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LOANS (Tables)
 9 Months Ended
Sep. 30, 2014
LOANS [Abstract]  
Major Classifications of Loans
Major classifications of loans at September 30, 2014 and December 31, 2013 are summarized as follows:

  
2014
  
2013
 
Residential real estate
 
$
278,586
  
$
216,081
 
Multifamily real estate
  
30,315
   
38,456
 
Commercial real estate:
        
Owner occupied
  
103,457
   
90,539
 
Non owner occupied
  
212,811
   
208,756
 
Commercial and industrial
  
103,764
   
85,301
 
Consumer
  
34,230
   
25,113
 
All other
  
91,231
   
76,524
 
  
$
854,394
  
$
740,770
 
Activity in the Allowance for Loan Losses by Portfolio Segment
Activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2014 was as follows:

Loan Class
 
Balance
Dec 31,
2013
  
Provision for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
Sept 30,
2014
 
           
Residential real estate
 
$
2,694
  
$
(419
)
 
$
308
  
$
55
  
$
2,022
 
Multifamily real estate
  
417
   
(137
)
  
-
   
-
   
280
 
Commercial real estate:
                    
Owner occupied
  
1,407
   
112
   
207
   
-
   
1,312
 
Non owner occupied
  
2,037
   
310
   
323
   
-
   
2,024
 
Commercial and industrial
  
2,184
   
(335
)
  
111
   
11
   
1,749
 
Consumer
  
297
   
(12
)
  
105
   
45
   
225
 
All other
  
1,991
   
628
   
267
   
216
   
2,568
 
Total
 
$
11,027
  
$
147
  
$
1,321
  
$
327
  
$
10,180
 

Activity in the allowance for loan losses by portfolio segment for the nine months ending September 30, 2013 was as follows:

Loan Class
 
Balance
Dec 31,
2012
  
Provision for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
Sept 30,
2013
 
           
Residential real estate
 
$
2,163
  
$
571
  
$
191
  
$
10
  
$
2,553
 
Multifamily real estate
  
331
   
43
   
-
   
-
   
374
 
Commercial real estate:
                    
Owner occupied
  
1,117
   
96
   
67
   
299
   
1,445
 
Non owner occupied
  
1,888
   
209
   
-
   
-
   
2,097
 
Commercial and industrial
  
3,046
   
215
   
12
   
87
   
3,336
 
Consumer
  
244
   
87
   
123
   
47
   
255
 
All other
  
2,699
   
(671
)
  
202
   
286
   
2,112
 
Total
 
$
11,488
  
$
550
  
$
595
  
$
729
  
$
12,172
 

Activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2014 was as follows:

Loan Class
 
Balance
June 30,
2014
  
Provision for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
Sept 30,
2014
 
           
Residential real estate
 
$
2,140
  
$
(28
)
 
$
137
  
$
47
  
$
2,022
 
Multifamily real estate
  
311
   
(31
)
  
-
   
-
   
280
 
Commercial real estate:
                    
Owner occupied
  
1,364
   
73
   
125
   
-
   
1,312
 
Non owner occupied
  
2,270
   
(246
)
  
-
   
-
   
2,024
 
Commercial and industrial
  
1,489
   
281
   
27
   
6
   
1,749
 
Consumer
  
232
   
21
   
46
   
18
   
225
 
All other
  
2,071
   
466
   
63
   
94
   
2,568
 
Total
 
$
9,877
  
$
536
  
$
398
  
$
165
  
$
10,180
 

Activity in the allowance for loan losses by portfolio segment for the three months ending September 30, 2013 was as follows:

Loan Class
 
Balance
June 30,
2013
  
Provision for
loan losses
  
Loans
charged-
off
  
Recoveries
  
Balance
Sept 30,
2013
 
           
Residential real estate
 
$
2,371
  
$
213
  
$
35
  
$
4
  
$
2,553
 
Multifamily real estate
  
429
   
(55
)
  
-
   
-
   
374
 
Commercial real estate:
                    
Owner occupied
  
1,094
   
351
   
-
   
-
   
1,445
 
Non owner occupied
  
1,968
   
129
   
-
   
-
   
2,097
 
Commercial and industrial
  
4,073
   
(772
)
  
-
   
35
   
3,336
 
Consumer
  
233
   
60
   
60
   
22
   
255
 
All other
  
2,030
   
124
   
108
   
66
   
2,112
 
Total
 
$
12,198
  
$
50
  
$
203
  
$
127
  
$
12,172
 
Purchased Loans
The Company holds purchased loans for which there was, at their acquisition date, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected.  The carrying amount of those loans is as follows at September 30, 2014 and December 31, 2013.

