Loans Receivable | 6 Months Ended |
Jun. 30, 2014 |
Receivables [Abstract] | ' |
Loans Receivable | ' |
3 | Loans Receivable | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Company’s loans receivable as of the respective dates are summarized as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | June 30, | | | December 31, | | | | | | | | | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | | | | | | | | | |
Mortgage loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Single family | | $ | 347,223 | | | $ | 341,775 | | | | | | | | | | | | | | | | | | | | | |
Multi family | | | 42,154 | | | | 37,857 | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 40,590 | | | | 44,327 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total residential real estate | | | 429,967 | | | | 423,959 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 91,310 | | | | 77,366 | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 10,235 | | | | 25,971 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | 101,545 | | | | 103,337 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal mortgage loans | | | 531,512 | | | | 527,296 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity loans | | | 84,504 | | | | 82,987 | | | | | | | | | | | | | | | | | | | | | |
Dealer auto and RV loans | | | 49,437 | | | | 46,502 | | | | | | | | | | | | | | | | | | | | | |
Other loans | | | 6,047 | | | | 6,653 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 139,988 | | | | 136,142 | | | | | | | | | | | | | | | | | | | | | |
Commercial business | | | 55,071 | | | | 52,801 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal other loans | | | 195,059 | | | | 188,943 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans receivable | | | 726,571 | | | | 716,239 | | | | | | | | | | | | | | | | | | | | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | 6,816 | | | | 6,805 | | | | | | | | | | | | | | | | | | | | | |
Deferred loan fees and net discounts | | | (2,329 | ) | | | (2,007 | ) | | | | | | | | | | | | | | | | | | | | |
Loans in process | | | 12,711 | | | | 15,805 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal | | | 17,198 | | | | 20,603 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Net loans receivable | | $ | 709,373 | | | $ | 695,636 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At June 30, 2014 and December 31, 2013, the Company conducted its business through 23 offices in Allegheny, Beaver, Butler and Lawrence counties in Pennsylvania which also serves as its primary lending area. Management does not believe it has significant concentrations of credit risk to any one group of borrowers given its underwriting and collateral requirements. |
Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Loans are segmented into the following pools: commercial business loans, commercial real estate loans, residential real estate loans and consumer loans. The Company sub-segments residential real estate loans into the following three classes: single family, construction and multi-family. Commercial real estate is sub-segmented into commercial and construction classes. The Company also sub-segments the consumer loan portfolio into the following three classes: home equity, dealer automobile and recreational vehicle (RV) and other consumer loans. Historical loss percentages for each risk category are calculated and used as the basis for calculating allowance allocations. These historical loss percentages are calculated over a three year period for all portfolio segments. Certain qualitative factors are then added to the historical loss percentages to get the adjusted factor to be applied to non classified loans. The following qualitative factors are analyzed for each portfolio segment: |
|
| • | | Levels of and trends in delinquencies and nonaccruals | | | | | | | | | | | | | | | | | | | | | | | | | |
| • | | Changes in lending policies and procedures | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Volatility of losses within each risk category | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Loans and Lending staff acquired through acquisition | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Economic trends | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Concentrations of credit | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Trends in volume and terms | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Experience depth and ability of management | | | | | | | | | | | | | | | | | | | | | | | | | |
