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Note 3 - Loans Receivable and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3: Loans Receivable and Allowance for Loan Losses

A summary of the Company’s loan portfolio at September 30, 2015 and December 31, 2014 is as follows:

(in thousands)		September 30,				December 31,
		2015				2014
Commercial		$	61,184			$	53,973
Commercial Real Estate			273,715				254,505
Construction			12,386				3,096
Construction to permanent			10,669				10,627
Residential			91,378				108,543
Consumer			46,982				46,164
Total Loans			496,314				476,908
Allowance for loan losses			(5,240	)			(4,924	)
Loans receivable, net		$	491,074			$	471,984

The Company's lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut, Westchester County in New York, and the five Boroughs of New York City. The Company originates commercial real estate loans, commercial business loans, construction loans and a variety of consumer loans. In addition, the Company previously had originated loans on residential real estate. All residential and commercial mortgage loans are collateralized primarily by first or second mortgages on real estate. The ability and willingness of borrowers to satisfy their loan obligations is dependent to some degree on the status of the regional economy as well as upon the regional real estate market. Accordingly, the ultimate collectability of a substantial portion of the loan portfolio and the recovery of a substantial portion of any resulting real estate acquired is susceptible to changes in market conditions.

The Company has established credit policies applicable to each type of lending activity in which it engages, evaluates the creditworthiness of each customer and, in most cases, extends credit of up to 75% of the market value of the collateral for commercial real estate at the date of the credit extension depending on the Company's evaluation of the borrowers' creditworthiness and type of collateral and up to 80% for multi–family real estate. In the case of construction loans, the maximum loan-to-value is 75% of the “as completed” appraised value. The appraised value of collateral is monitored on an ongoing basis and additional collateral is requested when warranted. Real estate is the primary form of collateral. Other important forms of collateral are accounts receivable, inventory, other business assets, marketable securities and time deposits.

Risk characteristics of the Company’s portfolio classes include the following:

Commercial Real Estate Loans – In underwriting commercial real estate loans, the Company evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans. Repayment of such loans may be negatively impacted should there be a substantial decline in the value of the property securing the loan or a decline in general economic conditions. Where the owner occupies the property, the Company also evaluates the businesses ability to repay the loan on a timely basis. In addition, the Company may require personal guarantees, lease assignments and/or the guarantee of the operating company when the property is owner occupied.

Commercial and Industrial Loans – The Company’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals. These loans are usually made to finance accounts receivable, the purchase of inventory or new or used equipment and for other short or long-term working capital purposes. These loans are generally secured by business assets, but are also occasionally offered on an unsecured basis. In granting this type of loan, the Company primarily looks to the borrower’s cash flow as the source of repayment with collateral and personal guarantees, when obtained, as a secondary source. Payments on such loans are often dependent upon the successful operation of the underlying business. Repayment of such loans may therefore be negatively impacted by adverse changes in economic conditions, management’s inability to effectively manage the business, claims of others against the borrower’s assets which may take priority over the Company’s claims against assets, death or disability of the borrower or loss of market share for the borrower’s products or services.

Residential Real Estate Loans – Home equity loans secured by real estate properties are offered by the Company. The Company no longer offers residential mortgages, having exited this business in 2013. Repayment of residential real estate loans may be negatively impacted should the borrower have financial difficulties, should there be a significant decline in the value of the property securing the loan or should there be a decline in general economic conditions.

Construction Loans – Construction loans are short-term loans (generally up to 18 months) secured by land for either residential or commercial development. The loans are generally made for acquisition and development. Funds are disbursed as phases of construction are completed. Construction loans are generally personally guaranteed by the principal(s). Repayment of such loans may be negatively impacted by the builders’ inability to complete construction, by a downturn in the new construction market, by a significant increase in interest rates or by a decline in general economic conditions.

Other/Consumer Loans – The Company also offers installment loans, credit cards, consumer overdraft and home equity lines of credit to individuals. Repayments of such loans are often dependent on the personal income of the borrower which may be negatively impacted by adverse changes in economic conditions. The Company does not place a high emphasis on originating these types of loans.

The Company does not have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burdened ratios.

The following table sets forth activity in our allowance for loan losses, by loan type, for the three months and nine months ended September 30, 2015. The following table also details the amount of loans receivable that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan portfolio segment.

