Loans, Allowance for Loan Losses, and Credit Quality Indicators | 12 Months Ended |
Dec. 31, 2013 |
Receivables [Abstract] | ' |
Loans, Allowance for Loan Losses, and Credit Quality Indicators | ' |
NOTE 3—LOANS, ALLOWANCE FOR LOAN LOSSES, AND CREDIT QUALITY INDICATORS |
Loans are stated at the amount of unpaid principal net of loan premiums or discounts for purchased loans, net deferred loan origination fees, discounts associated with retained portions of loans sold, and an allowance for loan losses. Interest on loans is calculated using the simple-interest method on daily balances of the principal amount outstanding. Loan origination fees, net of origination costs and discounts, are amortized over the lives of the loans as adjustments to yield. |
Major classifications of loans, including loans held-for-sale, at December 31 are as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, | | | % of gross | | | December 31, | | | % of gross | | | | | | | | | | | | | |
| | 2013 | | | loans | | | 2012 | | | loans | | | | | | | | | | | | | |
Real estate secured loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Permanent Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | 46,217 | | | | 4.6 | % | | $ | 45,212 | | | | 5.2 | % | | | | | | | | | | | | |
Residential 1-4 family | | | 46,438 | | | | 4.7 | % | | | 51,437 | | | | 5.9 | % | | | | | | | | | | | | |
Owner-occupied commercial | | | 249,311 | | | | 25.1 | % | | | 219,276 | | | | 25.2 | % | | | | | | | | | | | | |
Nonowner-occupied commercial | | | 158,786 | | | | 16 | % | | | 145,315 | | | | 16.7 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total permanent real estate loans | | | 500,752 | | | | 50.4 | % | | | 461,240 | | | | 53 | % | | | | | | | | | | | | |
Construction Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | 23,419 | | | | 2.4 | % | | | 17,022 | | | | 2 | % | | | | | | | | | | | | |
Residential 1-4 family | | | 26,512 | | | | 2.7 | % | | | 20,390 | | | | 2.3 | % | | | | | | | | | | | | |
Commercial real estate | | | 30,516 | | | | 3.1 | % | | | 23,235 | | | | 2.7 | % | | | | | | | | | | | | |
Commercial bare land and acquisition & development | | | 11,473 | | | | 1.2 | % | | | 10,668 | | | | 1.2 | % | | | | | | | | | | | | |
Residential bare land and acquisition & development | | | 6,990 | | | | 0.6 | % | | | 8,405 | | | | 0.9 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction real estate loans | | | 98,910 | | | | 10 | % | | | 79,720 | | | | 9.1 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 599,662 | | | | 60.4 | % | | | 540,960 | | | | 62.1 | % | | | | | | | | | | | | |
Commercial loans | | | 390,301 | | | | 39.2 | % | | | 325,604 | | | | 37.4 | % | | | | | | | | | | | | |
Consumer loans | | | 3,878 | | | | 0.3 | % | | | 3,581 | | | | 0.4 | % | | | | | | | | | | | | |
Other loans | | | 928 | | | | 0.1 | % | | | 1,112 | | | | 0.1 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross loans | | | 994,769 | | | | 100 | % | | | 871,257 | | | | 100 | % | | | | | | | | | | | | |
Deferred loan origination fees | | | (924 | ) | | | | | | | (841 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 993,845 | | | | | | | | 870,416 | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (15,917 | ) | | | | | | | (16,345 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans, net of allowance for loan losses and net deferred fees | | $ | 977,928 | | | | | | | $ | 854,071 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At December 31, 2013, outstanding loans to dental professionals totaled $307,268 and represented 30.89% of total outstanding loans compared to dental professional loans of $270,782 or 31.08% of total loans at December 31, 2012. Additional information about the Company’s dental portfolio can be found in Item 8, Note 4 of the Notes to Consolidated Financial Statements. There are no other industry concentrations in excess of 10.00% of the total loan portfolio. However, as of December 31, 2013, approximately 60.38% of the Company’s loan portfolio was collateralized by real estate and is, therefore, susceptible to changes in local market conditions. While appropriate action is taken to manage identified concentration risks, management believes that the loan portfolio is well diversified by geographic location and among industry groups. |
|
Acquired Loans |
On February 1, 2013, the Bank acquired all of the assets and liabilities of Century Bank of Eugene, Oregon. The transaction has been accounted for under the acquisition method of accounting for cash consideration of $13,398, which included the consideration paid for all common shares and outstanding warrants and options. The assets and liabilities were recorded at their estimated fair values as of the acquisition date. The fair value estimates are considered provisional and are subject to change for up to one year after the closing date of the acquisition. |
Acquired loans presented below at December 31, 2013, and the acquisition date: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 | | | February 1, 2013 | | | | | | | | | | | | | | | | | | | | | |
Contractually required principal payments | | $ | 44,358 | | | $ | 65,532 | | | | | | | | | | | | | | | | | | | | | |
Purchase adjustment for credit and interest rate | | | (1,341 | ) | | | (2,193 | ) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance of acquired loans | | $ | 43,017 | | | $ | 63,339 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The acquisition of Century Bank is not considered significant to the Company’s financial statements, therefore pro forma financial information is not presented. |
Allowance for Loan Losses |
A summary of the activity in the allowance for loan losses is as follows for the years ended 2013, 2012, and 2011: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Twelve months ended December 31, | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | 2011 | | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 16,345 | | | $ | 14,941 | | | $ | 16,570 | | | | | | | | | | | | | | | | | |
Provision charged to income | | | 250 | | | | 1,900 | | | | 12,900 | | | | | | | | | | | | | | | | | |
Loans charged against allowance | | | (2,088 | ) | | | (3,664 | ) | | | (15,804 | ) | | | | | | | | | | | | | | | | |