These qualitative factors are reviewed each quarter and adjusted based upon relevant changes within the portfolio. During the first six months of 2014, the qualitative factors for trends in volume and terms remained unchanged from December 31, 2013. |
In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer loans. The Company has historically experienced very low levels of consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans. |
|
Loans by Segment |
The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the statement of financial condition date. The Company considers the allowance for loan losses of $6.8 million adequate to cover loan losses inherent in the loan portfolio, at June 30, 2014. The following tables present by portfolio segment, the changes in the allowance for loan losses for the three and six month periods ended June 30, 2014 and 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended June 30, 2014 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | Commercial | | | | | | | | | | | | | | | | | |
| | Commercial | | | Real Estate | | | Consumer | | | Residential | | | Unallocated | | | Total | | | | | |
| | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Beginning balance | | $ | 535 | | | $ | 1,832 | | | $ | 1,045 | | | $ | 2,786 | | | $ | 520 | | | $ | 6,718 | | | | | |
Charge-offs | | | — | | | | — | | | | 59 | | | | 26 | | | | — | | | | 85 | | | | | |
Recoveries | | | 10 | | | | — | | | | 23 | | | | — | | | | — | | | | 33 | | | | | |
Provision | | | (74 | ) | | | (96 | ) | | | 63 | | | | 384 | | | | (127 | ) | | | 150 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 471 | | | $ | 1,736 | | | $ | 1,072 | | | $ | 3,144 | | | $ | 393 | | | $ | 6,816 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended June 30, 2013 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | Commercial | | | | | | | | | | | | | | | | | |
| | Commercial | | | Real Estate | | | Consumer | | | Residential | | | Unallocated | | | Total | | | | | |
| | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Beginning balance | | $ | 556 | | | $ | 2,197 | | | $ | 1,064 | | | $ | 2,389 | | | $ | 515 | | | $ | 6,721 | | | | | |
Charge-offs | | | — | | | | 7 | | | | 107 | | | | 1 | | | | 2 | | | | 117 | | | | | |
Recoveries | | | — | | | | — | | | | 49 | | | | — | | | | — | | | | 49 | | | | | |
Provision | | | (13 | ) | | | (88 | ) | | | 56 | | | | 37 | | | | 83 | | | | 75 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 543 | | | $ | 2,102 | | | $ | 1,062 | | | $ | 2,425 | | | $ | 596 | | | $ | 6,728 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended June 30, 2014 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | Commercial | | | | | | | | | | | | | | | | | |
| | Commercial | | | Real Estate | | | Consumer | | | Residential | | | Unallocated | | | Total | | | | | |
| | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Beginning balance | | $ | 523 | | | $ | 1,723 | | | $ | 1,054 | | | $ | 2,996 | | | $ | 509 | | | $ | 6,805 | | | | | |
Charge-offs | | | — | | | | — | | | | 171 | | | | 34 | | | | — | | | | 205 | | | | | |
Recoveries | | | 103 | | | | — | | | | 53 | | | | — | | | | — | | | | 156 | | | | | |
Provision | | | (155 | ) | | | 13 | | | | 136 | | | | 182 | | | | (116 | ) | | | 60 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 471 | | | $ | 1,736 | | | $ | 1,072 | | | $ | 3,144 | | | $ | 393 | | | $ | 6,816 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended June 30, 2013 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | Commercial | | | | | | | | | | | | | | | | | |
| | Commercial | | | Real Estate | | | Consumer | | | Residential | | | Unallocated | | | Total | | | | | |
| | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Beginning balance | | $ | 550 | | | $ | 2,075 | | | $ | 1,031 | | | $ | 2,541 | | | $ | 512 | | | $ | 6,709 | | | | | |
Charge-offs | | | — | | | | 7 | | | | 253 | | | | 11 | | | | 2 | | | | 273 | | | | | |
Recoveries | | | — | | | | — | | | | 67 | | | | — | | | | — | | | | 67 | | | | | |
Provision | | | (7 | ) | | | 34 | | | | 217 | | | | (105 | ) | | | 86 | | | | 225 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 543 | | | $ | 2,102 | | | $ | 1,062 | | | $ | 2,425 | | | $ | 596 | | | $ | 6,728 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following tables present by portfolio segment, the recorded investment in loans at June 30, 2014 and December 31, 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of June 30, 2014 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | Commercial | | | | | | | | | | | | | | | | | |
| | Commercial | | | Real Estate | | | Consumer | | | Residential | | | Unallocated | | | Total | | | | | |
| | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending Balance | | $ | 558 | | | $ | 1,876 | | | $ | 1,034 | | | $ | 2,828 | | | $ | 520 | | | $ | 6,816 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: individually evaluated for impairment | | $ | 56 | | | $ | 847 | | | $ | 47 | | | $ | 401 | | | | | | | $ | 1,351 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: collectively evaluated for impairment | | $ | 415 | | | $ | 889 | | | $ | 1,025 | | | $ | 2,743 | | | $ | 393 | | | $ | 5,465 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Loans Receivable: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending Balance | | $ | 55,071 | | | $ | 101,545 | | | $ | 139,988 | | | $ | 429,967 | | | $ | — | | | $ | 726,571 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: individually evaluated for impairment | | $ | 56 | | | $ | 13,957 | | | $ | 461 | | | $ | 2,356 | | | $ | — | | | $ | 16,830 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: collectively evaluated for impairment | | $ | 55,015 | | | $ | 87,588 | | | $ | 139,527 | | | $ | 427,611 | | | $ | — | | | $ | 709,741 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | Commercial | | | | | | | | | | | | | | | | | |
| | Commercial | | | Real Estate | | | Consumer | | | Residential | | | Unallocated | | | Total | | | | | |
| | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending Balance | | $ | 523 | | | $ | 1,723 | | | $ | 1,054 | | | $ | 2,996 | | | $ | 509 | | | $ | 6,805 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: individually evaluated for impairment | | $ | 24 | | | $ | 989 | | | $ | 48 | | | $ | — | | | $ | — | | | $ | 1,061 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: collectively evaluated for impairment | | $ | 499 | | | $ | 734 | | | $ | 1,006 | | | $ | 2,996 | | | $ | 509 | | | $ | 5,744 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Loans Receivable: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending Balance | | $ | 52,801 | | | $ | 103,337 | | | $ | 136,142 | | | $ | 423,959 | | | $ | — | | | $ | 716,239 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: individually evaluated for impairment | | $ | 24 | | | $ | 14,385 | | | $ | 407 | | | $ | 2,206 | | | $ | — | | | $ | 17,022 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance: collectively evaluated for impairment | | $ | 52,777 | | | $ | 88,952 | | | $ | 135,735 | | | $ | 421,753 | | | $ | — | | | $ | 699,217 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Credit Quality Information |
The following tables represent credit exposures by internally assigned grades as of June 30, 2014 and December 31, 2013. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans. |
The Company’s internally assigned grades are as follows: |
Pass - loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. |
Special Mention - loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected. |
Substandard - loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. |
Doubtful - loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances. |
Loss - loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of June 30, 2014 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | Residential | | | Residential | | | Commercial | | | Commercial | | | Commercial | | | Total | | | | | |
Real Estate | Real Estate | Real Estate | Real Estate | | | | |
Multi - family | Construction | Commercial | Construction | | | | |
| | | | | | | | | | |
Pass | | $ | 42,154 | | | $ | 38,256 | | | $ | 78,056 | | | $ | 10,235 | | | $ | 55,032 | | | $ | 223,733 | | | | | |
Special Mention | | | — | | | | 341 | | | | 1,222 | | | | — | | | | 11 | | | | 1,574 | | | | | |
Substandard | | | — | | | | 1,993 | | | | 12,032 | | | | — | | | | 28 | | | | 14,053 | | | | | |
Doubtful | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 42,154 | | | $ | 40,590 | | | $ | 91,310 | | | $ | 10,235 | | | $ | 55,071 | | | $ | 239,360 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | Residential | | | Residential | | | Commercial | | | Commercial | | | Commercial | | | Total | | | | | |
Real Estate | Real Estate | Real Estate | Real Estate | | | | |
Multi-family | Construction | Commercial | Construction | | | | |
| | | | | | | | | | |
Pass | | $ | 37,857 | | | $ | 40,874 | | | $ | 63,532 | | | $ | 25,971 | | | $ | 52,730 | | | $ | 220,964 | | | | | |
Special Mention | | | — | | | | 382 | | | | 1,283 | | | | — | | | | 17 | | | | 1,682 | | | | | |
Substandard | | | — | | | | 3,071 | | | | 12,551 | | | | — | | | | 54 | | | | 15,676 | | | | | |
