Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | 7. Loans Loans receivable consist of the following: December 31, December 31, (In Thousands) Real Estate: Secured by 1-4 family residential $ 322,686 $ 274,862 Secured by multi-family residential 278,358 248,092 Secured by commercial real estate 1,126,452 987,129 Construction 265,772 265,476 1,993,268 1,775,559 Other Loans: Commercial 509,577 526,142 Home equity and improvement 128,152 135,457 Consumer Finance 34,405 29,109 672,134 690,708 Total loans 2,665,402 2,466,267 Deduct: Undisbursed loan funds (123,293 ) (115,972 ) Net deferred loan origination fees and costs (2,070 ) (1,582 ) Allowance for loan loss (28,331 ) (26,683 ) Totals $ 2,511,708 $ 2,322,030 Loan segments have been identified by evaluating the portfolio based on collateral and credit risk characteristics. The following table discloses the year-to-date activity in the allowance for loan loss for the dates indicated by portfolio segment (In Thousands): Year to Date December 31, 1-4 Family Multi- Family 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 (261 ) - (1,387 ) - (724 ) (269 ) (233 ) (2,874 ) Recoveries 131 57 720 - 2,221 191 26 3,346 Provisions 479 342 2,354 35 (2,181 ) (151 ) 298 1,176 Ending Allowance $ 2,881 $ 3,101 $ 12,041 $ 682 $ 7,281 $ 2,026 $ 319 $ 28,331 Year to Date December 31, 1-4 Family Multi- Family 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 (279 ) - (429 ) - (2,301 ) (301 ) (139 ) (3,449 ) Recoveries 115 32 657 - 243 167 85 1,299 Provisions 69 442 (499 ) 197 2,662 3 75 2,949 Ending Allowance $ 2,532 $ 2,702 $ 10,354 $ 647 $ 7,965 $ 2,255 $ 228 $ 26,683 Year to Date December 31, 1-4 Family Multi- Family Commercial Construction Commercial Home Equity Consumer Total Beginning Allowance $3,212 $2,151 $11,772 $517 $5,255 $2,304 $171 $25,382 Charge-Offs (350 ) - (92 ) - (615 ) (268 ) (94 ) (1,419 ) Recoveries 166 - 923 - 335 150 64 1,638 Provisions (401 ) 77 (1,978 ) (67 ) 2,386 200 66 283 Ending Allowance $ 2,627 $ 2,228 $ 10,625 $ 450 $ 7,361 $ 2,386 $ 207 $ 25,884 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, 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 $ 175 $ 3 $ 95 $ - $ 79 $ 242 $ 1 $ 595 Collectively evaluated for impairment 2,706 3,098 11,946 682 7,202 1,784 318 27,736 Acquired with deteriorated credit quality - - - - - - - - Total ending allowance balance $ 2,881 $ 3,101 $ 12,041 $ 682 $ 7,281 $ 2,026 $ 319 $ 28,331 Loans: Loans individually evaluated for impairment $ 6,774 $ 1,347 $ 26,334 $ - $ 10,477 $ 963 $ 45 $ 45,940 Loans collectively evaluated for impairment 315,385 277,105 1,102,355 142,096 500,730 128,065 34,486 2,500,222 Loans acquired with deteriorated credit quality 1,012 296 846 - 177 - - 2,331 Total ending loans balance $ 323,171 $ 278,748 $ 1,129,535 $ 142,096 $ 511,384 $ 129,028 $ 34,531 $ 2,548,493 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 tables presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans for the years ended December 31, 2018, 2017 and 2016 (In Thousands): Twelve Months Ended December 31, 2018 Average Interest Cash Basis Residential Owner Occupied $ 4,704 $ 151 $ 150 Residential Non Owner Occupied 2,354 133 126 Total 1-4 Family Residential Real Estate 7,058 284 276 Multi-Family Residential Real Estate 1,644 90 89 CRE Owner Occupied 9,992 234 221 CRE Non Owner Occupied 2,620 94 93 Agriculture Land 13,827 575 575 Other CRE 1,304 106 106 Total Commercial Real Estate 27,743 1,009 995 Construction - - - Commercial Working Capital 8,047 256 245 Commercial Other 3,501 119 119 Total Commercial 11,548 375 364 Home Equity and Home Improvement 1,150 38 38 