Note 4 - Loans and Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2013 |
Receivables [Abstract] | ' |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | ' |
NOTE 4 – LOANS AND ALLOWANCE FOR LOAN LOSSES |
|
Loans are comprised of the following: | | September 30, | | | December 31, | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 216,001 | | | $ | 226,022 | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | 97,929 | | | | 104,842 | | | | | | | | | | | | | | | | | |
Nonowner-occupied | | | 55,495 | | | | 52,792 | | | | | | | | | | | | | | | | | |
Construction | | | 24,169 | | | | 17,376 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 61,522 | | | | 57,239 | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Automobile | | | 40,294 | | | | 41,168 | | | | | | | | | | | | | | | | | |
Home equity | | | 17,736 | | | | 18,332 | | | | | | | | | | | | | | | | | |
Other | | | 43,067 | | | | 40,517 | | | | | | | | | | | | | | | | | |
| | | 556,213 | | | | 558,288 | | | | | | | | | | | | | | | | | |
Less: Allowance for loan losses | | | 7,266 | | | | 6,905 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loans, net | | $ | 548,947 | | | $ | 551,383 | | | | | | | | | | | | | | | | | |
|
The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2013 and 2012: |
|
30-Sep-13 | | Residential | | | Commercial | | | Commercial | | | Consumer | | | Total | | | | | |
Real Estate | Real Estate | and Industrial | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 1,192 | | | $ | 3,034 | | | $ | 1,342 | | | $ | 900 | | | $ | 6,468 | | | | | |
Provision for loan losses | | | 173 | | | | 313 | | | | 291 | | | | 56 | | | | 833 | | | | | |
Loans charged off | | | (94 | ) | | | ---- | | | | ---- | | | | (256 | ) | | | (350 | ) | | | | |
Recoveries | | | 80 | | | | 48 | | | | 14 | | | | 173 | | | | 315 | | | | | |
Total ending allowance balance | | $ | 1,351 | | | $ | 3,395 | | | $ | 1,647 | | | $ | 873 | | | $ | 7,266 | | | | | |
|
30-Sep-12 | | Residential | | | Commercial | | | Commercial | | | Consumer | | | Total | | | | | |
Real Estate | Real Estate | and Industrial | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 1,443 | | | $ | 4,369 | | | $ | 653 | | | $ | 1,062 | | | $ | 7,527 | | | | | |
Provision for loan losses | | | 257 | | | | 394 | | | | 359 | | | | 173 | | | | 1,183 | | | | | |
Loans charged-off | | | (61 | ) | | | (54 | ) | | | (429 | ) | | | (430 | ) | | | (974 | ) | | | | |
Recoveries | | | 23 | | | | 27 | | | | 159 | | | | 240 | | | | 449 | | | | | |
Total ending allowance balance | | $ | 1,662 | | | $ | 4,736 | | | $ | 742 | | | $ | 1,045 | | | $ | 8,185 | | | | | |
|
The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2013 and 2012: |
|
30-Sep-13 | | Residential | | | Commercial | | | Commercial | | | Consumer | | | Total | | | | | |
Real Estate | Real Estate | and Industrial | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 1,329 | | | $ | 3,946 | | | $ | 783 | | | $ | 847 | | | $ | 6,905 | | | | | |
Provision for loan losses | | | 318 | | | | (880 | ) | | | 823 | | | | 414 | | | | 675 | | | | | |
Loans charged off | | | (551 | ) | | | (2 | ) | | | ---- | | | | (977 | ) | | | (1,530 | ) | | | | |
Recoveries | | | 255 | | | | 331 | | | | 41 | | | | 589 | | | | 1,216 | | | | | |
Total ending allowance balance | | $ | 1,351 | | | $ | 3,395 | | | $ | 1,647 | | | $ | 873 | | | $ | 7,266 | | | | | |
|
30-Sep-12 | | Residential | | | Commercial | | | Commercial | | | Consumer | | | Total | | | | | |
Real Estate | Real Estate | and Industrial | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 1,730 | | | $ | 3,623 | | | $ | 636 | | | $ | 1,355 | | | $ | 7,344 | | | | | |
Provision for loan losses | | | 552 | | | | 2,290 | | | | (48 | ) | | | 229 | | | | 3,023 | | | | | |
Loans charged-off | | | (739 | ) | | | (1,212 | ) | | | (499 | ) | | | (1,247 | ) | | | (3,697 | ) | | | | |