(in thousands)

Three months ended September 30, 2015		Commercial				Commercial Real Estate				Construction				Construction to Permanent				Residential				Consumer				Unallocated				Total
Allowance for loan losses:
Beginning Balance		$	982			$	2,317			$	275			$	150			$	660			$	726			$	98			$	5,208
Charge-offs			-				-				-				-				(7	)			(4	)			-				(11	)
Recoveries			7				35				-				-				-				1				-				43
Provision			(219	)			32				119				38				(26	)			(25	)			81				-
Ending Balance		$	770			$	2,384			$	394			$	188			$	627			$	698			$	179			$	5,240


Nine months ended September 30, 2015		Commercial				Commercial Real Estate				Construction				Construction to Permanent				Residential				Consumer				Unallocated				Total
Allowance for loan losses:
Beginning Balance		$	1,918			$	1,419			$	63			$	215			$	831			$	478			$	-			$	4,924
Charge-offs			-				-				-				-				(10	)			(11	)			-				(21	)
Recoveries			37				35				-				5				-				10				-				87
Provision			(1,185	)			930				331				(32	)			(194	)			221				179				250
Ending Balance		$	770			$	2,384			$	394			$	188			$	627			$	698			$	179			$	5,240

September 30, 2015		Commercial				Commercial Real Estate				Construction				Construction to Permanent				Residential				Consumer				Unallocated				Total
Ending balance: individually evaluated for impairment		$	-			$	-			$	-			$	-			$	-			$	3			$	-			$	3
Ending balance: collectively evaluated for impairment			770				2,384				394				188				627				695				179				5,237
Total Allowance for Loan Losses		$	770			$	2,384			$	394			$	188			$	627			$	698			$	179			$	5,240

Total Loans ending balance		$	61,184			$	273,715			$	12,386			$	10,669			$	91,378			$	46,982			$	-			$	496,314

Ending balance: individually evaluated for impairment		$	-			$	7,809			$	-			$	-			$	3,366			$	552			$	-			$	11,727

Ending balance: collectively evaluated for impairment		$	61,184			$	265,906			$	12,386			$	10,669			$	88,012			$	46,430			$	-			$	484,587

The following table sets forth activity in our allowance for loan losses, by loan type, for the three months and nine months ended September 30, 2014. The following table also details the amount of loans receivable that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan portfolio segment.

(in thousands)

Three months ended September 30, 2014		Commercial				Commercial Real Estate				Construction				Construction to Permanent				Residential				Consumer				Unallocated				Total
Allowance for loan losses:
Beginning Balance		$	2,478			$	1,125			$	-			$	149			$	630			$	694			$	138			$	5,214
Charge-offs			(25	)			(297	)			-				-				-				(4	)			-				(326	)
Recoveries			-				15				10				-				-				-				-				25
Provision			(263	)			261				66				(27	)			(76	)			-				39				-
Ending Balance		$	2,190			$	1,104			$	76			$	122			$	554			$	690			$	177			$	4,913


Nine months ended September 30, 2014		Commercial				Commercial Real Estate				Construction				Construction to Permanent				Residential				Consumer				Unallocated				Total
Allowance for loan losses:
Beginning Balance		$	2,285			$	1,585			$	260			$	25			$	795			$	534			$	197			$	5,681
Charge-offs			(37	)			(297	)			(260	)			-				(195	)			(39	)			-				(828	)
Recoveries			4				45				10				-				-				1				-				60
Provision			(62	)			(229	)			66				97				(46	)			194				(20	)			-
Ending Balance		$	2,190			$	1,104			$	76			$	122			$	554			$	690			$	177			$	4,913

September 30, 2014		Commercial				Commercial Real Estate				Construction				Construction to Permanent				Residential				Consumer				Unallocated				Total
Ending balance: individually evaluated for impairment		$	1,513			$	4			$	-			$	-			$	-			$	3			$	-			$	1,520
Ending balance: collectively evaluated for impairment			677				1,100				76				122				554				687				177				3,393
Total Allowance for Loan Losses		$	2,190			$	1,104			$	76			$	122			$	554			$	690			$	177			$	4,913


Total Loans ending balance		$	56,432			$	255,556			$	8,622			$	11,725			$	85,942			$	45,529			$	-			$	463,806

Ending balance: individually evaluated for impairment		$	5,827			$	8,404			$	-			$	-			$	4,978			$	558			$	-			$	19,767

Ending balance: collectively evaluated for impairment		$	50,605			$	247,152			$	8,622			$	11,725			$	80,964			$	44,971			$	-			$	444,039

The following table details for the year ended December 31, 2014 the amount of loans receivable that were evaluated individually, and collectively, for impairment, and the related portion of the allowance for the loans losses that was allocated to each loan portfolio segment:

(in thousands)

December 31, 2014		Commercial				Commercial Real Estate				Construction				Construction to Permanent				Residential				Consumer				Total
Ending balance: individually evaluated for impairment		$	-			$	-			$	-			$	-			$	-			$	7			$	7
Ending balance: collectively evaluated for impairment			1,918				1,419				63				215				831				471				4,917

Total Allowance for Loan Losses		$	1,918			$	1,419			$	63			$	215			$	831			$	478			$	4,924


Total Loans ending balance		$	53,973			$	254,505			$	3,096			$	10,627			$	108,543			$	46,164			$	476,908

Ending balance: individually evaluated for impairment			2				7,398				-				-				3,764				560				11,724

Ending balance: collectively evaluated for impairment		$	53,971			$	247,107			$	3,096			$	10,627			$	104,779			$	45,604			$	465,184

The Company monitors the credit quality of its loans receivable in an ongoing manner. Credit quality is monitored by reviewing certain credit quality indicators and trends, including but not limited to, loan to value ratios, debt service coverage ratios, debt to worth ratios, profitability ratios, cash flows and credit scores.

Appraisals on properties securing non-performing loans and Other Real Estate Owned (“OREO”) are updated annually. We update our impairment analysis monthly based on the most recent appraisal as well as other factors (such as senior lien positions, property taxes, etc.).

The majority of the Company’s impaired loans have been resolved through courses of action other than via liquidations of real estate collateral through OREO. These include normal loan payoffs, the traditional workout process, triggering personal guarantee obligations, and troubled debt restructurings. However, as loan workout efforts progress to a point where the Company's liquidation of real estate collateral is the likely outcome, the impairment analysis is updated to reflect actual recent experience with the Company's sales of OREO properties.

A disposition discount is built into our impairment analysis and reflected in our allowance once a property is determined to be a likely OREO (e.g. foreclosure is probable). To determine the discount we compare the average sales prices of our prior OREO properties to the appraised value that was obtained as of the date when we took title to the property. The difference is the Company owned disposition discount.

The Company has a risk rating system as part of the risk assessment of its loan portfolio. The Company’s lending officers are required to assign a risk rating to each loan in their portfolio at origination, which is ratified or modified by the Committee to which the loan is submitted for approval. When the lender learns of important financial developments, the risk rating is reviewed and adjusted if necessary. Similarly, the Loan Committee can adjust a risk rating. The Company employs a system to ensure an independent review of the ratings annually for commercial credits over $250,000.

The Company uses an independent third party loan reviewer who performs quarterly reviews of a sample of loans, validating the Company's risk ratings assigned to such loans. Any upgrades to classified loans must be approved by the Management Loan Committee.

When assigning a risk rating to a loan, management utilizes the Company's internal eleven-point risk rating system. An asset is considered “special mention” when it has a potential weakness based on objective evidence, but does not currently expose the Company to sufficient risk to warrant classification in one of the following categories:

●

An asset is considered “substandard” if it is not adequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the “distinct possibility” that the Company will sustain “some loss” if the deficiencies are not corrected.

●

Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.”

Charge–off generally commences after the loan is classified “doubtful” to reduce the loan to its recoverable balance. If the account is classified as “loss”, the full balance is charged off regardless of the potential recovery from the sale of the collateral. That amount is recognized as a recovery after the collateral is sold.

In accordance with FFIEC (“Federal Financial Institutions Examination Council”) published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end” credits are charged-off when 180 days delinquent and “Closed-end” credits are charged-off when 120 days delinquent.

Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The unpaid principal balances of loans on nonaccrual status and considered impaired were $383,000 at September 30, 2015 and $866,000 at December 31, 2014. If non-accrual loans had been performing in accordance with their contractual terms, the Company would have recorded approximately $3,000 of additional income during the quarter ended September 30, 2015 and $17,000 during the quarter ended September 30, 2014. If non-accrual loans had been performing in accordance with their contractual terms, the Company would have recorded approximately $8,000 of additional income during the nine months ended September 30, 2015 and $52,000 during the nine months ended September 30, 2014.

