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Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
 9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 7 – LOANS AND RELATED ALLOWANCE FOR LOAN AND LEASE LOSSES

Major classifications of loans are summarized as follows (in thousands):

 

     September 30,
2016		      December 31,
2015		  

Commercial and industrial

    $ 59,376       $ 42,536   

Real estate – construction

      17,633         22,137   

Real estate – mortgage:

      

Residential

      258,952         232,478   

Commercial

      245,636         231,701   

Consumer installment

      4,732         4,858   
  

 

 

     

 

 

  
     586,329         533,710   

Less: Allowance for loan and lease losses

      6,334         6,385   
  

 

 

     

 

 

  

Net loans

    $ 579,995       $ 527,325   
  

 

 

     

 

 

  

The Company’s primary business activity is with customers located within its local Northeastern Ohio trade area, eastern Geauga County, and contiguous counties to the north, east, and south. The Company also serves the central Ohio market with offices in Dublin, Sunbury and Westerville, Ohio. Commercial, residential, consumer, and agricultural loans are granted. Although the Company has a diversified loan portfolio, loans outstanding to individuals and businesses are dependent upon the local economic conditions in the Company’s immediate trade area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances net of the allowance for loan and lease losses. Interest income is recognized as income when earned on the accrual method. The accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of interest is doubtful. Interest received on nonaccrual loans is recorded as income or applied against principal according to management’s judgment as to the collectability of such principal.

Loan origination fees and certain direct loan origination costs are being deferred and the net amount amortized as an adjustment of the related loan’s yield. Management is amortizing these amounts over the contractual life of the related loans.

The following tables summarize the primary segments of the loan portfolio and allowance for loan and lease losses (in thousands):

 

                   Real Estate- Mortgage                
September 30, 2016    Commercial and
industrial		      Real estate-
construction		      Residential      Commercial      Consumer
installment		      Total  

Loans:

                  

Individually evaluated for impairment

    $ 844       $ 1,093       $ 3,238       $ 6,466       $ 5       $ 11,646   

Collectively evaluated for impairment

      58,532         16,540         255,714         239,170         4,727         574,683   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total loans

    $ 59,376       $ 17,633       $ 258,952       $ 245,636       $ 4,732       $ 586,329   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

                   Real estate- Mortgage                
December 31, 2015    Commercial and
industrial		      Real estate-
construction		      Residential      Commercial      Consumer
installment		      Total  

Loans:

                  

Individually evaluated for impairment

    $ 1,808       $ 1,787       $ 3,881       $ 6,199       $ 6       $ 13,681   

Collectively evaluated for impairment

      40,728         20,350         228,597         225,502         4,852         520,029   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total loans

    $ 42,536       $ 22,137       $ 232,478       $ 231,701       $ 4,858       $ 533,710   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

                          Real Estate- Mortgage         
September 30, 2016    Commercial
and industrial		      Real estate-
construction		      Residential      Commercial      Consumer
installment		      Total  

Allowance for loan and lease losses:

                  

Ending allowance balance attributable to loans:

                  

Individually evaluated for impairment

    $ 184       $ 17       $ 104       $ 239       $ —           544   

Collectively evaluated for impairment

      329         121         2,657         2,656         27         5,790   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total ending allowance balance

    $ 513       $ 138       $ 2,761       $ 2,895       $ 27       $ 6,334   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

                          Real Estate- Mortgage         
December 31, 2015    Commercial
and industrial		      Real estate-
construction		      Residential      Commercial      Consumer
installment		      Total  

Allowance for loan and lease losses:

                  

Ending allowance balance attributable to loans:

                  

Individually evaluated for impairment

    $ 388       $ 130       $ 276       $ 39       $ —         $ 833   

Collectively evaluated for impairment

      479         146         2,863         2,039         25         5,552   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total ending allowance balance

    $ 867       $ 276       $ 3,139       $ 2,078       $ 25       $ 6,385   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance. The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate—Mortgage which is further segmented into Residential and Commercial real estate (“CRE”), and Consumer Installment Loans. The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers. The residential mortgage loan segment consists of loans made for the purpose of financing the activities of residential homeowners. The commercial mortgage loan segment consists of loans made for the purpose of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts. The decrease in the allowance for loan loss for C&I and Residential real estate loan portfolios were offset by increases in the allowance for the CRE loan portfolio.

