Loans | 9 Months Ended |
Sep. 30, 2014 |
Loans [Abstract] | ' |
Loans | ' |
5. Loans |
|
The following disclosure reports the Company’s loan portfolio segments and classes. Segments are groupings of similar loans at a level which the Company has adopted systematic methods of documentation for determining its allowance for loan and credit losses. Classes are a disaggregation of the portfolio segments. In the first quarter of 2014, the Company combined its land acquisition and development and real estate construction loan segments into a single segment called Construction and land. Prior period balances were adjusted to conform to the current presentation. The Company’s loan portfolio segments are: |
|
| · | | Commercial loans – Commercial loans consist of loans to small and medium-sized businesses in a wide variety of industries. The Bank’s areas of emphasis in commercial lending include, but are not limited to, loans to wholesalers, manufacturers, construction and business services companies. Commercial loans are generally collateralized by inventory, accounts receivable, equipment, real estate and other commercial assets, and may be supported by other credit enhancements such as personal guarantees. Risk arises primarily due to a difference between expected and actual cash flows of the borrowers. However, the recoverability of the Company’s investment in these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans. The fair value of the collateral securing these loans may fluctuate as market conditions change. In the case of loans secured by accounts receivable, the recovery of the Company’s investment is dependent upon the borrowers’ ability to collect amounts due from its customers. | | | | | | | | | | | | | | | | | | | | |
|
| · | | Real estate - mortgage loans – Real estate - mortgage loans include various types of loans for which the Company holds real property as collateral. Commercial real estate lending activity is typically restricted to owner-occupied properties or to investor properties that are owned by customers with a current banking relationship. The primary risks of real estate mortgage loans include the borrower’s inability to pay, material decreases in the value of the real estate that is being held as collateral and significant increases in interest rates, which may make the real estate mortgage loan unprofitable. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. | | | | | | | | | | | | | | | | | | | | |
|
| · | | Construction and land – The Company originates loans to finance construction projects including one- to four-family residences, multifamily residences, commercial office, senior housing, and industrial projects. Residential construction loans are due upon the sale of the completed project and are generally collateralized by first liens on the real estate and have floating interest rates. Construction loans are considered to have higher risks due to construction completion and timing risk, and the ultimate repayment being sensitive to interest rate changes, governmental regulation of real property and the availability of long-term financing. Additionally, economic conditions may impact the Company’s ability to recover its investment in construction loans. Adverse economic conditions may negatively impact the real estate market which could affect the borrowers’ ability to complete and sell the project. Additionally, the fair value of the underlying collateral may fluctuate as market conditions change. The Company also originates loans for the acquisition and future development of land for residential building projects, as well as finished lots prepared to enter the construction phase. The primary risks include the borrower’s inability to pay and the inability of the Company to recover its investment due to a decline in the fair value of the underlying collateral. | | | | | | | | | | | | | | | | | | | | |
|
| · | | Consumer loans – The Company provides a broad range of consumer loans to customers, including personal lines of credit, home equity loans, jumbo mortgage loans and automobile loans. Repayment of these loans is dependent on the borrowers’ ability to pay and the fair value of the underlying collateral. | | | | | | | | | | | | | | | | | | | | |
|
| · | | Other loans – Other loans include lending products, such as taxable and tax-exempt leasing, not defined as commercial, real estate, construction and land, or consumer loans. | | | | | | | | | | | | | | | | | | | | |
|
The loan portfolio segments at September 30, 2014 and December 31, 2013 were as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | At September 30, 2014 | | At December 31, 2013 | | | | | | | | | | | | | | | | | | |
Commercial | $ | 962,838 | | $ | 825,530 | | | | | | | | | | | | | | | | | | |
