Loan Portfolio | 3 Months Ended |
Mar. 31, 2015 |
Loan Portfolio | Note G – Loan Portfolio |
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Loans receivable consisted of the following as of the dates indicated: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2015 | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Originated | | | Acquired | | | Total | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 581,688 | | | $ | 53,801 | | | $ | 635,489 | | | | | | | | | | | | | | | | | |
Home equity | | | 62,796 | | | | 5,742 | | | | 68,538 | | | | | | | | | | | | | | | | | |
Commercial | | | 241,299 | | | | 71,226 | | | | 312,525 | | | | | | | | | | | | | | | | | |
Construction | | | 38,436 | | | | 1,425 | | | | 39,861 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 924,219 | | | | 132,194 | | | | 1,056,413 | | | | | | | | | | | | | | | | | |
Commercial and municipal loans | | | 120,771 | | | | 12,257 | | | | 133,028 | | | | | | | | | | | | | | | | | |
Consumer loans | | | 6,790 | | | | 1,513 | | | | 8,303 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 1,051,780 | | | | 145,964 | | | | 1,197,744 | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (9,088 | ) | | | — | | | | (9,088 | ) | | | | | | | | | | | | | | | | |
Deferred loan origination costs, net | | | 3,991 | | | | — | | | | 3,991 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable, net | | $ | 1,046,683 | | | $ | 145,964 | | | $ | 1,192,647 | | | | | | | | | | | | | | | | | |
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| | December 31, 2014 | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Originated | | | Acquired | | | Total | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 592,386 | | | $ | 53,304 | | | $ | 645,690 | | | | | | | | | | | | | | | | | |
Home equity | | | 63,176 | | | | 6,027 | | | | 69,203 | | | | | | | | | | | | | | | | | |
Commercial | | | 235,640 | | | | 77,377 | | | | 313,017 | | | | | | | | | | | | | | | | | |
Construction | | | 34,988 | | | | 1,457 | | | | 36,445 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 926,190 | | | | 138,165 | | | | 1,064,355 | | | | | | | | | | | | | | | | | |
Commercial and municipal loans | | | 125,161 | | | | 13,414 | | | | 138,575 | | | | | | | | | | | | | | | | | |
Consumer loans | | | 7,438 | | | | 1,712 | | | | 9,150 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 1,058,789 | | | | 153,291 | | | | 1,212,080 | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (9,269 | ) | | | — | | | | (9,269 | ) | | | | | | | | | | | | | | | | |
Deferred loan origination costs, net | | | 4,034 | | | | — | | | | 4,034 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable, net | | $ | 1,053,554 | | | $ | 153,291 | | | $ | 1,206,845 | | | | | | | | | | | | | | | | | |
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The following tables set forth information regarding the allowance for loan losses by portfolio segment as of and for the periods ending on the dates indicated: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Real Estate | | | | | | | | | | | | | |
(Dollars in thousands) | | Conventional | | | Commercial | | | Construction | | | Commercial | | | Consumer | | | Unallocated | | | Total | |
| and Home | and Municipal |
March 31, 2015 | Equity | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance, December 31, 2014 | | $ | 4,763 | | | $ | 2,724 | | | $ | 991 | | | $ | 635 | | | $ | 86 | | | $ | 70 | | | $ | 9,269 | |
Charge-offs | | | (135 | ) | | | — | | | | — | | | | (247 | ) | | | (66 | ) | | | — | | | | (448 | ) |
Recoveries | | | 5 | | | | — | | | | — | | | | 6 | | | | 51 | | | | — | | | | 62 | |
(Benefit) provision | | | (52 | ) | | | (392 | ) | | | 113 | | | | 151 | | | | 5 | | | | 380 | | | | 205 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance, March 31, 2015 | | $ | 4,581 | | | $ | 2,332 | | | $ | 1,104 | | | $ | 545 | | | $ | 76 | | | $ | 450 | | | $ | 9,088 | |
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Acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance, December 31, 2014 | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Charge-offs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Recoveries | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Provision (benefit) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance, March 31, 2015 | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 150 | | | $ | 3 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 153 | |
Collectively evaluated for impairment | | | 4,431 | | | | 2,329 | | | | 1,104 | | | | 545 | | | | 76 | | | | 450 | | | | 8,935 | |
