Note 5. Loans, Allowance for Loan Losses and Credit Quality | The composition of net loans as of the balance sheet dates was as follows: September 30, December 31, September 30, 2015 2014 2014 Commercial & industrial $ 68,970,374 $ 64,390,220 $ 63,959,230 Commercial real estate 171,636,701 166,611,830 162,275,498 Residential real estate - 1st lien 161,763,468 163,966,124 165,662,426 Residential real estate - Jr lien 45,237,294 44,801,483 44,147,861 Consumer 7,810,295 8,035,298 7,943,615 455,418,132 447,804,955 443,988,630 Deduct (add): Allowance for loan losses 5,015,987 4,905,874 4,885,791 Deferred net loan costs (308,189 ) (303,394 ) (288,898 ) 4,707,798 4,602,480 4,596,893 Net Loans $ 450,710,334 $ 443,202,475 $ 439,391,737 The following is an age analysis of past due loans (including non-accrual), by portfolio segment: 90 Days or 90 Days Total Non-Accrual More September 30, 2015 30-89 Days or More Past Due Current Total Loans Loans and Accruing Commercial & industrial $ 98,272 $ 254,837 $ 353,109 $ 68,617,265 $ 68,970,374 $ 631,247 $ 0 Commercial real estate 666,897 515,083 1,181,980 170,454,721 171,636,701 2,377,232 0 Residential real estate - 1st lien 1,873,326 1,062,526 2,935,852 158,827,616 161,763,468 2,240,524 348,353 Residential real estate - Jr lien 248,648 111,849 360,497 44,876,797 45,237,294 351,805 67,811 Consumer 53,090 1,791 54,881 7,755,414 7,810,295 0 1,791 Total $ 2,940,233 $ 1,946,086 $ 4,886,319 $ 450,531,813 $ 455,418,132 $ 5,600,808 $ 417,955 90 Days or 90 Days Total Non-Accrual More December 31, 2014 30-89 Days or More Past Due Current Total Loans Loans and Accruing Commercial & industrial $ 439,151 $ 299,095 $ 738,246 $ 63,651,974 $ 64,390,220 $ 552,386 $ 23,579 Commercial real estate 988,924 5,313 994,237 165,617,593 166,611,830 1,934,096 5,313 Residential real estate - 1st lien 4,446,138 1,484,334 5,930,472 158,035,652 163,966,124 1,263,046 980,138 Residential real estate - Jr lien 637,917 179,920 817,837 43,983,646 44,801,483 404,061 115,852 Consumer 56,392 0 56,392 7,978,906 8,035,298 0 0 Total $ 6,568,522 $ 1,968,662 $ 8,537,184 $ 439,267,771 $ 447,804,955 $ 4,153,589 $ 1,124,882 90 Days or 90 Days Total Non-Accrual More September 30, 2014 30-89 Days or More Past Due Current Total Loans Loans and Accruing Commercial & industrial $ 450,811 $ 612,822 $ 1,063,633 $ 62,895,597 $ 63,959,230 $ 1,068,390 $ 0 Commercial real estate 1,137,779 48,520 1,186,299 161,089,199 162,275,498 1,754,002 5,313 Residential real estate - 1st lien 2,230,067 1,239,799 3,469,866 162,192,560 165,662,426 1,740,509 554,327 Residential real estate - Jr lien 256,212 76,089 332,301 43,815,560 44,147,861 410,187 57,385 Consumer 55,034 8,859 63,893 7,879,722 7,943,615 0 8,859 Total $ 4,129,903 $ 1,986,089 $ 6,115,992 $ 437,872,638 $ 443,988,630 $ 4,973,088 $ 625,884 For all loan segments, loans over 30 days past due are considered delinquent. As of September 30, 2015, there were four residential mortgage loans in process of foreclosure totaling $370,413. Allowance for loan losses The allowance for loan losses is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is probable. Subsequent recoveries, if any, are credited to the allowance. Unsecured loans, primarily consumer loans, are charged off when they become uncollectible and no later than 120 days past due. Unsecured loans to customers who subsequently file bankruptcy are charged off within 30 days of receipt of the notification of filing or by the end of the month in which the loans become 120 days past due, whichever occurs first. For secured loans, both residential and commercial, the potential loss on impaired loans is carried as a loan loss reserve specific allocation; the loss portion is charged off when collection of the full loan appears unlikely. The unsecured portion of a real estate loan is that portion of the loan exceeding the "fair value" of the collateral less the estimated cost to sell. Value of the collateral is determined in accordance with the Companys appraisal policy. The unsecured portion of an impaired real estate secured loan is charged off by the end of the month in which the loan becomes 180 days past due. As described below, the allowance consists of general, specific and unallocated components. However, the