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5. Loans, Allowance for Loan Losses and Credit Quality (Tables)
 9 Months Ended
Sep. 30, 2012
Notes to Financial Statements  
Composition of net loans

The composition of net loans follows:

 

    September 30, 2012     December 31, 2011     September 30, 2011  
                   
Commercial & industrial   $ 47,484,639     $ 39,514,607     $ 34,570,063  
Commercial real estate     136,016,554       132,269,368       137,892,249  
Residential real estate - 1st lien     168,541,410       159,535,958       159,755,182  
Residential real estate - Jr lien     46,029,238       45,886,967       46,843,024  
Consumer     11,022,804       11,465,139       11,899,588  
      409,094,645       388,672,039       390,960,106  
Deduct (add):                        
Allowance for loan losses     4,115,230       3,886,502       3,835,840  
Deferred net loan costs (fees)     (101,742 )     (7,251 )     20,474  
Loans held-for-sale     1,483,940       2,285,567       2,411,242  
      5,497,428       6,164,818       6,267,556  
          Net Loans   $ 403,597,217     $ 382,507,221     $ 384,692,550  
Past due loans by segment

The following is an age analysis of past due loans (including non-accrual) by segment:

 

          90 Days     Total                 Non-Accrual     Over 90 Days  
September 30, 2012   30-89 Days     or More     Past Due     Current     Total Loans     Loans     and Accruing  
                                           
Commercial & industrial   $ 254,847     $ 326,693     $ 581,540     $ 46,903,099     $ 47,484,639     $ 613,817     $ 75,042  
Commercial real estate     426,428       1,331,505       1,757,933       134,258,621       136,016,554       2,321,320       53,936  
Residential real estate - 1st lien     749,535       1,102,424       1,851,959       165,205,511       167,057,470       1,441,659       825,843  
Residential real estate - Jr lien     456,984       109,222       566,206       45,463,032       46,029,238       326,882       109,222  
Consumer     123,197       14,077       137,274       10,885,530       11,022,804       4,841       9,236  
          Total   $ 2,010,991     $ 2,883,921     $ 4,894,912     $ 402,715,793     $ 407,610,705     $ 4,708,519     $ 1,073,279  

 

            90 Days     Total                     Non-Accrual     Over 90 Days  
December 31, 2011   30-89 Days     or More     Past Due     Current     Total Loans     Loans     and Accruing  
                                                         
Commercial & industrial   $ 655,168     $ 265,668     $ 920,836     $ 38,593,771     $ 39,514,607     $ 1,066,945     $ 59,618  
Commercial real estate     2,266,412       1,288,616       3,555,028       128,714,340       132,269,368       3,714,146       98,554  
Residential real estate - 1st lien     5,614,513       2,517,282       8,131,795       149,118,596       157,250,391       2,703,920       969,078  
Residential real estate - Jr lien     431,885       2,754,129       3,186,014       42,700,953       45,886,967       464,308       111,061  
Consumer     152,151       1,498       153,649       11,311,490       11,465,139       0       1,498  
          Total   $ 9,120,129     $ 6,827,193     $ 15,947,322     $ 370,439,150     $ 386,386,472     $ 7,949,319     $ 1,239,809  

 

            90 Days     Total                     Non-Accrual     Over 90 Days  
September 30, 2011   30-89 Days     or More     Past Due     Current     Total Loans     Loans     and Accruing  
                                                         
Commercial & industrial   $ 667,668     $ 583,258     $ 1,250,926     $ 33,319,137     $ 34,570,063     $ 917,328     $ 21,824  
Commercial real estate     3,066,295       1,025,858       4,092,153       133,800,096       137,892,249       2,911,034       209,506  
Residential real estate - 1st lien     1,673,594       2,192,883       3,866,477       153,477,463       157,343,940       2,768,549       619,848  
Residential real estate - Jr lien     380,341       403,815       784,156       46,058,868       46,843,024       537,892       208,754  
Consumer     92,843       2,869       95,712       11,803,876       11,899,588       0       1,010  
          Total   $ 5,880,741     $ 4,208,683     $ 10,089,424     $ 378,459,440     $ 388,548,864     $ 7,134,803     $ 1,060,942  
Changes in the allowance for loan losses

The following summarizes changes in the allowance for loan losses and select loan information, by portfolio segment (excluding loans held-for-sale).

