CREDIT QUALITY ASSESSMENT

3 Months Ended

Mar. 31, 2015

Credit Quality Assessment [Abstract]

CREDIT QUALITY ASSESSMENT

Note 4 – CREDIT QUALITY ASSESSMENT

Allowance for Loan and Lease Losses

Summary information on the allowance for loan and lease loss activity for the period indicated is provided in the following table:

			Three Months Ended March 31,
(In thousands)			2015		2014
Balance at beginning of year			$	37,802	$	38,766
	Provision for loan and lease losses			597		(982)
	Loan and lease charge-offs			(1,114)		(717)
	Loan and lease recoveries			190		959
		Net charge-offs		(924)		242
Balance at period end			$	37,475	$	38,026

The following tables provide information on the activity in the allowance for loan and lease losses by the respective loan portfolio segment for the period indicated:

		For the Three Months Ended March 31, 2015
				Commercial Real Estate										Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner						Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	5,852	$	4,267	$	9,784	$	7,143	$	9	$	3,592	$	6,232	$	923	$	37,802
Provision (credit)			(312)		(112)		261		328		-		318		143		(29)		597
Charge-offs			(19)		(706)		-		(213)		-		(99)		(77)		-		(1,114)
Recoveries			108		-		5		1		-		56		12		8		190
	Net charge-offs		89		(706)		5		(212)		-		(43)		(65)		8		(924)
Balance at end of period		$	5,629	$	3,449	$	10,050	$	7,259	$	9	$	3,867	$	6,310	$	902	$	37,475
Total loans and leases		$	385,452	$	203,731	$	668,931	$	618,846	$	36	$	428,531	$	728,858	$	130,321	$	3,164,706
Allowance for loans and leases to total loans and leases ratio			1.46%		1.69%		1.50%		1.17%		25.02%		0.90%		0.87%		0.69%		1.18%
Balance of loans specifically evaluated for impairment		$	4,860	$	1,363	$	12,194	$	8,974	$	na.	$	na.	$	3,813	$	na.	$	31,204
Allowance for loans specifically evaluated for impairment		$	1,058	$	48	$	545	$	999	$	na.	$	na.	$	-	$	na.	$	2,650
Specific allowance to specific loans ratio			21.77%		3.52%		4.47%		11.13%		na.		na.		na.		na.		8.49%
Balance of loans collectively evaluated		$	380,592	$	202,368	$	656,737	$	609,872	$	36	$	428,531	$	725,045	$	130,321	$	3,133,502
Allowance for loans collectively evaluated		$	4,571	$	3,401	$	9,505	$	6,260	$	9	$	3,867	$	6,310	$	902	$	34,825
Collective allowance to collective loans ratio			1.20%		1.68%		1.45%		1.03%		25.02%		0.90%		0.87%		0.00%		1.11%

		For the Year Ended December 31,2014
				Commercial Real Estate										Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner						Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	6,308	$	3,754	$	9,263	$	6,308	$	16	$	4,142	$	7,819	$	1,156	$	38,766
Provision (credit)			(1,204)		1,042		486		1,094		(7)		119		(1,385)		(308)		(163)
Charge-offs			(729)		(529)		(3)		(265)		-		(834)		(323)		(4)		(2,687)
Recoveries			1,477		-		38		6		-		165		121		79		1,886
	Net charge-offs		748		(529)		35		(259)		-		(669)		(202)		75		(801)
Balance at end of period		$	5,852	$	4,267	$	9,784	$	7,143	$	9	$	3,592	$	6,232	$	923	$	37,802
Total loans and leases		$	390,781	$	205,124	$	640,193	$	611,061	$	54	$	425,552	$	717,886	$	136,741	$	3,127,392
Allowance for loans and leases to total loans and leases ratio			1.50%		2.08%		1.53%		1.17%		16.80%		0.84%		0.87%		0.67%		1.21%
Balance of loans specifically evaluated for impairment		$	3,894	$	2,464	$	10,279	$	8,941	$	na.	$	na.	$	3,535	$	306	$	29,419
Allowance for loans specifically evaluated for impairment		$	788	$	741	$	541	$	824	$	na.	$	na.	$	-	$	-	$	2,894
Specific allowance to specific loans ratio			20.24%		30.07%		5.26%		9.22%		na.		na.		na.		na.		9.84%
Balance of loans collectively evaluated		$	386,887	$	202,660	$	629,914	$	602,120	$	54	$	425,552	$	714,351	$	136,435	$	3,097,973
Allowance for loans collectively evaluated		$	5,064	$	3,526	$	9,243	$	6,319	$	9	$	3,592	$	6,232	$	923	$	34,908
Collective allowance to collective loans ratio			1.31%		1.74%		1.47%		1.05%		16.80%		0.84%		0.87%		0.68%		1.13%

The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended:

