Note 7 - Loans | 6 Months Ended |
Jun. 30, 2014 |
Receivables [Abstract] | ' |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | ' |
7. LOANS |
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The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. Loans outstanding at June 30, 2014 and December 31, 2013 are summarized by segment, and by classes within each segment, as follows: |
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Summary of Loans by Type | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Thousands) | | June 30, | | | Dec. 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 291,690 | | | $ | 299,831 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 22,401 | | | | 23,040 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 34,633 | | | | 34,530 | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 Family residential construction | | | 13,948 | | | | 13,909 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total residential mortgage | | | 362,672 | | | | 371,310 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 145,934 | | | | 147,215 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 46,778 | | | | 42,387 | | | | | | | | | | | | | | | | | | | | | | | | | |
Political subdivisions | | | 11,617 | | | | 16,291 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial construction and land | | | 8,550 | | | | 17,003 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by farmland | | | 8,380 | | | | 10,468 | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family (5 or more) residential | | | 10,548 | | | | 10,985 | | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | | 3,116 | | | | 3,251 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial loans | | | 13,816 | | | | 14,631 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial | | | 248,739 | | | | 262,231 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 10,203 | | | | 10,762 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 621,614 | | | | 644,303 | | | | | | | | | | | | | | | | | | | | | | | | | |
Less: allowance for loan losses | | | (7,267 | ) | | | (8,663 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Loans, net | | $ | 614,347 | | | $ | 635,640 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the Pennsylvania and New York counties that comprise the market serviced by Citizens & Northern Bank. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10% of total loans at either June 30, 2014 or December 31, 2013. |
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The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In the process of evaluating the loan portfolio, management also considers the Corporation’s exposure to losses from unfunded loan commitments. As of June 30, 2014 and December 31, 2013, management determined that no allowance for credit losses related to unfunded loan commitments was required. |
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Transactions within the allowance for loan losses, summarized by segment and class, for the three-month and six-month periods ended June 30, 2014 and 2013 were as follows: |
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Three Months Ended June 30, 2014 | | 31-Mar-14 | | | | | | | | | | | | | | | 30-Jun-14 | | | | | | | | | | | | | |
(In Thousands) | | Balance | | | Charge-offs | | | Recoveries | | | Provision (Credit) | | | Balance | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 2,863 | | | $ | (40 | ) | | $ | 1 | | | $ | 142 | | | $ | 2,966 | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 280 | | | | 0 | | | | 0 | | | | 0 | | | | 280 | | | | | | | | | | | | | |
Home equity lines of credit | | | 271 | | | | 0 | | | | 0 | | | | 6 | | | | 277 | | | | | | | | | | | | | |
1-4 Family residential construction | | | 153 | | | | 0 | | | | 0 | | | | 20 | | | | 173 | | | | | | | | | | | | | |
Total residential mortgage | | | 3,567 | | | | (40 | ) | | | 1 | | | | 168 | | | | 3,696 | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 3,081 | | | | (1,486 | ) | | | 0 | | | | 301 | | | | 1,896 | | | | | | | | | | | | | |
Commercial and industrial | | | 555 | | | | 0 | | | | 7 | | | | 64 | | | | 626 | | | | | | | | | | | | | |
Political subdivisions | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Commercial construction and land | | | 247 | | | | 0 | | | | 5 | | | | (89 | ) | | | 163 | | | | | | | | | | | | | |
Loans secured by farmland | | | 98 | | | | 0 | | | | 0 | | | | (2 | ) | | | 96 | | | | | | | | | | | | | |
Multi-family (5 or more) residential | | | 105 | | | | 0 | | | | 0 | | | | (2 | ) | | | 103 | | | | | | | | | | | | | |
Agricultural loans | | | 30 | | | | 0 | | | | 0 | | | | 0 | | | | 30 | | | | | | | | | | | | | |
Other commercial loans | | | 138 | | | | 0 | | | | 0 | | | | (3 | ) | | | 135 | | | | | | | | | | | | | |
Total commercial | | | 4,254 | | | | (1,486 | ) | | | 12 | | | | 269 | | | | 3,049 | | | | | | | | | | | | | |
Consumer | | | 128 | | | | (20 | ) | | | 11 | | | | 8 | | | | 127 | | | | | | | | | | | | | |