Management evaluates individual loans in all of the commercial segments for possible impairment based on guidance established by the Board of Directors. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of the following methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs. The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method. The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis. The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

 

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

 

September 30, 2016

  

Impaired Loans

  
     Recorded
Investment		      Unpaid
Principal
Balance		      Related
Allowance		  

With no related allowance recorded:

         

Commercial and industrial

    $ 569       $ 569       $ —     

Real estate – construction

      1,076         1,076         —     

Real estate – mortgage:

         

Residential

      2,774         2,771         —     

Commercial

      1,378         1,375         —     

Consumer installment

      5         5         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 5,802       $ 5,796       $ —     
  

 

 

     

 

 

     

 

 

  

With an allowance recorded:

         

Commercial and industrial

    $ 275       $ 275       $ 184   

Real estate – construction

      17         17         17   

Real estate – mortgage:

         

Residential

      464         462         104   

Commercial

      5,088         5,078         239   

Consumer installment

      —           —           —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 5,844       $ 5,832       $ 544   
  

 

 

     

 

 

     

 

 

  

Total:

         

Commercial and industrial

    $ 844       $ 844       $ 184   

Real estate – construction

      1,093         1,093         17   

Real estate – mortgage:

         

Residential

      3,238         3,233         104   

Commercial

      6,466         6,453         239   

Consumer installment

      5         5         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 11,646       $ 11,628       $ 544   
  

 

 

     

 

 

     

 

 

  

 

December 31, 2015

  

Impaired Loans

  
     Recorded
Investment		      Unpaid
Principal
Balance		      Related
Allowance		  

With no related allowance recorded:

         

Commercial and industrial

    $ 1,027       $ 1,025       $ —     

Real estate – construction

      1,657         1,651         —     

Real estate – mortgage:

         

Residential

      2,445         2,443         —     

Commercial

      2,337         2,335         —     

Consumer installment

      6         6         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 7,472       $ 7,460       $ —     
  

 

 

     

 

 

     

 

 

  

With an allowance recorded:

         

Commercial and industrial

    $ 781       $ 781       $ 388   

Real estate – construction

      130         130         130   

Real estate – mortgage:

         

Residential

      1,436         1,436         276   

Commercial

      3,862         3,846         39   

Consumer installment

      —           —           —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 6,209       $ 6,193       $ 833   
  

 

 

     

 

 

     

 

 

  

Total:

         

Commercial and industrial

    $ 1,808       $ 1,806       $ 388   

Real estate – construction

      1,787         1,781         130   

Real estate – mortgage:

         

Residential

      3,881         3,879         276   

Commercial

      6,199         6,181         39   

Consumer installment

      6         6         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 13,681       $ 13,653       $ 833   
  

 

 

     

 

 

     

 

 

  

 

The following tables present interest income by class, recognized on impaired loans (in thousands):

 

     For the Three Months Ended
September 30, 2016		      For the Nine Months Ended
September 30, 2016		  
     Average
Recorded
Investment		      Interest
Income
Recognized		      Average
Recorded
Investment		      Interest
Income
Recognized		  

Total:

            

Commercial and industrial

    $ 864       $ 4       $ 1,218       $ 9   

Real estate – construction

      1,105         3         1,404         22   

Real estate – mortgage:

            

Residential

      3,389         36         3,660         36   

Commercial

      7,939         8         7,449         115   

Consumer installment

      5         —           6         —     
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 13,302       $ 51       $ 13,737       $ 182   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     For the Three Months
Ended September 30, 2015		      For the Nine Months Ended
September 30, 2015		  
     Average
Recorded
Investment		      Interest
Income
Recognized		      Average
Recorded
Investment		      Interest
Income
Recognized		  

Total:

            

Commercial and industrial

    $ 1,480       $ 21       $ 1,354       $ 73   

Real estate – construction

      2,347         28         2,614         94   

Real estate – mortgage:

            

Residential

      4,195         43         4,514         128   

Commercial

      5,476         71         4,871         200   

Consumer installment

      6         —           6         —     
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 13,504       $ 163       $ 13,359       $ 495   
  

 

 

     

 

 

     

 

 

     

 

 

  

Management uses a nine-point internal risk-rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized and are aggregated as Pass rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan-rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death, occurs to raise awareness of a possible credit event. The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis with the Chief Credit Officer ultimately responsible for accurate and timely risk ratings. The Credit Department performs an annual review of all commercial relationships with loan balances of $1,000,000 or greater. Confirmation of the appropriate risk grade is included in the review on an ongoing basis. The Company engages an external consultant to conduct loan reviews on a semiannual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and/or criticized relationships greater than $125,000. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

 

The primary risk of commercial and industrial loans is the current economic uncertainties. C&I loans are, by nature, secured by less substantial collateral than real estate-secured loans. The primary risk of real estate construction loans is potential delays and /or disputes during the completion process. The primary risk of residential real estate loans is current economic uncertainties along with the slow recovery in the housing market. The primary risk of commercial real estate loans is loss of income of the owner or occupier of the property and the inability of the market to sustain rent levels. Consumer installment loans historically have experienced higher delinquency rates. Consumer installments are typically secured by less substantial collateral than other types of credits.

