Loans | Loans: Loan balances were as follows: (In Thousands of Dollars) March 31, 2016 December 31, 2015 Originated loans: Commercial real estate Owner occupied $ 112,454 $ 113,160 Non-owner occupied 150,137 139,502 Other 50,002 50,855 Commercial 168,686 157,447 Residential real estate 1-4 family residential 192,001 179,657 Home equity lines of credit 43,985 41,171 Consumer Indirect 127,118 127,335 Direct 19,965 17,325 Other 4,708 4,508 Subtotal $ 869,056 $ 830,960 Net deferred loan costs 2,698 2,731 Allowance for loan losses (9,376 ) (8,947 ) Total originated loans $ 862,378 $ 824,744 Acquired loans: Commercial real estate Owner occupied $ 132,512 $ 131,673 Non-owner occupied 27,102 28,045 Other 19,397 23,536 Commercial 65,683 73,621 Residential real estate 1-4 family residential 130,545 133,701 Home equity lines of credit 39,508 40,929 Consumer Direct 28,725 31,465 Other 275 204 Subtotal $ 443,747 $ 463,174 Allowance for loan losses (14 ) (31 ) Total acquired loans 443,733 463,143 Net loans $ 1,306,111 $ 1,287,887 Certain loan categories have been reclassified in the current presentation. The reclassifications had no effect on net income or stockholders’ equity. Purchased credit impaired loans As part of the NBOH acquisition the Company acquired various loans that displayed evidence of deterioration of credit quality since origination and which was probable that all contractually required payments would not be collected. The carrying amounts and contractually required payments of these loans which are included in the loan balances above are summarized in the following tables: (In Thousands of Dollars) March 31, 2016 December 31, 2015 Commercial real estate Owner occupied $ 696 $ 986 Non-owner occupied 477 501 Commercial 1,273 1,576 Total outstanding balance $ 2,446 $ 3,063 Carrying amount, net of allowance of $14 in 2016 and $31 in 2015 $ 1,902 $ 2,184 Accretable yield, or income expected to be collected, is shown in the table below: (In Thousands of Dollars) March 31, 2016 Beginning balance $ 323 New loans purchased 0 Accretion of income (18 ) Ending balance $ 305 The key assumptions considered include probability of default and the amount of actual prepayments after the acquisition date. Prepayments affect the estimated life of the loans and could change the amount of interest income and principal expected to be collected. In reforecasting future estimated cash flows, credit loss expectations are adjusted as necessary. There were no adjustments to forecasted cash flows that impacted the allowance for loan losses for the three months ended March 31, 2016. The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended March 31, 2016 and 2015: Three Months Ended March 31, 2016 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 3,127 $ 1,373 $ 1,845 $ 2,160 $ 473 $ 8,978 Provision for loan losses 43 64 75 446 152 780 Loans charged off 0 0 (34 ) (544 ) 0 (578 ) Recoveries 11 15 28 156 0 210 Total ending allowance balance $ 3,181 $ 1,452 $ 1,914 $ 2,218 $ 625 $ 9,390 Three Months Ended March 31, 2015 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 2,676 $ 1,420 $ 1,689 $ 1,663 $ 184 $ 7,632 Provision for loan losses 232 (70 ) 10 352 (74 ) 450 Loans charged off (4 ) 0 (81 ) (533 ) 0 (618 ) Recoveries 13 1 22 223 0 259 Total ending allowance balance $ 2,917 $ 1,351 $ 1,640 $ 1,705 $ 110 $ 7,723 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2016 and December 31, 2015. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees and costs, but excludes accrued interest receivable, which is not considered to be material: March 31, 2016 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 418 $ 5 $ 59 $ 0 $ 0 $ 482 Collectively evaluated for impairment 2,763 1,433 1,855 2,218 625 8,894 Acquired loans 0 0 0 0 0 0 Acquired with deteriorated credit quality 0 14 0 0 0 14 Total ending allowance balance $ 3,181 $ 1,452 $ 1,914 $ 2,218 $ 625 $ 9,390 Loans: Loans individually evaluated for impairment $ 5,444 $ 670 $ 3,354 $ 88 $ 0 $ 9,556 Loans collectively evaluated for impairment 306,334 167,728 232,190 155,946 0 862,198 Acquired loans 178,030 64,748 170,053 29,000 0 441,831 Acquired with deteriorated credit quality 981 935 0 0 0 1,916 Total ending loans balance $ 490,789 $ 234,081 $ 405,597 $ 185,034 $ 0 $ 1,315,501 December 31, 2015 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 429 $ 5 $ 63 $ 0 $ 0 $ 497 Collectively evaluated for impairment 2,698 1,337 1,782 2,160 473 8,450 Acquired loans 0 0 0 0 0 0 Acquired with deteriorated credit quality 0 31 0 0 0 31 Total ending allowance balance $ 3,127 $ 1,373 $ 1,845 $ 2,160 $ 473 $ 8,978 Loans: Loans individually evaluated for impairment $ 5,853 $ 712 $ 3,414 $ 103 $ 0 $ 10,082 Loans collectively evaluated for impairment 296,866 156,415 217,023 153,305 0 823,609 Acquired loans 181,987 72,673 174,630 31,669 0 460,959 Acquired with deteriorated credit quality 1,267 948 0 0 0 2,215 Total ending loans balance $ 485,973 $ 230,748 $ 395,067 $ 185,077 $ 0 $ 1,296,865 The following tables present information related to impaired loans by class of loans as of March 31, 2016 and December 31, 2015: (In Thousands of Dollars) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated March 31, 2016 With no related allowance recorded: Commercial real estate Owner occupied $ 2,582 $ 2,062 $ 0 Non-owner occupied 336 335 0 Commercial 793 590 0 Residential real estate 1-4 family residential 2,540 2,275 0 Home equity lines of credit 248 233 0 Consumer 173 88 0 Subtotal 6,672 5,583 0 With an allowance recorded: Commercial real estate Owner occupied 1,587 1,585 373 Non-owner occupied 1,463 1,462 45 Commercial 80 80 5 Residential real estate 1-4 family residential 780 760 57 Home equity lines of credit 86 86 2 Subtotal 3,996 3,973 482 Total $ 10,668 $ 9,556 $ 482 (In Thousands of Dollars) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated December 31, 2015 With no related allowance recorded: Commercial real estate Owner occupied $ 2,956 $ 2,436 $ 0 Non-owner occupied 343 342 0 Commercial 834 631 0 Residential real estate 1-4 family residential 2,575 2,310 0 Home equity lines of credit 283 268 0 Consumer 214 103 0 Subtotal 7,205 6,090 0 With an allowance recorded: Commercial real estate Owner occupied 1,597 1,595 379 Non-owner occupied 1,480 1,480 50 Commercial 81 81 5 Residential real estate 1-4 family residential 769 749 61 Home equity lines of credit 87 87 2 Subtotal 4,014 3,992 497 Total $ 11,219 $ 10,082 $ 497 The following tables present the average recorded investment in impaired loans by class and interest income recognized by loan class for the three month periods ended March 31, 2016 and 2015: Average Recorded Investment Interest Income Recognized For Three Months Ended March 31, For Three Months Ended March 31, (In Thousands of Dollars) 2016 2015 2016 2015 With no related allowance recorded: Commercial real estate Owner occupied $ 2,307 $ 2,311 $ 10 $ 16 Non-owner occupied 336 387 4 6 Commercial 614 463 5 6 Residential real estate 1-4 family residential 2,292 2,125 38 31 Home equity lines of credit 240 251 3 3 Consumer 116 91 3 4 Subtotal 5,905 5,628 63 66 With an allowance recorded: Commercial real estate Owner occupied 1,589 2,870 9 24 Non-owner occupied 1,469 1,537 19 20 Commercial 80 1,117 1 1 Residential real estate 1-4 family residential 749 983 9 9 Home equity lines of credit 86 90 1 1 Subtotal 3,973 6,597 39 55 Total $ 9,878 $ 12,225 $ 102 $ 121 Cash basis interest recognized during the three month periods ended March 31, 2016 and 2015 was materially equal to interest income recognized. Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following table presents the recorded investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans as of March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 (In Thousands of Dollars) Nonaccrual Loans Past Due 90 Days or More Still Accruing Nonaccrual Loans Past Due 90 Days or More Still Accruing Originated loans: Commercial real estate Owner occupied $ 2,943 $ 0 $ 3,313 $ 0 Non-owner occupied 336 2 345 0 Commercial 571 0 541 73 Residential real estate 1-4 family residential 2,194 451 2,406 336 Home equity lines of credit 131 60 127 112 Consumer Indirect 216 122 266 297 Direct 19 0 30 3 Other 0 10 0 24 Total originated loans $ 6,410 $ 645 $ 7,028 $ 845 Acquired loans: Commercial real estate Owner occupied $ 138 $ 0 $ 126 $ 18 Other 75 0 92 0 Commercial 976 0 1,068 0 Residential real estate 1-4 family residential 447 752 458 467 Home equity lines of credit 124 7 125 7 Consumer Direct 136 0 161 50 Total acquired loans $ 1,896 $ 759 $ 2,030 $ 542 Total loans $ 8,306 $ 1,404 $ 9,058 $ 1,387 The following table presents the aging of the recorded investment in past due loans as of March 31, 2016 and December 31, 2015 by class of loans: (In Thousands of Dollars) 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Nonaccrual Total Past Due Loans Not Past Due Total March 31, 2016 Originated loans: Commercial real estate Owner occupied $ 182 $ 0 $ 2,943 $ 3,125 $ 109,067 $ 112,192 Non-owner occupied 0 0 338 338 149,417 149,755 Other 0 0 0 0 49,831 49,831 Commercial 87 48 571 706 167,692 168,398 Residential real estate 1-4 family residential 1,571 1,307 2,645 5,523 185,987 191,510 Home equity lines of credit 318 4 191 513 43,521 44,034 Consumer Indirect 1,423 312 338 2,073 129,117 131,190 Direct 227 41 19 287 19,848 20,135 Other 17 12 10 39 4,670 4,709 Total originated loans: $ 3,825 $ 1,724 $ 7,055 $ 12,604 $ 859,150 $ 871,754 Acquired loans: Commercial real estate Owner occupied $ 500 $ 523 $ 138 $ 1,161 $ 131,351 $ 132,512 Non-owner occupied 71 0 0 71 27,031 27,102 Other 0 0 75 75 19,322 19,397 Commercial 567 775 976 2,318 63,365 65,683 Residential real estate 1-4 family residential 749 668 1,199 2,616 127,929 130,545 Home equity lines of credit 86 62 131 279 39,229 39,508 Consumer Direct 470 50 136 656 28,069 28,725 Other 2 0 0 2 273 275 Total acquired loans $ 2,445 $ 2,078 $ 2,655 $ 7,178 $ 436,569 $ 443,747 Total loans $ 6,270 $ 3,802 $ 9,710 $ 19,782 $ 1,295,719 $ 1,315,501 (In Thousands of Dollars) 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Nonaccrual Total Past Due Loans Not Past Due Total December 31, 2015 Originated loans: Commercial real estate Owner occupied $ 34 $ 0 $ 3,313 $ 3,347 $ 109,532 $ 112,879 Non-owner occupied 0 0 345 345 138,824 139,169 Other 112 0 0 112 50,559 50,671 Commercial 0 0 614 614 156,513 157,127 Residential real estate 1-4 family residential 1,694 402 2,742 4,838 174,376 179,214 Home equity lines of credit 62 5 239 306 40,917 41,223 Consumer Indirect 2,059 525 563 3,147 128,280 131,427 Direct 311 5 33 349 17,124 17,473 Other 13 10 24 47 4,461 4,508 Total originated loans $ 4,285 $ 947 $ 7,873 $ 13,105 $ 820,586 $ 833,691 Acquired loans: Commercial real estate Owner occupied $ 669 $ 0 $ 144 $ 813 $ 130,860 $ 131,673 Non-owner occupied 0 0 0 0 28,045 28,045 Other 0 0 92 92 23,444 23,536 Commercial 276 2 1,068 1,346 72,275 73,621 Residential real estate 1-4 family residential 1,994 244 925 3,163 130,538 133,701 Home equity lines of credit 78 11 132 221 40,708 40,929 Consumer Direct 567 56 211 834 30,631 31,465 Other 0 0 0 0 204 204 Total acquired loans $ 3,584 $ 313 $ 2,572 $ 6,469 $ 456,705 $ 463,174 Total loans $ 7,869 $ 1,260 $ 10,445 $ 19,574 $ 1,277,291 $ 1,296,865 |