Acquired loans (Discounts related to Credit Quality) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
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Total allowance for loan losses ending balance, March 31, 2015 | | $ | 4,581 | | | $ | 2,332 | | | $ | 1,104 | | | $ | 545 | | | $ | 76 | | | $ | 450 | | | $ | 9,088 | |
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Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 5,722 | | | $ | 5,613 | | | $ | 455 | | | $ | 661 | | | $ | — | | | $ | — | | | $ | 12,451 | |
Collectively evaluated for impairment | | | 638,762 | | | | 235,686 | | | | 37,981 | | | | 120,110 | | | | 6,790 | | | | — | | | | 1,039,329 | |
Acquired loans (Discounts related to Credit Quality) | | | 59,543 | | | | 71,226 | | | | 1,425 | | | | 12,257 | | | | 1,513 | | | | — | | | | 145,964 | |
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Total loans ending balance, March 31, 2015 | | $ | 704,027 | | | $ | 312,525 | | | $ | 39,861 | | | $ | 133,028 | | | $ | 8,303 | | | $ | — | | | $ | 1,197,744 | |
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| | Real Estate | | | | | | | | | | | | | |
(Dollars in thousands) | | Conventional | | | Commercial | | | Construction | | | Commercial | | | Consumer | | | Unallocated | | | Total | |
| and | and Municipal |
December 31, 2014 | Home Equity | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance, December 31, 2013 | | $ | 5,385 | | | $ | 2,143 | | | $ | 353 | | | $ | 1,561 | | | $ | 75 | | | $ | 240 | | | $ | 9,757 | |
Charge-offs | | | (681 | ) | | | (533 | ) | | | — | | | | (445 | ) | | | (219 | ) | | | — | | | | (1,878 | ) |
Recoveries | | | 314 | | | | 1 | | | | — | | | | 57 | | | | 113 | | | | — | | | | 485 | |
(Benefit) provision | | | (255 | ) | | | 1,113 | | | | 638 | | | | (538 | ) | | | 117 | | | | (170 | ) | | | 905 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance, December 31, 2014 | | $ | 4,763 | | | $ | 2,724 | | | $ | 991 | | | $ | 635 | | | $ | 86 | | | $ | 70 | | | $ | 9,269 | |
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Acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance, December 31, 2013 | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Charge-offs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Recoveries | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Provision (benefit) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
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Ending balance, December 31, 2014 | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 50 | | | $ | 17 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 67 | |
Collectively evaluated for impairment | | | 4,713 | | | | 2,707 | | | | 991 | | | | 635 | | | | 86 | | | | 70 | | | | 9,202 | |
Acquired loans (Discounts related to Credit Quality) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total allowance for loan losses ending balance, December 31, 2014 | | $ | 4,763 | | | $ | 2,724 | | | $ | 991 | | | $ | 635 | | | $ | 86 | | | $ | 70 | | | $ | 9,269 | |
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Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 5,965 | | | $ | 8,110 | | | $ | 1,163 | | | $ | 880 | | | $ | — | | | $ | — | | | $ | 16,118 | |
Collectively evaluated for impairment | | | 649,597 | | | | 227,530 | | | | 33,825 | | | | 124,281 | | | | 7,438 | | | | — | | | | 1,042,671 | |
Acquired loans (Discounts related to Credit Quality) | | | 59,331 | | | | 77,377 | | | | 1,457 | | | | 13,414 | | | | 1,712 | | | | — | | | | 153,291 | |
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Total loans ending balance, December 31, 2014 | | $ | 714,893 | | | $ | 313,017 | | | $ | 36,445 | | | $ | 138,575 | | | $ | 9,150 | | | $ | — | | | $ | 1,212,080 | |
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The following tables set forth information regarding nonaccrual loans and past-due loans as of the dates indicated: |
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| | March 31, 2015 | | | | | | | | | |
(Dollars in thousands) | | 30-59 Days | | | 60-89 Days | | | 90 Days or | | | Total Past | | | Nonaccrual | | | | | | | | | |
More | Due | Loans | | | | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 3,041 | | | $ | 241 | | | $ | 1,225 | | | $ | 4,507 | | | $ | 1,993 | | | | | | | | | |
Home equity | | | 434 | | | | 59 | | | | 125 | | | | 618 | | | | 125 | | | | | | | | | |
Commercial | | | 3,064 | | | | 583 | | | | 583 | | | | 4,230 | | | | 2,089 | | | | | | | | | |
Construction | | | 27 | | | | — | | | | — | | | | 27 | | | | — | | | | | | | | | |
