Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 3 Loans Receivable Year end loans are summarized below: (Dollars in thousands) December 31, 2017 December 31, 2016 Loans secured by real estate: Residential real estate $ 172,780 $ 173,365 Home equity 36,718 32,614 Commercial real estate 211,090 195,438 Construction and land development 50,746 38,937 Multifamily 43,369 36,086 Total loans secured by real estate 514,703 476,440 Consumer 460 522 Commercial business 77,122 77,513 Government 28,785 29,529 Subtotal 621,070 584,004 Less: Net deferred loan origination fees (130 ) (162 ) Undisbursed loan funds (729 ) (192 ) Loans receivable $ 620,211 $ 583,650 (Dollars in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending Balance The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the twelve months ended December 31, 2017: Allowance for loan losses: Residential real estate $ 2,111 $ (959 ) $ 3 $ 413 $ 1,568 Home equity 299 (60 ) - (73 ) 166 Commercial real estate 3,113 - - 12 3,125 Construction and land development 617 - - 1 618 Multifamily 572 - - 50 622 Consumer 34 (71 ) 18 50 31 Commercial business 896 (386 ) 39 749 1,298 Government 56 - - (2 ) 54 Total $ 7,698 $ (1,476 ) $ 60 $ 1,200 $ 7,482 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: Residential real estate $ 1,447 $ (529 ) $ 2 $ 1,191 $ 2,111 Home equity 263 - - 36 299 Commercial real estate 2,986 - - 127 3,113 Construction and land development 692 - - (75 ) 617 Multifamily 758 - - (186 ) 572 Consumer 38 (33 ) 9 20 34 Commercial business 699 - 28 169 896 Government 70 - - (14 ) 56 Total $ 6,953 $ (562 ) $ 39 $ 1,268 $ 7,698 Ending Balances Loans Purchased Loans Individually Collectively receivable credit impaired receivable (Dollars in thousands) evaluated for evaluated for Individually individually Collectively impairment impairment Loan evaluated for evaluated for evaluated for reserves reserves receivables impairment impairment impairment The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2017: Residential real estate $ 21 $ 1,547 $ 172,141 $ 462 $ 690 $ 170,989 Home equity - 166 36,769 - - 36,769 Commercial real estate 144 2,981 211,090 512 - 210,578 Construction and land development - 618 50,746 134 - 50,612 Multifamily - 622 43,368 - - 43,368 Commercial business 539 759 76,851 724 - 76,127 Consumer - 31 461 - - 461 Government - 54 28,785 - - 28,785 Total $ 704 $ 6,778 $ 620,211 $ 1,832 $ 690 $ 617,689 The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2016: Residential real estate $ 879 $ 1,232 $ 173,262 $ 1,419 $ 956 $ 170,886 Home equity - 299 32,575 - - 32,575 Commercial real estate 3 3,110 195,438 322 - 195,116 Construction and land development - 617 38,937 134 - 38,804 Multifamily - 572 36,086 - - 36,086 Commercial business 354 542 77,299 687 - 76,612 Consumer - 34 524 - - 524 Government - 56 29,529 - - 29,529 Total $ 1,236 $ 6,462 $ 583,650 $ 2,562 $ 956 $ 580,132 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: 1 Minimal Risk Borrower demonstrates exceptional credit fundamentals, including stable and predictable profit margins, strong liquidity and a conservative balance sheet with superior asset quality. Excellent cash flow coverage of existing and projected debt service. Historic and projected performance indicates borrower is able to meet obligations under almost any economic circumstances. 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, 2017 and December 31, 2016: Credit Exposure - Credit Risk Portfolio By Creditworthiness Category December 31, 2017 (Dollars in thousands) 2 3 4 5 6 7 8 Above average Marginally Special Loan Segment Moderate acceptable Acceptable acceptable Pass/monitor mention Substandard Residential real estate $ 887 $ 12,317 $ 92,241 $ 8,759 $ 50,075 $ 4,130 $ 3,732 Home equity - 1,065 34,871 - 250 233 350 Commercial real estate - 2,372 79,847 81,547 40,054 6,758 512 Construction and land development - - 20,719 19,583 10,310 - 134 Multifamily - - 20,159 20,965 2,076 168 - Commercial business 7,169 17,202 16,784 21,087 13,041 394 1,174 Consumer - 131 330 - - - - Government - 2,318 20,202 6,265 - - - Total $ 8,056 $ 35,405 $ 285,153 $ 158,206 $ 115,806 $ 11,683 $ 5,902 December 31, 2016 2 3 4 5 6 7 8 Above average Marginally Special Loan Segment Moderate