entire allowance is available to absorb losses in the loan portfolio, regardless of specific, general and unallocated components considered in determining the amount of the allowance. General component The general component of the allowance for loan losses is based on historical loss experience, adjusted for qualitative factors and stratified by the following loan segments: commercial and industrial, commercial real estate, residential real estate first (1st) lien, residential real estate junior (Jr) lien and consumer loans. The Company does not disaggregate its portfolio segments further into classes. Loss ratios are calculated by loan segment for one year, two year, three year, four year and five year look back periods. The highest loss ratio among these look-back periods is then applied against the respective segment. Management uses an average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels of and trends in delinquencies and non-performing loans, levels of and trends in loan risk groups, trends in volumes and terms of loans, effects of any changes in loan related policies, experience, ability and the depth of management, documentation and credit data exception levels, national and local economic trends, external factors such as competition and regulation and lastly, concentrations of credit risk in a variety of areas, including portfolio product mix, the level of loans to individual borrowers and their related interests, loans to industry segments, and the geographic distribution of commercial real estate loans. This evaluation is inherently subjective as it requires estimates that are susceptible to revision as more information becomes available. The reserve methodology was modified during the quarter ended June 30, 2015 to eliminate using the higher of the 1999-2001 losses as compared to current losses, by eliminating the use of the 1999-2001 period. The 1999-2001 information has become dated and the Banks credit portfolio management has evolved during that time. The revised methodology now considers the highest annual loss rates for the most recent one to five year look back periods for each segment of the portfolio. This change resulted in a reduction to required reserves of $529,234 at June 30, 2015. Adjustments were made to the commercial & industrial and commercial real estate qualitative factors to adjust for the impact of the change in methodology, principally in the area of loan growth, loan policy, and delinquency factors. The commercial & industrial and commercial real estate factors were each increased a total of 10 basis points, amounting to increases of $171,000 and $70,000, respectively at June 30, 2015. The qualitative factors are determined based on the various risk characteristics of each loan segment. The Company has policies, procedures and internal controls that management believes are commensurate with the risk profile of each of these segments. Major risk characteristics relevant to each portfolio segment are as follows: Commercial & Industrial Commercial Real Estate Residential Real Estate - 1st Lien Residential Real Estate Jr Lien Consumer Specific component The specific component of the allowance for loan losses relates to loans that are impaired. Impaired loans are loan(s) to a borrower that in the aggregate are greater than $100,000 and that are in non-accrual status or are troubled debt restructurings (TDR) regardless of amount. A specific allowance is established for an impaired loan when its estimated impaired basis is less than the carrying value of the loan. For all loan segments, except consumer loans, a loan is considered impaired when, based on current information and events, in managements estimation it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant or temporary payment delays and payment shortfalls generally are not classified as impaired. Management evaluates the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and frequency of the delay, the reasons for the delay, the borrowers prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis, by either the present value of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Impaired loans also include troubled loans that are restructured. A TDR occurs when the Company, for economic or legal reasons related to the borrowers financial difficulties, grants a concession to the borrower that would otherwise not be granted. TDRs may include the transfer of assets to the Company in partial satisfaction of a troubled loan, a modification of a loans terms, or a combination of the two. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer loans for impairment evaluation, unless such loans are subject to a restructuring agreement. Unallocated component An unallocated component of the allowance for loan losses is maintained to cover uncertainties that could affect managements estimate of probable losses. The unallocated component reflects managements estimate of the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. While unallocated reserves have increased, they are considered by management to be appropriate in light of the Companys continued growth strategy and shift in the portfolio from residential loans to commercial and commercial real estate loans and the risk associated with the relatively new, unseasoned loans in those portfolios. The following tables summarize changes in the allowance for loan losses and select loan information, by portfolio segment, for the periods indicated: As of or for the three months ended September 30, 2015 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 881,094 $ 1,984,559 $ 1,358,504 $ 352,125 $ 63,813 $ 455,117 $ 5,095,212 Charge-offs (70,000 ) (14,783 ) (17,473 ) (35,194 ) (25,334 ) 0 (162,784 ) Recoveries 997 0 0 60 7,502 0 8,559 Provision (credit) (91,246 ) 45,039 57,167 106,934 23,350 (66,244 ) 75,000 Ending balance $ 720,845 $ 2,014,815 $ 1,398,198 $ 423,925 $ 69,331 $ 388,873 $ 5,015,987 As of or for the nine months ended September 30, 2015 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 646,719 $ 2,311,936 $ 1,270,766 $ 321,099 $ 118,819 $ 236,535 $ 4,905,874 Charge-offs (105,059 ) (14,783 ) (112,047 ) (55,393 ) (53,440 ) 0 (340,722 ) Recoveries 43,909 0 6,042 180 25,704 0 75,835 Provision (credit) 135,276 (282,338 ) 233,437 158,039 (21,752 ) 152,338 375,000 Ending balance $ 720,845 $ 2,014,815 $ 1,398,198 $ 423,925 $ 69,331 $ 388,873 $ 5,015,987 Allowance for loan losses Evaluated for impairment Individually $ 0 $ 0 $ 71,800 $ 115,000 $ 0 $ 0 $ 186,800 Collectively 720,845 2,014,815 1,326,398 308,925 69,331 388,873 4,829,187 Total $ 720,845 $ 2,014,815 $ 1,398,198 $ 423,925 $ 69,331 $ 388,873 $ 5,015,987 Loans evaluated for impairment Individually $ 446,928 $ 2,526,797 $ 1,701,790 $ 236,301 $ 0 $ 4,911,816 Collectively 68,523,446 169,109,904 160,061,678 45,000,993 7,810,295 450,506,316 Total $ 68,970,374 $ 171,636,701 $ 161,763,468 $ 45,237,294 $ 7,810,295 $ 455,418,132 As of or for the year ended December 31, 2014 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 516,382 $ 2,143,398 $ 1,452,184 $ 366,471 $ 105,279 $ 271,201 $ 4,854,915 Charge-offs (153,329 ) (167,841 ) (58,904 ) (51,389 ) (112,376 ) 0 (543,839 ) Recoveries 6,249 0 14,543 240 33,766 0 54,798 Provision (credit) 277,417 336,379 (137,057 ) 5,777 92,150 (34,666 ) 540,000 Ending balance $ 646,719 $ 2,311,936 $ 1,270,766 $ 321,099 $ 118,819 $ 236,535 $ 4,905,874 Allowance for loan losses Evaluated for impairment Individually $ 0 $ 34,400 $ 43,400 $ 0 $ 0 $ 0 $ 77,800 Collectively 646,719 2,277,536 1,227,366 321,099 118,819 236,535 4,828,074 Total $ 646,719 $ 2,311,936 $ 1,270,766 $ 321,099 $ 118,819 $ 236,535 $ 4,905,874 Loans evaluated for impairment Individually $ 390,605 $ 1,930,993 $ 721,241 $ 328,889 $ 0 $ 3,371,728 Collectively 63,999,615 164,680,837 163,244,883 44,472,594 8,035,298 444,433,227 Total $ 64,390,220 $ 166,611,830 $ 163,966,124 $ 44,801,483 $ 8,035,298 $ 447,804,955 As of or for the three months ended September 30, 2014 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 687,416 $ 2,155,738 $ 1,337,011 $ 294,614 $ 84,115 $ 317,922 $ 4,876,816 Charge-offs (27,881 ) (24,100 ) (28,382 ) (33,875 ) (24,255 ) 0 (138,493 ) Recoveries 3,028 0 1,725 60 7,655 0 12,468 Provision (credit) 11,893 118,614 (22,894 ) 23,329 23,252 (19,194 ) 135,000 Ending balance $ 674,456 $ 2,250,252 $ 1,287,460 $ 284,128 $ 90,767 $ 298,728 $ 4,885,791 As of or for the nine months ended September 30, 2014 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 