Doubtful | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 37,857 | | | $ | 44,327 | | | $ | 77,366 | | | $ | 25,971 | | | $ | 52,801 | | | $ | 238,322 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following tables present performing and nonperforming single family residential and consumer loans based on payment activity as of June 30, 2014 and December 31, 2013. Payment activity is reviewed by management on a monthly basis to determine how loans are performing. Loans are considered to be nonperforming when they become 90 days delinquent. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of June 30, 2014 | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | |
| | Residential Real Estate | | | Consumer | | | Dealer | | | Other | | | Total | | | | | | | | | |
Single Family | Home Equity | Auto and RV | Consumer | | | | | | | | |
| | | | | | | | | | | | | |
Performing | | $ | 343,873 | | | $ | 84,272 | | | $ | 49,291 | | | $ | 5,972 | | | $ | 483,408 | | | | | | | | | |
Nonperforming | | | 3,350 | | | | 232 | | | | 146 | | | | 75 | | | | 3,803 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 347,223 | | | $ | 84,504 | | | $ | 49,437 | | | $ | 6,047 | | | $ | 487,211 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | |
| | Residential Real Estate | | | Consumer | | | Dealer | | | Other | | | Total | | | | | | | | | |
Single Family | Home Equity | Auto and RV | Consumer | | | | | | | | |
| | | | | | | | | | | | | |
Performing | | $ | 338,370 | | | $ | 82,692 | | | $ | 46,364 | | | $ | 6,588 | | | $ | 474,014 | | | | | | | | | |
Nonperforming | | | 3,405 | | | | 295 | | | | 138 | | | | 65 | | | | 3,903 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 341,775 | | | $ | 82,987 | | | $ | 46,502 | | | $ | 6,653 | | | $ | 477,917 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonperforming loans also include certain loans that have been modified and classified as troubled debt restructuring (TDR) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. |
Non-performing loans, which include non-accrual loans and TDRs, were $8.9 million and $7.4 million at June 30, 2014 and December 31, 2013, respectively. The TDRs included in non-performing loans amounted to $186,000 and $368,000 at June 30, 2014 and December 31, 2013, respectively. The Company also had TDR’s that were in compliance with their modified terms of $9.3 million and $8.2 million at June 30, 2014 and December 31, 2013, respectively. The Company is not committed to lend additional funds to debtors whose loans are on non-accrual status. |
Age Analysis of Past Due Loans Receivable by Class |
The following tables are an aging analysis of the investment of past due loans receivable as of June 30, 2014 and December 31, 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | Recorded | |
Investment > |
As of June 30, 2014 | | | | | | | | | | | | | | | | | | | | 90 Days and |
| | 30-59 Days | | | 60-89 Days | | | 90 Days | | | Total Past | | | Current | | | Total Loans | | | Accruing |
Past Due | Past Due | Or Greater | Due | Receivable | |
| | | | | | | |
Residential real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Single family | | $ | 633 | | | $ | 475 | | | $ | 3,350 | | | $ | 4,458 | | | $ | 342,765 | | | $ | 347,223 | | | $ | — | |
Construction | | | — | | | | — | | | | — | | | | — | | | | 40,590 | | | | 40,590 | | | | — | |
Multi-family | | | — | | | | — | | | | — | | | | — | | | | 42,154 | | | | 42,154 | | | | — | |
Commercial Real Estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 105 | | | | 7 | | | | 5,023 | | | | 5,135 | | | | 86,175 | | | | 91,310 | | | | — | |
Construction | | | — | | | | — | | | | — | | | | — | | | | 10,235 | | | | 10,235 | | | | — | |
Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer - home equity | | | 96 | | | | 28 | | | | 124 | | | | 248 | | | | 84,256 | | | | 84,504 | | | | — | |
Consumer - dealer auto and RV | | | 497 | | | | 138 | | | | 124 | | | | 759 | | | | 48,678 | | | | 49,437 | | | | — | |
Consumer - other | | | 37 | | | | 24 | | | | 75 | | | | 136 | | | | 5,911 | | | | 6,047 | | | | — | |
Commercial | | | — | | | | | | | | 28 | | | | 28 | | | | 55,043 | | | | 55,071 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,368 | | | $ | 672 | | | $ | 8,724 | | | $ | 10,764 | | | $ | 715,807 | | | $ | 726,571 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | Recorded | |
Investment > |
As of December 31, 2013 | | | | | | | | | | | | | | | | | | | | 90 Days and |
| | 30-59 Days | | | 60-89 Days | | | 90 Days | | | Total Past | | | Current | | | Total Loans | | | Accruing |
