Loans

12 Months Ended

Dec. 31, 2014

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

7. Loans

Loans receivable consist of the following:

	December 31,		December 31,
	2014		2013
	(In Thousands)
Real Estate:
Secured by 1-4 family residential	$	206,437	$	195,752
Secured by multi-family residential		156,530		148,952
Secured by commercial real estate		683,958		670,666
Construction		112,385		86,058
		1,159,310		1,101,428
Other Loans:
Commercial		399,730		388,236
Home equity and improvement		111,813		106,930
Consumer Finance		15,466		16,902
		527,009		512,068
Total loans		1,686,319		1,613,496
Deduct:
Undisbursed loan funds		(38,653)		(32,290)
Net deferred loan origination fees and costs		(880)		(758)
Allowance for loan loss		(24,766)		(24,950)
Totals	$	1,622,020	$	1,555,498

Loan segments have been identified by evaluating the portfolio based on collateral and credit risk characteristics.

The following table discloses allowance for loan loss activity year to date as of December 31, 2014, December 31, 2013, and December 31, 2012 by portfolio segment (In Thousands):

Year to Date December 31, 2014	1-4 Family Residential Real Estate		Multi- Family Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity and Improvement		Consumer Finance		Total
Beginning Allowance	$	2,847	$	2,508	$	12,000	$	134	$	5,678	$	1,635	$	148	$	24,950
Charge-Offs		(426)		-		(1,018)		-		(2,982)		(392)		(41)		(4,859)
Recoveries		188		7		2,670		-		435		193		65		3,558
Provisions		(115)		(62)		(2,384)		87		3,378		268		(55)		1,117
Ending Allowance	$	2,494	$	2,453	$	11,268	$	221	$	6,509	$	1,704	$	117	$	24,766

Year to Date December 31, 2013	1-4 Family Residential Real Estate		Multi-Family Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity and Improvement		Consumer Finance		Total
Beginning Allowance	$	3,506	$	2,197	$	12,702	$	75	$	6,325	$	1,759	$	147	$	26,711
Charge-Offs		(643)		(6)		(2,469)		-		(1,230)		(757)		(94)		(5,199)
Recoveries		282		-		837		-		290		125		80		1,614
Provisions		(298)		317		930		59		293		508		15		1,824
Ending Allowance	$	2,847	$	2,508	$	12,000	$	134	$	5,678	$	1,635	$	148	$	24,950

Year-to-Date December 31, 2012	1-4 Family Residential Real Estate		Multi-Family Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity and Improvement		Consumer Finance		Total
Beginning Allowance	$	4,095	$	2,850	$	17,640	$	63	$	6,576	$	1,856	$	174	$	33,254
Charge-Offs		(2,515)		(555)		(10,764)		-		(4,047)		(1,165)		(133)		(19,179)
Recoveries		177		122		895		-		359		95		64		1,712
Provisions		1,749		(220)		4,931		12		3,437		973		42		10,924
Ending Allowance	$	3,506	$	2,197	$	12,702	$	75	$	6,325	$	1,759	$	147	$	26,711

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, 2014: (In Thousands)

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:

Ending allowance balance attributable to loans:

Individually evaluated for impairment	$	216	$	-	$	1,003	$	-	$	30	$	24	$	-	$	1,273

Collectively evaluated for impairment		2,278		2,453		10,265		221		6,479		1,680		117		23,493

Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-

Total ending allowance balance	$	2,494	$	2,453	$	11,268	$	221	$	6,509	$	1,704	$	117	$	24,766

Loans:

Loans individually evaluated for impairment	$	10,281	$	2,482	$	28,117	$	150	$	5,739	$	2,242	$	34	$	49,045

Loans collectively evaluated for impairment		196,582		154,178		657,677		73,572		395,270		110,040		15,417		1,602,736

Loans acquired with deteriorated credit quality		1		-		163		-		22		-		-		186

Total ending loans balance	$	206,864	$	156,660	$	685,957	$	73,722	$	401,031	$	112,282	$	15,451	$	1,651,967

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:

Ending allowance balance attributable to loans:

Individually evaluated for impairment	$	220	$	-	$	1,121	$	-	$	6	$	45	$	-	$	1,392

Collectively evaluated for impairment		2,627		2,508		10,879		134		5,672		1,590		148		23,558

Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-

Total ending allowance balance	$	2,847	$	2,508	$	12,000	$	134	$	5,678	$	1,635	$	148	$	24,950

Loans:

Loans individually evaluated for impairment	$	10,245	$	840	$	34,874	$	263	$	8,737	$	2,429	$	53	$	57,441

