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Loans | 6 Months Ended
--- | ---
Jun. 30, 2014
Loans [Abstract] |
Loans | (4.) LOANS The Company's loan portfolio consisted of the following as of the dates indicated (in thousands):
|  | Principal |  | Net Deferred |  |  |  |
|  | Amount |  | Loan Costs |  |  |  |
|  | Outstanding |  | (Fees) |  |  | Loans, Net |
June 30, 2014 |  |  |  |  |  |  |  |
Commercial business | $ | 277,609 | $ | 76 |  | $ | 277,685 |
Commercial mortgage |  | 469,936 |  | (881 | ) |  | 469,055 |
Residential mortgage |  | 106,342 |  | (136 | ) |  | 106,206 |
Home equity |  | 363,243 |  | 6,335 |  |  | 369,578 |
Consumer indirect |  | 626,418 |  | 26,330 |  |  | 652,748 |
Other consumer |  | 21,205 |  | 187 |  |  | 21,392 |
Total | $ | 1,864,753 | $ | 31,911 |  |  | 1,896,664 |
Allowance for loan losses |  |  |  |  |  |  | (27,166 | )
Total loans, net |  |  |  |  |  | $ | 1,869,498 |
December 31, 2013 |  |  |  |  |  |  |  |
Commercial business | $ | 265,751 | $ | 15 |  | $ | 265,766 |
Commercial mortgage |  | 470,312 |  | (1,028 | ) |  | 469,284 |
Residential mortgage |  | 113,101 |  | (56 | ) |  | 113,045 |
Home equity |  | 320,658 |  | 5,428 |  |  | 326,086 |
Consumer indirect |  | 609,390 |  | 26,978 |  |  | 636,368 |
Other consumer |  | 22,893 |  | 177 |  |  | 23,070 |
Total | $ | 1,802,105 | $ | 31,514 |  |  | 1,833,619 |
Allowance for loan losses |  |  |  |  |  |  | (26,736 | )
Total loans, net |  |  |  |  |  | $ | 1,806,883 |
Loans held for sale (not included above) were comprised entirely of residential real estate mortgages and totaled $201 thousand and $3.4 million as of June 30, 2014 and December 31, 2013, respectively. Past Due Loans Aging The Company's recorded investment, by loan class, in current and nonaccrual loans, as well as an analysis of accruing delinquent loans is set forth as of the dates indicated (in thousands):
|  |  |  |  |  | Greater |  |  |  |  |  |  |  |
|  | 30-59 Days |  | 60-89 Days |  | Than 90 |  | Total Past |  |  |  |  |  | Total
|  | Past Due |  | Past Due |  | Days |  | Due |  | Nonaccrual |  | Current |  | Loans
June 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business | $ | 2,005 | $ | - | $ | - | $ | 2,005 | $ | 3,589 | $ | 272,015 | $ | 277,609
Commercial mortgage |  | - |  | - |  | - |  | - |  | 2,734 |  | 467,202 |  | 469,936
Residential mortgage |  | 408 |  | - |  | - |  | 408 |  | 758 |  | 105,176 |  | 106,342
Home equity |  | 235 |  | 32 |  | - |  | 267 |  | 371 |  | 362,605 |  | 363,243
Consumer indirect |  | 1,590 |  | 324 |  | - |  | 1,914 |  | 1,427 |  | 623,077 |  | 626,418
Other consumer |  | 139 |  | 20 |  | 6 |  | 165 |  | 6 |  | 21,034 |  | 21,205
Total loans, gross | $ | 4,377 | $ | 376 | $ | 6 | $ | 4,759 | $ | 8,885 | $ | 1,851,109 | $ | 1,864,753
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial business | $ | 558 | $ | 199 | $ | - | $ | 757 | $ | 3,474 | $ | 261,520 | $ | 265,751
Commercial mortgage |  | 800 |  | - |  | - |  | 800 |  | 9,663 |  | 459,849 |  | 470,312
Residential mortgage |  | 542 |  | - |  | - |  | 542 |  | 1,078 |  | 111,481 |  | 113,101
Home equity |  | 750 |  | 143 |  | - |  | 893 |  | 925 |  | 318,840 |  | 320,658
Consumer indirect |  | 2,129 |  | 476 |  | - |  | 2,605 |  | 1,471 |  | 605,314 |  | 609,390
Other consumer |  | 126 |  | 72 |  | 6 |  | 204 |  | 5 |  | 22,684 |  | 22,893
Total loans, gross | $ | 4,905 | $ | 890 | $ | 6 | $ | 5,801 | $ | 16,616 | $ | 1,779,688 | $ | 1,802,105
There were no loans past due greater than 90 days and still accruing interest as of June 30, 2014 and December 31, 2013. There were $6 thousand in consumer overdrafts which were past due greater than 90 days as of June 30, 2014 and December 31, 2013. Consumer overdrafts are overdrawn deposit accounts which have been reclassified as loans but by their terms do not accrue interest. Troubled Debt Restructurings A modification of a loan constitutes a troubled debt restructuring ("TDR") when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company offers various types of concessions when modifying loans, however, forgiveness of principal is seldom granted. Commercial loans modified in a TDR may involve temporary interest-only payments, term extensions, reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, requesting additional collateral, releasing collateral for consideration, or substituting or adding a new borrower or guarantor. The following table presents information related to loans modified in a TDR during the periods indicated (dollars in thousands).
