5. Loans, Allowance for Loan Losses and Credit Quality (Tables)

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Composition of net loans

The composition of net loans follows:

	June 30, 2013			December 31, 2012			June 30, 2012
Commercial & industrial	$	57,608,840		$	49,283,948		$	52,696,811
Commercial real estate		138,664,212			139,807,517			131,239,549
Residential real estate - 1st lien		174,902,277			171,114,515			166,621,140
Residential real estate - Jr. lien		45,145,675			47,029,023			46,253,285
Consumer		9,491,326			10,642,151			11,370,898
		425,812,330			417,877,154			408,181,683
Deduct (add):
Allowance for loan losses		4,522,179			4,312,080			3,926,119
Deferred net loan costs		(247,624	)		(169,501	)		(76,703	)
Loans held-for-sale		1,019,119			1,501,706			2,984,024
		5,293,674			5,644,285			6,833,440
Net Loans	$	420,518,656		$	412,232,869		$	401,348,243

Past due loans by segment

The following is an age analysis of past due loans (including non-accrual), net of loans held-for-sale, by segment:

June 30, 2013	30-89 Days		90 Days or More		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More and Accruing
Commercial & industrial	$	572,834	$	29,329	$	602,163	$	57,006,677	$	57,608,840	$	497,287	$	0
Commercial real estate		1,251,943		213,084		1,465,027		137,199,185		138,664,212		1,165,336		45,653
Residential real estate - 1st lien		1,933,003		1,143,585		3,076,588		170,806,570		173,883,158		1,660,626		596,814
Residential real estate - Jr. lien		292,954		41,068		334,022		44,811,653		45,145,675		348,815		5,951
Consumer		75,781		0		75,781		9,415,545		9,491,326		0		0
Total	$	4,126,515	$	1,427,066	$	5,553,581	$	419,239,630	$	424,793,211	$	3,672,064	$	648,418
December 31, 2012	30-89 Days		90 Days or More		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More and Accruing
Commercial & industrial	$	782,937	$	377,145	$	1,160,082	$	48,123,866	$	49,283,948	$	596,777	$	0
Commercial real estate		785,890		888,179		1,674,069		138,133,448		139,807,517		1,892,195		53,937
Residential real estate - 1st lien		4,654,077		844,803		5,498,880		164,113,929		169,612,809		1,928,097		281,845
Residential real estate - Jr. lien		379,363		57,128		436,491		46,592,532		47,029,023		338,383		41,434
Consumer		132,624		844		133,468		10,508,683		10,642,151		0		844
Total	$	6,734,891	$	2,168,099	$	8,902,990	$	407,472,458	$	416,375,448	$	4,755,452	$	378,060
June 30, 2012	30-89 Days		90 Days or More		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More and Accruing
Commercial & industrial	$	690,163	$	608,100	$	1,298,263	$	51,398,548	$	52,696,811	$	1,159,782	$	31,517
Commercial real estate		403,082		2,609,864		3,012,946		128,226,603		131,239,549		3,571,542		96,622
Residential real estate - 1st lien		1,148,563		1,263,035		2,411,598		161,225,518		163,637,116		1,629,611		704,780
Residential real estate - Jr. lien		315,398		80,602		396,000		45,857,285		46,253,285		340,427		71,155
Consumer		157,491		17,131		174,622		11,196,276		11,370,898		0		17,131
Total	$	2,714,697	$	4,578,732	$	7,293,429	$	397,904,230	$	405,197,659	$	6,701,362	$	921,205

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 June 30, 2013
							Residential			Residential
	Commercial			Commercial			Real Estate			Real Estate
	& Industrial			Real Estate			1st Lien			Jr Lien		Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	436,389		$	1,763,037		$	1,511,139		$	386,070	$	119,032		$	277,717		$	4,493,384
Charge-offs		(1,352	)		(107,936	)		(3,052	)		0		(8,783	)		0			(121,122	)
Recoveries		792			0			3,010			60		26,056			0			29,918
Provision (credit)		79,415			42,939			16,865			28,031		(20,058	)		(27,193	)		120,000
Ending balance	$	515,244		$	1,698,040		$	1,527,962		$	414,161	$	116,248		$	250,524		$	4,522,179

