Loans and allowance for loan losses

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Loans and allowance for loan losses

3. Loans and Allowance for Loan Losses

A summary of the Company’s loan portfolio is as follows:

	June 30,			December 31,
	2019			2018
	(unaudited)
Commercial real estate loans:
Construction	$	13,357		$	12,870
Non-residential		207,027			197,499
Multi-family		18,779			12,661
Residential real estate loans		39,959			43,534
Commercial and industrial loans		89,473			83,203
Consumer loans:
Indirect automobile		338,367			297,144
Home equity		18,591			19,269
Other consumer		10,312			10,826
Total gross loans		735,865			677,006
Net deferred loan costs		9,286			8,042
Allowance for loan losses		(7,858	)		(6,646	)
Total net loans	$	737,293		$	678,402

At June 30, 2019 and December 31, 2018, the unpaid principal balances of loans held for sale, included in the residential real estate category above, were $838 and $888, respectively.

The following tables present the classes of the loan portfolio summarized by the pass category and the criticized categories of special mention, substandard and doubtful within the internal risk system:

	June 30, 2019
			Special
	Pass		Mention		Substandard		Doubtful		Total
	(unaudited)
Commercial real estate:
Construction	$	13,357	$	-	$	-	$	-	$	13,357
Non-residential		197,330		6,495		3,202		-		207,027
Multifamily		18,394		-		385		-		18,779
Residential real estate		37,263		-		-		2,696		39,959
Commercial and industrial		87,853		659		921		40		89,473
Consumer:
Indirect automobile		337,777		-		-		590		338,367
Home equity		18,127		-		-		464		18,591
Other consumer		10,272		-		-		40		10,312
Total	$	720,373	$	7,154	$	4,508	$	3,830	$	735,865

	December 31, 2018
			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial real estate:
Construction	$	12,870	$	-	$	-	$	-	$	12,870
Non-residential		186,020		6,840		4,639		-		197,499
Multifamily		12,261		-		400		-		12,661
Residential real estate		41,249		-		-		2,285		43,534
Commercial and industrial		81,111		965		1,124		3		83,203
Consumer:
Indirect automobile		296,692		-		-		452		297,144
Home equity		19,071		-		-		198		19,269
Other consumer		10,816		-		-		10		10,826
Total	$	660,090	$	7,805	$	6,163	$	2,948	$	677,006

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 past due status of all classes of loans is determined based on contractual due dates for loan payments.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans:

	June 30, 2019
							Greater Than
			30-59 Days		60-89 Days		90 Days Past		Total Loans
	Current		Past Due		Past Due		Due		Receivable		Non-accrual
	(unaudited)
Commercial real estate:
Construction	$	13,357	$	-	$	-	$	-	$	13,357	$	-
Non-residential		204,559		241		173		2,054		207,027		2,054
Multifamily		18,420		-		359		-		18,779		-
Residential real estate		37,993		889		-		1,077		39,959		2,696
Commercial and industrial		88,942		68		423		40		89,473		306
Consumer:
Indirect automobile		332,384		4,520		896		567		338,367		590
Home equity		18,039		186		-		366		18,591		463
Other consumer		10,061		165		45		41		10,312		41
Total	$	723,755	$	6,069	$	1,896	$	4,145	$	735,865	$	6,150

	December 31, 2018
							Greater Than
			30-59 Days		60-89 Days		90 Days Past		Total Loans
	Current		Past Due		Past Due		Due		Receivable		Non-accrual
Commercial real estate:
Construction	$	12,870	$	-	$	-	$	-	$	12,870	$	-
Non-residential		193,273		1,466		253		2,507		197,499		2,507
Multifamily		12,487		174		-		-		12,661		-
Residential real estate		42,083		305		615		531		43,534		2,208
Commercial and industrial		82,992		206		1		4		83,203		297
Consumer:
Indirect automobile		291,369		4,429		915		431		297,144		452
Home equity		18,905		264		-		100		19,269		198
Other consumer		10,601		186		29		10		10,826		10
Total	$	664,580	$	7,030	$	1,813	$	3,583	$	677,006	$	5,672

The following tables summarize information in regards to impaired loans by loan portfolio class:

	June 30, 2019
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
	(unaudited)
With no related allowance recorded:
Commercial real estate:
Construction	$	-	$	-	$	-	$	-
Non-residential		2,054		2,094		-		2,281
Multifamily		-		-		-		-
Residential real estate		2,696		3,162		-		2,490
Commercial and industrial		266		401		-		282
Consumer:
Indirect automobile		353		395		-		313
Home equity		464		481		-		331
Other consumer		-		-		-		5
Total	$	5,833	$	6,533	$	-	$	5,702
With an allowance recorded:
Commercial real estate:
Construction	$	-	$	-	$	-	$	-
Non-residential		-		-		-		-
Multifamily		-		-		-		-
Residential real estate		-		-		-		-
Commercial and industrial		40		40		40		20
Consumer:								-
Indirect automobile		237		265		69		208
Home equity		-		-		-		-
Other consumer		40		41		12		20
Total	$	317	$	346	$	121	$	248
Total:
Commercial real estate:
Construction	$	-	$	-	$	-	$	-
Non-residential		2,054		2,094		-		2,281
Multifamily		-		-		-		-
Residential real estate		2,696		3,162		-		2,490
Commercial and industrial		306		441		40		302
Consumer:
Indirect automobile		590		660		69		521
Home equity		464		481		-		331
Other consumer		40		41		12		25
Total	$	6,150	$	6,879	$	121	$	5,950

	December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
With no related allowance recorded:
Commercial real estate:
Construction	$	-	$	-	$	-	$	563
Non-residential		2,507		2,601		-		3,023
Multifamily		-		-		-		-
Residential real estate		2,285		2,841		-		2,235
Commercial and industrial		297		421		-		758
Consumer:
Indirect automobile		274		320		-		242
Home equity		198		211		-		158
Other consumer		10		10		-		5
Total	$	5,571	$	6,404	$	-	$	6,984
With an allowance recorded:
Commercial real estate:
Construction	$	-	$	-	$	-	$	-
Non-residential		-		-		-		451
Multifamily		-		-		-		-
Residential real estate		-		-		-		-
Commercial and industrial		-		-		-		9
Consumer:
Indirect automobile		178		191		50		205
Home equity		-		-		-		-
Other consumer		-		-		-		2
Total	$	178	$	191	$	50	$	667
Total:
Commercial real estate:
Construction	$	-	$	-	$	-	$	563
Non-residential		2,507		2,601		-		3,474
Multifamily		-		-		-		-
Residential real estate		2,285		2,841		-		2,235
Commercial and industrial		297		421		-		767
Consumer:
Indirect automobile		452		511		50		447
Home equity		198		211		-		158
Other consumer		10		10		-		7
Total	$	5,749	$	6,595	$	50	$	7,651

A loan is considered impaired when based on current information and events it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans and loans modified as troubled debt restructurings. Loan modifications, which resulted in these loans being considered TDRs, are primarily in the form of rate concessions and extensions of maturity dates. The Company does not generally recognize interest income on a loan in an impaired status. At June 30, 2019 and December 31, 2018, three loans totaling $1,716 and the same three loans totaling $1,774, respectively, included in impaired loans, were identified as TDRs. There were no new TDRs in the first half of 2019. In 2018, the Company restructured two loans, a residential mortgage and home equity loan, into a single residential mortgage, with a carrying value of $117, which included both rate and term modifications. At June 30, 2019 and December 31, 2018, all TDR loans were performing in accordance with their restructured terms. During the year ended December 31, 2018, one loan for $19 had defaulted in its modified terms and was charged off. At June 30, 2019 and December 31, 2018, the Company had no commitments to advance additional funds to borrowers under TDR loans.

The Company services certain loans that it has sold without recourse to third parties. The aggregate balances of loans serviced for others were $261,559 and $255,892 as of June 30, 2019 and December 31, 2018, respectively.

The balance of capitalized servicing rights, included in other assets at June 30, 2019 and December 31, 2018, were $2,203 and $2,278, respectively. Fair value exceeds carrying value. No impairment charges related to servicing rights were recognized during the period ended June 30, 2019 and the year ended December 31, 2018.