Unallocated | | | 394 | | | | 0 | | | | 0 | | | | 1 | | | | 395 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Allowance for Loan Losses | | $ | 8,343 | | | $ | (1,546 | ) | | $ | 24 | | | $ | 446 | | | $ | 7,267 | | | | | | | | | | | | | |
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Three Months Ended June 30, 2013 | | March 31, 2013 | | | | | | | | | | | | | | | 30-Jun-13 | | | | | | | | | | | | | |
(In Thousands) | | Balance | | | Charge-offs | | | Recoveries | | | Provision (Credit) | | | Balance | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 2,786 | | | $ | (13 | ) | | $ | 11 | | | $ | 87 | | | $ | 2,871 | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 236 | | | | 0 | | | | 0 | | | | (7 | ) | | | 229 | | | | | | | | | | | | | |
Home equity lines of credit | | | 251 | | | | 0 | | | | 0 | | | | 7 | | | | 258 | | | | | | | | | | | | | |
1-4 Family residential construction | | | 145 | | | | (11 | ) | | | 0 | | | | 45 | | | | 179 | | | | | | | | | | | | | |
Total residential mortgage | | | 3,418 | | | | (24 | ) | | | 11 | | | | 132 | | | | 3,537 | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1,906 | | | | 0 | | | | 43 | | | | (5 | ) | | | 1,944 | | | | | | | | | | | | | |
Commercial and industrial | | | 597 | | | | (2 | ) | | | 1 | | | | 32 | | | | 628 | | | | | | | | | | | | | |
Political subdivisions | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Commercial construction and land | | | 368 | | | | (4 | ) | | | 0 | | | | (106 | ) | | | 258 | | | | | | | | | | | | | |
Loans secured by farmland | | | 127 | | | | 0 | | | | 0 | | | | (6 | ) | | | 121 | | | | | | | | | | | | | |
Multi-family (5 or more) residential | | | 65 | | | | 0 | | | | 0 | | | | (1 | ) | | | 64 | | | | | | | | | | | | | |
Agricultural loans | | | 26 | | | | 0 | | | | 0 | | | | 2 | | | | 28 | | | | | | | | | | | | | |
Other commercial loans | | | 2 | | | | 0 | | | | 0 | | | | 3 | | | | 5 | | | | | | | | | | | | | |
Total commercial | | | 3,091 | | | | (6 | ) | | | 44 | | | | (81 | ) | | | 3,048 | | | | | | | | | | | | | |
Consumer | | | 211 | | | | (22 | ) | | | 11 | | | | 15 | | | | 215 | | | | | | | | | | | | | |
Unallocated | | | 398 | | | | 0 | | | | 0 | | | | 0 | | | | 398 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Allowance for Loan Losses | | $ | 7,118 | | | $ | (52 | ) | | $ | 66 | | | $ | 66 | | | $ | 7,198 | | | | | | | | | | | | | |
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Six Months Ended June 30, 2014 | | 31-Dec-13 | | | | | | | | | | | | | | | 30-Jun-14 | | | | | | | | | | | | | |
(In Thousands) | | Balance | | | Charge-offs | | | Recoveries | | | Provision (Credit) | | | 2014 Balance | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 2,974 | | | $ | (59 | ) | | $ | 1 | | | $ | 50 | | | $ | 2,966 | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 294 | | | | 0 | | | | 0 | | | | (14 | ) | | | 280 | | | | | | | | | | | | | |
Home equity lines of credit | | | 269 | | | | 0 | | | | 0 | | | | 8 | | | | 277 | | | | | | | | | | | | | |
1-4 Family residential construction | | | 168 | | | | 0 | | | | 0 | | | | 5 | | | | 173 | | | | | | | | | | | | | |
Total residential mortgage | | | 3,705 | | | | (59 | ) | | | 1 | | | | 49 | | | | 3,696 | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 3,123 | | | | (1,521 | ) | | | 250 | | | | 44 | | | | 1,896 | | | | | | | | | | | | | |
Commercial and industrial | | | 591 | | | | (24 | ) | | | 8 | | | | 51 | | | | 626 | | | | | | | | | | | | | |
Political subdivisions | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Commercial construction and land | | | 267 | | | | (170 | ) | | | 5 | | | | 61 | | | | 163 | | | | | | | | | | | | | |
Loans secured by farmland | | | 115 | | | | 0 | | | | 0 | | | | (19 | ) | | | 96 | | | | | | | | | | | | | |
Multi-family (5 or more) residential | | | 103 | | | | 0 | | | | 0 | | | | 0 | | | | 103 | | | | | | | | | | | | | |
Agricultural loans | | | 30 | | | | 0 | | | | 0 | | | | 0 | | | | 30 | | | | | | | | | | | | | |
Other commercial loans | | | 138 | | | | 0 | | | | 0 | | | | (3 | ) | | | 135 | | | | | | | | | | | | | |
Total commercial | | | 4,367 | | | | (1,715 | ) | | | 263 | | | | 134 | | | | 3,049 | | | | | | | | | | | | | |
Consumer | | | 193 | | | | (46 | ) | | | 25 | | | | (45 | ) | | | 127 | | | | | | | | | | | | | |
Unallocated | | | 398 | | | | 0 | | | | 0 | | | | (3 | ) | | | 395 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Allowance for Loan Losses | | $ | 8,663 | | | $ | (1,820 | ) | | $ | 289 | | | $ | 135 | | | $ | 7,267 | | | | | | | | | | | | | |
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Six Months Ended June 30, 2013 | | 31-Dec-12 | | | | | | | | | | | | | | | June 30, 2013 | | | | | | | | | | | | | |
(In Thousands) | | Balance | | | Charge-offs | | | Recoveries | | | Provision (Credit) | | | Balance | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 2,619 | | | $ | (65 | ) | | $ | 11 | | | $ | 306 | | | $ | 2,871 | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 247 | | | | 0 | | | | 0 | | | | (18 | ) | | | 229 | | | | | | | | | | | | | |
Home equity lines of credit | | | 255 | | | | 0 | | | | 0 | | | | 3 | | | | 258 | | | | | | | | | | | | | |
