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, and consumer loans are granted. Although the Company has a diversified loan portfolio at December 31, 2020 2019, The following tables summarize the primary segments of the loan portfolio and the allowance for loan and lease losses (in thousands): December 31, 2020 Ending Loan Balance by Impairment Evaluation Individually Collectively Total Loans Loans: Commercial real estate: Owner occupied $ 1,565 $ 101,556 $ 103,121 Non-owner occupied 4,123 305,301 309,424 Multifamily - 39,562 39,562 Residential real estate 1,319 232,676 233,995 Commercial and industrial 834 231,210 232,044 Home equity lines of credit 246 112,297 112,543 Construction and other - 63,573 63,573 Consumer installment - 9,823 9,823 Total $ 8,087 $ 1,095,998 $ 1,104,085 December 31, 2019 Ending Loan Balance by 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 December 31, 2020 20 The amounts above include net deferred loan origination fees of $4.4 million and $1.3 million at December 31, 2020 December 31, 2019, December 31, 2020 December 31, 2020 Ending Allowance Balance by Impairment Evaluation Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Allocation Loans: Commercial real estate: Owner occupied $ 10 $ 1,332 $ 1,342 Non-owner occupied 371 6,446 6,817 Multifamily - 461 461 Residential real estate 20 1,663 1,683 Commercial and industrial 48 1,305 1,353 Home equity lines of credit 41 1,364 1,405 Construction and other - 378 378 Consumer installment - 20 20 Total $ 490 $ 12,969 $ 13,459 December 31, 2019 Ending Allowance Balance by Impairment Evaluation 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 Real Estate (“RRE”), Commercial and Industrial (“C&I”), Home Equity Lines of Credit (“HELOC”), Construction and Other (“Construction”), and Consumer Installment Loans. 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 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, 2020 Impaired Loans Unpaid Recorded Principal Related Investment Balance Allowance With no related allowance recorded: Commercial real estate: Owner occupied $ 1,118 $ 1,142 $ - Non-owner occupied 801 801 - Residential real estate 941 1,013 - Commercial and industrial 561 1,056 - Home equity lines of credit 80 92 - Total $ 3,501 $ 4,104 $ - With an allowance recorded: Commercial real estate: Owner occupied $ 447 $ 447 $ 10 Non-owner occupied 3,322 3,596 371 Residential real estate 378 378 20 Commercial and industrial 273 276 48 Home equity lines of credit 166 166 41 Total $ 4,586 $ 4,863 $ 490 Total: Commercial real estate: Owner occupied $ 1,565 $ 1,589 $ 10 Non-owner occupied 4,123 4,397 371 Residential real estate 1,319 1,391 20 Commercial and industrial 834 1,332 48 Home equity lines of credit 246 258 41 Total $ 8,087 $ 8,967 $ 490 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 December 31, 2020 2019, December 31, 2020 December 31, 2019, The following table presents the average balance and interest income by class, recognized on impaired loans (in thousands): As of December 31, 2020 As of December 31, 2019 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial real estate: Owner occupied $ 2,851 $ 72 $ 3,808 $ 176 Non-owner occupied 8,815 184 6,558 199 Residential real estate 1,247 52 1,626 49 Commercial and industrial 1,076 42 1,770 141 Home equity lines of credit 308 8 177 2 Construction and other - - 648 - Consumer installment - - 2 - Total $ 14,297 $ 358 $ 14,589 $ 567 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. See Note 20 19 Additionally, on April 7, 2020, 19 not 19, 30 19 not The following tables summarize troubled debt restructurings that did not December 31, 2020 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 $ 25 $ 24 Residential real estate 1 - 1 114 114 $ 139 $ 138 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 - 2 2 123 178 Home equity lines of credit 4 - 4 171 176 $ 782 $ 844 One loan with a book balance of $36,000 was restructured in 2019 December 31, 2019. December 31, 2020 2019. 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 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 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/or criticized relationships greater than $125,000. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on 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 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, 2020 Pass Mention Substandard Doubtful Loans Commercial real estate: Owner occupied $ 93,939 $ 7,084 $ 2,098 $ - $ 103,121 Non-owner occupied 258,974 983 49,467 - 309,424 Multifamily 39,562 - - - 39,562 Residential real estate 230,944 265 2,786 - 233,995 Commercial and industrial 227,765 1,800 2,479 - 232,044 Home equity lines of credit 111,208 - 1,335 - 112,543 Construction and other 58,082 - 5,491 - 63,573 Consumer installment 9,816 - 7 - 9,823 Total $ 1,030,290 $ 10,132 $ 63,663 $ - $ 1,104,085 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 292,191 3,038 6,951 - 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 14,399 - 12 - 14,411 Total $ 957,939 $ 11,028 $ 15,291 $ - $ 984,258 The increase in substandard CRE NOO loans from the prior year was mostly due to pandemic related deferrals. 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, 2020 Current Past Due Past Due Past Due Past Due Loans Commercial real estate: Owner occupied $ 102,587 $ 418 $ - $ 116 $ 534 $ 103,121 Non-owner occupied 305,613 1,844 1,373 594 3,811 309,424 Multifamily 39,562 - - - - 39,562 Residential real estate 230,996 2,364 95 540 2,999 233,995 Commercial and industrial 231,534 260 219 31 510 232,044 Home equity lines of credit 112,325 120 - 98 218 112,543 Construction and other 63,529 44 - - 44 63,573 Consumer installment 9,424 71 108 220 399 9,823 Total $ 1,095,570 $ 5,121 $ 1,795 $ 1,599 $ 8,515 $ 1,104,085 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 December 31, 2020 Nonaccrual 90+ Days Past Due and Accruing Commercial real estate: Owner occupied $ 458 $ - Non-owner occupied 3,758 - Residential real estate 2,487 - Commercial and industrial 509 - Home equity lines of credit 422 - Consumer installment 224 - Total $ 7,858 $ - 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 2020 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 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 ALLL within the primary segments of the loan portfolio and the activity within those segments (in thousands): Allowance for Loan and Lease Losses Balance Balance December 31, 2019 Charge-offs Recoveries Provision December 31, 2020 Loans: Commercial real estate: Owner occupied $ 801 $ (50 ) $ 17 $ 574 $ 1,342 Non-owner occupied 3,382 (3,022 ) 74 6,383 6,817 Multifamily 340 - - 121 461 Residential real estate 726 (62 ) 42 977 1,683 Commercial and industrial 456 (245 ) 294 848 1,353 Home equity lines of credit 932 (55 ) 84 444 1,405 Construction and other 103 - 157 118 378 Consumer installment 28 (405 ) 22 375 20 Total $ 6,768 $ (3,839 ) $ 690 $ 9,840 $ 13,459 Allowance for Loan and Lease Losses Balance Balance December 31, 2018 Charge-offs Recoveries Provision December 31, 2019 Loans: Commercial real estate: Owner occupied $ 1,315 $ (32 ) $ 5 $ (487 ) $ 801 Non-owner occupied 2,862 - 12 508 3,382 Multifamily 474 - - (134 ) 340 Residential real estate 761 (361 ) 46 280 726 Commercial and industrial 969 (519 ) 82 (76 ) 456 Home equity lines of credit 820 (162 ) 32 242 932 Construction and other 100 - 74 (71 ) 103 Consumer installment 127 (735 ) 8 628 28 Total $ 7,428 $ (1,809 ) $ 259 $ 890 $ 6,768 The provision fluctuations during the year ended December 31, 2020 ● commercial real estate loans are due to large charge offs from two ● commercial and industrial loans are due to several small charge-offs that total $245,000, along with an allocation for the PPP loans in the amount of $464,000, along with additional provisions for unexpected losses resulting from the current economic environment. ● residential real estate loans are due to several small charge-offs totaling $62,000 and additional provisions for unexpected losses resulting from the current economic environment. ● consumer installment loans are due to charge-offs in the student loan portfolio totaling $383,000. The provision fluctuations during the year ended December 31, 2019 ● commercial and industrial loans are due to the charge-offs of two 2018. ● residential real estate loans are due to the charge-off of two ● commercial real estate loans are due to a small charge-off and a declining portfolio balance. ● consumer installment loans are due to charge-offs in the student loan portfolio totaling $566,000. |