For the six months ended June 30, 2013
							Residential			Residential
	Commercial			Commercial			Real Estate			Real Estate
	& Industrial			Real Estate			1st Lien			Jr Lien		Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	428,381		$	1,536,440		$	1,563,576		$	332,556	$	138,699		$	312,428		$	4,312,080
Charge-offs		(19,287	)		(107,936	)		(3,052	)		0		(26,009	)		0			(156,284	)
Recoveries		992			0			8,636			120		30,385			0			40,133
Provision (credit)		105,158			269,536			(41,198	)		81,485		(26,827	)		(61,904	)		326,250
Ending balance	$	515,244		$	1,698,040		$	1,527,962		$	414,161	$	116,248		$	250,524		$	4,522,179
Allowance for loan losses
Evaluated for impairment
Individually	$	0		$	29,000		$	121,700		$	91,100	$	0		$	0		$	241,800
Collectively		515,244			1,669,040			1,406,262			323,061		116,248			250,524			4,280,379
Total	$	515,244		$	1,698,040		$	1,527,962		$	414,161	$	116,248		$	250,524		$	4,522,179
Loans evaluated for impairment
Individually	$	305,425		$	1,068,160		$	1,366,685		$	348,815	$	0					$	3,089,085
Collectively		57,303,415			137,596,052			172,516,473			44,796,860		9,491,326						421,704,126
Total	$	57,608,840		$	138,664,212		$	173,883,158		$	45,145,675	$	9,491,326					$	424,793,211

For the year ended December 31, 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	)		(57,923	)		(246,237	)		(135,622	)		(96,491	)		0		(695,582	)
Recoveries		29,769			51,863			5,538			1,538			32,452			0		121,160
Provision		215,607			156,561			225,782			134,956			77,959			189,135		1,000,000
Ending balance	$	428,381		$	1,536,440		$	1,563,576		$	332,556		$	138,699		$	312,428	$	4,312,080
Allowance for loan losses
Evaluated for impairment
Individually	$	0		$	0		$	134,800		$	39,200		$	0		$	0	$	174,000
Collectively		428,381			1,536,440			1,428,776			293,356			138,699			312,428		4,138,080
Total	$	428,381		$	1,536,440		$	1,563,576		$	332,556		$	138,699		$	312,428	$	4,312,080
Loans evaluated for impairment
Individually	$	435,165		$	1,762,615		$	1,641,960		$	309,606		$	0				$	4,149,346
Collectively		48,848,783			138,044,902			167,970,849			46,719,417			10,642,151					412,226,102
Total	$	49,283,948		$	139,807,517		$	169,612,809		$	47,029,023		$	10,642,151				$	416,375,448

For the quarter ended June 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	$	388,576		$	1,389,368		$	1,595,453		$	318,075	$	124,022		$	136,995	$	3,952,489
Charge-offs		(115,100	)		(8,259	)		(125,000	)		0		(36,714	)		0		(285,073	)
Recoveries		1,268			108			366			62		6,900			0		8,704
Provision		108,779			4,966			2,842			50,802		32,706			49,904		249,999
Ending balance	$	383,523		$	1,386,183		$	1,473,661		$	368,939	$	126,914		$	186,899	$	3,926,119

