Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 5 - Loans Receivable Loans receivable are summarized below: (Dollars in thousands) September 30, 2018 December 31, 2017 Loans secured by real estate: Residential real estate 221,054 172,780 Home equity 43,175 36,718 Commercial real estate 243,304 211,090 Construction and land development 54,755 50,746 Farmland 242 - Multifamily 45,752 43,369 Total loans secured by real estate 608,282 514,703 Consumer 5,633 460 Commercial business 102,820 77,122 Government 25,763 28,785 Subtotal 742,498 621,070 Less: Net deferred loan origination fees (188 ) (130 ) Undisbursed loan funds (78 ) (729 ) Loans receivable $ 742,232 $ 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 September 30, 2018: Allowance for loan losses: Residential real estate $ 1,523 $ (30 ) - $ 82 $ 1,575 Home equity 183 - - 10 193 Commercial real estate 3,170 - 22 48 3,240 Construction and land development 611 - - (32 ) 579 Multifamily 607 - - (150 ) 457 Farmland 4 - - (1 ) 3 Consumer 36 (19 ) 8 298 323 Commercial business 1,264 - 8 61 1,333 Government 50 - - (4 ) 46 Total $ 7,448 $ (49 ) $ 38 $ 312 $ 7,749 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended September 30, 2017: Allowance for loan losses: Residential real estate $ 1,561 $ (10 ) $ 3 $ 17 $ 1,571 Home equity 76 (35 ) - 41 82 Commercial real estate 2,890 - - 28 2,918 Construction and land development 600 - - (30 ) 570 Multifamily 501 - - 40 541 Farmland - - - - - Consumer 30 (29 ) 7 22 30 Commercial business 1,357 (120 ) 5 49 1,291 Government 58 - - (2 ) 56 Total $ 7,073 $ (194 ) $ 15 $ 165 $ 7,059 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2018: Allowance for loan losses: Residential real estate $ 1,568 $ (136 ) $ - $ 143 $ 1,575 Home equity 166 (24 ) - 51 193 Commercial real estate 3,125 (119 ) 24 210 3,240 Construction and land development 618 - - (39 ) 579 Multifamily 622 - - (165 ) 457 Farmland - - - 3 3 Consumer 31 (41 ) 17 316 323 Commercial business 1,298 (529 ) 125 439 1,333 Government 54 - - (8 ) 46 Total $ 7,482 $ (849 ) $ 166 $ 950 $ 7,749 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2017: Allowance for loan losses: Residential real estate $ 2,111 $ (913 ) $ 3 $ 370 $ 1,571 Home equity 299 (60 ) - (157 ) 82 Commercial real estate 3,113 - - (195 ) 2,918 Construction and land development 617 - - (47 ) 570 Multifamily 572 - - (31 ) 541 Consumer 34 (59 ) 11 44 30 Commercial business 896 (365 ) 22 738 1,291 Government 56 - - - 56 Total $ 7,698 $ (1,397 ) $ 36 $ 722 $ 7,059 The Bancorp's impairment analysis is summarized below: Ending Balances (Dollars in thousands) Individually evaluated for impairment reserves Collectively evaluated for impairment reserves Loan receivables Individually evaluated for impairment Purchased credit impaired individually evaluated for impairment Collectively evaluated for impairment The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at September 30, 2018: Residential real estate $ 20 $ 1,555 $ 220,862 $ 536 $ 1,095 $ 219,231 Home equity 9 184 43,234 147 123 42,964 Commercial real estate 278 2,962 243,304 1,804 1,605 239,895 Construction and land development - 579 54,755 - - 54,755 Multifamily - 457 45,752 - - 45,752 Farmland - 3 242 - - 242 Consumer - 323 5,633 - - 5,633 Commercial business 69 1,264 102,687 473 1,436 100,778 Government - 46 25,763 - - 25,763 Total $ 376 $ 7,373 $ 742,232 $ 2,960 $ 4,259 $ 735,013 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 - - - - - - Consumer - 31 461 - - 461 Commercial business 539 759 76,851 724 - 76,127 Government - 54 28,785 - - 28,785 Total $ 704 $ 6,778 $ 620,211 $ 1,832 $ 690 $ 617,689 The Bancorp's credit quality indicators are summarized below at September 30, 2018 and December 31, 2017: Credit Exposure - Credit Risk Portfolio By Creditworthiness Category September 30, 2018 (Dollars in thousands) 2 3 4 5 6 7 8 Loan Segment Moderate Above average acceptable Acceptable Marginally acceptable Pass/monitor Special mention Substandard Total Residential real estate $ 143 $ 55,619 $ 99,366 $ 8,920 $ 47,779 $ 4,685 $ 4,350 $ 220,862 Home equity 108 4,552 37,472 - 126 544 432 43,234 Commercial real estate - 6,133 80,598 102,712 46,018 5,972 1,871 243,304 Construction and land development - 330 22,127 22,895 9,403 - - 54,755 Multifamily - 574 19,575 23,686 1,763 154 - 45,752 Farmland - - - - 242 - - 242 Commercial business 9,872 22,398 22,229 31,540 12,724 3,144 780 102,687 Consumer 794 3,007 678 221 913 20 - 5,633 Government - 2,111 18,707 4,945 - - - 25,763 Total $ 10,917 $ 94,724 $ 300,752 $ 194,919 $ 118,968 $ 14,519 $ 7,433 $ 742,232 December 31, 2017 2 3 4 5 6 7 8 Loan Segment Moderate Above average acceptable Acceptable Marginally