(In thousands)		March 31, 2015		December 31, 2014
Impaired loans with a specific allowance		$	10,587	$	11,411
Impaired loans without a specific allowance			20,617		18,008
	Total impaired loans	$	31,204	$	29,419
Allowance for loan and lease losses related to impaired loans		$	2,650	$	2,894
Allowance for loan and lease losses related to loans collectively evaluated			34,825		34,908
	Total allowance for loan and lease losses	$	37,475	$	37,802
Average impaired loans for the period		$	30,312	$	34,331
Contractual interest income due on impaired loans during the period		$	698	$	2,339
Interest income on impaired loans recognized on a cash basis		$	190	$	773
Interest income on impaired loans recognized on an accrual basis		$	66	$	280

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated:

			March 31, 2015
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	1,459	$	48	$	2,328	$	5,138	$	-	$	8,973
		Restructured accruing		675		-		-		-		-		675
		Restructured non-accruing		224		-		73		642		-		939
	Balance		$	2,358	$	48	$	2,401	$	5,780	$	-	$	10,587
	Allowance		$	1,058	$	48	$	545	$	999	$	-	$	2,650
Impaired loans without a specific allowance
		Non-accruing	$	1,126	$	563	$	7,682	$	1,731	$	-	$	11,102
		Restructured accruing		19		-		2,111		-		2,641		4,771
		Restructured non-accruing		1,357		752		-		1,463		1,172		4,744
	Balance		$	2,502	$	1,315	$	9,793	$	3,194	$	3,813	$	20,617
Total impaired loans
		Non-accruing	$	2,585	$	611	$	10,010	$	6,869	$	-	$	20,075
		Restructured accruing		694		-		2,111		-		2,641		5,446
		Restructured non-accruing		1,581		752		73		2,105		1,172		5,683
	Balance		$	4,860	$	1,363	$	12,194	$	8,974	$	3,813	$	31,204
Unpaid principal balance in total impaired loans			$	6,354	$	6,662	$	16,851	$	10,808	$	4,117	$	44,792

	March 31, 2015
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	4,377	$	1,914	$	11,237	$	8,958	$	3,827	$	30,312
Contractual interest income due on impaired loans during the period	$	135	$	87	$	220	$	199	$	57
Interest income on impaired loans recognized on a cash basis	$	54	$	-	$	11	$	103	$	22
Interest income on impaired loans recognized on an accrual basis	$	14	$	-	$	27	$	-	$	25

			December 31, 2014
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	473	$	1,330	$	2,288	$	5,013	$	-	$	9,104
		Restructured accruing		687		-		-		-		-		687
		Restructured non-accruing		308		-		76		1,236		-		1,620
	Balance		$	1,468	$	1,330	$	2,364	$	6,249	$	-	$	11,411
	Allowance		$	788	$	741	$	541	$	824	$	-	$	2,894
Impaired loans without a specific allowance
		Non-accruing	$	1,115	$	-	$	5,792	$	1,769	$	-	$	8,676
		Restructured accruing		23		-		2,123		-		2,664		4,810
		Restructured non-accruing		1,288		1,134		-		923		1,177		4,522
	Balance		$	2,426	$	1,134	$	7,915	$	2,692	$	3,841	$	18,008
Total impaired loans
		Non-accruing	$	1,588	$	1,330	$	8,080	$	6,782	$	-	$	17,780
		Restructured accruing		710		-		2,123		-		2,664		5,497
		Restructured non-accruing		1,596		1,134		76		2,159		1,177		6,142
	Balance		$	3,894	$	2,464	$	10,279	$	8,941	$	3,841	$	29,419
Unpaid principal balance in total impaired loans			$	5,360	$	7,044	$	14,926	$	10,729	$	4,126	$	42,185

	December 31, 2014
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	5,308	$	3,651	$	9,327	$	8,963	$	7,082	$	34,331
Contractual interest income due on impaired loans during the period	$	311	$	352	$	730	$	859	$	87
Interest income on impaired loans recognized on a cash basis	$	252	$	39	$	78	$	344	$	60
Interest income on impaired loans recognized on an accrual basis	$	63	$	-	$	111	$	-	$	106

Credit Quality

The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated:

		March 31, 2015
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans and leases	$	4,166	$	1,363	$	10,083	$	8,974	$	-	$	1,962	$	3,235	$	788	$	30,571
	Loans and leases 90 days past due		-		-		-		-		-		-		-		-		-
	Restructured loans and leases		694		-		2,111		-		-		-		2,641		-		5,446
Total non-performing loans and leases			4,860		1,363		12,194		8,974		-		1,962		5,876		788		36,017
	Other real estate owned		39		365		-		-		-		-		1,440		1,383		3,227
Total non-performing assets		$	4,899	$	1,728	$	12,194	$	8,974	$	-	$	1,962	$	7,316	$	2,171	$	39,244

		December 31, 2014
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans and leases	$	3,184	$	2,464	$	8,156	$	8,941	$	-	$	1,668	$	3,012	$	1,105	$	28,530
	Loans and leases 90 days past due		-		-		-		-		-		-		-		-		-
	Restructured loans and leases		710		-		2,123		-		-		-		2,664		-		5,497
Total non-performing loans and leases			3,894		2,464		10,279		8,941		-		1,668		5,676		1,105		34,027
	Other real estate owned		39		365		-		-		-		-		1,408		1,383		3,195
Total non-performing assets		$	3,933	$	2,829	$	10,279	$	8,941	$	-	$	1,668	$	7,084	$	2,488	$	37,222

			March 31, 2015
					Commercial Real Estate										Residential Real Estate
									Commercial
					Commercial		Commercial		Owner						Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
	31-60 days		$	435	$	711	$	1,352	$	1,373	$	3	$	605	$	4,604	$	-	$	9,083
	61-90 days			-		-		-		207		2		266		3,402		-		3,877
	> 90 days			-		-		-		-		-		-		-		-		-
		Total past due		435		711		1,352		1,580		5		871		8,006		-		12,960
	Non-accrual loans and leases			4,166		1,363		10,083		8,974		-		1,962		3,235		788		30,571
	Loans acquired with deteriorated credit quality			1,213		-		-		1,712		-		-		-		-		2,925
	Current loans			379,638		201,657		657,496		606,580		31		425,698		717,617		129,533		3,118,250
		Total loans and leases	$	385,452	$	203,731	$	668,931	$	618,846	$	36	$	428,531	$	728,858	$	130,321	$	3,164,706

			December 31, 2014
					Commercial Real Estate										Residential Real Estate
									Commercial
					Commercial		Commercial		Owner						Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
	31-60 days		$	759	$	-	$	2,374	$	2,658	$	11	$	797	$	3,064	$	-	$	9,663
	61-90 days			995		320		1,493		156		-		179		836		-		3,979
	> 90 days			-		-		-		-		-		-		-		-		-
		Total past due		1,754		320		3,867		2,814		11		976		3,900		-		13,642
	Non-accrual loans and leases			3,184		2,464		8,156		8,941		-		1,668		3,012		1,105		28,530
	Loans acquired with deteriorated credit quality			1,238		-		-		1,773		-		-		-		-		3,011
	Current loans			384,605		202,340		628,170		597,533		43		422,908		710,974		135,636		3,082,209
		Total loans and leases	$	390,781	$	205,124	$	640,193	$	611,061	$	54	$	425,552	$	717,886	$	136,741	$	3,127,392

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated:

		March 31, 2015
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	360,219	$	201,375	$	654,005	$	591,308	$	1,806,907
	Special Mention		8,212		698		1,857		6,431		17,198
	Substandard		17,021		1,658		13,069		21,107		52,855
	Doubtful		-		-		-		-		-
Total		$	385,452	$	203,731	$	668,931	$	618,846	$	1,876,960

		Decemeber 31, 2014
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	366,367	$	201,642	$	621,511	$	581,575	$	1,771,095
	Special Mention		8,835		698		3,931		7,669		21,133
	Substandard		15,579		2,784		14,751		21,817		54,931
	Doubtful		-		-		-		-		-
Total		$	390,781	$	205,124	$	640,193	$	611,061	$	1,847,159

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

			March 31, 2015
							Residential Real Estate
							Residential		Residential
(In thousands)			Leasing		Consumer		Mortgage		Construction		Total
	Performing		$	36	$	426,569	$	722,982	$	129,533	$	1,279,120
	Non-performing:
		90 days past due		-		-		-		-		-
		Non-accruing		-		1,962		3,235		788		5,985
		Restructured loans and leases		-		-		2,641		-		2,641
Total			$	36	$	428,531	$	728,858	$	130,321	$	1,287,746

			December 31, 2014
							Residential Real Estate
							Residential		Residential
(In thousands)			Leasing		Consumer		Mortgage		Construction		Total
	Performing		$	54	$	423,884	$	712,210	$	135,636	$	1,271,784
	Non-performing:
		90 days past due		-		-		-		-		-
		Non-accruing		-		1,668		3,012		1,105		5,785
		Restructured loans and leases		-		-		2,664		-		2,664
Total			$	54	$	425,552	$	717,886	$	136,741	$	1,280,233

During the three months ended March 31, 2015, the Company restructured a $0.6 million loan. No modifications resulted in the reduction of the principal in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans restructured during 2015have specific reserves of $0.2 million at March 31, 2015. For the year ended December 31, 2014, the Company restructured $1.6 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2014 had specific reserves of $0.1 million at December 31, 2014. Commitments to lend additional funds on loans that have been restructured at March 31, 2015 and December 31, 2014 amounted to $0.1 million and $0.1 million, respectively.

The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

		For the Three Months Ended March 31, 2015
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	-	$	-	$	-	$	-	$	-	$	-
	Restructured non-accruing		-		-		-		642		-		642
Balance		$	-	$	-	$	-	$	642	$	-	$	642
Specific allowance		$	-	$	-	$	-	$	152	$	-	$	152
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

		For the Year Ended December 31, 2014
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	75	$	-	$	1,284	$	-	$	-	$	1,359
	Restructured non-accruing		92		192		-		-		-		284
Balance		$	167	$	192	$	1,284	$	-	$	-	$	1,643
Specific allowance		$	99	$	-	$	-	$	-	$	-	$	99
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

Other Real Estate Owned

Other real estate owned totaled $3.2 million and $3.2 million at March 31, 2015 and December 31, 2014, respectively.