Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 8 - LOANS AND RELATED ALLOWANCE FOR LOAN AND LEASE LOSSES 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, Plain City, Powell, Sunbury, and Westerville, 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): September 30, 2020 Impairment Evaluation Individually Collectively Total Loans Loans: Commercial real estate: Owner occupied $ 2,300 $ 105,042 $ 107,342 Non-owner occupied 11,138 299,374 310,512 Multifamily - 39,622 39,622 Residential real estate 1,225 221,012 222,237 Commercial and industrial 1,624 256,689 258,313 Home equity lines of credit 248 114,975 115,223 Construction and other - 60,613 60,613 Consumer installment - 10,534 10,534 Total $ 16,535 $ 1,107,861 $ 1,124,396 December 31, 2019 Impairment Evaluation Individually Collectively Total Loans Loans: Commercial real estate: Owner occupied $ 3,474 $ 98,912 $ 102,386 Non-owner occupied 7,084 295,096 302,180 Multifamily - 62,028 62,028 Residential real estate 1,278 233,520 234,798 Commercial and industrial 882 88,645 89,527 Home equity lines of credit 351 111,897 112,248 Construction and other - 66,680 66,680 Consumer installment 1 14,410 14,411 Total $ 13,070 $ 971,188 $ 984,258 The commercial and industrial loan portfolio as of September 30, 2020 10 The amounts above include net deferred loan origination fees of $5.6 million and $1.3 million at September 30, 2020 December 31, 2019, September 30, 2020 September 30, 2020 Ending Allowance Balance Attributable to Loans: Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Allocation Loans: Commercial real estate: Owner occupied $ 10 $ 1,093 $ 1,103 Non-owner occupied 403 5,002 5,405 Multifamily - 346 346 Residential real estate 21 1,350 1,371 Commercial and industrial 60 1,443 1,503 Home equity lines of credit 21 1,305 1,326 Construction and other - 293 293 Consumer installment - 12 12 Total $ 515 $ 10,844 $ 11,359 December 31, 2019 Ending Allowance Balance Attributable to Loans: Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Allocation Loans: Commercial real estate: Owner occupied $ 45 $ 756 $ 801 Non-owner occupied 582 2,800 3,382 Multifamily - 340 340 Residential real estate 28 698 726 Commercial and industrial 3 453 456 Home equity lines of credit 2 930 932 Construction and other - 103 103 Consumer installment - 28 28 Total $ 660 $ 6,108 $ 6,768 The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance. The portfolio is segmented into Commercial Real Estate (“CRE”) which is further segmented into Owner Occupied (“CRE OO”), Non-owner Occupied (“CRE NOO”), and Multifamily Residential, Residential Real Estate (“RRE”), Commercial and Industrial (“C&I”), Home Equity Lines of Credit (“HELOC”), Construction and Other (“Construction”), and Consumer Installment Loans. The commercial real estate loan segments consist of loans made for the purpose of financing the activities of commercial real estate owners and operators. The residential real estate and HELOC loan segments consist of loans made for the purpose of financing the activities of residential homeowners. The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers. Although PPP loans are included with C&I loans, the nature of PPP loans differs considerably from the rest of the category. Loans funded through the PPP program are fully guaranteed by the U.S. government. This guarantee exists at the inception of the loans and throughout the lives of the loans and was not 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 September 30, 2020 Impaired Loans Unpaid Recorded Principal Related Investment Balance Allowance With no related allowance recorded: Commercial real estate: Owner occupied $ 1,844 $ 1,863 $ - Non-owner occupied 7,518 7,518 - Residential real estate 797 927 - Commercial and industrial 1,336 1,833 - Home equity lines of credit 81 93 - Total $ 11,576 $ 12,234 $ - With an allowance recorded: Commercial real estate: Owner occupied $ 456 $ 456 $ 10 Non-owner occupied 3,620 3,894 403 Residential real estate 428 428 21 Commercial and industrial 288 288 60 Home equity lines of credit 167 167 21 Total $ 4,959 $ 