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Credit Quality and Related Allowance for Loan Losses (Tables)
 3 Months Ended
Mar. 31, 2014
Loans and Leases Receivable Disclosure [Abstract]  
Schedule of related aging categories of loans by segment
The following table presents the related aging categories of loans, by segment, as of March 31, 2014 and December 31, 2013:
 
 
 
March 31, 2014
 
 
 
 
Past Due
 
Past Due 90
 
 
 
 
 
 
 
 
30 To 89
 
Days Or More
 
Non-
 
 
(In Thousands)
 
Current
 
Days
 
& Still Accruing
 
Accrual
 
Total
Commercial and agricultural
 
$
107,699

 
$
502

 
$
7

 
$
106

 
$
108,314

Real estate mortgage:
 
 

 
 

 
 

 
 

 
 

Residential
 
397,002

 
5,726

 
144

 
422

 
403,294

Commercial
 
264,599

 
2,498

 
—

 
8,709

 
275,806

Construction
 
14,460

 
320

 
—

 
1,224

 
16,004

Installment loans to individuals
 
17,745

 
355

 
2

 
—

 
18,102

 
 
801,505

 
$
9,401

 
$
153

 
$
10,461

 
821,520

Net deferred loan fees and discounts
 
(909
)
 
 

 
 

 
 

 
(909
)
Allowance for loan losses
 
(8,520
)
 
 

 
 

 
 

 
(8,520
)
Loans, net
 
$
792,076

 
 

 
 

 
 

 
$
812,091

 
 
December 31, 2013
 
 
 
 
Past Due
 
Past Due 90
 
 
 
 
 
 
 
 
30 To 89
 
Days Or More
 
Non-
 
 
(In Thousands)
 
Current
 
Days
 
& Still Accruing
 
Accrual
 
Total
Commercial and agricultural
 
$
104,419

 
$
502

 
$
—

 
$
108

 
$
105,029

Real estate mortgage:
 
 

 
 

 
 

 
 

 
 

Residential
 
392,300

 
6,424

 
531

 
526

 
399,781

Commercial
 
272,745

 
2,533

 
—

 
7,198

 
282,476

Construction
 
15,967

 
—

 
73

 
1,242

 
17,282

Installment loans to individuals
 
14,170

 
477

 
—

 
—

 
14,647

 
 
799,601

 
$
9,936

 
$
604

 
$
9,074

 
819,215

Net deferred loan fees and discounts
 
(871
)
 
 

 
 

 
 

 
(871
)
Allowance for loan losses
 
(10,144
)
 
 

 
 

 
 

 
(10,144
)
Loans, net
 
$
788,586

 
 

 
 

 
 

 
$
808,200
Schedule of changes in the amortizable yield for purchased credit-impaired loans
Changes in the amortizable yield for purchased credit-impaired loans were as follows for the three months ended March 31, 2014:
 
(In Thousands)
 
March 31, 2014
Balance at beginning of period
 
$
35

Accretion
 
(7
)
Balance at end of period
 
$
28
Schedule of additional information regarding loans acquired and accounted
The following table presents additional information regarding loans acquired in the Luzerne Bank transaction with specific evidence of deterioration in credit quality:
(In Thousands)
 
March 31, 2014
 
December 31, 2013
Outstanding balance
 
$
1,222

 
$
1,224

Carrying amount
 
866

 
868
Schedule of interest income if interest had been recorded based on the original loan agreement terms and rate of interest for non-accrual loans and interest income recognized on a cash basis for non-accrual loans
The following table presents interest income the Bank would have recorded if interest had been recorded based on the original loan agreement terms and rate of interest for non-accrual loans and interest income recognized on a cash basis for non-accrual loans for the three months ended March 31, 2014 and 2013:
 
 
 
Three Months Ended March 31,
 
 
2014
 
2013
(In Thousands)
 
Interest Income That
Would Have Been
Recorded Based on
Original Term and Rate
 
Interest
Income
Recorded on
a Cash Basis
 
Interest Income That
Would Have Been
Recorded Based on
Original Term and Rate
 
Interest
Income
Recorded on
a Cash Basis
Commercial and agricultural
 
$
2

 
$
—

 
$
—

 
$
—

Real estate mortgage:
 
 

 
 

 
 

 
 

Residential
 
8

 
4

 
32

 
9

Commercial
 
131

 
34

 
85

 
50

Construction
 
19

 
8

 
41

 
11

 
 
$
160

 
$
46

 
$
158

 
$
70

 
Schedule of recorded investment, unpaid principal balance, and related allowance of impaired loans by segment
The following table presents the recorded investment, unpaid principal balance, and related allowance of impaired loans by segment as of March 31, 2014 and December 31, 2013:
 
 
 
March 31, 2014
 
 
Recorded
 
Unpaid Principal
 
Related
(In Thousands)
 
Investment
 
Balance
 
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial and agricultural
 
$
—

 
$
—

 
$
—

Real estate mortgage:
 
 

 
 

 
 