Consumer Finance 39 4 4 Total Impaired Loans $ 49,182 $ 1,800 $ 1,766 Twelve Months Ended December 31, 2017 Average Interest Cash Basis Residential Owner Occupied $ 3,811 $ 138 $ 138 Residential Non Owner Occupied 3,038 138 138 Total 1-4 Family Residential Real Estate 6,849 276 276 Multi-Family Residential Real Estate 2,471 58 58 CRE Owner Occupied 10,592 110 109 CRE Non Owner Occupied 3,768 140 133 Agriculture Land 9,667 472 229 Other CRE 1,603 76 70 Total Commercial Real Estate 25,630 798 541 Construction - - - Commercial Working Capital 5,235 129 123 Commercial Other 5,940 109 79 Total Commercial 11,175 238 202 Home Equity and Home Improvement 1,217 43 43 Consumer Finance 59 4 4 Total Impaired Loans $ 47,401 $ 1,417 $ 1,124 Twelve Months Ended December 31, 2016 Average Interest Cash Basis Residential Owner Occupied $ 3,954 $ 244 $ 237 Residential Non Owner Occupied 3,133 211 210 Total 1-4 Family Residential Real Estate 7,087 455 447 Multi-Family Residential Real Estate 3,946 124 123 CRE Owner Occupied 6,925 203 183 CRE Non Owner Occupied 5,351 411 407 Agriculture Land 2,283 128 68 Other CRE 1,632 71 70 Total Commercial Real Estate 16,191 813 728 Construction - - - Commercial Working Capital 1,606 109 90 Commercial Other 2,393 81 79 Total Commercial 3,999 190 169 Home Equity and Home Improvement 1,543 85 83 Consumer Finance 67 8 8 Total Impaired Loans $ 32,833 $ 1,675 $ 1,558 The following table presents loans individually evaluated for impairment by class of loans (In Thousands): December 31, 2018 December 31, 2017 Unpaid Principal Balance* Recorded Allowance Unpaid Recorded Allowance With no allowance recorded: Residential Owner Occupied $ 901 $ 775 $ - $ 2,507 $ 2,364 $ - Residential Non Owner Occupied 950 955 - 1,711 1,708 - Total 1-4 Family Residential Real Estate 1,851 1,730 - 4,218 4,072 - Multi-Family Residential Real Estate 1,296 1,302 - 2,095 2,102 - CRE Owner Occupied 7,464 6,202 - 12,273 11,804 - CRE Non Owner Occupied 1,824 1,659 - 3,085 2,925 - Agriculture Land 14,915 14,994 - 13,029 13,185 - Other CRE 464 462 - 981 768 - Total Commercial Real Estate 24,667 23,317 - 29,368 28,682 - Construction - - - - - - Commercial Working Capital 7,569 7,498 - 5,462 5,422 - Commercial Other 2,095 2,100 - 9,916 7,644 - Total Commercial 9,664 9,598 - 15,378 13,066 - Home Equity and Home Improvement - - - 630 584 - Consumer Finance - - - 42 42 - Total loans with no allowance recorded $ 37,478 $ 35,947 $ - $ 51,731 $ 48,548 $ - With an allowance recorded: Residential Owner Occupied $ 3,926 $ 3,884 $ 148 $ 1,841 $ 1,814 $ 137 Residential Non Owner Occupied 1,152 1,160 27 1,031 1,024 30 Total 1-4 Family Residential Real Estate 5,078 5,044 175 2,872 2,838 167 Multi-Family Residential Real Estate 44 44 3 175 176 7 CRE Owner Occupied 2,419 1,935 38 2,007 1,546 44 CRE Non Owner Occupied 350 353 16 651 593 28 Agriculture Land 37 38 2 293 292 14 Other CRE 1,107 691 39 909 708 32 Total Commercial Real Estate 3,913 3,017 95 3,860 3,139 118 Construction - - - - - - Commercial Working Capital 525 528 55 447 449 77 Commercial Other 560 352 24 854 858 110 Total Commercial 1,085 880 79 1,301 1,307 187 Home Equity and Home Improvement 1,013 963 242 596 592 279 Consumer Finance 45 45 1 8 8 - Total loans with an allowance recorded $ 11,178 $ 9,993 $ 595 $ 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: December 31, December 31, (In Thousands) Non-accrual loans $ 19,016 $ 30,715 Loans over 90 days past due and still accruing - - Total non-performing loans 19,016 30,715 Real estate and other assets held for sale 1,205 1,532 Total non-performing assets $ 20,221 $ 32,247 Troubled debt