Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 6. Loans Receivable and Related Allowance for Loan Losses (Dollar amounts in thousands) March 31, December 31, 2016 2015 Mortgage loans on real estate: Residential first mortgages $ 150,996 $ 139,305 Home equity loans and lines of credit 87,231 87,410 Commercial real estate 127,139 129,691 365,366 356,406 Other loans: Commercial business 67,150 71,948 Consumer 6,660 6,742 73,810 78,690 Total loans, gross 439,176 435,096 Less allowance for loan losses 5,352 5,205 Total loans, net $ 433,824 $ 429,891 Included in total loans above are net deferred fees and costs of $ 1.2 835,000 The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of March 31, 2016: (Dollar amounts in thousands) Impaired Loans with Specific Allowance For the three months ended As of March 31, 2016 March 31, 2016 Cash Basis Unpaid Average Interest Income Interest Principal Recorded Related Recorded Recognized Recognized Balance Investment Allowance Investment in Period in Period Residential first mortgages $ 78 $ 78 $ 19 $ 124 $ 1 $ 1 Home equity and lines of credit - - - - - - Commercial real estate - - - 47 - - Commercial business 629 629 78 776 - - Consumer - - - - - - Total $ 707 $ 707 $ 97 $ 947 $ 1 $ 1 Impaired Loans with No Specific Allowance For the three months ended As of March 31, 2016 March 31, 2016 Cash Basis Unpaid Average Interest Income Interest Principal Recorded Recorded Recognized Recognized Balance Investment Investment in Period in Period Residential first mortgages $ 91 $ 58 $ 29 $ 2 $ 2 Home equity and lines of credit - - - - - Commercial real estate 1,256 857 801 1 1 Commercial business 75 75 76 - - Consumer - - - - - Total $ 1,422 $ 990 $ 906 $ 3 $ 3 (Dollar amounts in thousands) Impaired Loans with Specific Allowance For the year ended As of December 31, 2015 December 31, 2015 Cash Basis Unpaid Average Interest Income Interest Principal Recorded Related Recorded Recognized Recognized Balance Investment Allowance Investment in Period in Period Residential first mortgages $ 169 $ 169 $ 29 $ 170 $ 6 $ 6 Home equity and lines of credit - - - - - - Commercial real estate 93 93 5 1,613 12 9 Commercial business 923 923 76 1,641 112 99 Consumer - - - - - - Total $ 1,185 $ 1,185 $ 110 $ 3,424 $ 130 $ 114 Impaired Loans with No Specific Allowance For the year ended As of December 31, 2015 December 31, 2015 Cash Basis Unpaid Average Interest Income Interest Principal Recorded Recorded Recognized Recognized Balance Investment Investment in Period in Period Residential first mortgages $ - $ - $ 45 $ 7 $ 7 Home equity and lines of credit - - - - - Commercial real estate 1,145 746 1,069 49 40 Commercial business 76 76 66 3 3 Consumer - - - - - Total $ 1,221 $ 822 $ 1,180 $ 59 $ 50 The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of March 31, 2015: (Dollar amounts in thousands) Impaired Loans with Specific Allowance For the three months As of March 31, 2015 ended March 31, 2015 Cash Basis Unpaid Average Interest Income Interest Principal Recorded Related Recorded Recognized Recognized Balance Investment Allowance Investment in Period in Period Residential first mortgages $ 170 $ 170 $ 27 $ 170 $ 2 $ 2 Home equity and lines of credit - - - - - - Commercial real estate 3,550 2,609 252 2,642 - - Commercial business 2,559 2,559 506 2,591 - - Consumer - - - - - - Total $ 6,279 $ 5,338 $ 785 $ 5,403 $ 2 $ 2 Impaired Loans with No Specific Allowance For the three months As of March 31, 2015 ended March 31, 2015 Cash Basis Unpaid Average Interest Income Interest Principal Recorded Recorded Recognized Recognized Balance Investment Investment in Period in Period Residential first mortgages $ 111 $ 111 $ 112 $ - $ - Home equity and lines of credit - - - - - Commercial real estate 1,208 809 832 5 5 Commercial business 51 51 51 2 2 Consumer - - - - - Total $ 1,370 $ 971 $ 995 $ 7 $ 7 Unpaid principal balance includes any loans that have been partially charged off but not forgiven. Accrued interest is not included in the recorded investment in loans presented above or in the tables that follow based on the amounts not being material. Troubled debt restructurings (TDR). The Corporation has certain loans that have been modified in order to maximize collection of loan balances. If, for economic or legal reasons related to the customer’s financial difficulties, management grants a concession compared to the original terms and conditions of the loan that it would not have otherwise considered, the modified loan is classified as a TDR. Concessions related to TDRs generally do not include forgiveness of principal balances. The Corporation generally does not extend additional credit to borrowers with loans classified as TDRs. At March 31, 2016 and December 31, 2015, the Corporation had $ 414,000 835,000 19,000 63,000 During the three month periods ended March 31, 2016 and 2015, the Corporation did not modify any loans as TDRs. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. During the three month periods ended March 31, 2016 and 2015, the Corporation did not have any loans which were modified as TDRs for which there was a payment default within twelve months following the modification. Credit Quality Indicators. Management categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. Commercial real estate and commercial business loans not identified as impaired are evaluated as risk rated pools of loans utilizing a risk rating practice that is supported by a quarterly special asset review. In this review process, strengths and weaknesses are identified, evaluated and documented for each criticized and classified loan and borrower, strategic action plans are developed, risk ratings are confirmed and the loan’s performance status is reviewed. Management has determined certain portions of the loan portfolio to be homogeneous in nature and assigns like reserve factors for the following loan pool types: residential real estate, home equity loans and lines of credit, and consumer installment and personal lines of credit. The reserve allocation for risk rated loan pools is developed by applying the following factors: Historic: Management utilizes a computer model to develop the historical net charge-off experience which is used to formulate the assumptions employed in the migration analysis applied to estimate losses in the portfolio. Outstanding balance and charge-off information are input into the model and historical loss migration rate assumptions are developed to apply to pass, special mention, substandard and doubtful risk rated loans. A twelve-quarter rolling weighted-average is utilized to estimate probable incurred losses in the portfolios. Qualitative : Qualitative adjustment factors for pass, special mention, substandard and doubtful ratings are developed and applied to risk rated loans to allow for: quality of lending policies and procedures; national and local economic and business conditions; changes in the nature and volume of the portfolio; experiences, ability and depth of lending management; changes in trends, volume and severity of past due, nonaccrual and classified loans and loss and recovery trends; quality of loan review systems; concentrations of credit and other external factors. Management uses the following definitions for risk ratings: Pass: Loans classified as pass typically exhibit good payment performance and have underlying borrowers with acceptable financial trends where repayment capacity is evident. These borrowers typically would have a sufficient cash flow that would allow them to weather an economic downturn and the value of any underlying collateral could withstand a moderate degree of depreciation due to economic conditions. Special Mention: Loans classified as special mention are characterized by potential weaknesses that could jeopardize repayment as contractually agreed. These loans may exhibit adverse trends such as increasing leverage, shrinking profit margins and/or deteriorating cash flows. These borrowers would inherently be more vulnerable to the application of economic pressures. Substandard: Loans classified as substandard exhibit weaknesses that are well-defined to the point that repayment is jeopardized. Typically, the Corporation is no longer adequately protected by both the apparent net worth and repayment capacity of the borrower. Doubtful: Loans classified as doubtful have advanced to the point that collection or liquidation in full, on the basis of currently ascertainable facts, conditions and value, is highly questionable or improbable. (Dollar amounts in thousands) Special