(4) ALLOWANCE FOR CREDIT LOSSES

The performance and credit quality of the loan portfolio is monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of December 31, 2015 and December 31, 2014:

Age Analysis of Past Due Loans Receivables



	December 31, 2015
														Loans
														Receivable
		30-59		60-89		Greater						Total		> 90
		Days Past		Days Past		than		Total				Loans		Days and
(Dollars in thousands)		Due		Due		90 Days		Past Due		Current		Receivables		Accruing
Residential mortgage	$	502	$	552	$	2,076	$	3,130	$	25,521	$	28,651	$	457
Commercial mortgage		36		86		96		218		273,914		274,132		-
Commercial:
Commercial term		-		-		-		-		102,178		102,178		-
Commercial construction		-		581		447		1,028		19,336		20,364		-
Consumer:
Home equity		7		310		153		470		50,800		51,270		-
Other		100		-		148		248		4,915		5,163		-
Total	$	645	$	1,529	$	2,920	$	5,094	$	476,664	$	481,758	$	457



	December 31, 2014
													Loans
													Receivable
	30-59		60-89		Greater						Total		> 90
	Days Past		Days Past		than		Total				Loans		Days and
(Dollars in thousands)	Due		Due		90 Days		Past Due		Current		Receivables		Accruing
Residential mortgage	$	1,005	$	302	$	2,648	$	3,955	$	22,038	$	25,993	$	191
Commercial mortgage		48		187		236		471		256,839		257,310		-
Commercial:
Commercial term		-		-		-		-		80,819		80,819		-
Commercial construction		-		-		2,043		2,043		33,491		35,534		-
Consumer:
Home equity		58		214		386		658		49,534		50,192		119
Other		71		70		119		260		5,495		5,755		24
Total	$	1,182	$	773	$	5,432	$	7,387	$	448,216	$	455,603	$	334

DNB had $1.1 million and $2.2 million in loans in process of foreclosure as of December 31, 2015 and 2014, respectively.

The following table sets forth those assets that are: (i) placed on non-accrual status, (ii) contractually delinquent by 90 days or more and still accruing, and (iii) OREO as a result of foreclosure or voluntary transfer to DNB as well as other repossessed assets.

Interest that would have been recognized on nonaccrual loans had they been current in accordance with their original terms was $473,000 and $493,000 for the years ended December 31, 2015 and December 31, 2014, respectively.

Non-Performing Assets



	December 31
(Dollars in thousands)	2015		2014
Non-accrual loans:
Residential mortgage	$	1,619	$	2,457
Commercial mortgage		1,048		1,294
Commercial:
Commercial term		188		198
Commercial construction		1,028		2,043
Consumer:
Home equity		563		432
Other		189		95
Total non-accrual loans		4,635		6,519
Loans 90 days past due and still accruing		457		334
Total non-performing loans		5,092		6,853
Other real estate owned & other repossessed property		2,581		901
Total non-performing assets	$	7,673	$	7,754

The following tables summarize information in regards to impaired loans by loan portfolio class as of December 31, 2015 and December 31, 2014 and for the years then ended.

Impaired Loans



	December 31, 2015
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Residential mortgage	$	1,620	$	1,919	$	-	$	1,883	$	5
Commercial mortgage		1,181		1,461		-		2,501		85
Commercial:
Commercial term		-		-		-		-		-
Commercial construction		1,140		3,526		-		838		-
Consumer:
Home equity		691		716		-		535		4
Other		82		90		-		124		2
Total	$	4,714	$	7,712	$	-	$	5,881	$	96
With allowance recorded:
Residential mortgage	$	-	$	-	$	-	$	105	$	-
Commercial mortgage		-		-		-		121		-
Commercial:
Commercial term		200		211		110		200		-
Commercial construction		-		-		-		537		-
Consumer:
Home equity		-		-		-		18		-
Other		107		107		4		29		-
Total	$	307	$	318	$	114	$	1,010	$	-
Total:
Residential mortgage	$	1,620	$	1,919	$	-	$	1,988	$	5
Commercial mortgage		1,181		1,461		-		2,622		85
Commercial:
Commercial term		200		211		110		200		-
Commercial construction		1,140		3,526		-		1,375		-
Consumer:
Home equity		691		716		-		553		4
Other		189		197		4		153		2
Total	$	5,021	$	8,030	$	114	$	6,891	$	96



	December 31, 2014
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Residential mortgage	$	2,457	$	3,270	$	-	$	2,010	$	-
Commercial mortgage		3,400		3,501		-		2,869		88
Commercial:
Commercial term		-		-		-		-		-
Commercial construction		1,706		4,822		-		1,310		-
Consumer:
Home equity		549		564		-		459		9
Other		94		102		-		62		-
Total	$	8,206	$	12,259	$	-	$	6,710	$	97
With allowance recorded:
Residential mortgage	$	-	$	-	$	-	$	151	$	-
Commercial mortgage		200		200		104		54		-
Commercial:
Commercial term		200		202		119		80		-
Commercial construction		450		2,031		50		1,026		-
Consumer:
Home equity		-		-		-		-		-
Other		-		-		-		43		-
Total	$	850	$	2,433	$	273	$	1,354	$	-
Total:
Residential mortgage	$	2,457	$	3,270	$	-	$	2,161	$	-
Commercial mortgage		3,600		3,701		104		2,923		88
Commercial:
Commercial term		200		202		119		80		-
Commercial construction		2,156		6,853		50		2,336		-
Consumer:
Home equity		549		564		-		459		9
Other		94		102		-		105		-
Total	$	9,056	$	14,692	$	273	$	8,064	$	97

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within DNB’s internal risk rating system as of December 31, 2015 and December 31, 2014.

