CREDIT QUALITY ASSESSMENT

9 Months Ended

Sep. 30, 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:

			Nine Months Ended September 30,
(In thousands)			2015		2014
Balance at beginning of year			$	37,802	$	38,766
	Provision for loan and lease losses			3,521		(1,016)
	Loan and lease charge-offs			(2,753)		(1,541)
	Loan and lease recoveries			1,091		1,365
		Net (charge-offs) recoveries		(1,662)		(176)
Balance at period end			$	39,661	$	37,574

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 Nine Months Ended September 30, 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)			139		293		68		1,218		-		881		919		3		3,521
Charge-offs			(185)		(739)		(90)		(317)		-		(930)		(492)		-		(2,753)
Recoveries			226		580		15		2		-		144		103		21		1,091
	Net charge-offs		41		(159)		(75)		(315)		-		(786)		(389)		21		(1,662)
Balance at end of period		$	6,032	$	4,401	$	9,777	$	8,046	$	9	$	3,687	$	6,762	$	947	$	39,661
Total loans and leases		$	423,855	$	239,160	$	710,694	$	680,601	$	19	$	444,729	$	773,889	$	139,492	$	3,412,439
Allowance for loans and leases to total loans and leases ratio			1.42%		1.84%		1.38%		1.18%		47.37%		0.83%		0.87%		0.68%		1.16%
Balance of loans specifically evaluated for impairment		$	5,360	$	194	$	10,697	$	8,172	$	na.	$	na.	$	6,482	$	na.	$	30,905
Allowance for loans specifically evaluated for impairment		$	1,278	$	57	$	709	$	958	$	na.	$	na.	$	-	$	na.	$	3,002
Specific allowance to specific loans ratio			23.84%		29.38%		6.63%		11.72%		na.		na.		na.		na.		9.71%
Balance of loans collectively evaluated		$	418,495	$	238,966	$	699,997	$	672,429	$	19	$	444,729	$	767,407	$	139,492	$	3,381,534
Allowance for loans collectively evaluated		$	4,754	$	4,344	$	9,068	$	7,088	$	9	$	3,687	$	6,762	$	947	$	36,659
Collective allowance to collective loans ratio			1.14%		1.82%		1.30%		1.05%		47.37%		0.83%		0.88%		0.68%		1.08%

		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)		September 30, 2015		December 31, 2014
Impaired loans with a specific allowance		$	9,654	$	11,411
Impaired loans without a specific allowance			21,251		18,008
	Total impaired loans	$	30,905	$	29,419
Allowance for loan and lease losses related to impaired loans		$	3,002	$	2,894
Allowance for loan and lease losses related to loans collectively evaluated			36,659		34,908
	Total allowance for loan and lease losses	$	39,661	$	37,802
Average impaired loans for the period		$	30,055	$	34,331
Contractual interest income due on impaired loans during the period		$	2,016	$	2,339
Interest income on impaired loans recognized on a cash basis		$	745	$	773
Interest income on impaired loans recognized on an accrual basis		$	239	$	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:

			September 30, 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	$	1,140	$	57	$	2,589	$	4,139	$	-	$	7,925
		Restructured accruing		863		-		-		-		-		863
		Restructured non-accruing		162		-		65		639		-		866
	Balance		$	2,165	$	57	$	2,654	$	4,778	$	-	$	9,654
	Allowance		$	1,278	$	57	$	709	$	958	$	-	$	3,002
Impaired loans without a specific allowance
		Non-accruing	$	999	$	-	$	5,955	$	1,741	$	2,750	$	11,445
		Restructured accruing		616		-		2,088		240		2,612		5,556
		Restructured non-accruing		1,580		137		-		1,413		1,120		4,250
	Balance		$	3,195	$	137	$	8,043	$	3,394	$	6,482	$	21,251
Total impaired loans
		Non-accruing	$	2,139	$	57	$	8,544	$	5,880	$	2,750	$	19,370
		Restructured accruing		1,479		-		2,088		240		2,612		6,419
		Restructured non-accruing		1,742		137		65		2,052		1,120		5,116
	Balance		$	5,360	$	194	$	10,697	$	8,172	$	6,482	$	30,905
Unpaid principal balance in total impaired loans			$	7,483	$	4,456	$	15,355	$	10,076	$	7,184	$	44,554

	September 30, 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	$	4,574	$	1,054	$	11,322	$	8,628	$	4,477	$	30,055
Contractual interest income due on impaired loans during the period	$	353	$	231	$	685	$	543	$	204
Interest income on impaired loans recognized on a cash basis	$	197	$	11	$	132	$	283	$	122
Interest income on impaired loans recognized on an accrual basis	$	73	$	-	$	81	$	9	$	76

			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:

		September 30, 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	$	3,881	$	194	$	8,609	$	7,932	$	-	$	1,621	$	7,488	$	770	$	30,495
	Loans and leases 90 days past due		-		-		-		-		1		-		-		-		1
	Restructured loans and leases		1,479		-		2,088		240		-		-		2,612		-		6,419
Total non-performing loans and leases			5,360		194		10,697		8,172		1		1,621		10,100		770		36,915
	Other real estate owned		39		365		38		-		-		690		1,487		-		2,619
Total non-performing assets		$	5,399	$	559	$	10,735	$	8,172	$	1	$	2,311	$	11,587	$	770	$	39,534

		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

			September 30, 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		$	55	$	-	$	29	$	401	$	-	$	1,973	$	5,672	$	-	$	8,130
	61-90 days			425		-		1,415		454		-		393		3,208		-		5,895
	> 90 days			-		-		-		-		1		-		-		-		1
		Total past due		480		-		1,444		855		1		2,366		8,880		-		14,026
	Non-accrual loans and leases			3,881		194		8,609		7,932		-		1,621		7,488		770		30,495
	Loans acquired with deteriorated credit quality			568		-		-		1,003		-		-		-		-		1,571
	Current loans			418,926		238,966		700,641		670,811		18		440,742		757,521		138,722		3,366,347
		Total loans and leases	$	423,855	$	239,160	$	710,694	$	680,601	$	19	$	444,729	$	773,889	$	139,492	$	3,412,439

			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:

		September 30, 2015
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	404,966	$	238,965	$	697,533	$	659,219	$	2,000,683
	Special Mention		814		-		1,861		1,910		4,585
	Substandard		18,075		195		11,300		19,472		49,042
	Doubtful		-		-		-		-		-
Total		$	423,855	$	239,160	$	710,694	$	680,601	$	2,054,310

		December 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:

			September 30, 2015
							Residential Real Estate
							Residential		Residential
(In thousands)			Leasing		Consumer		Mortgage		Construction		Total
	Performing		$	18	$	443,108	$	763,789	$	138,722	$	1,345,637
	Non-performing:
		90 days past due		1		-		-		-		1
		Non-accruing		-		1,621		7,488		770		9,879
		Restructured loans and leases		-		-		2,612		-		2,612
Total			$	19	$	444,729	$	773,889	$	139,492	$	1,358,129

			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 nine months ended September 30, 2015, the Company restructured $2.3 million in loans. 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 $0.4 million at September 30, 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 September 30, 2015 and December 31, 2014 amounted to $0.5 million and $0.1 million, respectively.

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

		For the Nine Months Ended September 30, 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	$	875	$	-	$	-	$	240	$	-	$	1,115
	Restructured non-accruing		543		-		-		639		-		1,182
Balance		$	1,418	$	-	$	-	$	879	$	-	$	2,297
Specific allowance		$	272	$	-	$	-	$	149	$	-	$	421
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 $2.6 million and $3.2 million at September 30, 2015 and December 31, 2014, respectively.