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LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses and balances in the loan portfolio were as follows:

(Dollars in thousands)		Agricultural				Commercial and Industrial				Consumer				Commercial Real Estate				Construction Real Estate				Residential Real Estate				Unallocated				Total
Allowance for Loan Losses
Three Months Ended September 30, 2016
Beginning balance		$	399			$	656			$	279			$	1,133			$	44			$	1,222			$	563			$	4,296
Charge-offs			—				—				(68	)			—				—				(25	)			—				(93	)
Recoveries			—				8				49				5				—				11				—				73
Provision			(11	)			(55	)			30				340				(3	)			(205	)			(96	)			—
Ending balance		$	388			$	609			$	290			$	1,478			$	41			$	1,003			$	467			$	4,276
Nine Months Ended September 30, 2016
Beginning balance		$	420			$	586			$	297			$	1,030			$	46			$	1,388			$	427			$	4,194
Charge-offs			—				(33	)			(136	)			—				—				(94	)			—				(263	)
Recoveries			—				31				119				35				—				160				—				345
Provision			(32	)			26				10				412				(5	)			(451	)			40				—
Ending balance		$	388			$	610			$	290			$	1,477			$	41			$	1,003			$	467			$	4,276
Individually evaluated for impairment		$	4			$	8			$	1			$	167			$	—			$	321			$	—			$	501
Collectively evaluated for impairment		$	384			$	602			$	289			$	1,310			$	41			$	682			$	467			$	3,775
Three Months Ended September 30, 2015
Beginning balance		$	279			$	498			$	193			$	1,284			$	28			$	1,375			$	695			$	4,352
Charge-offs			—				—				(65	)			—				—				(25	)			—				(90	)
Recoveries			—				11				25				15				—				4				—				55
Provision			10				(14	)			57				(179	)			15				(2	)			113				—
Ending balance		$	289			$	495			$	210			$	1,120			$	43			$	1,352			$	808			$	4,317
Nine Months Ended September 30, 2015
Beginning balance		$	187			$	527			$	183			$	1,641			$	9			$	1,193			$	433			$	4,173
Charge-offs			—				—				(172	)			—				—				(46	)			—				(218	)
Recoveries			1				59				104				36				—				62				—				262
Provision			101				(91	)			95				(557	)			34				143				375				100
Ending balance		$	289			$	495			$	210			$	1,120			$	43			$	1,352			$	808			$	4,317
Individually evaluated for impairment		$	3			$	1			$	29			$	296			$	—			$	355			$	—			$	684
Collectively evaluated for impairment		$	286			$	494			$	181			$	824			$	43			$	997			$	808			$	3,633
Loans
September 30, 2016
Individually evaluated for impairment		$	534			$	450			$	26			$	1,459			$	—			$	3,109							$	5,578
Collectively evaluated for impairment			37,744				95,221				21,427				107,608				6,027				88,998								357,025
Ending balance		$	38,278			$	95,671			$	21,453			$	109,067			$	6,027			$	92,107							$	362,603
December 31, 2015
Individually evaluated for impairment		$	50			$	192			$	24			$	2,790			$	—			$	2,529							$	5,585
Collectively evaluated for impairment			40,182				94,155				20,066				94,946				5,390				88,980								343,719
Ending balance		$	40,232			$	94,347			$	20,090			$	97,736			$	5,390			$	91,509							$	349,304

The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans, (2) the level of classified business loans, and (3) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 8. A description of the characteristics of the ratings follows:

Risk ratings 1 and 2: These loans are considered pass credits. They exhibit good to exceptional credit risk and demonstrate the ability to repay the loan from normal business operations.

Risk rating 3: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations.

Risk rating 4: These loans are considered pass credits. However, they have potential developing weaknesses that, if not corrected, may cause deterioration in the ability of the borrower to repay the loan. While a loss is possible for a loan with this rating, it is not anticipated.

Risk rating 5: These loans are considered special mention credits. Loans in this risk rating are considered to be inadequately protected by the net worth and debt service coverage of the borrower or of any pledged collateral. These loans have well defined weaknesses that may jeopardize the borrower’s ability to repay the loan. If the weaknesses are not corrected, loss of principal and interest could be probable.

Risk rating 6: These loans are considered substandard credits. These loans have well defined weaknesses, the severity of which makes collection of principal and interest in full, questionable. Loans in this category may be placed on nonaccrual status.

Risk rating 7: These loans are considered doubtful credits. Some loss of principal and interest has been determined to be probable. The estimate of the amount of loss could be affected by factors such as the borrower’s ability to provide additional capital or collateral. Loans in this category are on nonaccrual status.