The following table sets forth the detail, and delinquency status, of non-accrual loans at September 30, 2015 :

(in thousands)		Non-Accrual Loans

2015		30-59 Days Past Due				60-89 Days Past Due				90 Days or More Past Due				Total Past Due				Current				Total Non-Accrual Loans
Commercial Real Estate
Substandard		$	-			$	-			$	-			$	-			$	-			$	-
Total Commercial Real Estate		$	-			$	-			$	-			$	-			$	-			$	-
Residential Real Estate
Substandard		$	-			$	-			$	380			$	380			$	-			$	380
Total Residential Real Estate		$	-			$	-			$	380			$	380			$	-			$	380
Consumer
Substandard		$	-			$	-			$	3			$	3			$	-			$	3
Total Consumer		$	-			$	-			$	3			$	3			$	-			$	3

Total		$	-			$	-			$	383			$	383			$	-			$	383

Generally, loans are placed on non-accruing status when they become 90 days or more delinquent, and remain on non-accrual status until they are brought current, have at least nine months of performance under the loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on a non-accruing status.

At September 30, 2015, 2 loans were on non-accrual status totaling $383,000. One of them is a residential real estate loan for $380, 000 and the other one is a $3,000 consumer auto loan.

The following table sets forth the detail, and delinquency status, of non-accrual loans at December 31, 2014:

(in thousands)		Non-Accrual Loans

2014		31-60 Days Past Due				61-90 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Non-Accrual Loans
Commercial
Substandard		$	-			$	-			$	2			$	2			$	-			$	2
Total Commercial		$	-			$	-			$	2			$	2			$	-			$	2
Commercial Real Estate
Substandard		$	-			$	-			$	-			$	-			$	138			$	138
Total Commercial Real Estate		$	-			$	-			$	-			$	-			$	138			$	138
Residential Real Estate
Substandard		$	-			$	-			$	719			$	719			$	-			$	719
Total Residential Real Estate		$	-			$	-			$	719			$	719			$	-			$	719
Consumer
Substandard		$	-			$	-			$	7			$	7			$	-			$	7
Total Consumer		$	-			$	-			$	7			$	7			$	-			$	7

Total		$	-			$	-			$	728			$	728			$	138			$	866

The following table sets forth the detail and delinquency status of loans receivable, by performing and non-performing loans at September 30, 2015.

(in thousands)		Performing (Accruing) Loans

2015		30-59 Days Past Due				60-89 Days Past Due				90 Days or More Past Due				Total Past Due				Current				Total Performing Loans				Total Non- Accrual Loans				Total Loans
Commercial
Pass		$	-			$	3,061			$	74			$	3,135			$	52,849			$	55,984			$	-			$	55,984
Special Mention			-				-				-				-				101				101				-			$	101
Substandard			-				-				-				-				5,099				5,099				-			$	5,099
Total Commercial		$	-			$	3,061			$	74			$	3,135			$	58,049			$	61,184			$	-			$	61,184
Commercial Real Estate
Pass		$	-			$	3,310			$	1,624			$	4,934			$	260,186			$	265,120			$	-			$	265,120
Special Mention			-				1,014				-				1,014				5,887				6,901				-				6,901
Substandard			-				-				-				-				1,694				1,694				-				1,694
Total Commercial Real Estate		$	-			$	4,324			$	1,624			$	5,948			$	267,767			$	273,715			$	-			$	273,715
Construction
Pass		$	-			$	-			$	-			$	-			$	12,386			$	12,386			$	-			$	12,386
Total Construction		$	-			$	-			$	-			$	-			$	12,386			$	12,386			$	-			$	12,386
Construction to Permanent
Pass		$	-			$	-			$	-			$	-			$	10,669			$	10,669			$	-			$	10,669
Total Construction to Permanent		$	-			$	-			$	-			$	-			$	10,669			$	10,669			$	-			$	10,669
Residential Real Estate
Pass		$	-			$	1,342			$	1,594			$	2,936			$	88,062			$	90,998			$	-			$	90,998
Substandard			-				-				-				-				-				-				380				380
Total Residential Real Estate		$	-			$	1,342			$	1,594			$	2,936			$	88,062			$	90,998			$	380			$	91,378
Consumer
Pass		$	12			$	348			$	8			$	368			$	46,611			$	46,979			$	-			$	46,979
Substandard			-				-				-				-				-				-				3				3
Total Consumer		$	12			$	348			$	8			$	368			$	46,611			$	46,979			$	3			$	46,982
Total
Pass		$	12			$	8,061			$	3,300			$	11,373			$	470,763			$	482,136			$	-			$	482,136
Special Mention			-				1,014				-				1,014				5,988				7,002				-				7,002
Substandard			-				-				-				-				6,793				6,793				383				7,176
Grand Total		$	12			$	9,075			$	3,300			$	12,387			$	483,544			$	495,931			$	383			$	496,314