Commercial and municipal | | | 36 | | | | 83 | | | | 273 | | | | 392 | | | | 324 | | | | | | | | | |
Consumer | | | 11 | | | | 2 | | | | 13 | | | | 26 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 6,613 | | | $ | 968 | | | $ | 2,219 | | | $ | 9,800 | | | $ | 4,531 | | | | | | | | | |
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Acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 450 | | | $ | 654 | | | $ | 922 | | | $ | 2,026 | | | $ | 1,046 | | | | | | | | | |
Commercial | | | 655 | | | | 236 | | | | 697 | | | | 1,588 | | | | 1,780 | | | | | | | | | |
Commercial and municipal | | | — | | | | 10 | | | | 405 | | | | 415 | | | | 405 | | | | | | | | | |
Consumer | | | 27 | | | | 14 | | | | — | | | | 41 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,132 | | | $ | 914 | | | $ | 2,024 | | | $ | 4,070 | | | $ | 3,231 | | | | | | | | | |
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| | December 31, 2014 | | | | | | | | | |
(Dollars in thousands) | | 30-59 Days | | | 60-89 Days | | | 90 Days or | | | Total Past | | | Nonaccrual | | | | | | | | | |
More | Due | Loans | | | | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 2,639 | | | $ | 810 | | | $ | 1,080 | | | $ | 4,529 | | | $ | 1,577 | | | | | | | | | |
Home equity | | | 60 | | | | 31 | | | | 181 | | | | 272 | | | | 181 | | | | | | | | | |
Commercial | | | 1,683 | | | | 365 | | | | 672 | | | | 2,720 | | | | 2,290 | | | | | | | | | |
Construction | | | — | | | | 28 | | | | — | | | | 28 | | | | — | | | | | | | | | |
Commercial and municipal | | | 304 | | | | 48 | | | | 330 | | | | 682 | | | | 659 | | | | | | | | | |
Consumer | | | 34 | | | | 6 | | | | — | | | | 40 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 4,720 | | | $ | 1,288 | | | $ | 2,263 | | | $ | 8,271 | | | $ | 4,707 | | | | | | | | | |
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Acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 907 | | | $ | 589 | | | $ | 352 | | | $ | 1,848 | | | $ | 849 | | | | | | | | | |
Commercial | | | 545 | | | | 1,107 | | | | 671 | | | | 2,323 | | | | 1,636 | | | | | | | | | |
Construction | | | — | | | | — | | | | 15 | | | | 15 | | | | 15 | | | | | | | | | |
Commercial and municipal | | | 1 | | | | 415 | | | | — | | | | 416 | | | | 120 | | | | | | | | | |
Consumer | | | 37 | | | | 15 | | | | — | | | | 52 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,490 | | | $ | 2,126 | | | $ | 1,038 | | | $ | 4,654 | | | $ | 2,620 | | | | | | | | | |
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Loans past due 90 days or more and still accruing interest was $76 thousand as of March 31, 2015. There were no loans past 90 days and still accruing as of December 31, 2014. |
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Troubled Debt Restructurings |
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The following tables present the recorded investment in troubled debt restructured (“TDR”) loans as of March 31, 2015 and December 31, 2014 based on payment performance status: |
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| | March 31, 2015 | | | | | | | | | |
| | Real Estate | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Conventional | | | Commercial | | | Construction | | | Commercial | | | Total | | | | | | | | | |
Performing | | $ | 3,302 | | | $ | 2,911 | | | $ | 455 | | | $ | 56 | | | $ | 6,724 | | | | | | | | | |
Non-performing | | | 1,052 | | | | 2,019 | | | | — | | | | 406 | | | | 3,477 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 4,354 | | | $ | 4,930 | | | $ | 455 | | | $ | 462 | | | $ | 10,201 | | | | | | | | | |
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| | December 31, 2014 | | | | | | | | | |
| | Real Estate | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Conventional | | | Commercial | | | Construction | | | Commercial | | | Total | | | | | | | | | |
Performing | | $ | 3,359 | | | $ | 4,183 | | | $ | 1,148 | | | $ | 101 | | | $ | 8,791 | | | | | | | | | |
Non-performing | | | 882 | | | | 1,015 | | | | — | | | | 358 | | | | 2,255 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 4,241 | | | $ | 5,198 | | | $ | 1,148 | | | $ | 459 | | | $ | 11,046 | | | | | | | | | |
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TDR loans are considered impaired and are included in the impaired loan disclosures in this footnote. |
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During the three month period ending March 31, 2015, certain loan modifications were executed that constituted TDRs. Substantially all of these modifications included one or a combination of the following: (1) an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; (2) temporary reduction in the interest rate; or (3) change in scheduled payment amount. |
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The following table presents pre-modification balance information on how loans were modified as TDRs during the three months ended March 31, 2015: |
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(Dollars in thousands) | | Extended | | | Combination of | | | Combination of | | | Interest Rate | | | Total | | | | | | | | | |
Maturity | Payments, Rate | Interest Only | | | | | | | | |
| And Maturity | Payments and | | | | | | | | |
| | Maturity | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 80 | | | $ | 160 | | | $ | 243 | | | $ | — | | | $ | 483 | | | | | | | | | |
Commercial and municipal | | | — | | | | — | | | | — | | | | 7 | | | | 7 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total TDRs | | $ | 80 | | | $ | 160 | | | $ | 243 | | | $ | 7 | | | $ | 490 | | | | | | | | | |
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The following table presents pre-modification balance information on how loans were modified as TDRs during the 12 months ended December 31, 2014: |
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(Dollars in thousands) | | Extended | | | Combination of | | | Combination of | | | Combination of | | | Other (a) | | | Total | | | | | |
Maturity | Payments, Rate | Interest Only | Interest Rate, | | | | |
| And Maturity | Payments and | Maturity and | | | | |
| | Maturity | Reamortized | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | — | | | $ | 516 | | | $ | 619 | | | $ | 122 | | | $ | — | | | $ | 1,257 | | | | | |
Commercial | | | 211 | | | | 210 | | | | — | | | | — | | | | 570 | | | | 991 | | | | | |
Construction | | | — | | | | — | | | | 95 | | | | — | | | | — | | | | 95 | | | | | |
Commercial and municipal | | | — | | | | — | | | | — | | | | — | | | | 35 | | | | 35 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total TDRs | | $ | 211 | | | $ | 726 | | | $ | 714 | | | $ | 122 | | | $ | 605 | | | $ | 2,378 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
(a) | Other includes covenant modifications, forbearance and/or other modifications. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following table summarizes TDRs that occurred during the period indicated: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended March 31, 2015 | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Number | | | Pre- | | | Post- | | | | | | | | | | | | | | | | | |
of Loans | Modification | Modification | | | | | | | | | | | | | | | | |
| Outstanding | Outstanding | | | | | | | | | | | | | | | | |
| Recorded | Recorded | | | | | | | | | | | | | | | | |
| Investment | Investment | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | | 3 | | | $ | 483 | | | $ | 483 | | | | | | | | | | | | | | | | | |
Commercial and municipal | | | 1 | | | | 7 | | | | 7 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 4 | | | $ | 490 | | | $ | 490 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
At March 31, 2015, there were specific loan loss reserves of $4 thousand related to TDRs that occurred during the three month period ended March 31, 2015. There were no TDRs for which there was a payment default during the three month period ending March 31, 2015, which occurred within 12 months following the date of the restructuring. Loans are considered to be in payment default once they are greater than 30 days contractually past due under the modified terms. |
|
Information about loans that meet the definition of an impaired loan in ASC 310-10-35, “Receivables-Overall-Subsequent Measurement,” is as follows as of and for the three months ended March 31, 2015: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Recorded | | | Unpaid | | | Related | | | Average | | | Interest | | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | | | | | | | | |
| Balance | For Credit | Investment | Recognized | | | | | | | | |
| | Losses | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 4,775 | | | $ | 5,252 | | | $ | — | | | $ | 4,959 | | | $ | 46 | | | | | | | | | |
Home equity | | | 174 | | | | 234 | | | | — | | | | 181 | | | | — | | | | | | | | | |
Commercial | | | 5,411 | | | | 6,187 | | | | — | | | | 5,741 | | | | 52 | | | | | | | | | |
Construction | | | 455 | | | | 476 | | | | — | | | | 1,006 | | | | 13 | | | | | | | | | |