Risk rating 8: These loans are considered loss credits. They are considered uncollectible and will be charged off against the allowance for loan losses.

Information regarding the Bank’s credit exposure is as follows:

Corporate Credit Exposure - Credit Risk Profile By Creditworthiness Category:

		Agricultural								Commercial and Industrial								Commercial Real Estate
(Dollars in thousands)		September 30,				December 31,				September 30,				December 31,				September 30,				December 31,
		2016				2015				2016				2015				2016				2015
Risk ratings 1 and 2		$	8,072			$	10,416			$	11,672			$	10,480			$	7,305			$	3,875
Risk rating 3			21,626				25,189				63,450				66,921				57,355				57,540
Risk rating 4			7,269				3,086				19,242				16,169				40,692				29,826
Risk rating 5			1,267				1,491				1,227				574				3,153				3,776
Risk rating 6			44				50				80				129				562				2,719
Risk rating 7			—				—				—				74				—				—
		$	38,278			$	40,232			$	95,671			$	94,347			$	109,067			$	97,736
Corporate Credit Exposure - Credit Risk Profile Based On Payment Activity:
		Consumer								Construction Real Estate								Residential Real Estate
(Dollars in thousands)		September 30,				December 31,				September 30,				December 31,				September 30,				December 31,
		2016				2015				2016				2015				2016				2015
Performing		$	21,448			$	20,090			$	6,027			$	5,390			$	91,317			$	90,796
Nonperforming			5				—				—				—				336				282
Nonaccrual			—				—				—				—				454				431
		$	21,453			$	20,090			$	6,027			$	5,390			$	92,107			$	91,509

The following schedule provides information on loans that were considered TDRs that were modified during the three- and nine-month periods ended September 30, 2016:

		Three Months Ended September 30, 2016												Nine Months Ended September 30, 2016
						Pre-				Post-								Pre-				Post-
						Modification				Modification								Modification				Modification
						Outstanding				Outstanding								Outstanding				Outstanding
(Dollars in thousands)		Number of				Recorded				Recorded				Number of				Recorded				Recorded
		Loans				Investment				Investment				Loans				Investment				Investment
Agricultural			—			$	—			$	—				1			$	113			$	113
Residential real estate			—				—				—				2				156				156
			—			$	—			$	—				3			$	269			$	269

The following schedule provides information on loans that were considered TDRs that were modified during the three- and nine-month periods ended September 30, 2015:

		Three Months Ended September 30, 2015												Nine Months Ended September 30, 2015
						Pre-				Post-								Pre-				Post-
						Modification				Modification								Modification				Modification
						Outstanding				Outstanding								Outstanding				Outstanding
(Dollars in thousands)		Number of				Recorded				Recorded				Number of				Recorded				Recorded
		Loans				Investment				Investment				Loans				Investment				Investment
Commercial real estate			—			$	—			$	—				4			$	448			$	448
Residential real estate			1				85				85				2				193				193
			1			$	85			$	85				6			$	641			$	641

The pre-modification and post-modification outstanding recorded investment represents amounts as of the date of loan modification. If a difference exists between the pre-modification and post-modification outstanding recorded investment, it represents impairment recognized through the provision for loan losses computed based on a loan’s post-modification present value of expected future cash flows discounted at the loan’s original effective interest rate. If no difference exists, a loss is not expected to be incurred based on an assessment of the borrower’s expected cash flows.

The following schedule provides information on TDRs as of September 30, 2016 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three months and nine months ended September 30, 2016 that had been modified during the year prior to the default:

Three Months Ended

Nine Months Ended

September 30, 2016

September 30, 2016

(Dollars in thousands)

Number

Recorded

Number

Recorded

of Loans

Investment

of Loans

Investment

Agricultural

—

$

—

1

$

113

The following schedule provides information on TDRs as of September 30, 2015 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three months and nine months ended September 30, 2015 that had been modified during the year prior to the default:

Three Months Ended

Nine Months Ended

September 30, 2015

September 30, 2015

(Dollars in thousands)

Number

Recorded

Number

Recorded

of Loans

Investment

of Loans

Investment

Commercial real estate

2

$

293

3

$

409

Loans are classified as performing when they are current as to principal and interest payments or are past due on payments less than 90 days. Loans are classified as nonperforming when they are past due 90 days or more as to principal and interest payments or are considered a troubled debt restructuring.

