Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 5 - Loans Receivable Loans receivable are summarized below: (Dollars in thousands) March 31, 2019 December 31, 2018 Loans secured by real estate: Residential real estate $ 303,111 $ 224,082 Home equity 49,658 45,423 Commercial real estate 265,013 253,104 Construction and land development 66,920 64,433 Multifamily 49,316 47,234 Farmland 236 240 Total loans secured by real estate 734,254 634,516 Commercial business 103,734 103,628 Consumer 6,713 5,293 Government 19,591 21,101 Subtotal 864,292 764,538 Less: Net deferred loan origination fees 844 530 Undisbursed loan funds (141 ) (668 ) Loans receivable $ 864,995 $ 764,400 (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 March 31, 2019: Allowance for loan losses: Residential real estate $ 1,715 $ (48 ) $ 14 $ (1 ) $ 1,680 Home equity 202 - - (8 ) 194 Commercial real estate 3,335 - - 150 3,485 Construction and land development 756 - - 21 777 Multifamily 472 - - (38 ) 434 Farmland - - - - - Commercial business 1,362 - 6 23 1,391 Consumer 82 (18 ) 3 187 254 Government 38 - - (17 ) 21 Total $ 7,962 $ (66 ) $ 23 $ 317 $ 8,236 The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended March 31, 2018: Allowance for loan losses: Residential real estate $ 1,568 $ (68 ) $ - $ (7 ) $ 1,493 Home equity 166 (19 ) - 12 159 Commercial real estate 3,125 (119 ) - (10 ) 2,996 Construction and land development 618 - - 43 661 Multifamily 622 - - (7 ) 615 Farmland - - - 4 4 Commercial business 1,298 (526 ) 10 295 1,077 Consumer 31 (8 ) 4 8 35 Government 54 - - 3 57 Total $ 7,482 $ (740 ) $ 14 $ 341 $ 7,097 The Bancorp's impairment analysis is summarized below: Ending Balances (Dollars in thousands) ALLL Individually evaluated for impairment reserves ALLL Collectively evaluated for impairment reserves Total Loans receivable Loans receivable Individually evaluated for impairment Loans receivable Purchased credit impaired individually evaluated for impairment Loans receivable Collectively evaluated for impairment The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at March 31, 2019: Residential real estate $ 23 1,657 302,918 $ 559 $ 1,366 $ 300,993 Home equity 8 186 49,716 136 370 49,210 Commercial real estate 202 3,283 265,013 1,673 483 262,857 Construction and land development - 777 66,920 - - 66,920 Multifamily - 434 49,316 - 716 48,600 Farmland - - 236 - - 236 Commercial business 32 1,359 103,507 416 1,152 101,939 Consumer - 254 7,778 - - 7,778 Government - 21 19,591 - - 19,591 Total $ 265 $ 7,971 $ 864,995 $ 2,784 $ 4,087 $ 858,124 The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2018: Residential real estate $ 22 1,693 223,323 $ 570 $ 980 $ 221,773 Home equity 9 193 45,483 141 123 45,219 Commercial real estate 210 3,125 253,104 1,703 402 250,999 Construction and land development - 756 64,433 - - 64,433 Multifamily - 472 47,234 - - 47,234 Farmland - - 240 - - 240 Commercial business 5 1,357 103,439 423 1,440 101,576 Consumer - 82 6,043 - - 6,043 Government - 38 21,101 - - 21,101 Total $ 246 $ 7,716 $ 764,400 $ 2,837 $ 2,945 $ 758,618 The Bancorp's credit quality indicators are summarized below at March 31, 2019 and December 31, 2018: Credit Exposure - Credit Risk Portfolio By Creditworthiness Category March 31, 2019 (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 $ 862 $ 116,851 $ 103,661 $ 13,038 $ 