CREDIT QUALITY ASSESSMENT | Note 4 – CREDIT QUALITY ASSESSMENT Allowance for Loan and Lease Losses Summary information on the allowance for loan and lease loss activity for the period indicated is provided in the following table: Three Months Ended March 31, (In thousands) 2016 2015 Balance at beginning of year $ 40,895 $ 37,802 Provision for loan and lease losses 1,236 597 Loan and lease charge-offs (511) (1,114) Loan and lease recoveries 146 190 Net charge-offs (365) (924) Balance at period end $ 41,766 $ 37,475 The following tables provide information on the activity in the allowance for loan and lease losses by the respective loan portfolio segment for the period indicated: For the Three Months Ended March 31, 2016 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Commercial Owner Residential Residential (Dollars in thousands) Business AD&C Investor R/E Occupied R/E Leasing Consumer Mortgage Construction Total Balance at beginning of year $ 6,529 $ 4,691 $ 10,440 $ 7,984 $ - $ 3,456 $ 6,901 $ 894 $ 40,895 Provision (credit) 228 44 1,060 59 - (353) 204 (6) 1,236 Charge-offs (64) (48) (197) - - (114) (88) - (511) Recoveries (3) - 5 3 - 60 73 8 146 Net charge-offs (67) (48) (192) 3 - (54) (15) 8 (365) Balance at end of period $ 6,690 $ 4,687 $ 11,308 $ 8,046 $ - $ 3,049 $ 7,090 $ 896 $ 41,766 Total loans and leases $ 451,239 $ 261,204 $ 783,161 $ 675,560 $ - $ 447,198 $ 804,105 $ 138,221 $ 3,560,688 Allowance for loans and leases to total loans and leases ratio 1.48% 1.79% 1.44% 1.19% na. 0.68% 0.88% 0.65% 1.17% Balance of loans specifically evaluated for impairment $ 5,078 $ 147 $ 9,943 $ 7,897 $ na. $ na. $ 6,409 $ - $ 29,474 Allowance for loans specifically evaluated for impairment $ 1,354 $ 9 $ 1,194 $ 651 $ na. $ na. $ - $ - $ 3,208 Specific allowance to specific loans ratio 26.66% 6.12% 12.01% 8.24% na. na. na. na. 10.88% Balance of loans collectively evaluated $ 446,161 $ 261,057 $ 773,218 $ 667,663 $ na. $ 447,198 $ 797,696 $ 138,221 $ 3,531,214 Allowance for loans collectively evaluated $ 5,336 $ 4,678 $ 10,114 $ 7,395 $ na. $ 3,049 $ 7,090 $ 896 $ 38,558 Collective allowance to collective loans ratio 1.20% 1.79% 1.31% 1.11% na. 0.68% 0.89% 0.00% 1.09% For the Year Ended December 31,2015 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Commercial Owner Residential Residential (Dollars in thousands) Business AD&C Investor R/E Occupied R/E Leasing Consumer Mortgage Construction Total Balance at beginning of year $ 5,852 $ 4,267 $ 9,784 $ 7,143 $ 9 $ 3,592 $ 6,232 $ 923 $ 37,802 Provision (credit) 508 583 727 1,881 (5) 619 1,138 (80) 5,371 Charge-offs (306) (739) (91) (1,043) (4) (998) (614) - (3,795) Recoveries 475 580 20 3 - 243 145 51 1,517 Net charge-offs 169 (159) (71) (1,040) (4) (755) (469) 51 (2,278) Balance at end of period $ 6,529 $ 4,691 $ 10,440 $ 7,984 $ - $ 3,456 $ 6,901 $ 894 $ 40,895 Total loans and leases $ 465,765 $ 255,980 $ 719,084 $ 678,027 $ - $ 450,875 $ 796,358 $ 129,281 $ 3,495,370 Allowance for loans and leases to total loans and leases ratio 1.40% 1.83% 1.45% 1.18% na. 0.77% 0.87% 0.69% 1.17% Balance of loans specifically evaluated for impairment $ 5,273 $ 194 $ 10,441 $ 6,580 $ na. $ na. $ 6,439 $ - $ 28,927 Allowance for loans specifically evaluated for impairment $ 1,318 $ 58 $ 1,489 $ 510 $ na. $ na. $ - $ - $ 3,375 Specific allowance to specific loans ratio 25.00% 29.90% 14.26% 7.75% na. na. na. na. 