Loans Receivable (Tables)

9 Months Ended

Sep. 30, 2014

Loans Receivable [Abstract]

Loans receivable

Loans receivable, included unfunded commitments consist of the following:

	September 30			December 31
	2014			2013
	(dollars in thousands)
Residential mortgage, total	$	295,656		$	258,919
Individually evaluated for impairment		28,959			35,064
Collectively evaluated for impairment		266,697			223,855
Construction, land acquisition and development, total		79,105			75,539
Individually evaluated for impairment		916			2,808
Collectively evaluated for impairment		78,189			72,731
Land, total		31,965			34,429
Individually evaluated for impairment		2,061			1,263
Collectively evaluated for impairment		29,904			33,166
Lines of credit, total		17,968			21,598
Individually evaluated for impairment		454			304
Collectively evaluated for impairment		17,514			21,294
Commercial real estate, total		205,275			220,160
Individually evaluated for impairment		6,174			4,672
Collectively evaluated for impairment		199,101			215,488
Commercial non-real estate, total		9,358			8,583
Individually evaluated for impairment		303			-
Collectively evaluated for impairment		9,055			8,583
Home equity, total		28,966			30,339
Individually evaluated for impairment		1,638			1,777
Collectively evaluated for impairment		27,328			28,562
Consumer, total		1,061			1,185
Individually evaluated for impairment		13			-
Collectively evaluated for impairment		1,048			1,185
Total Loans		669,354			650,752
Less
Unfunded commitments included above		(36,854	)		(34,069	)
	$	632,500		$	616,683
Individually evaluated for impairment		40,518			45,888
Collectively evaluated for impairment		591,982			570,795
		632,500			616,683
Allowance for loan losses		(9,282	)		(11,739	)
Deferred loan origination fees and costs, net		(3,158	)		(2,131	)
Net Loans	$	620,060		$	602,813

Allowance for loan losses

The following is a summary of the allowance for loan losses for the nine and three month periods ended September 30, 2014 (dollars in thousands):

	Total			Residential Mortgage			Construction Acquisition Development			Land			Lines of Credit			Commercial  Real Estate			Commercial Non-Real Estate			Home Equity			Consumer
Nine months ended September 30, 2014
Beginning Balance	$	11,739		$	6,291		$	414		$	1,346		$	36		$	2,512		$	135		$	1,003		$	2
Provision		431			(1,213	)		8			(842	)		1,282			58			1,300			(157	)		(5	)
Charge-offs		(3,680	)		(704	)		(62	)		-			(1,313	)		(92	)		(1,311	)		(198	)		-
Recoveries		792			257			-			349			-			25			156			-			5
Ending Balance	$	9,282		$	4,631		$	360		$	853		$	5		$	2,503		$	280		$	648		$	2
Ending balance related to:
Loans individually evaluated for impairment	$	2,464		$	2,160		$	-		$	56		$	-		$	229		$	17		$	-		$	2
Loans collectively evaluated for impairment	$	6,818		$	2,471		$	360		$	797		$	5		$	2,274		$	263		$	648		$	-
Three months ended September 30, 2014
Beginning Balance	$	10,828		$	5,167		$	480		$	987		$	621		$	2,514		$	324		$	731		$	4
Provision		250			(459	)		(120	)		(134	)		697			81			275			(83	)		(7	)
Charge-offs		(1,858	)		(111	)		-			-			(1,313	)		(92	)		(342	)		-			-
Recoveries		62			34			-			-			-			-			23			-			5
Ending Balance	$	9,282		$	4,631		$	360		$	853		$	5		$	2,503		$	280		$	648		$	2

The following is a summary of the allowance for loan losses for the nine and three month periods ended September 30, 2013 (dollars in thousands):

	Total			Residential Mortgage			Construction Acquisition Development			Land			Lines of Credit			Commercial Real Estate			Commercial Non-Real Estate			Home Equity			Consumer
Nine months ended September 30, 2013
Beginning Balance	$	17,478		$	8,418		$	2,120		$	2,245		$	87		$	3,295		$	46		$	1,254		$	13
Provision		12,820			243			687			3,045			387			8,254			186			(16	)		34
Charge-offs		(19,115	)		(2,821	)		(2,338	)		(4,506	)		(485	)		(8,246	)		(109	)		(564	)		(46	)
Recoveries		1,087			51			10			947			20			54			5			-			-
Ending Balance	$	12,270		$	5,891		$	479		$	1,731		$	9		$	3,357		$	128		$	674		$	1
Ending balance related to:
Loans individually evaluated for impairment	$	2,767		$	2,450		$	-		$	71		$	-		$	246		$	-		$	-		$	-
Loans collectively evaluated for impairment	$	9,503		$	3,441		$	479		$	1,660		$	9		$	3,111		$	128		$	674		$	1
Three months ended September 30, 2013
Beginning Balance	$	12,765		$	6,032		$	1,203		$	1,582		$	51		$	2,970		$	117		$	810		$	-
Provision		12,200			884			450			2,104			436			8,130			8			187			1
Charge-offs		(13,680	)		(1,034	)		(1,174	)		(2,902	)		(485	)		(7,762	)		-			(323	)		-
Recoveries		985			9			-			947			7			19			3			-			-
Ending Balance	$	12,270		$	5,891		$	479		$	1,731		$	9		$	3,357		$	128		$	674		$	1