For the six months ended June 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		(124,934	)		(55,057	)		(183,474	)		(60,287	)		(60,373	)		0		(484,125	)
Recoveries		2,520			863			1,823			1,418			17,116			0		23,740
Provision		163,623			54,438			76,819			96,124			45,392			63,606		500,002
Ending balance	$	383,523		$	1,386,183		$	1,473,661		$	368,939		$	126,914		$	186,899	$	3,926,119
Allowance for loan losses
Evaluated for impairment
Individually	$	0		$	15,100		$	144,300		$	21,000		$	0		$	0	$	180,400
Collectively		383,523			1,371,083			1,329,361			347,939			126,914			186,899		3,745,719
Total	$	383,523		$	1,386,183		$	1,473,661		$	368,939		$	126,914		$	186,899	$	3,926,119
Loans evaluated for impairment
Individually	$	985,350		$	3,459,215		$	1,345,724		$	301,796		$	0				$	6,092,085
Collectively		51,711,461			127,780,334			162,291,392			45,951,489			11,370,898					399,105,574
Total	$	52,696,811		$	131,239,549		$	163,637,116		$	46,253,285		$	11,370,898				$	405,197,659

Impaired loans by segment

Impaired loans by segments were as follows:

	As of June 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment (1)		Average Recorded Investment (2)
With no related allowance recorded
Commercial & Industrial	$	305,425	$	348,569	$	0	$	314,456	$	354,692
Commercial real estate		971,245		1,030,645		0		1,360,330		1,494,425
Residential real estate - 1st lien		897,190		1,122,551		0		953,984		977,522
Residential real estate - Jr lien		24,591		32,254		0		20,143		18,660
With an allowance recorded
Commercial & Industrial		0		0		0		0		0
Commercial real estate		96,915		96,915		29,000		200,883		133,922
Residential real estate - 1st lien		469,495		539,218		121,700		474,361		522,028
Residential real estate - Jr lien		324,224		349,871		91,100		324,436		314,261
Total
Commercial & Industrial	$	305,425	$	348,569	$	0	$	314,456	$	354,692
Commercial real estate	$	1,068,160	$	1,127,560	$	29,000	$	1,561,213	$	1,628,347
Residential real estate - 1st lien	$	1,366,685	$	1,661,769	$	121,700	$	1,428,345	$	1,499,550
Residential real estate - Jr lien	$	348,815	$	382,125	$	91,100	$	344,579	$	332,921
Total	$	3,089,085	$	3,520,023	$	241,800	$	3,648,593	$	3,815,510
(1) For the quarter ended June 30, 2013
(2) For the six months ended June 30, 2013

For the year ended December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
With no related allowance recorded
Commercial & industrial	$	435,165	$	473,664	$	0	$	536,973
Commercial real estate		1,762,615		2,123,371		0		2,019,449
Residential real estate - 1st lien		1,024,598		1,250,224		0		893,629
Residential real estate - Jr lien		15,694		76,680		0		34,602
With an allowance recorded
Commercial & industrial		0		0		0		232,743
Commercial real estate		0		0		0		920,842
Residential real estate - 1st lien		617,362		669,288		134,800		892,339
Residential real estate - Jr lien		293,912		319,020		39,200		295,372
Total
Commercial & industrial	$	435,165	$	473,664	$	0	$	769,716
Commercial real estate	$	1,762,615	$	2,123,371	$	0	$	2,940,291
Residential real estate - 1st lien	$	1,641,960	$	1,919,512	$	134,800	$	1,785,968
Residential real estate - Jr lien	$	309,606	$	395,700	$	39,200	$	329,974
Total	$	4,149,346	$	4,912,247	$	174,000	$	5,825,949

	As of June 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment (1)		Average Recorded Investment (2)
With no related allowance recorded
Commercial & industrial	$	985,350	$	1,098,373	$	0	$	711,297	$	601,073
Commercial real estate		2,307,560		2,658,965		0		2,148,538		2,112,726
Residential real estate - 1st lien		701,424		924,758		0		771,255		847,776
Residential real estate - Jr lien		31,532		36,024		0		15,766		52,439
With an allowance recorded
Commercial & industrial		0		0		0		272,109		387,905
Commercial real estate		1,151,655		1,167,055		15,100		1,392,722		1,471,201
Residential real estate - 1st lien		644,300		683,961		144,300		1,058,887		1,161,093
Residential real estate - Jr lien		270,264		284,776		21,000		288,086		295,016
Total
Commercial & industrial	$	985,350	$	1,098,373	$	0	$	983,406	$	988,978
Commercial real estate	$	3,459,215	$	3,826,020	$	15,100	$	3,541,260	$	3,583,927
Residential real estate - 1st lien	$	1,345,724	$	1,608,719	$	144,300	$	1,830,142	$	2,008,869
Residential real estate - Jr lien	$	301,796	$	320,800	$	21,000	$	303,852	$	347,455
Total	$	6,092,085	$	6,853,912	$	180,400	$	6,658,660	$	6,929,229
(1) For the quarter ended June 30, 2012
(2) For the six months ended June 30, 2012

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
June 30, 2013	& Industrial		Real Estate		1st Lien		Jr Lien		Consumer		Total
Group A	$	55,985,055	$	131,939,691	$	171,245,755	$	44,215,183	$	9,489,361	$	412,875,045
Group B		567,569		2,321,844		178,847		461,445		0		3,529,705
Group C		1,056,216		4,402,677		2,458,556		469,047		1,965		8,388,461
Total	$	57,608,840	$	138,664,212	$	173,883,158	$	45,145,675	$	9,491,326	$	424,793,211

Total Loans
					Residential		Residential
	Commercial		Commercial		Real Estate		Real Estate
December 31, 2012	& Industrial		Real Estate		1st Lien		Jr Lien		Consumer		Total
Group A	$	47,689,238	$	131,643,756	$	166,374,493	$	46,162,420	$	10,632,404	$	402,502,311
Group B		593,838		4,139,367		404,752		318,248		0		5,456,205
Group C		1,000,872		4,024,394		2,833,564		548,355		9,747		8,416,932
Total	$	49,283,948	$	139,807,517	$	169,612,809	$	47,029,023	$	10,642,151	$	416,375,448

Total Loans
					Residential		Residential
	Commercial		Commercial		Real Estate		Real Estate
June 30, 2012	& Industrial		Real Estate		1st Lien		Jr Lien		Consumer		Total
Group A	$	50,347,984	$	119,388,434	$	159,049,480	$	45,302,653	$	11,350,308	$	385,438,859
Group B		400,125		4,660,012		412,798		321,946		0		5,794,881
Group C		1,948,702		7,191,103		4,174,838		628,686		20,590		13,963,919
Total	$	52,696,811	$	131,239,549	$	163,637,116	$	46,253,285	$	11,370,898	$	405,197,659

Loans modified as TDRs

TDR’s by segment for the periods presented were as follows:

For the quarter and the six months ended June 30, 2013

			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Contracts		Investment		Investment
Residential real estate - Jr lien		1	$	23,425	$	23,425

For the year ended December 31, 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						3			200,241				205,588
Total						5		$	1,230,886			$	1,236,233
	For the quarter ended June 30, 2012									For the six months ended June 30, 2012
			Pre-			Post-								Pre-		Post-
			Modification			Modification								Modification		Modification
	Number		Outstanding			Outstanding				Number				Outstanding		Outstanding
	of		Recorded			Recorded				of				Recorded		Recorded
	Contracts		Investment			Investment				Contracts				Investment		Investment
Commercial real estate		0	$	0		$	0				2			$	1,030,645	$	1,030,645
Residential real estate - 1st lien		1		23,944			27,336				2				147,301		152,219
Total		1	$	23,944		$	27,336				4			$	1,177,946	$	1,182,864

There were no TDRs for which there was a payment default under the restructured terms during the twelve month period ended June 30, 2013. The TDR’s for which there was a payment default during the twelve month period ended June 30, 2012 were as follows:

	Number of		Recorded
	Contracts		Investment
Commercial		3	$	283,363
Commercial real estate		1		398,002
Residential real estate - 1st lien		1		107,584
Total		5	$	788,949