58,546 4,466 5,494 $ 302,918 Home equity 62 7,486 39,164 345 1,235 866 558 49,716 Commercial real estate - 5,186 75,157 123,162 55,123 4,556 1,829 265,013 Construction and land development - 316 22,989 32,640 10,975 - - 66,920 Multifamily - 948 19,537 25,117 2,853 178 683 49,316 Farmland - - - - 236 - - 236 Commercial business 9,617 18,669 20,326 34,730 16,896 2,839 430 103,507 Consumer 1,153 2,810 2,716 194 905 - - 7,778 Government - 2,001 13,680 3,910 - - - 19,591 Total $ 11,694 $ 154,267 $ 297,230 $ 233,136 $ 146,769 $ 12,905 $ 8,994 $ 864,995 December 31, 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 $ 261 $ 58,276 $ 100,374 $ 10,404 $ 44,734 $ 3,908 $ 5,366 $ 223,323 Home equity 192 3,736 40,165 37 323 657 373 45,483 Commercial real estate - 5,042 78,611 110,984 51,982 4,715 1,770 253,104 Construction and land development... - 322 24,271 29,383 10,457 - - 64,433 Multifamily... - 569 19,255 23,417 3,844 149 - 47,234 Farmland. - - - - 240 - - 240 Commercial business... 10,655 19,127 20,941 34,996 14,034 2,958 728 103,439 Consumer 925 2,953 1,040 196 909 20 - 6,043 Government - 2,111 14,795 4,195 - - - 21,101 Total $ 12,033 $ 92,136 $ 299,452 $ 213,612 $ 126,523 $ 12,407 $ 8,237 $ 764,400 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 three months of 2019, one commercial business loan totaling $ 47 The Bancorp's individually evaluated impaired loans are summarized below: For the three months ended As of March 31, 2019 March 31, 2019 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance recorded: Residential real estate $ 1,766 $ 3,900 $ - $ 1,578 $ 14 Home equity 450 482 - 328 2 Commercial real estate 1,675 2,276 - 1,650 19 Construction and land development - - - - - Multifamily 716 798 - - - Farmland - - - - - Commercial business 1,536 1,685 - 1,668 21 Consumer - - - - - Government - - - - - With an allowance recorded: Residential real estate 159 159 23 160 2 Home equity 56 56 8 57 1 Commercial real estate 481 481 202 481 - Construction and land development - - - - - Multifamily - - - - - Farmland - - - - - Commercial business 32 32 32 48 - Consumer - - - - - Government - - - - - Total: Residential real estate $ 1,925 $ 4,059 $ 23 $ 1,738 $ 16 Home equity $ 506 $ 538 $ 8 $ 385 $ 3 Commercial real estate $ 2,156 $ 2,757 $ 202 $ 2,131 $ 19 Construction & land development $ - $ - $ - $ - $ - Multifamily $ 716 $ 798 $ - $ - $ - Farmland $ - $ - $ - $ - $ - Commercial business $ 1,568 $ 1,717 $ 32 $ 1,716 $ 21 Consumer $ - $ - $ - $ - $ - Government $ - $ - $ - $ - $ - For the three months ended As of December 31, 2018 March 31, 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 $ 1,389 $ 3,628 $ - $ 1,103 $ 6 Home equity 207 214 - 35 - Commercial real estate 1,624 2,222 - 252 - Construction & land development - - - 134 - Multifamily - - - - - Farmland - - - - - Commercial business 1,799 2,038 - 184 1 Consumer - - - - - Government - - - - - With an allowance recorded: Residential real estate 161 161 22 106 5 Home equity 57 57 9 - - Commercial real estate 481 481 210 186 4 Construction & land development - - - - - Multifamily - - - - - Farmland - - - - - Commercial business 64 64 5 275 - Consumer - - - - - Government - - - - - Total: Residential real estate $ 1,550 $ 3,789 $ 22 $ 1,209 $ 11 Home equity $ 264 $ 271 $ 9 $ 35 $ - Commercial real estate $ 2,105 $ 2,703 $ 210 $ 438 $ 4 Construction & land development $ - $ - $ - $ 134 $ - Multifamily $ - $ - $ - $ - $ - Farmland $ - $ - $ - $ - $ - Commercial business $ 1,863 $ 2,102 $ 5 $ 459 $ 1 Consumer $ - $ - $ - $ - $ - Government $ - $ - $ - $ - $ - 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 March 31, 2019, total purchased credit impaired loans with unpaid principal balances totaled $7.1 million with a recorded investment of $4.1 million. At December 31, 2018, purchased credit impaired loans with unpaid principal balances totaled $6.0 million with a recorded investment of $2.9 million. 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 a nd Accruing March 31, 2019 Residential real estate $ 2,384 $ 1,490 $ 4,132 $ 8,006 $ 294,912 $ 302,918 $ 379 Home equity 141 98 427 666 49,050 49,716 - Commercial real estate 6,057 93 912 7,062 257,951 265,013 303 Construction and land development 125 - - 125 66,795 66,920 - Multifamily 33 270 145 448 48,868 49,316 145 Farmland - - - - 236 236 - Commercial business 956 538 353 1,847 101,660 103,507 322 Consumer 96 18 - 114 7,664 7,778 - Government - - - - 19,591 19,591 - Total $ 9,792 $ 2,507 $ 5,969 $ 18,268 $ 846,727 $ 864,995 $ 1,149 December 31, 2018 Residential real estate $ 3,659 $ 909 $ 4,362 $ 8,930 $ 214,393 $ 223,323 $ 122 Home equity 143 5 304 452 45,031 45,483 50 Commercial real estate 842 18 611 1,471 251,633 253,104 - Construction and land development 491 533 - 1,024 63,409 64,433 - Multifamily - 149 - 149 47,085 47,234 - Farmland - - - - 240 240 - Commercial business 733 260 436 1,429 102,010 103,439 149 Consumer 1 72 - 73 5,970 6,043 - Government - - - - 21,101 21,101 - Total $ 5,869 $ 1,946 $ 5,713 $ 13,528 $ 750,872 $ 764,400 $ 321 The Bancorp's loans on nonaccrual status are summarized below: (Dollars in thousands) March 31, 2019 December 31, 2018 Residential real estate $ 5,546 $ 5,135 Home equity 537 270 Commercial real estate 691 695 Construction and land development - - Multifamily 270 - Farmland - - Commercial business 168 495 Consumer - - Government - - Total $ 7,212 $ 6,595 For the acquisitions of First Federal Savings & Loan (“First Federal”), Liberty Savings Bank (“Liberty Savings”), First Personal Bank (“First Personal”), and A.J. Smith Federal Savings Bank (“AJ Smith”), 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 AJ Smith Net fair value discount Accretable period in months 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 $ 1,062 59 $ 1,203 44 $ 948 56 $ 3,734 52 Home equity 44 29 5 29 51 50 141 32 Commercial real estate - - - - 208 56 8 9 Construction and land development - - - - 1 30 - - Multifamily - - - - 11 48 2 48 Consumer - - - - 146 50 1 5 Commercial business - - - - 348 24 - - Purchased credit impaired loans - - - - 424 32 - - Total $ 1,106 $ 1,208 $ 2,137 $ 3,886 Accretable yield, or income recorded for the three months ended March 31, is as follows: (dollars in thousands) First Federal Liberty Savings First Personal AJ Smith Total 2018 $ 36 $ 68 $ - $ - $ 104 2019 22 42 203 155 $ 422 Total $ 58 $ 110 $ 203 $ 155 $ 526 Accretable yield, or income expected to be recorded in the future is as follows: (dollars in thousands) First Federal Liberty Savings First Personal AJ Smith Total 2019 $ - $ - $ 389 $ 695 $ 1,084 2020 - - 491 895 1,386 2021 - - 290 888 1,178 2022 - - 278 888 1,166 2023 - - 61 365 426 Total $ - $ - $ 1,509 $ 3,731 $ 5,240 |