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LOANS (Tables)
 12 Months Ended
Dec. 31, 2013
LOANS [Abstract]  
Categorizes total loans
At December 31, 2013 and 2012, net loans disaggregated by class consisted of the following (in thousands):

 
 
December 31, 2013
  
December 31, 2012
 
Commercial and industrial
 
$
171,199
  
$
168,709
 
Commercial real estate
  
469,357
   
360,010
 
Multifamily
  
184,624
   
9,261
 
Real estate construction
  
6,565
   
15,469
 
Residential mortgages
  
169,552
   
146,575
 
Home equity
  
57,112
   
66,468
 
Consumer
  
10,439
   
14,288
 
Gross loans
  
1,068,848
   
780,780
 
Allowance for loan losses
  
(17,263
)
  
(17,781
)
Net loans at end of period
 
$
1,051,585
  
$
762,999
 
 
Summary of changes in the allowance for loan losses
At December 31, 2013 and 2012, the ending balance in the allowance for loan losses disaggregated by class and impairment methodology is as follows (in thousands). Also in the tables below are total loans at December 31, 2013 and 2012 disaggregated by class and impairment methodology (in thousands).

December 31, 2013
 
Commercial
and industrial
  
Commercial real estate
  
Multifamily
  
Real estate construction
  
Residential
mortgages
  
Home equity
  
Consumer
  
Unallocated
  
Total
 
Allowance for loan losses:
 
  
  
  
  
  
  
  
  
 
Ending balance: individually evaluated for impairment
 
$
41
  
$
-
  
$
-
  
$
-
  
$
709
  
$
93
  
$
102
  
$
-
  
$
945
 
Ending balance: collectively evaluated for impairment
  
2,574
   
6,626
   
2,159
   
88
   
1,754
   
652
   
139
   
2,326
   
16,318
 
Ending balance
 
$
2,615
  
$
6,626
  
$
2,159
  
$
88
  
$
2,463
  
$
745
  
$
241
  
$
2,326
  
$
17,263
 
Loan balances:
                                    
Ending balance: individually evaluated for impairment
 
$
7,754
  
$
11,821
  
$
-
  
$
-
  
$
5,049
  
$
1,082
  
$
284
  
$
-
  
$
25,990
 
Ending balance: collectively evaluated for impairment
  
163,445
   
457,536
   
184,624
   
6,565
   
164,503
   
56,030
   
10,155
   
-
   
1,042,858
 
Ending balance
 
$
171,199
  
$
469,357
  
$
184,624
  
$
6,565
  
$
169,552
  
$
57,112
  
$
10,439
  
$
-
  
$
1,068,848
 
December 31, 2012
 
 
Commercial
and  industrial
  
Commercial real estate
  
Multifamily
  
Real estate construction
  
Residential mortgages
  
Home equity
  
Consumer
  
Unallocated
  
Total
 
Allowance for loan losses:
 
  
  
  
  
  
  
  
  
 
Ending balance: individually evaluated for impairment
 
$
340
  
$
22
  
$
-
  
$
1
  
$
575
  
$
86
  
$
-
  
$
-
  
$
1,024
 
Ending balance: collectively evaluated for impairment
  
5,841
   
5,977
   
150
   
140
   
1,001
   
821
   
189
   
2,638
   
16,757
 
Ending balance
 
$
6,181
  
$
5,999
  
$
150
  
$
141
  
$
1,576
  
$
907
  
$
189
  
$
2,638
  
$
17,781
 
Loan balances:
                                    
Ending balance: individually evaluated for impairment
 
$
10,369
  
$
9,443
  
$
-
  
$
1,961
  
$
4,660
  
$
502
  
$
21
  
$
-
  
$
26,956
 
Ending balance: collectively evaluated for impairment
  
158,340
   
350,567
   
9,261
   
13,508
   
141,915
   
65,966
   
14,267
   
-
   
753,824
 
Ending balance
 
$
168,709
  
$
360,010
  
$
9,261
  
$
15,469
  
$
146,575
  
$
66,468
  
$
14,288
  
$
-
  
$
780,780
 
Summary of current and past due loans
At December 31, 2013 and 2012, past due loans disaggregated by class were as follows (in thousands).