Residential
 
831

 
962

 
—

Commercial
 
2,254

 
2,654

 
—

Construction
 
522

 
522

 
—

 
 
3,607

 
4,138

 
—

With an allowance recorded:
 
 

 
 

 
 

Commercial and agricultural
 
522

 
522

 
216

Real estate mortgage:
 
 

 
 

 
 

Residential
 
319

 
351

 
54

Commercial
 
8,681

 
9,036

 
2,848

Construction
 
507

 
1,361

 
108

 
 
10,029

 
11,270

 
3,226

Total:
 
 

 
 

 
 

Commercial and agricultural
 
522

 
522

 
216

Real estate mortgage:
 
 

 
 

 
 

Residential
 
1,150

 
1,313

 
54

Commercial
 
10,935

 
11,690

 
2,848

Construction
 
1,029

 
1,883

 
108

 
 
$
13,636

 
$
15,408

 
$
3,226

 
 
December 31, 2013
 
 
Recorded
 
Unpaid Principal
 
Related
(In Thousands)
 
Investment
 
Balance
 
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial and agricultural
 
$
—

 
$
—

 
$
—

Real estate mortgage:
 
 

 
 

 
 

Residential
 
916

 
1,173

 
—

Commercial
 
623

 
879

 
—

Construction
 
528

 
528

 
—

 
 
2,067

 
2,580

 
—

With an allowance recorded:
 
 

 
 

 
 

Commercial and agricultural
 
532

 
532

 
224

Real estate mortgage:
 
 

 
 

 
 

Residential
 
319

 
342

 
65

Commercial
 
7,598

 
7,742

 
2,153

Construction
 
512

 
1,367

 
113

 
 
8,961

 
9,983

 
2,555

Total:
 
 

 
 

 
 

Commercial and agricultural
 
532

 
532

 
224

Real estate mortgage:
 
 

 
 

 
 

Residential
 
1,235

 
1,515

 
65

Commercial
 
8,221

 
8,621

 
2,153

Construction
 
1,040

 
1,895

 
113

 
 
$
11,028

 
$
12,563

 
$
2,555
Schedule of average recorded investment in impaired loans and related interest income recognized
The following table presents the average recorded investment in impaired loans and related interest income recognized for the three months ended for March 31, 2014 and 2013:
 
 
 
Three Months Ended March 31,
 
 
2014
 
2013
(In Thousands)
 
Average
Investment in
Impaired Loans
 
Interest Income
Recognized on an
Accrual Basis on
Impaired Loans
 
Interest Income
Recognized on a
Cash Basis on
Impaired Loans
 
Average
Investment in
Impaired Loans
 
Interest Income
Recognized on an
Accrual Basis on
Impaired Loans
 
Interest Income
Recognized on a
Cash Basis on
Impaired Loans
Commercial and agricultural
 
$
528

 
$
7

 
$
—

 
$
529

 
$
6

 
$
—

Real estate mortgage:
 
 

 
 

 
 

 
 

 
 

 
 

Residential
 
1,170

 
13

 
4

 
1,559

 
8

 
5

Commercial
 
9,492

 
42

 
15

 
8,693

 
47

 
46

Construction
 
1,120

 
—

 
8

 
4,988

 
—

 
539

 
 
$
12,310

 
$
62

 
$
27

 
$
15,769

 
$
61

 
$
590

 
Schedule of loan modifications that are considered TDRs
Loan modifications that are considered TDRs completed during the three months ended March 31, 2013 were as follows:
 
 
 
Three Months Ended March 31, 2013
(In Thousands, Except Number of Contracts)
 
Number
of
Contracts
 
Pre-Modification Outstanding Recorded Investment
 
Post-Modification Outstanding Recorded Investment
Real estate mortgage:
 
 

 
 

 
 

Residential
 
—

 
$
—

 
$
—

Commercial
 
2

 
264

 
264

Construction
 
—

 
—

 
—

 
 
2

 
$
264

 
$
264

 
Schedule of credit quality categories
The following table presents the credit quality categories identified above as of March 31, 2014 and December 31, 2013:
 
 
March 31, 2014
 
 
Commercial and
 
Real Estate Mortgages
 
Installment Loans
 
 
(In Thousands)
 
Agricultural
 
Residential
 
Commercial
 
Construction
 
to Individuals
 
Totals
Pass
 
$
101,785

 
$
401,898

 
$
255,639

 
$
14,779

 
$
18,101

 
$
792,202

Special Mention
 
5,299

 
603

 
9,487

 
207

 
—

 
15,596

Substandard
 
1,230

 
793

 
10,680

 
1,018

 
1

 
13,722

 
 
$
108,314

 
$
403,294

 
$
275,806

 
$
16,004

 
$
18,102

 
$
821,520

 
 
 
December 31, 2013
 
 
Commercial and
 
Real Estate Mortgages
 
Installment Loans
 
 
(In Thousands)
 
