Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | (3) Loans Composition of loans, net of deferred fees and costs, by primary loan portfolio class follows: (in thousands) March 31, 2016 December 31, 2015 Commercial and industrial $ 676,782 $ 644,398 Construction and development, excluding undeveloped land 139,148 134,482 Undeveloped land 21,519 21,185 Real estate mortgage: Commercial investment 496,647 482,639 Owner occupied commercial 372,811 375,016 1-4 family residential 234,199 226,575 Home equity - first lien 52,042 50,115 Home equity - junior lien 63,336 63,066 Subtotal: Real estate mortgage 1,219,035 1,197,411 Consumer 38,004 35,531 Total loans $ 2,094,488 $ 2,033,007 The following table presents the balance in the recorded investment in loans and allowance for loan losses by portfolio segment and based on impairment evaluation method as of March 31, 2016 and December 31, 2015. (in thousands) Type of loan March 31, 2016 Commercial industrial Construction and development excluding undeveloped land Undeveloped land Real estate mortgage Consumer Total Loans $ 676,782 $ 139,148 $ 21,519 $ 1,219,035 $ 38,004 $ 2,094,488 Loans collectively evaluated for impairment $ 672,059 $ 138,827 $ 21,519 $ 1,214,376 $ 37,906 $ 2,084,687 Loans individually evaluated for impairment $ 4,647 $ - $ - $ 4,173 $ 98 $ 8,918 Loans acquired with deteriorated credit quality $ 76 $ 321 $ - $ 486 $ - $ 883 Commercial industrial Construction and development excluding undeveloped land Undeveloped land Real estate mortgage Consumer Total Allowance for loan losses At December 31, 2015 $ 8,645 $ 1,760 $ 814 $ 10,875 $ 347 $ 22,441 Provision (credit) 813 159 94 (578 ) 12 500 Charge-offs (348 ) - - (203 ) (117 ) (668 ) Recoveries 32 10 - 20 116 178 At March 31, 2016 $ 9,142 $ 1,929 $ 908 $ 10,114 $ 358 $ 22,451 Allowance for loans collectively evaluated for impairment $ 8,760 $ 1,929 $ 908 $ 9,814 $ 292 $ 21,703 Allowance for loans individually evaluated for impairment $ 382 $ - $ - $ 300 $ 66 $ 748 Allowance for loans acquired with deteriorated credit quality $ - $ - $ - $ - $ - $ - (in thousands) Type of loan December 31, 2015 Commercial and industrial Construction and development excluding undeveloped land Undeveloped land Real estate mortgage Consumer Total Loans $ 644,398 $ 134,482 $ 21,185 $ 1,197,411 $ 35,531 $ 2,033,007 Loans collectively evaluated for impairment $ 639,760 $ 134,160 $ 21,185 $ 1,192,864 $ 35,463 $ 2,023,432 Loans individually evaluated for impairment $ 4,635 $ - $ - $ 4,050 $ 68 $ 8,753 Loans acquired with deteriorated credit quality $ 3 $ 322 $ - $ 497 $ - $ 822 Commercial and industrial Construction and development excluding undeveloped land Undeveloped land Real estate mortgage Consumer Total Allowance for loan losses At December 31, 2014 $ 11,819 $ 721 $ 1,545 $ 10,541 $ 294 $ 24,920 Provision (credit) 793 1,065 (2,131 ) 872 151 750 Charge-offs (4,065 ) (26 ) - (693 ) (597 ) (5,381 ) Recoveries 98 - 1,400 155 499 2,152 At December 31, 2015 $ 8,645 $ 1,760 $ 814 $ 10,875 $ 347 $ 22,441 Allowance for loans collectively evaluated for impairment $ 8,377 $ 1,760 $ 814 $ 10,667 $ 279 $ 21,897 Allowance for loans individually evaluated for impairment $ 268 $ - $ - $ 208 $ 68 $ 544 Allowance for loans acquired with deteriorated credit quality $ - $ - $ - $ - $ - $ - The considerations by Bancorp in computing its allowance for loan losses are determined based on the various risk characteristics of each loan segment. Relevant risk characteristics are as follows: ● Commercial and industrial loans: Loans in this category are made to businesses. Generally these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A decline in the strength of the business or a weakened economy and resultant decreased consumer and/or business spending may have an effect on the credit quality in this loan category. ● Construction and development, excluding undeveloped land: Loans in this category primarily include owner-occupied and investment construction loans and commercial development projects. In most cases, construction loans require only interest to be paid during construction. Upon completion or stabilization, the construction loan may convert to permanent