Loans, net (Tables)

6 Months Ended

Jun. 30, 2013

Loans receivable consisted of the following (dollars in thousands):

	June 30,			December 31,
	2013			2012
Mortgage loans:
Fixed-rate residential	$	5,740		$	6,329
Adjustable-rate residential		3,230			3,376
Commercial real estate		74,383			75,210
Construction		414			59
Total mortgage loans		83,767			84,974
Commercial nonreal estate		9,120			9,024
Consumer loans:
Home equity		13,045			14,063
Consumer and installment		17,100			19,468
Consumer lines of credit		267			267
Total consumer loans		30,412			33,798
Total loans		123,299			127,796
Adjustments:
Unamortized loan discount		(169	)		(181	)
Loans in process		1,141			--
Allowance for loan losses		(4,312	)		(4,367	)
Net deferred loan origination costs		129			166
Total, net	$	120,088		$	123,414
Weighted-average interest rate of loans		4.90	%		5.15	%

Information about Impaired Loans

Information about impaired loans for the periods ended June 30, 2013 and December 31, 2012 is as follows (in thousands):

	June 30,		December 31,
	2013		2012

Loans receivable for which there is a related allowance for credit losses determined in accordance with ASC 310-10/Statement No. 114	$	4,944	$	5,339
Other impaired loans		15,755		20,508
Total impaired loans	$	20,699	$	25,847
Average monthly balance of impaired loans	$	19,161	$	29,171
Specific allowance for credit losses	$	2,135	$	2,385

Impaired Loans

For the Periods Ended June 30, 2013 and December 31, 2012

(in thousands)

June 30, 2013	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment

With no related allowance recorded:

Commercial
Commercial real estate	$	9,929	$	8,499	$	--	$	9,214
Commercial non real estate		2,353		2,002		--		2,178

Consumer
Consumer – other		3,989		3,036		--		3,513
Consumer - home equity		689		646		--		667

Residential real estate
1-4 Family		1,773		1,572		--		1,672

With a related allowance recorded:

Commercial
Commercial real estate	$	5,597	$	3,340	$	1,273	$	4,468
Commercial non real estate		112		95		47		104

Consumer
Consumer – other		1,778		1,509		815		1,644

Residential real estate
1-4 Family		--		--		--		--

Total:	$	26,220	$	20,699	$	2,135	$	23,460
Commercial		17,991		13,936		1,320		15,964
Consumer		6,456		5,191		815		5,824
Residential		1,773		1,572		--		1,672

December 31, 2012	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment

With no related allowance recorded:

Commercial
Commercial real estate	$	14,778	$	13,273	$	--	$	14,025
Commercial non real estate		2,004		1,680		--		1,842

Consumer
Consumer - other		4,611		3,696		--		4,154
Consumer - home equity		566		536		--		551

Residential real estate
1-4 Family		1,448		1,323		--		1,385

With a related allowance recorded:

Commercial
Commercial real estate	$	5,622	$	3,388	$	1,260	$	4,505
Commercial non real estate		206		189		49		198

Consumer
Consumer – other		1,363		1,354		962		1,358

Residential real estate
1-4 Family		416		408		114		412

Total:	$	31,014	$	25,847	$	2,385	$	28,430
Commercial		22,610		18,530		1,309		20,570
Consumer		6,540		5,586		962		6,063
Residential		1,864		1,731		114		1,797

Loans Receivable on Non - Accrual Basis

Loans Receivable on Nonaccrual Status

As of June 30, 2013 and December 31, 2012

(in thousands)

	June 30,		December 31,
	2013		2012
Commercial
Commercial real estate	$	6,878	$	8,734
Commercial non real estate		917		835

Consumer
Consumer – other		2,733		2,287
Consumer – automobile		7		19
Consumer – home equity		440		329

Residential real estate
1-4 family		1,228		970
Total	$	12,203	$	13,174

Allowance for Loan Losses and Recorded Investment in Loans Receivable

(in thousands)

			Commercial
	Commercial		Real Estate			Consumer			Residential			Total

June 30, 2013

Allowance for loan losses:

Beginning balance	$	1,040	$	1,675		$	1,301		$	351		$	4,367
Charge-offs		--		(299	)		(337	)		(15	)		(651	)
Recoveries		3		65			22			5			95
Provisions		--		400			204			(104	)		500
Ending balance	$	1,043	$	1,841		$	1,190		$	238		$	4,312

Loans receivable:

Ending balances:
Individually evaluated for impairment	$	2,097	$	11,839		$	5,191		$	1,572		$	20,699
Allowance for loan losses		47		1,273			815			--			2,135
Collectively evaluated for impairment imprimpairment	$	7,023	$	62,544		$	25,221		$	7,812		$	102,518
Allowance for loan losses		996		568			375			238			2,177
Ending balance	$	9,120	$	74,383		$	30,412		$	9,384		$	123,217
Total allowance for loan losses	$	1,043	$	1,841		$	1,190		$	238		$	4,312

				Commercial
	Commercial			Real Estate			Consumer			Residential			Total

December 31, 2012

Allowance for loan losses:

Beginning balance	$	1,887		$	1,920		$	484		$	258		$	4,549
Charge-offs		(118	)		(339	)		(576	)		(8	)		(1,041	)
Recoveries		52			94			5			4			155
Provisions		(781	)		--			1,388			97			704
Ending Balance	$	1,040		$	1,675		$	1,301		$	351		$	4,367

Loans receivable:

Ending balances:
Individually evaluated for impairment	$	1,869		$	16,661		$	5,586		$	1,731		$	25,847
Allowance for loan losses		49			1,260			962			114			2,385
Collectively evaluated for impairment imprimpairment	$	7,155		$	58,549		$	28,212		$	8,033		$	101,949
Allowance for loan losses		991			415			339			237			1,982
Ending balance	$	9,024		$	75,210		$	33,798		$	9,764		$	127,796
Total allowance for loan losses	$	1,040		$	1,675		$	1,301		$	351		$	4,367

Credit Risk Profile by Creditworthiness Category

Consumer Credit Exposure (1)

Credit Risk Profile Based on Payment Activity

													Residential real estate
	Other				Consumer automobile				Home equity				1-4 family
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2013		2012		2013		2012		2013		2012		2013		2012

Performing	$	13,843	$	16,676	$	784	$	753	$	12,605	$	13,734	$	8,156	$	8,794
Nonperforming		2,733		2,287		7		19		440		329		1,228		970
Total	$	16,576	$	18,963	$	791	$	772	$	13,045	$	14,063	$	9,384	$	9,764

(1) Credit quality indicators are reviewed and updated as applicable on an ongoing basis in accordance with credit policies.

Past Due Loan Trends for Corporation's Loans Receivable

The following are past due loans for the Corporation’s loans receivable for the periods ended June 30, 2013 and December 31, 2012 (in thousands).

					Greater
	30 -59 Days		60 - 89 Days		Than		Total Past				Total Loans
	Past Due		Past Due		90 Days		Due		Current		Receivable
June 30, 2013

Commercial:
Commercial non real estate	$	75	$	64	$	854	$	993	$	8,127	$	9,120
Commercial real estate		931		1,459		4,536		6,926		67,457		74,383
Consumer:
Consumer – other		635		322		1,161		2,118		14,458		16,576
Consumer – automobile		2		3		2		7		784		791
Consumer – home equity		148		--		163		311		12,734		13,045
Residential 1-4 family		156		162		278		596		8,788		9,384
Total	$	1,947	$	2,010	$	6,994	$	10,951	$	112,348	$	123,299

December 31, 2012

Commercial:
Commercial non real estate	$	146	$	110	$	646	$	902	$	8,122	$	9,024
Commercial real estate		2,525		482		6,047		9,054		66,156		75,210
Consumer:
Consumer – other		638		419		1,045		2,102		16,861		18,963
Consumer – automobile		11		5		3		19		753		772
Consumer – home equity		157		7		168		332		13,731		14,063
Residential 1-4 family		259		406		970		1,635		8,129		9,764
Total	$	3,736	$	1,429	$	8,879		14,044	$	113,752	$	127,796

Loan Modifications for Corporation's Loans Receivable

The following are loan modifications for the Corporation’s loans receivable for the three and six month periods ended June 30, 2013.

	Three Months Ended June 30, 2013					Six Months Ended June 30, 2013
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
	Number	Outstanding		Outstanding		Number	Outstanding		Outstanding
Troubled Debt Restructurings	of New	Recorded		Recorded		of New	Recorded		Recorded
Added during current period	Contracts	Investment		Investment		Contracts	Investment		Investment
	(in thousands)					(in thousands)
Commercial:
Commercial non real estate	-	$	--	$	--	--	$	--	$	--
Commercial real estate	2		326		326	2		326		326
Consumer:
Consumer – other	2		261		261	3		346		341
Residential 1-4 family	1		49		49	1		49		49
Total	5	$	636	$	636	6	$	721	$	716

	Three Months Ended June 30, 2013					Six Months Ended June 30, 2013
		Post					Post
		Modification					Modification
	Number	Outstanding		Defaulted		Number	Outstanding		Defaulted
Troubled Debt Restructurings	of New	Recorded		Recorded		of New	Recorded		Recorded
Defaulted during the period	Contracts	Investment		Investment		Contracts	Investment		Investment
Added since last twelve months	(in thousands)

Commercial:
Commercial non real estate	--	$	--	$	--	--	$	--	$	--
Commercial real estate	--		--		--	--		--		--
Consumer:
Consumer – other	2		187		187	2		187		187
Total	2	$	187	$	187	2	$	187	$	187

Consumer Portfolio Segment

Credit Risk Profile by Creditworthiness Category

Consumer Credit Exposure (1)

Credit Risk Profile by Internally Assigned Grade

	Residential				Consumer
	June 30,		December 31,		June 30,		December 31,
	2013		2012		2013		2012
Grade:
Pass	$	7,619	$	7,905	$	25,470	$	27,976
Special mention		383		732		791		1,366
Substandard		1,382		1,127		4,151		4,456
Total	$	9,384	$	9,764	$	30,412	$	33,798

(1) Credit quality indicators are reviewed and updated as applicable on an ongoing basis in accordance with credit policies.

Commercial Portfolio Segment

Credit Risk Profile by Creditworthiness Category

Commercial Credit Exposure (1)

Credit Risk Profile by Creditworthiness Category

	Commercial non real estate				Commercial real estate
	June 30,		December 31,		June 30,		December 31,
	2013		2012		2013		2012
Grade 1 Superior quality	$	53	$	58	$	--	$	--
Grade 2 Good quality		--		--		--		--
Grade 3 Satisfactory		215		209		6,565		7,238
Grade 4 Acceptable		3,379		4,148		25,928		24,844
Grade 5 Watch		2,631		2,433		27,316		23,762
Grade 6 Special mention		1,165		1,125		3,930		6,860
Grade 7 Substandard		1,582		957		9,394		11,256
Grade 8 Doubtful		95		94		1,250		1,250
Total	$	9,120	$	9,024	$	74,383	$	75,210

(1) Credit quality indicators are reviewed and updated as applicable on an ongoing basis in accordance with credit policies.