  
2014
  
2013
 
Residential real estate
 
$
-
  
$
183
 
Multifamily real estate
  
515
   
1,229
 
Commercial real estate
        
Owner occupied
  
245
   
250
 
Non owner occupied
  
5,728
   
6,782
 
Commercial and industrial
  
327
   
496
 
All other
  
5,117
   
4,623
 
Total carrying amount
 
$
11,932
  
$
13,563
 
         
Carrying amount, net of allowance
 
$
10,937
  
$
12,931
 
Purchase Loans Accretable Yield, or Income Expected to be Collected
The accretable yield, or income expected to be collected, on the purchased loans above is as follows at September 30, 2014 and September 30, 2013.

  
2014
  
2013
 
Balance at January 1
 
$
217
  
$
635
 
New loans purchased
  
-
   
-
 
Accretion of income
  
(9
)
  
(22
)
Income recognized upon full loan repayment
  
-
   
(415
)
Reclassifications from non-accretable difference
  
-
   
23
 
Disposals
  
-
   
-
 
Balance at September 30
 
$
208
  
$
221
 
Past Due and Non-performing Loans
The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2014 and December 31 2013.  The recorded investment in non-accrual loans is less than the principal owed on non-accrual loans due to discounts applied to the carrying value of the loan at time of their acquisition and interest payments made by the borrower which have been used to reduce the recorded investment in the loan rather than recognized as interest income.

September 30, 2014
 
Principal
Owed on
Non-accrual
Loans
  
Recorded
Investment in
Non-accrual
Loans
  
Loans Past
Due Over 90
Days, still
accruing
 
       
Residential  real estate
 
$
2,105
  
$
1,898
  
$
1,973
 
Multifamily real estate
  
1,933
   
1,176
   
1,355
 
Commercial real estate
            
Owner occupied
  
2,347
   
2,073
   
5
 
Non owner occupied
  
2,061
   
1,887
   
26
 
Commercial and industrial
  
2,574
   
1,284
   
106
 
Consumer
  
267
   
232
   
60
 
All other
  
12,596
   
5,162
   
481
 
Total
 
$
23,883
  
$
13,712
  
$
4,006
 

December 31, 2013
 
Principal
Owed on
Non-accrual
Loans
  
Recorded
Investment in
Non-accrual
Loans
  
Loans Past
Due Over 90
Days, still
accruing
 
       
Residential  real estate
 
$
2,021
  
$
1,725
  
$
1,737
 
Multifamily real estate
  
3,282
   
1,889
   
1,369
 
Commercial real estate
            
Owner occupied
  
1,364
   
1,147
   
1,387
 
Non owner occupied
  
2,683
   
1,973
   
3,739
 
Commercial and industrial
  
6,838
   
4,961
   
84
 
Consumer
  
167
   
148
   
16
 
All other
  
12,212
   
4,798
   
146
 
Total
 
$
28,567
  
$
16,641
  
$
8,478
 
Aging of Recorded Investment in Past Due Loans by Loan Class
The following table presents the aging of the recorded investment in past due loans as of September 30, 2014 by class of loans:

Loan Class
 
Total
Loans
  
30-89 Days
Past Due
  
Greater
than 90
days past
due
  
Total Past
Due
  
Loans Not
Past Due
 
           
Residential real estate
 
$
278,586
  
$
6,827
  
$
3,068
  
$
9,895
  
$
268,691
 
Multifamily real estate
  
30,315
   
330
   
2,016
   
2,346
   
27,969
 
Commercial real estate:
                    
