| CREDIT QUALITY ASSESSMENT |
Note 5 – CREDIT QUALITY ASSESSMENT Allowance for Loan and Lease Losses Credit risk can vary significantly as losses, as a percentage of outstanding loans, can vary widely during economic cycles and are sensitive to changing economic conditions. The amount of loss in any particular type of loan can vary depending on the purpose of the loan and the underlying collateral securing the loan. Collateral securing commercial loans can range from accounts receivable to equipment to improved or unimproved real estate depending on the purpose of the loan. Home mortgage and home equity loans and lines are typically secured by first or second liens on residential real estate. Consumer loans may be secured by personal property, such as auto loans or they may be unsecured loan products. Management has an internal credit process in place to maintain credit standards. This process along with an in-house loan administration, accompanied by oversight and review procedures, combines to control and manage credit risk. The primary purpose of loan underwriting is the evaluation of specific lending risks that involves the analysis of the borrower’s ability to service the debt as well as the assessment of the value of the underlying collateral. Oversight and review procedures include the monitoring of the portfolio credit quality, early identification of potential problem credits and the management of the problem credits. As part of the oversight and review process, the Company maintains an allowance for loan and lease losses (the “allowance”) to absorb estimated and probable losses in the loan and lease portfolio. The allowance is based on consistent, periodic review and evaluation of the loan and lease portfolio, along with ongoing, monthly assessments of the probable losses and problem credits in each portfolio. While portions of the allowance are attributed to specific portfolio segments, the entire allowance is available to absorb credit losses inherent in the total loan portfolio. Summary information on the allowance for loan and lease loss activity for the years ended December 31 is provided in the following table: | (In thousands) | | 2014 | | 2013 | | 2012 | | Balance at beginning of year | | $ | 38,766 | | $ | 42,957 | | $ | 49,426 | | Provision (credit) for loan and lease losses | | | (163) | | | (1,084) | | | 3,649 | | Loan and lease charge-offs | | | (2,687) | | | (11,165) | | | (12,804) | | Loan and lease recoveries | | | 1,886 | | | 8,058 | | | 2,686 | | | Net charge-offs | | | (801) | | | (3,107) | | | (10,118) | | Balance at period end | | $ | 37,802 | | $ | 38,766 | | $ | 42,957 |
The following tables provide information on the activity in the allowance for loan and lease losses by the respective loan portfolio segment for the years 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% |
| | | 2013 | | | | | | | 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 | | $ | 6,495 | | $ | 4,737 | | $ | 9,583 | | $ | 6,997 | | $ | 332 | | $ | 3,846 | | $ | 8,522 | | $ | 2,445 | | $ | 42,957 | | Provision (credit) | | | 1,910 | | | (3,978) | | | 1,100 | | | (874) | | | (326) | | | 1,951 | | | 329 | | | (1,196) | | | (1,084) | | Charge-offs | | | (2,915) | | | (85) | | | (4,774) | | | (240) | | | - | | | (1,853) | | | (1,194) | | | (104) | | | (11,165) | | Recoveries | | | 818 | | | 3,080 | | | 3,354 | | | 425 | | | 10 | | | 198 | | | 162 | | | 11 | | | 8,058 | | Net charge-offs | | | (2,097) | | | 2,995 | | | (1,420) | | | 185 | | | 10 | | | (1,655) | | | (1,032) | | | (93) | | | (3,107) | | Balance at end of period | | $ | 6,308 | | $ | 3,754 | | $ | 9,263 | | $ | 6,308 | | $ | 16 | | $ | 4,142 | | $ | 7,819 | | $ | 1,156 | | $ | 38,766 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total loans and leases | | $ | 356,651 | | $ | 160,696 | | $ | 552,178 | | $ | 592,823 | | $ | 703 | | $ | 373,657 | | $ | 618,381 | | $ | 129,177 | | $ | 2,784,266 | | Allowance for loans and leases to total loans and leases ratio | | | 1.77% | | | 2.34% | | | 1.68% | | | 1.06% | | | 2.28% | | | 1.11% | | | 1.26% | | | 0.89% | | | 1.39% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance of loans specifically evaluated for impairment | | $ | 5,608 | | $ | 4,128 | | $ | 7,654 | | $ | 7,111 | | | na. | | $ | 29 | | $ | 6,141 | | $ | 1,852 | | $ | 32,523 | | Allowance for loans specifically evaluated for impairment | | $ | 849 | | $ | 1,031 | | $ | 126 | | $ | 426 | | | na. | | | na. | | $ | 626 | | $ | - | | $ | 3,058 | | Specific allowance to specific loans ratio | | | 15.14% | | | 24.98% | | | 1.65% | | | 5.99% | | | na. | | | na. | | | 10.19% | | | na. | | | 9.40% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance of loans collectively evaluated | | $ | 351,043 | | $ | 156,568 | | $ | 544,524 | | $ | 585,712 | | $ | 703 | | $ | 373,628 | | $ | 612,240 | | $ | 127,325 | | $ | 2,751,743 | | Allowance for loans collectively evaluated | | $ | 5,459 | | $ | 2,723 | | $ | 9,137 | | $ | 5,882 | | $ | 16 | | $ | 4,142 | | $ | 7,193 | | $ | 1,156 | | $ | 35,708 | | Collective allowance to collective loans ratio | | | 1.56% | | | 1.74% | | | 1.68% | | | 1.00% | | | 2.28% | | | 1.11% | | | 1.17% | | | 0.91% | | | 1.30% |
The Company’s methodology for evaluating whether a loan is impaired begins with risk-rating credits on an individual basis and includes consideration of the borrower’s overall financial condition, payment record and available cash resources that may include the collateral value and, in a select few cases, verifiable support from financial guarantors. In measuring impairment, the Company looks primarily to the discounted cash flows of the project itself or to the value of the collateral as the primary sources of repayment of the loan. Collateral values or estimates of discounted cash flows (inclusive of any potential cash flow from guarantees) are evaluated to estimate the probability and severity of potential losses. The actual occurrence and severity of losses involving impaired credits can differ substantially from estimates. The Company may consider the existence of guarantees and the financial strength and wherewithal of the guarantors involved in any loan relationship. Guarantees may be considered as a source of repayment based on the guarantor’s financial condition and respective payment capacity. Accordingly, absent a verifiable payment capacity, a guarantee alone would not be sufficient to avoid classifying the loan as impaired. Management has established a credit process that dictates that procedures be performed to monitor impaired loans between the receipt of an original appraisal and the updated appraisal. These procedures include the following: - An internal evaluation is updated quarterly to include borrower financial statements and/or cash flow projections.
- The borrower may be contacted for a meeting to discuss an updated or revised action plan which may include a request for additional collateral.
- Re-verification of the documentation supporting the Company’s position with respect to the collateral securing the loan.
- At the monthly credit committee meeting the loan may be downgraded.
- Upon receipt of the updated appraisal or based on an updated internal financial evaluation, the loan balance is compared to the appraisal and a specific allowance is determined for the particular loan, typically for the amount of the difference between the appraisal and the loan balance.
- The Company will specifically reserve for or charge-off the excess of the loan amount over the amount of the appraisal. In certain cases the Company may establish a larger reserve due to knowledge of current market conditions or the existence of an offer for the collateral that will facilitate a more timely resolution of the loan.
