XML 23 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1

LOANS AND ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Mar. 31, 2018

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:

						Commercial
(Dollars in thousands)						and								Commercial				Construction				Residential
		Agricultural				Industrial				Consumer				Real Estate				Real Estate				Real Estate				Unallocated				Total
Allowance for Loan Losses Three Months Ended March 31, 2018
Beginning balance		$	506			$	1,001			$	262			$	1,761			$	35			$	726			$	286			$	4,577
Charge-offs			—				—				(69	)			—				—				(3	)			—				(72	)
Recoveries			—				53				37				55				—				24				—				169
Provision			(156	)			(49	)			15				(30	)			(17	)			(122	)			394				35
Ending balance		$	350			$	1,005			$	245			$	1,786			$	18			$	625			$	680			$	4,709
Individually evaluated for impairment		$	—			$	93			$	9			$	46			$	—			$	217			$	—			$	365
Collectively evaluated for  impairment		$	350			$	912			$	236			$	1,740			$	18			$	408			$	680			$	4,344
December 31, 2017
Individually evaluated for  impairment		$	—			$	26			$	3			$	49			$	—			$	224			$	—			$	302
Collectively evaluated for impairment		$	506			$	975			$	259			$	1,712			$	35			$	502			$	286			$	4,275
Three Months Ended March 31, 2017
Beginning balance		$	433			$	688			$	305			$	1,438			$	62			$	1,014			$	337			$	4,277
Charge-offs			—				(10	)			(80	)			—				—				(35	)			—				(125	)
Recoveries			—				—				52				112				—				9				—				173
Provision			(27	)			67				9				(136	)			(39	)			(261	)			387				—
Ending balance		$	406			$	745			$	286			$	1,414			$	23			$	727			$	724			$	4,325
Individually evaluated for impairment		$	36			$	25			$	6			$	98			$	—			$	276			$	—			$	441
Collectively evaluated for impairment		$	370			$	720			$	280			$	1,316			$	23			$	451			$	724			$	3,884
Loans
March 31, 2018
Individually evaluated for  impairment		$	423			$	291			$	43			$	842			$	—			$	2,839							$	4,438
Collectively evaluated for impairment			37,530				99,908				23,924				126,377				4,215				90,048								382,002
Ending balance		$	37,953			$	100,199			$	23,967			$	127,219			$	4,215			$	92,887							$	386,440
December 31, 2017
Individually evaluated for  impairment		$	423			$	124			$	36			$	778			$	—			$	2,779							$	4,140
Collectively evaluated for impairment			48,041				104,262				24,477				122,709				6,613				88,543								394,645
Ending balance		$	48,464			$	104,386			$	24,513			$	123,487			$	6,613			$	91,322							$	398,785

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)		March 31,				December 31,				March 31,				December 31,				March 31,				December 31,
		2018				2017				2018				2017				2018				2017
Risk ratings 1 and 2		$	10,049			$	14,813			$	13,393			$	13,491			$	8,519			$	8,227
Risk rating 3			18,429				22,721				59,965				63,366				82,378				78,868
Risk rating 4			8,808				10,199				25,882				26,943				32,672				33,429
Risk rating 5			244				308				856				491				2,297				1,533
Risk rating 6			423				423				103				95				1,353				1,430
		$	37,953			$	48,464			$	100,199			$	104,386			$	127,219			$	123,487
Corporate Credit Exposure - Credit Risk Profile Based On Payment Activity
		Consumer								Construction Real Estate								Residential Real Estate
(Dollars in thousands)			March 31,				December 31,				March 31,				December 31,				March 31,				December 31,
			2018				2017				2018				2017				2018				2017
Performing		$	23,944			$	24,497			$	4,215			$	6,613			$	92,333			$	90,629
Nonperforming			—				1				—				—				—				257
Nonaccrual			23				15				—				—				554				436
		$	23,967			$	24,513			$	4,215			$	6,613			$	92,887			$	91,322

The following schedule provides information on loans that were considered TDRs that were modified during the three months ended March 31, 2018 and March 31, 2017:

		March 31, 2018												March 31, 2017
						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			1			$	58			$	58				—			$	—			$	—
Commercial and industrial			2				97				97				—				—				—
			3			$	155			$	155				—			$	—			$	—

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 March 31, 2018 and 2017 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three-month periods ended March 31, 2018 and March 31, 2017 that had been modified during the year prior to the default:

		Three Months Ended								Three Months Ended
		March 31, 2018								March 31, 2017
(Dollars in thousands)		Number				Recorded				Number				Recorded
		of Loans				Investment				of Loans				Investment
Agricultural			—			$	—				1			$	105
Commercial and industrial			2				97				—				—
Commercial real estate			1				58				—				—
Residential real estate			—				—				1				126
			3			$	155				2			$	231