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk-rating system (in thousands):

 

     Pass      Special
Mention		      Substandard      Doubtful      Total
Loans		  

September 30, 2016

               

Commercial and industrial

    $ 57,954       $ 445       $ 977       $ —         $ 59,376   

Real estate – construction

      17,448         144         24         17         17,633   

Real estate – mortgage:

               

Residential

      252,783         433         5,736         —           258,952   

Commercial

      237,916         3,141         4,579         —           245,636   

Consumer installment

      4,723         —           9         —           4,732   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 570,824       $ 4,163       $ 11,325       $ 17       $ 586,329   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

     Pass      Special
Mention		      Substandard      Doubtful      Total
Loans		  

December 31, 2015

               

Commercial and industrial

    $ 40,560       $ 242       $ 1,734       $ —         $ 42,536   

Real estate – construction

      22,007         —           —           130         22,137   

Real estate – mortgage:

               

Residential

      225,945         728         5,805         —           232,478   

Commercial

      219,331         4,327         8,043         —           231,701   

Consumer installment

      4,854         —           4         —           4,858   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 512,697       $ 5,297       $ 15,586       $ 130       $ 533,710   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

Nonperforming assets include nonaccrual loans, troubled debt restructurings (TDRs), loans 90 days or more past due, EMORECO assets, other real estate owned, and repossessed assets. A loan is classified as nonaccrual when, in the opinion of management, there are serious doubts about collectability of interest and principal. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions, the borrower’s financial condition is such that collection of principal and interest is doubtful. Payments received on nonaccrual loans are applied against the principal balance.

 

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans (in thousands):

 

     Current      30-59 Days
Past Due		      60-89 Days
Past Due		      90 Days+
Past Due		      Total
Past Due		      Total
Loans		  

September 30, 2016

                  

Commercial and industrial

    $ 58,889       $ 59       $ 92       $ 336       $ 487       $ 59,376   

Real estate – construction

      17,633         —           —           —           —           17,633   

Real estate – mortgage:

                  

Residential

      257,068         1,052         547         285         1,884         258,952   

Commercial

      244,771         121         —           744         865         245,636   

Consumer installment

      4,656         76         —           —           76         4,732   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 583,017       $ 1,308       $ 639       $ 1,365       $ 3,312       $ 586,329   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

     Current      30-59 Days
Past Due		      60-89 Days
Past Due		      90 Days+
Past Due		      Total
Past Due		      Total
Loans		  

December 31, 2015

                  

Commercial and industrial

    $ 41,544       $ 225       $ 26       $ 741       $ 992       $ 42,536   

Real estate – construction

      22,137         —           —           —           —           22,137   

Real estate – mortgage:

                  

Residential

      229,725         1,482         92         1,179         2,753         232,478   

Commercial

      230,903         189         —           609         798         231,701   

Consumer installment

      4,837         16         3         2         21         4,858   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 529,146       $ 1,912       $ 121       $ 2,531       $ 4,564       $ 533,710   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

The following tables present the classes of the loan portfolio summarized by nonaccrual loans (in thousands):

 

     September 30, 2016
Nonaccrual		      90+Days Past Due
and Accruing		  

Commercial and industrial

    $ 920       $ —     

Real estate – construction

      17         —     

Real estate – mortgage:

      

Residential

      3,822         —     

Commercial

      1,730         —     

Consumer installment

      —           —     
  

 

 

     

 

 

  

Total

    $ 6,490       $ —     
  

 

 

     

 

 

  

 

     December 31, 2015
Nonaccrual		      90+Days Past Due
and Accruing		  

Commercial and industrial

    $ 1,450       $ —     

Real estate – construction

      130         —     

Real estate – mortgage:

      

Residential

      4,122         —     

Commercial

      1,842         —     

Consumer installment

      1         2   
  

 

 

     

 

 

  

Total

    $ 7,545       $ 2   
  

 

 

     

 

 

  

An allowance for loan and lease losses (“ALLL”) is maintained to absorb losses from the loan portfolio. The ALLL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans.

 

The Company’s methodology for determining the ALLL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance. The total of the two components represents the Company’s ALLL. Management also performs impairment analyses on TDRs, which may result in specific reserves.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the ALLL analysis. Management tracks the historical net charge-off activity at the purpose code level. A historical charge-off factor is calculated using the last four consecutive historical quarters.

Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and nonaccrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALLL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL.