Owner occupied
  
103,457
   
543
   
1,464
   
2,007
   
101,450
 
Non owner occupied
  
212,811
   
3,892
   
1,665
   
5,557
   
207,254
 
Commercial and industrial
  
103,764
   
175
   
1,181
   
1,356
   
102,408
 
Consumer
  
34,230
   
530
   
130
   
660
   
33,570
 
All other
  
91,231
   
4,210
   
5,595
   
9,805
   
81,426
 
Total
 
$
854,394
  
$
16,507
  
$
15,119
  
$
31,626
  
$
822,768
 

The following table presents the aging of the recorded investment in past due loans as of December 31, 2013 by class of loans:

Loan Class
 
Total
Loans
  
30-89 Days
Past Due
  
Greater
than 90
days past
due
  
Total Past
Due
  
Loans Not
Past Due
 
           
Residential real estate
 
$
216,081
  
$
4,770
  
$
2,431
  
$
7,201
  
$
208,880
 
Multifamily real estate
  
38,456
   
367
   
2,688
   
3,055
   
35,401
 
Commercial real estate:
                    
Owner occupied
  
90,539
   
516
   
2,073
   
2,589
   
87,950
 
Non owner occupied
  
208,756
   
278
   
5,478
   
5,756
   
203,000
 
Commercial and industrial
  
85,301
   
1,433
   
1,438
   
2,871
   
82,430
 
Consumer
  
25,113
   
421
   
82
   
503
   
24,610
 
All other
  
76,524
   
2,510
   
4,881
   
7,391
   
69,133
 
Total
 
$
740,770
  
$
10,295
  
$
19,071
  
$
29,366
  
$
711,404
 
Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment Method
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2014:

  
Allowance for Loan Losses
  
Loan Balances
 
Loan Class
 
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
  
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
 
                 
Residential real estate
 
$
-
  
$
2,022
  
$
-
  
$
2,022
  
$
2,076
  
$
276,510
  
$
-
  
$
278,586
 
Multifamily real estate
  
26
   
254
   
-
   
280
   
1,800
   
28,000
   
515
   
30,315
 
Commercial real estate:
                                
Owner occupied
  
125
   
1,187
   
-
   
1,312
   
2,104
   
101,108
   
245
   
103,457
 
Non-owner occupied
  
14
   
2,010
   
-
   
2,024
   
3,151
   
203,932
   
5,728
   
212,811
 
Commercial and industrial
  
368
   
1,286
   
95
   
1,749
   
1,190
   
102,247
   
327
   
103,764
 
Consumer
  
-
   
225
   
-
   
225
   
-
   
34,230
   
-
   
34,230
 
All other
  
-
   
1,668
   
900
   
2,568
   
2,572
   
83,542
   
5,117
   
91,231
 
Total
 
$
533
  
$
8,652
  
$
995
  
$
10,180
  
$
12,893
  
$
829,569
  
$
11,932
  
$
854,394
 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2013:

  
Allowance for Loan Losses
  
Loan Balances
 
Loan Class
 
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
  
Individually
Evaluated for
Impairment
  
Collectively
Evaluated for
Impairment
  
Acquired with
Deteriorated
Credit Quality
  
Total
 
                 
Residential real estate
 
$
138
  
$
2,556
  
$
-
  
$
2,694
  
$
2,787
  
$
213,111
  
$
183
  
$
216,081
 
Multifamily real estate
  
-
   
417
   
-
   
417
   
1,822
   
35,405
   
1,229
   
38,456
 
Commercial real estate:
                                
Owner occupied
  
170
   
1,237
   
-
   
1,407
   
2,386
   
87,903
   
250
   
90,539
 
Non-owner occupied
  
362
   
1,675
   
-
   
2,037
   
1,024
   
200,950
   
6,782
   
208,756
 
Commercial and industrial
  
1,088
   
964
   
132
   
2,184
   
4,270
   
80,535
   
496
   
85,301
 
Consumer
  
-
   
297
   
-
   
297
   
-
   
25,113
   
-
   
25,113
 
All other
  
102
   
1,389
   
500
   
1,991
   
3,279
   
68,622
   
4,623
   
76,524
 
Total
 
$
1,860
  
$
8,535
  
$
632
  
$
11,027
  
$
15,568
  
$
711,639
  
$
13,563
  
$
740,770
 
Loans Individually Evaluated for Impairment by Class of Loans
The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2014.  The table includes $5,980,000 of loans acquired with deteriorated credit quality that the Company cannot reasonably estimate cash flows such that they are accounted for on the cost recovery method and are still individually evaluated for impairment.