Real estate - mortgage | | 965,016 | | | 901,721 | | | | | | | | | | | | | | | | | | |
Construction & land | | 183,035 | | | 128,670 | | | | | | | | | | | | | | | | | | |
Consumer | | 202,399 | | | 181,067 | | | | | | | | | | | | | | | | | | |
Other | | 45,389 | | | 49,394 | | | | | | | | | | | | | | | | | | |
Loans held for investment | | 2,358,677 | | | 2,086,382 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | -33,682 | | | -37,050 | | | | | | | | | | | | | | | | | | |
Unearned net loan fees | | -1,608 | | | -2,023 | | | | | | | | | | | | | | | | | | |
Total net loans | $ | 2,323,387 | | $ | 2,047,309 | | | | | | | | | | | | | | | | | | |
|
The Company uses qualifying loans as collateral for advances and a line of credit from the FHLB. The FHLB line of credit, which had a $166.0 million balance outstanding at September 30, 2014, was collateralized by loans of $844.2 million with a lending value of $537.5 million. |
|
The Company maintains a loan review program independent of the lending function that is designed to reduce and control risk in lending. It includes the continuous monitoring of lending activities with respect to underwriting and processing new loans, preventing insider abuse and timely follow-up and corrective action for loans showing signs of deterioration in quality. The Company also has a systematic process to evaluate individual loans and pools of loans within the loan portfolio. The Company maintains a loan grading system whereby each loan is assigned a grade between 1 and 8, with 1 representing the highest quality credit, 7 representing a nonaccrual loan where collection or liquidation in full is highly questionable and improbable, and 8 representing a loss that has been or will be charged-off. Grades are assigned based upon the degree of risk associated with repayment of a loan in the normal course of business pursuant to the original terms. Loans that are graded 5 or better are categorized as non-classified credits while loans graded 6 or worse are categorized as classified credits. Loan grade changes are evaluated on a monthly basis. Loans above a certain dollar amount that are adversely graded are reported to the Special Assets Group Manager and the Chief Credit Officer along with current financial information, a collateral analysis and an action plan. |
|
The loan portfolio showing total non-classified and classified balances by loan class at September 30, 2014 and December 31, 2013 is summarized below: |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At September 30, 2014 | | | | | | | | | | | | | | | |
(in thousands) | Non-classified | | Classified | | Total | | | | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | 128,495 | | $ | 4,403 | | $ | 132,898 | | | | | | | | | | | | | | | |
Finance and insurance | | 81,747 | | | 226 | | | 81,973 | | | | | | | | | | | | | | | |
Healthcare | | 87,829 | | | 145 | | | 87,974 | | | | | | | | | | | | | | | |
Real estate services | | 108,162 | | | 1,585 | | | 109,747 | | | | | | | | | | | | | | | |
Construction | | 56,859 | | | 4,200 | | | 61,059 | | | | | | | | | | | | | | | |
Wholesale and retail trade | | 76,536 | | | 3,767 | | | 80,303 | | | | | | | | | | | | | | | |
Other | | 406,527 | | | 2,357 | | | 408,884 | | | | | | | | | | | | | | | |
| | 946,155 | | | 16,683 | | | 962,838 | | | | | | | | | | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | 462,513 | | | 13,780 | | | 476,293 | | | | | | | | | | | | | | | |
Residential & commercial investor | | 487,274 | | | 1,449 | | | 488,723 | | | | | | | | | | | | | | | |
| | 949,787 | | | 15,229 | | | 965,016 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | 181,757 | | | 1,278 | | | 183,035 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 199,146 | | | 3,253 | | | 202,399 | | | | | | | | | | | | | | | |
Other | | 45,298 | | | 91 | | | 45,389 | | | | | | | | | | | | | | | |
Total loans held for investment | $ | 2,322,143 | | $ | 36,534 | | $ | 2,358,677 | | | | | | | | | | | | | | | |
Unearned net loan fees | | | | | | | | -1,608 | | | | | | | | | | | | | | | |
Net loans held for investment | | | | | | | $ | 2,357,069 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At December 31, 2013 | | | | | | | | | | | | | | | |
(in thousands) | Non-classified | | Classified | | Total | | | | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | 101,114 | | $ | 4,582 | | $ | 105,696 | | | | | | | | | | | | | | | |
Finance and insurance | | 76,589 | | | 517 | | | 77,106 | | | | | | | | | | | | | | | |
Healthcare | | 99,526 | | | 639 | | | 100,165 | | | | | | | | | | | | | | | |
Real estate services | | 98,691 | | | 1,591 | | | 100,282 | | | | | | | | | | | | | | | |
Construction | | 51,616 | | | 1,695 | | | 53,311 | | | | | | | | | | | | | | | |
