Loans and Allowance | 12 Months Ended |
Dec. 31, 2013 |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | ' |
Loans and Allowance | ' |
Note 6: Loans and Allowance | | | | | | | | | | | | | | | | | | | | | | | |
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The Company’s loan and allowance polices are discussed in Note 1 above. |
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The following table presents the breakdown of loans as of December 31, 2013 and December 31, 2012. |
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| | | 31-Dec-13 | | | 31-Dec-12 | | | | | | | | | | | | | | | |
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| Construction/Land | | $ | 24,307 | | | $ | 26,506 | | | | | | | | | | | | | | | |
| One-to-four family residential | | | 137,298 | | | | 137,402 | | | | | | | | | | | | | | | |
| Multi-family residential | | | 16,408 | | | | 19,988 | | | | | | | | | | | | | | | |
| Nonresidential and agricultural land | | | 118,946 | | | | 106,433 | | | | | | | | | | | | | | | |
| Commercial | | | 24,741 | | | | 19,549 | | | | | | | | | | | | | | | |
| Consumer and other | | | 4,326 | | | | 4,906 | | | | | | | | | | | | | | | |
| | | | 326,026 | | | | 314,784 | | | | | | | | | | | | | | | |
| Unamortized deferred loan costs | | | 487 | | | | 484 | | | | | | | | | | | | | | | |
| Undisbursed loans in process | | | (5,775 | ) | | | (6,186 | ) | | | | | | | | | | | | | | |
| Allowance for loan losses | | | (4,510 | ) | | | (3,564 | ) | | | | | | | | | | | | | | |
| Total loans | | $ | 316,228 | | | $ | 305,518 | | | | | | | | | | | | | | | |
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The risk characteristics of each loan portfolio class are as follows: |
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Construction, Land and Land Development |
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The Construction, Land and Land Development segments include loans for raw land, loans to develop raw land preparatory to building construction, and construction loans of all types. Construction and development loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction and development loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest-rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing. |
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Land loans are secured by raw land held as an investment, for future development, or as collateral for other use. Management monitors and evaluates these loans based on collateral, geography and risk grade criteria. These loans are underwritten based on the underlying purpose of the loan with repayment primarily from the sale or use of the underlying collateral. |
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One-to-Four Family Residential and Consumer |
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With respect to residential loans that are secured by one-to-four family residences and are usually owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. This segment also includes residential loans secured by non-owner-occupied one-to-four family residences. Management tracks the level of owner-occupied residential loans versus non-owner-occupied residential loans as a portion of our recent loss history relates to these loans. Home equity loans are typically secured by a subordinate interest in one-to-four family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. |
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Nonresidential (including agricultural land) and Multi-family Residential |
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These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Nonresidential and multi-family residential real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Nonresidential and multi-family residential real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s nonresidential and multi-family residential real estate portfolio are diverse in terms of type and geographic location. Management monitors and evaluates these loans based on collateral, geography and risk grade criteria. As a general rule, the Company avoids financing single-purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied residential real estate loans versus non-owner-occupied residential loans. |
