Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 8. Loans Loans receivable consist of the following: March 31, 2018 December 31, 2017 (In Thousands) Real Estate: Secured by 1-4 family residential $ 275,547 $ 274,862 Secured by multi-family residential 270,733 248,092 Secured by commercial real estate 1,011,294 987,129 Construction 251,944 265,476 1,809,518 1,775,559 Other Loans: Commercial 500,496 526,142 Home equity and improvement 133,407 135,457 Consumer finance 28,035 29,109 661,938 690,708 Total loans 2,471,456 2,466,267 Deduct: Undisbursed loan funds (111,450 ) (115,972 ) Net deferred loan origination fees and costs (1,676 ) (1,582 ) Allowance for loan loss (27,267 ) (26,683 ) Totals $ 2,331,063 $ 2,322,030 Loan segments have been identified by evaluating the portfolio based on collateral and credit risk characteristics. The following table discloses allowance for loan loss activity for the quarters ended March 31, 2018 and 2017 by portfolio segment (In Thousands): Quarter Ended March, 2018 1-4 Family Multi- Commercial Construction Commercial Home Equity Consumer Total Beginning Allowance $ 2,532 $ 2,702 $ 10,354 $ 647 $ 7,965 $ 2,255 $ 228 $ 26,683 Charge-Offs (16 ) 0 (55 ) 0 (97 ) (117 ) (31 ) (316 ) Recoveries 24 0 184 0 1,757 28 2 1,995 Provisions (6 ) 281 290 20 (1,787 ) 43 64 (1,095 ) Ending Allowance $ 2,534 $ 2,983 $ 10,773 $ 667 $ 7,838 $ 2,209 $ 263 $ 27,267 Quarter Ended March 31, 2017 1-4 Family Multi- Commercial Construction Commercial Home Equity Consumer Total Beginning Allowance $ 2,627 $ 2,228 $ 10,625 $ 450 $ 7,361 $ 2,386 $ 207 $ 25,884 Charge-Offs (49 ) 0 (290 ) 0 0 (54 ) (71 ) (464 ) Recoveries 56 32 34 0 115 33 4 274 Provisions (13 ) (138 ) (159 ) 8 333 (65 ) 89 55 Ending Allowance $ 2,621 $ 2,122 $ 10,210 $ 458 $ 7,809 $ 2,300 $ 229 $ 25,749 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2018 (In Thousands): 1-4 Family Multi Family Residential Residential Commercial Home Equity Consumer Real Estate Real Estate Real Estate Construction Commercial & Improvement Finance Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 218 $ 2 $ 164 $ - $ 83 $ 312 $ - $ 779 Collectively evaluated for impairment 2,316 2,981 10,609 667 7,755 1,897 263 26,488 Acquired with deteriorated credit quality - - - - - - - - Total ending allowance balance $ 2,534 $ 2,983 $ 10,773 $ 667 $ 7,838 $ 2,209 $ 263 $ 27,267 Loans: Loans individually evaluated for impairment $ 7,117 $ 2,042 $ 30,070 $ - $ 10,328 $ 1,463 $ 36 $ 51,056 Loans collectively evaluated for impairment 267,814 268,745 982,263 140,221 491,616 132,707 28,062 2,311,428 Loans acquired with deteriorated credit quality 1,045 300 2,024 - 318 - - 3,687 Total ending loans balance $ 275,976 $ 271,087 $ 1,014,357 $ 140,221 $ 502,262 $ 134,170 $ 28,098 $ 2,366,171 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2017 (In Thousands): 1-4 Family Multi Family Residential Residential Commercial Home Equity Consumer Real Estate Real Estate Real Estate Construction Commercial & Improvement Finance Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 167 $ 7 $ 118 $ - $ 187 $ 279 $ - $ 758 Collectively evaluated for impairment 2,365 2,695 10,236 647 7,778 1,976 228 25,925 Acquired with deteriorated credit quality - - - - - - - - Total ending allowance balance $ 2,532 $ 2,702 $ 10,354 $ 647 $ 7,965 $ 2,255 $ 228 $ 26,683 Loans: Loans individually evaluated for impairment $ 6,910 $ 2,278 $ 31,821 $ - $ 14,373 $ 1,176 $ 50 $ 56,608 Loans collectively evaluated for impairment 267,377 245,823 956,238 149,174 513,218 135,098 29,125 2,296,053 Loans acquired with deteriorated credit quality 1,069 301 2,121 - 337 - - 3,828 Total ending loans balance $ 275,356 $ 248,402 $ 990,180 $ 149,174 $ 527,928 $ 136,274 $ 29,175 $ 2,356,489 The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands): Three Months Ended March 31, 2018 Average Balance Interest Income Recognized Cash Basis Income Recognized Residential Owner Occupied $ 4,639 $ 32 $ 31 Residential Non Owner Occupied 2,509 44 41 Total Residential Real Estate 7,148 76 72 Construction - - - Multi-Family 2,049 27 26 CRE Owner Occupied 13,225 44 35 CRE Non Owner Occupied 3,482 34 34 Agriculture Land 11,516 95 42 Other CRE 1,486 25 20 Total Commercial Real Estate 29,709 198 131 Commercial Working Capital 5,208 24 24 Commercial Other 5,100 25 23 Total Commercial 10,308 49 47 Home Equity and Improvement 1,474 11 11 Consumer Finance 39 1 1 Total Impaired Loans $ 50,727 $ 362 $ 288 The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands): Three Months Ended March 31, 2017 Average Balance Interest Income Recognized Cash Basis Income Recognized Residential Owner Occupied $ 2,820 $ 28 $ 28 Residential Non Owner Occupied 3,891 36 36 Total Residential Real Estate 6,711 64 64 Construction 3,374 10 10 Multi-Family 4,614 22 22 CRE Owner Occupied 4,499 42 39 CRE Non Owner Occupied 2,707 47 19 Agriculture Land 1,668 13 12 Other CRE 13,488 124 92 Total Commercial Real Estate - - - Commercial Working Capital 2,372 19 19 Commercial Other 1,722 21 16 Total Commercial 4,094 40 35 Home Equity and Improvement 1,254 10 10 Consumer Finance 74 1 1 Total Impaired Loans $ 28,995 $ 249 $ 212 The following table presents loans individually evaluated for impairment by class of loans (In Thousands): March 31, 2018 December 31, 2017 Unpaid Principal Balance* Recorded Investment Allowance for Loan Losses Allocated Unpaid Principal Balance* Recorded Investment Allowance for Loan Losses Allocated With no allowance recorded: Residential Owner Occupied $ 2,744 $ 2,597 $ - $ 2,507 $ 2,364 $ - Residential Non Owner Occupied 1,468 1,464 - 1,711 1,708 - Total 1-4 Family Residential Real Estate 4,212 4,061 - 4,218 4,072 - Multi-Family Residential Real Estate 1,863 1,870 - 2,095 2,102 - CRE Owner Occupied 11,847 11,387 - 12,273 11,804 - CRE Non Owner Occupied 3,035 2,873 - 3,085 2,925 - Agriculture Land 11,682 11,860 - 13,029 13,185 - Other CRE 959 748 - 981 768 - Total Commercial Real Estate 27,523 26,868 - 29,368 28,682 - Construction - - - - - - Commercial Working Capital 4,888 4,815 - 5,462 5,422 - Commercial Other 4,744 4,757 - 9,916 7,644 - Total Commercial 9,632 9,572 - 15,378 13,066 - Home Equity and Home Improvement 614 569 - 630 584 - Consumer Finance 36 36 - 42 42 - Total loans with no allowance recorded $ 43,880 $ 42,976 $ - $ 51,731 $ 48,548 $ - With an allowance recorded: Residential Owner Occupied $ 1,998 $ 1,978 $ 144 $ 1,841 $ 1,814 $ 137 Residential Non Owner Occupied 1,076 1,078 74 1,031 1,024 30 Total 1-4 Family Residential Real Estate 3,074 3,056 218 2,872 2,838 167 Multi-Family Residential Real Estate 171 172 2 175 176 7 CRE Owner Occupied 2,077 1,616 50 2,007 1,546 44 CRE Non Owner Occupied 644 584 42 651 593 28 Agriculture Land 287 284 32 293 292 14 Other CRE 916 718 40 909 708 32 Total Commercial Real Estate 3,924 3,202 164 3,860 3,139 118 Construction - - - - - - Commercial Working Capital 458 461 62 447 449 77 Commercial Other 293 295 21 854 858 110 Total Commercial 751 756 83 1,301 1,307 187 Home Equity and Home Improvement 898 894 312 596 592 279 Consumer Finance - - - 8 8 - Total loans with an allowance recorded $ 8,818 $ 8,080 $ 779 $ 8,812 $ 8,060 $ 758 * Presented gross of charge offs The following table presents the current balance of the aggregate amounts of non-performing assets, comprised of non-performing loans and real estate owned on the dates indicated: March 31, 2018 December 31, (In Thousands) Non-accrual loans $ 27,925 $ 30,715 Loans over 90 days past due and still accruing - - Total non-performing loans 27,925 30,715 Real estate and other assets held for sale 1,440 1,532 Total non-performing assets $ 29,365 $ 32,247 Troubled debt restructuring, still accruing $ 13,722 $ 13,770 The following table presents the aging of the recorded investment in past due and non- accrual loans as of March 31, 2018, by class of loans (In Thousands): Current 30-59 days 60-89 days 90+ days Total Total Residential Owner Occupied $ 177,799 $ 537 $ 259 $ 933 $ 1,729 $ 2,111 Residential Non Owner Occupied 96,275 76 - 97 173 342 Total 1-4 Family Residential Real Estate 274,074 613 259 1,030 1,902 2,453 Multi-Family Residential Real Estate 271,087 - - - - 124 CRE Owner Occupied 407,019 592 76 847 1,515 10,170 CRE Non Owner Occupied 424,247 1,074 29 263 1,366 2,164 Agriculture Land 130,940 82 - 208 290 4,275 Other Commercial Real Estate 48,868 13 - 99 112 611 Total Commercial Real Estate 1,011,074 1,761 105 1,417 3,283 17,220 Construction 140,221 - - - - - Commercial Working Capital 229,844 209 - 100 309 3,550 Commercial Other 271,422 49 - 638 687 3,620 Total Commercial 501,266 258 - 738 996 7,170 Home Equity/Home Improvement 133,552 29 7 582 618 909 Consumer Finance 27,764 199 96 39 334 39 Total Loans $ 2,359,038 $ 2,860 $ 467 $ 3,806 $ 7,133 $ 27,915 The following table presents the aging of the recorded investment in past due and non-accrual loans as of December 31, 2017, by class of loans (In Thousands): Current 30-59 days 60-89 days 90+ days Total Total Residential Owner Occupied $ 175,139 $ 821 $ 1,033 $ 1,227 $ 3,081 $ 2,510 Residential Non Owner Occupied 96,400 495 8 233 736 520 Total 1-4 Family Residential Real Estate 271,539 1,316 1,041 1,460 3,817 3,030 Multi-Family Residential Real Estate 247,980 422 - - 422 128 CRE Owner Occupied 393,125 195 188 1,268 1,651 10,775 CRE Non Owner Occupied 403,656 1 91 424 516 2,431 Agriculture Land 131,753 412 - 66 478 4,144 Other Commercial Real Estate 58,784 13 - 204 217 734 Total Commercial Real Estate 987,318 621 279 1,962 2,862 18,084 Construction 149,174 - - - - - Commercial Working Capital 233,632 102 1,264 876 2,242 2,369 Commercial Other 291,455 82 - 517 599 6,474 Total Commercial 525,087 184 1,264 1,393 2,841 8,843 Home Equity and Home Improvement 133,144 2,490 434 206 3,130 591 Consumer Finance 28,800 293 80 2 375 27 Total Loans $ 2,343,042 $ 5,326 $ 3,098 $ 5,023 $ 13,447 $ 30,703 Troubled Debt Restructurings As of March 31, 2018, and December 31, 2017, the Company had a recorded investment in troubled debt restructurings (“TDRs”) of $20.4 million and $21.7 million, respectively. The Company allocated $686,000 and $751,000 of specific reserves to those loans at March 31, 2018, and December 31, 2017, and had committed to lend additional amounts totaling up to $769,000 and $242,000 at March 31, 2018, and December 31, 2017, respectively. The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Each TDR is uniquely designed to meet the specific needs of the borrower. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral or an additional guarantor is often requested when granting a concession. Commercial mortgage loans modified in a TDR often involve temporary interest-only payments, re-amortization of remaining debt in order to lower payments, and sometimes reducing the interest rate lower than the current market rate. Residential mortgage loans modified in a TDR are comprised of loans where monthly payments are lowered, either through interest rate reductions or principal only payments for a period of time, to accommodate the borrowers’ financial needs, interest is capitalized into principal, or the term and amortization are extended. Home equity modifications are made