Loans And Allowance For Credit Losses [Text Block] | Note 3: Loans and Allowance for Credit Losses A summary of the major categories of loans outstanding is shown in the following tables. At December 31, 2015 Commercial Commercial Construction Residential Consumer Total (In thousands) Originated loans $ 368,117 $ 517,070 $ 2,978 $ 117,631 $ 346,043 $ 1,351,839 Purchased covered loans : Gross purchased covered loans - - - 2,385 11,828 14,213 Purchased loan discount - - - (133 ) (19 ) (152 ) Purchased non-covered loans : Gross purchased non-covered loans 15,620 124,650 973 231 32,454 173,928 Purchased loan discount (989 ) (4,264 ) - (23 ) (1,156 ) (6,432 ) Total $ 382,748 $ 637,456 $ 3,951 $ 120,091 $ 389,150 $ 1,533,396 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 Years Ended December 31, 2015 2014 Impaired purchased loans (In thousands) Carrying amount at the beginning of the period $ 4,672 $ 4,936 Reductions during the period (785 ) (264 ) Carrying amount at the end of the period $ 3,887 $ 4,672 Changes in the accretable yield for purchased loans were as follows: For the Years Ended December 31, 2015 2014 Accretable yield: (In thousands) Balance at the beginning of the period $ 2,261 $ 2,505 Reclassification from nonaccretable difference 3,051 5,016 Accretion (4,053 ) (5,260 ) Balance at the end of the period $ 1,259 $ 2,261 Accretion $ (4,053 ) $ (5,260 ) Change in FDIC indemnification 698 1,110 (Increase) in interest income $ (3,355 ) $ (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 $ 5,460 $ 4,245 $ 644 $ 2,241 $ 7,717 $ 2,120 $ - $ 9,058 $ 31,485 Additions: Provision 3,702 356 (512 ) (440 ) 950 (961 ) - (3,095 ) - Deductions: Chargeoffs (756 ) (449 ) - - (3,493 ) (431 ) - - (5,129 ) Recoveries 1,153 72 45 - 1,906 239 - - 3,415 Net loan recoveries (losses) 397 (377 ) 45 - (1,587 ) (192 ) - - (1,714 ) Total allowance for loan losses $ 9,559 $ 4,224 $ 177 $ 1,801 $ 7,080 $ 967 $ - $ 5,963 $ 29,771 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 1,095 (7,276 ) 39 1,866 6,864 1,006 - (794 ) 2,800 Deductions: Chargeoffs (1,890 ) (762 ) - (30 ) (4,214 ) (522 ) - - (7,418 ) Recoveries 2,250 213 3 - 1,869 75 - - 4,410 Net loan recoveries (losses) 360 (549 ) 3 (30 ) (2,345 ) (447 ) - - (3,008 ) Indemnification expiration - - - - - 1,561 (1,561 ) - - Balance at end of period 5,460 4,245 644 2,241 7,717 2,120 - 9,058 31,485 Liability for off-balance sheet credit exposure 2,408 - 344 - 437 - - (496 ) 2,693 Total allowance for credit losses $ 7,868 $ 4,245 $ 988 $ 2,241 $ 8,154 $ 2,120 $ - $ 8,562 $ 34,178 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 $ 6,445 $ 10,063 $ 484 $ 380 $ 3,194 $ - $ 1,005 $ 8,663 $ 30,234 Additions: Provision (1,158 ) 2,813 118 134 1,949 385 2,570 1,189 8,000 Deductions: Chargeoffs (2,857 ) (997 ) - (109 ) (4,097 ) (385 ) (2,286 ) - (10,731 ) Recoveries 1,575 191 - - 2,152 - 272 - 4,190 Net loan losses (1,282 ) (806 ) - (109 ) (1,945 ) (385 ) (2,014 ) - (6,541 ) Balance at end of period 4,005 12,070 602 405 3,198 - 1,561 9,852 31,693 Liability for off-balance sheet credit exposure 1,658 - 37 - 497 - - 501 2,693 Total allowance for credit losses $ 5,663 $ 12,070 $ 639 $ 405 $ 3,695 $ - $ 1,561 $ 10,353 $ 34,386 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 $ 4,942 $ 585 $ - $ - $ - $ - $ - $ - $ 5,527 Collectively evaluated for impairment 4,617 3,639 177 1,801 7,080 967 - 5,963 24,244 Purchased loans with evidence of credit deterioration - - - - - - - - - Total $ 9,559 $ 4,224 $ 177 $ 1,801 $ 7,080 $ 967 $ - $ 5,963 $ 29,771 Carrying value of loans: Individually evaluated for impairment $ 12,587 $ 5,541 $ - $ - $ - $ 11,777 $ - $ - $ 29,905 Collectively evaluated for impairment 355,530 511,529 2,978 117,631 346,043 152,038 13,855 - 1,499,604 Purchased loans with evidence of credit deterioration - - - - - 3,681 206 - 3,887 Total $ 368,117 $ 517,070 $ 2,978 $ 117,631 $ 346,043 $ 167,496 $ 14,061 $ - $ 1,533,396 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 At December 31, 2015 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 $ 353,474 $ 496,744 $ 2,978 $ 114,525 $ 344,876 $ 149,100 $ 12,563 $ 1,474,260 Substandard 14,643 20,326 - 3,106 781 24,810 1,650 65,316 Doubtful - - - - 12 18 - 30 Loss - - - - 374 - - 374 Purchased loan discount - - - - - (6,432 ) (152 ) (6,584 ) Total $ 368,117 $ 517,070 $ 2,978 $ 117,631 $ 346,043 $ 167,496 $ 14,061 $ 1,533,396 (1) Credit Risk Profile by Internally Assigned Grade At December 31, 2014 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 At December 31, 2015 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 $ 365,450 $ 1,777 $ 122 $ - $ 768 $ 368,117 Commercial real estate 504,970 5,930 726 - 5,444 517,070 Construction 2,978 - - - - 2,978 Residential real estate 115,575 1,202 414 - 440 117,631 Consumer installment and other 341,566 3,263 919 295 - 346,043 Total originated loans 1,330,539 12,172 2,181 295 6,652 1,351,839 