| Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
Note 5 - Loans Receivable
| Loans receivable are summarized below: |
| (Dollars in thousands) |
|
|
|
|
|
|
|
|
| |
|
September 30, 2020 |
|
|
December 31, 2019 |
|
| Loans secured by real estate: |
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
284,381 |
|
|
$ |
299,569 |
|
| Home equity |
|
|
42,127 |
|
|
|
49,118 |
|
| Commercial real estate |
|
|
285,701 |
|
|
|
283,108 |
|
| Construction and land development |
|
|
89,176 |
|
|
|
87,710 |
|
| Multifamily |
|
|
50,701 |
|
|
|
51,286 |
|
| Farmland |
|
|
218 |
|
|
|
227 |
|
| Total loans secured by real estate |
|
|
752,304 |
|
|
|
771,018 |
|
| Commercial business |
|
|
184,406 |
|
|
|
103,222 |
|
| Consumer |
|
|
467 |
|
|
|
627 |
|
| Manufactured homes |
|
|
21,991 |
|
|
|
13,285 |
|
| Government |
|
|
13,205 |
|
|
|
15,804 |
|
| Subtotal |
|
|
972,373 |
|
|
|
903,956 |
|
| Less: |
|
|
|
|
|
|
|
|
| Net deferred loan origination fees |
|
|
3,441 |
|
|
|
2,934 |
|
| Undisbursed loan funds |
|
|
126 |
|
|
|
(21 |
) |
| Loans receivable |
|
$ |
975,940 |
|
|
$ |
906,869 |
|
| (Dollars in thousands) |
|
Beginning Balance |
|
|
Charge-offs |
|
|
Recoveries |
|
|
Provisions |
|
|
Ending Balance |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended September 30, 2020: |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
1,708 |
|
|
$ |
- |
|
|
$ |
5 |
|
|
$ |
170 |
|
|
$ |
1,883 |
|
| Home equity |
|
|
231 |
|
|
|
- |
|
|
|
- |
|
|
|
(19 |
) |
|
|
212 |
|
| Commercial real estate |
|
|
3,712 |
|
|
|
- |
|
|
|
- |
|
|
|
675 |
|
|
|
4,387 |
|
| Construction and land development |
|
|
1,201 |
|
|
|
- |
|
|
|
- |
|
|
|
(29 |
) |
|
|
1,172 |
|
| Multifamily |
|
|
609 |
|
|
|
- |
|
|
|
- |
|
|
|
(59 |
) |
|
|
550 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
2,375 |
|
|
|
- |
|
|
|
- |
|
|
|
113 |
|
|
|
2,488 |
|
| Consumer |
|
|
30 |
|
|
|
(9 |
) |
|
|
3 |
|
|
|
(2 |
) |
|
|
22 |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Total |
|
$ |
9,866 |
|
|
$ |
(9 |
) |
|
$ |
8 |
|
|
$ |
849 |
|
|
$ |
10,714 |
|
| The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the three months ended September 30, 2019: |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
1,660 |
|
|
$ |
(62 |
) |
|
$ |
5 |
|
|
$ |
149 |
|
|
$ |
1,752 |
|
| Home equity |
|
|
202 |
|
|
|
- |
|
|
|
2 |
|
|
|
23 |
|
|
|
227 |
|
| Commercial real estate |
|
|
3,529 |
|
|
|
- |
|
|
|
- |
|
|
|
178 |
|
|
|
3,707 |
|
| Construction and land development |
|
|
806 |
|
|
|
- |
|
|
|
- |
|
|
|
188 |
|
|
|
994 |
|
| Multifamily |
|
|
453 |
|
|
|
- |
|
|
|
- |
|
|
|
51 |
|
|
|
504 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
1,517 |
|
|
|
(9 |
) |
|
|
8 |
|
|
|
405 |
|
|
|
1,921 |
|
| Consumer |
|
|
51 |
|
|
|
(13 |
) |
|
|
5 |
|
|
|
7 |