The following table sets forth the detail and delinquency status of loans receivable, by performing and non-performing loans at December 31, 2014.

(in thousands)		Performing (Accruing) Loans

2014		31-60 Days Past Due				61-90 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Performing Loans				Total Non- Accrual Loans				Total Loans
Commercial
Pass		$	1,520			$	-			$	279			$	1,799			$	46,279			$	48,078			$	-			$	48,078
Special Mention			-				-				-				-				121				121				-				121
Substandard			-				-				-				-				5,772				5,772				2				5,774
Total Commercial		$	1,520			$	-			$	279			$	1,799			$	52,172			$	53,971			$	2			$	53,973
Commercial Real Estate
Pass		$	-			$	-			$	-			$	-			$	248,132			$	248,132			$	-			$	248,132
Special Mention			1,041				-				-				1,041				2,887				3,928				-				3,928
Substandard			-				815				-				815				1,492				2,307				138				2,445
Total Commercial Real Estate		$	1,041			$	815			$	-			$	1,856			$	252,511			$	254,367			$	138			$	254,505
Construction
Pass		$	-			$	-			$	-			$	-			$	3,096			$	3,096			$	-			$	3,096
Total Construction		$	-			$	-			$	-			$	-			$	3,096			$	3,096			$	-			$	3,096
Construction to Permanent
Pass		$	-			$	-			$	-			$	-			$	10,627			$	10,627			$	-			$	10,627
Total Construction to Permanent		$	-			$	-			$	-			$	-			$	10,627			$	10,627			$	-			$	10,627
Residential Real Estate
Pass		$	172			$	87			$	1,553			$	1,812			$	106,012			$	107,824			$	-			$	107,824
Substandard			-				-				-				-				-				-				719				719
Total Residential Real Estate		$	172			$	87			$	1,553			$	1,812			$	106,012			$	107,824			$	719			$	108,543
Consumer
Pass		$	-			$	2			$	-			$	2			$	46,155			$	46,157			$	-			$	46,157
Subsandard			-				-				-				-				-				-				7				7
Total Consumer		$	-			$	2			$	-			$	2			$	46,155			$	46,157			$	7			$	46,164
Total
Pass		$	1,692			$	89			$	1,832			$	3,613			$	460,301			$	463,914			$	-			$	463,914
Special Mention			1,041				-				-				1,041				3,008				4,049				-				4,049
Substandard			-				815				-				815				7,264				8,079				866				8,945
Grand Total		$	2,733			$	904			$	1,832			$	5,469			$	470,573			$	476,042			$	866			$	476,908

The following table summarizes impaired loans by loan portfolio class as of September 30, 2015

(in thousands)		Recorded Investment				Unpaid Principal Balance				Related Allowance



With no related allowance recorded:
Commercial		$	-			$	97			$	-
Commercial Real Estate			7,809				8,332				-
Construction			-				287				-
Residential			3,366				3,394				-
Consumer			549				635				-
Total:		$	11,724			$	12,745			$	-

With an allowance recorded:
Commercial		$	-			$	-			$	-
Commercial Real Estate			-				-				-
Construction			-				-				-
Residential			-				-				-
Consumer			3				3				3
Total:		$	3			$	3			$	3

Commercial		$	-			$	97			$	-
Commercial Real Estate			7,809				8,332				-
Construction			-				287				-
Residential			3,366				3,394				-
Consumer			552				638				3
Total:		$	11,727			$	12,748			$	3

Impaired loans consist of non-accrual loans, troubled debt restructurings (“TDRs”), and loans previously classified as TDRs that have been upgraded. The recorded investment of impaired loans at September 30, 2015 and December 31, 2014 was $11.7 million, with related allowances of $3,000 and $7,000 respectively.

