Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 4 – LOANS The following tables set forth by class of loans as of September 30, 2015 and December 31, 2014 the amount of loans individually and collectively evaluated for impairment and the portion of the allowance for loan losses allocable to such loans. Construction and land development loans are included with commercial mortgages in the following tables and small business credit scored loans are included with commercial and industrial loans. September 30, 2015 Loans Allowance for Loan Losses Individually Evaluated for Impairment Collectively Evaluated for Impairment Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Ending Balance (in thousands) Commercial and industrial $ 71 $ 85,269 $ 85,340 $ 57 $ 848 $ 905 Commercial mortgages: Multifamily 1,883 554,235 556,118 - 6,815 6,815 Other - 296,452 296,452 - 2,863 2,863 Owner-occupied 602 101,199 101,801 - 949 949 Residential mortgages: Closed end 3,716 968,807 972,523 389 12,538 12,927 Revolving home equity 572 84,234 84,806 - 968 968 Consumer and other - 5,849 5,849 - 93 93 $ 6,844 $ 2,096,045 $ 2,102,889 $ 446 $ 25,074 $ 25,520 December 31, 2014 Commercial and industrial $ 16 $ 77,124 $ 77,140 $ - $ 838 $ 838 Commercial mortgages: Multifamily 303 528,790 529,093 - 7,207 7,207 Other - 222,537 222,537 - 2,340 2,340 Owner-occupied 630 106,715 107,345 - 1,023 1,023 Residential mortgages: Closed end 1,083 778,911 779,994 60 10,539 10,599 Revolving home equity 376 82,733 83,109 - 1,121 1,121 Consumer and other - 5,601 5,601 - 93 93 $ 2,408 $ 1,802,411 $ 1,804,819 $ 60 $ 23,161 $ 23,221 The following tables present the activity in the allowance for loan losses for the nine and three months ended September 30, 2015. Balance at 1/1/15 Chargeoffs Recoveries Provision for Loan Losses (Credit) Balance at 9/30/15 (in thousands) Commercial and industrial $ 838 $ - $ 6 $ 61 $ 905 Commercial mortgages: Multifamily 7,207 88 - (304 ) 6,815 Other 2,340 - 2 521 2,863 Owner-occupied 1,023 - - (74 ) 949 Residential mortgages: Closed end 10,599 - 9 2,319 12,927 Revolving home equity 1,121 - 5 (158 ) 968 Consumer and other 93 37 - 37 93 $ 23,221 $ 125 $ 22 $ 2,402 $ 25,520 Balance at 7/1/15 Chargeoffs Recoveries Provision for Loan Losses (Credit) Balance at 9/30/15 Commercial and industrial $ 986 $ - $ - $ (81 ) $ 905 Commercial mortgages: Multifamily 7,030 21 - (194 ) 6,815 Other 2,263 - 1 599 2,863 Owner-occupied 1,007 - - (58 ) 949 Residential mortgages: Closed end 12,114 - - 813 12,927 Revolving home equity 1,021 - 5 (58 ) 968 Consumer and other 70 5 - 28 93 $ 24,491 $ 26 $ 6 $ 1,049 $ 25,520 The following tables present the activity in the allowance for loan losses for the nine and three months ended September 30, 2014. Balance at 1/1/14 Chargeoffs Recoveries Provision for Loan Losses (Credit) Balance at 9/30/14 (in thousands) Commercial and industrial $ 808 $ 96 $ - $ 125 $ 837 Commercial mortgages: Multifamily 7,348 - - (405 ) 6,943 Other 1,501 - - 572 2,073 Owner-occupied 1,191 400 - 223 1,014 Residential mortgages: Closed end 8,607 121 2 1,552 10,040 Revolving home equity 1,240 173 3 117 1,187 Consumer and other 153 7 9 (40 ) 115 $ 20,848 $ 797 $ 14 $ 2,144 $ 22,209 Balance at 7/1/14 Chargeoffs Recoveries Provision for Loan Losses (Credit) Balance at 9/30/14 Commercial and industrial $ 761 $ 96 $ - $ 172 $ 837 Commercial mortgages: Multifamily 6,920 - - 23 6,943 Other 1,802 - - 271 2,073 Owner-occupied 1,148 - - (134 ) 1,014 Residential mortgages: Closed end 9,180 - - 860 10,040 Revolving home equity 1,207 59 3 36 1,187 Consumer and other 122 - - (7 ) 115 $ 21,140 $ 155 $ 3 $ 1,221 $ 22,209 For individually impaired loans, the following tables set forth by class of loans at September 30, 2015 and December 31, 2014 the recorded investment, unpaid principal balance and related allowance. The tables also set forth the average recorded investment of individually impaired loans and interest income recognized while the loans were impaired during the nine and three months ended September 30, 2015 and 2014. The recorded investment is the unpaid principal balance of the loans less any interest payments applied to principal and any direct chargeoffs plus or minus net deferred loan costs and fees. Any principal and interest payments received on nonaccrual impaired loans are applied to the recorded investment in the loans. The Bank recognizes interest income on other impaired loans using the accrual method of accounting. Nine Months Ended Three Months Ended September 30, 2015 September 30, 2015 September 30, 2015 Unpaid Average Interest Average Interest Recorded Principal Related Recorded Income Recorded Income Investment Balance Allowance Investment Recognized Investment Recognized (in thousands) With no related allowance recorded: Commercial mortgages: Multifamily $ 1,883 $ 1,885 $ - $ 1,889 $ - $ 1,883 $ - Owner-occupied 602 658 - 617 - 606 - Residential mortgages: Closed end 348 442 - 365 - 351 - Revolving home equity 572 571 - 574 4 572 4 With an allowance recorded: Commercial and industrial 71 71 57 81 1 74 1 Residential mortgages - closed end 3,368 3,373 389 3,424 63 3,373 42 Total: Commercial and industrial 71 71 57 81 1 74 1 Commercial mortgages: Multifamily 1,883 1,885 - 1,889 - 1,883 - Owner-occupied 602 658 - 617 - 606 - Residential mortgages: Closed end 3,716 3,815 389 3,789 63 3,724 42 Revolving home equity 572 571 - 574 4 572 4 $ 6,844 $ 7,000 $ 446 $ 6,950 $ 68 $ 6,859 $ 47 Nine Months Ended Three Months Ended December 31, 2014 September 30, 2014 September 30, 2014 With no related allowance recorded: Commercial and industrial $ 16 $ 16 $ - $ 27 $ 1 $ 23 $ - Commercial mortgages: Multifamily 303 368 - - - - - Other - - - 38 2 38 1 Owner-occupied 630 663 - 399 - 394 - Residential mortgages: Closed end 216 270 - 890 - 883 - Revolving home equity 376 372 - 280 - 280 - With an allowance recorded: Commercial mortgages: Multifamily - - - 327 - 310 - Owner-occupied - - - 244 - 241 - Residential mortgages - closed end 867 893 60 898 18 884 7 Total: Commercial and industrial 16 16 - 27 1 23 - Commercial mortgages: Multifamily 303 368 - 327 - 310 - Other - - - 38 2 38 1 Owner-occupied 630 663 - 643 - 635 - Residential mortgages: Closed end 1,083 1,163 60 1,788 18 1,767 7 Revolving home equity 376 372 - 280 - 280 - $ 2,408 $ 2,582 $ 60 $ 3,103 $ 21 $ 3,053 $ 8 Aging of Loans September 30, 2015 Past Due Total Past 90 Days or Due Loans & 30-59 Days 60-89 Days More and Nonaccrual Nonaccrual Total Past Due Past Due Still Accruing Loans Loans Current Loans (in thousands) Commercial and industrial $ 6 $ - $ - $ 65 $ 71 $ 85,269 $ 85,340 Commercial mortgages: Multifamily - - - 1,883 1,883 554,235 556,118 Other - - - - - 296,452 296,452 Owner-occupied - - - 602 602 101,199 101,801 Residential mortgages: Closed end 996 152 - 348 1,496 971,027 972,523 Revolving home equity - - - 328 328 84,478 84,806 Consumer and other - - - - - 5,849 5,849 $ 1,002 $ 152 $ - $ 3,226 $ 4,380 $ 2,098,509 $ 2,102,889 December 31, 2014 Commercial and industrial $ - $ - $ - $ - $ - $ 77,140 $ 77,140 Commercial mortgages: Multifamily 954 - - 303 1,257 527,836 529,093 Other - - - - - 222,537 222,537 Owner-occupied - - - 630 630 106,715 107,345 Residential mortgages: Closed end 1,059 - - 395 1,454 778,540 779,994 Revolving home equity 74 99 - 376 549 82,560 83,109 Consumer and other - - - - - 5,601 5,601 $ 2,087 $ 99 $ - $ 1,704 $ 3,890 $ 1,800,929 $ 1,804,819 Nonaccrual loans at September 30, 2015 include a first lien residential mortgage in the amount of $32,000 that is in the process of foreclosure. There were no loans in the process of foreclosure at December 31, 2014. The Bank did not hold any foreclosed residential real estate property at September 30, 2015 or December 31, 2014. Troubled Debt Restructurings. During the nine months ended September 30, 2015, the Bank modified two loans to a single borrower in a troubled debt restructuring. The loans were a first lien residential mortgage with a pre and post-modification outstanding recorded investment of $2.7 million and a junior lien residential mortgage with a pre and post-modification outstanding recorded investment of $245,000. The restructuring reduced the interest rate on each loan from 5.25% to 4.00%, which is lower than the current market rate for new debt with similar risk. The restructuring resulted in a charge to the provision for loan losses of $332,000 during the second quarter of 2015. During the nine months ended September 30, 2014, the Bank did not modify any loans in troubled debt restructurings. At September 30, 2015 and December 31, 2014, the Bank had an allowance for loan losses of $392,000 and $60,000, respectively, allocated to specific troubled debt restructurings. The Bank had no commitments to lend additional amounts to loans that were classified as troubled debt restructurings. There were no troubled debt restructurings for which there was a payment default during the nine months ended September 30, 2015 that were modified during the twelve-month period prior to default. There were two troubled debt restructurings for which there were payment defaults during the nine months ended September 30, 2014 that were modified during the twelve-month period prior to default. The restructured loans were owner-occupied commercial mortgage loans with an aggregate outstanding recorded investment of $636,000 at September 30, 2014 and a specifically allocated allowance for loan losses of $40,000. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. Risk Characteristics . Credit Quality Indicators. Commercial and industrial loans, including small business credit scored loans, and commercial mortgage loans, including construction and land development loans, are risk rated utilizing a ten point rating system. Residential mortgages, home equity lines and other consumer loans are risk rated utilizing a three point rating system. The ten and three point risk rating systems are described hereinafter. Internally Assigned Risk Rating 1 – 2 Cash flow is of high quality and stable. Borrower has very good liquidity and ready access to traditional sources of credit. This category also includes loans to borrowers secured by cash and/or marketable securities within approved margin requirements. 