Credit Quality Indicators



	December 31, 2015
				Special
(Dollars in thousands)		Pass		Mention		Substandard		Doubtful		Total
Residential mortgage	$	26,762	$	-	$	1,889	$	-	$	28,651
Commercial mortgage		262,036		4,802		7,294		-		274,132
Commercial:
Commercial term		93,025		2,555		6,598		-		102,178
Commercial construction		17,521		-		2,843		-		20,364
Consumer:
Home equity		50,551		-		719		-		51,270
Other		4,974		-		189		-		5,163
Total	$	454,869	$	7,357	$	19,532	$	-	$	481,758



	December 31, 2014
				Special
(Dollars in thousands)		Pass		Mention		Substandard		Doubtful		Total
Residential mortgage	$	23,259	$	-	$	2,734	$	-	$	25,993
Commercial mortgage		245,307		2,610		9,393		-		257,310
Commercial:
Commercial term		75,303		72		5,444		-		80,819
Commercial construction		31,057		-		4,477		-		35,534
Consumer:
Home equity		49,611		-		581		-		50,192
Other		5,661		-		94		-		5,755
Total	$	430,198	$	2,682	$	22,723	$	-	$	455,603

Allowance for Credit Losses and Recorded Investment in Related Loans

The following tables set forth the activity and composition of DNB’s allowance for credit losses at the dates indicated.



	2015
	Residential		Commercial		Commercial		Commercial		Lease		Consumer		Consumer
(Dollars in thousands)	Mortgage		Mortgage		Term		Construction		Financing		Home Equity		Other		Unallocated		Total
Allowance for credit losses:
Beginning balance - January 1, 2015	$	269	$	2,300	$	709	$	881	$	-	$	189	$	70	$	488	$	4,906
Charge-offs		(194)		(105)		(200)		(581)		-		(11)		(63)		-		(1,154)
Recoveries		4		-		13		10		49		-		2		-		78
Provisions		137		180		467		259		(49)		17		55		39		1,105
Ending balance - December 31, 2015	$	216	$	2,375	$	989	$	569	$	-	$	195	$	64	$	527	$	4,935
Ending balance: individually
evaluated for impairment	$	-	$	-	$	110	$	-	$	-	$	-	$	4	$	-	$	114
Ending balance: collectively
evaluated for impairment	$	216	$	2,375	$	879	$	569	$	-	$	195	$	60	$	527	$	4,821
Ending balance: Loan
receivables	$	28,651	$	274,132	$	102,178	$	20,364	$	-	$	51,270	$	5,163			$	481,758
Ending balance: individually
evaluated for impairment	$	1,620	$	1,181	$	200	$	1,140	$	-	$	691	$	189			$	5,021
Ending balance: collectively
evaluated for impairment	$	27,031	$	272,951	$	101,978	$	19,224	$	-	$	50,579	$	4,974			$	476,737



	2014
	Residential		Commercial		Commercial		Commercial		Lease		Consumer		Consumer
(Dollars in thousands)	Mortgage		Mortgage		Term		Construction		Financing		Home Equity		Other		Unallocated		Total
Allowance for credit losses:
Beginning balance - January 1, 2014	$	285	$	2,010	$	621	$	1,033	$	-	$	156	$	78	$	440	$	4,623
Charge-offs		(326)		(8)		(47)		(511)		(1)		-		(82)		-		(975)
Recoveries		5		-		3		103		8		-		9		-		128
Provisions		305		298		132		256		(7)		33		65		48		1,130
Ending balance - December 31, 2014	$	269	$	2,300	$	709	$	881	$	-	$	189	$	70	$	488	$	4,906
Ending balance: individually
evaluated for impairment	$	-	$	104	$	119	$	50	$	-	$	-	$	-	$	-	$	273
Ending balance: collectively
evaluated for impairment	$	269	$	2,196	$	590	$	831	$	-	$	189	$	70	$	488	$	4,633
Ending balance: Loan
receivables	$	25,993	$	257,310	$	80,819	$	35,534	$	-	$	50,192	$	5,755			$	455,603
Ending balance: individually
evaluated for impairment	$	2,457	$	3,600	$	200	$	2,156	$	-	$	549	$	94			$	9,056
Ending balance: collectively
evaluated for impairment	$	23,536	$	253,710	$	80,619	$	33,378	$	-	$	49,643	$	5,661			$	446,547