Loan Quality | Note 7. Loan Quality The following table presents, by c l ass , the activity in the Allowance for Loan Losses (ALL) for the periods ended: Residential Real Estate 1-4 Family Junior Liens & Commercial (Dollars in thousands) First Liens Lines of Credit Construction Real Estate Commercial Consumer Unallocated Total ALL at March 31, 2016 $ 997 $ 316 $ 199 $ 6,181 $ 1,510 $ 99 $ 1,040 $ 10,342 Charge-offs (46) - - (1,951) (3) (42) - (2,042) Recoveries 1 - - 14 106 22 - 143 Provision 71 3 6 1,696 (17) 18 98 1,875 ALL at June 30, 2016 $ 1,023 $ 319 $ 205 $ 5,940 $ 1,596 $ 97 $ 1,138 $ 10,318 ALL at December 31, 2015 $ 989 $ 308 $ 194 $ 5,649 $ 1,519 $ 102 $ 1,325 $ 10,086 Charge-offs (49) - - (1,954) (66) (84) - (2,153) Recoveries 33 - - 14 121 42 - 210 Provision 50 11 11 2,231 22 37 (187) 2,175 ALL at June 30, 2016 $ 1,023 $ 319 $ 205 $ 5,940 $ 1,596 $ 97 $ 1,138 $ 10,318 ALL at March 31, 2015 $ 1,016 $ 268 $ 249 $ 5,137 $ 1,353 $ 116 $ 1,071 $ 9,210 Charge-offs (43) - (21) - (17) (26) - (107) Recoveries 1 - - 14 8 14 - 37 Provision 40 13 (22) 28 96 8 147 310 ALL at June 30, 2015 $ 1,014 $ 281 $ 206 $ 5,179 $ 1,440 $ 112 $ 1,218 $ 9,450 ALL at December 31, 2014 $ 994 $ 271 $ 214 $ 4,978 $ 1,515 $ 127 $ 1,012 $ 9,111 Charge-offs (43) - (21) - (218) (78) - (360) Recoveries 3 - - 14 14 33 - 64 Provision 60 10 13 187 129 30 206 635 ALL at June 30, 2015 $ 1,014 $ 281 $ 206 $ 5,179 $ 1,440 $ 112 $ 1,218 $ 9,450 T he following table presents, by c la ss , loans that were evaluated for the ALL under the specific reserve (individually) and those that were evaluated under the general reserve (collectively) and the amount of the ALL established in each class as of June 30, 2016 and December 31, 201 5 : Residential Real Estate 1-4 Family Junior Liens & Commercial (Dollars in thousands) First Liens Lines of Credit Construction Real Estate Commercial Consumer Unallocated Total June 30, 2016 Loans evaluated for ALL: Individually $ 396 $ 52 $ 491 $ 17,082 $ - $ - $ - $ 18,021 Collectively 163,141 51,962 7,829 354,704 226,307 4,692 - 808,635 Total $ 163,537 $ 52,014 $ 8,320 $ 371,786 $ 226,307 $ 4,692 $ - $ 826,656 ALL established for loans evaluated: Individually $ - $ - $ - $ - $ - $ - $ - $ - Collectively 1,023 319 205 5,940 1,596 97 1,138 10,318 ALL at June 30, 2016 $ 1,023 $ 319 $ 205 $ 5,940 $ 1,596 $ 97 $ 1,138 $ 10,318 December 31, 2015 Loans evaluated for ALL: Individually $ 930 $ 51 $ 502 $ 14,309 $ 230 $ - $ - $ 16,022 Collectively 160,548 50,862 7,386 326,386 215,712 5,100 - 765,994 Total $ 161,478 $ 50,913 $ 7,888 $ 340,695 $ 215,942 $ 5,100 $ - $ 782,016 ALL established for loans evaluated: Individually $ - $ - $ - $ - $ 9 $ - $ - $ 9 Collectively 989 308 194 5,649 1,510 102 1,325 10,077 ALL at December 31, 2015 $ 989 $ 308 $ 194 $ 5,649 $ 1,519 $ 102 $ 1,325 $ 10,086 The following table shows additional information about those loans considered to be impaired at June 30, 2016 and December 31, 201 5 : Impaired Loans With No Allowance With Allowance (Dollars in thousands) Unpaid Unpaid Recorded Principal Recorded Principal Related June 30, 2016 Investment Balance Investment Balance Allowance Residential Real Estate 1-4 Family First liens $ 921 $ 996 $ - $ - $ - Junior liens and lines of credit 63 75 - - - Total 984 1,071 - - - Residential real estate - construction 491 540 - - - Commercial real estate 17,357 19,910 - - - Commercial 25 37 - - - Total $ 18,857 $ 21,558 $ - $ - $ - December 31, 2015 Residential Real Estate 1-4 Family First liens $ 1,523 $ 1,725 $ - $ - $ - Junior liens and lines of credit 105 133 - - - Total 1,628 1,858 - - - Residential real estate - construction 502 546 - - - Commercial real estate 14,431 15,007 - - Commercial 267 330 9 10 9 Total $ 16,828 $ 17,741 $ 9 $ 10 $ 9 The following table shows the average of impaired loans and related interest income for the three and six months ended June 30, 2016 and 2015 : Three Months Ended Six Months Ended June 30, 2016 June 30, 2016 Average Interest Average Interest (Dollars in thousands) Recorded Income Recorded Income Investment Recognized Investment Recognized Residential Real Estate 1-4 Family First liens $ 926 $ 6 $ 998 $ 12 Junior liens and lines of credit 63 - 67 - Total 989 6 1,065 12 Residential real estate - construction 494 - 498 - Commercial real estate 19,345 117 19,555 