Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 8 - LOANS AND RELATED ALLOWANCE FOR LOAN AND LEASE LOSSES Major classifications of loans are summarized as follows (in thousands): March 31, December 31, 2019 2018 Commercial and industrial $ 85,756 $ 83,857 Real estate - construction 58,019 56,731 Real estate - mortgage: Residential 340,483 336,487 Commercial 504,289 498,247 Consumer installment 15,937 16,787 1,004,484 992,109 Less: Allowance for loan and lease losses (7,206 ) (7,428 ) Net loans $ 997,278 $ 984,681 The amounts above include deferred loan origination costs of $1.4 $1.6 March 31, 2019 December 31, 2018. The Company’s primary business activity is with customers located within its local Northeastern Ohio trade area, eastern Geauga County, and contiguous counties. The Company also serves the central Ohio market with offices in Dublin, Sunbury, Westerville, and Powell, Ohio. Commercial, residential, consumer, and agricultural loans are granted. Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances net of the allowance for loan and lease losses. Interest income is recognized on the accrual method. The accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of interest is doubtful. Interest payments received on nonaccrual loans are applied against the unpaid principal balance until accrual status is restored. Loan origination fees and certain direct loan origination costs are deferred with the net amount amortized over the contractual life of the loan as an adjustment of the related loan’s yield. The following tables summarize the primary segments of the loan portfolio and allowance for loan and lease losses (in thousands): Real Estate - Mortgage March 31, 2019 Commercial and industrial Real estate- construction Residential Commercial Consumer installment Total Loans: Individually evaluated for impairment $ 1,825 $ 3,239 $ 1,856 $ 9,049 $ 2 $ 15,971 Collectively evaluated for impairment 83,931 54,780 338,627 495,240 15,935 988,513 Total loans $ 85,756 $ 58,019 $ 340,483 $ 504,289 $ 15,937 $ 1,004,484 Real Estate - Mortgage December 31, 2018 Commercial and industrial Real estate- construction Residential Commercial Consumer installment Total Loans: Individually evaluated for impairment $ 2,570 $ - $ 1,970 $ 9,533 $ 2 $ 14,075 Collectively evaluated for impairment 81,287 56,731 334,517 488,714 16,785 978,034 Total loans $ 83,857 $ 56,731 $ 336,487 $ 498,247 $ 16,787 $ 992,109 Real Estate - Mortgage March 31, 2019 Commercial and industrial Real estate- construction Residential Commercial Consumer installment Total Allowance for loan and lease losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 203 $ 661 $ 45 $ 54 $ - $ 963 Collectively evaluated for impairment 383 87 1,578 4,107 88 6,243 Total ending allowance balance $ 586 $ 748 $ 1,623 $ 4,161 $ 88 $ 7,206 Real Estate - Mortgage December 31, 2018 Commercial and industrial Real estate- construction Residential Commercial Consumer installment Total Allowance for loan and lease losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 667 $ - $ 43 $ 643 $ 1 $ 1,354 Collectively evaluated for impairment 302 100 1,538 4,008 126 6,074 Total ending allowance balance $ 969 $ 100 $ 1,581 $ 4,651 $ 127 $ 7,428 The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance. The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate - Mortgage which is further segmented into Residential and Commercial Real Estate (“CRE”), and Consumer Installment Loans. The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers. The residential mortgage loan segment consists of loans made for the purpose of financing the activities of residential homeowners. The commercial mortgage loan segment consists of loans made for the purpose of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts. The increases in the allowance for loan loss for C&I, Real Estate Construction, Residential, and CRE portfolios were partially offset by a decrease in the allowance for the Consumer Installment portfolio. Management evaluates individual loans in all of the commercial segments for possible impairment based on guidance established by the Board of Directors. Loans are considered to be impaired when, based on current information and events, it is probable that the Company 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 evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. 