Wholesale and retail trade | | 69,167 | | | 1,937 | | | 71,104 | | | | | | | | | | | | | | | |
Other | | 313,862 | | | 4,004 | | | 317,866 | | | | | | | | | | | | | | | |
| | 810,565 | | | 14,965 | | | 825,530 | | | | | | | | | | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | 436,479 | | | 16,500 | | | 452,979 | | | | | | | | | | | | | | | |
Residential & commercial investor | | 441,186 | | | 7,556 | | | 448,742 | | | | | | | | | | | | | | | |
| | 877,665 | | | 24,056 | | | 901,721 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | 122,637 | | | 6,033 | | | 128,670 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 179,645 | | | 1,422 | | | 181,067 | | | | | | | | | | | | | | | |
Other | | 49,394 | | | - | | | 49,394 | | | | | | | | | | | | | | | |
Total loans held for investment | $ | 2,039,906 | | $ | 46,476 | | $ | 2,086,382 | | | | | | | | | | | | | | | |
Unearned net loan fees | | | | | | | | -2,023 | | | | | | | | | | | | | | | |
Net loans held for investment | | | | | | | $ | 2,084,359 | | | | | | | | | | | | | | | |
|
|
|
Transactions in the allowance for loan losses by segment for the three and nine months ended September 30, 2014 and 2013 are summarized below: |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | | Nine months ended September 30, | | | | | | | | | | | |
(in thousands) | 2014 | | 2013 | | | 2014 | | 2013 | | | | | | | | | | | |
Allowance for loan losses, beginning of period | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 13,831 | | $ | 14,564 | | | $ | 14,103 | | $ | 13,448 | | | | | | | | | | | |
Real estate - mortgage | | 13,254 | | | 17,124 | | | | 14,919 | | | 17,832 | | | | | | | | | | | |
Construction & land | | 2,626 | | | 5,847 | | | | 3,346 | | | 9,893 | | | | | | | | | | | |
Consumer | | 2,472 | | | 2,714 | | | | 2,471 | | | 3,061 | | | | | | | | | | | |
Other | | 432 | | | 538 | | | | 479 | | | 451 | | | | | | | | | | | |
Unallocated | | 1,307 | | | 2,445 | | | | 1,732 | | | 2,181 | | | | | | | | | | | |
Total | | 33,922 | | | 43,232 | | | | 37,050 | | | 46,866 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Provision | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 1,406 | | $ | 138 | | | $ | 2,273 | | $ | 651 | | | | | | | | | | | |
Real estate - mortgage | | -1,021 | | | -449 | | | | -2,909 | | | 236 | | | | | | | | | | | |
Construction & land | | -761 | | | -970 | | | | -2,048 | | | -4,899 | | | | | | | | | | | |
Consumer | | 86 | | | 90 | | | | 42 | | | -187 | | | | | | | | | | | |
Other | | -3 | | | 13 | | | | -55 | | | 102 | | | | | | | | | | | |
Unallocated | | -159 | | | -376 | | | | -584 | | | -112 | | | | | | | | | | | |
Total | | -452 | | | -1,554 | | | | -3,281 | | | -4,209 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | -200 | | $ | -250 | | | $ | -1,648 | | $ | -438 | | | | | | | | | | | |
Real estate - mortgage | | - | | | -147 | | | | -52 | | | -2,007 | | | | | | | | | | | |
Construction & land | | -16 | | | - | | | | -54 | | | -632 | | | | | | | | | | | |
Consumer | | -2 | | | -3 | | | | -10 | | | -104 | | | | | | | | | | | |
Other | | -4 | | | - | | | | -5 | | | -2 | | | | | | | | | | | |
Total | | -222 | | | -400 | | | | -1,769 | | | -3,183 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Recoveries | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 72 | | $ | 144 | | | $ | 381 | | $ | 935 | | | | | | | | | | | |
Real estate - mortgage | | 58 | | | 85 | | | | 333 | | | 552 | | | | | | | | | | | |
Construction & land | | 300 | | | 297 | | | | 905 | | | 812 | | | | | | | | | | | |
Consumer | | 2 | | | 6 | | | | 55 | | | 37 | | | | | | | | | | | |
Other | | 2 | | | - | | | | 8 | | | - | | | | | | | | | | | |
Total | | 434 | | | 532 | | | | 1,682 | | | 2,336 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses, end of period | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 15,109 | | $ | 14,596 | | | $ | 15,109 | | $ | 14,596 | | | | | | | | | | | |
Real estate - mortgage | | 12,291 | | | 16,613 | | | | 12,291 | | | 16,613 | | | | | | | | | | | |
Construction & land | | 2,149 | | | 5,174 | | | | 2,149 | | | 5,174 | | | | | | | | | | | |
Consumer | | 2,558 | | | 2,807 | | | | 2,558 | | | 2,807 | | | | | | | | | | | |
Other | | 427 | | | 551 | | | | 427 | | | 551 | | | | | | | | | | | |
Unallocated | | 1,148 | | | 2,069 | | | | 1,148 | | | 2,069 | | | | | | | | | | | |
Total | $ | 33,682 | | $ | 41,810 | | | $ | 33,682 | | $ | 41,810 | | | | | | | | | | | |
|
|
|
The Company estimates the ALL in accordance with ASC 310 for purposes of evaluating loan impairment on a loan-by-loan basis and ASC 450 for purposes of collectively evaluating loan impairment by grouping loans with common risk characteristics (i.e. risk classification, past-due status, type of loan, and collateral). The ALL is comprised of the following components: |