239 Commercial 34 - 39 - Total $ 20,862 $ 123 $ 21,157 $ 251 Three Months Ended Six Months Ended June 30, 2015 June 30, 2015 Average Interest Average Interest (Dollars in thousands) Recorded Income Recorded Income Investment Recognized Investment Recognized Residential Real Estate 1-4 Family First liens $ 1,618 $ 9 $ 1,723 $ 16 Junior liens and lines of credit 117 - 131 - Total 1,735 9 1,854 16 Residential real estate - construction 516 - 723 - Commercial real estate 21,756 174 21,971 327 Commercial 361 - 1,012 - Total $ 24,368 $ 183 $ 25,560 $ 343 The following table presents the aging of payments of the loan portfolio : (Dollars in thousands) Loans Past Due and Still Accruing Total Current 30-59 Days 60-89 Days 90 Days+ Total Non-Accrual Loans June 30, 2016 Residential Real Estate 1-4 Family First liens $ 162,601 $ 102 $ 393 $ 14 $ 509 $ 427 $ 163,537 Junior liens and lines of credit 51,764 154 - 33 187 63 52,014 Total 214,365 256 393 47 696 490 215,551 Residential real estate - construction 7,652 117 - 60 177 491 8,320 Commercial real estate 362,157 2,415 96 306 2,817 6,812 371,786 Commercial 225,802 381 53 46 480 25 226,307 Consumer 4,674 18 - - 18 - 4,692 Total $ 814,650 $ 3,187 $ 542 $ 459 $ 4,188 $ 7,818 $ 826,656 December 31, 2015 Residential Real Estate 1-4 Family First liens $ 159,998 $ 44 $ 416 $ 214 $ 674 $ 806 $ 161,478 Junior liens and lines of credit 50,541 217 50 - 267 105 50,913 Total 210,539 261 466 214 941 911 212,391 Residential real estate - construction 7,209 177 - - 177 502 7,888 Commercial real estate 330,953 5,713 196 152 6,061 3,681 340,695 Commercial 215,449 210 5 2 217 276 215,942 Consumer 5,041 55 4 - 59 - 5,100 Total $ 769,191 $ 6,416 $ 671 $ 368 $ 7,455 $ 5,370 $ 782,016 The following table reports the internal credit rating for the loan portfolio. Consumer purpose loans (mortgage, home equity and installment) are assigned a rating of either pass or substandard. Substandard consumer loans are comprised of loans 90 days or more past due and still accruing , and nonaccrual loans. Commercial purpose loans may be assigned any rating in accordance with the Bank’s internal risk rating system. Pass Special Mention Substandard Doubtful (Dollars in thousands) (1-5) (6) (7) (8) Total June 30, 2016 Residential Real Estate 1-4 Family First liens $ 160,151 $ 2,003 $ 1,383 $ - $ 163,537 Junior liens and lines of credit 51,796 28 190 - 52,014 Total 211,947 2,031 1,573 - 215,551 Residential real estate - construction 7,488 - 832 - 8,320 Commercial real estate 352,191 1,758 17,837 - 371,786 Commercial 223,082 1,161 2,064 - 226,307 Consumer 4,692 - - - 4,692 Total $ 799,400 $ 4,950 $ 22,306 $ - $ 826,656 December 31, 2015 Residential Real Estate 1-4 Family First liens $ 157,514 $ 2,122 $ 1,842 $ - $ 161,478 Junior liens and lines of credit 50,685 28 200 - 50,913 Total 208,199 2,150 2,042 - 212,391 Residential real estate - construction 7,386 - 502 - 7,888 Commercial real estate 319,985 6,175 14,535 - 340,695 Commercial 213,492 1,978 472 - 215,942 Consumer 5,100 - - - 5,100 Total $ 754,162 $ 10,303 $ 17,551 $ - $ 782,016 The following table presents information on the Bank’s Troubled Debt Restructuring (TDR) loans: Troubled Debt Restructurings That Have Defaulted on Modified Terms in the (Dollars in thousands) Troubled Debt Restructurings Last Twelve Months Number of Recorded Number of Recorded Contracts Investment Performing* Nonperforming* Contracts Investment June 30, 2016 Residential real estate - construction 1 $ 491 $ 491 $ - - $ - Residential real estate 4 645 494 151 - - Commercial real estate 11 12,351 12,351 - - - Total 16 $ 13,487 $ 13,336 $ 151 - $ - December 31, 2015 Residential real estate - construction 1 $ 502 $ 502 $ - - $ - Residential real estate 4 654 503 151 - - Commercial real estate 10 12,125 12,125 - - - Total 15 $ 13,281 $ 13,130 $ 151 - $ - * The performing status is determined by the loan’s compliance with the modified terms . The following table reports new TDR loans during 2016, concession granted and the recorded investment as of June 3 0 , 2016 : New During Period Number of Pre-TDR After-TDR Recorded Six Months Ended June 30, 2016 Contracts Modification Modification Investment Concession Commercial real estate 1 $ 525 $ 525 $ 515 multiple There were no new TDR loans made in the first six months of 201 5 . |