5,233 $ 515 Total: Commercial real estate: Owner occupied $ 2,300 $ 2,319 $ 10 Non-owner occupied 11,138 11,412 403 Residential real estate 1,225 1,355 21 Commercial and industrial 1,624 2,121 60 Home equity lines of credit 248 260 21 Total $ 16,535 $ 17,467 $ 515 December 31, 2019 Impaired Loans Unpaid Recorded Principal Related Investment Balance Allowance With no related allowance recorded: Commercial real estate: Owner occupied $ 1,772 $ 1,772 $ - Non-owner occupied 3,845 3,845 - Residential real estate 759 829 - Commercial and industrial 747 1,524 - Home equity lines of credit 220 228 - Consumer installment 1 1 - Total $ 7,344 $ 8,199 $ - With an allowance recorded: Commercial real estate: Owner occupied $ 1,702 $ 1,713 $ 45 Non-owner occupied 3,239 3,239 582 Residential real estate 519 569 28 Commercial and industrial 135 135 3 Home equity lines of credit 131 131 2 Total $ 5,726 $ 5,787 $ 660 Total: Commercial real estate: Owner occupied $ 3,474 $ 3,485 $ 45 Non-owner occupied 7,084 7,084 582 Residential real estate 1,278 1,398 28 Commercial and industrial 882 1,659 3 Home equity lines of credit 351 359 2 Consumer installment 1 1 - Total $ 13,070 $ 13,986 $ 660 The tables above include troubled debt restructuring totaling $2.9 million and $3.6 million as of September 30, 2020 December 31, 2019, September 30, 2020 December 31, 2019, The following tables present the average balance and interest income by class, recognized on impaired loans (in thousands): For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial real estate: Owner occupied $ 2,893 $ - $ 3,173 $ 55 Non-owner occupied 12,912 129 9,988 387 Residential real estate 1,242 14 1,229 39 Commercial and industrial 1,376 28 1,136 49 Home equity lines of credit 298 1 323 5 Consumer installment - - 1 - Total $ 18,721 $ 172 $ 15,850 $ 535 For the Three Months Ended September 30, 2019 For the Nine Months Ended September 30, 2019 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial real estate: Owner occupied $ 3,548 $ 35 $ 3,891 $ 107 Non-owner occupied 7,796 60 6,426 179 Residential real estate 1,632 14 1,713 37 Commercial and industrial 1,786 20 1,992 44 Home equity lines of credit 150 - 134 1 Construction and other - - 810 - Consumer installment 2 - 2 - Total $ 14,914 $ 129 $ 14,968 $ 368 Management uses a nine first five not not not 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 payment delinquency, bankruptcy, repossession, or death, occurs to raise awareness of a possible credit quality 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 or greater. Confirmation of the appropriate risk grade is included in the review on an ongoing basis. The Company engages an external consultant to conduct loan reviews on a semiannual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and criticized relationships greater than $150,000. Detailed reviews, including plans for resolution, are performed on criticized loans on at least a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance. The primary risk of commercial and industrial loans is related to deterioration in the cash flow of the business that may 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 September 30, 2020 Pass Mention Substandard Doubtful Loans Commercial real estate: Owner occupied $ 101,389 $ 3,751 $ 2,202 $ - $ 107,342 Non-owner occupied 283,379 1,761 25,372 - 310,512 Multifamily 39,622 - - - 39,622 Residential real estate 218,450 270 3,517 - 222,237 Commercial and industrial 253,197 2,620 2,496 - 258,313 Home equity lines of credit 113,884 - 1,339 - 115,223 Construction and other 60,613 - - - 60,613 Consumer installment 10,522 - 12 - 10,534 Total $ 1,081,056 $ 8,402 $ 34,938 $ - $ 1,124,396 Special Total December 31, 2019 Pass Mention Substandard Doubtful Loans Commercial real estate: Owner occupied $ 95,518 $ 3,951 $ 2,917 $ - $ 102,386 Non-owner occupied 292,192 3,038 6,950 - 302,180 Multifamily 62,028 - - - 62,028 Residential real estate 231,633 420 2,745 - 234,798 Commercial and industrial 84,136 3,619 1,772 - 89,527 Home equity lines of credit 111,354 - 894 - 112,248 Construction and other 66,680 - - - 