|
| · | | Specific Reserves – The Company continuously evaluates its reserve for loan losses to maintain an adequate level to absorb loan losses incurred in the loan portfolio. Reserves on loans identified as impaired, including troubled debt restructurings, are based on discounted expected cash flows using the loan's initial effective interest rate, the observable market value of the loan or the fair value of the collateral for certain collateral-dependent loans. The fair value of the collateral is determined in accordance with ASC 820. Loans are considered to be impaired in accordance with the provisions of ASC 310, when it is probable that all amounts due in accordance with the contractual terms will not be collected. Factors contributing to the determination of specific reserves include the financial condition of the borrower, changes in the value of pledged collateral and general economic conditions. Troubled debt restructurings meet the definition of an impaired loan under ASC 310 and therefore, troubled debt restructurings are subject to impairment evaluation on a loan-by-loan basis. | | | | | | | | | | | | | | | | | | | | |
For collateral dependent loans that have been specifically identified as impaired, the Company measures fair value based on third-party appraisals, adjusted for estimated costs to sell the property. Upon impairment, the Company will obtain a new appraisal if one had not been previously obtained in the last 6-12 months. For credits over $2.0 million, the Company engages an additional third-party appraiser to review the appraisal. For credits under $2.0 million, the Company's internal appraisal department reviews the appraisal. All appraisals are reviewed for reasonableness based on recent sales transactions that may have occurred subsequent to or right at the time of the appraisal. Based on this analysis the appraised value may be adjusted downward if there is evidence that the appraised value may not be indicative of fair value. Each appraisal is updated on an annual basis, either through a new appraisal or through the Company's comprehensive internal review process. |
Values are reviewed and monitored internally and fair value is re-assessed at least quarterly or more frequently when events or circumstances occur that indicate a change in fair value. It has been the Company's experience that appraisals quickly become outdated due to the volatile real estate environment. As such, fair value based on property appraisals may be adjusted to reflect estimated declines in the fair value of properties since the time the last appraisal was performed. |
|
| · | | General Reserves – General reserves are considered part of the allocated portion of the allowance. The Company uses a comprehensive loan grading process for our loan portfolios. Based on this process, a loss factor is assigned to each pool of graded loans. A combination of loss experience and external loss data is used in determining the appropriate loss factor. This estimate represents the probable incurred losses within the portfolio. In evaluating the adequacy of the ALL, management considers historical losses (Migration), as well as other factors including changes in: | | | | | | | | | | | | | | | | | | | | |
|
| - | | Lending policies and procedures | | | | | | | | | | | | | | | | | | | | |
| - | | National and local economic and business conditions and developments | | | | | | | | | | | | | | | | | | | | |
| - | | Nature and volume of portfolio | | | | | | | | | | | | | | | | | | | | |
| - | | Trends of the volume and severity of past-due and classified loans | | | | | | | | | | | | | | | | | | | | |
| - | | Trends in the volume of nonaccrual loans, troubled debt restructurings, and other loan modifications | | | | | | | | | | | | | | | | | | | | |
| - | | Credit concentrations | | | | | | | | | | | | | | | | | | | | |
|
Troubled debt restructurings have a direct impact on the allowance to the extent a loss has been recognized in relation to the loan modified. This is consistent with the Company’s consideration of Migration in determining general reserves. |
|
The aforementioned factors enable management to recognize environmental conditions contributing to incurred losses in the portfolio, which have not yet manifested in Migration. Management believes Migration history adequately captures a great percentage of probable incurred losses within the portfolio. |
|
In addition to the allocated reserve for graded loans, a portion of the allowance is determined by segmenting the portfolio into product groupings with similar risk characteristics. Part of the segmentation involves assigning increased reserve factors to those lending activities deemed higher-risk such as leverage-financings, unsecured loans, certain loans lacking personal guarantees, and land acquisition and development loans. |