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Commercial |
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Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. |
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The following tables present the activity in the allowance for loan losses for the years ended December 31, 2013 and December 31, 2012, and information regarding the breakdown of the balance in the allowance for loan losses and the recorded investment in loans, both presented by portfolio class and impairment method, as of December 31, 2013 and December 31, 2012. |
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| | | Construction/Land | | 1-4 Family | | Multi-Family | | Nonresidential | | Commercial | | Consumer | | Total | |
| Year Ended | | | | | | | | | | | | | | | |
31-Dec-13 |
| Balances at beginning of period: | | $ | 648 | | $ | 1,423 | | $ | 281 | | $ | 1,078 | | $ | 133 | | $ | 1 | | $ | 3,564 | |
| Provision for losses | | | 109 | | | 565 | | | 123 | | | (180 | ) | | 181 | | | 134 | | | 932 | |
| Loans charged off | | | (99 | ) | | (245 | ) | | - | | | (182 | ) | | (140 | ) | | (177 | ) | | (843 | ) |
| Recoveries on loans | | | 18 | | | 6 | | | | | | 754 | | | 15 | | | 64 | | | 857 | |
| Balances at end of period | | $ | 676 | | $ | 1,749 | | $ | 404 | | $ | 1,470 | | $ | 189 | | $ | 22 | | $ | 4,510 | |
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| Year Ended | | | | | | | | | | | | | | | | | | | | | | |
31-Dec-12 |
| | | $ | 1,016 | | $ | 1,986 | | $ | 65 | | $ | 822 | | | 70 | | $ | 44 | | $ | 4,003 | |
Balances at beginning of period: |
| Provision for losses | | | (31 | ) | | 493 | | | 216 | | | 619 | | | 63 | | | 22 | | | 1,382 | |
| Loans charged off | | | (341 | ) | | (1,136 | ) | | - | | | (366 | ) | | - | | | (89 | ) | | (1,932 | ) |
| Recoveries on loans | | | 4 | | | 80 | | | - | | | 3 | | | - | | | 24 | | | 111 | |
| Balances at end of period | | $ | 648 | | $ | 1,423 | | $ | 281 | | $ | 1,078 | | $ | 133 | | $ | 1 | | $ | 3,564 | |
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| | | Construction/ Land | | 4-Jan | | Multi-Family | | Nonresidential | | Commercial | | Consumer | | Total | |
Family |
| As of December 31, 2013 | | | | | | | | | | | | | | | |
Allowance for losses: |
| Individually evaluated for impairment | | $ | 195 | | $ | 552 | | $ | 196 | | $ | 97 | | $ | 68 | | $ | - | | $ | 1,108 | |
| Collectively evaluated for impairment | | | 481 | | | 1,101 | | | 110 | | | 1,305 | | | 120 | | | 21 | | | 3,138 | |
| Loans acquired with a deteriorated credit quality | | | - | | | 96 | | | 98 | | | 68 | | | 1 | | | 1 | | | 264 | |
| Balances at end of period | | $ | 676 | | $ | 1,749 | | $ | 404 | | $ | 1,470 | | $ | 189 | | $ | 22 | | $ | 4,510 | |
| Loans: | | | | | | | | | | | | | | | | | | | | | | |
| Individually evaluated for impairment | | $ | 4,104 | | $ | 5,917 | | $ | 1,074 | | $ | 4,096 | | $ | 372 | | $ | - | | $ | 15,563 | |
| Collectively evaluated for impairment | | | 19,866 | | | 130,100 | | | 14,834 | | | 114,145 | | | 24,354 | | | 4,307 | | | 307,606 | |
| Loans acquired with a deteriorated credit quality | | | 337 | | | 1,281 | | | 500 | | | 705 | | | 15 | | | 19 | | | 2,857 | |
| Balances at end of period | | $ | 24,307 | | $ | 137,298 | | $ | 16,408 | | $ | 118,946 | | $ | 24,741 | | $ | 4,326 | | $ | 326,026 | |
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As of December 31, 2012 |
Allowance for losses: |
| Individually evaluated for impairment | | $ | 195 | | $ | 310 | | $ | 196 | | $ | - | | $ | 93 | | $ | - | | $ | 794 | |
| Collectively evaluated for impairment | | | 453 | | | 1,113 | | | 85 | | | 1,078 | | | 40 | | | 1 | | | 2,770 | |