 
 
Past Due
  
  
 
December 31, 2013
 
30 - 59 days
  
60 - 89 days
  
90 days and over
  
Total
  
Current
  
Total
 
Commercial and industrial
 
$
13
  
$
-
  
$
5,014
  
$
5,027
  
$
166,172
  
$
171,199
 
Commercial real estate
  
631
   
-
   
7,492
   
8,123
   
461,234
   
469,357
 
Multifamily
  
-
   
-
   
-
   
-
   
184,624
   
184,624
 
Real estate construction
  
-
   
-
   
-
   
-
   
6,565
   
6,565
 
Residential mortgages
  
1,535
   
339
   
1,897
   
3,771
   
165,781
   
169,552
 
Home equity
  
795
   
100
   
647
   
1,542
   
55,570
   
57,112
 
Consumer
  
75
   
-
   
133
   
208
   
10,231
   
10,439
 
Total
 
$
3,049
  
$
439
  
$
15,183
  
$
18,671
  
$
1,050,177
  
$
1,068,848
 
% of Total Loans
  
0.3
%
  
0.0
%
  
1.4
%
  
1.7
%
  
98.3
%
  
100.0
%

 
 
Past Due
  
  
 
December 31, 2012
 
30 - 59 days
  
60 - 89 days
  
90 days and over
  
Total
  
Current
  
Total
 
Commercial and industrial
 
$
6,591
  
$
1,274
  
$
6,529
  
$
14,394
  
$
154,315
  
$
168,709
 
Commercial real estate
  
1,145
   
329
   
5,192
   
6,666
   
353,344
   
360,010
 
Multifamily
  
-
   
-
   
-
   
-
   
9,261
   
9,261
 
Real estate construction
  
1,382
   
-
   
1,961
   
3,343
   
12,126
   
15,469
 
Residential mortgages
  
2,867
   
6
   
2,466
   
5,339
   
141,236
   
146,575
 
Home equity
  
261
   
100
   
266
   
627
   
65,841
   
66,468
 
Consumer
  
189
   
18
   
21
   
228
   
14,060
   
14,288
 
Total
 
$
12,435
  
$
1,727
  
$
16,435
  
$
30,597
  
$
750,183
  
$
780,780
 
% of Total Loans
  
1.6
%
  
0.2
%
  
2.1
%
  
3.9
%
  
96.1
%
  
100.0
%
 
Summary of impaired loans
The following table presents the Company’s impaired loans disaggregated by class for the years ended December 31, 2013 and 2012 (in thousands).
 
 
December 31, 2013
  
December 31, 2012
 
 
 
Unpaid
Principal
Balance
  
Recorded
Balance
  
Allowance
Allocated
  
Unpaid
Principal
Balance
  
Recorded
Balance
  
Allowance
Allocated
 
With no allowance recorded:
 
  
  
  
  
  
 
Commercial and industrial
 
$
6,711
  
$
6,711
  
$
-
  
$
7,913
  
$
7,492
  
$
-
 
Commercial real estate
  
12,239
   
11,821
   
-
   
8,859
   
7,282
   
-
 
Real estate construction
  
-
   
-
   
-
   
1,334
   
1,305
   
-
 
Residential mortgages
  
2,305
   
2,176
   
-
   
1,918
   
1,788
   
-
 
Home equity
  
891
   
891
   
-
   
418
   
416
   
-
 
Consumer
  
25
   
9
   
-
   
21
   
21
   
-
 
Subtotal
  
22,171
   
21,608
   
-
   
20,463
   
18,304
   
-
 
 
                        
With an allowance recorded:
                        