|
| · | | Unallocated Reserves – The unallocated reserve, which is judgmentally determined, is maintained to recognize the imprecision in estimating and measuring loss when evaluating reserves for individual loans or pools of loans. The unallocated reserve consists of a missed grade component that is intended to capture the inherent risk that certain loans may be assigned an incorrect loan grade. | | | | | | | | | | | | | | | | | | | | |
|
In assessing the reasonableness of management's assumptions, consideration is given to select peer ratios, industry standards and directional consistency of the ALL. Ratio analysis highlights divergent trends in the relationship of the ALL to nonaccrual loans, to total loans and to historical charge-offs. Although these comparisons can be helpful as a supplement to assess reasonableness of management assumptions, they are not, by themselves, sufficient basis for determining the adequacy of the ALL. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company's control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. |
|
The following table summarizes loans held for investment and the allowance for loan and credit losses on the basis of the impairment method: |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At September 30, 2014 | | At December 31, 2013 |
| Individually evaluated for impairment | | Collectively evaluated for impairment | | Individually evaluated for impairment | | Collectively evaluated for impairment |
(in thousands) | Loans held for investment | | Allowance for loan losses | | Loans held for investment | | Allowance for loan losses | | Loans held for investment | | Allowance for loan losses | | Loans held for investment | | Allowance for loan losses |
Commercial | $ | 22,150 | | $ | 3,638 | | $ | 940,288 | | $ | 11,471 | | $ | 17,454 | | $ | 2,140 | | $ | 806,999 | | $ | 11,963 |
Real estate - mortgage | | 18,533 | | | 767 | | | 945,567 | | | 11,524 | | | 25,501 | | | 2,371 | | | 875,363 | | | 12,548 |
Construction & land | | 5,015 | | | 316 | | | 177,273 | | | 1,833 | | | 10,454 | | | 932 | | | 117,498 | | | 2,414 |
Consumer | | 1,205 | | | 187 | | | 201,209 | | | 2,371 | | | 807 | | | 174 | | | 180,249 | | | 2,297 |
Other | | 91 | | | 6 | | | 45,738 | | | 421 | | | - | | | - | | | 50,034 | | | 479 |
Unallocated | | - | | | - | | | - | | | 1,148 | | | - | | | - | | | - | | | 1,732 |
Total | $ | 46,994 | | $ | 4,914 | | $ | 2,310,075 | | $ | 28,768 | | $ | 54,216 | | $ | 5,617 | | $ | 2,030,143 | | $ | 31,433 |
| | | | | | | | | | | | | | | | | | | | | | | |
|
|
Information on impaired loans at September 30, 2014 and December 31, 2013 is reported in the following tables: |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At September 30, 2014 | | | | | | | | | |
(in thousands) | | Unpaid principal balance | | Recorded investment in impaired loans(1) | | Recorded investment with a related allowance | | Recorded investment with no related allowance | | | Related | | | | | | | | | |
allowance | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | 6,827 | | $ | 5,756 | | $ | 5,692 | | $ | 64 | | $ | 710 | | | | | | | | | |
Finance and insurance | | 226 | | | 226 | | | 226 | | | - | | | 66 | | | | | | | | | |
Healthcare | | 145 | | | 145 | | | 145 | | | - | | | 11 | | | | | | | | | |
Real estate services | | 7,696 | | | 7,696 | | | 7,696 | | | - | | | 713 | | | | | | | | | |
Construction | | 2,416 | | | 2,416 | | | 2,326 | | | 90 | | | 294 | | | | | | | | | |
Wholesale and retail trade | | 3,455 | | | 3,455 | | | 3,123 | | | 332 | | | 1,420 | | | | | | | | | |
Other | | 2,655 | | | 2,456 | | | 2,267 | | | 189 | | | 424 | | | | | | | | | |
| | 23,420 | | | 22,150 | | | 21,475 | | | 675 | | | 3,638 | | | | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | 4,936 | | | 4,922 | | | 1,646 | | | 3,276 | | | 592 | | | | | | | | | |
Residential & commercial investor | | 4,923 | | | 4,923 | | | 4,923 | | | - | | | 175 | | | | | | | | | |
| | 9,859 | | | 9,845 | | | 6,569 | | | 3,276 | | | 767 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | 4,136 | | | 4,103 | | | 3,395 | | | 708 | | | 316 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 1,205 | | | 1,205 | | | 765 | | | 440 | | | 187 | | | | | | | | | |
Other | | 91 | | | 91 | | | 91 | | | - | | | 6 | | | | | | | | | |
Total | $ | 38,711 | | $ | 37,394 | | $ | 32,295 | | $ | 5,099 | | $ | 4,914 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At December 31, 2013 | | | | | | | | | |
(in thousands) | Unpaid principal balance | | Recorded investment in impaired loans(1) | | Recorded investment with a related allowance | | Recorded investment with no related allowance | | Related allowance | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | 4,887 | | $ | 4,859 | | $ | 4,797 | | $ | 62 | | $ | 479 | | | | | | | | | |