66,680 Consumer installment 14,398 - 13 - 14,411 Total $ 957,939 $ 11,028 $ 15,291 $ - $ 984,258 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 troubled debt restructurings (“TDR”), 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 September 30, 2020 Current Past Due Past Due Past Due Past Due Loans Commercial real estate: Owner occupied $ 106,416 $ 61 $ 177 $ 688 $ 926 $ 107,342 Non-owner occupied 306,800 2,379 739 594 3,712 310,512 Multifamily 39,622 - - - - 39,622 Residential real estate 219,234 1,224 342 1,437 3,003 222,237 Commercial and industrial 257,784 320 127 82 529 258,313 Home equity lines of credit 115,025 93 55 50 198 115,223 Construction and other 60,613 - - - - 60,613 Consumer installment 10,169 170 5 190 365 10,534 Total $ 1,115,663 $ 4,247 $ 1,445 $ 3,041 $ 8,733 $ 1,124,396 30-59 Days 60-89 Days 90 Days+ Total Total December 31, 2019 Current Past Due Past Due Past Due Past Due Loans Commercial real estate: Owner occupied $ 101,264 $ 64 $ - $ 1,058 $ 1,122 $ 102,386 Non-owner occupied 298,941 - - 3,239 3,239 302,180 Multifamily 62,028 - - - - 62,028 Residential real estate 232,518 1,439 34 807 2,280 234,798 Commercial and industrial 88,965 190 66 306 562 89,527 Home equity lines of credit 111,792 274 29 153 456 112,248 Construction and other 66,680 - - - - 66,680 Consumer installment 13,378 622 216 195 1,033 14,411 Total $ 975,566 $ 2,589 $ 345 $ 5,758 $ 8,692 $ 984,258 The following tables present the recorded investment in nonaccrual loans and loans past due over 89 September 30, 2020 Nonaccrual 90+ Days Past Due and Accruing Commercial real estate: Owner occupied $ 1,138 $ - Non-owner occupied 594 - Residential real estate 3,462 - Commercial and industrial 400 - Home equity lines of credit 859 - Consumer installment 237 - Total $ 6,690 $ - December 31, 2019 Nonaccrual 90+ Days Past Due and Accruing Commercial real estate: Owner occupied $ 1,162 $ - Non-owner occupied 3,289 - Residential real estate 2,576 - Commercial and industrial 946 - Home equity lines of credit 709 - Consumer installment 197 - Total $ 8,879 $ - Interest income that would have been recorded had these loans not three September 30, 2020 three December 31, 2019. not nine September 30, 2020 December 31, 2019. 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 call 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 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 ALLL within the primary segments of the loan portfolio and the activity within those segments (in thousands): For the nine months ended September 30, 2020 Allowance for Loan and Lease Losses Balance Balance December 31, 2019 Charge-offs Recoveries Provision September 30, 2020 Loans: Commercial real estate: Owner occupied $ 801 $ (50 ) $ 15 $ 337 $ 1,103 Non-owner occupied 3,382 (3,022 ) 73 4,972 5,405 Multifamily 340 - - 6 346 Residential real estate 726 (51 ) 30 666 1,371 Commercial and industrial 456 (185 ) 268 964 1,503 Home equity lines of credit 932 (54 ) 65 383 1,326 Construction and other 103 - 146 44 293 Consumer installment 28 (396 ) 12 368 12 Total $ 6,768 $ (3,758 ) $ 609 $ 7,740 $ 11,359 For the nine months ended September 30, 2019 Allowance for Loan and Lease Losses Balance Balance December 31, 2018 Charge-offs Recoveries Provision September 30, 2019 Loans: Commercial real estate: Owner occupied $ 1,315 $ (31 ) $ 3 $ (450 ) $ 837 Non-owner occupied 2,862 - - 622 3,484 Multifamily 474 - - (85 ) 389 Residential real estate 761 (361 ) 44 288 732 Commercial and industrial 969 (393 ) 55 (242 ) 389 Home equity lines of credit 820 (156 ) 28 249 941 Construction and other 100 - 57 (52 ) 105 Consumer installment 127 (110 ) 7 100 124 Total $ 7,428 $ (1,051 ) $ 194 $ 430 $ 7,001 For the three months ended September 30, 2020 Allowance for Loan and Lease Losses Balance Balance June 30, 2020 Charge-offs Recoveries Provision September 30, 2020 Loans: Commercial real estate: Owner occupied $ 1,038 $ - $ 1 $ 64 $ 1,103 Non-owner occupied 5,159 (3,021 ) - 3,267 5,405 Multifamily 291 - - 55 346 Residential real estate 1,167 - - 204 1,371 Commercial and industrial 1,105 (16 ) 29 385 