The following table summarizes impaired loans by loan portfolio class as of December 31, 2014

(in thousands)		Recorded Investment				Unpaid Principal Balance				Related Allowance



With no related allowance recorded:
Commercial		$	2			$	104			$	-
Commercial Real Estate			7,398				8,249				-
Construction			-				732				-
Residential			3,764				3,793				-
Consumer			553				633				-
Total:		$	11,717			$	13,511			$	-

With an allowance recorded:
Commercial		$	-			$	-			$	-
Commercial Real Estate			-				-				-
Construction			-				-				-
Residential			-				-				-
Consumer			7				7				7
Total:		$	7			$	7			$	7

Commercial		$	2			$	104			$	-
Commercial Real Estate			7,398				8,249				-
Construction			-				732				-
Residential			3,764				3,793				-
Consumer			560				640				7
Total:		$	11,724			$	13,518			$	7

Included in the tables above at September 30, 2015 and December 31, 2014 are loans with carrying balances of $11.7 million for which a specific reserve of $3,000 and $7,000 respectively has been established. Loans that did not require specific reserves have sufficient collateral values, less costs to sell, supporting the carrying balances of the loans. In some cases, there may be no specific reserves because the Company already charged-off the specific impairment. Once a borrower is in default, the Company is under no obligation to advance additional funds on unused commitments.

The following tables summarize additional information regarding impaired loans for the three months and nine months ended September 30, 2015 and 2014.

		Three Months Ended September 30
		2015								2014
(in thousands)		Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized

With no related allowance recorded:
Commercial		$	-			$	-			$	434			$	-
Commercial Real Estate			7,916				94				8,493				104
Construction			-				-				-				-
Residential			3,373				31				4,810				32
Consumer			549				4				573				5
Total:		$	11,838			$	129			$	14,310			$	141

With an allowance recorded:
Commercial		$	-			$	-			$	5,872			$	-
Commercial Real Estate			-				-				1,073				-
Construction			-				-				-				-
Residential			-				-				253				-
Consumer			1				-				4				-
Total:		$	1			$	-			$	7,202

Commercial		$	-			$	-			$	6,306			$	-
Commercial Real Estate			7,916				94				9,566				104
Construction			-				-				-				-
Residential			3,373				31				5,063				32
Consumer			550				4				577				5
Total:		$	11,839			$	129			$	21,512			$	141

		Nine Months Ended September 30
		2015								2014
(in thousands)		Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized

With no related allowance recorded:
Commercial		$	-			$	-			$	286			$	-
Commercial Real Estate			8,079				281				8,365				261
Construction			-				-				263				-
Residential			3,430				95				4,798				97
Consumer			551				13				582				19
Total:		$	12,060			$	389			$	14,294			$	377

With an allowance recorded:
Commercial		$	-			$	-			$	5,989			$	-
Commercial Real Estate			-				-				772				-
Construction			-				-				144				-
Residential			-				-				436				-
Consumer			1				-				3				-
Total:		$	1			$	-			$	7,344			$	-

Commercial		$	-			$	-			$	6,275			$	-
Commercial Real Estate			8,079				281				9,137				261
Construction			-				-				407				-
Residential			3,430				95				5,234				97
Consumer			552				13				585				19
Total:		$	12,061			$	389			$	21,638			$	377

On a case-by-case basis, the Company may agree to modify the contractual terms of a borrower’s loan to assist customers who may be experiencing financial difficulty. If the borrower is experiencing financial difficulties and a concession has been made, the loan is classified as a troubled debt restructured loan. No loans were modified in troubled debt restructurings during the twelve months ended September 30, 2015. During the twelve months ended December 31, 2014, the Company modified one loan as a troubled debt restructured loan. The loan was a commercial real estate loan with a pre-modification balance of $1.3 million. Modification was made to the term of the loan and to the interest rate on the note. Post-modification, the loan balance was $1.2 million as the result of a principal pay-down required as part of the terms of the modification. Since the modification, the loan has been current and paying in accordance with the terms of the restructuring.

Substantially all of our troubled debt restructured loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below market rate, an extension of the term of the loan, or a combination of these two methods. These modifications rarely result in the forgiveness of principal or accrued interest. In addition, we frequently obtain additional collateral or guarantor support when modifying commercial loans. If the borrower had demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally nine consecutive months of payments) and both principal and interest are deemed collectible. All troubled debt restructurings are classified as impaired loans, which are individually evaluated for impairment.