 

For the quarter ended September 30, 2012  
                Residential     Residential                    
    Commercial     Commercial     Real Estate     Real Estate                    
    & Industrial     Real Estate     1st Lien     Jr Lien     Consumer     Unallocated     Total  
Allowance for loan losses  
   Beginning balance   $ 383,523     $ 1,386,183     $ 1,473,661     $ 368,939     $ 126,914     $ 186,899     $ 3,926,119  
      Charge-offs     (34,375 )     (2,821 )     (56,126 )     (9,447 )     (9,065 )     0       (111,834 )
      Recoveries     17,978       24,587       1,426       60       6,895       0       50,946  
      Provisions     51,298       36,941       85,324       38,815       5,965       31,656       249,999  
   Ending balance   $ 418,424     $ 1,444,890     $ 1,504,285     $ 398,367     $ 130,709     $ 218,555     $ 4,115,230  

 

For the nine months ended September 30, 2012  
                Residential     Residential                    
    Commercial     Commercial     Real Estate     Real Estate                    
    & Industrial     Real Estate     1st Lien     Jr Lien     Consumer     Unallocated     Total  
Allowance for loan losses  
   Beginning balance   $ 342,314     $ 1,385,939     $ 1,578,493     $ 331,684     $ 124,779     $ 123,293     $ 3,886,502  
      Charge-offs     (159,309 )     (57,878 )     (239,600 )     (69,734 )     (69,437 )     0       (595,958 )
      Recoveries     20,498       25,450       3,248       1,479       24,010       0       74,685  
      Provisions     214,921       91,379       162,144       134,938       51,357       95,262       750,001  
   Ending balance   $ 418,424     $ 1,444,890     $ 1,504,285     $ 398,367     $ 130,709     $ 218,555     $ 4,115,230  
                                                         
Allowance for loan losses  
Evaluated for impairment                                                        
   Individually   $ 0     $ 8,900     $ 110,700     $ 46,400     $ 0     $ 0     $ 166,000  
   Collectively     418,424       1,435,990       1,393,585       351,967       130,709       218,555       3,949,230  
          Total   $ 418,424     $ 1,444,890     $ 1,504,285     $ 398,367     $ 130,709     $ 218,555     $ 4,115,230  
   
Loans evaluated for impairment  
   Individually   $ 446,484     $ 2,187,060     $ 1,261,272     $ 297,898     $ 0             $ 4,192,714  
   Collectively     47,038,155       133,829,494       165,796,198       45,731,340       11,022,804               403,417,991  
          Total   $ 47,484,639     $ 136,016,554     $ 167,057,470     $ 46,029,238     $ 11,022,804             $ 407,610,705  

 

 

For the year ended December 31, 2011  
                Residential     Residential                    
    Commercial     Commercial     Real Estate     Real Estate                    
    & Industrial     Real Estate     1st Lien     Jr Lien     Consumer     Unallocated     Total  
Allowance for loan losses  
   Beginning balance   $ 302,421     $ 1,391,898     $ 1,830,816     $ 0     $ 151,948     $ 50,852     $ 3,727,935  
      Charge-offs     (22,050 )     (197,367 )     (521,608 )     (96,961 )     (103,687 )     0       (941,673 )
      Recoveries     13,225       8,479       42,593       20       35,923       0       100,240  
      Provisions     48,718       182,929       226,692       428,625       40,595       72,441       1,000,000  
   Ending balance   $ 342,314     $ 1,385,939     $ 1,578,493     $ 331,684     $ 124,779     $ 123,293     $ 3,886,502  
                                                         
Allowance for loan losses  
Evaluated for impairment                                                        
   Individually   $ 70,600     $ 57,500     $ 283,200     $ 47,200     $ 0     $ 0     $ 458,500  
   Collectively     271,714       1,328,439       1,295,293       284,484       124,779       123,293       3,428,002  
          Total   $ 342,314     $ 1,385,939     $ 1,578,493     $ 331,684     $ 124,779     $ 123,293     $ 3,886,502  
   
Loans evaluated for impairment  
   Individually   $ 1,000,120     $ 3,669,260     $ 2,366,326     $ 434,664     $ 0             $ 7,470,370  
   Collectively     38,514,487       128,600,108       154,884,065       45,452,303       11,465,139               378,916,102  
          Total   $ 39,514,607     $ 132,269,368     $ 157,250,391     $ 45,886,967     $ 11,465,139             $ 386,386,472  

 

For the quarter ended September 30, 2011                          
    Commercial     Commercial     Residential                    
    & Industrial     Real Estate     Real Estate     Consumer     Unallocated     Total  
   
