loans using grading standards employed by bank regulatory agencies. Loans judged to carry lower-risk attributes are assigned a “pass” grade, with a minimal likelihood of loss. Loans judged to carry higher-risk attributes are referred to as “classified loans,” and are further disaggregated, with increasing expectations for loss recognition, as “substandard,” “doubtful,” and “loss.” Loan Review Department evaluations occur every calendar quarter. If the Bank becomes aware of deterioration in a borrower’s performance or financial condition between Loan Review Department examinations, assigned risk grades are re-evaluated promptly. Credit risk grades assigned by the Loan Review Department are subject to review by the Bank’s regulatory authorities during regulatory examinations. The following summarizes the credit risk profile by internally assigned grade: Credit Risk Profile by Internally Assigned Grade Commercial Commercial Real Estate Construction Residential Real Estate Consumer Installment and Other Purchased Non-covered Loans Purchased Covered Loans (1) Total (In thousands) Grade: Pass $ 354,025 $ 518,410 $ 6,762 $ 132,116 $ 363,193 $ 161,919 $ 13,621 $ 1,550,046 Substandard 16,961 30,200 - 2,305 812 36,902 1,685 88,865 Doubtful 11 - - - 9 74 - 94 Loss - - - - 243 - - 243 Purchased loan discount - - - - - (7,780 ) (197 ) (7,977 ) Total $ 370,997 $ 548,610 $ 6,762 $ 134,421 $ 364,257 $ 191,115 $ 15,109 $ 1,631,271 (1) Credit Risk Profile by Internally Assigned Grade Commercial Commercial Real Estate Construction Residential Real Estate Consumer Installment and Other Purchased Non-covered Loans Purchased Covered Loans (1) Total (In thousands) Grade: Pass $ 366,487 $ 527,980 $ 11,003 $ 144,902 $ 369,618 $ 182,644 $ 15,509 $ 1,618,143 Substandard 7,506 39,614 - 2,023 734 39,473 2,037 91,387 Doubtful 12 - - - 12 77 - 101 Loss - - - - 478 21 - 499 Purchased loan discount - - - - - (9,372 ) (468 ) (9,840 ) Total $ 374,005 $ 567,594 $ 11,003 $ 146,925 $ 370,842 $ 212,843 $ 17,078 $ 1,700,290 (1) The following tables summarize loans by delinquency and nonaccrual status: Summary of Loans by Delinquency and Nonaccrual Status Current and Accruing 30-59 Days Past Due and Accruing 60-89 Days Past Due and Accruing Past Due 90 days or More and Accruing Nonaccrual Total Loans (In thousands) Commercial $ 367,250 $ 3,053 $ 533 $ - $ 161 $ 370,997 Commercial real estate 534,629 6,554 1,308 - 6,119 548,610 Construction 6,762 - - - - 6,762 Residential real estate 132,049 2,044 328 - - 134,421 Consumer installment and other 360,943 2,617 476 221 - 364,257 Total originated loans 1,401,633 14,268 2,645 221 6,280 1,425,047 Purchased non-covered loans 177,690 2,401 1,082 - 9,942 191,115 Purchased covered loans 15,076 30 - - 3 15,109 Total $ 1,594,399 $ 16,699 $ 3,727 $ 221 $ 16,225 $ 1,631,271 Summary of Loans by Delinquency and Nonaccrual Status Current and Accruing 30-59 Days Past Due and Accruing 60-89 Days Past Due and Accruing Past Due 90 days or More and Accruing Nonaccrual Total Loans (In thousands) Commercial $ 372,235 $ 1,704 $ 36 $ - $ 30 $ 374,005 Commercial real estate 557,041 6,500 - - 4,053 567,594 Construction 11,003 - - - - 11,003 Residential real estate 144,021 1,513 817 - 574 146,925 Consumer installment and other 365,753 3,310 625 502 652 370,842 Total originated loans 1,450,053 13,027 1,478 502 5,309 1,470,369 Purchased non-covered loans 196,150 4,204 491 - 11,998 212,843 Purchased covered loans 16,389 389 3 - 297 17,078 Total $ 1,662,592 $ 17,620 $ 1,972 $ 502 $ 17,604 $ 1,700,290 The following is a summary of the effect of nonaccrual loans on interest income: For the Three Months For the Six Months Ended June 30, 2015 2014 2015 2014 (In thousands) Interest