1-4 Family residential construction | | | 96 | | | | (11 | ) | | | 0 | | | | 94 | | | | 179 | | | | | | | | | | | | | |
Total residential mortgage | | | 3,217 | | | | (76 | ) | | | 11 | | | | 385 | | | | 3,537 | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1,930 | | | | 0 | | | | 293 | | | | (279 | ) | | | 1,944 | | | | | | | | | | | | | |
Commercial and industrial | | | 581 | | | | (110 | ) | | | 2 | | | | 155 | | | | 628 | | | | | | | | | | | | | |
Political subdivisions | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Commercial construction and land | | | 234 | | | | (4 | ) | | | 0 | | | | 28 | | | | 258 | | | | | | | | | | | | | |
Loans secured by farmland | | | 129 | | | | 0 | | | | 0 | | | | (8 | ) | | | 121 | | | | | | | | | | | | | |
Multi-family (5 or more) residential | | | 67 | | | | 0 | | | | 0 | | | | (3 | ) | | | 64 | | | | | | | | | | | | | |
Agricultural loans | | | 27 | | | | 0 | | | | 0 | | | | 1 | | | | 28 | | | | | | | | | | | | | |
Other commercial loans | | | 3 | | | | 0 | | | | 0 | | | | 2 | | | | 5 | | | | | | | | | | | | | |
Total commercial | | | 2,971 | | | | (114 | ) | | | 295 | | | | (104 | ) | | | 3,048 | | | | | | | | | | | | | |
Consumer | | | 228 | | | | (55 | ) | | | 31 | | | | 11 | | | | 215 | | | | | | | | | | | | | |
Unallocated | | | 441 | | | | 0 | | | | 0 | | | | (43 | ) | | | 398 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Allowance for Loan Losses | | $ | 6,857 | | | $ | (245 | ) | | $ | 337 | | | $ | 249 | | | $ | 7,198 | | | | | | | | | | | | | |
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In the evaluation of the loan portfolio, management determines two major components for the allowance for loan losses – (1) a specific component based on an assessment of certain larger relationships, mainly commercial purpose loans, on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio. |
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In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table below. |
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The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of June 30, 2014 and December 31, 2013: |
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30-Jun-14 | | | | | | Special | | | | | | | | | | | | | | | | | | | | |
(In Thousands) | | Pass | | | Mention | | | Substandard | | | Doubtful | | | Total | | | | | | | | |
Residential Mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential Mortgage loans - first liens | | $ | 278,486 | | | $ | 1,825 | | | $ | 11,297 | | | $ | 82 | | | $ | 291,690 | | | | | | | | |
Residential Mortgage loans - junior liens | | | 21,245 | | | | 371 | | | | 785 | | | | 0 | | | | 22,401 | | | | | | | | |
Home Equity lines of credit | | | 33,902 | | | | 292 | | | | 439 | | | | 0 | | | | 34,633 | | | | | | | | |
1-4 Family residential construction | | | 13,948 | | | | 0 | | | | 0 | | | | 0 | | | | 13,948 | | | | | | | | |
Total residential mortgage | | | 347,581 | | | | 2,488 | | | | 12,521 | | | | 82 | | | | 362,672 | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 132,823 | | | | 3,376 | | | | 9,735 | | | | 0 | | | | 145,934 | | | | | | | | |
Commercial and Industrial | | | 38,348 | | | | 5,173 | | | | 3,022 | | | | 235 | | | | 46,778 | | | | | | | | |
Political subdivisions | | | 11,617 | | | | 0 | | | | 0 | | | | 0 | | | | 11,617 | | | | | | | | |
Commercial construction and land | | | 6,047 | | | | 306 | | | | 2,111 | | | | 86 | | | | 8,550 | | | | | | | | |
Loans secured by farmland | | | 5,952 | | | | 512 | | | | 1,889 | | | | 27 | | | | 8,380 | | | | | | | | |
Multi-family (5 or more) residential | | | 10,244 | | | | 302 | | | | 2 | | | | 0 | | | | 10,548 | | | | | | | | |
Agricultural loans | | | 3,072 | | | | 0 | | | | 44 | | | | 0 | | | | 3,116 | | | | | | | | |
Other commercial loans | | | 13,724 | | | | 92 | | | | 0 | | | | 0 | | | | 13,816 | | | | | | | | |
Total Commercial | | | 221,827 | | | | 9,761 | | | | 16,803 | | | | 348 | | | | 248,739 | | | | | | | | |
Consumer | | | 10,070 | | | | 1 | | | | 131 | | | | 1 | | | | 10,203 | | | | | | | | |
Totals | | $ | 579,478 | | | $ | 12,250 | | | $ | 29,455 | | | $ | 431 | | | $ | 621,614 | | | | | | | | |
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31-Dec-13 | | Pass | | | Special | | | Substandard | | | Doubtful | | | Total | | | | | | | | | | | | | |
(In Thousands) | Mention | | | | | | | | | | | | |
Residential Mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 286,144 | | | $ | 1,876 | | | $ | 11,629 | | | $ | 182 | | | $ | 299,831 | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 21,694 | | | | 351 | | | | 995 | | | | 0 | | | | 23,040 | | | | | | | | | | | | | |
Home equity lines of credit | | | 33,821 | | | | 295 | | | | 414 | | | | 0 | | | | 34,530 | | | | | | | | | | | | | |
1-4 Family residential construction | | | 13,837 | | | | 0 | | | | 72 | | | | 0 | | | | 13,909 | | | | | | | | | | | | | |
Total residential mortgage | | | 355,496 | | | | 2,522 | | | | 13,110 | | | | 182 | | | | 371,310 | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 129,834 | | | | 5,866 | | | | 11,368 | | | | 147 | | | | 147,215 | | | | | | | | | | | | | |