516,382 $ 2,143,398 $ 1,452,184 $ 366,471 $ 105,279 $ 271,201 $ 4,854,915 Charge-offs (115,095 ) (154,919 ) (28,382 ) (33,875 ) (90,024 ) 0 (422,295 ) Recoveries 5,265 0 12,823 180 29,903 0 48,171 Provision (credit) 267,904 261,773 (149,165 ) (48,648 ) 45,609 27,527 405,000 Ending balance $ 674,456 $ 2,250,252 $ 1,287,460 $ 284,128 $ 90,767 $ 298,728 $ 4,885,791 Allowance for loan losses Evaluated for impairment Individually $ 21,200 $ 62,000 $ 45,400 $ 0 $ 0 $ 0 $ 128,600 Collectively 653,256 2,188,252 1,242,060 284,128 90,767 298,728 4,757,191 Total $ 674,456 $ 2,250,252 $ 1,287,460 $ 284,128 $ 90,767 $ 298,728 $ 4,885,791 Loans evaluated for impairment Individually $ 983,044 $ 1,728,772 $ 947,329 $ 334,926 $ 0 $ 3,994,071 Collectively 62,976,186 160,546,726 164,715,097 43,812,935 7,943,615 439,994,559 Total $ 63,959,230 $ 162,275,498 $ 165,662,426 $ 44,147,861 $ 7,943,615 $ 443,988,630 Impaired loans, by portfolio segment, were as follows: As of September 30, 2015 Unpaid Average Average Recorded Principal Related Recorded Recorded Investment Balance Allowance Investment(1) Investment(2) With an allowance recorded Commercial & industrial $ 0 $ 0 $ 0 $ 93,398 $ 37,359 Commercial real estate 0 0 0 0 40,902 Residential real estate - 1st lien 246,594 283,363 71,800 302,937 193,515 Residential real estate - Jr lien 236,301 284,202 115,000 152,865 108,406 482,895 567,565 186,800 549,200 380,182 With no related allowance recorded Commercial & industrial 446,929 512,552 -- 555,057 389,530 Commercial real estate 2,526,797 2,741,550 -- 1,976,769 1,641,363 Residential real estate - 1st lien 1,455,195 1,658,402 -- 780,255 724,368 Residential real estate - Jr lien 0 0 -- 120,465 113,964 4,428,921 4,912,504 -- 3,432,546 2,869,225 Total $ 4,911,816 $ 5,480,069 $ 186,800 $ 3,981,746 $ 3,249,407 (1) For the three months ended September 30, 2015 (2) For the nine months ended September 30, 2015 As of December 31, 2014 2014 Unpaid Average Recorded Principal Related Recorded Investment Balance Allowance Investment With an allowance recorded Commercial & industrial $ 0 $ 0 $ 0 $ 158,690 Commercial real estate 204,511 220,981 34,400 280,104 Residential real estate - 1st lien 115,108 144,708 43,400 294,807 Residential real estate - Jr lien 0 0 0 149,772 319,619 365,689 77,800 883,373 With no related allowance recorded Commercial & industrial 390,605 424,598 -- 507,232 Commercial real estate 1,726,482 1,689,772 -- 1,294,710 Residential real estate - 1st lien 606,133 875,841 -- 971,542 Residential real estate - Jr lien 328,889 390,260 -- 238,826 3,052,109 3,380,471 -- 3,012,310 Total $ 3,371,728 $ 3,746,160 $ 77,800 $ 3,895,683 As of September 30, 2014 Unpaid Average Average Recorded Principal Related Recorded Recorded Investment Balance Allowance Investment(1) Investment(2) With an allowance recorded Commercial & industrial $ 256,356 $ 294,950 $ 21,200 $ 335,613 $ 198,362 Commercial real estate 423,569 439,630 62,000 322,093 299,003 Residential real estate - 1st lien 134,720 163,115 45,400 338,782 339,732 Residential real estate - Jr lien 89,260 0 0 95,062 209,531 903,905 897,695 128,600 1,091,550 1,046,628 With no related allowance recorded Commercial & industrial 726,688 772,605 -- 772,852 536,388 Commercial real estate 1,305,203 1,414,604 -- 1,321,387 1,186,767 Residential real estate - 1st lien 812,609 903,309 -- 822,309 1,062,894 Residential real estate - Jr lien 245,666 391,644 -- 257,789 193,995 3,090,166 3,482,162 -- 3,174,337 2,980,044 Total $ 3,994,071 $ 4,379,857 $ 128,600 $ 4,265,887 $ 4,026,672 (1) For the three months ended September 30, 2014 (2) For the nine months ended September 30, 2014 Interest income recognized on impaired loans was immaterial for all periods presented. For all loan segments, the accrual of interest is discontinued when a loan is specifically determined to be impaired or when the loan is delinquent 90 days and management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is considered by management to be doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is generally not recognized on specific impaired loans unless the likelihood of further loss is considered by management to be remote. Interest payments received on impaired loans are generally applied as a reduction of the loan principal balance. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are considered by management to be reasonably assured. As of the balance sheet dates, the Company was not contractually committed to lend additional funds to debtors with impaired, non-accrual or restructured loans. Credit Quality Grouping In developing the allowance for loan losses, management uses credit quality grouping to help evaluate trends in credit quality. The Company groups credit risk into Groups A, B and C. The manner the Company utilizes to assign risk grouping is driven by loan purpose. Commercial purpose loans are individually risk graded while the retail portion of the portfolio is generally grouped by delinquency pool. Group A loans - Acceptable Risk Group B loans Management Involved Group C loans Unacceptable Risk Commercial purpose loan ratings are assigned by the commercial account officer; for larger and more complex commercial loans, the credit rating is a collaborative assignment by the lender and the credit analyst. The credit risk rating is based on the borrower's expected performance, i.e., the likelihood that the borrower will be able to service its obligations in accordance with the loan terms. Credit risk ratings are meant to measure risk versus simply record history. Assessment of expected future payment performance requires consideration of numerous factors. While past performance is part of the overall evaluation, expected performance is based on an analysis of the borrower's financial strength, and historical and projected factors such as size and financing alternatives, capacity and cash flow, balance sheet and income statement trends, the quality and timeliness of financial reporting, and the quality of the borrowers management. Other factors influencing the credit risk rating to a lesser degree include collateral coverage and control, guarantor strength and commitment, documentation, structure and covenants and industry conditions. There are uncertainties inherent in this process. Credit risk ratings are dynamic and require updating whenever relevant information is received. The risk ratings of larger or more complex loans, and Group B and C rated loans, are assessed at the time of their respective annual reviews, during quarterly updates, in action plans or at any other time that relevant information warrants update. Lenders are required to make immediate disclosure to the Chief Credit Officer of any known increase in loan risk, even if considered temporary in nature. The risk ratings within the loan portfolio, by segment, as of the balance sheet dates were as follows: As of September 30, 2015 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Total Group A $ 65,623,508 $ 161,009,553 $ 158,003,285 $ 44,587,285 $ 7,808,505 $ 437,032,136 Group B 2,023,893 4,415,932 178,938 224,090 0 6,842,853 Group C 1,322,973 6,211,216 3,581,245 425,919 1,790 11,543,143 Total $ 68,970,374 $ 171,636,701 $ 161,763,468 $ 45,237,294 $ 7,810,295 $ 455,418,132 As of December 31, 2014 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Total Group A $ 61,201,586 $ 157,767,641 $ 160,912,689 $ 44,018,956 $ 8,035,298 $ 431,936,170 Group B 2,316,908 3,280,904 228,148 251,822 0 6,077,782 Group C 871,726 5,563,285 2,825,287 530,705 0 9,791,003 Total $ 64,390,220 $ 166,611,830 $ 163,966,124 $ 44,801,483 $ 8,035,298 $ 447,804,955 As of September 30, 2014 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Total Group A $ 60,077,761 $ 153,398,713 $ 162,739,339 $ 43,546,848 $ 7,934,756 $ 427,697,417 Group B 2,717,261 3,447,445 205,415 163,910 0 6,534,031 Group C 1,164,208 5,429,340 2,717,672 437,103 8,859 9,757,182 Total $ 63,959,230 $ 162,275,498 $ 165,662,426 $ 44,147,861 $ 7,943,615 $ 443,988,630 Modifications of Loans and TDRs A loan is classified as a TDR if, for economic or legal reasons related to a borrowers financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. The Company is deemed to have granted such a concession if it has modified a troubled loan in any of the following ways: ● Reduced accrued interest; ● Reduced the original contractual interest rate to a rate that is below the current market rate for the borrower; ● Converted a variable-rate loan to a