restructuring, still accruing $ 11,573 $ 13,770 The following table presents the aging of the recorded investment in past due and non-accrual loans as of December 31, 2018, by class of loans: (In Thousands) Current 30-59 days 60-89 days 90+ days Total Total Non Residential Owner Occupied $ 199,664 $ 887 $ 821 $ 1,402 $ 3,110 $ 3,266 Residential Non Owner Occupied 119,988 64 180 165 409 363 Total 1-4 Family Residential Real Estate 319,652 951 1,001 1,567 3,519 3,629 Multi-Family Residential Real Estate 278,748 - - - - 102 CRE Owner Occupied 416,879 52 300 138 490 4,377 CRE Non Owner Occupied 534,823 6 119 - 125 620 Agriculture Land 129,040 66 - 2,869 2,935 5,253 Other Commercial Real Estate 45,232 11 - - 11 - Total Commercial Real Estate 1,125,974 135 419 3,007 3,561 10,250 Construction 142,096 - - - - - Commercial Working Capital 217,832 268 - 3,838 4,106 4,021 Commercial Other 289,125 32 54 235 321 480 Total Commercial 506,957 300 54 4,073 4,427 4,501 Home Equity and Home Improvement 127,346 1,446 146 90 1,682 394 Consumer Finance 34,224 134 77 96 307 126 Total Loans $ 2,534,997 $ 2,966 $ 1,697 $ 8,833 $ 13,496 $ 19,002 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 Non 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 December 31, 2018 and 2017, the Company had a recorded investment in troubled debt restructurings (“TDRs”) of $19.2 million and $21.7 million, respectively. The Company allocated $581,000 and $751,000, of specific reserves to those loans at December 31, 2018 and 2017, and committed to lend additional amounts totaling up to $169,000 and $242,000 at December 31, 2018 and 2017. 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 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 real estate 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, $7.6 million are 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 presents loans by class modified as TDRs that occurred during the years indicated (Dollars in Thousands): Loans Modified as a TDR for the Loans Modified as a TDR for the Loans Modified as a TDR for the TDRs Number Recorded Number Recorded Number of Recorded Residential Owner Occupied 18 $ 980 24 $ 982 17 $ 778 Residential Non Owner Occupied 4 189 5 193 5 494 Multi Family - - - - 2 1,885 CRE Owner Occupied 12 1,639 2 149 - - CRE Non Owner Occupied 1 42 1 262 5 974 Agriculture Land - - 5 1,700 1 45 Other CRE - - 2 153 1 348 Commercial Working Capital 5 2,898 7 1,475 1 226 Commercial Other 1 44 7 3,833 1 587 Home Equity and Home Improvement 7 89 6 152 9 281 Consumer Finance 8 29 5 14 2 14 Total 56 $ 5,910 64 $ 8,913 44 $ 5,632 The loans described above increased the allowance for loan losses (“ALLL”) by $110,000 for the year ended December 31, 2018, decreased the ALLL by $104,000 for the year ended December 31, 2017, and increased the ALLL by $413,000 for the year ended December 31, 2016. Of the 2018 modifications, four were made a TDR due to terming out lines of credit, 18 were made a TDR due to advancing or renewing money to a watch list credit, one loan was made a TDR due to a reduction of the interest rate, five were made a TDR due to extending the maturity, 18 were made a TDR due to bankruptcy and 10 were made a TDR because the current debt was refinanced due to maturity or for payment relief. The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the indicated: Twelve Months Ended Twelve Months Ended Twelve Months Ended TDRs That Subsequently Defaulted: Number of Recorded Number of Recorded Number Recorded Residential Owner Occupied 1 $ 76 - $ - - $ - Residential Non Owner Occupied 1 45 - - - - CRE Owner Occupied - - - - - - CRE Non Owner