|
|
|
50 |
|
| Manufactured homes |
|
|
505 |
|
|
|
- |
|
|
|
- |
|
|
|
(505 |
) |
|
|
- |
|
| Government |
|
|
21 |
|
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
|
|
19 |
|
| Total |
|
$ |
8,744 |
|
|
$ |
(84 |
) |
|
$ |
20 |
|
|
$ |
494 |
|
|
$ |
9,174 |
|
| The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2020: |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
1,812 |
|
|
$ |
(2 |
) |
|
$ |
15 |
|
|
$ |
58 |
|
|
$ |
1,883 |
|
| Home equity |
|
|
223 |
|
|
|
- |
|
|
|
- |
|
|
|
(11 |
) |
|
|
212 |
|
| Commercial real estate |
|
|
3,773 |
|
|
|
(80 |
) |
|
|
- |
|
|
|
694 |
|
|
|
4,387 |
|
| Construction and land development |
|
|
1,098 |
|
|
|
(17 |
) |
|
|
- |
|
|
|
91 |
|
|
|
1,172 |
|
| Multifamily |
|
|
529 |
|
|
|
- |
|
|
|
- |
|
|
|
21 |
|
|
|
550 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
1,504 |
|
|
|
(78 |
) |
|
|
17 |
|
|
|
1,045 |
|
|
|
2,488 |
|
| Consumer |
|
|
43 |
|
|
|
(22 |
) |
|
|
11 |
|
|
|
(10 |
) |
|
|
22 |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Government |
|
|
17 |
|
|
|
- |
|
|
|
- |
|
|
|
(17 |
) |
|
|
- |
|
| Total |
|
$ |
8,999 |
|
|
$ |
(199 |
) |
|
$ |
43 |
|
|
$ |
1,871 |
|
|
$ |
10,714 |
|
| The Bancorp's activity in the allowance for loan losses, by loan segment, is summarized below for the nine months ended September 30, 2019: |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
1,715 |
|
|
$ |
(128 |
) |
|
$ |
23 |
|
|
$ |
142 |
|
|
$ |
1,752 |
|
| Home equity |
|
|
202 |
|
|
|
- |
|
|
|
4 |
|
|
|
21 |
|
|
|
227 |
|
| Commercial real estate |
|
|
3,335 |
|
|
|
- |
|
|
|
- |
|
|
|
372 |
|
|
|
3,707 |
|
| Construction and land development |
|
|
756 |
|
|
|
- |
|
|
|
- |
|
|
|
238 |
|
|
|
994 |
|
| Multifamily |
|
|
472 |
|
|
|
- |
|
|
|
- |
|
|
|
32 |
|
|
|
504 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
1,362 |
|
|
|
(9 |
) |
|
|
24 |
|
|
|
544 |
|
|
|
1,921 |
|
| Consumer |
|
|
41 |
|
|
|
(38 |
) |
|
|
14 |
|
|
|
33 |
|
|
|
50 |
|
| Manufactured homes |
|
|
41 |
|
|
|
- |
|
|
|
- |
|
|
|
(41 |
) |
|
|
- |
|
| Government |
|
|
38 |
|
|
|
- |
|
|
|
- |
|
|
|
(19 |
) |
|
|
19 |
|
| Total |
|
$ |
7,962 |
|
|
$ |
(175 |
) |
|
$ |
65 |
|
|
$ |
1,322 |
|
|
$ |
9,174 |
|
A deferred cost reserve is maintained for the portfolio of manufactured home loans that have been purchased. This reserve is available for use for manufactured home loan nonperformance and costs associated with nonperformance. If the segment performs in line with expectation, the deferred cost reserve is paid as an origination cost to the third party originator of the loan. The unamortized balance of the deferred cost reserve totaled $3.3 million and $1.9 million as of September 30, 2020 and December 31, 2019, respectively, and is included in net deferred loan origination costs.
| The Bancorp's impairment analysis is summarized below: |
| |
|
Ending Balances |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in thousands) |
|
Individually evaluated for impairment reserves |
|
|
Collectively evaluated for impairment reserves |
|
|
Loan receivables |
|
|
Individually evaluated for impairment |
|
|
Purchased credit impaired individually evaluated for impairment |
|
|
Collectively evaluated for impairment |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at September 30, 2020: |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
186 |
|
|
$ |
1,697 |
|
|
$ |
284,293 |
|
|
$ |
781 |
|
|
|
1,422 |
|
|
$ |
282,090 |
|
| |
|
|
1 |
|
|
|
211 |
|
|
|
42,183 |
|
|
|
222 |
|
|
|
139 |
|
|
|
41,822 |
|
| Commercial real estate |
|
|
683 |
|
|
|
3,704 |
|
|
|
285,701 |
|
|
|
6,242 |
|
|
|
152 |
|
|
|
279,307 |
|
| Construction and land development |
|
|
- |
|
|
|
1,172 |
|
|
|
89,176 |
|
|
|
- |
|
|
|
- |
|
|
|
89,176 |
|
| Multifamily |
|
|
- |
|
|
|
550 |
|
|
|
50,701 |
|
|
|
102 |
|
|
|
646 |
|
|
|
49,953 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
218 |
|
|
|
- |
|
|
|
- |
|
|
|
218 |
|
| Commercial business |
|
|
460 |
|
|
|
2,028 |
|
|
|
182,182 |
|
|
|
1,451 |
|
|
|
1,158 |
|
|
|
179,573 |
|
| Consumer |
|
|
- |
|
|
|
22 |
|
|
|
467 |
|
|
|
- |
|
|
|
- |
|
|
|
467 |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
27,814 |
|
|
|
- |
|
|
|
- |
|
|
|
27,814 |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
13,205 |
|
|
|
- |
|
|
|
- |
|
|
|
13,205 |
|
| Total |
|
$ |
1,330 |
|
|
$ |
9,384 |
|
|
$ |
975,940 |
|
|
$ |
8,798 |
|
|
$ |
3,517 |
|
|
$ |
963,625 |
|
| The Bancorp's allowance for loan losses impairment evaluation and loan receivables are summarized below at December 31, 2019: |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
10 |
|
|
$ |
1,802 |
|
|
$ |
299,333 |
|
|
$ |
642 |
|
|
$ |
1,581 |
|
|
$ |
297,110 |
|
| Home equity |
|
|
4 |
|
|
|
219 |
|
|
|
49,181 |
|
|
|
221 |
|
|
|
216 |
|
|
|
48,744 |
|
| Commercial real estate |
|
|
- |
|
|
|
3,773 |
|
|
|
283,108 |
|
|
|
1,078 |
|
|
|
487 |
|
|
|
281,543 |
|
| Construction and land development |
|
|
- |
|
|
|
1,098 |
|
|
|
87,710 |
|
|
|
- |
|
|
|
- |
|
|
|
87,710 |
|
| Multifamily |
|
|
- |
|
|
|
529 |
|
|
|
51,286 |
|
|
|
129 |
|
|
|
673 |
|
|
|
50,484 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
227 |
|
|
|
- |
|
|
|
- |
|
|
|
227 |
|
| Commercial business |
|
|
152 |
|
|
|
1,352 |
|
|
|
103,088 |
|
|
|
1,041 |
|
|
|
1,150 |
|
|
|
100,897 |
|
| Consumer |
|
|
- |
|
|
|
43 |
|
|
|
627 |
|
|
|
- |
|
|
|
- |
|
|
|
627 |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
16,505 |
|
|
|
- |
|
|
|
- |
|
|
|
16,505 |
|
| Government |
|
|
- |
|
|
|
17 |
|
|
|
15,804 |
|
|
|
- |
|
|
|
- |
|
|
|
15,804 |
|
| Total |
|
$ |
166 |
|
|
$ |
8,833 |
|
|
$ |
906,869 |
|
|
$ |
3,111 |
|
|
$ |
4,107 |
|
|
$ |
899,651 |
|
| The Bancorp's credit quality indicators are summarized below at September 30, 2020 and December 31, 2019: |
| |
|
Credit Exposure - Credit Risk Portfolio By Creditworthiness Category |
|
|
|
|
|
| |
|
September 30, 2020 |
|
|
|
|
|
| (Dollars in thousands) |
|
2 |
|
|
3 |
|
|
4 |
|
|
5 |
|
|
6 |
|
|
7 |
|
|
8 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan Segment |
|
Moderate |
|
|
Above average acceptable |
|
|
Acceptable |
|
|
Marginally acceptable |
|
|
Pass/monitor |
|
|
Special mention |
|
|
Substandard |
|
|
Total |
|
| Residential real estate |
|
$ |
952 |
|
|
$ |
115,720 |
|
|
$ |
100,115 |
|
|
$ |
13,601 |
|
|
$ |
44,660 |
|
|
$ |
2,555 |
|
|
$ |
6,690 |
|
|
$ |
284,293 |
|
| Home equity |
|
|
76 |
|
|
|
5,636 |
|
|
|
34,538 |
|
|
|
115 |
|
|
|
713 |
|
|
|
563 |
|
|
|
542 |
|
|
|
42,183 |
|
| Commercial real estate |
|
|
- |
|
|
|
1,780 |
|
|
|
70,624 |
|
|
|
143,743 |
|
|
|
54,799 |
|
|
|
6,486 |
|
|
|
8,269 |
|
|
|
285,701 |
|
| Construction and land development |
|
|
- |
|
|
|
2,238 |
|
|
|
26,639 |
|
|
|
45,236 |
|
|
|
15,063 |
|
|
|
- |
|
|
|
- |
|
|
|
89,176 |
|
| Multifamily |
|
|
- |
|
|
|
723 |
|
|
|
13,364 |
|
|
|
29,548 |
|
|
|
4,971 |
|
|
|
1,567 |
|
|
|
528 |
|
|
|
50,701 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
218 |
|
|
|
- |
|
|
|
- |
|
|
|
218 |
|
| Commercial business |
|
|
5,674 |
|
|
|
101,847 |
|
|
|
17,848 |
|
|
|
33,675 |
|
|
|
19,994 |
|
|
|
1,718 |
|
|
|
1,426 |
|
|
|
182,182 |
|
| Consumer |
|
|
63 |
|
|
|
1 |
|
|
|
403 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
467 |
|
| Manufactured homes |
|
|
5,822 |
|
|
|
1,998 |
|
|
|
19,041 |
|
|
|
178 |
|
|
|
775 |
|
|
|
- |
|
|
|
- |
|
|
|
27,814 |
|
| Government |
|
|
- |
|
|
|
1,658 |
|
|
|
9,887 |
|
|
|
1,660 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,205 |
|
| Total |
|
$ |
12,587 |
|
|
$ |
231,601 |
|
|
$ |
292,459 |
|
|
$ |
267,756 |
|
|
$ |
141,193 |
|
|
$ |
12,889 |
|
|
$ |
17,455 |
|
|
$ |
975,940 |
|
| |
|
December 31, 2019 |
|
|
|
|
|
| (Dollars in thousands) |
|
2 |
|
|
3 |
|
|
4 |
|
|
5 |
|
|
6 |
|
|
7 |
|
|
8 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan Segment |
|
Moderate |
|
|
Above average acceptable |
|
|
Acceptable |
|
|
Marginally acceptable |
|
|
Pass/monitor |
|
|
Special mention |
|
|
Substandard |
|
|
Total |
|
| Residential real estate |
|
$ |
827 |
|
|
$ |
119,138 |
|
|
$ |
104,153 |
|
|
$ |
13,463 |
|
|
$ |
53,058 |
|
|
$ |
4,203 |
|
|
$ |
4,491 |
|
|
$ |
299,333 |
|
| Home equity |
|
|
100 |
|
|
|
6,536 |
|
|
|
40,027 |
|
|
|
264 |
|
|
|
934 |
|
|
|
813 |
|
|
|
507 |
|
|
|
49,181 |
|
| Commercial real estate |
|
|
- |
|
|
|
2,030 |
|
|
|
82,158 |
|
|
|
135,058 |
|
|
|
56,917 |
|
|
|
5,380 |
|
|
|
1,565 |
|
|
|
283,108 |
|
| Construction and land development |
|
|
- |
|
|
|
719 |
|
|
|
26,900 |
|
|
|
45,751 |
|
|
|
14,340 |
|
|
|
- |
|
|
|
- |
|
|
|
87,710 |
|
| Multifamily |
|
|
- |
|
|
|
903 |
|
|
|
18,107 |
|
|
|
26,800 |
|
|
|
4,674 |
|
|
|
- |
|
|
|
802 |
|
|
|
51,286 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
227 |
|
|
|
- |
|
|
|
- |
|
|
|
227 |
|
| Commercial business |
|
|
8,312 |
|
|
|
13,158 |
|
|
|
19,638 |
|
|
|
39,016 |
|
|
|
20,009 |
|
|
|
2,228 |
|
|
|
727 |
|
|
|
103,088 |
|
| Consumer |
|
|
90 |
|
|
|
- |
|
|
|
537 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
627 |
|
| Manufactured homes |
|
|
3,221 |
|
|
|
2,413 |
|
|
|
9,825 |
|
|
|
184 |
|
|
|
862 |
|
|
|
- |
|
|
|
- |
|
|
|
16,505 |
|
| Government |
|
|
- |
|
|
|
1,889 |
|
|
|
11,505 |
|
|
|
2,410 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,804 |
|
| Total |
|
$ |
12,550 |
|
|
$ |
146,786 |
|
|
$ |
312,850 |
|
|
$ |
262,946 |
|
|
$ |
151,021 |
|
|
$ |
12,624 |
|
|
$ |
8,092 |
|
|
$ |
906,869 |
|
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:
1 – Minimal Risk
Borrower demonstrates exceptional credit fundamentals, including stable and predictable profit margins, strong liquidity and a conservative balance sheet with superior asset quality. Excellent cash flow coverage of existing and projected debt service. Historic and projected performance indicates borrower is able to meet obligations under almost any economic circumstances.
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.
During the first nine months of 2020, one commercial real estate loan totaling $145 thousand, one residential loan totaling $51 thousand and one home equity loan totaling $23 thousand were renewed as a troubled debt restructuring. One commercial business trouble debt restructuring loan totaling $287 thousand has 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: |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended |
|
| |
|
As of September 30, 2020 |
|
|
September 30, 2020 |
|
| (Dollars in thousands) |
|
Recorded Investment |
|
|
Unpaid Principal Balance |
|
|
Related Allowance |
|
|
Average Recorded Investment |
|
|
Interest Income Recognized |
|
| With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
1,923 |
|
|
$ |
3,260 |
|
|
$ |
- |
|
|
$ |
2,061 |
|
|
$ |
81 |
|
| Home equity |
|
|
360 |
|
|
|
372 |
|
|
|
- |
|
|
|
378 |
|
|
|
13 |
|
| Commercial real estate |
|
|
1,214 |
|
|
|
1,797 |
|
|
|
- |
|
|
|
1,338 |
|
|
|
65 |
|
| Construction and land development |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Multifamily |
|
|
748 |
|
|
|
830 |
|
|
|
- |
|
|
|
775 |
|
|
|
23 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
1,693 |
|
|
|
1,728 |
|
|
|
- |
|
|
|
1,614 |
|
|
|
61 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
280 |
|
|
$ |
324 |
|
|
$ |
186 |
|
|
$ |
151 |
|
|
$ |
4 |
|
| Home equity |
|
|
1 |
|
|
|
9 |
|
|
|
1 |
|
|
|
4 |
|
|
|
- |
|
| Commercial real estate |
|
|
5,180 |
|
|
|
5,180 |
|
|
|
683 |
|
|
|
1,346 |
|
|
|
- |
|
| Construction and land development |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Multifamily |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
916 |
|
|
|
916 |
|
|
|
460 |
|
|
|
736 |
|
|
|
19 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
2,203 |
|
|
$ |
3,584 |
|
|
$ |
186 |
|
|
$ |
2,212 |
|
|
$ |
85 |
|
| Home equity |
|
$ |
361 |
|
|
$ |
381 |
|
|
$ |
1 |
|
|
$ |
382 |
|
|
$ |
13 |
|
| Commercial real estate |
|
$ |
6,394 |
|
|
$ |
6,977 |
|
|
$ |
683 |
|
|
$ |
2,684 |
|
|
$ |
65 |
|
| Construction & land development |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Multifamily |
|
$ |
748 |
|
|
$ |
830 |
|
|
$ |
- |
|
|
$ |
775 |
|
|
$ |
23 |
|
| Farmland |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Commercial business |
|
$ |
2,609 |
|
|
$ |
2,644 |
|
|
$ |
460 |
|
|
$ |
2,350 |
|
|
$ |
80 |
|
| Consumer |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Manufactured homes |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Government |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended |
|
| |
|
As of December 31, 2019 |
|
|
September 30, 2019 |
|
| (Dollars in thousands) |
|
Recorded Investment |
|
|
Unpaid Principal Balance |
|
|
Related Allowance |
|
|
Average Recorded Investment |
|
|
Interest Income Recognized |
|
| With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
2,140 |
|
|
$ |
3,555 |
|
|
$ |
- |
|
|
$ |
1,915 |
|
|
$ |
55 |
|
| Home equity |
|
|
429 |
|
|
|
451 |
|
|
|
- |
|
|
|
368 |
|
|
|
6 |
|
| Commercial real estate |
|
|
1,547 |
|
|
|
2,141 |
|
|
|
- |
|
|
|
1,586 |
|
|
|
41 |
|
| Construction & land development |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Multifamily |
|
|
802 |
|
|
|
884 |
|
|
|
- |
|
|
|
525 |
|
|
|
12 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
1,814 |
|
|
|
1,906 |
|
|
|
- |
|
|
|
1,933 |
|
|
|
63 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
83 |
|
|
$ |
83 |
|
|
$ |
10 |
|
|
$ |
158 |
|
|
$ |
3 |
|
| Home equity |
|
|
8 |
|
|
|
8 |
|
|
|
4 |
|
|
|
60 |
|
|
|
1 |
|
| Commercial real estate |
|
|
18 |
|
|
|
18 |
|
|
|
- |
|
|
|
473 |
|
|
|
- |
|
| Construction & land development |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Multifamily |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
377 |
|
|
|
377 |
|
|
|
152 |
|
|
|
547 |
|
|
|
3 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
2,223 |
|
|
$ |
3,638 |
|
|
$ |
10 |
|
|
$ |
2,073 |
|
|
$ |
58 |
|
| Home equity |
|
$ |
437 |
|
|
$ |
459 |
|
|
$ |
4 |
|
|
$ |
428 |
|
|
$ |
7 |
|
| Commercial real estate |
|
$ |
1,565 |
|
|
$ |
2,159 |
|
|
$ |
- |
|
|
$ |
2,059 |
|
|
$ |
41 |
|
| Construction & land development |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Multifamily |
|
$ |
802 |
|
|
$ |
884 |
|
|
$ |
- |
|
|
$ |
525 |
|
|
$ |
12 |
|
| Farmland |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Commercial business |
|
$ |
2,191 |
|
|
$ |
2,283 |
|
|
$ |
152 |
|
|
$ |
2,480 |
|
|
$ |
66 |
|
| Consumer |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Manufactured homes |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Government |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| 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 Past Due and Accruing |
|
| September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
2,697 |
|
|
$ |
2,028 |
|
|
$ |
3,284 |
|
|
$ |
8,009 |
|
|
$ |
276,284 |
|
|
$ |
284,293 |
|
|
$ |
- |
|
| Home equity |
|
|
163 |
|
|
|
- |
|
|
|
408 |
|
|
|
571 |
|
|
|
41,612 |
|
|
|
42,183 |
|
|
|
- |
|
| Commercial real estate |
|
|
9,837 |
|
|
|
1,532 |
|
|
|
248 |
|
|
|
11,617 |
|
|
|
274,084 |
|
|
|
285,701 |
|
|
|
- |
|
| Construction and land development |
|
|
478 |
|
|
|
- |
|
|
|
345 |
|
|
|
823 |
|
|
|
88,353 |
|
|
|
89,176 |
|
|
|
345 |
|
| Multifamily |
|
|
102 |
|
|
|
269 |
|
|
|
166 |
|
|
|
537 |
|
|
|
50,164 |
|
|
|
50,701 |
|
|
|
- |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
218 |
|
|
|
218 |
|
|
|
- |
|
| Commercial business |
|
|
1,342 |
|
|
|
215 |
|
|
|
759 |
|
|
|
2,316 |
|
|
|
179,866 |
|
|
|
182,182 |
|
|
|
234 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
467 |
|
|
|
467 |
|
|
|
- |
|
| Manufactured homes |
|
|
423 |
|
|
|
168 |
|
|
|
- |
|
|
|
591 |
|
|
|
27,223 |
|
|
|
27,814 |
|
|
|
- |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,205 |
|
|
|
13,205 |
|
|
|
- |
|
| Total |
|
$ |
15,042 |
|
|
$ |
4,212 |
|
|
$ |
5,210 |
|
|
$ |
24,464 |
|
|
$ |
951,476 |
|
|
$ |
975,940 |
|
|
$ |
579 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential real estate |
|
$ |
3,486 |
|
|
$ |
1,332 |
|
|
$ |
3,724 |
|
|
$ |
8,542 |
|
|
$ |
290,791 |
|
|
$ |
299,333 |
|
|
$ |
452 |
|
| Home equity |
|
|
90 |
|
|
|
24 |
|
|
|
388 |
|
|
|
502 |
|
|
|
48,679 |
|
|
|
49,181 |
|
|
|
19 |
|
| Commercial real estate |
|
|
1,461 |
|
|
|
170 |
|
|
|
719 |
|
|
|
2,350 |
|
|
|
280,758 |
|
|
|
283,108 |
|
|
|
61 |
|
| Construction and land development |
|
|
143 |
|
|
|
289 |
|
|
|
- |
|
|
|
432 |
|
|
|
87,278 |
|
|
|
87,710 |
|
|
|
- |
|
| Multifamily |
|
|
140 |
|
|
|
- |
|
|
|
160 |
|
|
|
300 |
|
|
|
50,986 |
|
|
|
51,286 |
|
|
|
- |
|
| Farmland |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
227 |
|
|
|
227 |
|
|
|
- |
|
| Commercial business |
|
|
926 |
|
|
|
583 |
|
|
|
870 |
|
|
|
2,379 |
|
|
|
100,709 |
|
|
|
103,088 |
|
|
|
288 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
627 |
|
|
|
627 |
|
|
|
- |
|
| Manufactured homes |
|
|
63 |
|
|
|
36 |
|
|
|
46 |
|
|
|
145 |
|
|
|
16,360 |
|
|
|
16,505 |
|
|
|
46 |
|
| Government |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,804 |
|
|
|
15,804 |
|
|
|
- |
|
| Total |
|
$ |
6,309 |
|
|
$ |
2,434 |
|
|
$ |
5,907 |
|
|
$ |
14,650 |
|
|
$ |
892,219 |
|
|
$ |
906,869 |
|
|
$ |
866 |
|
| The Bancorp's loans on nonaccrual status are summarized below: |
| (Dollars in thousands) |
|
|
|
|
|
|
|
|
| |
|
September 30, 2020 |
|
|
December 31, 2019 |
|
| Residential real estate |
|
$ |
6,650 |
|
|
$ |
4,374 |
|
| Home equity |
|
|
509 |
|
|
|
473 |
|
| Commercial real estate |
|
|
5,411 |
|
|
|
658 |
|
| Construction and land development |
|
|
- |
|
|
|
- |
|
| Multifamily |
|
|
528 |
|
|
|
420 |
|
| Farmland |
|
|
- |
|
|
|
- |
|
| Commercial business |
|
|
1,383 |
|
|
|
582 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
| Manufactured homes |
|
|
- |
|
|
|
- |
|
| Government |
|
|
- |
|
|
|
- |
|
| Total |
|
$ |
14,481 |
|
|
$ |
6,507 |
|
As a result of acquisition activity, 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, 2020, total purchased credit impaired loans with unpaid principal balances totaled $5.6 million with a recorded investment of $3.5 million. At December 31, 2019, purchased credit impaired loans with unpaid principal balances totaled $6.3 million with a recorded investment of $4.1 million.
| Accretable interest taken from the purchase credit impaired portfolio, or income recorded for the nine months ended September 30, is as follows: |
| (dollars in thousands) |
|
First Personal |
|
| 2019 |
|
$ |
118 |
|
| 2020 |
|
|
78 |
|
| Accretable interest taken from the purchase credit impaired portfolio, or income expected to be recorded in the future is as follows: |
| (dollars in thousands) |
|
First Personal |
|
| 2020 |
|
|
21 |
|
| 2021 |
|
|
21 |
|
| Total |
|
$ |
42 |
|
For the acquisitions of First Federal Savings & Loan (“First Federal”), Liberty Savings Bank (“Liberty Savings”), First Personal Bank (“First Personal”), and A.J. Smith Federal Savings Bank (“AJ Smith”), as part of the fair value of loans receivable, a net fair value discount was established for loans as summarized below:
| (dollars in thousands) |
|
First Federal |
|
|
Libery Savings |
|
|
First Personal |
|
|
AJSB |
|
| |
|
Net fair value discount |
|
|
Accretable period in months |
|
|
Net fair value discount |
|
|
Accretable period in months |
|
|
Net fair value discount |
|
|
Accretable period in months |
|
|
Net fair value discount |
|
|
Accretable period in months |
|
| Residential real estate |
|
$ |
1,062 |
|
|
|
59 |
|
|
$ |
1,203 |
|
|
|
44 |
|
|
$ |
948 |
|
|
|
56 |
|
|
$ |
3,734 |
|
|
|
52 |
|
| Home equity |
|
|
44 |
|
|
|
29 |
|
|
|
5 |
|
|
|
29 |
|
|
|
51 |
|
|
|
50 |
|
|
|
141 |
|
|
|
32 |
|
| Commercial real estate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
208 |
|
|
|
56 |
|
|
|
8 |
|
|
|
9 |
|
| Construction and land development |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
30 |
|
|
|
- |
|
|
|
- |
|
| Multifamily |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11 |
|
|
|
48 |
|
|
|
2 |
|
|
|
48 |
|
| Consumer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
146 |
|
|
|
50 |
|
|
|
1 |
|
|
|
5 |
|
| Commercial business |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
348 |
|
|
|
24 |
|
|
|
- |
|
|
|
- |
|
| Purchased credit impaired loans |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
424 |
|
|
|
32 |
|
|
|
- |
|
|
|
- |
|
| Total |
|
$ |
1,106 |
|
|
|
|
|
|
$ |
1,208 |
|
|
|
|
|
|
$ |
2,137 |
|
|
|
|
|
|
$ |
3,886 |
|
|
|
|
|
| Accretable yield, or income recorded for the nine months ended September 30, is as follows: |
| (dollars in thousands) |
|
First Federal |
|
|
Libery Savings |
|
|
First Personal |
|
|
AJSB |
|
|
Total |
|
| 2019 |
|
$ |
22 |
|
|
$ |
42 |
|
|
$ |
402 |
|
|
$ |
843 |
|
|
$ |
1,245 |
|
| 2020 |
|
|
- |
|
|
|
- |
|
|
|
416 |
|
|
|
936 |
|
|
|
1,352 |
|
| Accretable yield, or income expected to be recorded in the future is as follows: |
| (dollars in thousands) |
|
First Personal |
|
|
AJ Smith |
|
|
Total |
|
| 2020 |
|
$ |
73 |
|
|
$ |
167 |
|
|
$ |
240 |
|
| 2021 |
|
|
292 |
|
|
|
667 |
|
|
|
959 |
|
| 2022 |
|
|
282 |
|
|
|
667 |
|
|
|
949 |
|
| 2023 |
|
|
63 |
|
|
|
275 |
|
|
|
338 |
|
| Total |
|
$ |
710 |
|
|
$ |
1,776 |
|
|
$ |
2,486 |
|
|