  
Unpaid
Principal
Balance
  
Recorded
 Investment
  
Allowance
for Loan
Losses
Allocated
 
With no related allowance recorded:
      
Residential real estate
 
$
2,128
  
$
2,076
  
$
-
 
Multifamily real estate
  
2,715
   
1,957
   
-
 
Commercial real estate
            
Owner occupied
  
1,896
   
1,702
   
-
 
Non owner occupied
  
2,628
   
2,548
   
-
 
Commercial and industrial
  
1,021
   
273
   
-
 
All other
  
2,608
   
2,572
   
-
 
   
12,996
   
11,128
   
-
 
With an allowance recorded:
            
Multifamily real estate
 
$
364
  
$
358
  
$
26
 
Commercial real estate
            
Owner occupied
  
515
   
515
   
125
 
Non owner occupied
  
602
   
602
   
14
 
Commercial and industrial
  
1,502
   
1,152
   
463
 
All other
  
12,514
   
5,118
   
900
 
   
15,497
   
7,745
   
1,528
 
Total
 
$
28,493
  
$
18,873
  
$
1,528
 

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2013.  The table includes $7,483,000 of loans acquired with deteriorated credit quality that the Company cannot reasonably estimate cash flows such that they are accounted for on the cost recovery method and are still individually evaluated for impairment.

  
Unpaid
Principal
Balance
  
Recorded
Investment
  
Allowance
for Loan
Losses
Allocated
 
With no related allowance recorded:
      
Residential  real estate
 
$
1,513
  
$
1,314
  
$
-
 
Multifamily real estate
  
4,449
   
3,051
   
-
 
Commercial real estate
            
Owner occupied
  
2,601
   
1,986
   
-
 
Non owner occupied
  
1,861
   
1,184
   
-
 
Commercial and industrial
  
809
   
49
   
-
 
All other
  
3,185
   
3,167
   
-
 
   
14,418
   
10,751
   
-
 
With an allowance recorded:
            
Residential  real estate
 
$
1,668
  
$
1,656
  
$
138
 
Commercial real estate
            
Owner occupied
  
515
   
515
   
170
 
Non owner occupied
  
810
   
790
   
362
 
Commercial and industrial
  
5,543
   
4,604
   
1,220
 
All other
  
12,132
   
4,735
   
602
 
   
20,668
   
12,300
   
2,492
 
Total
 
$
35,086
  
$
23,051
  
$
2,492
 
The Average Balance of Loans Individually Evaluated for Impairment and Interest Income Recognized
The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the nine months ended September 30, 2014 and September 30, 2013.   The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Nine months ended Sept. 30, 2014
  
Nine months ended Sept. 30, 2013
 
Loan Class
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
 
Residential real estate
 
$
2,421
  
$
209
  
$
209
  
$
4,303
  
$
140
  
$
140
 
Multifamily real estate
  
2,518
   
746
   
746
   
4,247
   
828
   
828
 
Commercial real estate:
                        
Owner occupied
  
2,171
   
39
   
30
   
2,620
   
136
   
119
 
Non-owner occupied
  
1,388
   
644
   
634
   
2,603
   
9
   
9
 
Commercial and industrial
  
2,152
   
546
   
546
   
9,184
   
44
   
44
 
All other
  
7,624
   
126
   
126
   
8,620
   
214
   
214
 
Total
 
$
18,274
  
$
2,310
  
$
2,291
  
$
31,577
  
$
1,371
  
$
1,354
 

The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the three months ended September 30, 2014 and September 30, 2013.   The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

  
Three months ended Sept. 30, 2014
  
Three months ended Sept. 30, 2013
 
Loan Class
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
  
Average
Recorded
 Investment
  
Interest
Income
Recognized
  
Cash Basis
Interest
Recognized
 
             
Residential real estate
 
$
2,166
  
$
148
  
$
148
  
$
3,920
  
$
42
  
$
42
 
Multifamily real estate
  
2,328
   
19
   
19
   
3,981
   
32
   
27
 
Commercial real estate:
                        
