Loans Receivable

v3.5.0.2

Loans Receivable	9 Months Ended
	Sep. 30, 2016
Receivables [Abstract]
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]	Note 4 - Loans Receivable Loans receivable are summarized below:       (Dollars in thousands)       September 30, 2016     December 31, 2015   Loans secured by real estate:                 Residential, including home equity   $ 208,658     $ 213,951   Commercial real estate, construction & land development,  and other dwellings     280,517       259,478   Commercial participations purchased     289       310   Total loans secured by real estate     489,464       473,739   Consumer     730       535   Commercial business     75,828       68,813   Government     29,014       29,062   Subtotal     595,036       572,149   Less:                 Net deferred loan origination fees     (170 )     (174 ) Undisbursed loan funds     (235 )     (77 ) Loan receivables   $ 594,631     $ 571,898     (Dollars in thousands)   Residential Real Estate, Including Home Equity     Consumer     Commercial Real Estate, Construction & Land Development, and Other Dwellings     Commercial Participations Purchased     Commercial Business     Government     Total                                               The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended September 30, 2016:                                                           Allowance for loan losses:                                                         Beginning Balance   $ 1,770     $ 37     $ 4,607     $ 9     $ 846     $ 68     $ 7,337   Charge-offs     (93 )     (12 )     -       -       -       -       (105 ) Recoveries     1       1       -       -       8       -       10   Provisions     97       25       112       (2 )     43       (13 )     262   Ending Balance   $ 1,775     $ 51     $ 4,719     $ 7     $ 897     $ 55     $ 7,504                                                             The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended September 30, 2015:                                                           Allowance for loan losses:                                                         Beginning Balance   $ 1,528     $ 31     $ 4,216     $ 19     $ 830     $ 75     $ 6,699   Charge-offs     -       (8 )     -       -       (77 )     -       (85 ) Recoveries     7       2       -       -       2       -       11   Provisions     (68 )     14       91       (3 )     57       9       100   Ending Balance   $ 1,467     $ 39     $ 4,307     $ 16     $ 812     $ 84     $ 6,725                                                             The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2016:                                                           Allowance for loan losses:                                                         Beginning Balance   $ 1,711     $ 38     $ 4,422     $ 14     $ 698     $ 70     $ 6,953   Charge-offs     (305 )     (24 )     -       -       -       -       (329 ) Recoveries     1       5       -       -       28       -       34   Provisions     368       32       297       (7 )     171       (15 )     846   Ending Balance   $ 1,775     $ 51     $ 4,719     $ 7     $ 897     $ 55     $ 7,504                                                             The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2015:                                                           Allowance for loan losses:                                                         Beginning Balance   $ 1,878     $ 17     $ 3,645     $ 13     $ 733     $ 75     $ 6,361   Charge-offs     (101 )     (22 )     (59 )     -       (77 )     -       (259 ) Recoveries     7       3       22       -       6       -       38   Provisions     (317 )     41       699       3       150       9       585   Ending Balance   $ 1,467     $ 39     $ 4,307     $ 16     $ 812     $ 84     $ 6,725     (Dollars in thousands)   Residential Real Estate, Including Home Equity     Consumer     Commercial Real Estate, Construction & Land Development, and Other Dwellings     Commercial Participations Purchased     Commercial Business     Government     Total                                               The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at September 30, 2016:                                                           Ending balance: individually evaluated for impairment   $ 135     $ -     $ 3     $ 7     $ 332     $ -     $ 477                                                             Ending balance: collectively evaluated for impairment   $ 1,640     $ 51     $ 4,716     $ -     $ 565     $ 55     $ 7,027                                                             LOAN RECEIVABLES                                                         Ending balance   $ 208,506     $ 732     $ 280,517     $ 289     $ 75,572     $ 29,014     $ 594,631                                                             Ending balance: individually evaluated for impairment   $ 2,099     $ -     $ 374     $ 85     $ 652     $ -     $ 3,210                                                             Ending balance: purchased credit impaired individually evaluated for impairment   $ 1,015     $ -     $ -     $ -     $ -     $ -     $ 1,015                                                             Ending balance: collectively evaluated for impairment   $ 205,392     $ 732     $ 280,143     $ 204     $ 74,920     $ 29,014     $ 590,406                                                             The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2015:                                                           Ending balance: individually evaluated for impairment   $ 149     $ -     $ 171     $ 14     $ 22     $ -     $ 356                                                             Ending balance: collectively evaluated for impairment   $ 1,562     $ 38     $ 4,251     $ -     $ 676     $ 70     $ 6,597                                                             LOAN RECEIVABLES                                                         Ending balance   $ 213,755     $ 535     $ 259,479     $ 310     $ 68,757     $ 29,062     $ 571,898                                                             Ending balance: individually evaluated for impairment   $ 227     $ -     $ 5,298     $ 92     $ 96     $ -     $ 5,713                                                             Ending balance: purchased credit impaired individually