The Company generally follows a policy of not extending maturities on non-performing loans under existing terms. Certain performing loans that have displayed some inherent weakness in the underlying collateral values, an inability to comply with certain loan covenants which do not affect the performance of the credit or other identified weakness may have their terms extended on an exception basis. Maturity date extensions only occur under revised terms that place the Company in a better position to fully collect the loan under the contractual terms and /or terms at the time of the extension that may eliminate or mitigate the inherent weakness in the loan. These terms may incorporate, but are not limited to additional assignment of collateral, significant balance curtailments/liquidations and assignments of additional project cash flows. Documented or demonstrated guarantees may be a consideration in the extension of loan maturities. As a general matter, the Company does not view extension of a loan to be a satisfactory approach to resolving non-performing credits. Loans that have their terms restructured (e.g., interest rates, loan maturity date, payment and amortization period, etc.) in circumstances that provide payment relief or other concessions to a borrower experiencing financial difficulty are considered trouble debt restructured loans. All restructurings that constitute concessions to a troubled borrower are considered impaired loans that may either be in accruing status or non-accruing status. Non-accruing restructured loans may return to accruing status provided there is a sufficient period of payment performance in accordance with the restructure terms. Loans may be removed from the restructured category in the year subsequent to the restructuring if their revised loans terms are considered to be consistent with terms that can be obtained in the credit market for loans with comparable risk. At December 31, 2014, restructured loans totaled $11.6 million, of which $5.5 million were accruing and $6.1 million were non-accruing. The Company has commitments to lend $0.1 million in additional funds on loans that have been restructured at December 31, 2014. Restructured loans at December 31, 2013 totaled $20.0 million, of which $9.5 million were accruing and $10.5 million were non-accruing. Commitments to lend additional funds on loans that have been restructured at December 31, 2013 amounted to $5.5 million. The following table provides summary information regarding impaired loans at December 31 and for the years then ended: | (In thousands) | | 2014 | | 2013 | | 2012 | | Impaired loans with a specific allowance | | $ | 11,411 | | $ | 12,217 | | $ | 27,526 | | Impaired loans without a specific allowance | | | 18,008 | | | 20,306 | | | 21,247 | | Total impaired loans | | $ | 29,419 | | $ | 32,523 | | $ | 48,773 | | | | | | | | | | | | | Allowance for loan and lease losses related to impaired loans | | $ | 2,894 | | $ | 3,058 | | $ | 5,149 | | Allowance for loan and lease losses related to loans collectively evaluated | | | 34,908 | | | 35,708 | | | 37,808 | | Total allowance for loan and lease losses | | $ | 37,802 | | $ | 38,766 | | $ | 42,957 | | | | | | | | | | | | | Average impaired loans for the period | | $ | 34,331 | | $ | 38,379 | | $ | 57,438 | | Contractual interest income due on impaired loans during the period | | $ | 2,339 | | $ | 2,612 | | $ | 4,433 | | Interest income on impaired loans recognized on a cash basis | | $ | 773 | | $ | 1,374 | | $ | 1,121 | | Interest income on impaired loans recognized on an accrual basis | | $ | 280 | | $ | 473 | | $ | 560 |
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 December 31 for the years indicated: | | | | 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 |
| | 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 | | | |
| | | | 2013 | | | | | | | | 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 | | $ | 374 | | $ | 1,360 | | $ | 749 | | $ | 2,022 | | $ | - | | $ | 4,505 | | | Restructured accruing | | | 790 | | | - | | | - | | | 1,174 | | | 2,365 | | | 4,329 | | | Restructured non-accruing | | | 349 | | | 1,122 | | | - | | | 1,274 | | | 638 | | | 3,383 | | Balance | | $ | 1,513 | | $ | 2,482 | | $ | 749 | | $ | 4,470 | | $ | 3,003 | | $ | 12,217 | | | | | | | | | | | | | | | | | | | | | | | Allowance | | $ | 849 | | $ | 1,031 | | $ | 126 | | $ | 426 | | $ | 626 | | $ | 3,058 | | | | | | | | | | | | | | | | | | | | | | | Impaired loans without a specific allowance | | | | | | | | | | | | | | | | | | | | | Non-accruing | | $ | 1,532 | | $ | 382 | | $ | 5,440 | | $ | 646 | | $ | - | | $ | 8,000 | | | Restructured accruing | | | 1,417 | | | - | | | 852 | | | - | | | 2,861 | | | 5,130 | | | Restructured non-accruing | | | 1,146 | | | 1,264 | | | 613 | | | 1,995 | | | 2,158 | | | 7,176 | | Balance | | $ | 4,095 | | $ | 1,646 | | $ | 6,905 | | $ | 2,641 | | $ | 5,019 | | $ | 20,306 | | | | | | | | | | | | | | | | | | | | | | | Total impaired loans | | | | | | | | | | | | | | | | | | | | | Non-accruing | | $ | 1,906 | | $ | 1,742 | | $ | 6,189 | | $ | 2,668 | | $ | - | | $ | 12,505 | | | Restructured accruing | | | 2,207 | | | - | | | 852 | | | 1,174 | | | 5,226 | | | 9,459 | | | Restructured non-accruing | | | 1,495 | | | 2,386 | | | 613 | | | 3,269 | | | 2,796 | | | 10,559 | | Balance | | $ | 5,608 | | $ | 4,128 | | $ | 7,654 | | $ | 7,111 | | $ | 8,022 | | $ | 32,523 | | | | | | | | | | | | | | | | | | | | | | | Unpaid principal balance in total impaired loans | | $ | 7,943 | | $ | 10,318 | | $ | 12,351 | | $ | 8,684 | | $ | 8,650 | | $ | 47,946 |
| | 2013 | | | | | | | | | | | | | | | | | | | | | | | | | 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 | | $ | 7,153 | | $ | 5,451 | | $ | 10,605 | | $ | 8,386 | | $ | 6,784 | | $ | 38,379 | | Contractual interest income due on impaired loans during the period | | $ | 452 | | $ | 654 | | $ | 587 | | $ | 692 | | $ | 227 | | | | | Interest income on impaired loans recognized on a cash basis | | $ | 238 | | $ | 253 | | $ | 75 | | $ | 725 | | $ | 83 | | | | | Interest income on impaired loans recognized on an accrual basis | | $ | 133 | | $ | - | | $ | 30 | | $ | 77 | | $ | 233 | | | |
Credit Quality The following tables provide information on the credit quality of the loan portfolio by segment at December 31 for the years indicated: | | | 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 | | 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 |
| | | 2013 | | | | | | | 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 | | $ | 3,400 | | $ | 4,127 | | $ | 6,802 | | $ | 5,936 | | $ | - | | $ | 2,259 | | $ | 5,735 | | $ | 2,315 | | $ | 30,574 | | Loans and leases 90 days past due | | | - | | | - | | | - | | | - | | | - | | | 1 | | | - | | | - | | | 1 | | Restructured loans and leases | | | 2,207 | | | - | | | 852 | | | 1,174 | | | - | | | 29 | | | 5,197 | | | - | | | 9,459 | | Total non-performing loans and leases | | | 5,607 | | | 4,127 | | | 7,654 | | | 7,110 | | | - | | | 2,289 | | | 10,932 | | | 2,315 | | | 40,034 | | Other real estate owned | | | 54 | | | 365 | | | - | | | - | | | - | | | - | | | 919 | | | - | | | 1,338 | | Total non-performing assets | | $ | 5,661 | | $ | 4,492 | | $ | 7,654 | | $ | 7,110 | | $ | - | | $ | 2,289 | | $ | 11,851 | | $ | 2,315 | | $ | 41,372 |
| | | | 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 aquired 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 |
| | | | 2013 | | | | | | | | 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 | | $ | 382 | | $ | - | | $ | 5,826 | | $ | 876 | | $ | 4 | | $ | 716 | | $ | 4,119 | | $ | - | | $ | 11,923 | | 61-90 days | | | 1,142 | | | - | | | - | | | 2,540 | | | - | | | 176 | | | 208 | | | - | | | 4,066 | | > 90 days | | | - | | | - | | | - | | | - | | | - | | | 1 | | | - | | | - | | | 1 | | Total past due | | | 1,524 | | | - | | | 5,826 | | | 3,416 | | | 4 | | | 893 | | | 4,327 | | | - | | | 15,990 | | Non-accrual loans and leases | | | 3,400 | | | 4,127 | | | 6,802 | | | 5,936 | | | - | | | 2,259 | | | 5,735 | | | 2,315 | | | 30,574 | | Loans aquired with deteriorated credit quality | | 1,363 | | | - | | | 571 | | | 2,366 | | | - | | | - | | | - | | | - | | | 4,300 | | Current loans | | | 350,364 | | | 156,569 | | | 538,979 | | | 581,105 | | | 699 | | | 370,505 | | | 608,319 | | | 126,862 | | | 2,733,402 | | | Total loans and leases | | $ | 356,651 | | $ | 160,696 | | $ | 552,178 | | $ | 592,823 | | $ | 703 | | $ | 373,657 | | $ | 618,381 | | $ | 129,177 | | $ | 2,784,266 |