The following tables summarize the primary segments of the loan portfolio (in thousands):

 

     Commercial
and industrial		     Real estate-
construction		     Real estate-
residential
mortgage		     Real estate-
commercial
mortgage		     Consumer
installment		     Total  

ALLL balance at December 31, 2015

    $ 867      $ 276      $ 3,139      $ 2,078      $ 25      $ 6,385   

Charge-offs

      (197 )      —          (394 )      (70 )      (18 )      (679 ) 

Recoveries

      51        —          113        140        9        313   

Provision

      (208 )      (138 )      (97 )      747        11        315   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

ALLL balance at September 30, 2016

    $ 513      $ 138      $ 2,761      $ 2,895      $ 27      $ 6,334   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     Commercial
and industrial		     Real estate-
construction		     Real estate-
residential
mortgage		     Real estate-
commercial
mortgage		     Consumer
installment		     Total  

ALLL balance at December 31, 2014

    $ 642      $ 868      $ 3,703      $ 1,576      $ 57      $ 6,846   

Charge-offs

      (196 )      (385 )      (425 )      (92 )      (11 )      (1,109 ) 

Recoveries

      186        —          161        5        21        373   

Provision

      (54 )      (149 )      (13 )      450        (24 )      210   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

ALLL balance at September 30, 2015

    $ 578      $ 334      $ 3,426      $ 1,939      $ 43      $ 6,320   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     Commercial
and industrial		     Real estate-
construction		     Real estate-
residential
mortgage		     Real estate-
commercial
mortgage		     Consumer
installment		     Total  

ALLL balance at June 30, 2016

    $ 484      $ 159      $ 2,788      $ 2,909      $ 26      $ 6,366   

Charge-offs

      (74 )      —          (149 )      —          (3 )      (226 ) 

Recoveries

      4        —          82        —          3        89   

Provision

      99        (21 )      40        (14 )      1        105   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

ALLL balance at September 30, 2016

    $ 513      $ 138      $ 2,761      $ 2,895      $ 27      $ 6,334   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     Commercial
and industrial		     Real estate-
construction		     Real estate-
residential
mortgage		     Real estate-
commercial
mortgage		     Consumer
installment		     Total  

ALLL balance at June 30, 2015

    $ 610      $ 363      $ 3,347      $ 1,978      $ 48      $ 6,346   

Charge-offs

      (100 )      —          (124 )      (5 )      —          (229 ) 

Recoveries

      5        —          81        5        7        98   

Provision

      63        (29 )      122        (39 )      (12 )      105   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

ALLL balance at September 30, 2015

    $ 578      $ 334      $ 3,426      $ 1,939      $ 43      $ 6,320   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

For the three months ended September 30, 2016 there were no troubled debt restructurings. The following tables summarize troubled debt restructurings (in thousands):

 

     For the Nine Months Ended September 30, 2016  
     Number of Contracts      Pre-Modification
Outstanding Recorded
Investment		      Post-Modification
Outstanding Recorded
Investment		  

Troubled Debt Restructurings

    Term
Modification		      Other      Total        

Commercial and industrial

      2         —           2       $ 169       $ 169   

Residential real estate

      1         —           1         58         58   

Commercial real estate

      1         —           1         311         311   

Consumer

      —           —           —           —           —     

 

     For the Three Months Ended September 30, 2015  
     Number of Contracts      Pre-Modification
Outstanding Recorded
Investment		      Post-Modification
Outstanding Recorded
Investment		  

Troubled Debt Restructurings

    Term
Modification		      Other      Total        

Commercial and industrial

      2         —           2       $ 15       $ 15   

Real estate construction

      —           —           —           —           —     

Residential real estate

      1         —           1         164         164   

Consumer

      1         —           1         9         9   

 

     For the Nine Months Ended September 30, 2015  
     Number of Contracts      Pre-Modification
Outstanding Recorded
Investment		      Post-Modification
Outstanding Recorded
Investment		  

Troubled Debt Restructurings

    Term
Modification		      Other      Total        

Commercial and industrial

      3         1         4       $ 126       $ 126   

Real estate construction

      1         —           1         181         181   

Residential real estate

      2         1         3         398         418   

Consumer

      1         —           1         9         9   

The following tables summarize subsequent defaults of troubled debt restructurings (in thousands):

 

     For the Three Months Ended
September 30, 2016		  

Troubled Debt Restructurings subsequently defaulted

    Number of
Contracts		      Recorded
Investment		  

Commercial and industrial

      1       $ 3   

Residential real estate

      1         58   

 

     For the Nine Months Ended
September 30, 2016		  

Troubled Debt Restructurings subsequently defaulted

    Number of
Contracts		      Recorded
Investment		  

Commercial and industrial

      2       $ 273   

Real estate construction

      1         58   

 