Commercial and industrial
  
1,043
   
1,043
   
41
   
2,884
   
2,877
   
340
 
Commercial real estate
  
-
   
-
   
-
   
2,161
   
2,161
   
22
 
Real estate construction
  
-
   
-
   
-
   
656
   
656
   
1
 
Residential mortgages
  
2,873
   
2,873
   
709
   
3,015
   
2,872
   
575
 
Home equity
  
328
   
191
   
93
   
86
   
86
   
86
 
Consumer
  
274
   
275
   
102
   
-
   
-
   
-
 
Subtotal
  
4,518
   
4,382
   
945
   
8,802
   
8,652
   
1,024
 
Total
 
$
26,689
  
$
25,990
  
$
945
  
$
29,265
  
$
26,956
  
$
1,024
 
 
The following table presents the Company’s average recorded investment in impaired loans and the related interest income recognized disaggregated by class for the years ended December 31, 2013, 2012 and 2011 (in thousands). No interest income was recognized on a cash basis on impaired loans for any of the periods presented.

 
 
Year Ended December 31, 2013
  
Year Ended December 31, 2012
  
Year Ended December 31, 2011
 
 
 
Average
recorded
investment in
impaired loans
  
Interest income
recognized on
impaired loans
  
Average
recorded
investment in
impaired loans
  
Interest income
recognized on
impaired loans
  
Average
recorded
investment in
impaired loans
  
Interest income
recognized on
impaired loans
 
Commercial and industrial
 
$
12,065
  
$
800
  
$
23,215
  
$
447
  
$
25,179
  
$
1,422
 
Commercial real estate
  
11,556
   
1,041
   
38,477
   
501
   
55,449
   
2,970
 
Real estate construction
  
488
   
114
   
13,681
   
410
   
30,641
   
-
 
Residential mortgages
  
4,970
   
102
   
9,538
   
127
   
6,956
   
-
 
Home equity
  
814
   
15
   
2,607
   
13
   
3,369
   
-
 
Consumer
  
235
   
22
   
429
   
-
   
337
   
-
 
Total
 
$
30,128
  
$
2,094
  
$
87,947
  
$
1,498
  
$
121,931
  
$
4,392
 
Summary of impaired and non-accrual loans
The following table presents a summary of non-performing assets for each period (in thousands):

 
 
December 31, 2013
  
December 31, 2012
 
Non-accrual loans
 
$
15,183
  
$
16,435
 
Non-accrual loans held-for-sale
  
-
   
907
 
Loans 90 days past due and still accruing
  
-
   
-
 
OREO
  
-
   
1,572
 
Total non-performing assets
 
$
15,183
  
$
18,914
 
TDRs accruing interest
 
$
10,647
  
$
9,954
 
TDRs non-accruing
 
$
5,438
  
$
6,650
 
Summarizes non-accrual loans by loan class
At December 31, 2013 and 2012, non-accrual loans disaggregated by class were as follows (dollars in thousands):
 
 
 
December 31, 2013
  
December 31, 2012
 
 
 
Non-
accrual
loans
  
% of
Total
  
Total Loans
  
% of
Total
Loans
  
Non-
accrual
loans
  
% of
Total
  
Total
Loans
  
% of
Total
Loans
 
Commercial and industrial
 
$
5,014
   
33.0
%
 
$
171,199
   
0.4
%
 
$
6,529
   
39.8
%
 
$
168,709
   
0.8
%
Commercial real estate
  
7,492
   
49.3
   
469,357
   
0.7
   
5,192
   
31.6
   
360,010
   
0.7
 
Multifamily
  
-
   
-
   
184,624
   
-
   
-
   
-
   
9,261
   
-
 
Real estate construction
  
-
   
-
   
6,565
   
-
   
1,961
   
11.9
   
15,469
   
0.3
 
Residential mortgages
  
1,897
   
12.5
   
169,552
   
0.2
   
2,466
   
15.0
   
146,575
   
0.3
 
Home equity
  
647
   
4.3
   
57,112
   
0.1
   
266
   
1.6
   
66,468
   
-
 
Consumer
  
133
   
0.9
   
10,439
   
-
   
21
   
0.1
   
14,288
   
-
 
Total
 
$
15,183
   
100.0
%
 
$
1,068,848
   
1.4
%
 
$
16,435
   
100.0
%
 
$
780,780
   
2.1
%
Collateral Value Securing Non Accrual Loans
The following table presents the collateral value securing non-accrual loans for each period (in thousands):