Allowance for loan losses  
   Beginning balance   $ 246,567     $ 1,395,350     $ 1,965,940     $ 132,532     $ 110,980     $ 3,851,369  
      Charge-offs     (18,924 )     (21,679 )     (291,077 )     (10,565 )     0       (342,245 )
      Recoveries     1,144       4,241       27,355       6,476       0       39,216  
      Provisions(Reductions)     51,343       148,745       129,545       615       (42,748 )     287,500  
   Ending balance   $ 280,130     $ 1,526,657     $ 1,831,763     $ 129,058     $ 68,232     $ 3,835,840  

 

For the nine months ended September 30, 2011                          
    Commercial     Commercial     Residential                    
    & Industrial     Real Estate     Real Estate     Consumer     Unallocated     Total  
   
Allowance for loan losses  
   Beginning balance   $ 302,421     $ 1,391,898     $ 1,830,816     $ 151,948     $ 50,852     $ 3,727,935  
      Charge-offs     (22,050 )     (21,679 )     (562,524 )     (74,677 )     0       (680,930 )
      Recoveries     12,665       6,422       27,955       29,293       0       76,335  
      Provisions(Reductions)     (12,906 )     150,016       535,516       22,494       17,380       712,500  
   Ending balance   $ 280,130     $ 1,526,657     $ 1,831,763     $ 129,058     $ 68,232     $ 3,835,840  
                                                 
 Individually evaluated for impairment   $ 42,100     $ 104,500     $ 352,600     $ 0     $ 0     $ 499,200  
 Collectively evaluated  for impairment     238,030       1,422,157       1,479,163       129,058       68,232       3,336,640  
Total   $ 280,130     $ 1,526,657     $ 1,831,763     $ 129,058     $ 68,232     $ 3,835,840  
   
Loans  
 Individually evaluated for impairment   $ 841,032     $ 2,834,584     $ 2,892,878     $ 0             $ 6,568,494  
 Collectively evaluated for impairment     33,729,031       135,057,665       201,294,086       11,899,588               381,980,370  
Total   $ 34,570,063     $ 137,892,249     $ 204,186,964     $ 11,899,588             $ 388,548,864  
Impaired loans by segment

Impaired loans by segments were as follows:

 

For the nine months ended September 30, 2012                          
          Unpaid           Average     Interest  
    Recorded     Principal     Related     Recorded     Income  
    Investment     Balance     Allowance     Investment     Recognized *  
                               
With no related allowance recorded                              
   Commercial & industrial   $ 446,484     $ 478,798     $ 0     $ 562,425     $ 0  
   Commercial real estate     1,996,452       2,426,167       0       2,083,657       0  
   Residential real estate 1st lien     900,217       1,149,862       0       860,886       0  
   Residential real estate Jr lien     0       0       0       39,329       0  
                                         
With an allowance recorded                                        
   Commercial & industrial     0       0       0       290,929       0  
   Commercial real estate     190,608       192,108       8,900       1,151,053       0  
   Residential real estate 1st lien     361,055       402,647       110,700       961,084       0  
   Residential real estate Jr lien     297,898       319,472       46,400       295,737       0  
                                         
Total                                        
   Commercial & industrial   $ 446,484     $ 478,798     $ 0     $ 853,354     $ 0  
   Commercial real estate   $ 2,187,060     $ 2,618,275     $ 8,900     $ 3,234,710     $ 0  
   Residential real estate 1st lien   $ 1,261,272     $ 1,552,509     $ 110,700     $ 1,821,970     $ 0  
   Residential real estate Jr lien   $ 297,898     $ 319,472     $ 46,400     $ 335,066     $ 0  
                                         
          Total   $ 4,192,714     $ 4,969,054     $ 166,000     $ 6,245,100     $ 0  

 

For the year ended December 31, 2011  
          Unpaid           Average     Interest  
    Recorded     Principal     Related     Recorded     Income  
    Investment     Balance     Allowance     Investment     Recognized*  
                               
With no related allowance recorded                              
   Commercial & industrial   $ 380,624     $ 391,800     $ 0     $ 332,523     $ 0  
   Commercial real estate     2,041,101       2,246,905       0       960,407       0  
   Residential real estate 1st lien     1,000,819       1,191,437       0       1,210,137       0  
   Residential real estate Jr lien     125,786       185,142       0       25,157       0  
                                         
With an allowance recorded                                        
   Commercial & industrial     619,496       637,729       70,600       237,724       0  
   Commercial real estate     1,628,159       1,653,646       57,500       1,128,795       0  
   Residential real estate 1st lien     1,365,507       1,869,338       283,200       1,629,151       0  
   Residential real estate Jr lien     308,878       321,475       47,200       61,776       0  
                                         
Total                                        
   Commercial & industrial   $ 1,000,120     $ 1,029,529     $ 70,600     $ 570,247     $ 0  
   Commercial real estate   $ 3,669,260     $ 3,900,551     $ 57,500     $ 2,089,202     $ 0  
   Residential real estate 1st lien   $ 2,366,326     $ 3,060,775     $ 283,200     $ 2,839,288     $ 0  
   Residential real estate Jr lien   $ 434,664     $ 506,617     $ 47,200     $ 86,933     $ 0  
                                         
          Total   $ 7,470,370     $ 8,497,472     $ 458,500     $ 5,585,670     $ 0  

  

 

For the nine months ended September 30, 2011  
          Unpaid           Average     Interest  
    Recorded     Principal     Related     Recorded     Income  
    Investment     Balance     Allowance     Investment     Recognized*  
                               
With no related allowance recorded                              
   Commercial & industrial   $ 397,993     $ 400,678     $ 0     $ 320,498     $ 0  
   Commercial real estate     1,320,096       1,350,647       0       690,234       0  
   Residential real estate     1,079,821       1,370,967       0       1,262,466       0  
                                         
With an allowance recorded                                        
   Commercial & industrial     443,039       443,887       42,100       142,281       0  
   Commercial real estate     1,514,488       1,517,237       104,500       1,003,954       0  
   Residential real estate     1,813,057       2,316,927       352,600       1,695,062       0  
                                         
Total                                        
   Commercial & industrial   $ 841,032     $ 844,565     $ 42,100     $ 462,779     $ 0  
   Commercial real estate   $ 2,834,584     $ 2,867,884     $ 104,500     $ 1,694,188     $ 0  
   Residential real estate   $ 2,892,878     $ 3,687,894     $ 352,600     $ 2,957,528     $ 0  
          Total   $ 6,568,494     $ 7,400,343     $ 499,200     $ 5,114,495     $ 0  
Risk ratings

The risk ratings within the loan portfolio by segments as of the balance sheet dates were as follows:

 

    Total Loans  
                Residential     Residential              
    Commercial     Commercial     Real Estate     Real Estate              
September 30, 2012   & Industrial     Real Estate     1st Lien     Jr Lien     Consumer     Total  
                                     
Group A   $ 45,649,737     $ 127,984,841     $ 164,474,055     $ 45,373,633     $ 11,005,770     $ 394,488,036  
Group B     590,534       3,787,365       408,051       318,848       0       5,104,798  
Group C     1,244,368       4,244,348       3,659,304       336,757       17,034       9,501,811  
          Total   $ 47,484,639     $ 136,016,554     $ 168,541,410     $ 46,029,238     $ 11,022,804     $ 409,094,645  

 

    Total Loans  
                Residential     Residential              
    Commercial     Commercial     Real Estate     Real Estate              
December 31, 2011   & Industrial     Real Estate     1st Lien     Jr Lien     Consumer     Total  
                                     
Group A   $ 36,971,880     $ 119,410,381     $ 153,954,604     $ 44,943,200     $ 11,459,371     $ 366,739,436  
Group B     530,523       4,037,860       98,603       322,022       0       4,989,008  
Group C     2,012,204       8,821,127       5,482,751       621,745       5,768       16,943,595  
          Total   $ 39,514,607     $ 132,269,368     $ 159,535,958     $ 45,886,967     $ 11,465,139     $ 388,672,039  

 

    Total Loans  
    Commercial     Commercial     Residential              
September 30, 2011   & Industrial     Real Estate     Real Estate     Consumer     Total  
                               
Group A   $ 31,263,167     $ 121,785,036     $ 200,493,345     $ 11,884,313     $ 365,425,861  
Group B     889,433       7,157,279       587,332       0       8,634,044  
Group C     2,417,463       8,949,934       5,517,529       15,275       16,900,201  
          Total   $ 34,570,063     $ 137,892,249     $ 206,598,206     $ 11,899,588     $ 390,960,106  
Loans modified as TDRs

For the nine months ended September 30, 2012        
          Pre-     Post-  
          Modification     Modification  
          Outstanding     Outstanding  
    Number of     Recorded     Recorded  
    Contracts     Investment     Investment  
                   
Commercial real estate     2     $ 1,030,645     $ 1,030,645  
Residential real estate 1st lien     1       143,757       146,306  
          Total     3     $ 1,174,402     $ 1,176,951  

 

The following table presents TDRs for the twelve month period ended September 30, 2012 for which there was a payment default under the restructured terms during the period:

 

    Number of     Recorded  
    Contracts     Investment  
Commercial & industrial     1     $ 158,076