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 September 30, 2015 Commercial Commercial Construction Residential Consumer Total (In thousands) Originated loans $ 354,853 $ 537,625 $ 3,461 $ 126,472 $ 354,494 $ 1,376,905 Purchased covered loans : Gross purchased covered loans - - - 2,467 12,328 14,795 Purchased loan discount - - - (133 ) (22 ) (155 ) Purchased non-covered loans : Gross purchased non-covered loans 15,443 136,600 984 237 34,116 187,380 Purchased loan discount (1,100 ) (4,654 ) - (167 ) (1,161 ) (7,082 ) Total $ 369,196 $ 669,571 $ 4,445 $ 128,876 $ 399,755 $ 1,571,843 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 (3 ) (264 ) Carrying amount at the end of the period $ 4,669 $ 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 2,327 5,016 Accretion (3,031 ) (5,260 ) Balance at the end of the period $ 1,557 $ 2,261 Accretion $ (3,031 ) $ (5,260 ) Change in FDIC indemnification 506 1,110 (Increase) in interest income $ (2,525 ) $ (4,150 ) The following summarizes activity in the allowance for loan losses: Allowance for Loan Losses Commercial Commercial Construction Residential Consumer Purchased Purchased Unallocated Total (In thousands) Allowance for loan losses: Balance at beginning of period $ 7,107 $ 4,896 $ 403 $ 2,058 $ 7,248 $ 1,244 $ - $ 7,872 $ 30,828 Additions: Provision 1,246 (96 ) (205 ) (50 ) 367 (15 ) 65 (1,312 ) - Deductions: Chargeoffs (239 ) (449 ) - - (773 ) - - - (1,461 ) Recoveries 300 27 - - 336 6 - - 669 Net loan recoveries (losses) 61 (422 ) - - (437 ) 6 - - (792 ) Total allowance for loan losses $ 8,414 $ 4,378 $ 198 $ 2,008 $ 7,178 $ 1,235 $ 65 $ 6,560 $ 30,036 Allowance for Loan Losses Commercial Commercial Construction Residential 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 2,840 525 (446 ) (233 ) 436 (689 ) 65 (2,498 ) - Deductions: Chargeoffs (700 ) (449 ) - - (2,344 ) (431 ) - - (3,924 ) Recoveries 814 57 - - 1,369 235 - - 2,475 Net loan recoveries (losses) 114 (392 ) - - (975 ) (196 ) - - (1,449 ) Total allowance for loan losses $ 8,414 $ 4,378 $ 198 $ 2,008 $ 7,178 $ 1,235 $ 65 $ 6,560 $ 30,036 Allowance for Credit Losses Commercial Commercial Construction Residential Consumer Purchased Purchased Unallocated Total (In thousands) Allowance for loan losses: Balance at beginning of period $ 5,297 $ 10,664 $ 442 $ 409 $ 2,055 $ 2,707 $ - $ 10,824 $ 32,398 Additions: Provision (269 ) (640 ) - (17 ) 802 (184 ) - 908 600 Deductions: Chargeoffs (905 ) - - - (916 ) - - - (1,821 ) Recoveries 229 15 - - 297 51 - - 592 Net loan (losses) recoveries (676 ) 15 - - (619 ) 51 - - (1,229 ) Balance at end of period 4,352 10,039 442 392 2,238 2,574 - 11,732 31,769 Liability for off-balance sheet credit exposure 1,706 24 105 - 451 131 - 276 2,693 Total allowance for credit losses $ 6,058 $ 10,063 $ 547 $ 392 $ 2,689 $ 2,705 $ - $ 12,008 $ 34,462 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 945 (2,224 ) (163 ) 17 942 1,203 - 1,880 2,600 Deductions: Chargeoffs (1,114 ) - - (30 ) (3,217 ) (260 ) - - (4,621 ) Recoveries 516 193 3 - 1,315 70 - - 2,097 Net loan (losses) recoveries (598 ) 193 3 (30 ) (1,902 ) (190 ) - - (2,524 ) Indemnification expiration - - - - - 1,561 (1,561 ) - - Balance at end of period 4,352 10,039 442 392 2,238 2,574 - 11,732 31,769 Liability for off-balance sheet credit exposure 1,706 24 105 - 451 131 - 276 2,693 Total allowance for credit losses $ 6,058 $ 10,063 $ 547 $ 392 $ 2,689 $ 2,705 $ - $ 12,008 $ 34,462 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 $ 4,477 $ 585 $ - $ - $ - $ - $ - $ - $ 5,062 Collectively evaluated for impairment 3,937 3,793 198 2,008 7,178 1,235 65 6,560 24,974 Purchased loans with evidence of credit deterioration - - - - - - - - - Total $ 8,414 $ 4,378 $ 198 $ 2,008 $ 7,178 $ 1,235 $ 65 $ 6,560 $ 30,036 Carrying value of loans: Individually evaluated for impairment $ 12,327 $ 5,864 $ - $ - $ - $ 10,008 $ - $ - $ 28,199 Collectively evaluated for impairment 342,526 531,761 3,461 126,472 354,494 165,833 14,428 - 1,538,975 Purchased loans with evidence of credit deterioration - - - - - 4,457 212 - 4,669 Total $ 354,853 $ 537,625 $ 3,461 $ 126,472 $ 354,494 $ 180,298 $ 14,640 $ - $ 1,571,843 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 $ 338,778 $ 512,570 $ 3,461 $ 123,753 $ 353,226 $ 155,312 $ 13,128 $ 1,500,228 Substandard 16,075 25,055 - 2,719 900 32,049 1,667 78,465 Doubtful - - - 30 19 - 49 Loss - - - - 338 - - 338 Purchased loan discount - - - - - (7,082 ) (155 ) (7,237 ) Total $ 354,853 $ 537,625 $ 3,461 $ 126,472 $ 354,494 $ 180,298 $ 14,640 $ 1,571,843 (1) Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification. 