The following tables summarize the segments of the loan portfolio and the allowance for loan losses, segregated into the amount required Afor loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment and the activity in the allowance for loan losses for the periods then ended: 

	Commercial Real Estate		Residential Real Estate			Commercial and Industrial			Indirect			Consumer			Totals
	Three months ended June 30, 2019
	(unaudited)
Allowance for loan losses:
Beginning balance	$	1,159	$	286		$	1,575		$	3,380		$	783		$	7,183
Provision for loan losses		93		17			327			329			14			780
Loans charged-off		-		-			(7	)		(424	)		(9	)		(440	)
Recoveries		-		2			-			321			12			335
Ending balance	$	1,252	$	305		$	1,895		$	3,606		$	800		$	7,858
	Six months ended June 30, 2019
	(unaudited)
Allowance for loan losses:
Beginning balance	$	1,080	$	320		$	1,542		$	2,915		$	789		$	6,646
Provision (credit) for loan losses		172		(18	)		364			1,032			10			1,560
Loans charged-off		-		-			(12	)		(919	)		(15	)		(946	)
Recoveries		-		3			1			578			16			598
Ending balance	$	1,252	$	305		$	1,895		$	3,606		$	800		$	7,858
Ending balance:
Individually evaluated for impairment	$	-	$	-		$	41		$	69		$	11		$	121
Collectively evaluated for impairment	$	1,252	$	305		$	1,854		$	3,537		$	789		$	7,737
Loan receivables:
Ending balance	$	239,163	$	39,959		$	89,473		$	338,367		$	28,903		$	735,865
Ending balance:
Individually evaluated for impairment	$	2,054	$	2,696		$	307		$	590		$	503		$	6,150
Collectively evaluated for impairment	$	237,109	$	37,263		$	89,166		$	337,777		$	28,400		$	729,715

	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Indirect			Consumer			Totals
	Three months ended June 30, 2018
	(unaudited)
Allowance for loan losses:
Beginning balance	$	897		$	462		$	950		$	2,577		$	734		$	5,620
Provision for loan losses		50			49			131			247			48			525
Loans charged-off		-			-			(9	)		(362	)		(10	)		(381	)
Recoveries		-			2			10			159			4			175
Ending balance	$	947		$	513		$	1,082		$	2,621		$	776		$	5,939
	Six months ended June 30, 2018
	(unaudited)
Allowance for loan losses:
Beginning balance	$	1,305		$	455		$	879		$	2,150		$	668		$	5,457
(Credit) provision for loan losses		(55	)		55			118			817			115			1,050
Loans charged-off		(303	)		-			(28	)		(735	)		(18	)		(1,084	)
Recoveries		-			3			113			389			11			516
Ending balance	$	947		$	513		$	1,082		$	2,621		$	776		$	5,939
Ending balance:
Individually evaluated for impairment	$	-		$	-		$	-		$	61		$	-		$	61
Collectively evaluated for impairment	$	947		$	513		$	1,082		$	2,560		$	776		$	5,878
Loan receivables:
Ending balance	$	220,697		$	43,736		$	75,612		$	250,217		$	30,329		$	620,591
Ending balance:
Individually evaluated for impairment	$	5,874		$	2,483		$	1,211		$	325		$	273		$	10,166
Collectively evaluated for impairment	$	214,823		$	41,253		$	74,401		$	249,892		$	30,056		$	610,425
	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Indirect			Consumer			Totals
	Year ended December 31, 2018
Allowance for loan losses:
Beginning balance	$	1,305		$	455		$	879		$	2,150		$	668		$	5,457
(Credit) provision for loan losses		(45	)		(140	)		578			1,539			168			2,100
Loans charged-off		(303	)		-			(37	)		(1,607	)		(66	)		(2,013	)
Recoveries		123			5			122			833			19			1,102
Ending balance	$	1,080		$	320		$	1,542		$	2,915		$	789		$	6,646
Ending balance:
Individually evaluated for impairment	$	-		$	-		$	-		$	50		$	-		$	50
Collectively evaluated for impairment	$	1,080		$	320		$	1,542		$	2,865		$	789		$	6,596
Loan receivables:
Ending balance	$	223,030		$	43,534		$	83,203		$	297,144		$	30,095		$	677,006
Ending balance:
Individually evaluated for impairment	$	2,507		$	2,285		$	297		$	452		$	208		$	5,749
Collectively evaluated for impairment	$	220,523		$	41,249		$	82,906		$	296,692		$	29,887		$	671,257

In the normal course of business, the Company grants loans to officers, directors and other related parties. Balances and activity of such loans during the periods presented were not material.