Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 5 - Loans Receivable (Dollars in thousands) June 30, 2018 December 31, 2017 Loans secured by real estate: Residential real estate $ 175,677 $ 172,780 Home equity 38,247 36,718 Commercial real estate 223,598 211,090 Construction and land development 51,947 50,746 Farmland 245 - Multifamily 44,781 43,369 Total loans secured by real estate 534,495 514,703 Consumer 485 460 Commercial business 83,941 77,122 Government 27,736 28,785 Subtotal 646,657 621,070 Less: Net deferred loan origination fees (180 ) (130 ) Undisbursed loan funds (189 ) (729 ) Loans receivable $ 646,288 $ 620,211 (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 three months ended June 30, 2018: Allowance for loan losses: Residential real estate $ 1,493 $ (38 ) - $ 68 $ 1,523 Home equity 159 (5 ) - 29 183 Commercial real estate 2,996 - 2 172 3,170 Construction and land development 661 - - (50 ) 611 Multifamily 615 - - (8 ) 607 Farmland 4 - - - 4 Consumer 35 (14 ) 5 10 36 Commercial business 1,077 (3 ) 107 83 1,264 Government 57 - - (7 ) 50 Total $ 7,097 $ (60 ) $ 114 $ 297 $ 7,448 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended June 30, 2017: Allowance for loan losses: Residential real estate $ 1,295 $ (71 ) $ - $ 337 $ 1,561 Home equity 306 - - (230 ) 76 Commercial real estate 3,198 - - (307 ) 2,891 Construction and land development 593 - - 6 599 Multifamily 561 - - (60 ) 501 Farmland - - - - - Consumer 28 (24 ) 2 24 30 Commercial business 795 - 9 553 1,357 Government 58 - - - 58 Total $ 6,834 $ (95 ) $ 11 $ 323 $ 7,073 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the six months ended June 30, 2018: Allowance for loan losses: Residential real estate $ 1,568 $ (106 ) $ - $ 61 $ 1,523 Home equity 166 (24 ) - 41 183 Commercial real estate 3,125 (119 ) 2 162 3,170 Construction and land development 618 - - (7 ) 611 Multifamily 622 - - (15 ) 607 Farmland - - - 4 4 Consumer 31 (22 ) 9 18 36 Commercial business 1,298 (529 ) 117 378 1,264 Government 54 - - (4 ) 50 Total $ 7,482 $ (800 ) $ 128 $ 638 $ 7,448 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the six months ended June 30, 2017: Allowance for loan losses: Residential real estate $ 2,111 $ (928 ) $ - $ 378 $ 1,561 Home equity 299 - - (223 ) 76 Commercial real estate 3,113 - - (222 ) 2,891 Construction and land development 617 - - (18 ) 599 Multifamily 572 - - (71 ) 501 Farmland - - - - - Consumer 34 (30 ) 4 22 30 Commercial business 896 (245 ) 17 689 1,357 Government 56 - - 2 58 Total $ 7,698 $ (1,203 ) $ 21 $ 557 $ 7,073 Ending Balances Purchased credit (Dollars in thousands) Individually Collectively impaired evaluated for evaluated Individually individually Collectively impairment for 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 June 30, 2018: Residential real estate $ 30 $ 1,493 $ 175,492 $ 548 $ 693 $ 174,251 Home equity 10 173 38,303 124 - 38,179 Commercial real estate 14 3,156 223,598 1,289 - 222,309 Construction and land development - 611 51,947 - - 51,947 Multifamily - 607 44,781 - - 44,781 Farmland - 4 245 - - 245 Commercial business 8 1,256 83,699 413 - 83,286 Consumer - 36 487 - - 487 Government - 50 27,736 - - 27,736 Total $ 62 $ 7,386 $ 646,288 $ 2,374 $ 693 $ 643,221 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 Farmland - - - - - 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 Credit Exposure - Credit Risk Portfolio By Creditworthiness Category June 30, 2018 (Dollars in thousands) 2 3 4 5 6 7 8 Above average Marginally Special Loan Segment Moderate acceptable Acceptable acceptable Pass/monitor mention Substandard Total Residential real estate $ 406 $ 16,577 $ 94,660 $ 9,170 $ 46,790 $ 3,999 $ 3,890 $ 175,492 Home equity 105 956 36,471 - 152 228 391 $ 38,303 Commercial real estate - 2,074 78,741 93,683 43,224 4,587 1,289 $ 223,598 Construction and land development - - 20,477 21,194 10,276 - - $ 51,947 Multifamily - - 19,676 23,301 1,582 222 - $ 44,781 Farmland - - - 245 - - - $ 245 Commercial business 7,957 20,484 15,241 25,579 12,263 1,762 413 $ 83,699 Consumer 115 4 368 - - - - $ 487 Government - 2,220 19,786 5,730 - - - $ 27,736 Total $ 8,583 $ 42,315 $ 285,420 $ 178,902 $ 114,287 $ 10,798 $ 5,983 $ 646,288 December 31, 2017 2 3 4 5 6 7 8 Above average Marginally