Past Due | Past Due | Or Greater | Due | Receivable | |
| | | | | | | |
Residential real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Single family | | $ | 653 | | | $ | 319 | | | $ | 3,405 | | | $ | 4,377 | | | $ | 337,398 | | | $ | 341,775 | | | $ | — | |
Construction | | | — | | | | — | | | | — | | | | — | | | | 44,327 | | | | 44,327 | | | | — | |
Multi-family | | | — | | | | — | | | | — | | | | — | | | | 37,857 | | | | 37,857 | | | | — | |
Commercial Real Estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 53 | | | | 65 | | | | 4,787 | | | | 4,905 | | | | 72,461 | | | | 77,366 | | | | — | |
Construction | | | — | | | | — | | | | — | | | | — | | | | 25,971 | | | | 25,971 | | | | — | |
Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer - home equity | | | 156 | | | | 65 | | | | 214 | | | | 435 | | | | 82,552 | | | | 82,987 | | | | — | |
Consumer - dealer auto and RV | | | 993 | | | | 106 | | | | 136 | | | | 1,235 | | | | 45,267 | | | | 46,502 | | | | — | |
Consumer - other | | | 47 | | | | 43 | | | | 65 | | | | 155 | | | | 6,498 | | | | 6,653 | | | | — | |
Commercial | | | — | | | | — | | | | 30 | | | | 30 | | | | 52,771 | | | | 52,801 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,902 | | | $ | 598 | | | $ | 8,637 | | | $ | 11,137 | | | $ | 705,102 | | | $ | 716,239 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Impaired Loans |
Management considers commercial loans, commercial real estate loans and development loans which are 90 days or more past due to be impaired. Larger commercial loans, commercial real estate loans and development loans which are 60 days or more past due, including any troubled debt restructuring, are selected for impairment testing in accordance with GAAP. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the fair value of the impaired loan is less than the recorded investment in the loan, impairment is recognized through a provision for loan loss estimate or a charge-off to the allowance for loan losses. The Company collectively reviews all residential real estate and consumer loans for impairment. |
The following tables summarize impaired loans: |
Impaired Loans |
As of June 30, 2014 and December 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | | December 31, 2013 | | | | | |
| | Recorded | | | Unpaid | | | Related | | | Recorded | | | Unpaid | | | Related | | | | | |
Investment | Principal | Allowance | Investment | Principal | Allowance | | | | |
| Balance | | | Balance | | | | | |
| | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | $ | 2,834 | | | $ | 2,940 | | | $ | — | | | $ | 3,139 | | | $ | 3,246 | | | $ | — | | | | | |
Residential single family | | | 1,380 | | | | 1,380 | | | | — | | | | 1,356 | | | | 1,356 | | | | — | | | | | |
Residential construction | | | — | | | | — | | | | — | | | | 850 | | | | 850 | | | | — | | | | | |
Consumer loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 286 | | | | 289 | | | | — | | | | 249 | | | | 253 | | | | — | | | | | |
Dealer auto and RV | | | 24 | | | | 24 | | | | — | | | | 6 | | | | 6 | | | | — | | | | | |
| | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Commercial Real Estate | | $ | 11,123 | | | $ | 11,287 | | | $ | 847 | | | $ | 11,246 | | | $ | 11,409 | | | $ | 989 | | | | | |
Commercial Business | | | 56 | | | | 56 | | | | 56 | | | | 24 | | | | 24 | | | | 24 | | | | | |
Residential Single Family | | | 976 | | | | 976 | | | | 401 | | | | — | | | | — | | | | — | | | | | |
Consumer Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 148 | | | | 148 | | | | 44 | | | | 149 | | | | 149 | | | | 45 | | | | | |
Dealer auto and RV | | | 3 | | | | 3 | | | | 3 | | | | 3 | | | | 3 | | | | 3 | | | | | |
| | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Commercial Real Estate | | | 13,957 | | | | 14,227 | | | | 847 | | | | 14,385 | | | | 14,655 | | | | 989 | | | | | |
Commercial Business | | | 56 | | | | 56 | | | | 56 | | | | 24 | | | | 24 | | | | 24 | | | | | |
Residential single family | | | 2,356 | | | | 2,356 | | | | 401 | | | | 1,356 | | | | 1,356 | | | | — | | | | | |
Residential construction | | | — | | | | — | | | | — | | | | 850 | | | | 850 | | | | — | | | | | |
Consumer | | | 461 | | | | 464 | | | | 47 | | | | 407 | | | | 411 | | | | 48 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 16,830 | | | $ | 17,103 | | | $ | 1,351 | | | $ | 17,022 | | | $ | 17,296 | | | $ | 1,061 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | | Three months ended | | | | | | | | | | | | | |
June 30, 2014 | June 30, 2013 | | | | | | | | | | | | |