evaluated for impairment   $ 1,691     $ -     $ -     $ -     $ -     $ -     $ 1,691                                                             Ending balance: collectively evaluated for impairment   $ 211,837     $ 535     $ 254,181     $ 218     $ 68,661     $ 29,062     $ 564,494     The Bancorp's credit quality indicators are summarized below at September 30, 2016 and December 31, 2015:       (Dollars in thousands)       Corporate Credit Exposure - Credit Risk Portfolio By Creditworthiness Category       Commercial Real Estate, Construction & Land Development, and Other Dwellings     Commercial Participations Purchased     Commercial Business     Government   Loan Grades   2016     2015     2016     2015     2016     2015     2016     2015   2  Moderate risk   $ 253     $ 270     $ -     $ -     $ 6,508     $ 6,526     $ -     $ -   3  Above average acceptable risk     6,254       7,136       -       -       15,862       4,313       955       -   4  Acceptable risk     131,214       129,353       188       199       23,569       31,735       28,059       29,062   5  Marginally acceptable risk     99,079       74,342       -       -       16,569       12,225       -           6  Pass/monitor     37,470       38,337       17       19       11,332       11,774       -       -   7  Special mention (watch)     5,874       4,707       -       -       534       601       -       -   8  Substandard     374       5,334       85       92       1,198       1,583       -       -   Total   $ 280,517     $ 259,479     $ 289     $ 310     $ 75,572     $ 68,757     $ 29,014     $ 29,062         (Dollars in thousands)       Consumer Credit Exposure - Credit Risk Profile Based On Payment Activity       Residential Real Estate, Including Home Equity     Consumer       2016     2015     2016     2015   Performing   $ 204,069     $ 209,583     $ 732     $ 535   Non-performing     4,437       4,172       -       -   Total   $ 208,506     $ 213,755     $ 732     $ 535     The Bancorp has established a standard loan grading system to assist management, lenders and review personnel in their analysis and supervision of the loan portfolio. The use and application of these grades by the Bancorp is uniform and conforms to regulatory definitions. The loan grading system is as follows:   2 – Moderate risk Borrower consistently internally generates sufficient cash flow to fund debt service, working assets, and some capital expenditures. Risk of default considered low.   3 – Above average acceptable risk Borrower generates sufficient cash flow to fund debt service and some working assets and/or capital expansion needs. Profitability and key balance sheet ratios are at or slightly above peers. Current trends are positive or stable. Earnings may be level or trending down slightly or be erratic; however, positive strengths are offsetting. Risk of default is reasonable but may warrant collateral protection.   4 – Acceptable risk Borrower generates sufficient cash flow to fund debt service, but most working asset and all capital expansion needs are provided from external sources. Profitability ratios and key balance sheet ratios are usually close to peers but one or more ratios (e.g. leverage) may be higher than peer. Earnings may be trending down over the last three years. Borrower may be able to obtain similar financing from other banks with comparable or less favorable terms. Risk of default is acceptable but requires collateral protection.   5 – Marginally acceptable risk Borrower may exhibit excessive growth, declining earnings, strained cash flow, increasing leverage and/or weakening market position that indicate above average risk. Limited additional debt capacity, modest coverage, and average or below average asset quality, margins and market share. Interim losses and/or adverse trends may occur, but not to the level that would affect the Bank’s position. The potential for default is higher than normal but considered marginally acceptable based on prospects for improving financial performance and the strength of the collateral.   6 – Pass/monitor The borrower has significant weaknesses resulting from performance trends or management concerns. The financial condition of the company has taken a negative turn and may be temporarily strained. Cash flow may be weak but cash reserves remain adequate to meet debt service. Management weaknesses are evident. Borrowers in this category will warrant more than the normal level of supervision and more frequent reporting.   7 – Special mention (watch) Special mention credits are considered bankable assets with no apparent loss of principal or interest envisioned but requiring a high level of management attention. Assets in this category are currently protected but are potentially weak. These borrowers are subject to economic, industry, or management factors having an adverse impact upon their prospects for orderly service of debt. The perceived risk in continued lending is considered to have increased beyond the level where such loans would normally be granted. These assets constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of Substandard.   8 – Substandard This classification consists of loans which are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged. Financial statements normally reveal some or all of the following: poor trends, lack of earnings and cash flow, excessive debt, lack of liquidity, and the absence of creditor protection. Loans are still considered collectible, but due to increased risks and defined weaknesses of the credit, some loss could be incurred in collection if the deficiencies are not corrected.   Performing loans are loans that are paying as agreed and are approximately less than ninety days past due on payments of interest and principal.   One residential real estate loan in the amount of $2 million was modified as a troubled debt restructuring during the second quarter of 2016. No troubled debt restructurings have subsequently defaulted during the periods presented. All of the loans classified as troubled debt restructurings are also considered impaired. The valuation basis for the Bancorp’s troubled debt restructurings is based on the present value of cash flows, unless consistent cash flows are not present, then the fair value of the collateral securing the loan is the basis for valuation.   