Special Loan Segment Moderate acceptable Acceptable acceptable Pass/monitor mention Substandard Total Residential real estate $ 887 $ 12,317 $ 92,241 $ 8,759 $ 50,075 $ 4,130 $ 3,732 $ 172,141 Home equity - 1,065 34,871 - 250 233 350 $ 36,769 Commercial real estate - 2,372 79,847 81,547 40,054 6,758 512 $ 211,090 Construction and land development - - 20,719 19,583 10,310 - 134 $ 50,746 Multifamily - - 20,159 20,965 2,076 168 - $ 43,368 Farmland - - - - - - - $ - Commercial business 7,169 17,202 16,784 21,087 13,041 394 1,174 $ 76,851 Consumer - 131 330 - - - - $ 461 Government - 2,318 20,202 6,265 - - - $ 28,785 Total $ 8,056 $ 35,405 $ 285,153 $ 158,206 $ 115,806 $ 11,683 $ 5,902 $ 620,211 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 these 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. Performing loans are loans that are paying as agreed and are approximately less than ninety days past due on payments of interest and principal. During the first six months of 2018, three commercial business loans totaling $355 thousand, three commercial real estate loans totaling $935 thousand, two residential real estate loans totaling $114 thousand and three home equity loans totaling $124 thousand were modified as a troubled debt restructuring. No troubled debt restructurings have subsequently defaulted during the periods presented. 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. As of June 30, 2018 June 30, 2018 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance recorded: Residential real estate $ 1,110 $ 2,841 $ - $ 1,108 $ 16 Home equity 65 65 - 45 Commercial real estate 1,180 1,180 - 561 - Construction and land development - - - 89 - Commercial business 405 405 - 257 - With an allowance recorded: Residential real estate 131 131 30 114 10 Home equity 59 59 10 20 - Commercial real estate. 109 109 14 160 16 Construction and land development - - - - - Commercial business 8 8 8 186 8 Total: Residential real estate $ 1,241 $ 2,972 $ 30 $ 1,222 $ 26 Home equity $ 124 $ 124 $ 10 $ 65 $ - Commercial real estate $ 1,289 $ 1,289 $ 14 $ 721 $ 16 Construction and land development $ - $ - $ - $ 89 $ - Commercial business $ 413 $ 413 $ 8 $ 443 $ 8 As of December 31, 2017 June 30, 2017 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance recorded: Residential real estate $ 1,072 $ 3,351 $ - $ 1,333 $ 22 Home equity - - - - - Commercial real estate 253 253 - 381 3 Construction and land development 134 134 - 134 - Commercial business 184 184 - 206 2 With an allowance recorded: Residential real estate 80 270 21 380 - Home equity - - - - - Commercial real estate 259 259 144 99 - Construction and land development - - - - - Commercial business 540 540 539 454 4 Total: Residential real estate $ 1,152 $ 3,621 $ 21 $ 1,713 $ 22 Home equity $ - $ - $ - $ - $ - Commercial real estate $ 512 $ 512 $ 144 $ 480 $ 3 Construction and land development $ 134 $ 134 $ - $ 134 $ - Commercial business $ 724 $ 724 $ 539 $ 660 $ 6 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 June 30, 2018, total purchased credit impaired loans with unpaid principal balances totaled $2.4 million with a recorded investment of $693 thousand. At December 31, 2017, purchased credit impaired loans with unpaid principal balances totaled $2.6 million with a recorded investment of $690 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 June 30, 2018 Residential real estate $ 2,848 $ 1,612 $ 2,750 $ 7,210 $ 168,282 $ 175,492 $ 71 Home equity 167 200 298 665 37,638 38,303 - Commercial real estate 8 935 85 1,028 222,570 223,598 - Construction and land development - - - - 51,947 51,947 - Multifamily 66 - - 66 44,715 44,781 - Farmland - - - - 245 245 - Commercial business 76 198 8 282 83,417 83,699 - Consumer - - - - 487 487 - Government - - - - 27,736 27,736 - Total $ 3,165 $ 2,945 $ 3,141 $ 9,251 $ 637,037 $ 646,288 $ 71 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 - Farmland - - - - - - 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 (Dollars in thousands) June 30, 2018 December 31, 2017 Residential real estate $ 3,478 $ 3,509 Home equity 332 350 Commercial real estate 175 332 Construction and land development - 133 Multifamily - - Farmland - - Commercial business 137 672 Consumer - - Government - - Total $ 4,122 $ 4,996 |