Loans and leases are monitored for credit quality on a recurring basis. The credit quality indicators used are dependent on the portfolio segment to which the loan relates. Commercial loans and leases and non-commercial loans and leases have different credit quality indicators as a result of the methods used to monitor each of these loan segments. The credit quality indicators for commercial loans and leases are developed through review of individual borrowers on an ongoing basis. Each borrower is evaluated at least annually with more frequent evaluation of more severely criticized loans and leases. The indicators represent the rating for loans or leases as of the date presented based on the most recent credit review performed. These credit quality indicators are defined as follows: Pass - A pass rated credit is not adversely classified because it does not display any of the characteristics for adverse classification. Special mention – A special mention credit has potential weaknesses that deserve management’s close attention. If uncorrected, such weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification. Substandard – A substandard loan is inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility of loss if the deficiencies are not corrected. Doubtful – A loan that is classified as doubtful has all the weaknesses inherent in a loan classified as substandard with added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values. Loss – Loans classified as a loss are considered uncollectible and of such little value that their continuing to be carried as a loan is not warranted. This classification is not necessarily equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full write-off even though partial recovery may be effected in the future. The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at December 31 for the years indicated: | | | 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 |
| | | 2013 | | | | | | | Commercial Real Estate | | | | | | | | | | | | | | | | Commercial | | | | | | | | | | Commercial | | Commercial | | Owner | | | | | (In thousands) | | Commercial | | AD&C | | Investor R/E | | Occupied R/E | | Total | | Pass | | $ | 324,941 | | $ | 154,869 | | $ | 523,901 | | $ | 553,604 | | $ | 1,557,315 | | Special Mention | | | 16,166 | | | - | | | 2,944 | | | 15,702 | | | 34,812 | | Substandard | | | 15,274 | | | 5,827 | | | 25,333 | | | 23,517 | | | 69,951 | | Doubtful | | | 270 | | | - | | | - | | | - | | | 270 | | Total | | $ | 356,651 | | $ | 160,696 | | $ | 552,178 | | $ | 592,823 | | $ | 1,662,348 |
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 December 31 for the years indicated: | | | | 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 |
| | | | 2013 | | | | | | | | | | | Residential Real Estate | | | | | | | | | | | | | | Residential | | Residential | | | | | (In thousands) | | Leasing | | Consumer | | Mortgage | | Construction | | Total | | Performing | | $ | 703 | | $ | 371,368 | | $ | 607,449 | | $ | 126,862 | | $ | 1,106,382 | | Non-performing: | | | | | | | | | | | | | | | | | | 90 days past due | | | - | | | 1 | | | - | | | - | | | 1 | | | Non-accruing | | | - | | | 2,259 | | | 5,735 | | | 2,315 | | | 10,309 | | | Restructured loans and leases | | | - | | | 29 | | | 5,197 | | | - | | | 5,226 | | Total | | $ | 703 | | $ | 373,657 | | $ | 618,381 | | $ | 129,177 | | $ | 1,121,918 |
During the year ended December 31, 2014, the Company restructured $1.6 million in loans that were designated as troubled debt restructurings. Modifications consisted principally of interest rate concessions. 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 2014 have specific reserves of $0.1 million at December 31, 2014. For the year ended December 31, 2013, the Company restructured $3.4 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 2013 had specific reserves of $0.3 million thousand at December 31, 2013. 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 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 | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - |
| | | For the Year Ended December 31, 2013 | | | | | | | 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 | | $ | 87 | | $ | - | | $ | 852 | | $ | - | | $ | 2,064 | | $ | 3,003 | | Restructured non-accruing | | | 425 | | | - | | | - | | | - | | | - | | | 425 | | Balance | | $ | 512 | | $ | - | | $ | 852 | | $ | - | | $ | 2,064 | | $ | 3,428 | | | | | | | | | | | | | | | | | | | | | | Specific allowance | | $ | 141 | | $ | - | | $ | - | | $ | - | | $ | - | | $ | 141 | | | | | | | | | | | | | | | | | | | | | | Restructured and subsequently defaulted | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - |
Other Real Estate Owned Other real estate owned totaled $3.2 million and $1.3 million at December 31, 2014 and 2013, respectively. At December 31, 2014, $2.8 million of the other real estate owned was comprised of consumer mortgage loans. Consumer mortgage loans collateralized by real estate property that are in the process of foreclosure according to the requirements of the associated local jurisdiction amounted to $0.9 million at December 31, 2014. |