Purchased non-covered loans 158,554 589 7 - 8,346 167,496 Purchased covered loans 13,929 132 - - - 14,061 Total $ 1,503,022 $ 12,893 $ 2,188 $ 295 $ 14,998 $ 1,533,396 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 Years Ended December 31, 2015 2014 2013 Interest income that would have been recognized had the loans performed in accordance with their original terms $ 1,277 $ 1,146 $ 1,866 Interest income recognized on nonaccrual loans (362 ) (60 ) (402 ) Total reduction of interest income $ 915 $ 1,086 $ 1,464 There were no commitments to lend additional funds to borrowers whose loans were on nonaccrual status at December 31, 2015 and December 31, 2014. The following summarizes impaired loans: Impaired Loans Recorded Unpaid Balance Related (In thousands) Impaired loans with no related allowance recorded: Commercial $ 2,917 $ 2,979 $ - Commercial real estate 16,309 21,168 - Construction 271 271 - Residential real estate 666 697 - Consumer installment and other 350 456 - Impaired loans with an allowance recorded: Commercial 10,170 10,170 4,942 Commercial real estate 4,660 5,109 585 Construction - - - Residential real estate - - - Consumer installment and other - - - Total: Commercial $ 13,087 $ 13,149 $ 4,942 Commercial real estate 20,969 26,277 585 Construction 271 271 - Residential real estate 666 697 - Consumer installment and other 350 456 - Impaired Loans Recorded Investment Unpaid Balance 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 December 31, 2015, included $15,712 thousand of restructured loans, $7,464 thousand of which were on nonaccrual status. Impaired loans at December 31, 2014, included $4,837 thousand of restructured loans, none of which were on nonaccrual status. Impaired Loans 2015 2014 2013 Average Recognized Income Average Recognized Average Recognized (In thousands) Commercial $ 12,631 $ 584 $ 5,240 $ 325 $ 10,566 $ 222 Commercial real estate 20,307 674 19,880 469 27,186 763 Construction 263 - 2,015 - 2,400 80 Residential real estate 643 31 153 - 362 - Consumer installment and other 739 25 1,399 29 1,469 38 Total $ 34,583 $ 1,314 $ 28,687 $ 823 $ 41,983 $ 1,103 The following table provides information on troubled debt restructurings: Troubled Debt Restructurings Number of Pre-Modification Period-End Period-End (In thousands) Commercial 6 $ 3,138 $ 2,802 $ 194 Commercial real estate 10 12,927 12,684 - Residential real estate 1 242 226 - Total 17 $ 16,307 $ 15,712 $ 194 Troubled Debt Restructurings Number of Pre-Modification Period-End Period-End (In thousands) Commercial 3 $ 2,075 $ 1,901 $ - Commercial real estate 4 2,890 2,928 - Consumer installment and other 1 18 8 - Total 8 $ 4,983 $ 4,837 $ - Troubled Debt Restructurings Number of Pre-Modification Period-End Period-End (In thousands) Commercial 4 $ 3,427 $ 3,164 $ - Commercial real estate 2 2,291 2,289 - Total 6 $ 5,718 $ 5,453 $ - During the year ended December 31, 2015, the Company modified ten loans with a carrying value of $11,026 thousand that were considered troubled debt restructurings. The concessions granted in the restructurings completed in 2015 consisted of four under-market terms and modification of payment terms to extend the maturity date to allow for deferred principal repayment and six court orders. During the year ended December 31, 2014, the Company modified five loans with a total carrying value of $713 thousand that were considered troubled debt restructurings. The concessions granted in the five restructurings completed in 2014 consisted of modification of payment terms to extend the maturity date to allow for deferred principal repayment. During the year ended December 31, 2013, the Company modified five loans with a total carrying value of $4,966 thousand that were considered troubled debt restructurings. The concessions granted in the five restructurings completed in 2013 consisted of modification of payment terms to lower the interest rate and extend the maturity date to allow for deferred principal repayment. During the years ended December 31, 2015 and 2014, no troubled debt restructured loans defaulted within 12 months of the modification date. During the year ended December 31, 2013 a commercial real estate loan with a carrying value of $3,954 thousand 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 December 31, 2015 and December 31, 2014. At December 31, 2015 and December 31, 2014, the Company held total other real estate owned (OREO) of $9,264 thousand net of reserve of $1,986 thousand and $6,374 thousand net of reserve of $2,390 thousand, respectively, of which $0 thousand and $0 thousand, respectively, were foreclosed residential real estate properties. The amount of consumer mortgage loans outstanding secured by residential real estate properties for which formal foreclosure proceedings were in process totaled $0 thousand and $967 thousand at December 31, 2015 and December 31, 2014, respectively. |