Occupied - - - - 1 205 Agriculture Land - - - - - - Other CRE - - - - - - Commercial Working Capital 3 2,644 - - - - Commercial Other 1 30 - - - - Home Equity and Home Improvement 1 61 - - - - Consumer - - - - - - Total 7 $ 2,856 - $ - 1 $ 205 The TDRs that subsequently defaulted described above increased the ALLL by $17,000 for the year ended December 31, 2018, and had no effect on the ALLL for the years ended December 31, 2017 and 2016. A default for purposes of this disclosure is a TDR loan in which the borrower is 90 days contractually past due under the modified terms. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed regarding 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 December 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 Substandard Doubtful Not Total Residential Owner Occupied $ 9,419 $ 91 $ 3,130 $ - $ 190,134 $ 202,774 Residential Non Owner Occupied 109,885 700 3,087 - 6,725 120,397 Total 1-4 Family Real Estate 119,304 791 6,217 - 196,859 323,171 Multi-Family Residential Real Estate 276,594 - 2,047 - 107 278,748 CRE Owner Occupied 402,008 5,724 9,547 - 89 417,368 CRE Non Owner Occupied 529,842 2,807 2,297 - - 534,946 Agriculture Land 111,595 4,023 16,358 - - 131,976 Other CRE 42,189 730 1,244 - 1,082 45,245 Total Commercial Real Estate 1,085,634 13,284 29,446 - 1,171 1,129,535 Construction 122,775 219 - - 19,102 142,096 Commercial Working Capital 205,903 6,546 9,489 - - 221,938 Commercial Other 279,234 7,011 3,201 - - 289,446 Total Commercial 485,137 13,557 12,690 - - 511,384 Home Equity and Home Improvement - - 434 - 128,594 129,028 Consumer Finance - - 206 - 34,325 34,531 Total Loans $ 2,089,444 $ 27,851 $ 51,040 $ - $ 380,158 $ 2,548,493 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 Substandard Doubtful Not 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 Certain loans acquired had evidence that the credit quality of the loan had deteriorated since its origination and in management’s assessment at the acquisition date it was probable that First Defiance would be unable to collect all contractually required payments due. In accordance with FASB ASC Topic 310 Subtopic 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality December 31, 2018 December 31, 2017 1-4 Family Residential Real Estate $ 1,045 $ 1,154 Multi-Family Residential Real Estate 300 309 Commercial Real Estate Loans 899 2,921 Commercial 227 407 Consumer - 2 Total Outstanding Balance $ 2,471 $ 4,793 Recorded Investment, net of allowance of $0 $ 2,331 $ 3,828 Accretable yield, or income expected to be collected, is as follows: 2018 2017 Balance at January 1 $ 804 $ - New Loans Purchased - 1,018 Accretion of Income (139 ) (163 ) Reclassification from Non-accretable - - Charge-off of Accretable Yield (197 ) (8 ) Balance at December 31 $ 468 $ 847 For those purchased loans disclosed above, the Company did not increase the allowance for loan losses during the twelve months ended December 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 December 31, 2017, using information as of the date of acquisition are included in the table below. There were no such loans purchased during the year ended December 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 Loans to executive officers, directors, and their affiliates are as follows: Years Ended December 31, 2018 2017 (In Thousands) Beginning balance $ 16,728 $ 16,199 New loans 10,806 5,857 Effect of changes in composition of related parties (217 ) - Repayments (5,754 ) (5,328 ) Ending Balance $ 21,563 $ 16,728 Foreclosure Proceedings Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $796,000 as of December 31, 2018. |