| Loans acquired with a deteriorated credit quality | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| Balances at end of period | | $ | 648 | | $ | 1,423 | | $ | 281 | | $ | 1,078 | | $ | 133 | | $ | 1 | | $ | 3,564 | |
| Loans: | | | | | | | | | | | | | | | | | | | | | | |
| Individually evaluated for impairment | | $ | 4,752 | | $ | 4,517 | | $ | 1,104 | | $ | 3,278 | | $ | 565 | | $ | 12 | | $ | 14,228 | |
| Collectively evaluated for impairment | | | 21,453 | | | 131,465 | | | 18,433 | | | 102,292 | | | 18,946 | | | 4,864 | | | 297,453 | |
| Loans acquired with a deteriorated credit quality | | | 301 | | | 1,420 | | | 451 | | | 863 | | | 38 | | | 30 | | | 3,103 | |
| Balances at end of period | | $ | 26,506 | | $ | 137,402 | | $ | 19,988 | | $ | 106,433 | | $ | 19,549 | | $ | 4,906 | | $ | 314,784 | |
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The following tables present the credit risk profile of the Company’s loan portfolio based on rating category as of December 31, 2013 and December 31, 2012. Loans acquired from Dupont State Bank have been adjusted to fair value for the periods ending December 31, 2013 and December 31, 2012. |
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| 31-Dec-13 | | Total Portfolio | | | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | |
| | | | | | |
| Construction/Land | | $ | 24,307 | | | $ | 20,023 | | | $ | 33 | | | $ | 4,251 | | | $ | - | | | |
| 1-4 family residential | | | 137,298 | | | | 124,765 | | | | 4,144 | | | | 7,691 | | | | 698 | | | |
| Multi-family residential | | | 16,408 | | | | 14,798 | | | | 44 | | | | 1,566 | | | | - | | | |
| Nonresidential | | | 118,946 | | | | 110,622 | | | | 2,686 | | | | 5,066 | | | | 572 | | | |
| Commercial | | | 24,741 | | | | 24,341 | | | | 8 | | | | 316 | | | | 76 | | | |
| Consumer | | | 4,326 | | | | 4,301 | | | | - | | | | 25 | | | | - | | | |
| Total loans | | $ | 326,026 | | | $ | 298,850 | | | $ | 6,915 | | | $ | 18,915 | | | $ | 1,346 | | | |
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| 31-Dec-12 | | Total Portfolio | | | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | |
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| Construction/Land | | $ | 26,506 | | | $ | 20,952 | | | $ | 314 | | | $ | 4,909 | | | $ | 331 | | | |
| 1-4 family residential | | | 137,402 | | | | 123,705 | | | | 6,597 | | | | 5,885 | | | | 1,215 | | | |
| Multi-family residential | | | 19,988 | | | | 17,546 | | | | 186 | | | | 2,256 | | | | - | | | |
| Nonresidential | | | 106,433 | | | | 97,307 | | | | 4,931 | | | | 2,793 | | | | 1,402 | | | |
| Commercial | | | 19,549 | | | | 18,869 | | | | 15 | | | | 414 | | | | 251 | | | |
| Consumer | | | 4,906 | | | | 4,863 | | | | 14 | | | | 29 | | | | - | | | |
| Total loans | | $ | 314,784 | | | $ | 283,242 | | | $ | 12,057 | | | $ | 16,286 | | | $ | 3,199 | | | |
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Credit Quality Indicators |
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The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually on an ongoing basis by classifying the loans as to credit risk, assigning grade classifications. Loan grade classifications of special mention, substandard, doubtful, or loss are reported to the Company’s board of directors monthly. The Company uses the following definitions for credit risk grade classifications: |
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Pass: Loans not meeting the criteria below are considered to be pass rated loans. |
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Special Mention: These assets are currently protected, but potentially weak. They have credit deficiencies deserving a higher degree of attention by management. These assets do not presently exhibit a sufficient degree of risk to warrant adverse classification. Concerns may lie with cash flow, liquidity, leverage, collateral, or industry conditions. These are graded special mention so that the appropriate level of attention is administered to prevent a move to a “substandard” rating. |