infrequently and usually involve providing an interest rate that is lower than the borrower would be able to obtain due to credit issues. All retail loans where the borrower is in bankruptcy are classified as TDRs regardless of whether or not a concession is made. Of the loans modified in a TDR, as of March 31, 2018, $6.6 million were on non-accrual status and partial charge-offs have in some cases been taken against the outstanding balance. Loans modified as a TDR may have the financial effect of increasing the allowance associated with the loan. If the loan is determined to be collateral dependent, the estimated fair value of the collateral, less any selling costs is used to determine if there is a need for a specific allowance or charge-off. If the loan is determined to be cash flow dependent, the allowance is measured based on the present value of expected future cash flows discounted at the loan’s pre-modification effective interest rate. The following table present loans by class modified as TDRs that occurred during the three month periods ending March 31, 2018, and March 31, 2017: Loans Modified as a TDR for the Three Months Ended March 31, 2018 ($ in thousands) Loans Modified as a TDR for the Three Months Ended March 31, 2017 ($ in thousands) Troubled Debt Restructurings Number of Loans Recorded Investment (as of period end) Number of Loans Recorded Investment (as of period end) 1-4 Family Owner Occupied 3 $ 145 4 $ 100 1-4 Family Non Owner Occupied 1 69 2 84 Multi Family 0 - 0 - CRE Owner Occupied 2 650 1 119 CRE Non Owner Occupied 0 - 0 - Agriculture Land 0 - 0 - Other CRE 0 - 0 - Commercial Working Capital 4 2,114 0 - Commercial Other 0 - 1 46 Home Equity and Improvement 0 - 1 25 Consumer Finance 0 - 2 15 Total 10 $ 2,978 11 $ 389 The loans described above decreased the ALLL by $5,000 in the three month period ending March 31, 2018 and decreased the ALLL by $19,000 in the three month period ending March 31, 2017. Of the 2018 modifications, one was made a TDR due to terming out lines of credit, five were made TDR due to advancing or renewing money to a watch list credit, one loan made a TDR due to an reduction of the interest rate, and three were made a TDR because the current debt was refinanced due to maturity or for payment relief. The following table present loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the three month period ended March 31, 2018, and March 31, 2017: Three Months Ended March 31, 2018 ($ in thousands) Three Months Ended March 31, 2017 ($ in thousands) Troubled Debt Restructurings That Subsequently Defaulted Number of Loans Recorded Investment (as of period end) Number of Loans Recorded Investment (as of period end) 1-4 Family Owner Occupied 0 $ - 0 $ - 1-4 Family Non Owner Occupied 0 - 0 - CRE Owner Occupied 0 - 0 - CRE Non Owner Occupied 0 - 0 - Agriculture Land 0 - 0 - Other CRE 0 - 0 - Commercial Working Capital or Other 0 - 0 - Commercial Other 1 197 0 - Home Equity and Improvement 0 - 0 - Consumer Finance 0 - 0 - Total 1 $ 197 0 $ - The TDRs that subsequently defaulted described above had no effect on the allowance for loan losses for the three month period ended March 31, 2018. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed on the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. Credit Quality Indicators Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans are analyzed individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans, such as commercial and commercial real estate loans and certain homogenous mortgage, home equity and consumer loans. This analysis is performed on a quarterly basis. First Defiance uses the following definitions for risk ratings: Special Mention. Substandard. Doubtful. Not Graded. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of March 31, 2018, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands): Class Pass Special Mention Substandard Doubtful Not Graded Total 1-4 Family Owner Occupied $ 6,764 $ 96 $ 2,387 $ - $ 170,282 $ 179,529 1-4 Family Non Owner Occupied 84,434 1,280 3,385 - 7,348 96,447 Total 1-4 Family Real Estate 91,198 1,376 5,772 - 177,630 275,976 Multi-Family Residential Real Estate 266,216 2,063 2,698 - 110 271,087 CRE Owner Occupied 384,271 11,521 13,100 - 125 409,017 CRE Non Owner Occupied 412,587 7,425 5,119 - - 425,131 Agriculture Land 109,860 7,896 13,473 - - 131,229 Other CRE 46,014 159 1,664 - 1,143 48,980 Total Commercial Real Estate 952,732 27,001 33,356 - 1,268 1,014,357 Construction 119,950 1,153 - - 19,118 140,221 Commercial Working Capital 206,697 18,428 5,028 - - 230,153 Commercial Other 263,830 2,831 5,448 - - 272,109 Total Commercial 470,527 21,259 10,476 - - 502,262 Home Equity and Home Improvement - - 931 - 133,239 134,170 Consumer Finance - - 128 - 27,970 28,098 Total Loans $ 1,900,623 $ 52,852 $ 53,361 $ - $ 359,335 $ 2,366,171 As of December 31, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands): Class Pass Special Mention Substandard Doubtful Not Graded Total Residential Owner Occupied $ 7,534 $ 99 $ 2,367 $ - $ 168,220 $ 178,220 Residential Non Owner Occupied 85,802 935 3,835 - 6,564 97,136 Total 1-4 Family Real Estate 93,336 1,034 6,202 - 174,784 275,356 Multi-Family Residential Real Estate 242,969 2,503 2,819 - 111 248,402 CRE Owner Occupied 370,613 10,432 13,575 - 156 394,776 CRE Non Owner Occupied 395,264 3,464 5,444 - - 404,172 Agriculture Land 114,776 2,639 14,816 - - 132,231 Other CRE 56,133 165 1,788 - 915 59,001 Total Commercial Real Estate 936,786 16,700 35,623 - 1,071 990,180 Construction 125,519 1,254 - - 22,401 149,174 Commercial Working Capital 222,526 7,605 5,743 - - 235,874 Commercial Other 280,013 3,443 8,598 - - 292,054 Total Commercial 502,539 11,048 14,341 - - 527,928 Home Equity and Home Improvement - - 600 - 135,674 136,274 Consumer Finance - - 82 - 29,093 29,175 Total Loans $ 1,901,149 $ 32,539 $ 59,667 $ - $ 363,134 $ 2,356,489 The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The outstanding balance of those loans is as follows (In Thousands): March 31, 2018 December 31, 2017 1-4 Family Residential Real Estate $ 1,124 $ 1,154 Multi-Family Residential Real Estate 307 309 Commercial Real Estate Loans 2,833 2,921 Commercial 389 407 Consumer 1 2 Total Outstanding Balance $ 4,654 $ 4,793 Recorded Investment, net of allowance of $0 $ 3,687 $ 3,828 Accretable yield, or income expected to be collected, is as follows: 2018 2017 Balance at January 1 $ 804 $ - New Loans Purchased - 1,034 Accretion of Income (15 ) - Reclassification from Non-accretable - - Charge-off of Accretable Yield - - Balance at March 31 $ 789 $ 1,034 For those purchased loans disclosed above, the Company did not increase the allowance for loan losses during the three months ended March 31, 2018 or 2017. No allowances for loan losses were reversed during the same period. Contractually required payments receivable of loans purchased with evidence of credit deterioration during the period ended March 31, 2017, using information as of the date of acquisition are included in the table below. There were no such loans purchased during the period ended March 31, 2018. (In Thousands) 1-4 Family Residential Real Estate $ 1,720 Commercial Real Estate 4,724 Commercial 785 Consumer 4 Total $ 7,233 Cash Flows Expected to be Collected at Acquisition $ 5,721 Fair Value of Acquired Loans at Acquisition $ 4,703 Foreclosure Proceedings Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $741,000 as of March 31, 2018. |