| | Average | | | Interest | | | Average | | | Interest | | | | | | | | | | | | | |
Recorded | Income | Recorded | Income | | | | | | | | | | | | |
Investment | Recognized | Investment | Recognized | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Commercial Real Estate | | $ | 2,978 | | | $ | 13 | | | $ | 5,279 | | | $ | 50 | | | | | | | | | | | | | |
Commercial business loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential single family | | | 1,364 | | | | — | | | | 1,358 | | | | 1 | | | | | | | | | | | | | |
Residential construction loans | | | — | | | | — | | | | 944 | | | | 11 | | | | | | | | | | | | | |
Consumer Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 273 | | | | 3 | | | | 190 | | | | 2 | | | | | | | | | | | | | |
Dealer auto and RV | | | 25 | | | | — | | | | 10 | | | | 1 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | | 11,145 | | | | 113 | | | | 8,420 | | | | 134 | | | | | | | | | | | | | |
Commercial business loans | | | 56 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential single family | | | 976 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential construction loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 148 | | | | 3 | | | | 176 | | | | 2 | | | | | | | | | | | | | |
Dealer auto and RV | | | 3 | | | | — | | | | 4 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Commercial Real Estate | | $ | 14,123 | | | $ | 126 | | | $ | 13,699 | | | $ | 184 | | | | | | | | | | | | | |
Commercial business loans | | | 56 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential single family | | | 2,340 | | | | — | | | | 1,358 | | | | 1 | | | | | | | | | | | | | |
Residential construction loans | | | — | | | | — | | | | 944 | | | | 11 | | | | | | | | | | | | | |
Consumer | | | 449 | | | | 6 | | | | 380 | | | | 5 | | | | | | | | | | | | | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six months ended June 30, | | | Six months ended June 30, | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | |
| | Average | | | Interest | | | Average | | | Interest | | | | | | | | | | | | | |
Recorded | Income | Recorded | Income | | | | | | | | | | | | |
Investment | Recognized | Investment | Recognized | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Commercial Real Estate | | $ | 3,025 | | | $ | 27 | | | $ | 5,207 | | | $ | 120 | | | | | | | | | | | | | |
Commercial business loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential single family | | | 1,360 | | | | 1 | | | | 1,359 | | | | 4 | | | | | | | | | | | | | |
Residential construction loans | | | — | | | | — | | | | 898 | | | | 18 | | | | | | | | | | | | | |
Consumer Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 262 | | | | 7 | | | | 170 | | | | 6 | | | | | | | | | | | | | |
Dealer auto and RV | | | 26 | | | | 1 | | | | 11 | | | | 2 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | | 11,179 | | | | 226 | | | | 8,180 | | | | 258 | | | | | | | | | | | | | |
Commercial business loans | | | 56 | | | | 1 | | | | — | | | | — | | | | | | | | | | | | | |
Residential single family | | | 488 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential construction loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 149 | | | | 4 | | | | 175 | | | | 5 | | | | | | | | | | | | | |
Dealer auto and RV | | | 3 | | | | — | | | | 4 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Commercial Real Estate | | $ | 14,204 | | | $ | 253 | | | $ | 13,387 | | | $ | 378 | | | | | | | | | | | | | |
Commercial business loans | | | 56 | | | | 1 | | | | — | | | | — | | | | | | | | | | | | | |
Residential single family | | | 1,848 | | | | 1 | | | | 1,359 | | | | 4 | | | | | | | | | | | | | |
Residential construction loans | | | — | | | | — | | | | 898 | | | | 18 | | | | | | | | | | | | | |
Consumer | | | 440 | | | | 12 | | | | 360 | | | | 13 | | | | | | | | | | | | | |
Nonaccrual Loans |
Loans are considered nonaccrual upon reaching 90 days delinquent, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed in nonaccrual status, previously accrued but unpaid interest is deducted from interest income. |
|
On the following table are the loans receivable on nonaccrual status as of June 30, 2014 and December 31, 2013. The balances are presented by class of loans: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | June 30, | | | December 31, | | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 28 | | | $ | 30 | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | | 5,023 | | | | 4,787 | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 3,350 | | | | 3,405 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer - Home Equity | | | 124 | | | | 214 | | | | | | | | | | | | | | | | | | | | | |