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Substandard: By regulatory definition, “substandard” loans are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged. These types of loans have well defined weaknesses that jeopardize the liquidation of the debt. A distinct possibility exists that the institution will sustain some loss if the deficiencies are not corrected. These loans are considered workout credits. They exhibit at least one of the following characteristics. |
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| · | An expected loan payment is in excess of 90 days past due (non-performing), or non-earning. | | | | | | | | | | | | | | | | | | | | | |
| · | The financial condition of the borrower has deteriorated to such a point that close monitoring is necessary. Payments do not necessarily have to be past due. | | | | | | | | | | | | | | | | | | | | | |
| · | Repayment from the primary source of repayment is gone or impaired. | | | | | | | | | | | | | | | | | | | | | |
| · | The borrower has filed for bankruptcy protection. | | | | | | | | | | | | | | | | | | | | | |
| · | The loans are inadequately protected by the net worth and cash flow of the borrower. | | | | | | | | | | | | | | | | | | | | | |
| · | The guarantors have been called upon to make payments. | | | | | | | | | | | | | | | | | | | | | |
| · | The borrower has exhibited a continued inability to reduce principal (although interest payment may be current). | | | | | | | | | | | | | | | | | | | | | |
| · | The Company is considering a legal action against the borrower. | | | | | | | | | | | | | | | | | | | | | |
| · | The collateral position has deteriorated to a point where there is a possibility the Company may sustain some loss. This may be due to the financial condition, improper documentation, or to a reduction in the value of the collateral. | | | | | | | | | | | | | | | | | | | | | |
| · | Although loss may not seem likely, the Company has gone to extraordinary lengths (restructuring with extraordinary lengths) to protect its position in order to maintain a high probability of repayment. | | | | | | | | | | | | | | | | | | | | | |
| · | Flaws in documentation leave the Company in a subordinated or unsecured position. | | | | | | | | | | | | | | | | | | | | | |
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Doubtful: These loans exhibit the same characteristics as those rated “substandard,” plus weaknesses that make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. This would include inadequately secured loans that are being liquidated, and inadequately protected loans for which the likelihood of liquidation is high. This classification is temporary. Pending events are expected to materially reduce the amount of the loss. This means that the “doubtful” classification will result in either a partial or complete loss on the loan (write-down or specific reserve), with reclassification of the asset as “substandard,” or removal of the asset from the classified list, as in foreclosure or full loss. |
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The Company evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis. No significant changes were made to either during the past year. |
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The following tables present the Company’s loan portfolio aging analysis as of December 31, 2013 and December 31, 2012. |
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| 31-Dec-13 | | 30-59 Days Past Due | | 60-89 Days Past Due | | Greater than 90 Days | | Total Past Due | | Current | | Purchased Credit Impaired Loans | | Total Loans Receivables | |
| Construction/Land | | $ | 207 | | $ | - | | $ | 71 | | $ | 278 | | $ | 23,692 | | $ | 337 | | $ | 24,307 | |
| 1-4 family residential | | | 458 | | | 671 | | | 2,322 | | | 3,451 | | | 132,566 | | | 1,281 | | | 137,298 | |
| Multi-family residential | | | - | | | - | | | - | | | - | | | 15,908 | | | 500 | | | 16,408 | |