Recoveries | | | 119 | | | | 35 | | | | 653 | | | | 708 | | | | 1,515 | | | | | |
Total ending allowance balance | | $ | 1,662 | | | $ | 4,736 | | | $ | 742 | | | $ | 1,045 | | | $ | 8,185 | | | | | |
|
The following table presents the balance in the allowance for loan losses and the recorded investment of loans by portfolio segment and based on impairment method as of September 30, 2013 and December 31, 2012: |
|
30-Sep-13 | | Residential | | | Commercial | | | Commercial | | | Consumer | | | Total | | | | | |
Real Estate | Real Estate | and Industrial | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Ending allowance balance attributable to loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 237 | | | $ | 1,699 | | | $ | 1,111 | | | $ | 7 | | | $ | 3,054 | | | | | |
Collectively evaluated for impairment | | | 1,114 | | | | 1,696 | | | | 536 | | | | 866 | | | | 4,212 | | | | | |
Total ending allowance balance | | $ | 1,351 | | | $ | 3,395 | | | $ | 1,647 | | | $ | 873 | | | $ | 7,266 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | | $ | 1,410 | | | $ | 11,073 | | | $ | 2,999 | | | $ | 218 | | | $ | 15,700 | | | | | |
Loans collectively evaluated for impairment | | | 214,591 | | | | 166,520 | | | | 58,523 | | | | 100,879 | | | | 540,513 | | | | | |
Total ending loans balance | | $ | 216,001 | | | $ | 177,593 | | | $ | 61,522 | | | $ | 101,097 | | | $ | 556,213 | | | | | |
|
31-Dec-12 | | Residential | | | Commercial | | | Commercial | | | Consumer | | | Total | | | | | |
Real Estate | Real Estate | and Industrial | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Ending allowance balance attributable to loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 128 | | | $ | 1,979 | | | $ | ---- | | | $ | ---- | | | $ | 2,107 | | | | | |
Collectively evaluated for impairment | | | 1,201 | | | | 1,967 | | | | 783 | | | | 847 | | | | 4,798 | | | | | |
Total ending allowance balance | | $ | 1,329 | | | $ | 3,946 | | | $ | 783 | | | $ | 847 | | | $ | 6,905 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | | $ | 827 | | | $ | 16,354 | | | $ | ---- | | | $ | 220 | | | $ | 17,401 | | | | | |
Loans collectively evaluated for impairment | | | 225,195 | | | | 158,656 | | | | 57,239 | | | | 99,797 | | | | 540,887 | | | | | |
Total ending loans balance | | $ | 226,022 | | | $ | 175,010 | | | $ | 57,239 | | | $ | 100,017 | | | $ | 558,288 | | | | | |
|
The following table presents information related to loans individually evaluated for impairment by class of loans: |
|
Nine months ended September 30, 2013 | | Unpaid | | | Recorded | | | Allowance | | | Average | | | Interest | | | Cash Basis | |
Principal | Investment | for Loan | Impaired | Income | Interest |
Balance | | Losses Allocated | Loans | Recognized | Recognized |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 732 | | | $ | 732 | | | $ | ---- | | | $ | 544 | | | $ | 25 | | | $ | 25 | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | 1,477 | | | | 1,476 | | | | ---- | | | | 1,391 | | | | 31 | | | | 31 | |
Nonowner-occupied | | | 6,699 | | | | 5,899 | | | | ---- | | | | 6,513 | | | | 267 | | | | 267 | |
Commercial and industrial | | | 1,981 | | | | 1,981 | | | | ---- | | | | 1,089 | | | | 72 | | | | 72 | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 678 | | | | 678 | | | | 237 | | | | 487 | | | | 25 | | | | 25 | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | 290 | | | | 290 | | | | 290 | | | | 73 | | | | ---- | | | | ---- | |
Nonowner-occupied | | | 3,408 | | | | 3,408 | | | | 1,409 | | | | 3,439 | | | | 94 | | | | 94 | |
Commercial and industrial | | | 1,018 | | | | 1,018 | | | | 1,111 | | | | 540 | | | | 35 | | | | 35 | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 218 | | | | 218 | | | | 7 | | | | 54 | | | | 8 | | | | 8 | |