11.67% Balance of loans collectively evaluated $ 460,492 $ 255,786 $ 708,643 $ 671,447 $ na. $ 450,875 $ 789,919 $ 129,281 $ 3,466,443 Allowance for loans collectively evaluated $ 5,211 $ 4,633 $ 8,951 $ 7,474 $ na. $ 3,456 $ 6,901 $ 894 $ 37,520 Collective allowance to collective loans ratio 1.13% 1.81% 1.26% 1.11% na. 0.77% 0.87% 0.69% 1.08% The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended: (In thousands) March 31, 2016 December 31, 2015 Impaired loans with a specific allowance $ 14,486 $ 14,208 Impaired loans without a specific allowance 14,988 14,719 Total impaired loans $ 29,474 $ 28,927 Allowance for loan and lease losses related to impaired loans $ 3,208 $ 3,375 Allowance for loan and lease losses related to loans collectively evaluated 38,558 37,520 Total allowance for loan and lease losses $ 41,766 $ 40,895 Average impaired loans for the period $ 29,202 $ 29,828 Contractual interest income due on impaired loans during the period $ 718 $ 2,527 Interest income on impaired loans recognized on a cash basis $ 104 $ 961 Interest income on impaired loans recognized on an accrual basis $ 79 $ 274 The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated: March 31, 2016 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Impaired loans with a specific allowance Non-accruing $ 1,217 $ 10 $ 7,318 $ 4,265 $ - $ 12,810 Restructured accruing 864 - - - - 864 Restructured non-accruing 173 - - 639 - 812 Balance $ 2,254 $ 10 $ 7,318 $ 4,904 $ - $ 14,486 Allowance $ 1,354 $ 9 $ 1,194 $ 651 $ - $ 3,208 Impaired loans without a specific allowance Non-accruing $ 966 $ - $ 513 $ 887 $ 2,750 $ 5,116 Restructured accruing 473 - 2,058 748 573 3,852 Restructured non-accruing 1,385 137 54 1,358 3,086 6,020 Balance $ 2,824 $ 137 $ 2,625 $ 2,993 $ 6,409 $ 14,988 Total impaired loans Non-accruing $ 2,183 $ 10 $ 7,831 $ 5,152 $ 2,750 $ 17,926 Restructured accruing 1,337 - 2,058 748 573 4,716 Restructured non-accruing 1,558 137 54 1,997 3,086 6,832 Balance $ 5,078 $ 147 $ 9,943 $ 7,897 $ 6,409 $ 29,474 Unpaid principal balance in total impaired loans $ 7,371 $ 4,407 $ 14,603 $ 9,929 $ 7,710 $ 44,020 March 31, 2016 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Average impaired loans for the period $ 5,176 $ 171 $ 10,192 $ 7,239 $ 6,424 $ 29,202 Contractual interest income due on impaired loans during the period $ 132 $ 71 $ 198 $ 168 $ 149 Interest income on impaired loans recognized on a cash basis $ 26 $ - $ 4 $ 63 $ 11 Interest income on impaired loans recognized on an accrual basis $ 33 $ - $ 26 $ 9 $ 11 December 31, 2015 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Impaired loans with a specific allowance Non-accruing $ 1,168 $ 58 $ 7,791 $ 3,519 $ - $ 12,536 Restructured accruing 876 - - - - 876 Restructured non-accruing 156 - - 640 - 796 Balance $ 2,200 $ 58 $ 7,791 $ 4,159 $ - $ 14,208 Allowance $ 1,318 $ 58 $ 1,489 $ 510 $ - $ 3,375 Impaired loans without a specific allowance Non-accruing $ 974 $ - $ 518 $ 793 $ 2,750 $ 5,035 Restructured accruing 701 - 2,073 240 577 3,591 Restructured non-accruing 1,398 136 59 1,388 3,112 6,093 Balance $ 3,073 $ 136 $ 2,650 $ 2,421 $ 6,439 $ 14,719 Total impaired loans Non-accruing $ 2,142 $ 58 $ 8,309 $ 4,312 $ 2,750 $ 17,571 Restructured accruing 1,577 - 2,073 240 577 4,467 Restructured non-accruing 1,554 136 59 2,028 3,112 6,889 Balance $ 5,273 $ 194 $ 10,441 $ 6,580 $ 6,439 $ 28,927 Unpaid