| Nonresidential | | | 267 | | | 398 | | | 940 | | | 1,605 | | | 116,636 | | | 705 | | | 118,946 | |
| Commercial | | | 66 | | | - | | | 96 | | | 162 | | | 24,564 | | | 15 | | | 24,741 | |
| Consumer | | | 104 | | | 7 | | | 7 | | | 118 | | | 4,189 | | | 19 | | | 4,326 | |
| | | $ | 1,102 | | $ | 1,076 | | $ | 3,436 | | $ | 5,614 | | $ | 317,555 | | $ | 2,857 | | $ | 326,026 | |
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| 31-Dec-12 | | 30-59 Days Past Due | | 60-89 Days Past Due | | Greater than 90 Days | | Total Past Due | | Current | | Purchased Credit Impaired Loans | | Total Loans Receivables | |
| Construction/Land | | $ | 63 | | $ | - | | $ | 556 | | $ | 619 | | $ | 25,586 | | $ | 301 | | $ | 26,506 | |
| 1-4 family residential | | | 1,347 | | | 768 | | | 1,408 | | | 3,523 | | | 132,459 | | | 1,420 | | | 137,402 | |
| Multi-family residential | | | - | | | - | | | - | | | - | | | 19,537 | | | 451 | | | 19,988 | |
| Nonresidential | | | 276 | | | - | | | 753 | | | 1,029 | | | 104,541 | | | 863 | | | 106,433 | |
| Commercial | | | 100 | | | - | | | 251 | | | 351 | | | 19,160 | | | 38 | | | 19,549 | |
| Consumer | | | 36 | | | - | | | 2 | | | 38 | | | 4,838 | | | 30 | | | 4,906 | |
| | | $ | 1,822 | | $ | 768 | | $ | 2,970 | | $ | 5,560 | | $ | 306,121 | | $ | 3,103 | | $ | 314,784 | |
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At December 31, 2013, there was one consumer installment loan of $1,000 that was past due 90 days or more and accruing. At December 31, 2012, there were no loans past due 90 days or more and accruing. |
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The following table presents the Company’s nonaccrual loans as of December 31, 2013 and December 31, 2012, which includes both non-performing troubled debt restructured and loans contractually delinquent 90 days or more. |
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| | | 2013 | | | 2012 | | | | | | | | | | | | | | | |
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| Construction/Land | | $ | 3,864 | | | $ | 4,798 | | | | | | | | | | | | | | | |
| One-to-four family residential | | | 3,833 | | | | 2,687 | | | | | | | | | | | | | | | |
| Multi-family residential | | | 1,073 | | | | 1,104 | | | | | | | | | | | | | | | |
| Nonresidential and agricultural land | | | 2,377 | | | | 1,678 | | | | | | | | | | | | | | | |
| Commercial | | | 362 | | | | 567 | | | | | | | | | | | | | | | |
| Consumer and other | | | 5 | | | | 16 | | | | | | | | | | | | | | | |
| Total nonaccrual loans | | $ | 11,514 | | | $ | 10,850 | | | | | | | | | | | | | | | |
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| Nonaccrual loans as a percent of total loans receivable | | | 3.53 | % | | | 3.45 | % | | | | | | | | | | | | | | |
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A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include non-performing commercial loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. |
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The following tables present information pertaining to the principal balances and specific valuation allocations for impaired loans as of December 31, 2013, as well as the average recorded investment and interest income recognized on impaired loans for the year ended December 31, 2013: |
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| | | Recorded Investment | | | Unpaid Principal Balance | | | Specific Allowance | | | Average Investment | | | Interest Income Recognized | | | |
| Impaired loans without a specific allowance: | | | |
| Construction/Land | | $ | 2,286 | | | $ | 2,516 | | | $ | - | | | $ | 2,559 | | | $ | 120 | | | |
| 1-4 family residential | | | 4,154 | | | | 4,184 | | | | - | | | | 3,633 | | | | 172 | | | |
| Multi-family residential | | | 52 | | | | 53 | | | | - | | | | 52 | | | | 3 | | | |
| Nonresidential | | | 3,194 | | | | 3,672 | | | | - | | | | 3,148 | | | | 179 | | | |
| Commercial | | | 237 | | | | 395 | | | | - | | | | 310 | | | | 15 | | | |
| Consumer | | | - | | | | - | | | | - | | | | 11 | | | | 1 | | | |