Commercial and Industrial | | | 32,317 | | | | 6,697 | | | | 3,138 | | | | 235 | | | | 42,387 | | | | | | | | | | | | | |
Political subdivisions | | | 16,291 | | | | 0 | | | | 0 | | | | 0 | | | | 16,291 | | | | | | | | | | | | | |
Commercial construction and land | | | 13,792 | | | | 427 | | | | 2,036 | | | | 748 | | | | 17,003 | | | | | | | | | | | | | |
Loans secured by farmland | | | 8,279 | | | | 758 | | | | 1,402 | | | | 29 | | | | 10,468 | | | | | | | | | | | | | |
Multi-family (5 or more) residential | | | 10,665 | | | | 316 | | | | 4 | | | | 0 | | | | 10,985 | | | | | | | | | | | | | |
Agricultural loans | | | 3,169 | | | | 34 | | | | 48 | | | | 0 | | | | 3,251 | | | | | | | | | | | | | |
Other commercial loans | | | 14,532 | | | | 99 | | | | 0 | | | | 0 | | | | 14,631 | | | | | | | | | | | | | |
Total commercial | | | 228,879 | | | | 14,197 | | | | 17,996 | | | | 1,159 | | | | 262,231 | | | | | | | | | | | | | |
Consumer | | | 10,587 | | | | 6 | | | | 169 | | | | 0 | | | | 10,762 | | | | | | | | | | | | | |
Totals | | $ | 594,962 | | | $ | 16,725 | | | $ | 31,275 | | | $ | 1,341 | | | $ | 644,303 | | | | | | | | | | | | | |
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The general component of the allowance for loan losses covers pools of loans including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans are evaluated for loss exposure based upon three-year average historical net charge-off rates for each loan class, adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management’s judgment using relevant information available at the time of the evaluation. The adjustment for qualitative factors is applied as an increase or decrease to the three-year average net charge-off rate to each loan class within each segment. |
|
The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation’s credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation’s lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation’s commercial segment loans (approximately 71% at June 30, 2014) is secured by real estate, and accordingly, the Corporation’s risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral. |
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Loans are classified as impaired, when, based on current information and events, it is probable that the Corporation 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 the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines 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 of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans, by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan’s effective rate or by the loan’s observable market price. |
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The scope of loans evaluated individually for impairment include all loan relationships greater than $200,000 for which there is at least one extension of credit graded Special Mention, Substandard or Doubtful. Also, all loans classified as troubled debt restructurings (discussed in more detail below) and all loan relationships less than $200,000 in the aggregate, but with an estimated loss of $100,000 or more, are individually evaluated for impairment. Loans that are individually evaluated for impairment, but which are not determined to be impaired, are combined with all remaining loans that are not reviewed on a specific basis, and such loans are included within larger pools of loans based on similar risk and loss characteristics for purposes of determining the general component of the allowance. The loans that have been individually evaluated, but which have not been determined to be impaired, are included in the “Collectively Evaluated” column in the tables summarizing the allowance and associated loan balances as of June 30, 2014 and December 31, 2013. |
|
The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of June 30, 2014 and December 31, 2013: |
|
30-Jun-14 | | Loans: | | | Allowance for Loan Losses: | | | | | | | | | |
(In Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Individually | | | Collectively | | | | | | | Individually | | | Collectively | | | | | | | | | | | | | |
| | Evaluated | | | Evaluated | | | Totals | | | Evaluated | | | Evaluated | | | Totals | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 2,652 | | | $ | 289,038 | | | $ | 291,690 | | | $ | 452 | | | $ | 2,514 | | | $ | 2,966 | | | | | | | | | |
Residential mortgage loans - junior liens | | | 181 | | | | 22,220 | | | | 22,401 | | | | 100 | | | | 180 | | | | 280 | | | | | | | | | |
Home equity lines of credit | | | 0 | | | | 34,633 | | | | 34,633 | | | | 0 | | | | 277 | | | | 277 | | | | | | | | | |
1-4 Family residential construction | | | 0 | | | | 13,948 | | | | 13,948 | | | | 0 | | | | 173 | | | | 173 | | | | | | | | | |
Total residential mortgage | | | 2,833 | | | | 359,839 | | | | 362,672 | | | | 552 | | | | 3,144 | | | | 3,696 | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 7,003 | | | | 138,931 | | | | 145,934 | | | | 20 | | | | 1,876 | | | | 1,896 | | | | | | | | | |