principal balance in total impaired loans $ 7,158 $ 4,456 $ 15,138 $ 8,555 $ 7,154 $ 42,461 December 31, 2015 Commercial Real Estate Total Recorded Commercial All Investment in Commercial Commercial Owner Other Impaired (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Loans Average impaired loans for the period $ 4,714 $ 882 $ 11,145 $ 8,218 $ 4,869 $ 29,828 Contractual interest income due on impaired loans during the period $ 450 $ 304 $ 918 $ 647 $ 208 Interest income on impaired loans recognized on a cash basis $ 273 $ 11 $ 226 $ 347 $ 104 Interest income on impaired loans recognized on an accrual basis $ 113 $ - $ 107 $ 11 $ 43 Credit Quality The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated: March 31, 2016 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Leasing Consumer Mortgage Construction Total Non-performing loans and assets: Non-accrual loans and leases $ 3,741 $ 147 $ 7,885 $ 7,149 $ - $ 2,715 $ 9,329 $ 412 $ 31,378 Loans and leases 90 days past due - - - - - 1 - - 1 Restructured loans and leases 1,337 - 2,058 748 - - 573 - 4,716 Total non-performing loans and leases 5,078 147 9,943 7,897 - 2,716 9,902 412 36,095 Other real estate owned 39 365 433 - - 690 887 - 2,414 Total non-performing assets $ 5,117 $ 512 $ 10,376 $ 7,897 $ - $ 3,406 $ 10,789 $ 412 $ 38,509 December 31, 2015 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Leasing Consumer Mortgage Construction Total Non-performing loans and assets: Non-accrual loans and leases $ 3,696 $ 194 $ 8,368 $ 6,340 $ - $ 2,193 $ 8,822 $ 418 $ 30,031 Loans and leases 90 days past due - - - - - - - - - Restructured loans and leases 1,577 - 2,073 240 - - 577 - 4,467 Total non-performing loans and leases 5,273 194 10,441 6,580 - 2,193 9,399 418 34,498 Other real estate owned 39 365 433 - - 690 1,215 - 2,742 Total non-performing assets $ 5,312 $ 559 $ 10,874 $ 6,580 $ - $ 2,883 $ 10,614 $ 418 $ 37,240 March 31, 2016 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Leasing Consumer Mortgage Construction Total Past due loans and leases 31-60 days $ 603 $ - $ 1,302 $ 1,068 $ - $ 1,644 $ 10,766 $ - $ 15,383 61-90 days 510 - - - - 633 609 - 1,752 > 90 days - - - - - 1 - - 1 Total past due 1,113 - 1,302 1,068 - 2,278 11,375 - 17,136 Non-accrual loans and leases 3,741 147 7,885 7,149 - 2,715 9,329 412 31,378 Loans acquired with deteriorated credit quality 544 - - 285 - - - - 829 Current loans 445,841 261,057 773,974 667,058 - 442,205 783,401 137,809 3,511,345 Total loans and leases $ 451,239 $ 261,204 $ 783,161 $ 675,560 $ - $ 447,198 $ 804,105 $ 138,221 $ 3,560,688 December 31, 2015 Commercial Real Estate Residential Real Estate Commercial Commercial Commercial Owner Residential Residential (In thousands) Commercial AD&C Investor R/E Occupied R/E Leasing Consumer Mortgage Construction Total Past due loans and leases 31-60 days $ 119 $ - $ 616 $ 1,819 $ - $ 1,642 $ 2,602 $ - $ 6,798 61-90 days 404 - 2,200 849 - 550 986 - 4,989 > 90 days - - - - - - - - - Total past due 523 - 2,816 2,668 - 2,192 3,588 - 11,787 Non-accrual loans and leases 3,696 194 8,368 6,340 - 2,193 8,822 418 30,031 Loans acquired with deteriorated credit quality 544 - - 307 - - - - 851 Current loans 461,002 255,786 707,900 668,712 - 446,490 783,948 128,863 3,452,701 Total loans and leases $ 465,765 $ 255,980 $ 719,084 $ 678,027 $ - $ 450,875 $ 796,358 $ 129,281 $ 3,495,370 