Loans collectively evaluated for impairment		185,923		148,294		637,657		53,467		380,711		104,958		16,838		1,527,848

Loans acquired with deteriorated credit quality		29		-		174		-		27		-		-		230

Total ending loans balance	$	196,197	$	149,134	$	672,705	$	53,730	$	389,475	$	107,387	$	16,891	$	1,585,519

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Twelve Months Ended December 31,
	2014
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	6,177	$	317	$	313
Residential Non Owner Occupied		3,920		143		143
Total 1-4 Family Residential Real Estate		10,097		460		456
Multi-Family Residential Real Estate		903		4		4
CRE Owner Occupied		8,906		145		142
CRE Non Owner Occupied		18,164		807		809
Agriculture Land		611		14		14
Other CRE		1,694		20		22
Total Commercial Real Estate		29,375		986		987
Construction		233		12		15
Commercial Working Capital		2,790		29		29
Commercial Other		4,576		14		12
Total Commercial		7,366		43		41
Home Equity and Home Improvement		2,233		95		94
Consumer Finance		47		3		3
Total Impaired Loans	$	50,254	$	1,603	$	1,600

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Twelve Months Ended December 31, 2013
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	6,529	$	345	$	343
Residential Non Owner Occupied		4,453		162		163
Total 1-4 Family Residential Real Estate		10,982		507		506
Multi-Family Residential Real Estate		1,176		27		28
CRE Owner Occupied		14,313		376		386
CRE Non Owner Occupied		22,339		901		909
Agriculture Land		987		26		16
Other CRE		4,162		43		38
Total Commercial Real Estate		41,801		1,346		1,349
Construction		165		10		8
Commercial Working Capital		2,085		33		36
Commercial Other		6,521		75		70
Total Commercial		8,606		108		106
Home Equity and Home Improvement		2,631		121		117
Consumer Finance		83		6		6
Total Impaired Loans	$	65,444	$	2,125	$	2,120

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Twelve Months Ended December 31, 2012
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	2,946	$	137	$	136
Residential Non Owner Occupied		5,291		173		177
Total 1-4 Family Residential Real Estate		8,237		310		313
Multi-Family Residential Real Estate		826		22		21
CRE Owner Occupied		11,755		190		176
CRE Non Owner Occupied		17,156		540		559
Agriculture Land		1,062		31		23
Other CRE		6,672		15		15
Total Commercial Real Estate		36,645		776		773
Construction		9		-		-
Commercial Working Capital		2,021		26		29
Commercial Other		5,018		87		90
Total Commercial		7,039		113		119
Home Equity and Home Improvement		563		33		33
Consumer Finance		25		3		3
Total Impaired Loans	$	53,344	$	1,257	$	1,262

The following table presents loans individually evaluated for impairment by class of loans (In Thousands):

	December 31, 2014						December 31, 2013
	Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated
With no allowance recorded:
Residential Owner Occupied	$	3,967	$	3,859	$	-	$	4,744	$	4,729	$	-
Residential Non Owner Occupied		3,763		3,670		-		4,844		4,329		-
Total 1-4 Family Residential Real Estate		7,730		7,529		-		9,588		9,058		-
Multi-Family Residential Real Estate		2,627		2,482		-		989		840		-
CRE Owner Occupied		7,109		6,481		-		11,105		8,376		-
CRE Non Owner Occupied		4,106		3,759		-		9,399		7,740		-
Agriculture Land		213		208		-		629		488		-
Other CRE		2,923		2,378		-		3,274		2,452		-
Total Commercial Real Estate		14,351		12,826		-		24,407		19,056		-
Construction		150		150		-		300		263		-
Commercial Working Capital		1,155		1,157		-		3,147		3,146		-
Commercial Other		3,966		3,663		-		6,063		5,415		-
Total Commercial		5,121		4,820		-		9,210		8,561		-

Home Equity and Home Improvement		2,192		2,140		-		1,985		1,992		-
Consumer Finance		35		34		-		53		53		-

Total loans with no allowance recorded	$	32,206	$	29,981	$	-	$	46,532	$	39,823	$	-

With an allowance recorded:
Residential Owner Occupied	$	2,112	$	2,114	$	204	$	1,100	$	1,103	$	218
Residential Non Owner Occupied		636		638		12		84		84		2
Total 1-4 Family Residential Real Estate		2,748		2,752		216		1,184		1,187		220
Multi-Family Residential Real Estate		-		-		-		-		-		-
CRE Owner Occupied		2,667		2,257		148		3,212		2,765		166
CRE Non Owner Occupied		13,020		12,606		842		12,756		12,803		946
Agriculture Land		333		320		10		195		197		7
Other CRE		137		108		3		82		53		2
Total Commercial Real Estate		16,157		15,291		1,003		16,245		15,818		1,121
Construction		-		-		-		-		-		-
Commercial Working Capital		649		650		21		-		-		-
Commercial Other		264		269		9		176		176		6
Total Commercial		913		919		30		176		176		6
Home Equity and Home Improvement		101		102		24		436		437		45
Consumer Finance		-		-		-		-		-		-
Total loans with an allowance recorded	$	19,919	$	19,064	$	1,273	$	18,041	$	17,618	$	1,392

* Presented gross of charge offs

The following table presents the current balance of the aggregate amounts of non-performing assets, comprised of non-performing loans and real estate owned on the dates indicated:

	December 31, 2014		December 31, 2013
	(In Thousands)
Non-accrual loans	$	24,130	$	27,847
Loans over 90 days past due and still accruing		-		-
Total non-performing loans		24,130		27,847
Real estate and other assets held for sale		6,181		5,859
Total non-performing assets	$	30,311	$	33,706

Troubled debt restructuring, still accruing	$	24,686	$	27,630

The following table presents the aging of the recorded investment in past due and non-accrual loans as of December 31, 2014 by class of loans (In Thousands):

	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Residential Owner Occupied	$	141,597	$	39	$	1,079	$	365	$	1,483	$	1,702
Residential Non Owner Occupied		62,991		110		105		578		793		1,625
Total 1-4 Family Residential Real Estate		204,588		149		1,184		943		2,276		3,327
Multi-Family Residential Real Estate		156,413		247		-		-		247		2,546

CRE Owner Occupied		299,500		163		1,566		1,753		3,482		7,004
CRE Non Owner Occupied		243,341		119		416		1,308		1,843		2,582
Agriculture Land		93,529		-		14		-		14		686
Other Commercial Real Estate		43,835		155		-		258		413		2,359

Total Commercial Real Estate		680,205		437		1,996		3,319		5,752		12,631

Construction		73,722		-		-		-		-		-

Commercial Working Capital		135,009		-		-		951		951		1,103
Commercial Other		262,982		67		10		2,012		2,089		3,897

Total Commercial		397,991		67		10		2,963		3,040		5,000

Home Equity and Home Improvement		110,940		1,236		0		106		1,342		619
Consumer Finance		15,326		68		57		-		125		12

Total Loans	$	1,639,185	$	2,204	$	3,247	$	7,331	$	12,782	$	24,135

The following table presents the aging of the recorded investment in past due and non-accrual loans as of December 31, 2013 by class of loans: (In Thousands)

	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Residential Owner Occupied	$	126,855	$	1,530	$	191	$	1,009	$	2,730	$	1,329
Residential Non Owner Occupied		65,292		531		403		386		1,320		1,943
Total 1-4 Family Residential Real Estate		192,147		2,061		594		1,395		4,050		3,272
Multi-Family Residential Real Estate		149,134		-		-		-		-		583

CRE Owner Occupied		311,253		334		495		3,671		4,500		7,492
CRE Non Owner Occupied		225,433		1,067		918		902		2,887		4,717
Agriculture Land		81,954		21		-		73		94		630
Other Commercial Real Estate		45,297		-		-		1,287		1,287		2,412

Total Commercial Real Estate		663,937		1,422		1,413		5,933		8,768		15,251

Construction		53,730		-		-		-		-		-

Commercial Working Capital		155,373		-		-		419		419		2,917
Commercial Other		230,054		37		26		3,566		3,629		5,419

Total Commercial		385,427		37		26		3,985		4,048		8,336

Home Equity and Home Improvement		105,657		1,163		155		413		1,731		413
Consumer Finance		16,759		131				-		131		-

Total Loans	$	1,566,791	$	4,814	$	2,188	$	11,726	$	18,728	$	27,855

Troubled Debt Restructurings

As of December 31, 2014 and 2013, the Company has a recorded investment in troubled debt restructurings (“TDRs”) of $33.0 million and $33.4 million, respectively. The Company has allocated $1.1 million and $1.2 million, of specific reserves to those loans at December 31, 2014 and 2013, and has committed to lend additional amounts totaling up to $69,000 and $300,000 at December 31, 2014 and 2013.

The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Each TDR is uniquely designed to meet the specific needs of the borrower. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral or an additional guarantor is often requested when granting a concession. Commercial mortgage loans modified in a TDR often involve temporary interest-only payments, re-amortization of remaining debt in order to lower payments, and sometimes reducing the interest rate lower than the current market rate. Residential mortgage loans modified in a TDR are comprised of loans where monthly payments are lowered, either through interest rate reductions or principal only payments for a period of time, to accommodate the borrowers’ financial needs, interest is capitalized into principal, or the term and amortization are extended. Home equity modifications are made infrequently and usually involve providing an interest rate that is lower than the borrower would be able to obtain due to credit issues. All retail loans where the borrower is in bankruptcy are classified as TDRs regardless of whether or not a concession is made.