Finance and insurance | | 517 | | | 517 | | | 517 | | | - | | | 106 | | | | | | | | | |
Healthcare | | 236 | | | 236 | | | 236 | | | - | | | 23 | | | | | | | | | |
Real estate services | | 7,473 | | | 7,473 | | | 7,473 | | | - | | | 505 | | | | | | | | | |
Construction | | 1,708 | | | 1,708 | | | 1,613 | | | 95 | | | 222 | | | | | | | | | |
Wholesale and retail trade | | 294 | | | 248 | | | 97 | | | 151 | | | 59 | | | | | | | | | |
Other | | 2,418 | | | 2,413 | | | 2,215 | | | 198 | | | 746 | | | | | | | | | |
| | 17,533 | | | 17,454 | | | 16,948 | | | 506 | | | 2,140 | | | | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | 6,468 | | | 5,967 | | | 2,524 | | | 3,443 | | | 709 | | | | | | | | | |
Residential & commercial investor | | 11,058 | | | 10,518 | | | 8,357 | | | 2,161 | | | 1,662 | | | | | | | | | |
| | 17,526 | | | 16,485 | | | 10,881 | | | 5,604 | | | 2,371 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | 10,279 | | | 8,877 | | | 4,557 | | | 4,320 | | | 932 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 807 | | | 807 | | | 807 | | | - | | | 174 | | | | | | | | | |
Total | $ | 46,145 | | $ | 43,623 | | $ | 33,193 | | $ | 10,430 | | $ | 5,617 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
|
| -1 | | Recorded investment in impaired loans in this table does not agree to loans individually evaluated for impairment disclosed in the previous table due to certain loans being excluded pursuant to ASC 310-40-50-2. | | | | | | | | | | | | | | | | | | | | |
|
|
Interest income recognized on impaired loans presented in the table below primarily represents interest earned on troubled debt restructurings that meet the definition of an impaired loan pursuant to ASU 310-10-35-16 and are subject to disclosure requirement under ASU 310-10-50-15. |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Impaired loans |
| Three months ended September 30, | | Nine months ended September 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
(in thousands) | Average recorded | | Interest income | | Average recorded | | Interest income | | Average recorded | | Interest income | | Average recorded | | Interest income |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | 4,297 | | $ | 113 | | $ | 4,744 | | $ | 70 | | $ | 3,840 | | $ | 198 | | $ | 5,106 | | $ | 233 |
Finance and insurance | | 227 | | | 2 | | | 649 | | | 8 | | | 349 | | | 11 | | | 706 | | | 24 |
Healthcare | | 183 | | | 6 | | | 256 | | | 3 | | | 217 | | | 11 | | | 269 | | | 10 |
Real estate services | | 7,510 | | | 65 | | | 8,445 | | | 84 | | | 5,878 | | | 190 | | | 8,195 | | | 229 |
Construction | | 1,491 | | | 60 | | | 2,152 | | | 170 | | | 1,407 | | | 92 | | | 2,867 | | | 226 |
Wholesale and retail trade | | 1,540 | | | 97 | | | 350 | | | 3 | | | 653 | | | 118 | | | 397 | | | 13 |
Other | | 2,417 | | | 59 | | | 1,578 | | | 8 | | | 2,723 | | | 120 | | | 1,871 | | | 26 |
| | 17,665 | | | 402 | | | 18,174 | | | 346 | | | 15,067 | | | 740 | | | 19,411 | | | 761 |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | 4,946 | | | 11 | | | 8,745 | | | 23 | | | 5,795 | | | 72 | | | 10,044 | | | 92 |
Residential & commercial investor | | 4,935 | | | 41 | | | 10,965 | | | 44 | | | 5,875 | | | 207 | | | 12,782 | | | 233 |
| | 9,881 | | | 52 | | | 19,710 | | | 67 | | | 11,670 | | | 279 | | | 22,826 | | | 325 |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | 5,022 | | | 40 | | | 7,869 | | | 178 | | | 6,597 | | | 126 | | | 8,997 | | | 407 |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 1,060 | | | 17 | | | 1,163 | | | 11 | | | 889 | | | 37 | | | 1,277 | | | 37 |
Other | | 91 | | | - | | | - | | | - | | | 40 | | | 1 | | | - | | | - |
Total | $ | 33,719 | | $ | 511 | | $ | 46,916 | | $ | 602 | | $ | 34,263 | | $ | 1,183 | | $ | 52,511 | | $ | 1,530 |
| | | | | | | | | | | | | | | | | | | | | | | |
|
|
The table below summarizes transactions as it relates to troubled debt restructurings during the nine months ended September 30, 2014: |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Performing | | Nonperforming | | Total | | | | | | | | | | | | | | | |
Beginning balance at December 31, 2013 | $ | 29,683 | | $ | 12,010 | | $ | 41,693 | | | | | | | | | | | | | | | |
New restructurings | | 10,402 | | | 631 | | | 11,033 | | | | | | | | | | | | | | | |
Change in accrual status | | -3,222 | | | 3,222 | | | - | | | | | | | | | | | | | | | |
Paydowns | | -7,742 | | | -10,716 | | | -18,458 | | | | | | | | | | | | | | | |
Net charge-offs | | - | | | -436 | | | -436 | | | | | | | | | | | | | | | |
Ending balance at September 30, 2014 | $ | 29,121 | | $ | 4,711 | | $ | 33,832 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