     For the Three Months Ended
September 30, 2015		  

Troubled Debt Restructurings subsequently defaulted

    Number of
Contracts		      Recorded
Investment		  

Commercial and industrial

      1       $ 8   

Real estate construction

      —           —     

Consumer

      1         8   

 

     For the Nine Months Ended
September 30, 2015		  

Troubled Debt Restructurings subsequently defaulted

    Number of
Contracts		      Recorded
Investment		  

Commercial and industrial

      3       $ 55   

Real estate construction

      1         152   

Consumer

      1         8   

4. LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES

Major classifications of loans at December 31 are summarized as follows (in thousands):

 

     2015      2014  

Commercial and industrial

    $ 42,536       $ 34,928   

Real estate – construction

      22,137         30,296   

Real estate – mortgage:

      

Residential

      232,478         210,096   

Commercial

      231,701         190,685   

Consumer installment

      4,858         4,579   
  

 

 

     

 

 

  
     533,710         470,584   

Less allowance for loan and lease losses

      (6,385 )       (6,846 ) 
  

 

 

     

 

 

  

Net loans

    $ 527,325       $ 463,738   
  

 

 

     

 

 

  

The Company’s primary business activity is with customers located within its local trade area, eastern Geauga County, and contiguous counties to the north, east, and south. The Company also serves the central Ohio market with offices in Dublin and Westerville, Ohio. Commercial, residential, consumer, and agricultural loans are granted. Although the Company has a diversified loan portfolio at December 31, 2015 and 2014, loans outstanding to individuals and businesses are dependent upon the local economic conditions in its immediate trade area.

 

The following tables summarize the primary segments of the loan portfolio and the allowance for loan and lease losses as of December 31, 2015 and 2014 (in thousands):

 

                   Real Estate- Mortgage                
December 31, 2015    Commercial and
industrial		      Real estate-
construction		      Residential      Commercial      Consumer
installment		      Total  

Loans:

                  

Individually evaluated for impairment

    $ 1,808       $ 1,787       $ 3,881       $ 6,199       $ 6       $ 13,681   

Collectively evaluated for impairment

      40,728         20,350         228,597         225,502         4,852         520,029   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total loans

    $ 42,536       $ 22,137       $ 232,478       $ 231,701       $ 4,858       $ 533,710   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

                   Real estate- Mortgage                
December 31, 2014    Commercial and
industrial		      Real estate-
construction		      Residential      Commercial      Consumer
installment		      Total  

Loans:

                  

Individually evaluated for impairment

    $ 1,393       $ 3,296       $ 5,183       $ 4,490       $ 6       $ 14,368   

Collectively evaluated for impairment

      33,535         27,000         204,913         186,195         4,573         456,216   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total loans

    $ 34,928       $ 30,296       $ 210,096       $ 190,685       $ 4,579       $ 470,584   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

                Real Estate- Mortgage              
December 31, 2015   Commercial and
industrial		     Real estate-
construction		     Residential     Commercial     Consumer
installment		     Total  

Allowance for loan and lease losses:

            

Ending allowance balance attributable to loans:

            

Individually evaluated for impairment

   $ 388      $ 130      $ 276      $ 39      $ —        $ 833   

Collectively evaluated for impairment

     479        146        2,863        2,039        25        5,552   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total ending allowance balance

   $ 867      $ 276      $ 3,139      $ 2,078      $ 25      $ 6,385   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                Real Estate- Mortgage              
December 31, 2014   Commercial and
industrial		     Real estate-
construction		     Residential     Commercial     Consumer
installment		     Total  

Allowance for loan and lease losses:

            

Ending allowance balance attributable to loans:

            

Individually evaluated for impairment

   $ 83      $ 589      $ 892      $ 30      $ 2      $ 1,596   

Collectively evaluated for impairment

     559        279        2,811        1,546        55        5,250   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total ending allowance balance

   $ 642      $ 868      $ 3,703      $ 1,576      $ 57      $ 6,846   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The Company’s loan portfolio is segmented to a level that allows management to monitor risk and performance. The portfolio is segmented into Commercial and Industrial (“C&I”), Real Estate Construction, Real Estate—Mortgage which is further segmented into Residential and Commercial real estate, and Consumer Installment Loans. The C&I loan segment consists of loans made for the purpose of financing the activities of commercial customers. The residential mortgage loan segment consists of loans made for the purpose of financing the activities of residential homeowners. The commercial mortgage loan segment consists of loans made for the purpose of financing the activities of commercial real estate owners and operators. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $150,000 and if the loan either is in nonaccrual status, or is risk rated Substandard or Doubtful and is greater than 90 days past due. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Company does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of a larger relationship that is impaired.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs. The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method. The evaluation of the need and amount of a specific allocation of the allowance and whether a loan can be removed from impairment status is made on a quarterly basis. The Company’s policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary (in thousands):