Commercial and industrial | | | 776 | | | | 46,002 | | | | 46,778 | | | | 83 | | | | 543 | | | | 626 | | | | | | | | | |
Political subdivisions | | | 0 | | | | 11,617 | | | | 11,617 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Commercial construction and land | | | 2,113 | | | | 6,437 | | | | 8,550 | | | | 72 | | | | 91 | | | | 163 | | | | | | | | | |
Loans secured by farmland | | | 1,294 | | | | 7,086 | | | | 8,380 | | | | 27 | | | | 69 | | | | 96 | | | | | | | | | |
Multi-family (5 or more) residential | | | 0 | | | | 10,548 | | | | 10,548 | | | | 0 | | | | 103 | | | | 103 | | | | | | | | | |
Agricultural loans | | | 43 | | | | 3,073 | | | | 3,116 | | | | 0 | | | | 30 | | | | 30 | | | | | | | | | |
Other commercial loans | | | 0 | | | | 13,816 | | | | 13,816 | | | | 0 | | | | 135 | | | | 135 | | | | | | | | | |
Total commercial | | | 11,229 | | | | 237,510 | | | | 248,739 | | | | 202 | | | | 2,847 | | | | 3,049 | | | | | | | | | |
Consumer | | | 0 | | | | 10,203 | | | | 10,203 | | | | 0 | | | | 127 | | | | 127 | | | | | | | | | |
Unallocated | | | | | | | | | | | | | | | | | | | | | | | 395 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 14,062 | | | $ | 607,552 | | | $ | 621,614 | | | $ | 754 | | | $ | 6,118 | | | $ | 7,267 | | | | | | | | | |
|
31-Dec-13 | | Loans: | | | Allowance for Loan Losses: | | | | | | | | | |
(In Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Individually | | | Collectively | | | | | | | Individually | | | Collectively | | | | | | | | | | | | | |
| | Evaluated | | | Evaluated | | | Totals | | | Evaluated | | | Evaluated | | | Totals | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 2,727 | | | $ | 297,104 | | | $ | 299,831 | | | $ | 449 | | | $ | 2,525 | | | $ | 2,974 | | | | | | | | | |
Residential mortgage loans - junior liens | | | 183 | | | | 22,857 | | | | 23,040 | | | | 100 | | | | 194 | | | | 294 | | | | | | | | | |
Home equity lines of credit | | | 0 | | | | 34,530 | | | | 34,530 | | | | 0 | | | | 269 | | | | 269 | | | | | | | | | |
1-4 Family residential construction | | | 0 | | | | 13,909 | | | | 13,909 | | | | 0 | | | | 168 | | | | 168 | | | | | | | | | |
Total residential mortgage | | | 2,910 | | | | 368,400 | | | | 371,310 | | | | 549 | | | | 3,156 | | | | 3,705 | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 7,988 | | | | 139,227 | | | | 147,215 | | | | 1,577 | | | | 1,546 | | | | 3,123 | | | | | | | | | |
Commercial and industrial | | | 1,276 | | | | 41,111 | | | | 42,387 | | | | 106 | | | | 485 | | | | 591 | | | | | | | | | |
Political subdivisions | | | 0 | | | | 16,291 | | | | 16,291 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Commercial construction | | | 2,776 | | | | 14,227 | | | | 17,003 | | | | 72 | | | | 195 | | | | 267 | | | | | | | | | |
Loans secured by farmland | | | 1,318 | | | | 9,150 | | | | 10,468 | | | | 29 | | | | 86 | | | | 115 | | | | | | | | | |
Multi-family (5 or more) residential | | | 0 | | | | 10,985 | | | | 10,985 | | | | 0 | | | | 103 | | | | 103 | | | | | | | | | |
Agricultural loans | | | 48 | | | | 3,203 | | | | 3,251 | | | | 0 | | | | 30 | | | | 30 | | | | | | | | | |
Other commercial loans | | | 0 | | | | 14,631 | | | | 14,631 | | | | 0 | | | | 138 | | | | 138 | | | | | | | | | |
Total commercial | | | 13,406 | | | | 248,825 | | | | 262,231 | | | | 1,784 | | | | 2,583 | | | | 4,367 | | | | | | | | | |
Consumer | | | 5 | | | | 10,757 | | | | 10,762 | | | | 0 | | | | 193 | | | | 193 | | | | | | | | | |
Unallocated | | | | | | | | | | | | | | | | | | | | | | | 398 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 16,321 | | | $ | 627,982 | | | $ | 644,303 | | | $ | 2,333 | | | $ | 5,932 | | | $ | 8,663 | | | | | | | | | |
|
The average balance of impaired loans and interest income recognized on impaired loans is as follows: |
|
(In Thousands) | | 3 Months Ended | | | 6 Months Ended | | | | | | | | | | | | | | | | | |
| | June 30, | | | June 30, | | | | | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | |
Average investment in impaired loans | | $ | 14,595 | | | $ | 7,131 | | | $ | 15,129 | | | $ | 7,291 | | | | | | | | | | | | | | | | | |
Interest income recognized on impaired loans | | | 210 | | | | 58 | | | | 373 | | | | 128 | | | | | | | | | | | | | | | | | |
Interest income recognized on a cash basis on impaired loans | | | 210 | | | | 58 | | | | 373 | | | | 128 | | | | | | | | | | | | | | | | | |
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Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status. |
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The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows: |
|
(In Thousands) | | 30-Jun-14 | | | 31-Dec-13 | | | | | | | | | | | | | | | | | |
| | Past Due | | | | | | | Past Due | | | | | | | | | | | | | | | | | | | | | |
| | 90+ Days and | | | | | | | 90+ Days and | | | | | | | | | | | | | | | | | | | | | |