Commercial and municipal | | | 661 | | | | 712 | | | | — | | | | 672 | | | | 2 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired with no related allowance | | $ | 11,476 | | | $ | 12,861 | | | $ | — | | | $ | 12,559 | | | $ | 113 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 773 | | | $ | 855 | | | $ | 150 | | | $ | 776 | | | $ | 5 | | | | | | | | | |
Commercial | | | 202 | | | | 202 | | | | 3 | | | | 203 | | | | 1 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired with an allowance recorded | | $ | 975 | | | $ | 1,057 | | | $ | 153 | | | $ | 979 | | | $ | 6 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 5,548 | | | $ | 6,107 | | | $ | 150 | | | $ | 5,735 | | | $ | 51 | | | | | | | | | |
Home equity | | | 174 | | | | 234 | | | | — | | | | 181 | | | | — | | | | | | | | | |
Commercial | | | 5,613 | | | | 6,389 | | | | 3 | | | | 5,944 | | | | 53 | | | | | | | | | |
Construction | | | 455 | | | | 476 | | | | — | | | | 1,006 | | | | 13 | | | | | | | | | |
Commercial and municipal | | | 661 | | | | 712 | | | | — | | | | 672 | | | | 2 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 12,451 | | | $ | 13,918 | | | $ | 153 | | | $ | 13,538 | | | $ | 119 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
Information about loans that meet the definition of an impaired loan in ASC 310-10-35 is as follows as of and for the year ended December 31, 2014: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Recorded | | | Unpaid | | | Related | | | Average | | | Interest | | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | | | | | | | | |
| Balance | | Investment | Recognized | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 5,447 | | | $ | 6,028 | | | $ | — | | | $ | 5,735 | | | $ | 342 | | | | | | | | | |
Home equity | | | 181 | | | | 264 | | | | — | | | | 232 | | | | 5 | | | | | | | | | |
Commercial | | | 7,383 | | | | 8,151 | | | | — | | | | 8,093 | | | | 379 | | | | | | | | | |
Construction | | | 1,163 | | | | 1,185 | | | | — | | | | 1,233 | | | | 53 | | | | | | | | | |
Commercial and municipal | | | 880 | | | | 1,204 | | | | — | | | | 1,118 | | | | 77 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired with no related allowance | | $ | 15,054 | | | $ | 16,832 | | | $ | — | | | $ | 16,411 | | | $ | 856 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 337 | | | $ | 370 | | | $ | 50 | | | $ | 546 | | | $ | 17 | | | | | | | | | |
Commercial | | | 727 | | | | 727 | | | | 17 | | | | 1,539 | | | | 32 | | | | | | | | | |
Commercial and municipal | | | — | | | | — | | | | — | | | | 350 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired with an allowance recorded | | $ | 1,064 | | | $ | 1,097 | | | $ | 67 | | | $ | 2,435 | | | $ | 49 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conventional | | $ | 5,784 | | | $ | 6,398 | | | $ | 50 | | | $ | 6,281 | | | $ | 359 | | | | | | | | | |
Home equity | | | 181 | | | | 264 | | | | — | | | | 232 | | | | 5 | | | | | | | | | |
Commercial | | | 8,110 | | | | 8,878 | | | | 17 | | | | 9,632 | | | | 411 | | | | | | | | | |
Construction | | | 1,163 | | | | 1,185 | | | | — | | | | 1,233 | | | | 53 | | | | | | | | | |
Commercial and municipal | | | 880 | | | | 1,204 | | | | — | | | | 1,468 | | | | 77 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 16,118 | | | $ | 17,929 | | | $ | 67 | | | $ | 18,846 | | | $ | 905 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following tables present a summary of credit impaired loans acquired through the merger with The Nashua Bank as of: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2015 | | | December 31, 2014 | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Commercial | | | Commercial | | | | | | | | | | | | | | | | | | | | | |
Real Estate | Real Estate | | | | | | | | | | | | | | | | | | | | |
and Commercial | and Commercial | | | | | | | | | | | | | | | | | | | | |
and Municipal | and Municipal | | | | | | | | | | | | | | | | | | | | |
Contractually required payments receivable | | $ | 952 | | | $ | 971 | | | | | | | | | | | | | | | | | | | | | |
Nonaccretable difference | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flows expected to be collected | | | 952 | | | | 971 | | | | | | | | | | | | | | | | | | | | | |
Accretable yield | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value of purchased credit impaired loans acquired | | $ | 952 | | | $ | 971 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
The following tables present a summary of credit impaired loans acquired through the merger with Central Financial Corporation: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2015 | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Commercial | | | Conventional | | | | | | | | | | | | | | | | | | | | | |