 

December 31, 2015

  

Impaired Loans

  

 

    Recorded
Investment		      Unpaid Principal
Balance		      Related
Allowance		  

With no related allowance recorded:

         

Commercial and industrial

    $ 1,027       $ 1,025       $ —     

Real estate – construction

      1,657         1,651         —     

Real estate – mortgage:

         

Residential

      2,445         2,443         —     

Commercial

      2,337         2,335         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 7,466       $ 7,454       $ —     
  

 

 

     

 

 

     

 

 

  

With an allowance recorded:

         

Commercial and industrial

    $ 781       $ 781       $ 388   

Real estate – construction

      130         130         130   

Real estate – mortgage:

         

Residential

      1,436         1,436         276   

Commercial

      3,862         3,846         39   

Consumer installment

      6         6         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 6,215       $ 6,199       $ 833   
  

 

 

     

 

 

     

 

 

  

Total:

         

Commercial and industrial

    $ 1,808       $ 1,806       $ 388   

Real estate – construction

      1,787         1,781         130   

Real estate – mortgage:

         

Residential

      3,881         3,879         276   

Commercial

      6,199         6,181         39   

Consumer installment

      6         6         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 13,681       $ 13,653       $ 833   
  

 

 

     

 

 

     

 

 

  

 

December 31, 2014

  

Impaired Loans

  

 

    Recorded
Investment		      Unpaid Principal
Balance		      Related
Allowance		  

With no related allowance recorded:

         

Commercial and industrial

    $ 1,146       $ 1,145       $ —     

Real estate – construction

      2,707         2,705         —     

Real estate – mortgage:

         

Residential

      2,202         2,197         —     

Commercial

      4,064         4,060         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 10,119       $ 10,107       $ —     
  

 

 

     

 

 

     

 

 

  

With an allowance recorded:

         

Commercial and industrial

    $ 247       $ 247       $ 83   

Real estate – construction

      589         589         589   

Real estate – mortgage:

         

Residential

      2,981         2,978         892   

Commercial

      426         426         30   

Consumer installment

      6         6         2   
  

 

 

     

 

 

     

 

 

  

Total

    $ 4,249       $ 4,246       $ 1,596   
  

 

 

     

 

 

     

 

 

  

Total:

         

Commercial and industrial

    $ 1,393       $ 1,392       $ 83   

Real estate – construction

      3,296         3,294         589   

Real estate – mortgage:

         

Residential

      5,183         5,175         892   

Commercial

      4,490         4,486         30   

Consumer installment

      6         6         2   
  

 

 

     

 

 

     

 

 

  

Total

    $ 14,368       $ 14,353       $ 1,596   
  

 

 

     

 

 

     

 

 

  

The tables above include troubled debt restructuring totaling $3.1 million and $2.9 million as of December 31, 2015 and 2014, respectively.

The following table presents interest income by class, recognized on impaired loans (in thousands):

 

     As of December 31, 2015      As of December 31, 2014      As of December 31, 2013  
     Average
Recorded
Investment		      Interest
Income
Recognized		      Average
Recorded
Investment		      Interest
Income
Recognized		      Average
Recorded
Investment		      Interest
Income
Recognized		  

Commercial and industrial

    $ 1,468       $ 100       $ 1,989       $ 85       $ 2,187       $ 119   

Real estate – construction

      2,407         115         3,631         154         3,743         183   

Real estate – mortgage:

                  

Residential

      4,356         160         5,331         171         5,380         293   

Commercial

      5,203         350         5,998         229         6,500         493   

Consumer installment

      6         —           11         1         13         1   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 13,440       $ 725       $ 16,960       $ 640       $ 17,824       $ 1,090   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Troubled Debt Restructuring (TDR) describes loans on which the bank has granted concessions for reasons related to the customer’s financial difficulties. Such concessions may include one or more of the following:

 

  •   reduction in the interest rate to below market rates

 

  •   extension of repayment requirements beyond normal terms

 

  •   reduction of the principal amount owed

 

  •   reduction of accrued interest due

 

  •   acceptance of other assets in full or partial payment of a debt

In each case the concession is made due to deterioration in the borrower’s financial condition, and the new terms are less stringent than those required on a new loan with similar risk.