| | Accruing | | | Nonaccrual | | | Accruing | | | Nonaccrual | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 1,698 | | | $ | 3,613 | | | $ | 2,016 | | | $ | 3,533 | | | | | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 137 | | | | 197 | | | | 187 | | | | 110 | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 38 | | | | 100 | | | | 87 | | | | 62 | | | | | | | | | | | | | | | | | |
1-4 Family residential construction | | | 0 | | | | 0 | | | | 0 | | | | 72 | | | | | | | | | | | | | | | | | |
Total residential mortgage | | | 1,873 | | | | 3,910 | | | | 2,290 | | | | 3,777 | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 660 | | | | 6,253 | | | | 744 | | | | 7,096 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 5 | | | | 475 | | | | 17 | | | | 434 | | | | | | | | | | | | | | | | | |
Commercial construction and land | | | 0 | | | | 2,001 | | | | 5 | | | | 2,663 | | | | | | | | | | | | | | | | | |
Loans secured by farmland | | | 508 | | | | 890 | | | | 0 | | | | 902 | | | | | | | | | | | | | | | | | |
Agricultural loans | | | 0 | | | | 43 | | | | 0 | | | | 35 | | | | | | | | | | | | | | | | | |
Total commercial | | | 1,173 | | | | 9,662 | | | | 766 | | | | 11,130 | | | | | | | | | | | | | | | | | |
Consumer | | | 4 | | | | 26 | | | | 75 | | | | 27 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Totals | | $ | 3,050 | | | $ | 13,598 | | | $ | 3,131 | | | $ | 14,934 | | | | | | | | | | | | | | | | | |
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The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual. |
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The table below presents a summary of the contractual aging of loans as of June 30, 2014 and December 31, 2013: |
|
| | As of June 30, 2014 | | | As of December 31, 2013 | |
| | Current & | | | | | | | | | | | | | | | Current & | | | | | | | | | | | | | |
(In Thousands) | | Past Due | | | Past Due | | | Past Due | | | | | | | Past Due | | | Past Due | | | Past Due | | | | | |
| | Less than | | | 30-89 | | | 90+ | | | | | | | Less than | | | 30-89 | | | 90+ | | | | | |
| | 30 Days | | | Days | | | Days | | | Total | | | 30 Days | | | Days | | | Days | | | Total | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | $ | 284,531 | | | $ | 3,919 | | | $ | 3,240 | | | $ | 291,690 | | | $ | 289,483 | | | $ | 6,776 | | | $ | 3,572 | | | $ | 299,831 | |
Residential mortgage loans - junior liens | | | 21,781 | | | | 295 | | | | 325 | | | | 22,401 | | | | 22,247 | | | | 506 | | | | 287 | | | | 23,040 | |
Home equity lines of credit | | | 34,386 | | | | 109 | | | | 138 | | | | 34,633 | | | | 34,263 | | | | 118 | | | | 149 | | | | 34,530 | |
1-4 Family residential construction | | | 13,948 | | | | 0 | | | | 0 | | | | 13,948 | | | | 13,837 | | | | 0 | | | | 72 | | | | 13,909 | |
Total residential mortgage | | | 354,646 | | | | 4,323 | | | | 3,703 | | | | 362,672 | | | | 359,830 | | | | 7,400 | | | | 4,080 | | | | 371,310 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 143,622 | | | | 809 | | | | 1,503 | | | | 145,934 | | | | 145,055 | | | | 405 | | | | 1,755 | | | | 147,215 | |
Commercial and industrial | | | 46,568 | | | | 69 | | | | 141 | | | | 46,778 | | | | 41,730 | | | | 434 | | | | 223 | | | | 42,387 | |
Political subdivisions | | | 11,617 | | | | 0 | | | | 0 | | | | 11,617 | | | | 16,291 | | | | 0 | | | | 0 | | | | 16,291 | |
Commercial construction and land | | | 6,392 | | | | 157 | | | | 2,001 | | | | 8,550 | | | | 14,303 | | | | 32 | | | | 2,668 | | | | 17,003 | |
Loans secured by farmland | | | 6,943 | | | | 66 | | | | 1,371 | | | | 8,380 | | | | 9,267 | | | | 329 | | | | 872 | | | | 10,468 | |
Multi-family (5 or more) residential | | | 10,548 | | | | 0 | | | | 0 | | | | 10,548 | | | | 10,985 | | | | 0 | | | | 0 | | | | 10,985 | |
Agricultural loans | | | 3,073 | | | | 0 | | | | 43 | | | | 3,116 | | | | 3,203 | | | | 13 | | | | 35 | | | | 3,251 | |
Other commercial loans | | | 13,816 | | | | 0 | | | | 0 | | | | 13,816 | | | | 14,631 | | | | 0 | | | | 0 | | | | 14,631 | |
Total commercial | | | 242,579 | | | | 1,101 | | | | 5,059 | | | | 248,739 | | | | 255,465 | | | | 1,213 | | | | 5,553 | | | | 262,231 | |
Consumer | | | 10,118 | | | | 81 | | | | 4 | | | | 10,203 | | | | 10,516 | | | | 171 | | | | 75 | | | | 10,762 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Totals | | $ | 607,343 | | | $ | 5,505 | | | $ | 8,766 | | | $ | 621,614 | | | $ | 625,811 | | | $ | 8,784 | | | $ | 9,708 | | | $ | 644,303 | |
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Nonaccrual loans are included in the contractual aging in the immediately preceding table. A summary of the contractual aging of nonaccrual loans at June 30, 2014 and December 31, 2013 is as follows: |
|
| | Current & | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Thousands) | | Past Due | | | Past Due | | | Past Due | | | | | | | | | | | | | | | | | | | | | |
| | Less than | | | 30-89 | | | 90+ | | | | | | | | | | | | | | | | | | | | | |
| | 30 Days | | | Days | | | Days | | | Total | | | | | | | | | | | | | | | | | |
June 30, 2014 Nonaccrual Totals | | $ | 7,214 | | | $ | 668 | | | $ | 5,716 | | | $ | 13,598 | | | | | | | | | | | | | | | | | |