| Quarter-to-Date | Year-to-Date
|  |  | Pre- |  | Post- |  |  | Pre- |  | Post-
|  |  | Modification |  | Modification |  |  | Modification |  | Modification
|  |  | Outstanding |  | Outstanding |  |  | Outstanding |  | Outstanding
| Number of |  | Recorded |  | Recorded | Number of |  | Recorded |  | Recorded
| Contracts |  | Investment |  | Investment | Contracts |  | Investment |  | Investment
June 30, 2014 |  |  |  |  |  |  |  |  |  |
Commercial business | 1 | $ | 1,381 | $ | 1,381 | 1 | $ | 1,381 | $ | 1,381
Commercial mortgage | - |  | - |  | - | - |  | - |  | -
Total | 1 | $ | 1,381 | $ | 1,381 | 1 | $ | 1,381 | $ | 1,381
June 30, 2013 |  |  |  |  |  |  |  |  |  |
Commercial business | 1 | $ | 1,273 | $ | 1,273 | 3 | $ | 1,462 | $ | 1,453
Commercial mortgage | - |  | - |  | - | - |  | - |  | -
Total | 1 | $ | 1,273 | $ | 1,273 | 3 | $ | 1,462 | $ | 1,453
All of the loans identified as TDRs by the Company during the six months ended June 30, 2014 and 2013 were previously on nonaccrual status and reported as impaired loans prior to restructuring. The modifications primarily related to extending the amortization periods of the loans. Nonaccrual loans that are restructured remain on nonaccrual status, but may move to accrual status after they have performed according to the restructured terms for a period of time. The TDR classification did not have a material impact on the Company's determination of the allowance for loan losses because the modified loans were impaired and evaluated for a specific reserve both before and after restructuring. There were no loans modified as a TDR within the previous 12 months that defaulted during the six months ended June 30, 2014 or 2013. For purposes of this disclosure, a loan modified as a TDR is considered to have defaulted when the borrower becomes 90 days past due. Impaired Loans Management has determined that specific commercial loans on nonaccrual status and all loans that have had their terms restructured in a troubled debt restructuring are impaired loans. The following table presents the recorded investment, unpaid principal balance and related allowance of impaired loans as of the dates indicated and average recorded investment and interest income recognized on impaired loans for the three month periods ended as of the dates indicated (in thousands):
|  |  |  | Unpaid |  |  |  | Average |  | Interest
|  | Recorded |  | Principal |  | Related |  | Recorded |  | Income
|  | Investment(1) |  | Balance(1) |  | Allowance |  | Investment |  | Recognized
June 30, 2014 |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |
Commercial business | $ | 1,618 | $ | 2,146 | $ | - | $ | 1,823 | $ | -
Commercial mortgage |  | 1,142 |  | 1,173 |  | - |  | 1,093 |  | -
|  | 2,760 |  | 3,319 |  | - |  | 2,916 |  | -
With an allowance recorded: |  |  |  |  |  |  |  |  |  |
Commercial business |  | 1,971 |  | 1,982 |  | 1,056 |  | 1,837 |  | -
Commercial mortgage |  | 1,592 |  | 1,592 |  | 432 |  | 6,733 |  | -
|  | 3,563 |  | 3,574 |  | 1,488 |  | 8,570 |  | -
| $ | 6,323 | $ | 6,893 | $ | 1,488 | $ | 11,486 | $ | -
December 31, 2013 |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |
Commercial business | $ | 1,777 | $ | 2,273 | $ | - | $ | 659 | $ | -
Commercial mortgage |  | 875 |  | 906 |  | - |  | 760 |  | -
|  | 2,652 |  | 3,179 |  | - |  | 1,419 |  | -
With an allowance recorded: |  |  |  |  |  |  |  |  |  |
Commercial business |  | 1,697 |  | 1,717 |  | 201 |  | 3,196 |  | -
Commercial mortgage |  | 8,788 |  | 9,188 |  | 1,057 |  | 3,758 |  | -
|  | 10,485 |  | 10,905 |  | 1,258 |  | 6,954 |  | -
| $ | 13,137 | $ | 14,084 | $ | 1,258 | $ | 8,373 | $ | -
(1) Difference between recorded investment and unpaid principal balance represents partial charge-offs. Credit Quality Indicators The Company categorizes loans 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 such as the fair value of collateral. The Company analyzes commercial business and commercial mortgage loans individually by classifying the loans as to credit risk. Risk ratings are updated any time the situation warrants. The Company uses the following definitions for risk ratings: Special Mention: Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company's credit position at some future date. Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans that do not meet the criteria above that are analyzed individually as part of the process described above are considered "Uncriticized" or pass-rated loans and are included in groups of homogeneous loans with similar risk and loss characteristics. The following table sets forth the Company's commercial loan portfolio, categorized by internally assigned asset classification, as of the dates indicated (in thousands):
