Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 3 Loans Receivable Year end loans are summarized below: (Dollars in thousands) December 31, 2016 December 31, 2015 Loans secured by real estate: Residential real estate, including home equity $ 205,979 $ 213,951 Commercial real estate, construction & land development, and other dwellings 270,092 259,478 Commercial participations purchased 369 310 Total loans secured by real estate 476,440 473,739 Consumer 522 535 Commercial business 77,513 68,813 Government 29,529 29,062 Subtotal 584,004 572,149 Less: Net deferred loan origination fees (162 ) (174 ) Undisbursed loan funds (192 ) (77 ) Loans receivable $ 583,650 $ 571,898 (Dollars in thousands) Residential Real Consumer Commercial Real Commercial Commercial Government Total The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the twelve months ended December 31, 2016: Allowance for loan losses: Beginning Balance $ 1,711 $ 38 $ 4,422 $ 14 $ 698 $ 70 $ 6,953 Charge-offs (529 ) (33 ) - - - - (562 ) Recoveries 2 9 - - 28 - 39 Provisions 1,226 20 (120 ) (14 ) 170 (14 ) 1,268 Ending Balance $ 2,410 $ 34 $ 4,302 $ - $ 896 $ 56 $ 7,698 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the twelve months ended December 31, 2015: Allowance for loan losses: Beginning Balance $ 1,878 $ 17 $ 3,645 $ 13 $ 733 $ 75 $ 6,361 Charge-offs (239 ) (30 ) (59 ) - (77 ) - (405 ) Recoveries 9 2 22 - 10 - 43 Provisions 63 49 814 1 32 (5 ) 954 Ending Balance $ 1,711 $ 38 $ 4,422 $ 14 $ 698 $ 70 $ 6,953 (Dollars in thousands) Residential Real Consumer Commercial Real Commercial Commercial Government Total The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2016: Ending balance: individually evaluated for impairment $ 879 $ - $ 3 $ - $ 354 $ - $ 1,236 Ending balance: collectively evaluated for impairment $ 1,531 $ 34 $ 4,299 $ - $ 542 $ 56 $ 6,462 LOAN RECEIVABLES Ending balance $ 205,837 $ 524 $ 270,092 $ 369 $ 77,299 $ 29,529 $ 583,650 Ending balance: individually evaluated for impairment $ 1,419 $ - $ 374 $ 82 $ 687 $ - $ 2,562 Ending balance: purchased credit impaired individually evaluated for impairment $ 956 $ - $ - $ - $ - $ - $ 956 Ending balance: collectively evaluated for impairment $ 203,462 $ 524 $ 269,718 $ 287 $ 76,612 $ 29,529 $ 580,132 The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2015: Ending balance: individually evaluated for impairment $ 149 $ - $ 171 $ 14 $ 22 $ - $ 356 Ending balance: collectively evaluated for impairment $ 1,562 $ 38 $ 4,251 $ - $ 676 $ 70 $ 6,597 LOAN RECEIVABLES Ending balance $ 213,755 $ 535 $ 259,479 $ 310 $ 68,757 $ 29,062 $ 571,898 Ending balance: individually evaluated for impairment $ 227 $ - $ 5,298 $ 92 $ 96 $ - $ 5,713 Ending balance: purchased credit impaired individually evaluated for impairment $ 1,691 $ - $ - $ - $ - $ - $ 1,691 Ending balance: collectively evaluated for impairment $ 211,837 $ 535 $ 254,181 $ 218 $ 68,661 $ 29,062 $ 564,494 The Bancorp has established a standard loan grading system to assist management, lenders and review personnel in their analysis and supervision of the loan portfolio. The use and application of theses grades by the Bancorp is uniform and conforms to regulatory definitions. The loan grading system is as follows: 2 Moderate risk Borrower consistently internally generates sufficient cash flow to fund debt service, working assets, and some capital expenditures. Risk of default considered low. 3 Above average acceptable risk Borrower generates sufficient cash flow to fund debt service and some working assets and/or capital expansion needs. Profitability and key balance sheet ratios are at or slightly above peers. Current trends are positive or stable. Earnings may be level or trending down slightly or be erratic; however, positive strengths are offsetting. Risk of default is reasonable but may warrant collateral protection. 4 Acceptable risk Borrower generates sufficient cash flow to fund debt service, but most working asset and all capital expansion needs are provided from external sources. Profitability ratios and key balance sheet ratios are usually close to peers but one or more ratios (e.g. leverage) may be higher than peer. Earnings may be trending down over the last three years. Borrower may be able to obtain similar financing from other banks with comparable or less favorable terms. Risk of default is acceptable but requires collateral protection. 