December 31, 2013 Nonaccrual Totals | | $ | 7,878 | | | $ | 479 | | | $ | 6,577 | | | $ | 14,934 | | | | | | | | | | | | | | | | | |
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Loans whose terms are modified are classified as Troubled Debt Restructurings (TDRs) if the Corporation grants such borrowers concessions, and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as contractual aging information at June 30, 2014 and December 31, 2013 is as follows: |
|
| | Current & | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Thousands) | | Past Due | | | Past Due | | | Past Due | | | | | | | | | | | | | | | | | | | | | |
| | Less than | | | | 30-89 | | | 90+ | | | | | | | | | | | | | | | | | | | | | |
| | 30 Days | | | Days | | | Days | | | Nonaccrual | | | Total | | | | | | | | | | | | | |
June 30, 2014 Totals | | $ | 1,811 | | | $ | 258 | | | $ | 619 | | | $ | 5,419 | | | $ | 8,107 | | | | | | | | | | | | | |
December 31, 2013 Totals | | $ | 3,254 | | | $ | 13 | | | $ | 0 | | | $ | 908 | | | $ | 4,175 | | | | | | | | | | | | | |
|
TDRs that occurred during the three-month periods ended June 30, 2014 and 2013 are as follows: |
|
Three Months Ended June 30, 2014 | | | | | | Pre- | | | Post- | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | Modification | | | Modification | | | | | | | | | | | | | | | | | | | | | |
| | Number | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | Investment | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | | 2 | | | $ | 67 | | | $ | 67 | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 5 | | | | 6,679 | | | | 5,193 | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 1 | | | | 80 | | | | 80 | | | | | | | | | | | | | | | | | | | | | |
|
Three Months Ended June 30, 2013 | | | | | | Pre- | | | Post- | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | Modification | | | Modification | | | | | | | | | | | | | | | | | | | | | |
| | Number | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | Investment | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | | 1 | | | $ | 143 | | | $ | 143 | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 1 | | | | 65 | | | | 65 | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1 | | | | 440 | | | | 440 | | | | | | | | | | | | | | | | | | | | | |
Loans secured by farmland | | | 4 | | | | 512 | | | | 512 | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | | 1 | | | | 13 | | | | 13 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 1 | | | | 6 | | | | 6 | | | | | | | | | | | | | | | | | | | | | |
|
The TDRs related to residential mortgage loans in the three-month period ended June 30, 2014 included a reduction in payment amount on one contract and an interest only period allowed on one contract. The TDRs related to commercial loans in the three-month period ended June 30, 2014 relate to six contracts associated with one relationship. The Corporation entered into a forbearance agreement with this commercial borrower which includes a reduction in monthly payment amounts over a fifteen-month period. At the end of the fifteen-month period, the monthly payment amounts would revert to the original amounts, unless the forbearance agreement is extended or the payment requirements are otherwise modified. The Corporation recorded a charge-off of $1,486,000 in the second quarter 2014 as a result of these modifications, as the payment amounts based on the forbearance agreement are not sufficient to fully amortize the contractual amount of principal outstanding on the loans. The amount of the charge-off was determined based on the excess of the contractual principal due over the present value of the payment amounts provided for in the forbearance agreement, assuming the revised payment amounts would continue until maturity, at the contractual interest rates. After the effect of the charge-off, the total recorded investment in loans to this borrower amounted to $5,273,000, with no related allowance for loan losses on these loans at June 30, 2014, while the allowance on the loans amounted to $1,503,000 at March 31, 2014. There were no other changes in the allowance for loan losses related to TDRs that occurred in the second quarter 2014. |
|
All of the TDRs in the three-month period ended June 30, 2013 were situations in which the Corporation agreed to permit the borrowers to pay interest only for an extended period of time, and all of the contracts included in the table above were associated with one relationship, except for the commercial loan secured by real estate. There were no changes in the allowance for loan losses in the second quarter 2013 as a result of TDRs that occurred in that period. |
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TDRs that occurred during the six-month periods ended June 30, 2014 and 2013 were as follows: |
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Six Months Ended June 30, 2014 | | | | | | Pre- | | | Post- | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | Modification | | | Modification | | | | | | | | | | | | | | | | | | | | | |