Of the loans modified in a TDR, $8.3 million are on non-accrual status and partial charge-offs have in some cases been taken against the outstanding balance. Loans modified as a TDR may have the financial effect of increasing the allowance associated with the loan. If the loan is determined to be collateral dependent, the estimated fair value of the collateral, less any selling costs is used to determine if there is a need for a specific allowance or charge-off. If the loan is determined to be cash flow dependent, the allowance is measured based on the present value of expected future cash flows discounted at the loan’s pre-modification effective interest rate.

The following table presents loans by class modified as TDRs that occurred during the years ending December 31, 2014, 2013, and 2012 (Dollars in Thousands):

	Loans Modified as a TDR for the Twelve Months Ended December 31, 2014			Loans Modified as a TDR for the Twelve Months Ended December 31, 2013			Loans Modified as a TDR for the Twelve Months Ended December 31, 2012
TDRs	Number of Loans	Recorded Investment (as of period end)		Number of Loans	Recorded Investment (as of period end)		Number of Loans	Recorded Investment (as of period end)

Residential Owner Occupied	18	$	1,726	10	$	752	87	$	6,052
Residential Non Owner Occupied	3		517	5		390	8		666
CRE Owner Occupied	2		27	9		714	9		3,859
CRE Non Owner Occupied	3		403	2		1,364	13		13,942
Agriculture Land	-		-	2		269	3		474
Other CRE	-		-	3		417	1		59
Commercial Working Capital	4		1,353	3		662	-		-
Commercial Other	16		2,020	5		940	7		1,196
Home Equity and Home Improvement	17		471	15		561	127		2,663
Consumer Finance	4		15	3		15	27		124
Total	67	$	6,532	57	$	6,084	282	$	29,035

The loans described above increased the allowance for loan losses (“ALLL”) by $234,000 for the year ended December 31, 2014, $27,000 for the year ended December 31, 2013, and decreased the ALLL by $1.2 million for the year ended December 31, 2012.

Of the 2014 modifications, 16 were made TDRs due to the fact that the borrower has filed bankruptcy, 5 were made TDRs due to a rate reduction, 1 was made a TDR due to an interest only period, 8 were made TDRs due to extending the amortization, 2 were made TDRs due to a reduction in the payment, 9 were made TDRs due to advancing or renewing funds to a watchlist credit, 4 were made to term out lines of credit, 5 were made to extend the maturity of existing loans, and 20 were made TDRs to refinance current debt for payment relief.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the years ending December 31, 2014, 2013, and 2012:

	Twelve Months Ended December 31, 2014 ($ in thousands)			Twelve Months Ended December 31, 2013 ($ in thousands)			Twelve Months Ended December 31, 2012 ($ in thousands)
TDRs That Subsequently Defaulted:	Number of Loans	Recorded Investment (as of Period End)		Number of Loans	Recorded Investment (as of Period End)		Number of Loans	Recorded Investment (as of Period End)

Residential Owner Occupied	1	$	80	6	$	409	6	$	462
Residential Non Owner Occupied	1		178	-		-	2		203
CRE Owner Occupied	-		-	2		290	-		-
CRE Non Owner Occupied	-		-	1		212	3		555
Agriculture Land	-		-	-		-	-		-
Other CRE	-		-	1		323	-		-
Commercial Working Capital	2		868	1		149	1		529
Commercial Other	5		865	4		740	4		1,600
Home Equity and Home Improvement	-		-	3		315	7		166
Consumer	-		-	-		-	-		-
Total	9	$	1,991	18	$	2,438	23	$	3,515

The TDRs that subsequently defaulted described above decreased the ALLL by $14,000 after $176,000 in charge-offs for the year ended December 31, 2014, increased the ALLL by $21,000 after $58,000 in charge-offs for the year ended December 31, 2013, and increased the ALLL by $631,000 after $1.5 million in charge-offs for the year ended December 31, 2012.

A default for purposes of this disclosure is a TDR loan in which the borrower is 90 days contractually past due under the modified terms.