Total | | $ | 16,501 | | | $ | 15,700 | | | $ | 3,054 | | | $ | 14,130 | | | $ | 557 | | | $ | 557 | |
|
Nine months ended September 30, 2012 | | Unpaid Principal Balance | | | Recorded | | | Allowance for Loan Losses Allocated | | | Average Impaired Loans | | | Interest Income Recognized | | | Cash Basis Interest Recognized | |
Investment |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 914 | | | $ | 774 | | | $ | ---- | | | $ | 662 | | | $ | 22 | | | $ | 22 | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | 5,557 | | | | 5,557 | | | | ---- | | | | 4,529 | | | | 23 | | | | 23 | |
Nonowner-occupied | | | 3,948 | | | | 3,048 | | | | ---- | | | | 3,657 | | | | 25 | | | | 25 | |
Construction | | | 1,713 | | | | 1,433 | | | | ---- | | | | 811 | | | | 33 | | | | 33 | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 219 | | | | 219 | | | | ---- | | | | 165 | | | | 7 | | | | 7 | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 420 | | | | 420 | | | | 128 | | | | 420 | | | | 7 | | | | 7 | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Nonowner-occupied | | | 2,737 | | | | 2,486 | | | | 2,078 | | | | 1,520 | | | | 26 | | | | 26 | |
Total | | $ | 15,508 | | | $ | 13,937 | | | $ | 2,206 | | | $ | 11,764 | | | $ | 143 | | | $ | 143 | |
|
Year ended December 31, 2012 | | Unpaid Principal Balance | | | Recorded | | | Allowance for Loan Losses Allocated | | | Average Impaired Loans | | | Interest Income Recognized | | | Cash Basis Interest Recognized | |
Investment |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 619 | | | $ | 407 | | | $ | ---- | | | $ | 493 | | | $ | ---- | | | $ | ---- | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | 5,528 | | | | 5,528 | | | | ---- | | | | 4,729 | | | | 338 | | | | 338 | |
Nonowner-occupied | | | 10,085 | | | | 8,847 | | | | ---- | | | | 4,767 | | | | 456 | | | | 456 | |
Commercial and industrial | | | 426 | | | | ---- | | | | ---- | | | | ---- | | | | ---- | | | | ---- | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 220 | | | | 220 | | | | ---- | | | | 176 | | | | 9 | | | | 9 | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 420 | | | | 420 | | | | 128 | | | | 420 | | | | 23 | | | | 23 | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Nonowner-occupied | | | 1,979 | | | | 1,979 | | | | 1,979 | | | | 1,132 | | | | 38 | | | | 38 | |
Total | | $ | 19,277 | | | $ | 17,401 | | | $ | 2,107 | | | $ | 11,717 | | | $ | 864 | | | $ | 864 | |
|
The recorded investment of a loan is its carrying value excluding accrued interest and deferred loan fees, as these amounts are immaterial. |
|
The following table presents the recorded investment of nonaccrual loans and loans past due 90 days or more and still accruing by class of loans: |
|
30-Sep-13 | | Loans Past Due | | | Nonaccrual | | | | | | | | | | | | | | | | | |
90 Days And | | | | | | | | | | | | | | | | |
Still Accruing | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 129 | | | $ | 3,130 | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | ---- | | | | 1,307 | | | | | | | | | | | | | | | | | |
Nonowner-occupied | | | ---- | | | | 52 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | ---- | | | | 22 | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Automobile | | | 2 | | | | 10 | | | | | | | | | | | | | | | | | |
Home equity | | | 38 | | | | ---- | | | | | | | | | | | | | | | | | |
Other | | | 1 | | | | ---- | | | | | | | | | | | | | | | | | |
Total | | $ | 170 | | | $ | 4,521 | | | | | | | | | | | | | | | | | |
|
31-Dec-12 | | Loans Past Due | | | Nonaccrual | | | | | | | | | | | | | | | | | |
90 Days And | | | | | | | | | | | | | | | | |
Still Accruing | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 341 | | | $ | 2,533 | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | ---- | | | | 675 | | | | | | | | | | | | | | | | | |