| | Number | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | Investment | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | | 3 | | | $ | 150 | | | $ | 150 | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 5 | | | | 6,679 | | | | 5,193 | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 1 | | | | 80 | | | | 80 | | | | | | | | | | | | | | | | | | | | | |
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Six Months Ended June 30, 2013 | | | | | | Pre- | | | Post- | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | Modification | | | Modification | | | | | | | | | | | | | | | | | | | | | |
| | Number | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | Recorded | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | Investment | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | | 6 | | | $ | 677 | | | $ | 677 | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 3 | | | | 102 | | | | 102 | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1 | | | | 440 | | | | 440 | | | | | | | | | | | | | | | | | | | | | |
Loans secured by farmland | | | 4 | | | | 512 | | | | 512 | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | | 1 | | | | 13 | | | | 13 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 1 | | | | 6 | | | | 6 | | | | | | | | | | | | | | | | | | | | | |
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In addition to the TDRs that occurred in the second quarter 2014, which are described above, earlier in 2014 the Corporation agreed to a reduction in interest rate and payment amount on one residential mortgage loan. After the effect of the $1,486,000 charge-off related to loans to one commercial borrower described above, there was no allowance for loan losses on loans to that borrower at June 30, 2014, while the allowance on the loans amounted to $1,552,000 at December 31, 2013. There were no other changes in the allowance for loan losses related to TDRs that occurred during the six-month period ended June 30, 2014. |
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The TDRs in the six-month period ended June 30, 2013 included interest only payments for an extended period of time (10 contracts), extensions of the final maturity date (3 contracts), reduction in interest rate (2 contracts) and reduction in payment amount for one year (1 contract). There was no allowance for loan losses on these loans at June 30, 2013 and no change in the allowance for loan losses resulting from these TDRs during the six-month period ended June 30, 2013. |
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In the three-month and six-month periods ended June 30, 2014 and 2013, defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months were as follows: |
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| | Number | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended June 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | | 1 | | | $ | 83 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 1 | | | | 62 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1 | | | | 429 | | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 1 | | | | 13 | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Number | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended June 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1 | | | $ | 440 | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Number | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
Six Months Ended June 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - first liens | | | 2 | | | $ | 223 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage loans - junior liens | | | 1 | | | | 62 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1 | | | | 429 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by farmland | | | 4 | | | | 490 | | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 1 | | | | 13 | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Number | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | of | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Contracts | | | Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
Six Months Ended June 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Balances in Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by real estate | | | 1 | | | $ | 440 | | | | | | | | | | | | | | | | | | | | | | | | | |
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In the second quarter 2014, the events of default in the table listed above included a borrower’s failure to make the reduced payments provided for at a reduced interest rate on a first lien residential mortgage. The other events of default listed above in the three-month and six-month periods ended June 30, 2014 resulted from the borrowers’ failure to make interest only monthly payments. There were no allowances for loan losses recorded on these loans at June 30, 2014. |
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In the three-month and six-month periods ended June 30, 2013, the event of default listed in the table resulted from the borrower’s failure to make interest only monthly payments. There was no allowance for loan losses recorded on this loan at June 30, 2013. |