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 the shortfall in relation to the principal and interest owed. The Company does not Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one not The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not March 31, 2019 Impaired Loans Unpaid Recorded Principal Related Investment Balance Allowance With no related allowance recorded: Commercial and industrial $ 671 $ 1,169 $ - Real estate - mortgage: Residential 1,496 1,660 - Commercial 2,621 2,887 - Consumer installment 2 2 - Total $ 4,790 $ 5,718 $ - With an allowance recorded: Commercial and industrial $ 1,154 $ 1,365 $ 203 Real estate - construction 3,239 3,239 661 Real estate - mortgage: Residential 360 411 45 Commercial 6,428 6,446 54 Total $ 11,181 $ 11,461 $ 963 Total: Commercial and industrial $ 1,825 $ 2,534 $ 203 Real estate - construction 3,239 3,239 661 Real estate - mortgage: Residential 1,856 2,071 45 Commercial 9,049 9,333 54 Consumer installment 2 2 - Total $ 15,971 $ 17,179 $ 963 December 31, 2018 Impaired Loans Unpaid Recorded Principal Related Investment Balance Allowance With no related allowance recorded: Commercial and industrial $ 207 $ 413 $ - Real estate - mortgage: Residential 1,306 1,462 - Commercial 1,867 2,186 - Total $ 3,380 $ 4,061 $ - With an allowance recorded: Commercial and industrial $ 2,363 $ 3,013 $ 667 Real estate - mortgage: Residential 664 715 43 Commercial 7,666 7,676 643 Consumer installment 2 2 1 Total $ 10,695 $ 11,406 $ 1,354 Total: Commercial and industrial $ 2,570 $ 3,426 $ 667 Real estate - mortgage: Residential 1,970 2,177 43 Commercial 9,533 9,862 643 Consumer installment 2 2 1 Total $ 14,075 $ 15,467 $ 1,354 The tables above include troubled debt restructuring totaling $3.8 March 31, 2019 $4.4 December 31, 2018. The following tables present the average balance and interest income by class, recognized on impaired loans (in thousands): For the Three Months Ended March 31, 2019 For the Three Months Ended March 31, 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial and industrial $ 2,198 $ 30 $ 5,631 $ 187 Real estate - construction 1,620 45 283 - Real estate - mortgage: Residential 1,913 12 2,892 21 Commercial 9,291 98 6,719 136 Consumer installment 2 - 4 - Total $ 15,024 $ 185 $ 15,529 $ 344 Management uses a nine first five not not not 90 To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan-rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death, occurs to raise awareness of a possible credit event. The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. The Credit Department performs an annual review of all commercial relationships with loan balances of $500,000 $250,000 $125,000. The primary risk of commercial and industrial loans is related to deterioration in the value of collateral securing the loan should foreclosure become necessary. C&I loans are, by nature, secured by less substantial collateral than real estate-secured loans. The primary risk of real estate construction loans is potential delays and disputes during the completion process. The primary risk of residential real estate loans is current economic uncertainties along with the slow recovery in the housing market. The primary risk of commercial real estate loans is loss of income of the owner or occupier of the property and the inability of the market to sustain rent levels. Consumer installment loans historically have experienced higher delinquency rates. Consumer installments are typically secured by less substantial collateral than other types of credits. The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk-rating system (in thousands): Special Total March 31, 2019 Pass Mention Substandard Doubtful Loans Commercial and industrial $ 80,203 $ 3,204 $ 2,349 $ - $ 85,756 Real estate - construction 53,458 1,322 3,239 - 58,019 Real estate - mortgage: Residential 335,486 547 4,450 - 340,483 Commercial 489,289 6,744 8,256 - 504,289 Consumer installment 15,927 - 10 - 15,937 Total $ 974,363 $ 11,817 $ 18,304 $ - $ 1,004,484 Special Total December 31, 2018 Pass Mention Substandard Doubtful Loans Commercial and industrial $ 77,002 $ 4,572 $ 2,283 $ - $ 83,857 Real estate - construction 55,397 1,334 - - 56,731 Real estate - mortgage: Residential 332,475 553 3,459 - 336,487 Commercial 483,516 6,617 8,114 - 498,247 Consumer installment 16,776 - 11 - 16,787 Total $ 965,166 $ 13,076 $ 13,867 $ - $ 992,109 Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. Nonperforming assets are nonaccrual loans including nonaccrual TDRs, loans 90 The following tables present the aging of the recorded investment in past-due loans by class of loans (in thousands): 30-59 Days 60-89 Days 90 Days+ Total Total March 31, 2019 Current Past Due Past Due Past Due Past Due Loans Commercial and industrial $ 85,157 $ 279 $ 73 $ 247 $ 599 $ 85,756 Real estate - construction 54,515 265 3,239 - 3,504 58,019 Real estate - mortgage: Residential 335,148 2,816 1,094 1,425 5,335 340,483 Commercial 502,895 499 422 473 1,394 504,289 Consumer installment 15,918 17 2 - 19 15,937 Total $ 993,633 $ 3,876 $ 4,830 $ 2,145 $ 10,851 $ 1,004,484 30-59 Days 60-89 Days 90 Days+ Total Total December 31, 2018 Current Past Due Past Due Past Due Past Due Loans Commercial and industrial $ 82,770 $ 288 $ 213 $ 586 $ 1,087 $ 83,857 Real estate - construction 56,731 - - - - 56,731 Real estate - mortgage: Residential 331,379 2,612 1,083 1,413 5,108 336,487 Commercial 496,597 664 - 986 1,650 498,247 Consumer installment 16,768 19 - - 19 16,787 Total $ 984,245 $ 3,583 $ 1,296 $ 2,985 $ 7,864 $ 992,109 The following tables present the recorded investment in non-accrual loans and loans past due over 89 March 31, 2019 Nonaccrual 90+ Days Past Due and Accruing Commercial and industrial $ 1,004 $ - Real estate - construction 3,239 - Real estate - mortgage: Residential 3,844 - Commercial 2,379 - Consumer installment 6 - Total $ 10,472 $ - December 31, 2018 Nonaccrual 90+ Days Past Due and Accruing Commercial and industrial $ 996 $ 91 Real estate - construction - - Real estate - mortgage: Residential 2,731 754 Commercial 2,864 100 Consumer installment 4 - Total $ 6,595 $ 945 Interest income that would have been recorded had these loans not $91,000 three March 31, 2019 $456,000 December 31, 2018. An allowance for loan and lease losses (“ALLL”) is maintained to absorb losses from the loan portfolio. The ALLL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans. The Company’s methodology for determining the ALLL is based on the requirements of ASC Section 310 10 35 450 20 two may Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative factors. The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the ALLL analysis. Management tracks the historical net charge-off activity at the purpose code level. The historical charge-off factor was calculated using the last twelve Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and nonaccrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint. Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALLL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL. The following tables summarize the primary segments of the loan portfolio and the activity within those segments (in thousands): Commercial and industrial Real estate- construction Real estate- residential mortgage Real estate- commercial mortgage Consumer installment Total ALLL balance at December 31, 2018 $ 969 $ 100 $ 1,581 $ 4,651 $ 127 $ 7,428 Charge-offs (347 ) - (91 ) (32 ) (47 ) (517 ) Recoveries 16 23 14 1 1 55 Provision (52 ) 625 119 (459 ) 7 240 ALLL balance at March 31, 2019 $ 586 $ 748 $ 1,623 $ 4,161 $ 88 $ 7,206 Commercial and industrial Real estate- construction Real estate- residential mortgage Real estate- commercial mortgage Consumer installment Total ALLL balance at December 31, 2017 $ 999 $ 313 $ 1,760 $ 4,036 $ 82 $ 7,190 Charge-offs (9 ) - - - (4 ) (13 ) Recoveries 109 17 20 - 18 164 Provision 157 (238 ) 2 287 2 210 ALLL balance at March 31, 2018 $ 1,256 $ 92 $ 1,782 $ 4,323 $ 98 $ 7,551 The provision fluctuations during the three March 31, 2019 ● commercial and industrial loans are due to the charge-off of a large relationship of $336,000 $358,000. ● real estate construction loans are due to the addition of a large loan requiring a reserve of $661,000. ● commercial real estate loans are due to the payoff of one $435,000. The following tables summarize troubled debt restructurings (in thousands): For the Three Months Ended March 31, 2018 Number of Contracts Pre-Modification Post-Modification Troubled Debt Restructurings Term Modification Other Total Outstanding Recorded Investment Outstanding Recorded Investment Commercial and industrial 2 - 2 $ 6,977 $ 6,977 Residential real estate 2 - 2 63 63 There were no three March 31, 2019. There were no three March 31, 2019 March 31, 2018. |