fixed-rate loan; ● Extended the term of the loan beyond an insignificant delay; ● Deferred or forgiven principal in an amount greater than three months of payments; or ● Performed a refinancing and deferred or forgiven principal on the original loan. An insignificant delay or insignificant shortfall in the amount of payments typically would not require the loan to be accounted for as a TDR. However, pursuant to regulatory guidance, any payment delay longer than three months is generally not considered insignificant. Managements assessment of whether a concession has been granted also takes into account payments expected to be received from third parties, including third-party guarantors, provided that the third party has the ability to perform on the guarantee. The Companys TDRs are principally a result of extending loan repayment terms to relieve cash flow difficulties. The Company has only, on a limited basis, reduced interest rates for borrowers below the current market rate for the borrower. The Company has not forgiven principal or reduced accrued interest within the terms of original restructurings, nor has it converted variable rate terms to fixed rate terms. However, the Company evaluates each TDR situation on its own merits and does not foreclose the granting of any particular type of concession. TDRs, by portfolio segment, for the periods presented were as follows: Three months ended September 30, 2015 Nine months ended September 30, 2015 Pre- Post- Pre- Post- Modification Modification Modification Modification Outstanding Outstanding Outstanding Outstanding Number of Recorded Recorded Number of Recorded Recorded Contracts Investment Investment Contracts Investment Investment Commercial & industrial 0 $ 0 $ 0 3 $ 198,999 $ 198,829 Commercial real estate 2 340,960 366,048 2 340,960 366,048 Residential real estate - 1st lien 3 207,979 219,335 11 1,170,625 1,240,437 - Jr lien 0 0 0 2 117,745 121,672 Total 5 $ 548,939 $ 585,383 18 $ 1,828,329 $ 1,926,986 Year ended December 31, 2014 Pre- Post- Modification Modification Outstanding Outstanding Number of Recorded Recorded Contracts Investment Investment Commercial real estate 1 $ 301,823 $ 301,823 Residential real estate - 1st lien 11 1,294,709 1,332,336 Total 12 $ 1,596,532 $ 1,634,159 Three months ended September 30, 2014 Nine months ended September 30, 2014 Pre- Post- Pre- Post- Modification Modification Modification Modification Outstanding Outstanding Outstanding Outstanding Number of Recorded Recorded Number of Recorded Recorded Contracts Investment Investment Contracts Investment Investment Residential real estate - 1st lien 2 $ 432,573 $ 436,963 8 $ 913,471 $ 947,700 The TDRs for which there was a payment default during the twelve month periods presented were as follows: Twelve months ended September 30, 2015 Number of Recorded Contracts Investment Commercial 2 $ 21,890 Residential real estate - 1st lien 3 256,348 Total 5 $ 278,238 Year ended December 31, 2014 Number of Recorded Contracts Investment Residential real estate - 1st lien 2 $ 137,830 Twelve months ended September 30, 2014 Number of Recorded Contracts Investment Residential real estate 1st lien 5 $ 438,428 TDRs are treated as other impaired loans and carry individual specific reserves with respect to the calculation of the allowance for loan losses. These loans are categorized as non-performing, may be past due, and are generally adversely risk rated. The TDRs that have defaulted under their restructured terms are generally in collection status and their reserve is typically calculated using the fair value of collateral method. At September 30, 2014, the specific allocation related to TDRs was approximately $6,600. There was no specific allowance related to TDRs at September 30, 2015 and December 31, 2014. As of September 30, 2015, the Company is contractually committed to lend up to $450,000 in additional funds to one debtor with an impaired SBA 75% guaranteed cap line of credit, This debtors loan relationship is expected to strengthen as a result of a prior troubled debt restructuring. With this exception, as of the balance sheet dates, the Company was not contractually committed to lend additional funds to debtors with impaired, non-accrual or modified loans. |