|  | Commercial |  | Commercial
|  | Business |  | Mortgage
June 30, 2014 |  |  |  |
Uncriticized | $ | 260,164 | $ | 453,747
Special mention |  | 7,708 |  | 6,136
Substandard |  | 9,737 |  | 10,053
Doubtful |  | - |  | -
Total | $ | 277,609 | $ | 469,936
December 31, 2013 |  |  |  |
Uncriticized | $ | 250,553 | $ | 449,447
Special mention |  | 6,311 |  | 6,895
Substandard |  | 8,887 |  | 13,970
Doubtful |  | - |  | -
Total | $ | 265,751 | $ | 470,312
The Company utilizes payment status as a means of identifying and reporting problem and potential problem retail loans. The Company considers nonaccrual loans and loans past due greater than 90 days and still accruing interest to be non-performing. The following table sets forth the Company's retail loan portfolio, categorized by payment status, as of the dates indicated (in thousands):
|  | Residential |  | Home |  | Consumer |  | Other
|  | Mortgage |  | Equity |  | Indirect |  | Consumer
June 30, 2014 |  |  |  |  |  |  |  |
Performing | $ | 105,584 | $ | 362,872 | $ | 624,991 | $ | 21,193
Non-performing |  | 758 |  | 371 |  | 1,427 |  | 12
Total | $ | 106,342 | $ | 363,243 | $ | 626,418 | $ | 21,205
December 31, 2013 |  |  |  |  |  |  |  |
Performing | $ | 112,023 | $ | 319,733 | $ | 607,919 | $ | 22,882
Non-performing |  | 1,078 |  | 925 |  | 1,471 |  | 11
Total | $ | 113,101 | $ | 320,658 | $ | 609,390 | $ | 22,893
Allowance for Loan Losses Loans and the related allowance for loan losses are presented below as of the dates indicated (in thousands):
|  | Commercial |  | Commercial |  | Residential |  | Home |  | Consumer |  | Other |  |
|  | Business |  | Mortgage |  | Mortgage |  | Equity |  | Indirect |  | Consumer |  | Total
June 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance | $ | 277,609 | $ | 469,936 | $ | 106,342 | $ | 363,243 | $ | 626,418 | $ | 21,205 | $ | 1,864,753
Evaluated for impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually | $ | 3,589 | $ | 2,734 | $ | - | $ | - | $ | - | $ | - | $ | 6,323
Collectively | $ | 274,020 | $ | 467,202 | $ | 106,342 | $ | 363,243 | $ | 626,418 | $ | 21,205 | $ | 1,858,430
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance | $ | 5,402 | $ | 7,633 | $ | 618 | $ | 1,607 | $ | 11,446 | $ | 460 | $ | 27,166
Evaluated for impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually | $ | 1,056 | $ | 432 | $ | - | $ | - | $ | - | $ | - | $ | 1,488
Collectively | $ | 4,346 | $ | 7,201 | $ | 618 | $ | 1,607 | $ | 11,446 | $ | 460 | $ | 25,678
June 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance | $ | 257,784 | $ | 438,513 | $ | 117,939 | $ | 301,429 | $ | 572,350 | $ | 24,107 | $ | 1,712,122
Evaluated for impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually | $ | 5,043 | $ | 3,073 | $ | - | $ | - | $ | - | $ | - | $ | 8,116
Collectively | $ | 252,741 | $ | 435,440 | $ | 117,939 | $ | 301,429 | $ | 572,350 | $ | 24,107 | $ | 1,704,006
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance | $ | 4,755 | $ | 7,125 | $ | 701 | $ | 1,424 | $ | 11,095 | $ | 490 | $ | 25,590
Evaluated for impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually | $ | 956 | $ | 554 | $ | - | $ | - | $ | - | $ | - | $ | 1,510
Collectively | $ | 3,799 | $ | 6,571 | $ | 701 | $ | 1,424 | $ | 11,095 | $ | 490 | $ | 24,080
The following table sets forth the changes in the allowance for loan losses for the three and six month periods ended June 30, 2014 (in thousands):
|  | Commercial |  | Commercial |  |  | Residential |  | Home |  | Consumer |  | Other |  |
|  | Business |  | Mortgage |  |  | Mortgage |  | Equity |  | Indirect |  | Consumer |  | Total
Three months ended June 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 4,689 | $ | 7,980 |  | $ | 672 | $ | 1,371 | $ | 11,984 | $ | 456 | $ | 27,152
Charge-offs |  | 3 |  | 165 |  |  | 69 |  | 156 |  | 2,331 |  | 224 |  | 2,948
Recoveries |  | 68 |  | 6 |  |  | 8 |  | 29 |  | 995 |  | 98 |  | 1,204