5 Marginally acceptable risk Borrower may exhibit excessive growth, declining earnings, strained cash flow, increasing leverage and/or weakening market position that indicate above average risk. Limited additional debt capacity, modest coverage, and average or below average asset quality, margins and market share. Interim losses and/or adverse trends may occur, but not to the level that would affect the Bank’s position. The potential for default is higher than normal but considered marginally acceptable based on prospects for improving financial performance and the strength of the collateral. 6 Pass/monitor The borrower has significant weaknesses resulting from performance trends or management concerns. The financial condition of the company has taken a negative turn and may be temporarily strained. Cash flow may be weak but cash reserves remain adequate to meet debt service. Management weaknesses are evident. Borrowers in this category will warrant more than the normal level of supervision and more frequent reporting. 7 Special mention (watch) Special mention credits are considered bankable assets with no apparent loss of principal or interest envisioned but requiring a high level of management attention. Assets in this category are currently protected but are potentially weak. These borrowers are subject to economic, industry, or management factors having an adverse impact upon their prospects for orderly service of debt. The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted. These assets constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of Substandard. 8 Substandard This classification consists of loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Financial statements normally reveal some or all of the following: poor trends, lack of earnings and cash flow, excessive debt, lack of liquidity, and the absence of creditor protection. Loans are still considered collectible, but due to increased risks and defined weaknesses of the credit, some loss could be incurred in collection if the deficiencies are not corrected. 9 Doubtful 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 reasonably specific pending factors which may strengthen the credit can be exactly determined. These factors may include proposed acquisitions, liquidation procedures, capital injection and receipt of additional collateral, mergers or refinancing plans. Performing loans are loans that are paying as agreed and are approximately less than ninety days past due on payments of interest and principal. The Bancorp's credit quality indicators are summarized below at December 31, 2016 and December 31, 2015: (Dollars in thousands) Corporate Credit Exposure - Credit Risk Portfolio By Creditworthiness Category Commercial Real Estate, Construction Commercial Participations Purchased Commercial Business Government Loan Grades 2016 2015 2016 2015 2016 2015 2016 2015 2 Moderate risk $ 248 $ 270 $ - $ - $ 6,315 $ 6,526 $ - $ - 3 Above average acceptable risk 3,147 7,136 - - 15,043 4,313 955 - 4 Acceptable risk 121,583 129,353 188 199 24,754 31,735 25,474 29,062 5 Marginally acceptable risk 100,615 74,342 83 - 18,787 12,225 3,100 - 6 Pass/monitor 38,326 38,337 16 19 10,653 11,774 - - 7 Special mention (watch) 5,799 4,707 - - 533 601 - - 8 Substandard 374 5,334 82 92 1,214 1,583 - - Total $ 270,092 $ 259,479 $ 369 $ 310 $ 77,299 $ 68,757 $ 29,529 $ 29,062 (Dollars in thousands) Consumer Credit Exposure - Credit Risk Profile Based On Payment Activity Residential Real Estate, Including Consumer 2016 2015 2016 2015 Performing $ 200,446 $ 209,583 $ 524 $ 535 Non-performing 5,021 4,549 - - Total $ 205,837 $ 213,755 $ 524 $ 535 A single borrower with seventeen investor owned residential real estate properties in the amount of $2.0 million was modified as a troubled debt restructuring during the second quarter of 2016. This borrower subsequently defaulted during the fourth quarter of 2016. No troubled debt restructurings subsequently defaulted during the fourth quarter of 2015. All of the loans classified as troubled debt restructurings are also considered impaired. The valuation basis for the Bancorp’s troubled debt restructurings is based on the present