Nonowner-occupied | | | ---- | | | | 352 | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Automobile | | | 11 | | | | 4 | | | | | | | | | | | | | | | | | |
Home equity | | | ---- | | | | 62 | | | | | | | | | | | | | | | | | |
Other | | | 7 | | | | ---- | | | | | | | | | | | | | | | | | |
Total | | $ | 359 | | | $ | 3,626 | | | | | | | | | | | | | | | | | |
|
Nonaccrual loans and loans past due 90 days or more and still accruing include both smaller balance homogenous loans that are collectively evaluated for impairment and individually classified as impaired loans. |
|
The following table presents the aging of the recorded investment of past due loans by class of loans: |
|
30-Sep-13 | | 30-59 | | | 60-89 | | | 90 Days | | | Total | | | Loans Not | | | Total | |
Days | Days | Or More | Past Due | Past Due |
Past Due | Past Due | Past Due | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 3,891 | | | $ | 1,861 | | | $ | 2,870 | | | $ | 8,622 | | | $ | 207,379 | | | $ | 216,001 | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | 722 | | | | 212 | | | | 841 | | | | 1,775 | | | | 96,154 | | | | 97,929 | |
Nonowner-occupied | | | ---- | | | | ---- | | | | 52 | | | | 52 | | | | 55,443 | | | | 55,495 | |
Construction | | | ---- | | | | ---- | | | | ---- | | | | ---- | | | | 24,169 | | | | 24,169 | |
Commercial and industrial | | | 303 | | | | ---- | | | | 20 | | | | 323 | | | | 61,199 | | | | 61,522 | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Automobile | | | 523 | | | | 163 | | | | 9 | | | | 695 | | | | 39,599 | | | | 40,294 | |
Home equity | | | 192 | | | | 59 | | | | 38 | | | | 289 | | | | 17,447 | | | | 17,736 | |
Other | | | 533 | | | | 187 | | | | 1 | | | | 721 | | | | 42,346 | | | | 43,067 | |
Total | | $ | 6,164 | | | $ | 2,482 | | | $ | 3,831 | | | $ | 12,477 | | | $ | 543,736 | | | $ | 556,213 | |
|
31-Dec-12 | | 30-59 | | | 60-89 | | | 90 Days | | | Total | | | Loans Not | | | Total | |
Days | Days | Or More | Past Due | Past Due |
Past Due | Past Due | Past Due | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 5,525 | | | $ | 1,033 | | | $ | 2,797 | | | $ | 9,355 | | | $ | 216,667 | | | $ | 226,022 | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | 753 | | | | 111 | | | | 675 | | | | 1,539 | | | | 103,303 | | | | 104,842 | |
Nonowner-occupied | | | ---- | | | | ---- | | | | 352 | | | | 352 | | | | 52,440 | | | | 52,792 | |
Construction | | | ---- | | | | ---- | | | | ---- | | | | ---- | | | | 17,376 | | | | 17,376 | |
Commercial and industrial | | | 202 | | | | ---- | | | | ---- | | | | 202 | | | | 57,037 | | | | 57,239 | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Automobile | | | 905 | | | | 138 | | | | 13 | | | | 1,056 | | | | 40,112 | | | | 41,168 | |
Home equity | | | 112 | | | | 37 | | | | 62 | | | | 211 | | | | 18,121 | | | | 18,332 | |
Other | | | 1,066 | | | | 162 | | | | 7 | | | | 1,235 | | | | 39,282 | | | | 40,517 | |
Total | | $ | 8,563 | | | $ | 1,481 | | | $ | 3,906 | | | $ | 13,950 | | | $ | 544,338 | | | $ | 558,288 | |
|
Troubled Debt Restructurings: |
|
A troubled debt restructuring (“TDR”) occurs when the Company has agreed to a loan modification in the form of a concession for a borrower who is experiencing financial difficulty. All TDR's are considered to be impaired. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a reduction in the contractual principal and interest payments of the loan; or short-term interest-only payment terms. |
|
The Company has allocated reserves for a portion of its TDR's to reflect the fair values of the underlying collateral or the present value of the concessionary terms granted to the customer. |
|
The following table presents the types of TDR loan modifications by class of loans as of September 30, 2013 and December 31, 2012: |
|
| | TDR’s | | | TDR’s Not | | | Total | | | | | | | | | | | | | |