3 – 4 Cash flow quality is strong, but shows some variability. Borrower has good liquidity and asset quality. Borrower has access to traditional sources of credit with minimal restrictions. 5 – 6 Cash flow quality is acceptable but shows some variability. Liquidity varies with operating cycle and assets provide an adequate margin of protection. Borrower has access to traditional sources of credit, but generally on a secured basis. 7 Watch - Cash flow has a high degree of variability and subject to economic downturns. Liquidity is strained and the ability of the borrower to access traditional sources of credit is diminished. 8 Special Mention - The borrower has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to risk sufficient to warrant adverse classification. 9 Substandard - Loans are inadequately protected by the current sound worth and paying capacity of the borrower or the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. 10 Doubtful - Loans have all the inherent weaknesses of those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Risk ratings on commercial and industrial loans and commercial mortgages are initially assigned by the lending officer together with any necessary approval authority. The ratings are periodically reviewed and evaluated based upon borrower contact, credit department review or independent loan review. The Bank's loan risk rating and review policy establishes requirements for the annual review of commercial real estate and commercial and industrial loans. The requirements include details of the scope of coverage and selection process based on loan-type and risk rating. Among other requirements, at least 60% of the recorded investment of commercial real estate loans as of December 31 of the prior year must be reviewed annually. The frequency of the review of other loans is determined by the Bank’s ongoing assessments of the borrower’s condition. Residential mortgage loans, revolving home equity lines and other consumer loans are risk rated utilizing a three point rating system. In most cases, the borrower’s credit score dictates the risk rating. However, regardless of credit score, loans that are on management’s watch list or have been criticized or classified by management are assigned a risk rating of 3. A credit score is a tool used in the Bank’s loan approval process, and a minimum score of 680 is generally required for new loans. Credit scores for each borrower are updated at least annually. The risk ratings along with their definitions are as follows: Internally Assigned Risk Rating 1 Credit score is equal to or greater than 680. 2 Credit score is 635 to 679. 3 Credit score is below 635 or, regardless of credit score, the loan has been classified, criticized or placed on watch. The following tables present the recorded investment in commercial and industrial loans and commercial real estate loans by class of loans and risk rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful. September 30, 2015 Internally Assigned Risk Rating Special Pass Watch Mention Substandard Doubtful Total (in thousands) Commercial and industrial $ 83,963 $ 1,106 $ 200 $ 71 $ - $ 85,340 Commercial mortgages: Multifamily 549,353 - 4,882 1,883 - 556,118 Other 293,949 900 - 1,603 - 296,452 Owner-occupied 97,295 3,904 - 602 - 101,801 $ 1,024,560 $ 5,910 $ 5,082 $ 4,159 $ - $ 1,039,711 December 31, 2014 Commercial and industrial $ 76,884 $ 65 $ - $ 191 $ - $ 77,140 Commercial mortgages: Multifamily 519,274 7,610 1,906 303 - 529,093 Other 219,997 900 - 1,640 - 222,537 Owner-occupied 106,443 - - 902 - 107,345 $ 922,598 $ 8,575 $ 1,906 $ 3,036 $ - $ 936,115 The following tables present the recorded investment in residential mortgages, home equity lines, and other consumer loans by class of loans and risk rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful. September 30, 2015 Internally Assigned Risk Rating Special Pass Watch Mention Substandard Doubtful Total (in thousands) Residential mortgages: Closed end $ 967,773 $ 1,034 $ - $ 3,716 $ - $ 972,523 Revolving home equity 84,135 - 99 572 - 84,806 Consumer and other 5,643 - - - - 5,643 $ 1,057,551 $ 1,034 $ 99 $ 4,288 $ - $ 1,062,972 December 31, 2014 Residential mortgages: Closed end $ 777,846 $ 1,066 $ - $ 1,082 $ - $ 779,994 Revolving home equity 82,730 99 - 280 - 83,109 Consumer and other 5,122 - - - - 5,122 $ 865,698 $ 1,165 $ - $ 1,362 $ - $ 868,225 Deposit account overdrafts were $206,000 and $479,000 at September 30, 2015 and December 31, 2014, respectively. Overdrafts are not assigned a risk-rating and are therefore excluded from consumer loans in the tables above. |