1,503 Home equity lines of credit 1,203 - 49 74 1,326 Construction and other 236 - 111 (54 ) 293 Consumer installment 11 (6 ) 2 5 12 Total $ 10,210 $ (3,043 ) $ 192 $ 4,000 $ 11,359 For the three months ended September 30, 2019 Allowance for Loan and Lease Losses Balance Balance June 30, 2019 Charge-offs Recoveries Provision September 30, 2019 Loans: Commercial real estate: Owner occupied $ 866 $ - $ 1 $ (30 ) $ 837 Non-owner occupied 3,588 - - (104 ) 3,484 Multifamily 412 - - (23 ) 389 Residential real estate 747 (360 ) 4 341 732 Commercial and industrial 539 (38 ) 16 (128 ) 389 Home equity lines of credit 936 (18 ) 22 1 941 Construction and other 97 - 11 (3 ) 105 Consumer installment 119 (22 ) 1 26 124 Total $ 7,304 $ (438 ) $ 55 $ 80 $ 7,001 The provision fluctuations during the nine September 30, 2020 ● a $2.2 million increase in all lending categories’ qualitative factors during the second third 2020 19 ● owner occupied, non-owner occupied, and commercial and industrial loans are due to an increase in substandard rated credits. ● non-owner occupied portfolio are also due to the increase of specific reserves for two ● commercial and industrial loans are due to growth in loan volume along with an allocation for the PPP loans in the amount of $423,000. ● residential real estate loans are due to an increase in delinquent residential mortgages. ● consumer installment loans are due to a large number of student loans that were charged off earlier in the year. The provision fluctuations during the nine September 30, 2019 ● commercial and industrial loans are due to the charge-off of a large relationship of $336,000 from a previous reserve of $358,000 in the first ● residential real estate and home equity lines of credit loans are due to charge-offs and portfolio growth. ● non-owner occupied loans are due to the reclassification of a large construction loan, with a first The provision fluctuations during the three September 30, 2020 ● owner occupied, non-owner occupied, and commercial and industrial loans are due to an increase in substandard rated credits. ● residential real estate loans are due to an increase in delinquent residential mortgages. ● non-owner occupied loans are due to the increase in specific reserve and subsequent $3.0 million charge-off of the resolved asset purchased at Sheriff's Sale and booked to OREO for $7.0 million. The provision fluctuation during the three September 30, 2019 ● commercial and industrial loans and commercial real estate loans are due to decreases in volume within these portfolios during the quarter. ● residential real estate portfolio are due to a strong growth in this portfolio during the quarter. 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. See Note 10 19 Additionally, on April 7, 2020, 19 not 19, 30 19 not The following tables summarize troubled debt restructurings that did not For the Three Months Ended September 30, 2020 Number of Contracts Pre-Modification Post-Modification Term Outstanding Recorded Outstanding Recorded Troubled Debt Restructurings Modification Other Total Investment Investment Residential real estate 1 - 1 $ 115 $ 115 Commercial and industrial 1 - 1 2 2 For the Nine Months Ended September 30, 2020 Number of Contracts Pre-Modification Post-Modification Term Outstanding Recorded Outstanding Recorded Troubled Debt Restructurings Modification Other Total Investment Investment Residential real estate 3 - 3 $ 156 $ 156 Commercial and industrial 3 - 3 120 119 For the Three Months Ended September 30, 2019 Number of Contracts Pre-Modification Post-Modification Term Outstanding Recorded Outstanding Recorded Troubled Debt Restructurings Modification Other Total Investment Investment Residential real estate - 1 1 $ 38 $ 38 For the Nine Months Ended September 30, 2019 Number of Contracts Pre-Modification Post-Modification Term Outstanding Recorded Outstanding Recorded Troubled Debt Restructurings Modification Other Total Investment Investment Residential real estate 0 2 2 $ 123 $ 178 There were no three September 30, 2020 September 30, 2019, nine September 30, 2020 September 30, 2019. |