 
 
December 31, 2013
  
December 31, 2012
 
 
 
Principal
Balance
  
Collateral
Value
  
Principal
Balance
  
Collateral
Value
 
Commercial and industrial (1)
 
$
5,014
  
$
3,750
  
$
6,529
  
$
4,400
 
Commercial real estate
  
7,492
   
13,050
   
5,192
   
12,675
 
Real estate construction
  
-
   
-
   
1,961
   
3,661
 
Residential mortgages
  
1,897
   
3,764
   
2,466
   
5,141
 
Home equity
  
647
   
3,072
   
266
   
849
 
Consumer
  
133
   
-
   
21
   
-
 
Total
 
$
15,183
  
$
23,636
  
$
16,435
  
$
26,726
 

(1) Repayment of commercial and industrial loans is expected primarily from the cash flow of the business. The collateral typically securing these loans is a lien on all corporate assets via a blanket UCC filing and does not usually include real estate. For purposes of this disclosure, the Company has ascribed no value to the non-real estate collateral for this class of loans.
Summary of the activity in the allowance for loan losses by loan class
The following summarizes the activity in the allowance for loan losses disaggregated by class for the periods indicated (in thousands):

 
 
Commercial
and  industrial
  
Commercial real estate
  
Multifamily
  
Real estate construction
  
Residential mortgages
  
Home equity
  
Consumer
  
Unallocated
  
Total
 
Year ended December 31, 2013
 
  
  
  
  
  
  
  
  
 
Balance at beginning of period
 
$
6,181
  
$
5,999
  
$
150
  
$
141
  
$
1,576
  
$
907
  
$
189
  
$
2,638
  
$
17,781
 
Charge-offs
  
(2,867
)
  
(383
)
  
-
   
-
   
(126
)
  
(558
)
  
(166
)
  
-
   
(4,100
)
Recoveries
  
2,077
   
97
   
-
   
-
   
5
   
32
   
121
   
-
   
2,332
 
(Credit) provision for loan losses
  
(2,776
)
  
913
   
2,009
   
(53
)
  
1,008
   
364
   
97
   
(312
)
  
1,250
 
Balance at end of period
 
$
2,615
  
$
6,626
  
$
2,159
  
$
88
  
$
2,463
  
$
745
  
$
241
  
$
2,326
  
$
17,263
 
 
 
 
Commercial
and industrial
  
Commercial real estate
  
Multifamily
  
Real estate construction
  
Residential mortgages
  
Home equity
  
Consumer
  
Unallocated
  
Total
 
Year ended December 31, 2012
 
  
  
  
  
  
  
  
  
 
Balance at beginning of period
 
$
25,047
  
$
10,470
  
$
559
  
$
623
  
$
2,401
  
$
512
  
$
313
  
$
33
  
$
39,958
 
Charge-offs
  
(8,534
)
  
(15,794
)
  
-
   
(3,671
)
  
(3,727
)
  
(1,953
)
  
(267
)
  
-
   
(33,946
)
Recoveries
  
2,456
   
-
   
-
   
340
   
115
   
246
   
112
   
-
   
3,269
 
(Credit) provision for loan losses
  
(12,788
)
  
11,323
   
(409
)
  
2,849
   
2,787
   
2,102
   
31
   
2,605
   
8,500
 
Balance at end of period
 
$
6,181
  
$
5,999
  
$
150
  
$
141
  
$
1,576
  
$
907
  
$
189
  
$
2,638
  
$
17,781
 

 
 