| | | $ | 9,923 | | | $ | 10,820 | | | $ | - | | | $ | 9,713 | | | $ | 490 | | | |
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| | | Recorded Investment | | | Unpaid Principal Balance | | | Specific Allowance | | | Average Investment | | | Interest Income Recognized | | | |
| Impaired loans with a specific allowance: | | | | | | | | | | | | | | | | | |
| Construction/Land | | $ | 1,818 | | | $ | 1,831 | | | $ | 195 | | | $ | 1,863 | | | $ | 18 | | | |
| 1-4 family residential | | | 1,763 | | | | 1,784 | | | | 552 | | | | 1,490 | | | | 31 | | | |
| Multi-family residential | | | 1,022 | | | | 1,038 | | | | 196 | | | | 1,031 | | | | 21 | | | |
| Nonresidential | | | 902 | | | | 902 | | | | 97 | | | | 769 | | | | 24 | | | |
| Commercial | | | 135 | | | | 143 | | | | 68 | | | | 135 | | | | 14 | | | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | - | | | |
| | | $ | 5,640 | | | $ | 5,698 | | | $ | 1,108 | | | $ | 5,288 | | | $ | 108 | | | |
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| | | Recorded Investment | | | Unpaid Principal Balance | | | Specific Allowance | | | Average Investment | | | Interest Income Recognized | |
| Total Impaired Loans: | |
| Construction/Land | | $ | 4,104 | | | $ | 4,347 | | | $ | 195 | | | $ | 4,422 | | | $ | 138 | | | |
| 1-4 family residential | | | 5,917 | | | | 5,968 | | | | 552 | | | | 5,123 | | | | 203 | | | |
| Multi-family residential | | | 1,074 | | | | 1,091 | | | | 196 | | | | 1,083 | | | | 24 | | | |
| Nonresidential | | | 4,096 | | | | 4,574 | | | | 97 | | | | 3,917 | | | | 203 | | | |
| Commercial | | | 372 | | | | 538 | | | | 68 | | | | 445 | | | | 29 | | | |
| Consumer | | | - | | | | - | | | | - | | | | 11 | | | | 1 | | | |
| | | $ | 15,563 | | | $ | 16,518 | | | $ | 1,108 | | | $ | 15,001 | | | $ | 598 | | | |
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For 2013, interest income recognized on a cash basis included above was $364,000. |
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The following tables present information pertaining to the principal balances and specific valuation allocations for impaired loans as of December 31, 2012, as well as the average recorded investment and interest income recognized on impaired loans for the year ended December 31, 2012: |
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| | | Recorded Investment | | | Unpaid Principal Balance | | | Specific | | | Average Investment | | | Interest Income Recognized | | | |
Allowance | | |
| Impaired loans without a specific allowance: | | | |
| Construction/Land | | $ | 2,870 | | | $ | 3,379 | | | $ | - | | | $ | 2,756 | | | $ | 2 | | | |
| 1-4 family residential | | | 3,562 | | | | 3,612 | | | | - | | | | 5,003 | | | | 157 | | | |
| Multi-family residential | | | 53 | | | | 54 | | | | - | | | | 41 | | | | 2 | | | |
| Nonresidential | | | 3,278 | | | | 4,439 | | | | - | | | | 3,692 | | | | 70 | | | |
| Commercial | | | 386 | | | | 418 | | | | - | | | | 423 | | | | 17 | | | |
| Consumer | | | 12 | | | | 12 | | | | - | | | | 14 | | | | 1 | | | |
| | | $ | 10,161 | | | $ | 11,914 | | | $ | - | | | $ | 11,929 | | | $ | 249 | | | |
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| | | Recorded Investment | | | Unpaid Principal Balance | | | Specific | | | Average Investment | | | Interest Income Recognized | | | |
Allowance | | |
| Impaired loans with a specific allowance: | | | | | | | | | | | | | | | | | |
| Construction/Land | | $ | 1,882 | | | $ | 1,882 | | | $ | 195 | | | | 1,903 | | | $ | - | | | |
| 1-4 family residential | | | 955 | | | | 957 | | | | 310 | | | | 950 | | | | 10 | | | |
| Multi-family residential | | | 1,051 | | | | 1,061 | | | | 196 | | | | 804 | | | | 4 | | | |
| Nonresidential | | | - | | | | - | | | | - | | | | - | | | | - | | | |
| Commercial | | | 179 | | | | 186 | | | | 93 | | | | 92 | | | | - | | | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | - | | | |
| | | $ | 4,067 | | | $ | 4,086 | | | $ | 794 | | | $ | 3,749 | | | $ | 14 | | | |
|