Performing to | Performing to | TDR’s | | | | | | | | | | | | |
Modified Terms | Modified Terms | | | | | | | | | | | | | |
30-Sep-13 | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | | | | | | | | | | | | | | | | | | | | | | |
Interest only payments | | $ | 249 | | | $ | ---- | | | $ | 249 | | | | | | | | | | | | | |
Rate reduction | | | ---- | | | | 426 | | | | 426 | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
Interest only payments | | | ---- | | | | 579 | | | | 579 | | | | | | | | | | | | | |
Rate reduction | | | ---- | | | | 261 | | | | 261 | | | | | | | | | | | | | |
Maturity extension at lower stated rate than market rate | | | 174 | | | | ---- | | | | 174 | | | | | | | | | | | | | |
Nonowner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
Interest only payments | | | 8,652 | | | | ---- | | | | 8,652 | | | | | | | | | | | | | |
Reduction of principal and interest payments | | | 655 | | | | ---- | | | | 655 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | | | | | | | | | | | | | | | | | | | | | | |
Maturity extension at lower stated rate than market rate | | | 218 | | | | ---- | | | | 218 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total TDR’s | | $ | 9,948 | | | $ | 1,266 | | | $ | 11,214 | | | | | | | | | | | | | |
|
| | TDR’s | | | TDR’s Not | | | Total | | | | | | | | | | | | | |
Performing to | Performing to | TDR’s | | | | | | | | | | | | |
Modified Terms | Modified Terms | | | | | | | | | | | | | |
31-Dec-12 | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | | | | | | | | | | | | | | | | | | | | | | |
Interest only payments | | $ | ---- | | | $ | 180 | | | $ | 180 | | | | | | | | | | | | | |
Rate reduction | | | 420 | | | | ---- | | | | 420 | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
Interest only payments | | | ---- | | | | 675 | | | | 675 | | | | | | | | | | | | | |
Rate reduction | | | 440 | | | | ---- | | | | 440 | | | | | | | | | | | | | |
Maturity extension at lower stated rate than market rate | | | 191 | | | | ---- | | | | 191 | | | | | | | | | | | | | |
Reduction of principal and interest payments | | | 4,222 | | | | ---- | | | | 4,222 | | | | | | | | | | | | | |
Nonowner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
Interest only payments | | | 9,856 | | | | 300 | | | | 10,156 | | | | | | | | | | | | | |
Reduction of principal and interest payments | | | 670 | | | | ---- | | | | 670 | | | | | | | | | | | | | |
Total TDR’s | | $ | 15,799 | | | $ | 1,155 | | | $ | 16,954 | | | | | | | | | | | | | |
|
During the three and nine months ended September 30, 2013, the TDR’s described above decreased the provision expense and the allowance for loan losses by $39 and $272, respectively, with no corresponding charge-offs. This was largely due to a $503 reduction in specific reserves on a commercial real estate loan based on an updated impairment analysis of collateral during the second quarter of 2013. This decrease in reserves was partially offset by a $275 recovery during the first quarter of 2013 on a previously charged-off commercial real estate loan that had been classified as a TDR at December 31, 2012. During the year ended December 31, 2012, the TDR’s described above increased the allowance for loan losses by $2,169, resulting in charge-offs of $536. |
|