Commercial
and industrial
  
Commercial real estate
  
Multifamily
  
Real estate construction
  
Residential mortgages
  
Home equity
  
Consumer
  
Unallocated
  
Total
 
Year ended December 31, 2011
 
  
  
  
  
  
  
  
  
 
Balance at beginning of period
 
$
13,826
  
$
9,149
  
$
77
  
$
3,177
  
$
519
  
$
1,392
  
$
279
  
$
-
  
$
28,419
 
Charge-offs
  
(9,490
)
  
(4,059
)
  
-
   
(232
)
  
(411
)
  
(191
)
  
(214
)
  
-
   
(14,597
)
Recoveries
  
781
   
-
   
-
   
415
   
3
   
2
   
97
   
-
   
1,298
 
Reclass to allowance for off-balance sheet credit risk
  
-
   
(50
)
  
-
   
-
   
-
   
-
   
-
   
-
   
(50
)
Provision (credit) for loan losses
  
19,930
   
5,430
   
482
   
(2,737
)
  
2,290
   
(691
)
  
151
   
33
   
24,888
 
Balance at end of period
 
$
25,047
  
$
10,470
  
$
559
  
$
623
  
$
2,401
  
$
512
  
$
313
  
$
33
  
$
39,958
 
Credit risk profile by internally assigned grade
The following presents the Company’s loan portfolio credit risk profile by internally assigned grade disaggregated by class of loan at December 31, 2013 and 2012 (in thousands).

December 31, 2013
 
Commercial
and industrial
  
Commercial real estate
  
Multifamily
  
Real estate construction
  
Residential
mortgages
  
Home
equity
  
Consumer
  
Total
  
% of
Total
 
Grade:
 
  
  
  
  
  
  
  
  
 
Pass
 
$
158,536
  
$
445,302
  
$
184,624
  
$
6,565
  
$
164,559
  
$
56,379
  
$
10,156
  
$
1,026,121
   
96.0
%
Special mention
  
2,934
   
2,817
   
-
   
-
   
-
   
-
   
-
   
5,751
   
0.5
 
Substandard
  
9,729
   
21,238
   
-
   
-
   
4,993
   
733
   
283
   
36,976
   
3.5
 
Total
 
$
171,199
  
$
469,357
  
$
184,624
  
$
6,565
  
$
169,552
  
$
57,112
  
$
10,439
  
$
1,068,848
   
100.0
%

December 31, 2012
 
Commercial
and industrial
  
Commercial real estate
  
Multifamily
  
Real estate construction
  
Residential
mortgages
  
Home
equity
  
Consumer
  
Total
  
% of
Total
 
Grade:
 
  
  
  
  
  
  
  
  
 
Pass
 
$
143,804
  
$
301,862
  
$
9,261
  
$
4,790
  
$
141,915
  
$
65,966
  
$
14,267
  
$
681,865
   
87.3
%
Special mention
  
5,995
   
38,670
   
-
   
-
   
-
   
-
   
-
   
44,665
   
5.7
 
Substandard
  
18,910
   
19,478
   
-
   
10,679
   
4,660
   
502
   
21
   
54,250
   
7.0
 
Total
 
$
168,709
  
$
360,010
  
$
9,261
  
$
15,469
  
$
146,575
  
$
66,468
  
$
14,288
  
$
780,780
   
100.0
%
Troubled debt restructurings
Outstanding TDRs, disaggregated by class, at December 31, 2013 and 2012 are as follows (dollars in thousands):
 
 
December 31, 2013
  
December 31, 2012
 
TDRs Outstanding
 
Number of
Loans
  
Outstanding
Recorded
Balance
  
Number of
Loans
  
Outstanding
Recorded
Balance
 
Commercial and industrial
  
43
  
$
6,022
   
41
  
$
6,468
 
Commercial real estate
  
7
   
6,022
   
9
   
6,238
 
Residential mortgages
  
17
   
3,891
   
15
   
3,587
 
Consumer
  
3
   
150
   
5
   
311
 
Total
  
70
  
$
16,085
   
70
  
$
16,604
 

The following presents, disaggregated by class, information regarding TDRs executed during the years ended December 31, 2013, 2012 and 2011 (dollars in thousands):