Consumer - Dealer auto and RV | | | 124 | | | | 136 | | | | | | | | | | | | | | | | | | | | | |
Consumer - other | | | 75 | | | | 65 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 8,724 | | | $ | 8,637 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Modifications |
The Company’s loan portfolio also includes TDRs, where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. |
When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination. |
The following table includes the recorded investment and number of modifications for modified loans, as of June 30, 2014 and December 31, 2013. The Company reports the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months ended | | | | | |
| | June 30, 2014 | | | | | |
| | | | | Pre-Modification | | | Post-Modification Recorded Investment | | | | | |
| | | | | Outstanding | | | | | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Maturity Date | | | Deferral of | | | | | | | | | | | |
| | Contracts | | | Investment | | | Extension | | | Principal Payments | | | Other | | | Total | | | | | |
| | | | | | | | | | |
Troubled Debt Restructurings | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 1 | | | $ | 46 | | | $ | 46 | | | $ | — | | | $ | — | | | $ | 46 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Troubled Debt Restructurings | | | 1 | | | $ | 46 | | | $ | 46 | | | $ | — | | | $ | — | | | $ | 46 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months ended | | | | | |
| | June 30, 2013 | | | | | |
| | | | | Pre-Modification | | | Post-Modification Recorded Investment | | | | | |
| | | | | Outstanding | | | | | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Maturity Date | | | Deferral of | | | | | | | | | | | |
| | Contracts | | | Investment | | | Extension | | | Principal Payments | | | Other | | | Total | | | | | |
| | | | | | | | | | |
Troubled Debt Restructurings | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 11 | | | $ | 2,288 | | | $ | 26 | | | $ | — | | | $ | 2,262 | | | $ | 2,288 | | | | | |
Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 3 | | | | 15 | | | | 15 | | | | — | | | | — | | | | 15 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Troubled Debt Restructurings | | | 14 | | | $ | 2,303 | | | $ | 41 | | | $ | — | | | $ | 2,262 | | | $ | 2,303 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | For the Six Months ended | | | | | |
| | June 30, 2014 | | | | | |
| | | | | Pre-Modification | | | Post-Modification Recorded Investment | | | | | |
| | | | | Outstanding | | | | | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Maturity Date | | | Deferral of | | | | | | | | | | | |
| | Contracts | | | Investment | | | Extension | | | Principal Payments | | | Other | | | Total | | | | | |
| | | | | | | | | | |
Troubled Debt Restructurings | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 1 | | | $ | 57 | | | $ | — | | | $ | — | | | $ | 57 | | | $ | 57 | | | | | |
Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 2 | | | | 57 | | | | 46 | | | | | | | | 11 | | | | 57 | | | | | |
Dealer auto and RV | | | 2 | | | | 24 | | | | 7 | | | | — | | | | 17 | | | | 24 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Troubled Debt Restructurings | | | 5 | | | $ | 138 | | | $ | 53 | | | $ | — | | | $ | 85 | | | $ | 138 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollar amounts in thousands) | | | | | | | | | | | | | | | | | | | | | | |
| | For the Six Months ended | | | | | |
| | June 30, 2013 | | | | | |
| | | | | | | | Post-Modification Recorded Investment | | | | | |
| | | | | Pre-Modification | | | | | | | | | | | | | | | | | |
| | | | | Outstanding | | | | | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Maturity Date | | | Deferral of | | | | | | | | | | | |
| | Contracts | | | Investment | | | Extension | | | Principal Payments | | | Other | | | Total | | | | | |
| | | | | | | | | | |
Troubled Debt Restructurings | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 12 | | | $ | 2,331 | | | $ | 26 | | | $ | — | | | $ | 2,305 | | | $ | 2,331 | | | | | |
Consumer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 6 | | | | 91 | | | | 91 | | | | — | | | | — | | | | 91 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Troubled Debt Restructurings | | | 18 | | | $ | 2,422 | | | $ | 117 | | | $ | — | | | $ | 2,305 | | | $ | 2,422 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Company did not have any TDRs that defaulted subsequent to their modification during the periods reported. |