Owner occupied
  
2,080
   
10
   
9
   
2,544
   
40
   
38
 
Non-owner occupied
  
1,679
   
17
   
7
   
2,166
   
-
   
-
 
Commercial and industrial
  
1,337
   
4
   
4
   
7,223
   
3
   
3
 
All other
  
7,475
   
45
   
45
   
7,900
   
54
   
17
 
Total
 
$
17,065
  
$
243
  
$
232
  
$
27,734
  
$
171
  
$
127
 
Troubled Debt Restructurings
The following table presents TDR’s as of September 30, 2014 and December 31, 2013:

September 30, 2014
 
TDR’s on
Non-accrual
  
Other
TDR’s
  
Total
TDR’s
 
       
Residential  real estate
 
$
15
  
$
195
  
$
210
 
Commercial real estate
            
Non owner occupied
  
-
   
479
   
479
 
Commercial and industrial
  
-
   
779
   
779
 
All other
  
-
   
1,838
   
1,838
 
Total
 
$
15
  
$
3,291
  
$
3,306
 

December 31, 2013
 
TDR’s on
Non-accrual
  
Other
TDR’s
  
Total
TDR’s
 
       
Residential  real estate
 
$
23
  
$
296
  
$
319
 
Commercial real estate
            
Non owner occupied
  
-
   
506
   
506
 
Commercial and industrial
  
-
   
831
   
831
 
Consumer
  
-
   
5
   
5
 
All other
  
-
   
2,017
   
2,017
 
Total
 
$
23
  
$
3,655
  
$
3,678
 
Troubled Debt Restructuring During the Period
The following table presents TDR’s that occurred during the nine months ended September 30, 2014 and September 30, 2013:

  
Nine months ended Sept. 30, 2014
  
Nine months ended Sept. 30, 2013
 
Loan Class
 
Number of
Loans
  
Pre-
Modification
Outstanding
Recorded
Investment
  
Post-
Modification
Outstanding
Recorded
Investment
  
Number of
Loans
  
Pre-
Modification
Outstanding
Recorded
Investment
  
Post-
Modification
Outstanding
Recorded
Investment
 
             
All other
  
-
  $
-
  
$ 
-
   
1
  
$
16
  
$
16
 
Total
  
-
  
$
-
  
$
-
   
1
  
$
16
  
$
16
 
Risk Category of Loans by Class of Loans
As of September 30, 2014 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
 
Pass
  
Special
Mention
  
Substandard
  
Doubtful
  
Total
Loans
 
           
Residential real estate
 
$
263,920
  
$
7,940
  
$
6,711
  
$
15
  
$
278,586
 
Multifamily real estate
  
27,106
   
894
   
2,315
   
-
   
30,315
 
Commercial real estate:
                    
Owner occupied
  
94,219
   
5,770
   
3,468
   
-
   
103,457
 
Non-owner occupied
  
201,056
   
6,739
   
5,016
   
-
   
212,811
 
Commercial and industrial
  
99,758
   
2,224
   
1,753
   
29
   
103,764
 
Consumer
  
33,808
   
315
   
107
   
-
   
34,230
 
All other
  
77,313
   
5,604
   
8,314
   
-
   
91,231
 
Total
 
$
797,180
  
$
29,486
  
$
27,684
  
$
44
  
$
854,394
 

As of December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
 
Pass
  
Special
Mention
  
Substandard
  
Doubtful
  
Total
Loans
 
           
Residential real estate
 
$
202,789
  
$
6,204
  
$
7,065
  
$
23
  
$
216,081
 
Multifamily real estate
  
34,487
   
918
   
3,051
   
-
   
38,456
 
Commercial real estate:
                    
Owner occupied
  
79,694
   
7,431
   
3,348
   
66
   
90,539
 
Non-owner occupied
  
196,338
   
8,569
   
3,849
   
-
   
208,756
 
Commercial and industrial
  
78,205
   
2,269
   
4,753
   
74
   
85,301
 
Consumer
  
24,772
   
204
   
137
   
-
   
25,113
 
All other
  
62,180
   
5,947
   
8,285
   
112
   
76,524
 
                     
Total
 
$
678,465
  
$
31,542
  
$
30,488
  
$
275
  
$
740,770