The Bancorp's individually evaluated impaired loans are summarized below:       As of September 30, 2016     For the nine months ended September 30, 2016   (Dollars in thousands)   Recorded Investment     Unpaid Principal Balance     Related Allowance     Average Recorded Investment     Interest Income Recognized   With no related allowance recorded:                                         Residential real estate, including home equity   $ 2,954     $ 4,965     $ -     $ 2,900     $ 113   Commercial real estate, construction & land development, and other dwellings     356       356       -       1,480       -   Commercial participations purchased     -       -       -       -       -   Commercial business     226       226       -       260       3   With an allowance recorded:                                         Residential real estate, including home equity     160       160       135       168       4   Commercial real estate, construction & land development, and other dwellings     18       18       3       18       -   Commercial participations purchased     85       85       7       89       5   Commercial business     426       426       332       184       1   Total:                                         Residential real estate, including home equity   $ 3,114     $ 5,125     $ 135     $ 3,068     $ 117   Commercial real estate, construction & land development, and other dwellings   $ 374     $ 374     $ 3     $ 1,498     $ -   Commercial participations purchased   $ 85     $ 85     $ 7     $ 89     $ 5   Commercial business   $ 652     $ 652     $ 332     $ 444     $ 4         As of December 31, 2015     For the nine months ended September 30, 2015   (Dollars in thousands)   Recorded Investment     Unpaid Principal Balance     Related Allowance     Average Recorded Investment     Interest Income Recognized   With no related allowance recorded:                                         Residential real estate, including home equity   $ 1,741     $ 4,737     $ -     $ 2,104     $ 17   Commercial real estate, construction & land development, and other dwellings     5,075       5,075       -       -       -   Commercial participations purchased     -       -       -       -       -   Commercial business     74       74       -       81       1   With an allowance recorded:                                         Residential real estate, including home equity     177       177       149       -       -   Commercial real estate, construction & land development, and other dwellings     223       223       171       5,024       43   Commercial participations purchased     92       92       14       95       3   Commercial business     22       22       22       23       -   Total:                                         Residential real estate, including home equity   $ 1,918     $ 4,914     $ 149     $ 2,104     $ 17   Commercial real estate, construction & land development, and other dwellings   $ 5,298     $ 5,298     $ 171     $ 5,024     $ 43   Commercial participations purchased   $ 92     $ 92     $ 14     $ 95     $ 3   Commercial business   $ 96     $ 96     $ 22     $ 104     $ 1     As part of the previously disclosed acquisitions of First Federal Savings and Loan Association of Hammond (“First Federal”), which closed during the second quarter of 2014, and Liberty Savings Bank (‘Liberty”), which closed during the third quarter of 2015, the Bancorp acquired loans for which there was evidence of credit quality deterioration since origination and it was determined that it was probable that the Bancorp would be unable to collect all contractually required principal and interest payments. At September 30, 2016, total purchased credit impaired loans with unpaid principal balances totaled $3.0 million with a recorded investment of $1.0 million. First Federal purchased credit impaired loans with unpaid principal balances totaled $1.2 million with a recorded investment of $527 thousand. Liberty purchased credit impaired loans with unpaid principal balances totaled $1.8 million with a recorded investment of $488 thousand.   The Bancorp's age analysis of past due loans is summarized below:       (Dollars in thousands)       30-59 Days Past Due     60-89 Days Past Due     Greater Than 90 Days Past Due     Total Past Due     Current     Total Loans     Recorded Investments Greater than 90 Days and Accruing   September 30, 2016                                                         Residential real estate, including home equity   $ 4,481     $ 1,528     $ 3,522     $ 9,531     $ 198,975     $ 208,506     $ 619   Consumer     -       -       -       -       732       732       -   Commercial real estate, construction & land  development, and other dwellings     574       222       375       1,171       279,346       280,517       1   Commercial participations purchased     -       -       85       85       205       289       -   Commercial business     308       -       567       875       74,697       75,572       -   Government     -       -       -       -       29,014       29,014       -   Total   $ 5,363     $ 1,750     $ 4,549     $ 11,662     $ 582,969     $ 594,631     $ 620                                                             December 31, 2015                                                         Residential real estate, including home equity   $ 5,559     $ 2,430     $ 3,055     $ 11,044     $ 202,711     $ 213,755     $ 377   Consumer     -       -       -       -       535       535       -   Commercial real estate, construction & land  development, and other dwellings     -       211       710       921       258,558       259,479       -   Commercial participations purchased     -       -       92       92       218       310       -   Commercial business     67       177       22       266       68,491       68,757       -   Government     -       -       -       -       29,062       29,062       -   Total   $ 5,626     $ 2,818     $ 3,879     $ 12,323     $ 559,575     $ 571,898     $ 377     The Bancorp's loans on nonaccrual status are summarized below:       (Dollars in thousands)       September 30, 2016     December 31, 2015   Residential real estate, including home equity   $ 3,819     $ 4,172   Consumer     -       -   Commercial real estate, construction & land  development, and other dwellings     374       915   Commercial participations purchased     85       92   Commercial business     589       22   Government     -       -   Total   $ 4,866     $ 5,201