Impaired loans

The following tables summarize impaired loans at September 30, 2014 and December 31, 2013 (dollars in thousands):

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
September 30, 2014
Residential mortgage	$	14,162	$	2,160	$	14,797	$	28,959	$	29,781
Construction, acquisition and development		-		-		916		916		915
Land		357		56		1,704		2,061		2,103
Lines of credit		-		-		454		454		545
Commercial real estate		2,543		229		3,631		6,174		6,398
Commercial non-real estate		282		17		21		303		812
Home equity		-		-		1,638		1,638		2,298
Consumer		13		2		-		13		13
Total impaired loans	$	17,357	$	2,464	$	23,161	$	40,518	$	42,866

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
December 31, 2013
Residential mortgage	$	16,910	$	2,749	$	18,154	$	35,064	$	39,149
Construction, acquisition and development		-		-		2,808		2,808		3,453
Land		363		67		900		1,263		1,380
Lines of credit		-		-		304		304		395
Commercial real estate		2,092		241		2,580		4,672		4,685
Commercial non-real estate		-		-		-		-		-
Home equity		491		246		1,286		1,777		2,239
Consumer		-		-		-		-		-
Total impaired loans	$	19,856	$	3,303	$	26,032	$	45,888	$	51,301

The following tables summarize average impaired loans for the nine month and three month periods ended September 30, 2014 and 2013 (dollars in thousands):

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance				Total Impaired Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Nine months ended September 30, 2014
Residential mortgage	$	14,361	$	455	$	17,567	$	517	$	31,928	$	972
Construction, acquisition and development		-		-		2,044		45		2,044		45
Land		360		10		1,802		65		2,162		75
Lines of credit		799		15		612		34		1,411		49
Commercial real estate		2,043		92		4,701		171		6,744		263
Commercial non-real estate		252		4		542		23		794		27
Home equity		-		-		1,678		44		1,678		44
Consumer		13		-		-		-		13		-
Total impaired loans	$	17,828	$	576	$	28,945	$	899	$	46,774	$	1,475

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance				Total Impaired Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three months ended September 30, 2014
Residential mortgage	$	14,188	$	147	$	14,846	$	139	$	29,034	$	286
Construction, acquisition and development		-		-		1,191		11		1,191		11
Land		358		3		1,725		24		2,083		27
Lines of credit		-		-		454		7		454		7
Commercial real estate		2,549		34		3,709		44		6,258		78
Commercial non-real estate		285		1		7		10		292		11
Home equity		-		-		1,639		15		1,639		15
Consumer		13		-		-		-		13		-
Total impaired loans	$	17,393	$	185	$	23,571	$	250	$	40,964	$	435

The following tables summarize average impaired loans for the nine and three month periods ended September 30, 2013 (dollars in thousands):

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance				Total Impaired Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Nine months ended September 30, 2013
Residential mortgage	$	16,681	$	551	$	31,600	$	884	$	48,281	$	1,435
Construction, acquisition and development		1,267		44		5,649		137		6,916		181
Land		2,462		55		1,645		94		4,107		149
Lines of credit		-		-		431		22		431		22
Commercial real estate		6,898		245		11,145		261		18,043		506
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		2,504		42		2,504		42
Consumer		-		-		-		-		-		-
Total impaired loans	$	27,308	$	895	$	52,974	$	1,440	$	80,282	$	2,335

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance				Total Impaired Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three months ended September 30, 2013
Residential mortgage	$	16,608	$	168	$	30,968	$	571	$	47,576	$	739
Construction, acquisition and development		816		11		4,610		32		5,426		43
Land		1,763		16		1,415		22		3,178		38
Lines of credit		-		-		381		7		381		7
Commercial real estate		5,517		81		9,720		100		15,237		181
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		2,406		8		2,406		8
Consumer		-		-		-		-		-		-
Total impaired loans	$	24,704	$	276	$	49,500	$	740	$	74,204	$	1,016

Classes of the loan portfolio

The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of September 30, 2014 and December 31, 2013.  Included in the Pass column were $36,854,000 and $34,069,000 in unfunded commitments at September 30, 2014 and December 31, 2013, respectively (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2014
Residential mortgage	$	279,031	$	2,976	$	13,649	$	-	$	295,656
Construction, acquisition and development		77,487		-		1,618		-		79,105
Land		31,822		-		143		-		31,965
Lines of credit		14,850		2,479		639		-		17,968
Commercial real estate		189,441		5,758		10,076		-		205,275
Commercial non-real estate		9,096		-		262		-		9,358
Home equity		27,464		-		1,502		-		28,966
Consumer		1,061		-		-		-		1,061
Total loans	$	630,252	$	11,213	$	27,889	$	-	$	669,354

	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2013
Residential mortgage	$	240,325	$	3,454	$	15,140	$	-	$	258,919
Construction, acquisition and development		72,104		250		3,185		-		75,539
Land		33,804		480		145		-		34,429
Lines of credit		19,152		568		1,878		-		21,598
Commercial real estate		205,063		6,775		8,322		-		220,160
Commercial non-real estate		8,583		-		-		-		8,583
Home equity		28,447		115		1,777		-		30,339
Consumer		299		-		886		-		1,185
Total loans	$	607,777	$	11,642	$	31,333	$	-	$	650,752

Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of September 30, 2014 and December 31, 2013 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		Non- Accrual
September 30, 2014
Residential mortgage	$	2,517	$	470	$	3,654	$	6,641	$	289,015	$	295,656	$	5,273
Construction, acquisition and development		-		-		-		-		79,105		79,105		113
Land		-		-		6		6		31,959		31,965		829
Lines of credit		-		-		-		-		17,968		17,968		454
Commercial real estate		250		1,138		410		1,798		203,477		205,275		1,033
Commercial non-real estate		-		-		-		-		9,358		9,358		1,806
Home equity		821		-		1,115		1,936		27,030		28,966		1,290
Consumer		-		-		-		-		1,061		1,061		-
Total loans	$	3,588	$	1,608	$	5,185	$	10,381	$	658,973	$	669,354	$	10,798

	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		Non- Accrual
December 31, 2013
Residential mortgage	$	3,644	$	4,471	$	5,506	$	13,621	$	245,298	$	258,919	$	6,802
Construction, acquisition and development		-		-		814		814		74,725		75,539		814
Land		29		-		183		212		34,217		34,429		183
Lines of credit		419		-		66		485		21,113		21,598		304
Commercial real estate		724		28		851		1,603		218,557		220,160		1,155
Commercial non-real estate		1		-		-		1		8,582		8,583		-
Home equity		1,199		138		607		1,944		28,395		30,339		1,777
Consumer		1		-		-		1		1,184		1,185		-
Total loans	$	6,017	$	4,637	$	8,027	$	18,681	$	632,071	$	650,752	$	11,035

Newly restructured loans during the period

The following tables present loans that were restructured during the nine and three months ended September 30, 2014 (dollars in thousands):

	Nine months ended September 30, 2014
	Rate Modification		Contracts		Combination Modifications		Contracts		Total		Total Contracts
Pre-Modification Outstanding Recorded Investment:
Residential mortgage		-		-	$	598		2	$	598		2
Construction, acquisition and development		-		-		-		-		-		-
Land		-		-		-		-		-		-
Lines of credit		-		-		-		-		-		-
Commercial real estate		-		-		696		8		696		8
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		-		-		-		-
Consumer		-		-		20		1		20		1
Total loans		-		-	$	1,314		11	$	1,314		11
Post-Modification Outstanding Recorded Investment:
Residential mortgage		-		-	$	446		2	$	446		2
Construction, acquisition and development		-		-		-		-		-		-
Land		-		-		-		-		-		-
Lines of credit		-		-		-		-		-		-
Commercial real estate		-		-		638		8		638		8
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		-		-		-		-
Consumer		-		-		13		1		13		1
Total loans		-		-	$	1,097		11	$	1,097		11

Three months ended September 30, 2014

Rate Modification

Contracts

Combination Modifications

Contracts

Total

Total Contracts

Pre-Modification Outstanding Recorded Investment:

Residential mortgage

-

-

-

-

-

-

Construction, acquisition and development

-

-

-

-

-

-

Land

-

-

-

-

-

-

Lines of credit

-

-

-

-

-

-

Commercial real estate

-

-

-

-

-

-

Commercial non-real estate

-

-

-

-

-

-

Home equity

-

-

-

-

-

-

Consumer

-

-

-

-

-

-

Total loans

$

-

-

$

-

-

$

-

-

Post-Modification Outstanding Recorded Investment:

Residential mortgage

-

-

-

-

-

-

Construction, acquisition and development

-

-

-

-

-

-

Land

-

-

-

-

-

-

Lines of credit

-

-

-

-

-

-

Commercial real estate

-

-

-

-

-

-

Commercial non-real estate

-

-

-

-

-

-

Home equity

-

-

-

-

-

-

Consumer

-

-

-

-

-

-

Total loans

$

-

-

$

-

-

$

-

-

In addition, the TDR is evaluated for impairment.  A determination is made as to whether an impaired TDR is cash flow or collateral dependent.  If the TDR is cash flow dependent, an allowance for loan losses specific reserve is calculated based on the difference in net present value of future cash flows between the original and modified loan terms.  If the TDR is collateral dependent, the collateral securing the TDR, which is always real estate, is evaluated for impairment based on either an appraisal or broker price opinion.  If a TDR’s collateral valuation is less than its current loan balance, the TDR is written down for accounting purposes by the amount of the difference between the current loan balance and the collateral value.  If the borrower performs under the terms of the modification, generally six consecutive months, and the ultimate collectability of all amounts contractually due under the modified terms is not in doubt, the loan is returned to accrual status.  There are no loans that have been modified due to the financial difficulties of the borrower that are not considered a TDR.

The following tables present loans that were restructured that occurred during the nine and three months ended September 30, 2013 (dollars in thousands):

	Nine months ended September 30, 2013
	Rate Modification		Contracts		Combination Modifications		Contracts		Total		Total Contracts
Pre-Modification Outstanding Recorded Investment:
Residential mortgage	$	990		1	$	4,667		7	$	5,657		8
Construction, acquisition and development		-		-		-		-		-		-
Land		-		-		-		-		-		-
Lines of credit		-		-		-		-		-		-
Commercial real estate		-		-		1,250		1		1,250		1
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total loans	$	990		1	$	5,917		8	$	6,907		9
Post-Modification Outstanding Recorded Investment:
Residential mortgage	$	818		1	$	3,672		7	$	4,490		8
Construction, acquisition and development		-		-		-		-		-		-
Land		-		-		-		-		-		-
Lines of credit		-		-		-		-		-		-
Commercial real estate		-		-		1,239		1		1,239		1
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total loans	$	818		1	$	4,911		8	$	5,729		9

	Three months ended September 30, 2013
	Rate Modification		Contracts		Combination Modifications		Contracts		Total		Total Contracts
Pre-Modification Outstanding Recorded Investment:
Residential mortgage	$	-		-	$	1,409		1	$	4,667		1
Construction, acquisition and development		-		-		-		-		-		-
Land		-		-		-		-		-		-
Lines of credit		-		-		-		-		-		-
Commercial real estate		-		-		1,250		1		1,250		1
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total loans	$	-		-	$	2,659		2	$	2,659		2
Post-Modification Outstanding Recorded Investment:
Residential mortgage	$	-		-	$	1,158		1	$	1,158		1
Construction, acquisition and development		-		-		-		-		-		-
Land		-		-		-		-		-		-
Lines of credit		-		-		-		-		-		-
Commercial real estate		-		-		1,239		1		1,239		1
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total loans	$	-		-	$	2,397		2	$	2,397		2

Methods used to account for interest on TDRs

Interest on TDRs was accounted for under the following methods as of September 30, 2014 and December 31, 2013 (dollars in thousands):

	Number of Contracts		Accrual Status		Number of Contracts		Non- Accrual Status		Total Number of Contracts		Total Modifications
September 30, 2014
Residential mortgage		58	$	23,218		5	$	1,612		63	$	24,830
Construction, acquisition and development		2		803		-		-		2		803
Land		5		997		1		6		6		1,003
Lines of credit		-		-		-		-		-		-
Commercial real estate		6		3,642		1		109		7		3,751
Commercial non-real estate		5		155		2		126		7		281
Home equity		-		-		-		-		-		-
Consumer		1		13		-		-		1		13
Total loans		77	$	28,828		9	$	1,853		86	$	30,681
December 31, 2013
Residential mortgage		66	$	28,966		5	$	856		71	$	29,822
Construction, acquisition and development		3		1,994		1		705		4		2,699
Land		5		1,080		2		6		7		1,086
Lines of credit		-		-		-		-		-		-
Commercial real estate		5		3,199		1		112		6		3,311
Commercial non-real estate		-		-		-		-		-		-
Home equity		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total loans		79	$	35,239		9	$	1,679		88	$	36,918

Financial instruments whose contract amounts represents credit risk

Unless otherwise noted, the Bank requires collateral or other security to support financial instruments with off-balance-sheet credit risk (dollars in thousands).

Financial Instruments Whose Contract	Contract Amount At
Amounts Represent Credit Risk	September 30, 2014		December 31, 2013
Standby letters of credit	$	12,214	$	14,719
Home equity lines of credit		8,732		12,345
Unadvanced construction commitments		36,955		34,023
Mortgage loan commitments		4,104		4,193
Lines of credit		20,985		30,965
Loans sold with limited repurchase provisions		20,531		28,134