The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated: March 31, 2016 Commercial Real Estate Commercial Commercial Commercial Owner (In thousands) Commercial AD&C Investor R/E Occupied R/E Total Pass $ 427,917 $ 261,057 $ 771,226 $ 657,038 $ 2,117,238 Special Mention 5,189 - 892 2,318 8,399 Substandard 18,133 147 11,043 16,204 45,527 Doubtful - - - - - Total $ 451,239 $ 261,204 $ 783,161 $ 675,560 $ 2,171,164 Decemeber 31, 2015 Commercial Real Estate Commercial Commercial Commercial Owner (In thousands) Commercial AD&C Investor R/E Occupied R/E Total Pass $ 447,439 $ 255,786 $ 706,623 $ 659,281 $ 2,069,129 Special Mention 797 - 1,509 3,356 5,662 Substandard 17,529 194 10,952 15,390 44,065 Doubtful - - - - - Total $ 465,765 $ 255,980 $ 719,084 $ 678,027 $ 2,118,856 Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated: March 31, 2016 Residential Real Estate Residential Residential (In thousands) Leasing Consumer Mortgage Construction Total Performing $ - $ 444,482 $ 794,203 $ 137,809 $ 1,376,494 Non-performing: 90 days past due - 1 - - 1 Non-accruing - 2,715 9,329 412 12,456 Restructured loans and leases - - 573 - 573 Total $ - $ 447,198 $ 804,105 $ 138,221 $ 1,389,524 December 31, 2015 Residential Real Estate Residential Residential (In thousands) Leasing Consumer Mortgage Construction Total Performing $ - $ 448,682 $ 786,959 $ 128,863 $ 1,364,504 Non-performing: 90 days past due - - - - - Non-accruing - 2,193 8,822 418 11,433 Restructured loans and leases - - 577 - 577 Total $ - $ 450,875 $ 796,358 $ 129,281 $ 1,376,514 During the three months ended March 31, 2016 , the Company restructured $0.5 million in loan s . No modifications resulted in the redu ction of the principal in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans r estructured during 2016 have specific reserves that were insignificant at March 31, 2016 . For the year ended December 31, 2015 , the Company restructured $1.9 million in loans. Modifications consisted principally of interest rate concessions and no mod ifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2015 had specific reserves of $0.5 million at December 31, 2015 . Commitments to lend additional funds on loans that have been re structured at March 31, 2016 and December 31, 2015 amounted to $0.1 million and $0.1 million, respectively . The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated: For the Three Months Ended March 31, 2016 Commercial Real Estate Commercial All Commercial Commercial Owner Other (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Total Troubled debt restructurings Restructured accruing $ - $ - $ - $ 508 $ - $ 508 Restructured non-accruing 22 - - - - 22 Balance $ 22 $ - $ - $ 508 $ - $ 530 Specific allowance $ 22 $ - $ - $ - $ - $ 22 Restructured and subsequently defaulted $ - $ - $ - $ - $ - $ - For the Year Ended December 31, 2015 Commercial Real Estate Commercial All Commercial Commercial Owner Other (In thousands) Commercial AD&C Investor R/E Occupied R/E Loans Total Troubled debt restructurings Restructured accruing $ 1,003 $ - $ - $ 240 $ - $ 1,243 Restructured non-accruing - - - 639 - 639 Balance $ 1,003 $ - $ - $ 879 $ - $ 1,882 Specific allowance $ 303 $ - $ - $ 149 $ - $ 452 Restructured and subsequently defaulted $ - $ - $ - $ - $ - $ - Other Real Estate Owned Other real estate own ed totaled $2.4 million and $2.7 million at March 31, 2016 and December 31, 2015 , respectively . |