Impaired loans by loan category follow:

						Unpaid
(Dollars in thousands)		Recorded				Principal				Related
		Investment				Balance				Allowance
March 31, 2018
With no related allowance recorded
Agricultural		$	423			$	455			$	—
Commercial and industrial			—				—				—
Consumer			9				9				—
Commercial real estate			58				58				—
Residential real estate			186				209				—
Subtotal			676				731				—
With an allowance recorded
Agricultural			—				—				—
Commercial and industrial			291				291				93
Consumer			34				34				9
Commercial real estate			784				869				46
Residential real estate			2,653				2,674				217
Subtotal			3,762				3,868				365
Total
Agricultural			423				455				—
Commercial and industrial			291				291				93
Consumer			43				43				9
Commercial real estate			842				927				46
Residential real estate			2,839				2,883				217
Total		$	4,438			$	4,599			$	365
December 31, 2017
With no related allowance recorded
Agricultural		$	423			$	455			$	—
Commercial and industrial			—				—				—
Consumer			—				—				—
Commercial real estate			127				258				—
Residential real estate			115				126				—
Subtotal			665				839				—
With an allowance recorded
Agricultural			—				—				—
Commercial and industrial			124				124				26
Consumer			36				36				3
Commercial real estate			651				734				49
Residential real estate			2,664				2,690				224
Subtotal			3,475				3,584				302
Total
Agricultural			423				455				—
Commercial and industrial			124				124				26
Consumer			36				36				3
Commercial real estate			778				992				49
Residential real estate			2,779				2,816				224
Total		$	4,140			$	4,423			$	302

The following schedule provides information regarding average balances of impaired loans and interest recognized on impaired loans for the three months ended March 31, 2018 and 2017:

		Average				Interest
(Dollars in thousands)		Recorded				Income
		Investment				Recognized
March 31, 2018
With no related allowance recorded
Agricultural		$	428			$	—
Commercial and industrial			59				—
Consumer			2				—
Commercial real estate			99				—
Residential real estate			152				—
Subtotal			740				—
With an allowance recorded
Agricultural			—				—
Commercial and industrial			170				8
Consumer			34				—
Commercial real estate			762				—
Residential real estate			2,549				26
Subtotal			3,515				34
Agricultural			428				—
Commercial and industrial			229				8
Consumer			36				—
Commercial real estate			861				—
Residential real estate			2,701				26
Total		$	4,255			$	34
March 31, 2017
With no related allowance recorded
Agricultural		$	241			$	—
Commercial and industrial			191				1
Consumer			—				—
Commercial real estate			222				—
Residential real estate			151				—
Subtotal			805				1
With an allowance recorded
Agricultural			263				—
Commercial and industrial			207				3
Consumer			31				1
Commercial real estate			885				14
Residential real estate			2,614				26
Subtotal			4,000				44
Agricultural			504				—
Commercial and industrial			398				4
Consumer			31				1
Commercial real estate			1,107				14
Residential real estate			2,765				26
Total		$	4,805			$	45

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
March 31, 2018
Agricultural		$	—			$	—			$	423			$	423			$	37,530			$	37,953			$	—
Commercial and industrial			25				73				—				98				100,101				100,199				—
Consumer			183				2				—				185				23,782				23,967				—
Commercial real estate			100				—				58				158				127,061				127,219				—
Construction real estate			—				—				—				—				4,215				4,215				—
Residential real estate			1,343				74				13				1,430				91,457				92,887				—
		$	1,651			$	149			$	494			$	2,294			$	384,146			$	386,440			$	—
December 31, 2017
Agricultural		$	—			$	—			$	83			$	83			$	48,381			$	48,464			$	—
Commercial and industrial			20				—				—				20				104,366				104,386				—
Consumer			142				38				1				181				24,332				24,513				—
Commercial real estate			95				58				69				222				123,265				123,487				—
Construction real estate			—				—				—				—				6,613				6,613				—
Residential real estate			585				272				296				1,153				90,169				91,322				258
		$	842			$	368			$	449			$	1,659			$	397,126			$	398,785			$	258

(1) Includes nonaccrual loans.

Nonaccrual loans by loan category follow:

(Dollars in thousands)		March 31,				December 31,
		2018				2017
Agricultural		$	423			$	423
Commercial and industrial			98				—
Consumer			23				15
Commercial real estate			146				222
Construction real estate			—				—
Residential real estate			554				436
		$	1,244			$	1,096

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
-URI http://asc.fasb.org/topic&trid=2196771

+ Details

Name:	us-gaap_FinancingReceivablesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- References

No definition available.

+ Details

Name:	us-gaap_ReceivablesAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration