Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 5. LOANS AND RELATED ALL OWANCE FOR LOAN AND LEASE LOSSES The Company’s primary business activity is with loan customers located within its local Northeastern Ohio trade area, eastern Geauga County, and contiguous counties to the north, east, and south. The Company also serves the central Ohio market with offices in Dublin, Sunbury, Powell, Plain City and Westerville, Ohio. The Northeastern Ohio trade area includes locations in Beachwood, Twinsburg, and Solon, Ohio. Commercial, residential, consumer, and agricultural loans are granted. Although the Company has a diversified loan portfolio at December 31, 2019 2018, The following tables summarize the primary segments of the loan portfolio and the allowance for loan and lease losses (in thousands): Real Estate-Mortgage December 31, 2019 Commercial and industrial Real estate- construction Residential Commercial Consumer installment Total Loans: Individually evaluated for impairment $ 882 $ - $ 1,628 $ 10,559 $ 1 $ 13,070 Collectively evaluated for impairment 88,645 63,246 345,419 459,468 14,410 971,188 Total loans $ 89,527 $ 63,246 $ 347,047 $ 470,027 $ 14,411 $ 984,258 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 The amounts above include net deferred loan origination costs of $1.3 $1.6 December 31, 2019 December 31, 2018, Real Estate-Mortgage December 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 $ 3 $ - $ 30 $ 627 $ - $ 660 Collectively evaluated for impairment 453 97 1,628 3,902 28 6,108 Total ending allowance balance $ 456 $ 97 $ 1,658 $ 4,529 $ 28 $ 6,768 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, 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. 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 three 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 December 31, 2019 Impaired Loans Recorded Unpaid Principal Related Investment Balance Allowance With no related allowance recorded: Commercial and industrial $ 747 $ 1,524 $ - Real estate - mortgage: Residential 979 1,057 - Commercial 5,617 5,617 - Consumer installment 1 1 - Total $ 7,344 $ 8,199 $ - With an allowance recorded: Commercial and industrial $ 135 $ 135 $ 3 Real estate - mortgage: Residential 649 700 30 Commercial 4,942 4,952 627 Total $ 5,726 $ 5,787 $ 660 Total: Commercial and industrial $ 882 $ 1,659 $ 3 Real estate - mortgage: Residential 1,628 1,757 30 Commercial 10,559 10,569 627 Consumer installment 1 1 - Total $ 13,070 $ 13,986 $ 660 December 31, 2018 Impaired Loans Recorded Unpaid 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 $3.6 $4.4 December 31, 2019 2018, The following table presents interest income by class, recognized on impaired loans (in thousands): As of December 31, 2019 As of December 31, 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial and industrial $ 1,770 $ 141 $ 4,210 $ 172 Real estate - construction 648 - 9 - Real estate - mortgage: Residential 1,803 51 2,531 57 Commercial 10,366 375 6,805 377 Consumer installment 2 - 3 - Total $ 14,589 $ 567 $ 13,558 $ 606 Troubled Debt Restructuring (TDR) describes loans on which the bank has granted concessions for reasons related to the customer’s financial difficulties. Such concessions may one ● reduction in the interest rate to below market rates ● extension of repayment requirements beyond normal terms ● reduction of the principal amount owed ● reduction of accrued interest due ● acceptance of other assets in full or partial payment of a debt In each case the concession is made due to deterioration in the borrower’s financial condition, and the new terms are less stringent than those required on a new loan with similar risk. The total impact on the ALLL for 2019 2018 $33,000 $459,000, The following tables present the number of loan modifications by class, the corresponding recorded investment, and the subsequently defaulted modifications (in thousands) for the years ended: December 31, 2019 Number of Contracts Pre-Modification Post-Modification Troubled Debt Restructurings Term Modification Other Total Outstanding Recorded Investment Outstanding Recorded Investment Commercial and industrial 3 - 3 $ 488 $ 490 Residential real estate 4 2 6 294 354 $ 782 $ 844 December 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 1 - 1 $ 44 $ 44 Residential real estate 3 2 5 286 286 Commercial real estate 1 - 1 94 94 $ 424 $ 424 December 31, 2018 Troubled Debt Restructurings Number of Recorded subsequently defaulted Contracts Investment Residential real estate 1 $ 19 One loan with a book balance of $36,000 2019 December 31, 2019. no December 31, 2019. 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 following tables present the classes of the loan portfolio summarized by the aggregate Pass rating and the criticized categories of Special Mention, Substandard, and Doubtful within the internal risk rating system (in thousands): Special Total December 31, 2019 Pass Mention Substandard Doubtful Loans Commercial and industrial $ 84,136 $ 3,619 $ 1,772 $ - $ 89,527 Real estate - construction 63,246 - - - 63,246 Real estate - mortgage: Residential 342,988 420 3,639 - 347,047 Commercial 453,170 6,989 9,868 - 470,027 Consumer installment 14,399 - 12 - 14,411 Total $ 957,939 $ 11,028 $ 15,291 $ - $ 984,258 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. The following tables present the classes of the loan portfolio summarized by the aging categories of loans and nonaccrual loans (in thousands): 30-59 Days 60-89 Days 90 Days+ Total Total December 31, 2019 Current Past Due Past Due Past Due Past Due Loans Commercial and industrial $ 88,965 $ 190 $ 66 $ 306 $ 562 89,527 Real estate - construction 63,246 - - - - 63,246 Real estate - mortgage: Residential 344,311 1,713 63 960 2,736 347,047 Commercial 465,666 63 - 4,298 4,361 470,027 Consumer installment 13,378 623 216 194 1,033 14,411 Total $ 975,566 $ 2,589 $ 345 $ 5,758 $ 8,692 $ 984,258 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 classes of the loan portfolio summarized by nonaccrual loans and loans 90 December 31, 2019 Nonaccrual 90+ Days Past Due and Accruing Commercial and industrial $ 946 $ - Real estate - mortgage: Residential 3,285 - Commercial 4,451 - Consumer installment 197 - Total $ 8,879 $ - December 31, 2018 Nonaccrual 90+ Days Past Due and Accruing Commercial and industrial $ 996 $ 91 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 $342,000 2019 $456,000 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. A historical charge-off factor is calculated utilizing 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 (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 (519 ) - (523 ) (32 ) (735 ) (1,809 ) Recoveries 82 74 78 17 8 259 Provision (76 ) (77 ) 522 (107 ) 628 890 ALLL balance at December 31, 2019 $ 456 $ 97 $ 1,658 $ 4,529 $ 28 $ 6,768 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 (610 ) - (177 ) (111 ) (220 ) (1,118 ) Recoveries 287 63 128 - 38 516 Provision 293 (276 ) (130 ) 726 227 840 ALLL balance at December 31, 2018 $ 969 $ 100 $ 1,581 $ 4,651 $ 127 $ 7,428 The provision fluctions during the the year ended December 31, 2019 ● commercial and industrial loans are due to the charge-offs of two $438,000, 2018. ● residential portfolio are due to the charge-off of two $360,000 ● commercial real estate loans are due to a small charge-off and a declining portfolio balance. ● consumer installments are due to charge-offs in the student loan portfolio totaling $566,000. The provision fluctions during the the year ended December 31, 2018 ● real estate construction loans are due to the historical loss rate for the real estate construction pool changing to - 0.127% 0.775% first 2018 no ● residential real estate are due to a continued decline in historical losses and consistent decreases in the ratio of nonperforming loans to toal loans in this segment over the past few years resulting in a decrease in the reserves required. ● consumer installment loans are primarily due to increases in historical losses for this segment over the prior year. |