| | | Recorded Investment | | | Unpaid Principal Balance | | | Specific | | | Average Investment | | | Interest Income Recognized | |
Allowance | |
| Total Impaired Loans: | |
| Construction/Land | | $ | 4,752 | | | $ | 5,261 | | | $ | 195 | | | $ | 4,659 | | | $ | 2 | | | |
| 1-4 family residential | | | 4,517 | | | | 4,569 | | | | 310 | | | | 5,953 | | | | 167 | | | |
| Multi-family residential | | | 1,104 | | | | 1,115 | | | | 196 | | | | 845 | | | | 6 | | | |
| Nonresidential | | | 3,278 | | | | 4,439 | | | | - | | | | 3,692 | | | | 70 | | | |
| Commercial | | | 565 | | | | 604 | | | | 93 | | | | 515 | | | | 17 | | | |
| Consumer | | | 12 | | | | 12 | | | | - | | | | 14 | | | | 1 | | | |
| | | $ | 14,228 | | | $ | 16,000 | | | $ | 794 | | | $ | 15,678 | | | $ | 263 | | | |
|
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For 2012, interest income recognized on a cash basis included above was immaterial. |
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Troubled Debt Restructurings |
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In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In restructuring the loan, the Company attempts to work out an alternative payment schedule with the borrower in order to optimize collectibility of the loan. Any loans that are modified, whether through a new agreement, replacing the old, or via changes to an existing loan agreement, are reviewed by the Company to identify if a troubled debt restructuring (“TDR”) has occurred. A troubled debt restructuring occurs when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status, and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Company may terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan. |
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Nonaccrual loans, including TDRs that have not met the six month minimum performance criterion, are reported in this report as non-performing loans. On at least a quarterly basis, the Company reviews all TDR loans to determine if the loan meets this criterion. A loan is generally classified as nonaccrual when the Company believes that receipt of principal and interest is questionable under the terms of the loan agreement. Most generally, this is at 90 or more days past due. |
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For all loan classes, it is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until six months of satisfactory borrower performance, at which time management would consider their return to accrual status. |
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Loans reported as TDR as of December 31, 2013 totaled $10.4 million. TDR loans reported as nonaccrual (non-performing) loans, and included in total nonaccrual (non-performing) loans, were $6.5 million at December 31, 2013. The remaining TDR loans, totaling $3.9 million, were accruing at December 31, 2013 and reported as performing loans. |
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All TDRs are considered impaired by the Company for the life of the loan and reflected so in the Company’s analysis of the allowance for credit losses. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously above. |
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At December 31, 2013, the Company had a number of loans that were modified in troubled debt restructurings and impaired. The modification of terms of such loans included one or a combination of the following: an extension of maturity, a reduction of the stated interest rate or a permanent reduction of the recorded investment in the loan. |
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The following tables present information regarding troubled debt restructurings, by class as of December 31, 2013 and December 31, 2012, and new troubled debt restructuring for the years ended December 31, 2013 and December 31, 2012. |
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| | | At December 31, 2013 | | | For the Year Ended December 31, 2013 | | | |