income that would have been recognized had the loans performed in accordance with their original terms $ 342 $ 276 $ 654 $ 534 Less: Interest income recognized on nonaccrual loans (118 ) (25 ) (324 ) (69 ) Total reduction of interest income $ 224 $ 251 $ 330 $ 465 There were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status at June 30, 2015 and December 31, 2014. The following summarizes impaired loans: Impaired Loans Recorded Investment Unpaid Related Allowance (In thousands) Impaired loans with no related allowance recorded: Commercial $ 2,756 $ 2,821 $ - Commercial real estate 17,161 22,374 - Construction - - - Residential real estate 240 270 - Consumer installment and other 664 711 - Impaired loans with an allowance recorded: Commercial 9,860 9,860 2,533 Commercial real estate 5,109 5,109 1,034 Construction - - - Residential real estate - - - Consumer installment and other - - - Total: Commercial $ 12,616 $ 12,681 $ 2,533 Commercial real estate 22,270 27,483 1,034 Construction - - - Residential real estate 240 270 - Consumer installment and other 664 711 - Impaired Loans Recorded Investment Unpaid Related Allowance (In thousands) Impaired loans with no related allowance recorded: Commercial $ 2,031 $ 2,095 $ - Commercial real estate 19,478 25,519 - Construction 1,834 1,884 - Residential real estate 574 574 - Consumer installment and other 1,518 1,628 - Impaired loans with an allowance recorded: Commercial 9,910 9,910 496 Commercial real estate - - - Construction - - - Residential real estate - - - Consumer installment and other - - - Total: Commercial $ 11,941 $ 12,005 $ 496 Commercial real estate 19,478 25,519 - Construction 1,834 1,884 - Residential real estate 574 574 - Consumer installment and other 1,518 1,628 - Impaired loans include troubled debt restructured loans. Impaired loans at June 30, 2015, included $ 6,594 Impaired Loans For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Average Recognized Average Recognized Average Recognized Average Recognized (In thousands) Commercial $ 12,564 $ 147 $ 4,437 $ 60 $ 12,395 $ 293 $ 4,639 $ 127 Commercial real estate 19,715 147 19,800 153 19,017 404 19,549 270 Construction - - 2,035 - 459 - 2,147 - Residential real estate 693 8 162 - 776 14 162 - Consumer installment and other 797 7 1,324 7 1,026 13 1,520 15 Total $ 33,769 $ 309 $ 27,758 $ 220 $ 33,673 $ 724 $ 28,017 $ 412 The following table provides information on troubled debt restructurings: Troubled Debt Restructurings Number of Contracts Pre-Modification Carrying Value Period-End Carrying Value Period-End (In thousands) Commercial 6 $ 2,813 $ 2,557 $ - Commercial real estate 6 3,975 3,797 - Residential real estate 1 241 237 - Consumer installment and other 1 18 3 - Total 14 $ 7,047 $ 6,594 $ - Troubled Debt Restructurings Number of Pre-Modification Period-End Period-End (In thousands) Commercial 4 $ 3,299 $ 2,992 $ 262 Commercial real estate 2 2,291 2,326 - Consumer installment and other 1 18 14 - Total 7 $ 5,608 $ 5,332 $ 262 During the three and six months ended June 30, 2015, the Company modified one 100 six 1,830 The Company repaid $20,015 thousand of Federal Home Loan Bank (“FHLB”) advances in January 2015, which had been collateralized by loans; the collateral requirements expired upon repayment of the debt. At December 31, 2014, the Company pledged loans to secure borrowings with a carrying value of $20,015 thousand from the FHLB. The loans restricted due to collateral requirements approximated $18,366 thousand at December 31, 2014. There were no loans held for sale at June 30, 2015 and December 31, 2014. At June 30, 2015 and June 30, 2014, the Company held total other real estate owned (OREO) of $ 9,260 486 585 -0- 705 |