Not Rated Pass Mention Substandard Doubtful Total March 31, 2016: Residential first mortgages $ 149,875 $ - $ - $ 1,121 $ - $ 150,996 Home equity and lines of credit 86,696 - - 535 - 87,231 Commercial real estate - 123,014 51 4,074 - 127,139 Commercial business - 60,268 5,933 949 - 67,150 Consumer 6,660 - - - - 6,660 Total $ 243,231 $ 183,282 $ 5,984 $ 6,679 $ - $ 439,176 December 31, 2015: Residential first mortgages $ 138,096 $ - $ - $ 1,209 $ - $ 139,305 Home equity and lines of credit 87,015 - - 395 - 87,410 Commercial real estate - 125,539 88 4,064 - 129,691 Commercial business - 69,740 942 1,266 - 71,948 Consumer 6,742 - - - - 6,742 Total $ 231,853 $ 195,279 $ 1,030 $ 6,934 $ - $ 435,096 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. (Dollar amounts in thousands) Performing Nonperforming Accruing Accruing Accruing Accruing Loans Not 30-59 Days 60-89 Days 90 Days + Total Past Due Past Due Past Due Past Due Nonaccrual Loans March 31, 2016: Residential first mortgages $ 148,824 $ 1,022 $ 29 $ - $ 1,121 $ 150,996 Home equity and lines of credit 86,493 204 - 55 479 87,231 Commercial real estate 126,124 146 - 12 857 127,139 Commercial business 66,432 14 - - 704 67,150 Consumer 6,632 28 - - - 6,660 Total loans $ 434,505 $ 1,414 $ 29 $ 67 $ 3,161 $ 439,176 December 31, 2015: Residential first mortgages $ 136,924 $ 1,097 $ 75 $ - $ 1,209 $ 139,305 Home equity and lines of credit 86,691 308 16 - 395 87,410 Commercial real estate 128,945 - - - 746 129,691 Commercial business 71,229 - - - 719 71,948 Consumer 6,723 19 - - - 6,742 Total loans $ 430,512 $ 1,424 $ 91 $ - $ 3,069 $ 435,096 (Dollar amounts in thousands) Not 30-59 Days 60-89 Days 90 Days + Total Past Due Past Due Past Due Past Due Loans March 31, 2016: Residential first mortgages $ 75 $ 78 $ - $ 968 $ 1,121 Home equity and lines of credit 13 - - 466 479 Commercial real estate 601 - - 256 857 Commercial business 675 - - 29 704 Consumer - - - - - Total loans $ 1,364 $ 78 $ - $ 1,719 $ 3,161 December 31, 2015: Residential first mortgages $ 75 $ - $ 79 $ 1,055 $ 1,209 Home equity and lines of credit 14 - - 381 395 Commercial real estate 623 - - 123 746 Commercial business 690 - - 29 719 Consumer - - - - - Total loans $ 1,402 $ - $ 79 $ 1,588 $ 3,069 An allowance for loan losses (ALL) is maintained to absorb probable incurred losses from the loan portfolio. The ALL 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. 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 ALL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL. (Dollar amounts in thousands) Home Equity Residential & Lines Commercial Commercial Mortgages of Credit Real Estate Business Consumer Total Three months ended March 31, 2016: Allowance for loan losses: Beginning Balance $ 1,429 $ 586 $ 2,185 $ 960 $ 45 $ 5,205 Charge-offs (33) - - - (9) (42) Recoveries - 1 4 - 3 8 Provision 181 49 (263) 202 12 181 Ending Balance $ 1,577 $ 636 $ 1,926 $ 1,162 $ 51 $ 5,352 Three months ended March 31, 2015: Allowance for loan losses: Beginning Balance $ 955 $ 543 $ 2,338 $ 1,336 $ 52 $ 5,224 Charge-offs (4) (64) - - (22) (90) Recoveries - 4 5 20 8 37 Provision 137 128 (110) 4 10 169 Ending Balance $ 1,088 $ 611 $ 2,233 $ 1,360 $ 48 $ 5,340 At March 31, 2016: Ending ALL balance attributable to loans: Individually evaluated for impairment $ 19 $ - $ - $ 78 $ - $ 97 Collectively evaluated for impairment 1,558 636 1,926 1,084 51 5,255 Total $ 1,577 $ 636 $ 1,926 $ 1,162 $ 51 $ 5,352 Total loans: Individually evaluated for impairment $ 136 $ - $ 857 $ 704 $ - $ 1,697 Collectively evaluated for impairment 150,860 87,231 126,282 66,446 6,660 437,479 Total $ 150,996 $ 87,231 $ 127,139 $ 67,150 $ 6,660 $ 439,176 At December 31, 2015: Ending ALL balance attributable to loans: Individually evaluated for impairment $ 29 $ - $ 5 $ 76 $ - $ 110 Collectively evaluated for impairment 1,400 586 2,180 884 45 5,095 Total $ 1,429 $ 586 $ 2,185 $ 960 $ 45 $ 5,205 Total loans: Individually evaluated for impairment $ 169 $ - $ 839 $ 999 $ - $ 2,007 Collectively evaluated for impairment 139,136 87,410 128,852 70,949 6,742 433,089 Total $ 139,305 $ 87,410 $ 129,691 $ 71,948 $ 6,742 $ 435,096 The allowance for loan losses is based on estimates and actual losses may vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date. |