The following tables present the number of loan modifications by class, the corresponding recorded investment, and the subsequently defaulted modifications (in thousands):

 

     December 31, 2015  
     Number of Contracts      Pre-Modification
Outstanding Recorded
Investment		      Post-Modification
Outstanding Recorded
Investment		  

Troubled Debt Restructurings

    Term
Modification		      Other      Total        

Commercial and industrial

      6         —           6       $ 434       $ 434   

Real estate construction

      1         —           1         181         181   

Residential real estate

      5         1         6         515         535   

Commercial real estate

      1         —           1         270         270   

 

     December 31, 2015  

Troubled Debt Restructurings subsequently defaulted

    Number of
Contracts		      Recorded
Investment		  

Commercial and industrial

      2       $ 14   

Real estate construction

      1         130   

 

     December 31, 2014  
     Number of Contracts      Pre-Modification
Outstanding Recorded
Investment		      Post-Modification
Outstanding Recorded
Investment		  

Troubled Debt Restructurings

    Term
Modification		      Other      Total        

Residential real estate

      3         —           3       $ 140       $ 140   

Commercial real estate

      1         —           1         48         48   

Consumer

      1         —           1         6         6   

 

     December 31, 2014  

Troubled Debt Restructurings subsequently defaulted

    Number of
Contracts		      Recorded
Investment		  

Residential real estate

      1       $ 15   

 

     December 31, 2013  
     Number of Contracts      Pre-Modification
Outstanding Recorded
Investment		      Post-Modification
Outstanding Recorded
Investment		  

Troubled Debt Restructurings

    Term
Modification		      Other      Total        

Commercial and industrial

      6         1         7       $ 1,264       $ 1,264   

Residential real estate

      7         —           7         784         784   

Commercial real estate

      2         —           2         834         834   

 

     December 31, 2013  

Troubled Debt Restructurings subsequently defaulted

    Number of
Contracts		      Recorded
Investment		  

Commercial and industrial

      5       $ 574   

Commercial real estate

      1         190   

Management uses a nine-point internal risk-rating system to monitor the credit quality of the overall loan portfolio. The first five categories are considered not criticized and are aggregated as Pass-rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan-rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death, occurs to raise awareness of a possible credit event. The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis with the Chief Credit Officer ultimately responsible for accurate and timely risk ratings. The Credit Department performs an annual review of all commercial relationships $1,000,000 or greater. Confirmation of the appropriate risk grade is included in the review on an ongoing basis. The Company engages an external consultant to conduct loan reviews on a semiannual basis. Generally, the external consultant reviews commercial relationships greater than $250,000 and/or criticized relationships greater than $125,000. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following tables present the classes of the loan portfolio summarized by the aggregate Pass rating and the criticized categories of Special Mention, Substandard, and Doubtful within the internal risk rating system as of December 31, 2015 and 2014 (in thousands):

 

December 31, 2015    Pass      Special
Mention		      Substandard      Doubtful      Total
Loans		  

Commercial and industrial

    $ 40,560       $ 242       $ 1,734       $ —         $ 42,536   

Real estate – construction

      22,007         —           —           130         22,137   

Real estate – mortgage:

               

Residential

      225,945         728         5,805         —           232,478   

Commercial

      219,331         4,327         8,043         —           231,701   

Consumer installment

      4,854         —           4         —           4,858   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 512,697       $ 5,297       $ 15,586       $ 130       $ 533,710   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

December 31, 2014    Pass      Special
Mention		      Substandard      Doubtful      Total
Loans		  

Commercial and industrial

    $ 33,160       $ —         $ 1,730       $ 38       $ 34,928   

Real estate – construction

      29,212         495         —           589         30,296   

Real estate – mortgage:

               

Residential

      200,928         584         8,584         —           210,096   

Commercial

      180,899         3,908         5,878         —           190,685   

Consumer installment

      4,572         —           7         —           4,579   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 448,759       $ 4,987       $ 16,211       $ 627       $ 470,584   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of loans and nonaccrual loans as of December 31, 2015 and 2014 (in thousands):

 

December 31, 2015    Current      30-59 Days
Past Due		      60-89 Days
Past Due		      90 Days+
Past Due		      Total
Past Due		      Total
Loans		  

Commercial and industrial

    $ 41,544       $ 225       $ 26       $ 741       $ 992       $ 42,536   

Real estate – construction

      22,137         —           —           —           —           22,137   

Real estate – mortgage:

                  

Residential

      229,725         1,482         92         1,179         2,753         232,478   

Commercial

      230,903         189         —           609         798         231,701   

Consumer installment

      4,837         16         3         2         21         4,858   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 529,146       $ 1,912       $ 121       $ 2,531       $ 4,564       $ 533,710   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

December 31, 2014    Current      30-59 Days
Past Due		      60-89 Days
Past Due		      90 Days+
Past Due		      Total
Past Due		      Total
Loans		  