financing in the real estate mortgage segment, requiring principal amortization. Repayment of development loans is derived from sale of lots or units including any pre-sold units. Credit risk is affected by construction delays, cost overruns, market conditions and availability of permanent financing, to the extent such permanent financing is not being provided by Bancorp. ● Undeveloped land: Loans in this category are secured by land initially acquired for development by the borrower, but for which no development has yet taken place. Credit risk is affected by market conditions and time to sell lots at an adequate price. Credit risk is also affected by availability of permanent financing, to the extent such permanent financing is not being provided by Bancorp. ● Real estate mortgage: Loans in this category are made to and secured by owner-occupied residential real estate, owner-occupied real estate used for business purposes, and income-producing investment properties. For owner occupied residential and commercial real estate, repayment is dependent on financial strength of the borrower. For income-producing investment properties, repayment is dependent on financial strength of tenants in addition to the borrower. Underlying properties are generally located in Bancorp's primary market area. Cash flows of income producing investment properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on credit quality. Overall health of the economy, including unemployment rates and real estate prices, has an effect on credit quality in this loan category. ● Consumer: Loans in this category may be either secured or unsecured and repayment is dependent on credit quality of the individual borrower and, if applicable, adequacy of collateral securing the loan. Therefore, overall health of the economy, including unemployment rates and stock prices, will have a significant effect on credit quality in this loan category. Bancorp has loans that were acquired in a 2013 acquisition, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is included in the balance sheet amounts of loans at March 31, 2016 and December 31, 2015. Changes in the fair value adjustment for acquired impaired loans are shown in the following table. (in thousands) Accretable discount Non-accretable discount Balance at December 31, 2014 $ 62 $ 266 Accretion (59 ) (77 ) Reclassifications from (to) non-accretable discount - - Disposals - - Balance at December 31, 2015 $ 3 $ 189 Accretion (3 ) - Reclassifications from (to) non-accretable discount - - Disposals - - Balance at March 31, 2016 $ - $ 189 Accretion in the non-accretable discount column represents accretion recorded upon payoff of loans. The following table presents loans individually evaluated for impairment. (in thousands) Unpaid Average Recorded principal Related recorded March 31, 2016 investment balance allowance investment Loans with no related allowance recorded: Commercial and industrial $ 3,544 $ 4,581 $ - $ 3,332 Construction and development, excluding undeveloped land - - - - Undeveloped land - - - - Real estate mortgage Commercial investment 204 204 - 241 Owner occupied commercial 1,693 2,132 - 1,718 1-4 family residential 1,115 1,115 - 1,011 Home equity - first lien - - - 7 Home equity - junior lien 289 289 - 191 Subtotal: Real estate mortgage 3,301 3,740 - 3,168 Consumer 32 32 - 16 Subtotal $ 6,877 $ 8,353 $ - $ 6,516 Loans with an allowance recorded: Commercial and industrial $ 1,103 $ 1,578 $ 382 $ 1,310 Construction and development, excluding undeveloped land - - - - Undeveloped land - - - - Real estate mortgage Commercial investment - - - - Owner occupied commercial 872 872 300 945 1-4 family residential - - - - Home equity - first lien - - - - Home equity - junior lien - - - - Subtotal: Real estate mortgage 872 872 300 945 Consumer 66 66 66 67 Subtotal $ 2,041 $ 2,516 $ 748 $ 2,322 Total: Commercial and industrial $ 4,647 $ 6,159 $ 382 $ 4,642 Construction and development, excluding undeveloped land - - - - Undeveloped land - - - - Real estate mortgage - - - - Commercial investment 204 204 - 241 Owner occupied commercial 2,565 3,004 300 2,663 1-4 family residential 1,115 1,115 - 1,011 Home equity - first lien - - - 7 Home equity - junior lien 289 289 - 191 Subtotal: Real estate mortgage 4,173 4,612 300 4,113 Consumer 98 98 66 83 Total $ 8,918 $ 10,869 $ 748 $ 8,838 (in thousands) Unpaid Average Recorded principal Related recorded December 31, 2015 investment balance allowance investment Loans with no related allowance recorded: Commercial and industrial $ 3,119 $ 3,859 $ - $ 1,414 Construction and development, excluding undeveloped land - 151 - 21 Undeveloped land - - - - Real estate mortgage Commercial investment 278 278 - 178 Owner occupied commercial 1,743 2,713 - 1,622 1-4 family residential 906 906 - 661 Home equity - first lien 13 13 - 37 Home equity - junior lien 92 92 - 69 Subtotal: Real estate mortgage 3,032 4,002 - 2,567 Consumer - - - 3 Subtotal $ 6,151 $ 8,012 $ - $ 4,005 Loans with an allowance recorded: Commercial and industrial $ 1,516 $ 3,087 $ 268 $ 4,612 Construction and development, excluding undeveloped land - - - 368 Undeveloped land - - - - Real estate mortgage Commercial investment - - - 92 Owner occupied commercial 1,018 1,018 208 1,266 1-4 family residential - - - 188 Home equity - first lien - - - - Home equity - junior lien - - - - Subtotal: Real estate mortgage 1,018 1,018 208 1,546 Consumer 68 68 68 72 Subtotal $ 2,602 $ 4,173 $ 544 $ 6,598 Total: Commercial and industrial $ 4,635 $ 6,946 $ 268 $ 6,026 Construction and development, excluding undeveloped land - 151 - 389 Undeveloped land - - - - Real estate mortgage - - - - Commercial investment 278 278 - 270 Owner occupied commercial 2,761 3,731 208 2,888 1-4 family residential 906 906 - 849 Home equity - first lien 13 13 - 37 Home equity - junior lien 92 92 - 69 Subtotal: Real estate mortgage 4,050 5,020 208 4,113 Consumer 68 68 68 75 Total $ 8,753 $ 12,185 $ 544 $ 10,603 Differences between recorded investment amounts and unpaid principal balance amounts less related allowance are due to partial charge-offs which have occurred over the life of loans and fair value adjustments recorded for loans acquired. Impaired loans include non-accrual loans and accruing loans accounted for as troubled debt restructurings (TDR), which continue to accrue interest. Non-performing loans include the balance of impaired loans plus any loans over 90 days past due and still accruing interest. Bancorp did not have any loans past due more than 90 days and still accruing interest, compared to $176 thousand at December 31, 2015. The following table presents the recorded investment in non-accrual loans as of March 31, 2016 and December 31, 2015. (in thousands) March 31, 2016 December 31, 2015 Commercial and industrial $ 3,673 $ 3,643 Construction and development, excluding undeveloped land - - Undeveloped land - - Real estate mortgage Commercial investment 204 278 Owner occupied commercial 2,565 2,761 1-4 family residential 1,115 906 Home equity - first lien - 13 Home equity - junior lien 289 92 Subtotal: Real estate mortgage 4,173 4,050 Consumer 32 - Total $ 7,878 $ 7,693 Bancorp did not have any loans accounted for as TDR that were restructured and experienced a subsequent payment default during the three and twelve month periods ended March 31, 2016 or 2015. Loans accounted for as TDR include modifications from original terms such as those due to bankruptcy proceedings, certain modifications of amortization periods or extended suspension of principal payments due to customer financial difficulties. Loans accounted for as TDR, which have not defaulted, are individually evaluated for impairment and, at March 31, 2016, had a total allowance allocation of $330 thousand, compared to $177 thousand at December 31, 2015. At March 31, 2016 and December 31, 2015, Bancorp did not have any outstanding commitments to lend additional funds to borrowers whose loans have been modified as TDR. The following table presents the aging of the recorded investment in loans as of March 31, 2016 and December 31, 2015. 