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) Credit risk profile reflects internally assigned grade of purchased covered loans without regard to FDIC indemnification. 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 $ 354,183 $ 417 $ 84 $ - $ 169 $ 354,853 Commercial real estate 527,957 2,667 - - 7,001 537,625 Construction 3,461 - - - - 3,461 Residential real estate 124,305 1,360 471 - 336 126,472 Consumer installment and other 350,289 2,834 818 481 72 354,494 Total originated loans 1,360,195 7,278 1,373 481 7,578 1,376,905 Purchased non-covered loans 168,816 1,736 878 - 8,868 180,298 Purchased covered loans 14,473 137 30 - - 14,640 Total $ 1,543,484 $ 9,151 $ 2,281 $ 481 $ 16,446 $ 1,571,843 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 Nine Months Ended September 30, 2015 2014 2015 2014 (In thousands) Interest income that would have been recognized had the loans performed in accordance with their original terms $ 315 $ 298 $ 969 $ 833 Interest income reversed (recognized) on nonaccrual loans 17 15 (308 ) (55 ) Total reduction of interest income $ 332 $ 313 $ 661 $ 778 There were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status at September 30, 2015 and December 31, 2014. The following summarizes impaired loans: Impaired Loans Recorded Unpaid Related (In thousands) Impaired loans with no related allowance recorded: Commercial $ 3,073 $ 3,136 $ - Commercial real estate 16,916 21,949 - Construction - - - Residential real estate 566 597 - Consumer installment and other 428 534 - Impaired loans with an allowance recorded: Commercial 9,810 9,810 4,477 Commercial real estate 4,660 5,109 585 Construction - - - Residential real estate - - - Consumer installment and other - - - Total: Commercial $ 12,883 $ 12,946 $ 4,477 Commercial real estate 21,576 27,058 585 Construction - - - Residential real estate 566 597 - Consumer installment and other 428 534 - Impaired Loans Recorded Unpaid Related (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 September 30, 2015, included $ 12,880 6,772 Impaired Loans For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Average Recognized Average Recognized Average Recognized Average Recognized (In thousands) Commercial $ 12,750 $ 147 $ 3,885 $ 59 $ 12,513 $ 440 $ 4,388 $ 186 Commercial real estate 21,923 142 20,787 103 19,985 546 19,961 373 Construction - - 1,934 - 306 - 2,076 - Residential real estate 403 9 - - 652 23 108 - Consumer installment and other 516 6 1,207 7 856 19 1,416 22 Total $ 35,592 $ 304 $ 27,813 $ 169 $ 34,312 $ 1,028 $ 27,949 $ 581 The following table provides information on troubled debt restructurings: Troubled Debt Restructurings Number of Pre-Modification Period-End Period-End (In thousands) Commercial 6 $ 2,813 $ 2,517 $ - Commercial real estate 7 10,305 10,133 - Residential real estate 1 242 230 - Total 14 $ 13,360 $ 12,880 $ - Troubled Debt Restructurings Number of Pre-Modification Period-End Period-End (In thousands) Commercial 6 $ 3,465 $ 3,109 $ 259 Commercial real estate 3 2,754 2,787 - Consumer installment and other 1 18 11 - Total 10 $ 6,237 $ 5,907 $ 259 During the three and nine months ended September 30, 2015, the Company modified one 6,330 seven 8,150 seven During the three and nine months ended September 30, 2014, the Company modified three loans with a total carrying value of $617 thousand and five loans with a total carrying value of $726 thousand, respectively, that were considered troubled debt restructurings. The concessions granted in the five restructurings completed in the first nine months of 2014 consisted of modification of payment terms to extend the maturity date to allow for deferred principal repayment. During the three and nine months ended September 30, 2015 and 2014, no troubled debt restructured loans defaulted within 12 months of the modification date. A troubled debt restructuring is considered to be in default when payments are ninety days or more past due. 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 September 30, 2015 and December 31, 2014. At September 30, 2015 and September 30, 2014, the Company held total other real estate owned (OREO) of $ 9,269 7,273 -0- 585 -0- 595 |