Impaired loans by loan category follow:

						Unpaid
(Dollars in thousands)		Recorded				Principal				Related
		Investment				Balance				Allowance
September 30, 2016
With no related allowance recorded
Agricultural		$	489			$	493			$	—
Commercial and industrial			177				177				—
Consumer			5				5				—
Commercial real estate			230				351				—
Residential real estate			266				266				—
Subtotal			1,167				1,292				—
With an allowance recorded
Agricultural			45				45				4
Commercial and industrial			273				247				8
Consumer			21				21				1
Commercial real estate			1,229				1,799				167
Residential real estate			2,843				2,859				321
Subtotal			4,411				4,971				501
Total
Agricultural			534				538				4
Commercial and industrial			450				424				8
Consumer			26				26				1
Commercial real estate			1,459				2,150				167
Residential real estate			3,109				3,125				321
Total		$	5,578			$	6,263			$	501
December 31, 2015
With no related allowance recorded
Agricultural		$	—			$	—			$	—
Commercial and industrial			74				103				—
Consumer			—				—				—
Commercial real estate			1,540				1,540				—
Residential real estate			13				13				—
Subtotal			1,627				1,656				—
With an allowance recorded
Agricultural			50				50				3
Commercial and industrial			118				118				15
Consumer			24				24				1
Commercial real estate			1,250				1,755				191
Residential real estate			2,516				2,516				296
Subtotal			3,958				4,463				506
Total
Agricultural			50				50				3
Commercial and industrial			192				221				15
Consumer			24				24				1
Commercial real estate			2,790				3,295				191
Residential real estate			2,529				2,529				296
Total		$	5,585			$	6,119			$	506

The following schedule provides information regarding average balances of impaired loans and interest recognized on impaired loans for the nine months ended September 30, 2016 and 2015:

		Average				Interest
(Dollars in thousands)		Recorded				Income
		Investment				Recognized
September 30, 2016
With no related allowance recorded
Agricultural		$	154			$	(1	)
Commercial and industrial			63				—
Consumer			1				—
Commercial real estate			1,071				33
Residential real estate			134				46
Subtotal			1,423				78
With an allowance recorded
Agricultural			79				16
Commercial and industrial			242				4
Consumer			22				3
Commercial real estate			1,426				116
Residential real estate			2,670				308
Subtotal			4,439				447
Total
Agricultural			233				15
Commercial and industrial			305				4
Consumer			23				3
Commercial real estate			2,497				149
Residential real estate			2,804				354
Total		$	5,862			$	525
September 30, 2015
With no related allowance recorded
Agricultural		$	—			$	—
Commercial and industrial			13				—
Consumer			2				—
Commercial real estate			941				23
Residential real estate			236				(1	)
Subtotal			1,192				22
With an allowance recorded
Agricultural			65				(6	)
Commercial and industrial			26				1
Consumer			37				2
Commercial real estate			2,190				53
Residential real estate			2,402				64
Subtotal			4,720				114
Total
Agricultural			65				(6	)
Commercial and industrial			39				1
Consumer			39				2
Commercial real estate			3,131				76
Residential real estate			2,638				63
Total		$	5,912			$	136

An aging analysis of loans by loan category follows:

										Greater																90 Days Past
(Dollars in thousands)		30 to 59				60 to 89				Than 90								Loans Not								Due and
		Days				Days				Days (1)				Total				Past Due				Total Loans				Accruing
September 30, 2016
Agricultural		$	—			$	—			$	113			$	113			$	38,165			$	38,278			$	—
Commercial and industrial			97				—				249				346				95,325				95,671				—
Consumer			40				6				5				51				21,402				21,453				5
Commercial real estate			—				256				260				516				108,551				109,067				—
Construction real estate			—				—				—				—				6,027				6,027				—
Residential real estate			230				614				487				1,331				90,776				92,107				346
		$	367			$	876			$	1,114			$	2,357			$	360,246			$	362,603			$	351
December 31, 2015
Agricultural		$	3			$	—			$	—			$	3			$	40,229			$	40,232			$	—
Commercial and industrial			90				322				77				489				93,858				94,347				—
Consumer			115				—				—				115				19,975				20,090				—
Commercial real estate			505				297				1,233				2,035				95,701				97,736				—
Construction real estate			299				—				—				299				5,091				5,390				—
Residential real estate			1,012				364				200				1,576				89,933				91,509				29
		$	2,024			$	983			$	1,510			$	4,517			$	344,787			$	349,304			$	29

(1) Includes nonaccrual loans.

Nonaccrual loans by loan category follow:

(Dollars in thousands)		September 30,				December 31,
		2016				2015
Agricultural		$	489			$	50
Commercial and industrial			320				77
Consumer			—				—
Commercial real estate			471				1,640
Construction real estate			—				—
Residential real estate			455				431
		$	1,735			$	2,198

X

- Definition

The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 55
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=32702940&loc=SL6953791-111525

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=66008989&loc=d3e4975-111524

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X

- References

No definition available.

+ Details

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Namespace Prefix:	us-gaap_
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