Note 7 - Loans

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

7. LOANS

The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. Loans outstanding at June 30, 2015 and December 31, 2014 are summarized by segment, and by classes within each segment, as follows:

Summary of Loans by Type
(In Thousands)	June 30,		Dec. 31,
	2015		2014
Residential mortgage:
Residential mortgage loans - first liens	$294,978		$291,882
Residential mortgage loans - junior liens	21,502		21,166
Home equity lines of credit	39,140		36,629
1-4 Family residential construction	19,651		16,739
Total residential mortgage	375,271		366,416
Commercial:
Commercial loans secured by real estate	135,063		145,878
Commercial and industrial	61,427		50,157
Political subdivisions	40,908		17,534
Commercial construction and land	7,826		6,938
Loans secured by farmland	7,565		7,916
Multi-family (5 or more) residential	8,561		8,917
Agricultural loans	4,287		3,221
Other commercial loans	12,809		13,334
Total commercial	278,446		253,895
Consumer	10,101		10,234
Total	663,818		630,545
Less: allowance for loan losses	(7,300	)	(7,336	)
Loans, net	$656,518		$623,209

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the Pennsylvania and New York counties that comprise the market serviced by Citizens & Northern Bank. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10% of total loans at either June 30, 2015 or December 31, 2014.

The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In the process of evaluating the loan portfolio, management also considers the Corporation’s exposure to losses from unfunded loan commitments. As of June 30, 2015 and December 31, 2014, management determined that no allowance for credit losses related to unfunded loan commitments was required.

Transactions within the allowance for loan losses, summarized by segment and class, for the three-month and six-month periods ended June 30, 2015 and 2014 were as follows:

Three Months Ended June 30, 2015	March 31,						June 30,
(In Thousands)	2015 Balance	Charge-offs		Recoveries	Provision (Credit)		2015 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,774	$(58	)	$0	$59		$2,775
Residential mortgage loans - junior liens	200	0		0	10		210
Home equity lines of credit	322	0		0	22		344
1-4 Family residential construction	207	0		0	50		257
Total residential mortgage	3,503	(58	)	0	141		3,586
Commercial:
Commercial loans secured by real estate	1,736	0		0	(44	)	1,692
Commercial and industrial	684	0		3	113		800
Political subdivisions	0	0		0	0		0
Commercial construction and land	286	0		0	10		296
Loans secured by farmland	159	0		0	(4	)	155
Multi-family (5 or more) residential	81	0		0	(1	)	80
Agricultural loans	29	0		0	11		40
Other commercial loans	123	0		0	(3	)	120
Total commercial	3,098	0		3	82		3,183
Consumer	139	(19	)	19	(4	)	135
Unallocated	394	0		0	2		396
Total Allowance for Loan Losses	$7,134	$(77	)	$22	$221		$7,300

Three Months Ended June 30, 2014	March 31,						June 30,
(In Thousands)	2014 Balance	Charge-offs		Recoveries	Provision (Credit)		2014 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,863	$(40	)	$1	$142		$2,966
Residential mortgage loans - junior liens	280	0		0	0		280
Home equity lines of credit	271	0		0	6		277
1-4 Family residential construction	153	0		0	20		173
Total residential mortgage	3,567	(40	)	1	168		3,696
Commercial:
Commercial loans secured by real estate	3,081	(1,486	)	0	301		1,896
Commercial and industrial	555	0		7	64		626
Political subdivisions	0	0		0	0		0
Commercial construction and land	247	0		5	(89	)	163
Loans secured by farmland	98	0		0	(2	)	96
Multi-family (5 or more) residential	105	0		0	(2	)	103
Agricultural loans	30	0		0	0		30
Other commercial loans	138	0		0	(3	)	135
Total commercial	4,254	(1,486	)	12	269		3,049
Consumer	128	(20	)	11	8		127
Unallocated	394	0		0	1		395
Total Allowance for Loan Losses	$8,343	$(1,546	)	$24	$446		$7,267