At September 30, 2013, the balance in TDR loans decreased $5,740, or 33.9%, from year-end 2012. The decrease was largely due to the removal of one commercial real estate loan from TDR status during the second quarter of 2013. This previously reported TDR loan, for which there was no principal forgiveness, totaled $4,222 at December 31, 2012. The loan paid as agreed under the modified terms through maturity in April, 2013. During the three months ended June 30, 2013, the Bank re-underwrote and re-modified the loan at terms that were considered to be at market for loans with comparable risk. Management expects the borrower will continue to perform under the re-modified terms based on the borrower’s past history of performance and the overall cash flows of the borrower. Based on the terms of the re-modification, the loan no longer meets the criteria for a troubled debt restructuring and, as such, was removed from TDR status at June 30, 2013 and is no longer evaluated individually for impairment. During the three and nine months ended September 30, 2013 and 2012, no other loans were removed from TDR status as a result of a re-modification. Further reducing the TDR balance from year-end 2012 were principal payments of $1,140 received on one commercial real estate loan during the first nine months of 2013 and a $300 payoff of another commercial real estate loan during the first quarter of 2013. At September 30, 2013 and December 31, 2012, a total of 89% and 93% of the Company’s TDR’s were performing according to their modified terms, respectively. The Company allocated $1,560 and $2,107 in reserves to customers whose loan terms have been modified in TDR’s as of September 30, 2013 and December 31, 2012, respectively. At September 30, 2013, the Company had $126 in commitments to lend additional amounts to customers with outstanding loans that are classified as TDR’s, as compared to $109 at December 31, 2012. |
|
The following table presents the pre- and post-modification balances of TDR loan modifications by class of loans that occurred during the nine months ended September 30, 2013 and 2012: |
|
| | TDR’s | | | TDR’s Not | | | | | | | | | |
Performing to Modified Terms | Performing to Modified Terms | | | | | | | | |
Nine months ended September 30, 2013 | | Pre-Modification Recorded Investment | | | Post-Modification Recorded Investment | | | Pre-Modification Recorded Investment | | | Post-Modification Recorded Investment | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | | | | | | | | | | | | | | | | | | | | | | |
Interest only payments | | $ | 249 | | | $ | 249 | | | $ | ---- | | | $ | ---- | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | | | | | | | | | | | | | | | | | | | | | | |
Maturity extension at lower stated rate than market rate | | | 218 | | | | 218 | | | | ---- | | | | ---- | | | | | | | | | |
Total TDR’s | | $ | 467 | | | $ | 467 | | | $ | ---- | | | $ | ---- | | | | | | | | | |
|
| | TDR’s | | | TDR’s Not | | | | | | | | | |
Performing to Modified Terms | Performing to Modified Terms | | | | | | | | |
Nine months ended September 30, 2012 | | Pre-Modification Recorded Investment | | | Post-Modification Recorded Investment | | | Pre-Modification Recorded Investment | | | Post-Modification Recorded Investment | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
Reduction of principal and interest payments | | $ | 4,308 | | | $ | 4,266 | | | $ | ---- | | | $ | ---- | | | | | | | | | |
Nonowner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
Reduction of principal and interest payments | | | 686 | | | | 676 | | | | ---- | | | | ---- | | | | | | | | | |
Total TDR’s | | $ | 4,994 | | | $ | 4,942 | | | $ | ---- | | | $ | ---- | | | | | | | | | |
|
As of September 30, 2013, all of the Company’s loans that were restructured during the nine months ended September 30, 2013 were performing in accordance with their modified terms. Furthermore, there were no TDR’s described above at September 30, 2013 that experienced any payment defaults within twelve months following their loan modification. A default is considered to have occurred once the TDR is past due 90 days or more or it has been placed on nonaccrual. TDR loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The loans modified during the nine months ended September 30, 2013 increased the provision expense and the allowance for loan losses by $7, with no corresponding charge-offs during those nine months. As a result, at September 30, 2013, the Company had an allocation of reserves totaling $7 to customers whose loan terms have been modified during the first nine months of 2013 described above. |
