Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2013

The following represents the composition of the loan portfolio for the period ending:

	(Amounts in thousands)
	December 31,
	2013				2012
	Balance		%		Balance		%
Commercial	$	73,643		21.2	$	62,312		19.6
Commercial real estate		206,744		59.6		193,417		61.1
Residential real estate		42,288		12.2		39,091		12.3
Consumer - home equity		19,510		5.6		17,910		5.6
Consumer - other		4,648		1.4		4,552		1.4
Total loans	$	346,833			$	317,282

Certain Qualitative Factors Considered in Measuring Risk Trends

These factors include, but are not limited to, the following:

Factor Considered:		Risk Trend:
Levels of and trends in charge-offs, classifications and non-accruals		Increasing
Trends in volume and terms		Increasing
Changes in lending policies and procedures		Stable
Experience, depth and ability of management		Stable
Economic trends		Decreasing
Concentrations of credit		Stable

Factors Analyzed and Applied to Loans Internally Graded with Higher Credit Risk

The following factors are analyzed and applied to loans internally graded with higher risk credit in addition to the above factors for non-classified loans:

Factor Considered:		Risk Trend:
Levels and trends in classification		Decreasing
Declining trends in financial performance		Increasing
Structure and lack of performance measures		Increasing
Migration between risk categories		Decreasing

Analysis of Changes in the Allowance for Loan Losses

The following is an analysis of changes in the allowance for loan losses for the periods ended:

	(Amounts in thousands)
December 31, 2013	Commercial			Commercial real estate			Residential real estate			Consumer - home equity			Consumer - other			Total
Balance at beginning of period	$	639		$	2,616		$	343		$	123		$	104		$	3,825
Loan charge-offs		(1	)		(782	)		(81	)		(12	)		(146	)		(1,022	)
Recoveries		167			11			26			18			89			311
Net loan charge-offs		166			(771	)		(55	)		6			(57	)		(711	)
Provision charged to operations		(212	)		793			68			(41	)		42			650
Balance at end of period	$	593		$	2,638		$	356		$	88		$	89		$	3,764

December 31, 2012	Commercial			Commercial real estate			Residential real estate			Consumer - home equity			Consumer - other			Total
Balance at beginning of period	$	565		$	1,803		$	470		$	128		$	92		$	3,058
Loan charge-offs		(1,937	)		(36	)		(231	)		(59	)		(152	)		(2,415	)
Recoveries		9			37			46			13			57			162
Net loan charge-offs		(1,928	)		1			(185	)		(46	)		(95	)		(2,253	)
Provision charged to operations		2,002			812			58			41			107			3,020
Balance at end of period	$	639		$	2,616		$	343		$	123		$	104		$	3,825

December 31, 2011	Commercial		Commercial real estate			Residential real estate			Consumer - home equity			Consumer - other			Total
Balance at beginning of period	$	249	$	1,611		$	418		$	111		$	112		$	2,501
Loan charge-offs		—		(211	)		(362	)		(91	)		(168	)		(832	)
Recoveries		3		118			6			6			60			193
Net loan charge-offs		3		(93	)		(356	)		(85	)		(108	)		(639	)
Provision charged to operations		313		285			408			102			88			1,196
Balance at end of period	$	565	$	1,803		$	470		$	128		$	92		$	3,058

Allowance for Loan Losses and the Recorded Investment in Loans

The following tables present a full breakdown by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods ended December 31, 2013 and 2012:

	(Amounts in thousands)
December 31, 2013	Commercial		Commercial real estate		Residential real estate		Consumer - home equity		Consumer - other		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	50	$	251	$	—	$	—	$	—	$	301
Collectively evaluated for impairment		543		2,387		356		88		89		3,463
Total ending allowance balance	$	593	$	2,638	$	356	$	88	$	89	$	3,764
Loan Portfolio:
Individually evaluated for impairment	$	418	$	5,134	$	—	$	—	$	—	$	5,552
Collectively evaluated for impairment		73,225		201,610		42,288		19,510		4,648		341,281
Total ending loans balance	$	73,643	$	206,744	$	42,288	$	19,510	$	4,648	$	346,833

December 31, 2012	Commercial		Commercial real estate		Residential real estate		Consumer - home equity		Consumer - other		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	49	$	423	$	—	$	—	$	—	$	472
Collectively evaluated for impairment		590		2,193		343		123		104		3,353
Total ending allowance balance	$	639	$	2,616	$	343	$	123	$	104	$	3,825
Loan Portfolio:
Individually evaluated for impairment	$	49	$	5,031	$	—	$	—	$	—	$	5,080
Collectively evaluated for impairment		62,263		188,386		39,091		17,910		4,552		312,202
Total ending loans balance	$	62,312	$	193,417	$	39,091	$	17,910	$	4,552	$	317,282

Summary of Credit Quality Indicators by Internally Assigned Grade

The following is a summary of credit quality indicators by internally assigned grade as of December 31, 2013 and 2012.

	(Amounts in thousands)
December 31, 2013	Commercial		Commercial real estate
Pass	$	72,562	$	192,604
Special Mention		626		9,158
Substandard		455		4,982
Doubtful		—		—
Ending Balance	$	73,643	$	206,744

December 31, 2012	Commercial		Commercial real estate
Pass	$	60,387	$	175,367
Special Mention		1,182		11,135
Substandard		743		6,915
Doubtful		—		—
Ending Balance	$	62,312	$	193,417

Summary of Consumer Credit Exposure

The following is a summary of consumer credit exposure as of December 31, 2013 and 2012.

	(Amounts in thousands)
	Residential real estate		Consumer - home equity		Consumer-other
December 31, 2013
Performing	$	41,807	$	19,438	$	4,632
Nonperforming		481		72		16
Total	$	42,288	$	19,510	$	4,648

	Residential real estate		Consumer - home equity		Consumer-other
December 31, 2012
Performing	$	38,602	$	17,838	$	4,525
Nonperforming		489		72		27
Total	$	39,091	$	17,910	$	4,552

The following presents, by class, information related to loans modified in a TDR during the periods ended:

	(Amounts in thousands)
	December 31, 2013
	Number of contracts		Pre-modification recorded investment		Post-modification recorded investment		Increase in the allowance
Commercial		5	$	438	$	438	$	20
Commercial real estate		7		2,348		2,348		—
Total restructured loans		12	$	2,786	$	2,786	$	20
Subsequently defaulted		—	$	—

	December 31, 2012
	Number of contracts		Pre-modification recorded investment		Post-modification recorded investment		Increase in the allowance
Commercial real estate		4	$	1,734	$	1,734	$	148
Total restructured loans		4	$	1,734	$	1,734	$	148
Subsequently defaulted		—	$	—

December 31, 2011

Number of
contracts

Pre-modification
recorded
investment

Post-modification
recorded
investment

Increase in the
allowance

Commercial real estate

—

Total restructured loans

—

Subsequently defaulted

—

Aging Analysis of the Recorded Investment of Past Due Loans

The following is an aging analysis of the recorded investment of past due loans as of the periods ended December 31, 2013 and 2012:

	(Amounts in thousands)
	30-59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
December 31, 2013
Commercial	$	—	$	—	$	30	$	30	$	73,613	$	73,643	$	—
Commercial real estate		—		—		1,136		1,136		205,608		206,744		—
Residential real estate		—		201		380		581		41,707		42,288		—
Consumer:
Consumer - home equity		—		7		65		72		19,438		19,510		—
Consumer - other		29		—		16		45		4,603		4,648		—
Total	$	29	$	208	$	1,627	$	1,864	$	344,969	$	346,833	$	—

	30 - 59 Days Past Due		60-89 Days Past Due		90 Days Or Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
December 31, 2012
Commercial	$	—	$	—	$	49	$	49	$	62,263	$	62,312	$	—
Commercial real estate		32		—		2,182		2,214		191,203		193,417		—
Residential real estate		72		158		384		614		38,477		39,091		—
Consumer:
Consumer - home equity		—		—		62		62		17,848		17,910		—
Consumer - other		14		—		27		41		4,511		4,552		—
Total	$	118	$	158	$	2,704	$	2,980	$	314,302	$	317,282	$	—

Recorded Investment and Unpaid Principal Balances for Impaired Loans, Excluding Homogenous Loans for Which Impaired Analyses are Not Necessarily Performed

The following table presents the recorded investment and unpaid principal balances for impaired loans, excluding homogenous loans for which impaired analyses are not necessarily performed, with the associated allowance amount, if applicable, at December 31, 2013 and 2012. Also presented are the average recorded investments in the impaired balances and interest income recognized after impairment for the years ended December 31, 2013, 2012 and 2011.

	(Amounts in thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance
December 31, 2013
With no related allowance recorded:
Commercial	$	320	$	320	$	—
Commercial real estate		3,554		3,554		—
With an allowance recorded:
Commercial		98		98		50
Commercial real estate		1,580		1,580		251
Total:
Commercial	$	418	$	418	$	50
Commercial real estate	$	5,134	$	5,134	$	251

	Recorded Investment		Unpaid Principal Balance		Related Allowance
December 31, 2012
With no related allowance recorded:
Commercial real estate	$	789	$	789	$	—
With an allowance recorded:
Commercial		49		49		49
Commercial real estate		4,242		4,242		423
Total:
Commercial	$	49	$	49	$	49
Commercial real estate	$	5,031	$	5,031	$	423

	(Amounts in thousands)
	Average Recorded Investment		Interest Income Recognized
December 31, 2013
With no related allowance recorded:
Commercial	$	123	$	6
Commercial real estate		1,638		117
With an allowance recorded:
Commercial		73		—
Commercial real estate		3,015		95
Total:
Commercial	$	196	$	6
Commercial real estate	$	4,653	$	212

	(Amounts in thousands)
	Average Recorded Investment		Interest Income Recognized
December 31, 2012
With no related allowance recorded:
Commercial	$	17	$	—
Commercial real estate		1,196		3
With an allowance recorded:
Commercial		58		—
Commercial real estate		3,177		117
Total:
Commercial	$	75	$	—
Commercial real estate	$	4,373	$	120

	Average Recorded Investment		Interest Income Recognized
December 31, 2011
With no related allowance recorded:
Commercial	$	42	$	—
Commercial real estate		951		66
With an allowance recorded:
Commercial		83		—
Commercial real estate		1,320		74
Total:
Commercial	$	125	$	—
Commercial real estate	$	2,271	$	140

Summary of Classes of Loans on Non-Accrual Status

The following is a summary of classes of loans on non-accrual status as of:

	(Amounts in thousands) December 31,
	2013		2012
Commercial	$	98	$	49
Commercial real estate		1,279		2,336
Residential real estate		481		489
Consumer:
Consumer - home equity		72		72
Consumer - other		16		27
Total	$	1,946	$	2,973