Six Months Ended June 30, 2015	December 31,						June 30,
(In Thousands)	2014 Balance	Charge-offs		Recoveries	Provision (Credit)		2015 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,941	$(137	)	$1	$(30	)	$2,775
Residential mortgage loans - junior liens	176	0		0	34		210
Home equity lines of credit	322	0		0	22		344
1-4 Family residential construction	214	0		0	43		257
Total residential mortgage	3,653	(137	)	1	69		3,586
Commercial:
Commercial loans secured by real estate	1,758	(115	)	0	49		1,692
Commercial and industrial	688	(10	)	4	118		800
Political subdivisions	0	0		0	0		0
Commercial construction and land	283	0		0	13		296
Loans secured by farmland	165	0		0	(10	)	155
Multi-family (5 or more) residential	87	0		0	(7	)	80
Agricultural loans	31	0		0	9		40
Other commercial loans	131	0		0	(11	)	120
Total commercial	3,143	(125	)	4	161		3,183
Consumer	145	(37	)	34	(7	)	135
Unallocated	395	0		0	1		396
Total Allowance for Loan Losses	$7,336	$(299	)	$39	$224		$7,300

Six Months Ended June 30, 2014	December 31,						June 30,
(In Thousands)	2013 Balance	Charge-offs		Recoveries	Provision (Credit)		2014 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,974	$(59	)	$1	$50		$2,966
Residential mortgage loans - junior liens	294	0		0	(14	)	$280
Home equity lines of credit	269	0		0	8		$277
1-4 Family residential construction	168	0		0	5		$173
Total residential mortgage	3,705	(59	)	1	49		3,696
Commercial:
Commercial loans secured by real estate	3,123	(1,521	)	250	44		1,896
Commercial and industrial	591	(24	)	8	51		626
Political subdivisions	0	0		0	0		0
Commercial construction and land	267	(170	)	5	61		163
Loans secured by farmland	115	0		0	(19	)	96
Multi-family (5 or more) residential	103	0		0	0		103
Agricultural loans	30	0		0	0		30
Other commercial loans	138	0		0	(3	)	135
Total commercial	4,367	(1,715	)	263	134		3,049
Consumer	193	(46	)	25	(45	)	127
Unallocated	398	0		0	(3	)	395
Total Allowance for Loan Losses	$8,663	$(1,820	)	$289	$135		$7,267

In the evaluation of the loan portfolio, management determines two major components for the allowance for loan losses – (1) a specific component based on an assessment of certain larger relationships, mainly commercial purpose loans, on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table below.

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of June 30, 2015 and December 31, 2014:

June 30, 2015		Special
(In Thousands)	Pass	Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential mortgage loans - first liens	$286,168	$485	$8,252	$73	$294,978
Residential mortgage loans - junior liens	20,931	90	481	0	21,502
Home equity lines of credit	37,328	1,407	405	0	39,140
1-4 Family residential construction	19,632	19	0	0	19,651
Total residential mortgage	364,059	2,001	9,138	73	375,271
Commercial:
Commercial loans secured by real estate	121,059	5,139	8,865	0	135,063
Commercial and Industrial	54,601	6,291	417	118	61,427
Political subdivisions	40,908	0	0	0	40,908
Commercial construction and land	5,744	164	1,918	0	7,826
Loans secured by farmland	5,668	423	1,451	23	7,565
Multi-family (5 or more) residential	8,287	274	0	0	8,561
Agricultural loans	4,266	0	21	0	4,287
Other commercial loans	12,727	82	0	0	12,809
Total Commercial	253,260	12,373	12,672	141	278,446
Consumer	9,915	22	164	0	10,101
Totals	$627,234	$14,396	$21,974	$214	$663,818

December 31, 2014      (In Thousands)	Pass	Special Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential mortgage loans - first liens	$280,094	$1,246	$10,464	$78	$291,882
Residential mortgage loans - junior liens	20,502	112	552	0	21,166
Home equity lines of credit	35,935	294	400	0	36,629
1-4 Family residential construction	16,719	20	0	0	16,739
Total residential mortgage	353,250	1,672	11,416	78	366,416
Commercial:
Commercial loans secured by real estate	133,204	2,775	9,899	0	145,878
Commercial and Industrial	41,751	7,246	1,042	118	50,157
Political subdivisions	17,534	0	0	0	17,534
Commercial construction and land	4,650	266	2,022	0	6,938
Loans secured by farmland	5,990	433	1,468	25	7,916
Multi-family (5 or more) residential	8,629	288	0	0	8,917
Agricultural loans	3,196	0	25	0	3,221
Other commercial loans	13,248	86	0	0	13,334
Total commercial	228,202	11,094	14,456	143	253,895
Consumer	10,095	22	117	0	10,234
Totals	$591,547	$12,788	$25,989	$221	$630,545

The general component of the allowance for loan losses covers pools of loans including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans are evaluated for loss exposure based upon three-year average historical net charge-off rates for each loan class, adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management’s judgment using relevant information available at the time of the evaluation. The adjustment for qualitative factors is applied as an increase or decrease to the three-year average net charge-off rate to each loan class within each segment.

The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation’s credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation’s lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation’s commercial segment loans (approximately 57% at June 30, 2015) is secured by real estate, and accordingly, the Corporation’s risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral.

Loans are classified as impaired, when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans, by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan’s effective rate or by the loan’s observable market price.

The scope of loans evaluated individually for impairment include all loan relationships greater than $200,000 for which there is at least one extension of credit graded Special Mention, Substandard or Doubtful. Also, all loans classified as troubled debt restructurings (discussed in more detail below) and all loan relationships less than $200,000 in the aggregate, but with an estimated loss of $100,000 or more, are individually evaluated for impairment. Loans that are individually evaluated for impairment, but which are not determined to be impaired, are combined with all remaining loans that are not reviewed on a specific basis, and such loans are included within larger pools of loans based on similar risk and loss characteristics for purposes of determining the general component of the allowance. The loans that have been individually evaluated, but which have not been determined to be impaired, are included in the “Collectively Evaluated” column in the tables summarizing the allowance and associated loan balances as of June 30, 2015 and December 31, 2014.

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of June 30, 2015 and December 31, 2014:

June 30, 2015	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$1,755	$293,223	$294,978	$136	$2,639	$2,775
Residential mortgage loans - junior liens	77	21,425	21,502	0	210	210
Home equity lines of credit	0	39,140	39,140	0	344	344
1-4 Family residential construction	0	19,651	19,651	0	257	257
Total residential mortgage	1,832	373,439	375,271	136	3,450	3,586
Commercial:
Commercial loans secured by real estate	6,145	128,918	135,063	80	1,612	1,692
Commercial and industrial	332	61,095	61,427	75	725	800
Political subdivisions	0	40,908	40,908	0	0	0
Commercial construction and land	1,840	5,986	7,826	211	85	296
Loans secured by farmland	1,474	6,091	7,565	98	57	155
Multi-family (5 or more) residential	0	8,561	8,561	0	80	80
Agricultural loans	21	4,266	4,287	0	40	40
Other commercial loans	0	12,809	12,809	0	120	120
Total commercial	9,812	268,634	278,446	464	2,719	3,183
Consumer	0	10,101	10,101	0	135	135
Unallocated						396
Total	$11,644	$652,174	$663,818	$600	$6,304	$7,300

December 31, 2014	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$1,665	$290,217	$291,882	$358	$2,583	$2,941
Residential mortgage loans - junior liens	17	21,149	21,166	0	176	176
Home equity lines of credit	0	36,629	36,629	0	322	322
1-4 Family residential construction	0	16,739	16,739	0	214	214
Total residential mortgage	1,682	364,734	366,416	358	3,295	3,653
Commercial:
Commercial loans secured by real estate	6,537	139,341	145,878	16	1,742	1,758
Commercial and industrial	663	49,494	50,157	82	606	688
Political subdivisions	0	17,534	17,534	0	0	0
Commercial construction	1,939	4,999	6,938	211	72	283
Loans secured by farmland	1,470	6,446	7,916	102	63	165
Multi-family (5 or more) residential	0	8,917	8,917	0	87	87
Agricultural loans	25	3,196	3,221	0	31	31
Other commercial loans	0	13,334	13,334	0	131	131
Total commercial	10,634	243,261	253,895	411	2,732	3,143
Consumer	0	10,234	10,234	0	145	145
Unallocated						395
Total	$12,316	$618,229	$630,545	$769	$6,172	$7,336

Summary information related to impaired loans at June 30, 2015 and December 31, 2014 is as follows:

(In Thousands)	June 30, 2015			December 31, 2014
	Unpaid			Unpaid
	Principal	Recorded	Related	Principal	Recorded	Related
	Balance	Investment	Allowance	Balance	Investment	Allowance
With no related allowance recorded:
Residential mortgage loans - first liens	$651	$651	-	$950	$950	-
Residential mortgage loans - junior liens	77	77	-	17	17	-
Commercial loans secured by real estate	7,409	5,823	-	8,062	6,521	-
Commercial and industrial	257	257	-	513	513	-
Commercial construction and land	25	25	-	124	124	-
Loans secured by farmland	910	910	-	925	925	-
Agricultural loans	21	21	-	25	25	-
Total with no related allowance recorded	9,350	7,764	-	10,616	9,075	-
With a related allowance recorded:
Residential mortgage loans - first liens	1,104	1,104	136	715	715	358
Commercial loans secured by real estate	322	322	80	16	16	16
Commercial and industrial	75	75	75	150	150	82
Commercial construction and land	1,815	1,815	211	1,815	1,815	211
Loans secured by farmland	564	564	98	545	545	102
Agricultural loans	0	0	0	0	0	0
Total with a related allowance recorded	3,880	3,880	600	3,241	3,241	769
Total	$13,230	$11,644	$600	$13,857	$12,316	$769

The average balance of impaired loans and interest income recognized on impaired loans is as follows:

					Interest Income Recognized on
	Average Investment in Impaired Loans				Impaired Loans on a Cash Basis
(In Thousands)	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	June 30,		June 30,		June 30,		June 30,
	2015	2014	2015	2014	2015	2014	2015	2014
Residential mortgage:
Residential mortgage loans - first lien	$3,701	$4,527	$3,819	$4,493	$20	$24	$58	$46
Residential mortgage loans - junior lien	66	197	57	214	1	0	2	2
Total residential mortgage	3,767	4,724	3,876	4,707	21	24	60	48
Commercial:
Commercial loans secured by real estate	6,286	7,261	6,437	7,589	90	156	203	267
Commercial and industrial	423	882	513	986	5	9	12	19
Commercial construction and land	41	408	58	519	0	2	0	4
Loans secured by farmland	1,447	1,274	1,468	1,280	26	18	52	33
Agricultural loans	46	45	23	46	2	1	2	2
Total commercial	8,243	9,870	8,499	10,420	123	186	269	325
Consumer	0	1	0	2	0	0	0	0
Total	$12,010	$14,595	$12,375	$15,129	$144	$210	$329	$373

Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans, including impaired loans, is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:

(In Thousands)	June 30, 2015		December 31, 2014
	Past Due		Past Due
	90+ Days and		90+ Days and
	Accruing	Nonaccrual	Accruing	Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$1,706	$3,227	$1,989	$3,440
Residential mortgage loans - junior liens	14	50	82	50
Home equity lines of credit	58	20	49	22
Total residential mortgage	1,778	3,297	2,120	3,512
Commercial:
Commercial loans secured by real estate	630	5,714	653	5,804
Commercial and industrial	0	257	5	379
Commercial construction and land	85	1,815	35	1,915
Loans secured by farmland	0	933	0	951
Agricultural loans	0	21	0	25
Total commercial	715	8,740	693	9,074
Consumer	36	23	30	24
Totals	$2,529	$12,060	$2,843	$12,610

The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual.

The table below presents a summary of the contractual aging of loans as of June 30, 2015 and December 31, 2014:

	As of June 30, 2015				As of December 31, 2014
	Current &				Current &
(In Thousands)	Past Due	Past Due	Past Due		Past Due	Past Due	Past Due
	Less than	30-89	90+		Less than	30-89	90+
	30 Days	Days	Days	Total	30 Days	Days	Days	Total
Residential mortgage:
Residential mortgage loans - first liens	$288,923	$3,085	$2,970	$294,978	$282,766	$5,443	$3,673	$291,882
Residential mortgage loans - junior liens	21,134	312	56	21,502	20,853	190	123	21,166
Home equity lines of credit	38,888	194	58	39,140	36,300	258	71	36,629
1-4 Family residential construction	19,651	0	0	19,651	16,739	0	0	16,739
Total residential mortgage	368,596	3,591	3,084	375,271	356,658	5,891	3,867	366,416
Commercial:
Commercial loans secured by real estate	133,590	338	1,135	135,063	143,713	883	1,282	145,878
Commercial and industrial	61,253	153	21	61,427	49,994	43	120	50,157
Political subdivisions	40,908	0	0	40,908	17,534	0	0	17,534
Commercial construction and land	5,896	30	1,900	7,826	4,897	91	1,950	6,938
Loans secured by farmland	6,704	23	838	7,565	6,811	254	851	7,916
Multi-family (5 or more) residential	8,561	0	0	8,561	8,720	197	0	8,917
Agricultural loans	3,958	308	21	4,287	3,105	91	25	3,221
Other commercial loans	12,809	0	0	12,809	13,334	0	0	13,334
Total commercial	273,679	852	3,915	278,446	248,108	1,559	4,228	253,895
Consumer	10,036	29	36	10,101	10,164	40	30	10,234
Totals	$652,311	$4,472	$7,035	$663,818	$614,930	$7,490	$8,125	$630,545

Nonaccrual loans are included in the contractual aging in the immediately preceding table. A summary of the contractual aging of nonaccrual loans at June 30, 2015 and December 31, 2014 is as follows:

	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Total
June 30, 2015 Nonaccrual Totals	$6,885	$669	$4,506	$12,060
December 31, 2014 Nonaccrual Totals	$6,959	$369	$5,282	$12,610

Loans whose terms are modified are classified as Troubled Debt Restructurings (TDRs) if the Corporation grants such borrowers concessions, and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as contractual aging information at June 30, 2015 and December 31, 2014 is as follows:

	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Nonaccrual	Total
June 30, 2015 Totals	$1,013	$81	$25	$5,216	$6,335
December 31, 2014 Totals	$1,725	$82	$0	$5,388	$7,195

There were no TDRs that occurred during the three-month period ended June 30, 2015. TDRs that occurred during the three-month period ended June 30, 2014 were as follows:

Three Months Ended June 30, 2014		Pre-	Post-
		Modification	Modification
	Number	Outstanding	Outstanding
	Of	Recorded	Recorded
	Contracts	Investment	Investment
Residential mortgage:
Residential mortgage loans - first liens	2	$67	$67
Commercial:
Commercial loans secured by real estate	5	6,679	5,193
Commercial and industrial	1	80	80

The TDRs related to residential mortgage loans in the three-month period ended June 30, 2014 included a reduction in payment amount on one contract and an interest only period allowed on one contract. The TDRs related to the commercial loans in the three-month period ended June 30, 2014 relate to six contracts associated with one relationship. The Corporation entered into a forbearance agreement with this commercial borrower which includes a reduction in monthly payment amounts over a fifteen-month period. At the end of the fifteen-month period, the monthly payment amounts would revert to the original amounts, unless the forbearance agreement is extended or the payment requirements are otherwise modified.  In July 2015, the forbearance agreement was extended for twelve months. The Corporation recorded a charge-off of $1,486,000 in the second quarter 2014 as a result of these modifications, as the payment amounts based on the forbearance agreement are not sufficient to fully amortize the contractual amount of principal outstanding on the loans. The amount of charge-off was determined based on the excess of the contractual principal due over the present value of the payment amounts provided for in the forbearance agreement, assuming the revised payment amounts would continue until maturity, at the contractual interest rates. After the effect of the charge-off, the total recorded investment in loans to this borrower amounted to $5,273,000, with no related allowance for loan losses on these loans at June 30, 2014, while the allowance on the loans amounted to $1,503,000 at March 31, 2014. There were no changes in the allowance for loan losses related to TDRs that occurred in the second quarter 2014.

TDRs that occurred during the six-month periods ended June 30, 2015 and 2014 were as follows:

Six Months Ended June 30, 2015		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	of	Recorded	Recorded
	Contracts	Investment	Investment
Residential mortgage:
Residential mortgage loans - first liens	1	$56	$56
Residential mortgage loans - junior liens	1	32	32
Consumer	1	30	30

Six Months Ended June 30, 2014		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	of	Recorded	Recorded
	Contracts	Investment	Investment
Residential mortgage:
Residential mortgage loans - first liens	3	$150	$150
Commercial:
Commercial loans secured by real estate	5	6,679	5,193
Commercial and industrial	1	80	80

The TDRs in the six-month period ended June 30, 2015 included an extended maturity date and a reduction in interest rate on a residential mortgage – first lien, a lowered interest rate and reduced payment amount on a residential mortgage – junior lien loan and a lowered interest rate and reduced payment amount on the consumer loan. There was no allowance for loan losses on these loans at June 30, 2015, and no change in the allowance for loan losses resulting from these TDRs.

In addition to the TDRs that occurred in the second quarter 2014, which are described above, in the first quarter 2014 the Corporation agreed to a reduction in interest rate and payment amount on one residential mortgage loan. After the effect of the $1,486,000 charge-off related to loans to one commercial borrower described above, there was no allowance for loan losses on loans to that borrower at June 30, 2014, while the allowance on the loans amounted to $1,552,000 at December 31, 2013. There were no other changes in the allowance for loan losses related to TDRs that occurred during the six-month period ended June 30, 2014.

There were no defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months in the three-month period ended June 30, 2015. In the three-month period ended June 30, 2014, defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months were as follows:

	Number
	of	Recorded
	Contracts	Investment
Three Months Ended June 30, 2014
(Balances in Thousands)
Residential mortgage,
Residential mortgage loans - first liens	1	$83
Residential mortgage loans - junior liens	1	62
Commercial,
Commercial loans secured by real estate	1	429
Agricultural	1	13

In the second quarter 2014, the events of default in the table listed above included a borrower’s failure to make the reduced payments provided for at a reduced interest rate on a first lien residential mortgage. The other events of default listed above in the three-month period resulted from the borrowers’ failure to make interest only monthly payments. There were no allowances for loan losses recorded on these loans at June 30, 2014.

In the six-month periods ended June 30, 2015 and 2014, defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months were as follows:

	Number
	of	Recorded
	Contracts	Investment
Six Months Ended June 30, 2015
(Balances in Thousands)
Residential mortgage,
Residential mortgage loans - first liens	2	$115
Commercial:
Commercial loans secured by real estate	1	407
Commercial construction and land	1	25

	Number
	of	Recorded
	Contracts	Investment
Six Months Ended June 30, 2014
(Balances in Thousands)
Residential mortgage:
Residential mortgage loans - first liens	2	$223
Residential mortgage loans - junior liens	1	62
Commercial,
Commercial loans secured by real estate	1	429
Loans secured by farmland	4	490
Agricultural	1	13

In the six-month period ended June 30, 2015, the events of default in the table listed above resulted from the borrowers’ failure to make timely payments under the following circumstances: (1) for one customer relationship included in the Residential first lien mortgage class, payment was missed after the interest rate and monthly payment amount had been reduced; (2) for the other customer relationship included in the Residential first lien mortgage class, monthly payments were missed after reducing the monthly payments to interest only payments; (3) for the Commercial loan secured by real estate, monthly payments were missed after reducing the monthly payments to interest only; and (4) for the Commercial construction and land loan, monthly payments were missed after extending the term of maturity. There were no allowances for loan losses recorded on these loans at June 30, 2015.

In the six-month period ended June 30, 2014, the events of default in the table listed above included a borrower’s failure to make reduced payments provided for at a reduced interest rate on a first lien residential mortgage. The other events of default listed above in the six-month period ended June 30, 2014 resulted from the borrowers’ failure to make interest only monthly payments. There were no allowances for loan losses recorded on these loans at June 30, 2014.

At June 30, 2015, the carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in Foreclosed assets held for sale in the unaudited consolidated balance sheet) was $487,000.

At June 30, 2015, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $1,388,000.