|
Credit Quality Indicators: |
|
The Company 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. These risk categories are represented by a loan grading scale from 1 through 10. The Company analyzes loans individually with a higher credit risk rating and groups these loans into categories called “criticized” and “classified" assets. The Company considers its criticized assets to be loans that are graded 8 and its classified assets to be loans that are graded 9 through 10. The Company's risk categories are reviewed at least annually on loans that have aggregate borrowing amounts that meet or exceed $500. |
|
The Company uses the following definitions for its criticized loan risk ratings: |
|
Special Mention (Loan Grade 8). Loans classified as special mention indicate considerable risk due to deterioration of repayment (in the earliest stages) due to potential weak primary repayment source, or payment delinquency. These loans will be under constant supervision, are not classified and do not expose the institution to sufficient risks to warrant classification. These deficiencies should be correctable within the normal course of business, although significant changes in company structure or policy may be necessary to correct the deficiencies. These loans are considered bankable assets with no apparent loss of principal or interest envisioned. The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted. Credits that are defined as a troubled debt restructuring should be graded no higher than special mention until they have been reported as performing over one year after restructuring. |
|
The Company uses the following definitions for its classified loan risk ratings: |
|
Substandard (Loan Grade 9). Loans classified as substandard represent very high risk, serious delinquency, nonaccrual, or unacceptable credit. Repayment through the primary source of repayment is in jeopardy due to the existence of one or more well defined weaknesses and the collateral pledged may inadequately protect collection of the loans. Loss of principal is not likely if weaknesses are corrected, although financial statements normally reveal significant weakness. Loans are still considered collectible, although loss of principal is more likely than with special mention loan grade 8 loans. Collateral liquidation is considered likely to satisfy debt. |
|
Doubtful (Loan Grade 10). Loans classified as doubtful display a high probability of loss, although the amount of actual loss at the time of classification is undetermined. This should be a temporary category until such time that actual loss can be identified, or improvements made to reduce the seriousness of the classification. These loans exhibit all substandard characteristics with the addition that weaknesses make collection or liquidation in full highly questionable and improbable. This classification consists of loans where the possibility of loss is high after collateral liquidation based upon existing facts, market conditions, and value. Loss is deferred until certain important and reasonable specific pending factors which may strengthen the credit can be more accurately determined. These factors may include proposed acquisitions, liquidation procedures, capital injection, receipt of additional collateral, mergers, or refinancing plans. A doubtful classification for an entire credit should be avoided when collection of a specific portion appears highly probable with the adequately secured portion graded substandard. |
|