|
The below table provides information regarding troubled debt restructurings that occurred during the three and nine months ended September 30, 2014 and 2013. Pre-modification outstanding recorded investment reflects the Company’s recorded investment immediately before the modification. Post-modification outstanding recorded investment represents the Company’s recorded investment at the end of the reporting period. The table below does not include loans restructured and paid-off during the periods presented. |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, 2014 | | Three months ended September 30, 2013 | | | | | | |
| Number of contracts | | Pre-modification outstanding recorded investment | | Post-modification outstanding recorded investment | | Number of contracts | | Pre-modification outstanding recorded investment | | Post-modification outstanding recorded investment | | | | | | |
($ in thousands) | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | | 4 | | $ | 1,949 | | $ | 1,943 | | | 1 | | $ | 160 | | $ | 135 | | | | | | |
Real estate services | | 2 | | | 283 | | | 150 | | | - | | | - | | | - | | | | | | |
Construction | | 1 | | | 1,750 | | | 1,625 | | | 1 | | | 63 | | | 63 | | | | | | |
Wholesale and retail trade | | 2 | | | 1,135 | | | 1,135 | | | - | | | - | | | - | | | | | | |
Other | | 2 | | | 389 | | | 378 | | | 2 | | | 585 | | | 447 | | | | | | |
| | 11 | | | 5,506 | | | 5,231 | | | 4 | | | 808 | | | 645 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | 1 | | | 29 | | | 29 | | | - | | | - | | | - | | | | | | |
Construction & land | | - | | | - | | | - | | | 1 | | | 2,615 | | | 2,615 | | | | | | |
Consumer | | 1 | | | 458 | | | 440 | | | - | | | - | | | - | | | | | | |
Total | | 13 | | $ | 5,993 | | $ | 5,700 | | | 5 | | $ | 3,423 | | $ | 3,260 | | | | | | |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine months ended September 30, 2014 | | Nine months ended September 30, 2013 | | | | | | |
($ in thousands) | Number of contracts | | Pre-modification outstanding recorded investment | | Post-modification outstanding recorded investment | | Number of contracts | | Pre-modification outstanding recorded investment | | Post-modification outstanding recorded investment | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | | 4 | | $ | 1,949 | | $ | 1,943 | | | 1 | | $ | 160 | | $ | 135 | | | | | | |
Real estate services | | 2 | | | 283 | | | 150 | | | - | | | - | | | - | | | | | | |
Construction | | 3 | | | 2,050 | | | 1,945 | | | 2 | | | 113 | | | 83 | | | | | | |
Wholesale and retail trade | | 3 | | | 1,182 | | | 1,174 | | | - | | | - | | | - | | | | | | |
Other | | 6 | | | 916 | | | 796 | | | 6 | | | 936 | | | 758 | | | | | | |
| | 18 | | | 6,380 | | | 6,008 | | | 9 | | | 1,209 | | | 976 | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential and commercial owner-occupied | | 1 | | | 29 | | | 29 | | | 4 | | | 3,221 | | | 3,118 | | | | | | |
Construction & land | | 1 | | | 121 | | | 102 | | | 1 | | | 2,615 | | | 2,615 | | | | | | |
Consumer | | 1 | | | 458 | | | 440 | | | 1 | | | 24 | | | 22 | | | | | | |
Other | | 1 | | | 91 | | | 91 | | | - | | | - | | | - | | | | | | |
Total | | 22 | | $ | 7,079 | | $ | 6,670 | | | 15 | | $ | 7,069 | | $ | 6,731 | | | | | | |
|
Troubled debt restructurings during the three and nine months ended September 30, 2014 resulted primarily from the extension of repayment terms and interest rate reductions. The Company had no charge-offs in conjunction with loans restructured during the three and nine months ended September 30, 2014 and 2013. |
|
Troubled loans restructured within the past 12 months with a payment default during the nine months ended September 30, 2014 were immaterial. There were no such loans for the nine months ended September 30, 2013. |
|
At September 30, 2014 and December 31, 2013 there were $2.8 million and $1.9 million in outstanding commitments on restructured loans, respectively. |
|
The Company’s nonaccrual loans by class at September 30, 2014 and December 31, 2013 are reported in the following table: |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At | | | | | | | | | | | | | | | | | | |
(in thousands) | 30-Sep-14 | | 31-Dec-13 | | | | | | | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | 261 | | $ | 79 | | | | | | | | | | | | | | | | | | |
Finance and insurance | | 53 | | | 63 | | | | | | | | | | | | | | | | | | |
Real estate services | | 243 | | | - | | | | | | | | | | | | | | | | | | |
Construction | | 172 | | | 201 | | | | | | | | | | | | | | | | | | |
Wholesale and retail trade | | 2,320 | | | 206 | | | | | | | | | | | | | | | | | | |
Other | | 516 | | | 781 | | | | | | | | | | | | | | | | | | |
Total commercial | | 3,565 | | | 1,330 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | 3,957 | | | 5,020 | | | | | | | | | | | | | | | | | | |