Real Estate | Real Estate | | | | | | | | | | | | | | | | | | | | |
and Commercial | | | | | | | | | | | | | | | | | | | | | |
and Municipal | | | | | | | | | | | | | | | | | | | | | |
Contractually required payments receivable | | $ | 970 | | | $ | 796 | | | | | | | | | | | | | | | | | | | | | |
Nonaccretable difference | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flows expected to be collected | | | 970 | | | | 796 | | | | | | | | | | | | | | | | | | | | | |
Accretable yield | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value of purchased credit impaired loans acquired | | $ | 970 | | | $ | 796 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2014 | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Commercial | | | Conventional | | | | | | | | | | | | | | | | | | | | | |
Real Estate | Real Estate | | | | | | | | | | | | | | | | | | | | |
and Commercial | | | | | | | | | | | | | | | | | | | | | |
and Municipal | | | | | | | | | | | | | | | | | | | | | |
Contractually required payments receivable | | $ | 983 | | | $ | 800 | | | | | | | | | | | | | | | | | | | | | |
Nonaccretable difference | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flows expected to be collected | | | 983 | | | | 800 | | | | | | | | | | | | | | | | | | | | | |
Accretable yield | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value of purchased credit impaired loans acquired | | $ | 983 | | | $ | 800 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following tables present the Company’s loans by risk ratings as of the dates indicated: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2015 | | | | | |
| | Real Estate | | | | | | | | | | | | | | |
(Dollars in thousands) | | Conventional | | | Commercial | | | Construction | | | Commercial | | | Consumer | | | Total | | | | | |
and Home | and Municipal | | | | |
Equity | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | — | | | $ | 200,546 | | | $ | 22,861 | | | $ | 96,308 | | | $ | — | | | $ | 319,715 | | | | | |
Special mention | | | — | | | | 8,905 | | | | 31 | | | | 916 | | | | — | | | | 9,852 | | | | | |
Substandard | | | 5,469 | | | | 10,918 | | | | 1,313 | | | | 417 | | | | — | | | | 18,117 | | | | | |
Loans not formally rated | | | 639,015 | | | | 20,930 | | | | 14,231 | | | | 23,130 | | | | 6,790 | | | | 704,096 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 644,484 | | | $ | 241,299 | | | $ | 38,436 | | | $ | 120,771 | | | $ | 6,790 | | | $ | 1,051,780 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | — | | | $ | 60,398 | | | $ | 916 | | | $ | 10,074 | | | $ | — | | | $ | 71,388 | | | | | |
Special mention | | | — | | | | 1,681 | | | | — | | | | — | | | | — | | | | 1,681 | | | | | |
Substandard | | | 765 | | | | 7,483 | | | | 384 | | | | 1,699 | | | | — | | | | 10,331 | | | | | |
Loans not formally rated | | | 58,778 | | | | 1,664 | | | | 125 | | | | 484 | | | | 1,513 | | | | 62,564 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 59,543 | | | $ | 71,226 | | | $ | 1,425 | | | $ | 12,257 | | | $ | 1,513 | | | $ | 145,964 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2014 | | | | | |
| | Real Estate: | | | | | | | | | | | | | | |
(Dollars in thousands) | | Conventional | | | Commercial | | | Construction | | | Commercial | | | Consumer | | | Total | | | | | |
and Home | and Municipal | | | | |
Equity | | | | | |
Originated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | — | | | $ | 205,158 | | | $ | 19,798 | | | $ | 99,705 | | | $ | — | | | $ | 324,661 | | | | | |
Special mention | | | — | | | | 2,952 | | | | 35 | | | | 850 | | | | — | | | | 3,837 | | | | | |
Substandard | | | 4,790 | | | | 11,944 | | | | 2,384 | | | | 359 | | | | — | | | | 19,477 | | | | | |
Loans not formally rated | | | 650,772 | | | | 15,586 | | | | 12,771 | | | | 24,247 | | | | 7,438 | | | | 710,814 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 655,562 | | | $ | 235,640 | | | $ | 34,988 | | | $ | 125,161 | | | $ | 7,438 | | | $ | 1,058,789 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Grade: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | — | | | $ | 64,441 | | | $ | 924 | | | $ | 10,676 | | | $ | — | | | $ | 76,041 | | | | | |
Special mention | | | — | | | | 5,600 | | | | — | | | | 401 | | | | — | | | | 6,001 | | | | | |
Substandard | | | 863 | | | | 5,693 | | | | 389 | | | | 1,811 | | | | — | | | | 8,756 | | | | | |