acceptable Acceptable acceptable Pass/monitor mention Substandard Residential real estate $ - $ 6,069 $ 94,394 $ 7,085 $ 57,644 $ 4,015 $ 4,056 Home equity 83 1,172 30,459 - 250 236 376 Commercial real estate 248 2,708 93,293 64,950 28,306 5,611 323 Construction and land development - 439 11,355 18,913 8,097 - 134 Multifamily - - 17,123 16,836 1,939 188 - Commercial business 6,315 15,044 24,754 18,786 10,653 533 1,214 Consumer 90 4 430 - - - - Government - 955 25,474 3,100 - - - Total $ 6,736 $ 26,391 $ 297,282 $ 129,669 $ 106,888 $ 10,582 $ 6,102 One commercial real estate loan and one residential real estate loan totaling $213 thousand were modified as a troubled debt restructuring during 2017. No troubled debt restructurings defaulted during 2017. 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: For the twelve months ended As of December 31, 2017 December 31, 2017 Unpaid Average Interest (Dollars in thousands) Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Residential real estate $ 1,072 $ 3,351 $ - $ 1,101 $ 70 Commercial real estate 253 253 - 339 6 Construction and land development 134 134 - 134 - Commercial business 184 184 - 198 10 With an allowance recorded: Residential real estate 80 270 21 256 1 Commercial real estate 259 259 144 163 - Construction and land development - - - - - Commercial business 540 540 539 492 - Total: Residential real estate $ 1,152 $ 3,621 $ 21 $ 1,357 $ 71 Commercial real estate $ 512 $ 512 $ 144 $ 502 $ 6 Construction & land development $ 134 $ 134 $ - $ 134 $ - Commercial business $ 724 $ 724 $ 539 $ 690 $ 10 For the twelve months ended As of December 31, 2016 December 31, 2016 Unpaid Average Interest (Dollars in thousands) Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Residential real estate $ 1,309 $ 3,293 $ - $ 2,582 $ 120 Commercial real estate 305 305 - 1,138 6 Construction and land development 134 134 - 134 - Commercial business 212 212 - 168 4 With an allowance recorded: Residential real estate 1,066 1,066 879 348 6 Commercial real estate 18 18 3 89 - Construction & land development - - - - - Commercial business 475 475 354 324 1 Total: Residential real estate $ 2,375 $ 4,359 $ 879 $ 2,930 $ 126 Commercial real estate $ 323 $ 323 $ 3 $ 1,227 $ 6 Construction & land development $ 134 $ 134 $ - $ 134 $ - Commercial business $ 687 $ 687 $ 354 $ 492 $ 5 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, 2017, purchased credit impaired loans with unpaid principal balances totaled $2.6 million with a recorded investment of $690 thousand. At December 31, 2016, purchased credit impaired loans with unpaid principal balances totaled $2.9 million with a recorded investment of $956 thousand. The Bancorp's age analysis of past due loans is summarized below: (Dollars In thousands) 30-59 Days Past Due 60-89 Days Past Due Greater Than 90 Days Past Due Total Past Due Current Total Loans Recorded Investments Greater than 90 Days Past Due and Accruing December 31, 2017 Residential real estate $ 4,921 $ 1,751 $ 3,092 $ 9,764 $ 162,377 $ 172,141 $ 225 Home equity 295 18 234 547 36,222 36,769 2 Commercial real estate 951 96 332 1,379 209,711 211,090 - Construction and land development - - 133 133 50,613 50,746 - Multifamily 319 - - 319 43,049 43,368 - Commercial business 285 162 539 986 75,865 76,851 - Consumer 1 - - 1 460 461 - Government - - - - 28,785 28,785 - Total $ 6,772 $ 2,027 $ 4,330 $ 13,129 $ 607,082 $ 620,211 $ 227 December 31, 2016 Residential real estate $ 3,640 $ 1,702 $ 3,804 $ 9,146 $ 164,115 $ 173,262 $ 436 Home equity 334 73 220 626 31,949 32,575 64 Commercial real estate 208 189 323 720 194,718 195,438 - Construction and land development - - 134 134 38,804 38,937 - Multifamily 188 - - 188 35,898 36,086 - Commercial business 171 217 465 853 76,445 77,299 - Consumer - - - - 524 524 - Government - - - - 29,529 29,529 - Total $ 4,541 $ 2,181 $ 4,946 $ 11,668 $ 571,982 $ 583,650 $ 500 The Bancorp's loans on nonaccrual status are summarized below: (Dollars in thousands) December 31, December 31, 2017 2016 Residential real estate $ 3,509 $ 4,146 Home equity 350 376 Commercial real estate 332 323 Construction and land development 133 134 Multifamily - - Commercial business 672 628 Consumer - - Government - - Total $ 4,996 $ 5,605 |