acceptable Pass/monitor Special 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 nine 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 five home equity loans totaling $149 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. The Bancorp's individually evaluated impaired loans are summarized below: For the nine months ended As of September 30, 2018 September 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 $ 1,518 $ 3,922 $ - $ 1,208 $ 61 Home equity 212 219 - 87 1 Commercial real estate 2,772 3,471 - 1,114 46 Construction and land development - - - 67 - Multifamily - - - - - Farmland - - - - - Commercial business 1,831 2,091 - 651 20 Consumer - - - - - Government - - - - - With an allowance recorded: Residential real estate 113 113 20 114 4 Home equity 58 58 9 29 - Commercial real estate 637 637 278 280 3 Construction and land development - - - - - Multifamily - - - - - Farmland - - - - - Commercial business 78 78 69 159 1 Consumer - - - - - Government - - - - - Total: Residential real estate $ 1,631 $ 4,035 $ 20 $ 1,322 $ 65 Home equity $ 270 $ 277 $ 9 $ 116 $ 1 Commercial real estate $ 3,409 $ 4,108 $ 278 $ 1,394 $ 49 Construction & land development $ - $ - $ - $ 67 $ - Multifamily $ - $ - $ - $ - $ - Farmland $ - $ - $ - $ - $ - Commercial business $ 1,909 $ 2,169 $ 69 $ 810 $ 21 Consumer $ - $ - $ - $ - $ - Government $ - $ - $ - $ - $ - For the nine months ended As of December 31, 2017 September 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 $ - $ 1,302 $ 48 Home equity - - - - - Commercial real estate 253 253 - 361 4 Construction and land development 134 134 - 134 - Multifamily - - - - - Commercial business 184 184 - 201 3 With an allowance recorded: Residential real estate 80 270 21 300 1 Home equity - - - - - Commercial real estate 259 259 144 139 - Construction & land development - - - - - Multifamily - - - - - Commercial business 540 540 539 481 4 Total: Residential real estate $ 1,152 $ 3,621 $ 21 $ 1,602 $ 49 Home equity $ - $ - $ - $ - $ - Commercial real estate $ 512 $ 512 $ 144 $ 500 $ 4 Construction & land development $ 134 $ 134 $ - $ 134 $ - Commercial business $ 724 $ 724 $ 539 $ 682 $ 7 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 September 30, 2018, total purchased credit impaired loans with unpaid principal balances totaled $7.6 million with a recorded investment of $4.3 million. 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 September 30, 2018 Residential real estate $ 2,329 $ 1,518 $ 3,942 $ 7,789 $ 213,073 $ 220,862 $ 885 Home equity 225 183 164 572 42,662 43,234 50 Commercial real estate - 352 680 1,032 242,272 243,304 - Construction and land development - - - - 54,755 54,755 - Multifamily - 154 - 154 45,598 45,752 - Farmland - - - - 242 242 - Commercial business 1,397 184 207 1,788 100,899 102,687 - Consumer 52 20 - 72 5,561 5,633 - Government - - - - 25,763 25,763 - Total $ 4,003 $ 2,411 $ 4,993 $ 11,407 $ 730,825 $ 742,232 $ 935 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 The Bancorp's loans on nonaccrual status are summarized below: (Dollars in thousands) September 30, 2018 December 31, 2017 Residential real estate $ 3,861 $ 3,509 Home equity 328 350 Commercial real estate 768 332 Construction and land development - 133 Multifamily - - Farmland - - Commercial business 514 672 Consumer - - Government - - Total $ 5,471 $ 4,996 For the acquisitions of First Federal Savings & Loan (“First Federal”), Liberty Savings Bank (“Liberty Savings”), and First Personal Bank (“First Personal”), as part of the fair value of loans receivable, a net fair value discount was established for loans as summarized below: (dollars in thousands) First Federal Liberty Savings First Personal Net fair value discount Accretable period in months Net fair value discount Accretable period in months Net fair value discount Accretable period in months Residential real estate $ 1,100 55 $ 1,200 44 $ 948 56 Home equity - - - - 51 50 Commercial real estate - - - - 208 56 Construction and land development - - - - 1 30 Multifamily - - - - 11 48 Consumer - - - - 146 50 Commercial business - - - - 348 24 Purchased credit impaired loans - - - - 424 32 Total $ 1,100 $ 1,200 $ 2,137 Accretable yield, or income collected for the nine months ended September 30, is as follows: (dollars in thousands) First Federal Liberty Savings First Personal Total 2017 $ 112 $ 239 $ - $ 351 2018 105 200 114 419 Accretable yield, or income expected to be collected is as follows: (dollars in thousands) First Federal Liberty Savings First Personal Total Remainder 2018 $ 33 $ 65 $ 157 $ 255 2019 22 43 627 692 2020 - - 554 554 2021 - - 335 335 2022 - - 283 283 2023 - - 67 67 Total $ 55 $ 108 $ 2,023 $ 2,186 |