| | | # of Loans | | | Total Troubled Debt Restructured | | | # of Loans | | | Pre-Modification Recorded Balance | | | Post-Modification Recorded Balance | | | |
| | | | | | | | | | | | | | | | | | |
| Construction/Land | | | 11 | | | $ | 4,032 | | | | 8 | | | $ | 2,031 | | | $ | 2,403 | | | |
| One-to-four family residential | | | 12 | | | | 3,628 | | | | 7 | | | | 758 | | | | 777 | | | |
| Multi-family residential | | | 1 | | | | 1,022 | | | | - | | | | - | | | | - | | | |
| Nonresidential and agricultural land | | | 4 | | | | 1,487 | | | | - | | | | - | | | | - | | | |
| Commercial | | | 8 | | | | 266 | | | | 4 | | | | 55 | | | | 69 | | | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | - | | | |
| | | | 36 | | | $ | 10,435 | | | | 19 | | | $ | 2,844 | | | $ | 3,249 | | | |
|
|
| | | At December 31, 2012 | | | For the Year Ended December 31, 2012 | | | |
| | | # of Loans | | | Total Troubled Debt Restructured | | | # of Loans | | | Pre-Modification Recorded Balance | | | Post-Modification Recorded Balance | | | |
| | | | | | | | | | | | | | | | | | |
| Construction/Land | | | 5 | | | $ | 4,366 | | | | 4 | | | $ | 2,623 | | | $ | 2,647 | | | |
| One-to-four family residential | | | 9 | | | | 3,629 | | | | 3 | | | | 574 | | | | 593 | | | |
| Multi-family residential | | | 1 | | | | 1,050 | | | | 1 | | | | 1,068 | | | | 1,082 | | | |
| Nonresidential and agricultural land | | | 5 | | | | 2,210 | | | | - | | | | - | | | | - | | | |
| Commercial | | | 9 | | | | 297 | | | | 8 | | | | 262 | | | | 342 | | | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | - | | | |
| | | | 29 | | | $ | 11,552 | | | | 16 | | | $ | 4,527 | | | $ | 4,664 | | | |
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The following tables present information regarding post modification balances of newly restructured troubled debt by type of modification as of December 31, 2013 and December 31, 2012. |
|
|
| 31-Dec-13 | | Interest Only | | | Term | | | Combination | | | Total Modifications | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Construction/Land | | $ | - | | | $ | 138 | | | $ | 2,265 | | | $ | 2,403 | | | | | | | |
| One-to-four family residential | | | - | | | | 204 | | | | 573 | | | | 777 | | | | | | | |
| Multi-family residential | | | - | | | | - | | | | - | | | | - | | | | | | | |
| Nonresidential and agricultural land | | | - | | | | - | | | | - | | | | - | | | | | | | |
| Commercial | | | - | | | | - | | | | 69 | | | | 69 | | | | | | | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | | | | |
| | | $ | - | | | $ | 342 | | | $ | 2,907 | | | $ | 3,249 | | | | | | | |
|
| 31-Dec-12 | | Interest Only | | | Term | | | Combination | | | Total Modifications | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Construction/Land | | $ | - | | | $ | 2,647 | | | $ | - | | | $ | 2,647 | | | | | | | |
| One-to-four family residential | | | - | | | | 90 | | | | 503 | | | | 593 | | | | | | | |
| Multi-family residential | | | - | | | | - | | | | 1,082 | | | | 1,082 | | | | | | | |
| Nonresidential and agricultural land | | | - | | | | - | | | | - | | | | - | | | | | | | |
| Commercial | | | - | | | | - | | | | 342 | | | | 342 | | | | | | | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | | | | |
| | | $ | - | | | $ | 2,737 | | | $ | 1,927 | | | $ | 4,664 | | | | | | | |
|
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No loans identified and reported as TDR during the year ended December 31, 2013, were considered in default during the period. One loan totaling $43,000 identified and reported as TDR during the year ended December 31, 2012, was considered in default during the period. |
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The Company defines default in this instance as being either past due 90 days or more at the end of the quarter or in the legal process of foreclosure. |
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Financial impact of these restructurings was immaterial to the financials of the Company at December 31, 2013 and 2012. |