 
 
For the year ended December 31, 2013
  
For the year ended December 31, 2012
 
 
 
  
Pre-Modification
  
Post-Modification
  
  
Pre-Modification
  
Post-Modification
 
 
 
Number
  
Outstanding
  
Outstanding
  
Number
  
Outstanding
  
Outstanding
 
 
 
of
  
Recorded
  
Recorded
  
of
  
Recorded
  
Recorded
 
New TDRs
 
Loans
  
Balance
  
Balance
  
Loans
  
Balance
  
Balance
 
Commercial and industrial
  
8
  
$
2,484
  
$
2,484
   
17
  
$
6,674
  
$
6,674
 
Commercial real estate
  
3
   
3,025
   
3,025
   
-
   
-
   
-
 
Residential mortgages
  
4
   
924
   
924
   
6
   
1,617
   
1,617
 
Consumer
  
1
   
17
   
17
   
1
   
49
   
49
 
Total
  
16
  
$
6,450
  
$
6,450
   
24
  
$
8,340
  
$
8,340
 

 
 
For the year ended December 31, 2011
 
 
 
  
Pre-Modification
  
Post-Modification
 
 
 
Number
  
Outstanding
  
Outstanding
 
 
 
of
  
Recorded
  
Recorded
 
New TDRs
 
Loans
  
Balance
  
Balance
 
Commercial and industrial
  
29
  
$
4,099
  
$
4,123
 
Commercial real estate
  
8
   
8,697
   
8,697
 
Residential mortgages
  
5
   
1,437
   
1,622
 
Home equity
  
1
   
291
   
291
 
Consumer
  
1
   
34
   
34
 
Total
  
44
  
$
14,558
  
$
14,767
 
 
Presented below and disaggregated by class is information regarding loans modified as TDRs that had payment defaults of 90 days or more within twelve months of restructuring during the years ended December 31, 2013, 2012 and 2011 (dollars in thousands):

 
 
Year ended December 31, 2013
  
Year ended December 31, 2012
  
Year ended December 31, 2011
 
 
 
  
Outstanding
  
  
Outstanding
  
  
Outstanding
 
 
 
Number
  
Recorded
  
Number
  
Recorded
  
Number
  
Recorded
 
Defaulted TDRs
 
of Loans
  
Balance
  
of Loans
  
Balance
  
of Loans
  
Balance
 
Commercial and industrial
  
-
  
$
-
   
2
  
$
1,125
   
9
  
$
41
 
Commercial real estate
  
1
   
390
   
-
   
-
   
2
   
4,879
 
Residential mortgages
  
1
   
310
   
2
   
807
   
-
   
-
 
Total
  
2
  
$
700
   
4
  
$
1,932
   
11
  
$
4,920
 
Summary of loans modified and renewed and not considered TDRs
The following presents information regarding modifications and renewals executed during the years ended December 31, 2013, 2012 and 2011 that are not considered TDRs (dollars in thousands):

 
 
Year ended December 31, 2013
  
Year ended December 31, 2012
  
Year ended December 31, 2011
 
 
 
  
Outstanding
  
  
Outstanding
  
  
Outstanding
 
 
 
Number
  
Recorded
  
Number
  
Recorded
  
Number
  
Recorded
 
Non-TDR Modifications
 
of Loans
  
Balance
  
of Loans
  
Balance
  
of Loans
  
Balance
 
Commercial and industrial
  
19
  
$
6,741
   
13
  
$
8,111
   
-
  
$
-
 
Commercial real estate
  
41
   
40,004
   
34
   
40,004
   
5
   
1,599
 
Multifamily
  
1
   
410
   
-
   
-
   
-
   
-
 
Total
  
61
  
$
47,155
   
47
  
$
48,115
   
5
  
$
1,599