Agricultural
 
Residential
 
Commercial
 
Construction
 
to Individuals
 
Totals
Pass
 
$
99,256

 
$
398,327

 
$
259,505

 
$
13,608

 
$
14,647

 
$
785,343

Special Mention
 
4,529

 
598

 
10,181

 
214

 
—

 
15,522

Substandard
 
1,244

 
856

 
12,790

 
3,460

 
—

 
18,350

 
 
$
105,029

 
$
399,781

 
$
282,476

 
$
17,282

 
$
14,647

 
$
819,215
Schedule of activity in the allowance
Activity in the allowance is presented for the three months ended March 31, 2014 and 2013:
 
 
Three Months Ended March 31, 2014
 
 
Commercial and
 
Real Estate Mortgages
 
Installment Loans
 
 
 
 
(In Thousands)
 
Agricultural
 
Residential
 
Commercial
 
Construction
 
to Individuals
 
Unallocated
 
Totals
Beginning Balance
 
$
474

 
$
3,917

 
$
4,079

 
$
741

 
$
139

 
$
794

 
$
10,144

Charge-offs
 
—

 
(56
)
 
(2,038
)
 
—

 
(40
)
 
—

 
(2,134
)
Recoveries
 
3

 
2

 
—

 
—

 
20

 
—

 
25

Provision
 
60

 
(801
)
 
1,283

 
54

 
42

 
(153
)
 
485

Ending Balance
 
$
537

 
$
3,062

 
$
3,324

 
$
795

 
$
161

 
$
641

 
$
8,520

 
 
 
Three Months Ended March 31, 2013
 
 
Commercial and
 
Real Estate Mortgages
 
Installment Loans
 
 
 
 
(In Thousands)
 
Agricultural
 
Residential
 
Commercial
 
Construction
 
to Individuals
 
Unallocated
 
Totals
Beginning Balance
 
$
361

 
$
1,954

 
$
3,831

 
$
950

 
$
144

 
$
377

 
$
7,617

Charge-offs
 
—

 
(134
)
 
—

 
—

 
(25
)
 
—

 
(159
)
Recoveries
 
2

 
1

 
1

 
850

 
18

 
—

 
872

Provision
 
205

 
951

 
(73
)
 
(986
)
 
7

 
396

 
500

Ending Balance
 
$
568

 
$
2,772

 
$
3,759

 
$
814

 
$
144

 
$
773

 
$
8,830

 
 
 
 
Schedule of concentration of loan
The Company has a concentration of loans at March 31, 2014 and 2013 as follows:
 
 
 
March 31,
 
 
2014
 
2013
Owners of residential rental properties
 
15.87
%
 
19.03
%
Owners of commercial rental properties
 
13.18
%
 
13.08
%
Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of March 31, 2014 and December 31, 2013:
 
 
March 31, 2014
 
 
Commercial and
 
Real Estate Mortgages
 
Installment Loans
 
 
 
 
(In Thousands)
 
Agricultural
 
Residential
 
Commercial
 
Construction
 
to Individuals
 
Unallocated
 
Totals
Allowance for Loan Losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending allowance balance attributable to loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
 
$
216

 
$
54

 
$
2,848

 
$
108

 
$
—

 
$
—

 
$
3,226

Collectively evaluated for impairment
 
321

 
3,008

 
476

 
687

 
161

 
641

 
5,294

Total ending allowance balance
 
$
537

 
$
3,062

 
$
3,324

 
$
795

 
$
161

 
$
641

 
$
8,520

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
 
$
522

 
$
797

 
$
10,422

 
$
1,029

 
$
—

 


 
$
12,770

Loans acquired with deteriorated credit quality
 
—

 
352

 
514

 
—

 
—

 


 
866

Collectively evaluated for impairment
 
107,792

 
402,145

 
264,870

 
14,975

 
18,102

 


 
807,884

Total ending loans balance
 
$
108,314

 
$
403,294

 
$
275,806

 
$
16,004

 
$
18,102

 


 
$
821,520

 
 
 
December 31, 2013
 
 
Commercial and
 
Real Estate Mortgages
 
Installment Loans
 
 
 
 
(In Thousands)
 
Agricultural
 
Residential
 
Commercial
 
Construction
 
to Individuals
 
Unallocated
 
Totals
Allowance for Loan Losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending allowance balance attributable to loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
 
$
224

 
$
65

 
$
2,153

 
$
113

 
$
—

 
$
—

 
$
2,555

Collectively evaluated for impairment
 
250

 
3,852

 
1,926

 
628

 
139

 
794

 
7,589

Total ending allowance balance
 
$
474

 
$
3,917

 
$
4,079

 
$
741

 
$
139

 
$
794

 
$
10,144

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
 
$
532

 
$
881

 
$
7,707

 
$
1,040

 
$
—

 
 

 
$
10,160

Loans acquired with deteriorated credit quality
 
—

 
354

 
514

 
—

 
 
 
 
 
868

Collectively evaluated for impairment
 
104,497

 
398,546

 
274,255

 
16,242

 
14,647

 
 

 
808,187

Total ending loans balance
 
$
105,029

 
$
399,781

 
$
282,476

 
$
17,282

 
$
14,647

 
 

 
$
819,215