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5. Loans, Allowance for Loan Losses and Credit Quality (Tables)
 9 Months Ended
Sep. 30, 2013
Notes to Financial Statements  
Composition of net loans

The composition of net loans follows:

 

   

September 30,

2013

    

December 31,

2012

    

September 30,

2012

  
                   
Commercial & industrial   $ 55,500,735     $ 49,283,948     $ 47,484,639  
Commercial real estate     147,280,787       139,807,517       136,016,554  
Residential real estate - 1st lien     175,737,499       171,114,515       168,541,410  
Residential real estate - Jr lien     45,279,400       47,029,023       46,029,238  
Consumer     9,412,856       10,642,151       11,022,804  
      433,211,277       417,877,154       409,094,645  
Deduct (add):                        
Allowance for loan losses     4,799,431       4,312,080       4,115,230  
Deferred net loan costs     (281,747 )     (169,501 )     (101,742 )
Loans held-for-sale     1,229,490       1,501,706       1,483,940  
      5,747,174       5,644,285       5,497,428  
          Net Loans   $ 427,464,103     $ 412,232,869     $ 403,597,217  
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:

 

          90 Days     Total                 Non-Accrual     90 Days or More  
September 30, 2013   30-89 Days     or More     Past Due     Current     Total Loans     Loans     and Accruing  
                                           
Commercial & industrial   $ 75,101     $ 269,744     $ 344,845     $ 55,155,890     $ 55,500,735     $ 493,272     $ 0  
Commercial real estate     982,378       546,252       1,528,630       145,752,157       147,280,787       1,740,350       50,965  
Residential real estate - 1st lien     1,270,029       1,071,400       2,341,429       172,166,580       174,508,009       1,999,274       344,193  
Residential real estate - Jr lien     539,828       223,200       763,028       44,516,372       45,279,400       669,292       62,359  
Consumer     95,907       8,755       104,662       9,308,194       9,412,856       0       8,755  
          Total   $ 2,963,243     $ 2,119,351     $ 5,082,594     $ 426,899,193     $ 431,981,787     $ 4,902,188     $ 466,272  

 

            90 Days     Total                     Non-Accrual     90 Days or More  
December 31, 2012   30-89 Days     or More     Past Due     Current     Total Loans     Loans     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  

 

            90 Days     Total                     Non-Accrual     90 Days or More  
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  
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, 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   $ 515,244     $ 1,698,040     $ 1,527,962     $ 414,161     $ 116,248     $ 250,524     $ 4,522,179  
      Charge-offs     (42,327 )     (16,913 )     (3,957 )     0       (10,647 )     0       (73,844 )
      Recoveries     1,126       185,791       3,128       21,110       2,441       0       213,596  
      Provision (credit)     4,891        72,698       (14,415 )     81,589       22,894       (30,157 )     137,500  
   Ending balance   $ 478,934     $ 1,939,616     $ 1,512,718     $ 516,860     $ 130,936     $ 220,367     $ 4,799,431  

 

For the Nine Months Ended September 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     (61,614 )     (124,849 )     (7,009 )     0       (36,655 )     0       (230,127 )
      Recoveries     2,117       185,791       11,764       21,230       32,826       0       253,728  
      Provision (credit)     110,050       342,234        (55,613 )      163,074        (3,934 )     (92,061 )     463,750  
   Ending balance   $ 478,934     $ 1,939,616     $ 1,512,718     $ 516,860     $ 130,936     $ 220,367     $ 4,799,431  
                                                         
Allowance for loan losses  
Evaluated for impairment                                                        
   Individually   $  0     $ 115,700     $ 110,500     $ 185,700     $ 0     $ 0     $ 411,900  
   Collectively     478,934       1,823,916       1,402,218       331,160       130,936       220,367       4,387,531  
          Total   $ 478,934     $ 1,939,616     $ 1,512,718     $ 516,860     $ 130,936     $ 220,367     $ 4,799,431  
   
Loans evaluated for impairment  
   Individually   $ 319,010     $  1,716,870     $ 1,734,139     $ 669,292     $ 0             $ 4,439,311  
   Collectively     55,181,725       145,563,917       172,773,870       44,610,108       9,412,856               427,542,476  
          Total   $ 55,500,735     $ 147,280,787     $ 174,508,009     $ 45,279,400     $ 9,412,856             $ 431,981,787  

 

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 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  
Impaired loans by segment

Impaired loans by segments were as follows:

 

    As of September 30, 2013              
          Unpaid           Average     Average  
    Recorded     Principal     Related     Recorded     Recorded  
    Investment     Balance     Allowance     Investment (1)     Investment (2)  
                               
With no related allowance recorded                              
   Commercial & industrial   $ 319,010     $ 366,022     $ 0     $ 312,218     $ 345,772  
   Commercial real estate     1,199,398       1,269,979       0       1,085,322       1,420,668  
   Residential real estate - 1st lien     1,156,159       1,390,485       0       1,026,675       1,022,181  
   Residential real estate - Jr lien     102,913       110,997       0       63,752       39,723  
                                         
With an allowance recorded                                        
   Commercial & industrial     0       0       0       0       0  
   Commercial real estate     517,472       517,472       115,700       307,194       229,809  
   Residential real estate - 1st lien     577,980       657,154       110,500       523,738       536,016  
   Residential real estate - Jr lien     566,379       595,494       185,700       445,302       377,291  
                                         
Total                                        
   Commercial & industrial   $ 319,010     $ 366,022     $ 0     $ 312,218     $ 345,772  
   Commercial real estate   $ 1,716,870     $ 1,787,451     $ 115,700     $ 1,392,516     $ 1,650,477  
   Residential real estate - 1st lien   $ 1,734,139     $ 2,047,639     $ 110,500     $ 1,550,413     $ 1,558,197  
   Residential real estate - Jr lien   $ 669,292     $ 706,491     $ 185,700     $ 509,054     $ 417,014  
                                         
          Total   $ 4,439,311     $ 4,907,603     $ 411,900     $ 3,764,201     $ 3,971,460  

 

As of December 31, 2012

 

          Unpaid           Average  
    Recorded     Principal     Related     Recorded  
    Investment     Balance     Allowance     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 September 30, 2012

 

          Unpaid           Average     Average  
    Recorded     Principal     Related     Recorded     Recorded  
    Investment     Balance     Allowance     Investment (1)     Investment (2)  
                               
With no related allowance recorded                              
   Commercial & industrial   $ 446,484     $ 478,798     $ 0     $ 715,917     $ 562,425  
   Commercial real estate     1,996,452       2,426,167       0       2,152,006       2,083,657  
   Residential real estate - 1st lien     900,217       1,149,862       0       800,820       860,886  
   Residential real estate - Jr lien     0       0       0       15,766       39,329  
                                         
With an allowance recorded                                        
   Commercial & industrial     0       0       0       0       290,929  
   Commercial real estate     190,608       192,108       8,900       671,132       1,151,053  
   Residential real estate - 1st lien     361,055       402,647       110,700       502,679       961,084  
   Residential real estate - Jr lien     297,898       319,472       46,400       284,081       295,737  
                                         
Total                                        
   Commercial & industrial   $ 446,484     $ 478,798     $    0     $ 715,917     $ 853,354  
   Commercial real estate   $ 2,187,060     $ 2,618,275     $  8,900     $ 2,823,138     $ 3,234,710  
   Residential real estate - 1st lien   $ 1,261,272     $ 1,552,509     $ 110,700     $ 1,303,499     $ 1,821,970  
   Residential real estate - Jr lien   $ 297,898     $ 319,472     $ 46,400     $ 299,847     $ 335,066  
                                         
          Total   $ 4,192,714     $ 4,969,054     $ 166,000     $ 5,142,401     $ 6,245,100  
Risk ratings

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

 

As of September 30, 2013  
                Residential     Residential              
    Commercial     Commercial     Real Estate     Real Estate              
    & Industrial     Real Estate     1st Lien     Jr Lien     Consumer     Total  
                                     
Group A   $ 51,937,275     $ 139,168,914     $ 171,694,502     $ 44,144,667     $ 9,404,101     $ 416,349,459  
Group B     2,412,663       3,572,369       175,081       497,992       0       6,658,105  
Group C     1,150,797       4,539,504       2,638,426       636,741       8,755       8,974,223  
          Total   $ 55,500,735     $ 147,280,787     $ 174,508,009     $ 45,279,400     $ 9,412,856     $ 431,981,787  

 

As of December 31, 2012  
                Residential     Residential              
    Commercial     Commercial     Real Estate     Real Estate              
    & 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  

 

As of September 30, 2012                                
                Residential     Residential              
    Commercial     Commercial     Real Estate     Real Estate              
    & Industrial     Real Estate     1st Lien     Jr Lien     Consumer     Total  
                                     
Group A   $ 45,649,737     $ 127,984,841     $ 162,990,115     $ 45,373,633     $ 11,005,770     $ 393,004,096  
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     $ 167,057,470     $ 46,029,238     $ 11,022,804     $ 407,610,705  
Loans modified as TDRs

There were no TDR’s for the quarter ended September 30, 2013.  TDR’s by segment for the periods presented were as follows:

 

For the nine months ended September 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 September 30, 2012

 

          Pre-     Post-  
          Modification     Modification  
          Outstanding     Outstanding  
    Number of     Recorded     Recorded  
    Contracts     Investment     Investment  
                   
Residential real estate - 1st lien     1     $ 52,940     $ 53,369  
                         

 

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     3       200,241       205,588  
          Total     5     $ 1,230,886     $ 1,236,233  

 

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

 

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