Commercial and industrial

    $ 34,480       $ 349       $ 68       $ 31       $ 448       $ 34,928   

Real estate – construction

      30,296         —           —           —           —           30,296   

Real estate – mortgage:

                  

Residential

      205,753         2,065         363         1,915         4,343         210,096   

Commercial

      190,088         30         —           567         597         190,685   

Consumer installment

      4,547         27         3         2         32         4,579   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 465,164       $ 2,471       $ 434       $ 2,515       $ 5,420       $ 470,584   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

The following tables present the classes of the loan portfolio summarized by nonaccrual loans and loans 90 days or more past due and still accruing as of December 31, 2015 and 2014 (in thousands):

 

December 31, 2015    Nonaccrual      90+ Day Past
Due and Accruing		  

Commercial and industrial

    $ 1,450       $ —     

Real estate – construction

      130         —     

Real estate – mortgage:

      

Residential

      4,122         —     

Commercial

      1,842         —     

Consumer installment

      1         2   
  

 

 

     

 

 

  

Total

    $ 7,545       $ 2   
  

 

 

     

 

 

  

 

December 31, 2014    Nonaccrual      90+ Days Past
Due and Accruing		  

Commercial and industrial

    $ 365       $ —     

Real estate – construction

      587         —     

Real estate – mortgage:

      

Residential

      5,310         165   

Commercial

      1,083         —     

Consumer installment

      2         —     
  

 

 

     

 

 

  

Total

    $ 7,347       $ 165   
  

 

 

     

 

 

  

Interest income that would have been recorded had these loans not been placed on nonaccrual status was $259,000 in 2015, $207,000 in 2014, and $439,000 in 2013.

 

An allowance for loan and lease losses (“ALLL”) is maintained to absorb losses from the loan portfolio. The ALLL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of nonperforming loans.

The Company’s methodology for determining the ALLL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statement on the Allowance for Loan and Lease Losses and other bank regulatory guidance. The total of the two components represents the Company’s ALLL.

Loans that are collectively evaluated for impairment are analyzed, with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the purpose code assigned to each loan, provide the starting point for the ALLL analysis. Management tracks the historical net charge-off activity at the purpose code level. A historical charge-off factor is calculated utilizing the last twelve consecutive quarters.

Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor, because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and nonaccrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry, and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALLL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL.

The following tables summarize the primary segments of the loan portfolio (in thousands):

 

     Commercial
and
industrial		     Real estate-
construction		     Real
estate-
residential
mortgage		     Real estate-
commercial
mortgage		     Consumer
installment		     Total  

ALLL balance at December 31, 2014

    $ 642      $ 868      $ 3,703      $ 1,576      $ 57      $ 6,846   

Charge-offs

      (280 )      (385 )      (425 )      (92 )      (15 )      (1,197 ) 

Recoveries

      207        —          186        5        23        421   

Provision

      298        (207 )      (325 )      589        (40 )      315   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

ALLL balance at December 31, 2015

    $ 867      $ 276      $ 3,139      $ 2,078      $ 25      $ 6,385   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     Commercial
and
industrial		     Real estate-
construction		      Real
estate-
residential
mortgage		     Real estate-
commercial
mortgage		     Consumer
installment		     Total  

ALLL balance at December 31, 2013

    $ 614      $ 576       $ 3,664      $ 2,170      $ 22      $ 7,046   

Charge-offs

      (237 )      —           (671 )      (260 )      (44 )      (1,212 ) 

Recoveries

      121        60         267        40        154        642   

Provision

      144        232         443        (374 )      (75 )      370   
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

ALLL balance at December 31, 2014

    $ 642      $ 868       $ 3,703      $ 1,576      $ 57      $ 6,846   
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

 

     Commercial
and
industrial		     Real estate-
construction		     Real
estate-
residential
mortgage		     Real estate-
commercial
mortgage		      Consumer
installment		     Total  

ALLL balance at December 31, 2012

    $ 1,732      $ 1,123      $ 2,872      $ 1,991       $ 61      $ 7,779   

Charge-offs

      (419 )      (191 )      (675 )      —           (45 )      (1,330 ) 

Recoveries

      191        33        107        46         24        401   

Provision

      (890 )      (389 )      1,360        133         (18 )      196   
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

ALLL balance at December 31, 2013

    $ 614      $ 576      $ 3,664      $ 2,170       $ 22      $ 7,046   
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

The decrease in the ALLL balance for real estate construction was largely due to a $0.4 million charge off. The decrease in the ALLL balance for residential real estate was largely due to aggregate charge offs of $0.3 million of loans secured by first liens. The increase in the ALLL balance for commercial real estate is mostly due to the 21.5% growth in the portfolio.