Loans not formally rated | | | 58,468 | | | | 1,643 | | | | 144 | | | | 526 | | | | 1,712 | | | | 62,493 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 59,331 | | | $ | 77,377 | | | $ | 1,457 | | | $ | 13,414 | | | $ | 1,712 | | | $ | 153,291 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Credit Quality Information |
|
The Company utilizes a nine grade internal loan rating system for commercial real estate, construction and commercial loans as follows: |
|
|
| • | | Loans rated 10-37: Loans in these categories are considered “pass” rated loans with low to average risk. | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| • | | Loans rated 40: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management. | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| • | | Loans rated 50: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| • | | Loans rated 60: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| • | | Loans rated 70: Loans in this category are considered uncollectible or a loss, and of such little value that their continuance as loans is not warranted. | | | | | | | | | | | | | | | | | | | | | | | | | |
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On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans over $250 thousand. The assessment of those loans less than $250 thousand is based on the borrower’s ability to pay and not on overall risk. Additionally, the Company monitors the repayment activity for loans less than $250 thousand and if a loan becomes delinquent over 60 days past due, it is reviewed for risk and is subsequently risk rated based on available information such as ability to repay based on current cash flow conditions and workout discussions with the borrower. |
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Loan Servicing |
|
The Company recognizes as separate assets from their related loans the rights to service mortgage loans for others, either through acquisition of those rights or from the sale or securitization of loans with the servicing rights retained on those loans, based on their relative fair values. To determine the fair value of the servicing rights created, the Company uses the market prices under comparable servicing sale contracts, when available, or alternatively uses a valuation model that calculates the present value of future cash flows to determine the fair value of the servicing rights. In using this valuation method, the Company incorporates assumptions that market participants would use in estimating future net servicing income, which includes estimates of the cost of servicing loans, the discount rate, ancillary income, prepayment speeds and default rates. |
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Mortgage servicing rights are amortized in proportion to, and over the period of, estimated net servicing revenues. Refinance activities are considered in estimating the period of net servicing revenues. Impairment of mortgage servicing rights is assessed based on the fair value of those rights. Fair values are estimated using discounted cash flows based on a current market interest rate. For purposes of measuring impairment, the rights are stratified based on the interest rate risk characteristics of the underlying loans. The amount of impairment recognized is the amount by which the capitalized mortgage servicing rights for a stratum exceed their fair value. |
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|
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The balance of capitalized servicing rights, net of valuation allowances, included in other assets at March 31, 2015, was $2.1 million. The fair value of capitalized servicing rights was $3.7 million as of March 31, 2015. Servicing rights of $163 thousand were capitalized during the three months ended March 31, 2015, compared to $49 thousand for the same period in 2014. Amortization of capitalized servicing rights was $357 thousand for the three months ended March 31, 2015, compared to $152 thousand for the same period in 2014. |
|
Following is an analysis of the aggregate changes in the valuation allowance for capitalized servicing rights during the periods indicated: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
March 31, | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | 2015 | | | 2014 | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 19 | | | $ | 65 | | | | | | | | | | | | | | | | | | | | | |
Increase (decrease) | | | 44 | | | | (23 | ) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, end of period | | $ | 63 | | | $ | 42 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |