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Loans and the Allowance for Loan Losses (Tables)
 3 Months Ended
Mar. 31, 2014
Loans and the Allowance for Loan Losses [Abstract]  
Schedule of Accounts, Notes, Loans and Financing Receivable
The following table sets forth the composition of the Corporation’s loan portfolio, including net deferred fees and costs, at March 31, 2014 and December 31, 2013:
 
 
 
March
31,
 
December
31,
 
 
 
2014
 
2013
 
 
 
(in thousands)
 
Commercial and industrial
 
$
249,365
 
$
229,688
 
Commercial real estate
 
 
548,133
 
 
536,539
 
Construction
 
 
39,308
 
 
42,722
 
Residential mortgage
 
 
149,653
 
 
150,571
 
Installment
 
 
747
 
 
1,084
 
Subtotal
 
 
987,206
 
 
960,604
 
Net deferred loan costs
 
 
323
 
 
339
 
Total loans
 
$
987,529
 
$
960,943
 
Loans Receivable on Non-Accrual Status
The following table presents information about loan receivables on non-accrual status at March 31, 2014 and December 31, 2013:
 
Loans Receivable on Non-Accrual Status
 
 
 
 
 
 
 
 
 
March 31,
2014
 
December 31,
2013
 
 
 
(in thousands)
 
Commercial and industrial
 
$
404
 
$
753
 
Commercial real estate
 
 
1,413
 
 
744
 
Residential mortgage
 
 
1,606
 
 
1,640
 
Total loans receivable on non-accrual status
 
$
3,423
 
$
3,137
 
Credit Quality Indicators
The following table presents information, excluding net deferred costs, about the Corporation’s loan credit quality at March 31, 2014 and December 31, 2013:
 
Credit Quality Indicators
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2014
 
 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Commercial and industrial
 
$
246,130
 
$
1,796
 
$
1,112
 
$
327
 
$
249,365
 
Commercial real estate
 
 
520,626
 
 
17,419
 
 
10,088
 
 
—
 
 
548,133
 
Construction
 
 
38,078
 
 
—
 
 
1,230
 
 
—
 
 
39,308
 
Residential mortgage
 
 
146,265
 
 
970
 
 
2,418
 
 
—
 
 
149,653
 
Installment
 
 
632
 
 
—
 
 
115
 
 
—
 
 
747
 
Total loans
 
$
951,731
 
$
20,185
 
$
14,963
 
$
327
 
$
987,206
 
 
 
 
December 31, 2013
 
 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Commercial and industrial
 
$
226,013
 
$
1,719
 
$
1,284
 
$
672
 
$
229,688
 
Commercial real estate
 
 
509,679
 
 
14,544
 
 
12,316
 
 
—
 
 
536,539
 
Construction
 
 
41,492
 
 
—
 
 
1,230
 
 
—
 
 
42,722
 
Residential mortgage
 
 
147,379
 
 
978
 
 
2,214
 
 
—
 
 
150,571
 
Installment
 
 
964
 
 
—
 
 
120
 
 
—
 
 
1,084
 
Total loans
 
$
925,527
 
$
17,241
 
$
17,164
 
$
672
 
$
960,604
 
Analysis of Impaired Loans
The following table provides an analysis of the impaired loans at March 31, 2014 and December 31, 2013:
 
 
 
March 31, 2014
 
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
No Related Allowance Recorded
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
642
 
$
975
 
$
—
 
Commercial real estate
 
 
8,244
 
 
8,545
 
 
—
 
Residential mortgage
 
 
2,112
 
 
2,254
 
 
—
 
Installment
 
 
115
 
 
115
 
 
—
 
Total
 
$
11,113
 
$
11,889
 
$
—
 
 
 
 
 
 
 
 
 
 
 
 
With An Allowance Recorded
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
$
4,333
 
$
4,333
 
$
227
 
Total
 
$
4,333
 
$
4,333
 
$
227
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
642
 
$
975
 
$
—
 
Commercial real estate
 
 
12,577
 
 
12,878
 
 
227
 
Residential mortgage
 
 
2,112
 
 
2,254
 
 
—
 
Installment
 
 
115
 
 
115
 
 
—
 
Total (including related allowance)
 
$
15,446
 
$
16,222
 
$
227
 
 
 
 
December 31, 2013
 
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
 
 
(in thousands)
 
No Related Allowance Recorded
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
449
 
$
449
 
$
—
 
Commercial real estate
 
 
10,482
 
 
10,783
 
 
—
 
Residential mortgage
 
 
1,858
 
 
2,000
 
 
—
 
Installment
 
 
120
 
 
120
 
 
—
 
Total
 
$
12,909
 
$
13,352
 
$
—
 
 
 
 
 
 
 
 
 
 
 
 
With An Allowance Recorded
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
672
 
$
672
 
$
300
 
Commercial real estate
 
 
4,344
 
 
4,344
 
 
115
 
Total
 
$
5,016
 
$
5,016
 
$
415
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
1,121
 
$
1,121
 
$
300
 
Commercial real estate
 
 
14,826
 
 
15,127
 
 
115
 
Residential mortgage
 
 
1,858
 
 
2,000
 
 
—
 
Installment
 
 
120
 
 
120
 
 
—
 
Total (including related allowance)
 
$
17,925
 
$
18,368
 
$
415
 
 
The following table provides an analysis related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2014 and 2013.
 
 
 
Three Months Ended March 31,
 
 
 
2014
 
2013
 
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
 Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans with no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
659
 
$
14
 
$
726
 
$
10
 
Commercial real estate
 
 
8,278
 
 
78
 
 
9,086
 
 
119
 
Residential mortgage
 
 
2,270
 
 
19
 
 
420
 
 
5
 
Installment
 
 
117
 
 
1
 
 
—
 
 
—
 
Total
 
$
11,324
 
$
112
 
$
10,232
 
$
134
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impaired loans with an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
$
4,337
 
$
53
 
$
4,180
 
$
34
 
Residential mortgage
 
 
—
 
 
—
 
 
1,249
 
 
10
 
Total
 
$
4,337
 
$
53
 
$
5,429
 
$
44
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total impaired loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
659
 
$
14
 
$
726
 
$
10
 
Commercial real estate
 
 
12,615
 
 
131
 
 
13,266
 
 
153
 
Residential mortgage
 
 
2,270
 
 
19
 
 
1,669
 
 
15
 
Installment
 
 
117
 
 
1
 
 
—
 
 
—
 
Total
 
$
15,661
 
$
165
 
$
15,661
 
$
178
 
Aging Analysis
The following table provides an analysis of the aging of loans, excluding net deferred costs that are past due at March 31, 2014 and December 31, 2013:
 
Aging Analysis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2014
 
 
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
Greater Than
90 Days
 
Total Past
Due
 
Current
 
Total Loans
Receivable
 
Loans
Receivable > 90
Days And
Accruing
 
 
 
(in thousands)
 
Commercial and Industrial
 
$
400
 
$
94
 
$
404
 
$
898
 
$
248,467
 
$
249,365
 
$
—
 
Commercial Real Estate
 
 
2,348
 
 
5,915
 
 
1,413
 
 
9,676
 
 
538,457
 
 
548,133
 
 
—
 
Construction
 
 
—
 
 
—
 
 
—
 
 
—
 
 
39,308
 
 
39,308
 
 
—
 
Residential Mortgage
 
 
1,248
 
 
43
 
 
1,843
 
 
3,134
 
 
146,519
 
 
149,653
 
 
237
 
Installment
 
 
7
 
 
—
 
 
—
 
 
7
 
 
740
 
 
747
 
 
—
 
Total
 
$
4,003
 
$
6,052
 
$
3,660
 
$
13,715
 
$
973,491
 
$
987,206
 
$
237
 
 
 
 
December 31, 2013
 
 
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
Greater Than
90 Days
 
Total Past
Due
 
Current
 
Total Loans
Receivable
 
Loans
Receivable > 90
Days And
Accruing
 
 
 
(in thousands)
 
Commercial and Industrial
 
$
18
 
$
—
 
$
753
 
$
771
 
$
228,917
 
$
229,688
 
$
—
 
Commercial Real Estate
 
 
221
 
 
—
 
 
744
 
 
965
 
 
535,574
 
 
536,539
 
 
—
 
Construction
 
 
—
 
 
—
 
 
—
 
 
—
 
 
42,722
 
 
42,722
 
 
—
 
Residential Mortgage
 
 
990
 
 
258
 
 
1,640
 
 
2,888
 
 
147,683
 
 
150,571
 
 
—
 
Installment
 
 
5
 
 
—
 
 
—
 
 
5
 
 
1,079
 
 
1,084
 
 
—
 
Total
 
$
1,234
 
$
258
 
$
3,137
 
$
4,629
 
$
955,975
 
$
960,604
 
$
—
Allowance for Loan and Lease Losses
The following table details the amount of loans receivable that are evaluated individually, and collectively, for impairment (excluding net deferred costs), and the related portion of the allowance for loan loss that is allocated to each loan portfolio segment:
 
Allowance for loan and lease losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2014
 
 
 
C & I
 
Comm
R/E
 
Construction
 
Res Mtge
 
Installment
 
Unallocated
 
Total
 
 
 
(in thousands)
 
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
—
 
$
227
 
$
—
 
$
—
 
$
—
 
$
—
 
$
227
 
Collectively evaluated for impairment
 
 
2,225
 
 
5,157
 
 
434
 
 
1,004
 
 
79
 
 
1,507
 
 
10,406
 
Total
 
$
2,225
 
$
5,384
 
$
434
 
$
1,004
 
$
79
 
$
1,507
 
$
10,633
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans Receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
642
 
$
12,577
 
$
—
 
$
2,112
 
$
115
 
$
—
 
$
15,446
 
Collectively evaluated for impairment
 
 
246,657
 
 
520,729
 
 
38,078
 
 
134,175
 
 
511
 
 
—
 
 
940,150
 
Loans acquired with discounts related to credit quality
 
 
2,066
 
 
14,827
 
 
1,230
 
 
13,366
 
 
121
 
 
—
 
 
31,610
 
Total
 
$
249,365
 
$
548,133
 
$
39,308
 
$
149,653
 
$
747
 
$
—
 
$
987,206
 
 
Allowance for loan and lease losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
C & I
 
Comm
R/E
 
Construction
 
Res Mtge
 
Installment
 
Unallocated
 
Total
 
 
 
(in thousands)
 
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
300
 
$
115
 
$
—
 
$
—
 
$
—
 
$
—
 
$
415
 
Collectively evaluated for impairment
 
 
1,398
 
 
5,631
 
 
362
 
 
990
 
 
146
 
 
1,391
 
 
9,918
 
Total
 
$
1,698
 
$
5,746
 
$
362
 
$
990
 
$
146
 
$
1,391
 
$
10,333
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans Receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
1,121
 
$
14,826
 
$
—
 
$
1,858
 
$
120
 
$
—
 
$
17,925
 
Collectively evaluated for impairment
 
 
226,450
 
 
505,361
 
 
41,493
 
 
135,031
 
 
839
 
 
—
 
 
909,174
 
Loans acquired with discounts related to credit quality
 
 
2,117
 
 
16,352
 
 
1,229
 
 
13,682
 
 
125
 
 
—
 
 
33,505
 
Total
 
$
229,688
 
$
536,539
 
$
42,722
 
$
150,571
 
$
1,084
 
$
—
 
$
960,604
 
 
The Corporation’s allowance for loan losses is analyzed quarterly. Many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other factors inherent in the extension of credit. There have been no material changes to the allowance for loan loss methodology as disclosed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.
 
 A summary of the activity in the allowance for loan losses is as follows:
 
 
 
Three Months Ended March 31, 2014
 
 
 
C & I
 
Comm
R/E
 
Construction
 
Res Mtge
 
Installment
 
Unallocated
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Balance at January 1,
 
$
1,698
 
$
5,746
 
$
362
 
$
990
 
$
146
 
$
1,391
 
$
10,333
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge offs
 
 
(333)
 
 
—
 
 
—
 
 
—
 
 
(3)
 
 
—
 
 
(336)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recoveries
 
 
—
 
 
—
 
 
—
 
 
10
 
 
1
 
 
—
 
 
11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision
 
 
860
 
 
(362)
 
 
72
 
 
4
 
 
(65)
 
 
116
 
 
625
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31,
 
$
2,225
 
$
5,384
 
$
434
 
$
1,004
 
$
79
 
$
1,507
 
$
10,633
 
 
 
 
Three Months Ended March 31, 2013
 
 
 
C & I
 
Comm
R/E
 
Construction
 
Res Mtge
 
Installment
 
Unallocated
 
Total
 
 
 
(in thousands)
 
Balance at January 1,
 
$
2,424
 
$
5,323
 
$
313
 
$
1,532
 
$
113
 
$
532
 
$
10,237
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge offs
 
 
—
 
 
—
 
 
—
 
 
—
 
 
(6)
 
 
—
 
 
(6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recoveries
 
 
—
 
 
—
 
 
—
 
 
—
 
 
1
 
 
—
 
 
1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision
 
 
(341)
 
 
30
 
 
(29)
 
 
(154)
 
 
(5)
 
 
499
 
 
—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31,
 
$
2,083
 
$
5,353
 
$
284
 
$
1,378
 
$
103
 
$
1,031
 
$
10,232