Criticized and classified loans will mostly consist of commercial and industrial and commercial real estate loans. The Company considers its loans that do not meet the criteria for a criticized and classified asset rating as pass rated loans, which will include loans graded from 1 (Prime) to 7 (Watch). All commercial loans are categorized into a risk category either at the time of origination or reevaluation date. As of September 30, 2013 and December 31, 2012, and based on the most recent analysis performed, the risk category of commercial loans by class of loans is as follows: |
|
30-Sep-13 | | | | | | | | | | | | | | | | | | | | |
| | Pass | | | Criticized | | | Classified | | | Total | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | $ | 85,768 | | | $ | 8,847 | | | $ | 3,314 | | | $ | 97,929 | | | | | | | | | |
Nonowner-occupied | | | 45,723 | | | | 5,733 | | | | 4,039 | | | | 55,495 | | | | | | | | | |
Construction | | | 23,163 | | | | ---- | | | | 1,006 | | | | 24,169 | | | | | | | | | |
Commercial and industrial | | | 57,264 | | | | 578 | | | | 3,680 | | | | 61,522 | | | | | | | | | |
Total | | $ | 211,918 | | | $ | 15,158 | | | $ | 12,039 | | | $ | 239,115 | | | | | | | | | |
|
31-Dec-12 | | | | | | | | | | | | | | | | | | | | |
| | Pass | | | Criticized | | | Classified | | | Total | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Owner-occupied | | $ | 87,614 | | | $ | 14,057 | | | $ | 3,171 | | | $ | 104,842 | | | | | | | | | |
Nonowner-occupied | | | 39,627 | | | | 2,171 | | | | 10,994 | | | | 52,792 | | | | | | | | | |
Construction | | | 16,276 | | | | ---- | | | | 1,100 | | | | 17,376 | | | | | | | | | |
Commercial and industrial | | | 47,226 | | | | 4,793 | | | | 5,220 | | | | 57,239 | | | | | | | | | |
Total | | $ | 190,743 | | | $ | 21,021 | | | $ | 20,485 | | | $ | 232,249 | | | | | | | | | |
|
The Company also obtains the credit scores of its borrowers upon origination (if available by the credit bureau), but the scores are not updated. The Company focuses mostly on the performance and repayment ability of the borrower as an indicator of credit risk and does not consider a borrower's credit score to be a significant influence in the determination of a loan's credit risk grading. |
|
The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. Nonperforming loans are defined as loans that are past due 90 days and still accruing or loans that have been placed on nonaccrual. For residential and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment of residential and consumer loans by class of loans based on repayment activity as of September 30, 2013 and December 31, 2012: |
|
30-Sep-13 | | Consumer | | | | | | | | | | | | |
| | | Automobile | | | Home | | | Other | | | Residential | | | Total | | | | |
Equity | Real Estate | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Performing | | $ | 40,282 | | | $ | 17,698 | | | $ | 43,066 | | | $ | 212,742 | | | $ | 313,788 | | | | |
Nonperforming | | | 12 | | | | 38 | | | | 1 | | | | 3,259 | | | | 3,310 | | | | |
Total | | $ | 40,294 | | | $ | 17,736 | | | $ | 43,067 | | | $ | 216,001 | | | $ | 317,098 | | | | |
|
31-Dec-12 | | Consumer | | | | | | | | | | | | |
| | | Automobile | | | Home Equity | | | Other | | | Residential | | | Total | | | | |
Real Estate | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Performing | | $ | 41,153 | | | $ | 18,270 | | | $ | 40,510 | | | $ | 223,148 | | | $ | 323,081 | | | | |
Nonperforming | | | 15 | | | | 62 | | | | 7 | | | | 2,874 | | | | 2,958 | | | | |
Total | | $ | 41,168 | | | $ | 18,332 | | | $ | 40,517 | | | $ | 226,022 | | | $ | 326,039 | | | | |
|
The Company, through its subsidiaries, grants residential, consumer, and commercial loans to customers located primarily in the southeastern areas of Ohio as well as the western counties of West Virginia. Approximately 5.11% of total loans were unsecured at September 30, 2013, up from 4.87% at December 31, 2012. |