The terms of certain other loans were modified during the periods ending December 31, 2014 and 2013 that did not meet the definition of a TDR. The modification of these loans involved a modification of the terms of a loan to borrowers who were not experiencing financial difficulties. A total of 153 loans were modified under this definition during the twelve month period ended December 31, 2014 and a total of 152 loans were modified under this definition during the twelve month period ended December 31, 2013.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed regarding the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

Credit Quality Indicators

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans are analyzed individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans, such as commercial and commercial real estate loans and certain homogenous mortgage, home equity and consumer loans. This analysis is performed on a quarterly basis. First Defiance uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Not Graded. Loans classified as not graded are generally smaller balance residential real estate, home equity and consumer installment loans which are originated primarily by using an automated underwriting system. These loans are monitored based on their delinquency status and are evaluated individually only if they are seriously delinquent.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total

Residential Owner Occupied	$	4,230	$	131	$	3,048	$	365	$	135,306	$	143,080
Residential Non Owner Occupied		51,327		2,404		4,872		7		5,174		63,784
Total 1-4 Family Real Estate		55,557		2,535		7,920		372		140,480		206,864
Multi-Family Residential Real Estate		152,290		220		3,236		-		914		156,660

CRE Owner Occupied		273,406		18,448		9,953		-		1,175		302,982
CRE Non Owner Occupied		224,073		7,898		13,186		-		27		245,184
Agriculture Land		90,875		1,849		819		-		-		93,543
Other CRE		40,147		63		3,466		-		572		44,248

Total Commercial Real Estate		628,501		28,258		27,424		-		1,774		685,957

Construction		62,355		-		150		-		11,217		73,722

Commercial Working Capital		128,229		6,287		1,444		-		-		135,960
Commercial Other		253,576		6,504		4,991		-		-		265,071

Total Commercial		381,805		12,791		6,435		-		-		401,031

Home Equity and Home Improvement		-		-		1,647		106		110,529		112,282
Consumer Finance		-		-		125		-		15,326		15,451

Total Loans	$	1,280,508	$	43,804	$	46,937	$	478	$	280,240	$	1,651,967

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 (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total

Residential Owner Occupied	$	4,287	$	18	$	3,515	$	-	$	121,765	$	129,585
Residential Non Owner Occupied		51,660		2,894		5,699		-		6,359		66,612
Total 1-4 Family Real Estate		55,947		2,912		9,214		-		128,124		196,197
Multi-Family Residential Real Estate		145,407		875		1,888		-		964		149,134

CRE Owner Occupied		291,770		10,584		11,665		-		1,734		315,753
CRE Non Owner Occupied		200,790		10,254		17,185		-		91		228,320
Agriculture Land		80,418		578		1,051		-		-		82,047
Other CRE		40,676		2,074		3,104		-		731		46,585

Total Commercial Real Estate		613,654		23,490		33,005		-		2,556		672,705

Construction		43,465		-		263		-		10,002		53,730

Commercial Working Capital		148,703		3,429		3,660		-		-		155,792
Commercial Other		219,790		6,994		6,899		-		-		233,683

Total Commercial		368,493		10,423		10,559		-		-		389,475

Home Equity and Home Improvement		-		-		755		45		106,587		107,387
Consumer Finance		-		-		31		-		16,860		16,891

Total Loans	$	1,226,966	$	37,700	$	55,715	$	45	$	265,093	$	1,585,519

Certain loans acquired had evidence that the credit quality of the loan had deteriorated since its origination and in management’s assessment at the acquisition date it was probable that First Defiance would be unable to collect all contractually required payments due. In accordance with FASB ASC Topic 310 Subtopic 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, these loans have been recorded based on management’s estimate of the fair value of the loans. Details of these loans are as follows:

	Contractual Amount Receivable		Impairment Discount		Recorded Loan Receivable
	(In Thousands)
Balance at January 1, 2012	$	2,206	$	1,003	$	1,203
Principal payments received		(697)		-		(697)
Loans charged off		(487)		(487)		-
Additional provision for loan loss		(167)		-		(167)
Loan accretion recorded		-		(173)		173
Balance at December 31, 2012		855		343		512
Principal payments received		(108)		-		(108)
Loans charged off		(41)		(41)		-
Additional provision for loan loss		(203)		-		(203)
Loan accretion recorded		-		(29)		29
Balance at December 31, 2013		503		273		230
Principal payments received		(90)		-		(90)
Loans charged off		-		-		-
Additional provision for loan loss		-		-		-
Loan accretion recorded		-		(46)		46
Balance at December 31, 2014	$	413	$	227	$	186

Loans to executive officers, directors, and their affiliates are as follows:

	Years Ended December 31
	2014		2013
	(In Thousands)
Beginning balance	$	3,712	$	3,489
New loans		9,800		8,874
Effect of changes in composition of related parties		(6)		-
Repayments		(7,618)		(8,651)
Ending Balance	$	5,888	$	3,712

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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