Residential & commercial investor | | - | | | 5,484 | | | | | | | | | | | | | | | | | | |
Total real estate - mortgage | | 3,957 | | | 10,504 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | 136 | | | 1,986 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 524 | | | 101 | | | | | | | | | | | | | | | | | | |
Other | | 91 | | | - | | | | | | | | | | | | | | | | | | |
Total nonaccrual loans | $ | 8,273 | | $ | 13,921 | | | | | | | | | | | | | | | | | | |
|
|
The following table summarizes the aging of the Company’s loan portfolio at September 30, 2014 and December 31, 2013. At September 30, 2014 there was no recorded investment on loans 90 days or more past due and accruing interest. |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At September 30, 2014 | | | | | | |
(in thousands) | 30 - 59 Days past due | | 60 - 89 Days past due | | 90+ Days past due | | Total past due | | Current | | | Total loans | | | | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | 48 | | $ | 16 | | $ | 184 | | $ | 248 | | $ | 132,650 | | $ | 132,898 | | | | | | |
Finance and insurance | | - | | | - | | | - | | | - | | | 81,973 | | | 81,973 | | | | | | |
Healthcare | | - | | | - | | | - | | | - | | | 87,974 | | | 87,974 | | | | | | |
Real estate services | | - | | | - | | | - | | | - | | | 109,747 | | | 109,747 | | | | | | |
Construction | | 60 | | | 89 | | | - | | | 149 | | | 60,910 | | | 61,059 | | | | | | |
Wholesale and retail trade | | 6,049 | | | - | | | - | | | 6,049 | | | 74,254 | | | 80,303 | | | | | | |
Other | | 50 | | | - | | | - | | | 50 | | | 408,834 | | | 408,884 | | | | | | |
| | 6,207 | | | 105 | | | 184 | | | 6,496 | | | 956,342 | | | 962,838 | | | | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | - | | | - | | | - | | | - | | | 476,293 | | | 476,293 | | | | | | |
Residential & commercial investor | | - | | | - | | | - | | | - | | | 488,723 | | | 488,723 | | | | | | |
| | - | | | - | | | - | | | - | | | 965,016 | | | 965,016 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | - | | | - | | | 104 | | | 104 | | | 182,931 | | | 183,035 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 93 | | | 1,934 | | | - | | | 2,027 | | | 200,372 | | | 202,399 | | | | | | |
Other | | - | | | 91 | | | - | | | 91 | | | 45,298 | | | 45,389 | | | | | | |
Total loans held for investment | $ | 6,300 | | $ | 2,130 | | $ | 288 | | $ | 8,718 | | $ | 2,349,959 | | $ | 2,358,677 | | | | | | |
Unearned net loan fees | | | | | | | | | | | | | | | | | -1,608 | | | | | | |
Net loans held for investment | | | | | | | | | | | | | | | | $ | 2,357,069 | | | | | | |
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| At December 31, 2013 | | | |
(in thousands) | 30 - 59 Days past due | | 60 - 89 Days past due | | 90+ Days past due | | Total past due | | Current | | | Total loans | | | Recorded investment in loans 90 days or more past due and accruing | | | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | |
Manufacturing | $ | - | | $ | - | | $ | - | | $ | - | | $ | 105,696 | | $ | 105,696 | | $ | - | | | |
Finance and insurance | | - | | | - | | | - | | | - | | | 77,106 | | | 77,106 | | | - | | | |
Healthcare | | 259 | | | - | | | - | | | 259 | | | 99,906 | | | 100,165 | | | - | | | |
Real estate services | | 24 | | | - | | | - | | | 24 | | | 100,258 | | | 100,282 | | | - | | | |
Construction | | - | | | - | | | 19 | | | 19 | | | 53,292 | | | 53,311 | | | 19 | | | |
Wholesale and retail trade | | - | | | - | | | 100 | | | 100 | | | 71,004 | | | 71,104 | | | - | | | |
Other | | 727 | | | 324 | | | - | | | 1,051 | | | 316,815 | | | 317,866 | | | - | | | |
| | 1,010 | | | 324 | | | 119 | | | 1,453 | | | 824,077 | | | 825,530 | | | 19 | | | |
Real estate - mortgage | | | | | | | | | | | | | | | | | | | | | | | |
Residential & commercial owner-occupied | | - | | | - | | | 913 | | | 913 | | | 452,066 | | | 452,979 | | | - | | | |
Residential & commercial investor | | - | | | - | | | - | | | - | | | 448,742 | | | 448,742 | | | - | | | |
| | - | | | - | | | 913 | | | 913 | | | 900,808 | | | 901,721 | | | - | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Construction & land | | 816 | | | - | | | 1,951 | | | 2,767 | | | 125,903 | | | 128,670 | | | - | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | - | | | 2 | | | - | | | 2 | | | 181,065 | | | 181,067 | | | - | | | |
Other | | - | | | - | | | - | | | - | | | 49,394 | | | 49,394 | | | - | | | |
Total loans held for investment | $ | 1,826 | | $ | 326 | | $ | 2,983 | | $ | 5,135 | | $ | 2,081,247 | | $ | 2,086,382 | | $ | 19 | | | |
Unearned net loan fees | | | | | | | | | | | | | | | | | -2,023 | | | | | | |
Net loans held for investment | | | | | | | | | | | | | | | | $ | 2,084,359 | | | | | | |
|
|