Provision (credit) |  | 648 |  | (188 | ) |  | 7 |  | 363 |  | 798 |  | 130 |  | 1,758
Ending balance | $ | 5,402 | $ | 7,633 |  | $ | 618 | $ | 1,607 | $ | 11,446 | $ | 460 | $ | 27,166
Six months ended June 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 4,273 | $ | 7,743 |  | $ | 676 | $ | 1,367 | $ | 12,230 | $ | 447 | $ | 26,736
Charge-offs |  | 71 |  | 165 |  |  | 147 |  | 262 |  | 4,786 |  | 493 |  | 5,924
Recoveries |  | 97 |  | 13 |  |  | 29 |  | 40 |  | 2,100 |  | 211 |  | 2,490
Provision |  | 1,103 |  | 42 |  |  | 60 |  | 462 |  | 1,902 |  | 295 |  | 3,864
Ending balance | $ | 5,402 | $ | 7,633 |  | $ | 618 | $ | 1,607 | $ | 11,446 | $ | 460 | $ | 27,166
The following table sets forth the changes in the allowance for loan losses for the three and six month periods ended June 30, 2013 (in thousands):
|  | Commercial |  |  | Commercial |  | Residential |  | Home |  | Consumer |  | Other |  |
|  | Business |  |  | Mortgage |  | Mortgage |  | Equity |  | Indirect |  | Consumer |  | Total
Three months ended June 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 5,167 |  | $ | 6,971 | $ | 668 | $ | 1,283 | $ | 11,312 | $ | 426 | $ | 25,827
Charge-offs |  | 292 |  |  | 106 |  | 85 |  | 53 |  | 1,929 |  | 229 |  | 2,694
Recoveries |  | 205 |  |  | 143 |  | 13 |  | 73 |  | 759 |  | 71 |  | 1,264
Provision (credit) |  | (325 | ) |  | 117 |  | 105 |  | 121 |  | 953 |  | 222 |  | 1,193
Ending balance | $ | 4,755 |  | $ | 7,125 | $ | 701 | $ | 1,424 | $ | 11,095 | $ | 490 | $ | 25,590
Six months ended June 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 4,884 |  | $ | 6,581 | $ | 740 | $ | 1,282 | $ | 10,715 | $ | 512 | $ | 24,714
Charge-offs |  | 531 |  |  | 109 |  | 247 |  | 322 |  | 3,647 |  | 481 |  | 5,337
Recoveries |  | 242 |  |  | 157 |  | 30 |  | 110 |  | 1,564 |  | 208 |  | 2,311
Provision |  | 160 |  |  | 496 |  | 178 |  | 354 |  | 2,463 |  | 251 |  | 3,902
Ending balance | $ | 4,755 |  | $ | 7,125 | $ | 701 | $ | 1,424 | $ | 11,095 | $ | 490 | $ | 25,590
Risk Characteristics Commercial business loans primarily consist of loans to small to midsize businesses in our market area in a diverse range of industries. These loans are of higher risk and typically are made on the basis of the borrower's ability to make repayment from the cash flow of the borrower's business. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. The credit risk related to commercial loans is largely influenced by general economic conditions and the resulting impact on a borrower's operations or on the value of underlying collateral, if any. Commercial mortgage loans generally have larger balances and involve a greater degree of risk than residential mortgage loans, inferring higher potential losses on an individual customer basis. Loan repayment is often dependent on the successful operation and management of the properties, as well as on the collateral securing the loan. Economic events or conditions in the real estate market could have an adverse impact on the cash flows generated by properties securing the Company's commercial real estate loans and on the value of such properties. Residential mortgage loans and home equities (comprised of home equity loans and home equity lines) are generally made on the basis of the borrower's ability to make repayment from his or her employment and other income, but are secured by real property whose value tends to be more easily ascertainable. Credit risk for these types of loans is generally influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral. Consumer indirect and other consumer loans may entail greater credit risk than residential mortgage loans and home equities, particularly in the case of other consumer loans which are unsecured or, in the case of indirect consumer loans, secured by depreciable assets, such as automobiles or boats. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance. In addition, consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances such as job loss, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 3, 4 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=28368275&loc=d3e5074-111524 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=28368275&loc=d3e5066-111524 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=28368275&loc=d3e5162-111524 + Details
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