90 or more Recorded (in thousands) days past investment due > 90 days 30-59 days 60-89 days (includes) Total Total and March 31, 2016 past due past due non-accrual) past due Current loans accruing Commercial and industrial $ 654 $ 37 $ 3,673 $ 4,364 $ 672,418 $ 676,782 $ - Construction and development, excluding undeveloped land - - - - 139,148 139,148 - Undeveloped land 1,859 - - 1,859 19,660 21,519 - Real estate mortgage Commercial investment 315 278 204 797 495,850 496,647 - Owner occupied commercial 1,495 95 2,565 4,155 368,656 372,811 - 1-4 family residential 626 193 1,115 1,934 232,265 234,199 - Home equity - first lien - - - - 52,042 52,042 - Home equity - junior lien 129 120 289 538 62,798 63,336 - Subtotal: Real estate mortgage 2,565 686 4,173 7,424 1,211,611 1,219,035 - Consumer 224 5 32 261 37,743 38,004 - Total $ 5,302 $ 728 $ 7,878 $ 13,908 $ 2,080,580 $ 2,094,488 $ - December 31, 2015 Commercial and industrial $ 238 $ 327 $ 3,643 $ 4,208 $ 640,190 $ 644,398 $ - Construction and development, excluding undeveloped land - - - - 134,482 134,482 - Undeveloped land - - - - 21,185 21,185 - Real estate mortgage Commercial investment 290 140 278 708 481,931 482,639 - Owner occupied commercial - - 2,761 2,761 372,255 375,016 - 1-4 family residential 1,147 94 1,082 2,323 224,252 226,575 176 Home equity - first lien 35 51 13 99 50,016 50,115 - Home equity - junior lien 285 173 92 550 62,516 63,066 - Subtotal: Real estate mortgage 1,757 458 4,226 6,441 1,190,970 1,197,411 176 Consumer 343 8 - 351 35,180 35,531 - Total $ 2,338 $ 793 $ 7,869 $ 11,000 $ 2,022,007 $ 2,033,007 $ 176 Consistent with regulatory guidance, Bancorp categorizes loans into credit risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends. Pass-rated loans included all risk-rated loans other than those classified as other assets especially mentioned, substandard, and doubtful, which are defined below: ● Other assets especially mentioned (“OAEM”): Loans classified as OAEM have potential weaknesses that deserve management's close attention. These potential weaknesses may result in deterioration of repayment prospects for the loan or of Bancorp's credit position at some future date. ● Substandard: Loans classified as substandard are inadequately protected by the paying capacity of the obligor or of collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize repayment of the debt. Default is a distinct possibility if the deficiencies are not corrected. ● Substandard non-performing: Loans classified as substandard non-performing have all the characteristics of substandard loans and have been placed on non-accrual status or have been accounted for as troubled debt restructurings. Loans are placed on non-accrual status when prospects for recovering both principal and accrued interest are considered doubtful or when a default of principal or interest has existed for 90 days or more. ● Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. As of March 31, 2016 and December 31, 2015, the internally assigned risk grades of loans by category were as follows: (in thousands) Substandard Total March 31, 2016 Pass OAEM Substandard non-performing Doubtful loans Commercial and industrial $ 642,042 $ 22,907 $ 7,186 $ 4,647 $ - $ 676,782 Construction and development, excluding undeveloped land 137,924 - 1,224 - - 139,148 Undeveloped land 20,854 - 665 - - 21,519 Real estate mortgage Commercial investment 494,426 1,950 67 204 - 496,647 Owner occupied commercial 354,090 12,591 3,565 2,565 - 372,811 1-4 family residential 232,502 582 - 1,115 - 234,199 Home equity - first lien 52,042 - - - - 52,042 Home equity - junior lien 62,997 50 - 289 - 63,336 Subtotal: Real estate mortgage 1,196,057 15,173 3,632 4,173 - 1,219,035 Consumer 37,906 - - 98 - 38,004 Total $ 2,034,783 $ 38,080 $ 12,707 $ 8,918 $ - $ 2,094,488 December 31, 2015 Commercial and industrial $ 612,853 $ 19,672 $ 7,238 $ 4,635 $ - $ 644,398 Construction and development, excluding undeveloped land 133,342 773 367 - - 134,482 Undeveloped land 20,513 517 155 - - 21,185 Real estate mortgage Commercial investment 480,178 2,183 - 278 - 482,639 Owner occupied commercial 351,707 17,135 3,413 2,761 - 375,016 1-4 family residential 224,645 848 - 1,082 - 226,575 Home equity - first lien 50,102 - - 13 - 50,115 Home equity - junior lien 62,924 50 - 92 - 63,066 Subtotal: Real estate mortgage 1,169,556 20,216 3,413 4,226 - 1,197,411 Consumer 35,463 - - 68 - 35,531 Total $ 1,971,727 $ 41,178 $ 11,173 $ 8,929 $ - $ 2,033,007 |