value of cash flows, unless consistent cash flows are not present, then the fair value of the collateral securing the loan is the basis for valuation. The Bancorp's individually evaluated impaired loans are summarized below: As of December 31, 2016 For the twelve months ended (Dollars in thousands) Recorded Unpaid Principal Related Average Interest With no related allowance recorded: Residential real estate, including home equity $ 1,309 $ 3,293 $ - $ 2,582 $ 120 Commercial real estate, construction & land development, and other dwellings 356 356 - 1,256 - Commercial participations purchased 82 82 - 16 6 Commercial business 212 212 - 168 4 With an allowance recorded: Residential real estate, including home equity 1,066 1,066 879 348 6 Commercial real estate, construction & land development, and other dwellings 18 18 3 18 - Commercial participations purchased - - - 71 - Commercial business 475 475 354 324 1 Total: Residential real estate, including home equity $ 2,375 $ 4,359 $ 879 $ 2,930 $ 126 Commercial real estate, construction & land development, and other dwellings $ 374 $ 374 $ 3 $ 1,274 $ - Commercial participations purchased $ 82 $ 82 $ - $ 87 $ 6 Commercial business $ 687 $ 687 $ 354 $ 492 $ 5 As of December 31, 2015 For the twelve months ended (Dollars in thousands) Recorded Unpaid Principal Related Average Interest With no related allowance recorded: Residential real estate, including home equity $ 1,741 $ 4,737 $ - $ 1,327 $ 3 Commercial real estate, construction & land development, and other dwellings 5,075 5,075 - 5,040 8 Commercial participations purchased - - - - - Commercial business 74 74 - 80 - With an allowance recorded: Residential real estate, including home equity 177 177 149 185 - Commercial real estate, construction & land development, and other dwellings 223 223 171 69 - Commercial participations purchased 92 92 14 96 - Commercial business 22 22 22 23 - Total: Residential real estate, including home equity $ 1,918 $ 4,914 $ 149 $ 1,512 $ 3 Commercial real estate, construction & land development, and other dwellings $ 5,298 $ 5,298 $ 171 $ 5,109 $ 8 Commercial participations purchased $ 92 $ 92 $ 14 $ 96 $ - Commercial business $ 96 $ 96 $ 22 $ 103 $ - As a result of acquisition activity, the Bancorp acquired loans for which there was evidence of credit quality deterioration since origination and it was determined that it was probable that the Bancorp would be unable to collect all contractually required principal and interest payments. At December 31, 2016, purchased credit impaired loans with unpaid principal balances totaled $2.9 million with a recorded investment of $956 thousand. At December 31, 2015, purchased credit impaired loans with unpaid principal balances totaled $4.0 million with a recorded investment of $1.7 million. The Bancorp's age analysis of past due loans is summarized below: (Dollars in thousands) 30-59 Days Past 60-89 Days Past Greater Than 90 Total Past Due Current Total Loans Recorded December 31, 2016 Residential real estate, including home equity $ 3,974 $ 1,775 $ 4,024 $ 9,773 $ 196,064 $ 205,837 $ 500 Consumer - - - - 524 524 - Commercial real estate, construction & land development, and other dwellings 396 189 374 959 269,133 270,092 - Commercial participations purchased - - 82 82 287 369 - Commercial business 171 217 466 854 76,445 77,299 - Government - - - - 29,529 29,529 - Total $ 4,541 $ 2,181 $ 4,946 $ 11,668 $ 571,982 $ 583,650 $ 500 December 31, 2015 Residential real estate, including home equity $ 5,559 $ 2,430 $ 3,055 $ 11,044 $ 202,711 $ 213,755 $ 377 Consumer - - - - 535 535 - Commercial real estate, construction & land development, and other dwellings - 211 710 921 258,558 259,479 - Commercial participations purchased - - 92 92 218 310 - Commercial business 67 177 22 266 68,491 68,757 - Government - - - - 29,062 29,062 - Total $ 5,626 $ 2,818 $ 3,879 $ 12,323 $ 559,575 $ 571,898 $ 377 The Bancorp's loans on nonaccrual status are summarized below: (Dollars in thousands) December 31, December 31, Residential real estate, including home equity $ 4,521 $ 4,172 Consumer - - Commercial real estate, construction & land development, and other dwellings 374 915 Commercial participations purchased 82 92 Commercial business 628 22 Government - - Total $ 5,605 $ 5,201 |