Recoveries credited to allowance | | | 1,410 | | | | 3,168 | | | | 1,275 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, end of period | | $ | 15,917 | | | $ | 16,345 | | | $ | 14,941 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The allowance for loan losses is established as an amount that management considers adequate to absorb possible losses on existing loans within the portfolio. The allowance consists of general, specific, and unallocated components. The general component is based upon all loans collectively evaluated for impairment. The specific component is based upon all loans individually evaluated for impairment. The unallocated component represents credit losses inherent in the loan portfolio that may not have been contemplated in the general risk factors or the specific allowance analysis. Loans are charged against the allowance when management believes the collection of principal and interest is unlikely. |
The Company performs regular credit reviews of the loan portfolio to determine the credit quality and adherence to underwriting standards. When loans are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan through the credit review process. The Company’s internal risk rating methodology assigns risk ratings ranging from one to ten, where a higher rating represents higher risk. The ten-point risk rating categories are a primary factor in determining an appropriate amount for the allowance for loan losses. |
Estimated credit losses reflect consideration of all significant factors that affect the collectability of the loan portfolio. The historical loss rate for each group of loans with similar risk characteristics is determined based on the Company’s own loss experience in that group. Historical loss experience and recent trends in losses provides a reasonable starting point for analysis, however they do not by themselves form a sufficient basis to determine the appropriate level for the allowance for loan losses. Qualitative or environmental factors that are likely to cause estimated credit losses to differ from historical losses are also considered including but not limited to: |
|
| • | | Changes in international, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Changes in the nature and volume of the portfolio and in the terms of loans, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Changes in the experience, ability, and depth of lending management and other relevant staff, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Changes in the quality of the institution’s loan review system, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Changes in the value of underlying collateral for collateral-dependent loans, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | The existence and effect of any concentrations of credit, and changes in the level of such concentrations, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses. | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Changes in the current and future US political environment, including debt ceiling negotiations, government shutdown and healthcare reform that may affect national, regional and local economic conditions, taxation, or disruption of national or global financial markets. | | | | | | | | | | | | | | | | | | | | | | | | | |
The adequacy of the allowance for loan losses and the reserve for unfunded commitments is determined using a consistent, systematic methodology and is monitored regularly based on management’s evaluation of numerous factors. For each portfolio segment, these factors include: |
|
| • | | The quality of the current loan portfolio, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | The trend in the migration of the loan portfolio’s risk ratings, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | The velocity of migration of losses and potential losses, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Current economic conditions, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Loan concentrations, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Loan growth rates, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Past-due and nonperforming trends, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Evaluation of specific loss estimates for all significant problem loans, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Recovery experience, | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Peer comparison loss rates. | | | | | | | | | | | | | | | | | | | | | | | | | |
During second quarter 2013, after several months of evaluation, the Company changed to full migration analysis from the method of probability of default and loss given default, to determine the appropriate amount of general reserves. The Company believes the change provides a more granular analysis accounting for changes in the composition of the portfolio and credit quality deterioration. This method of analysis involves tracking the loss experience on a rolling population of loans over a period of several quarters and the collection and analysis of historical data to determine what rate of loss the Bank has incurred on similarly criticized loans and how the current portfolio could migrate to loss. The change in methodology did not have a material impact on the allowance for loan losses calculation. |
|
A summary of the activity in the allowance for loan losses by major loan classification follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the year ended December 31, 2013 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
Beginning balance | | $ | 3,846 | | | $ | 9,456 | | | $ | 1,987 | | | $ | 70 | | | $ | 986 | | | $ | 16,345 | | | | | |
Charge-offs | | | (1,658 | ) | | | (407 | ) | | | — | | | | (23 | ) | | | — | | | | (2,088 | ) | | | | |
Recoveries | | | 982 | | | | 360 | | | | 60 | | | | 8 | | | | — | | | | 1,410 | | | | | |
Provision (reclassification) | | | 1,943 | | | | (1,741 | ) | | | (554 | ) | | | 13 | | | | 589 | | | | 250 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 5,113 | | | $ | 7,668 | | | $ | 1,493 | | | $ | 68 | | | $ | 1,575 | | | $ | 15,917 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | Balances as of December 31, 2013 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
Ending allowance: collectively evaluated for impairment | | $ | 5,095 | | | $ | 7,667 | | | $ | 1,455 | | | $ | 68 | | | $ | 1,575 | | | $ | 15,860 | | | | | |
Ending allowance: individually evaluated for impairment | | | 18 | | | | 1 | | | | 38 | | | | — | | | | — | | | | 57 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total ending allowance | | $ | 5,113 | | | $ | 7,668 | | | $ | 1,493 | | | $ | 68 | | | $ | 1,575 | | | $ | 15,917 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending loan balance: collectively evaluated for impairment | | $ | 386,332 | | | $ | 495,924 | | | $ | 98,627 | | | $ | 3,878 | | | $ | — | | | $ | 984,761 | | | | | |
Ending loan balance: individually evaluated for impairment | | | 4,897 | | | | 4,828 | | | | 283 | | | | — | | | | — | | | | 10,008 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total ending loan balance | | $ | 391,229 | | | $ | 500,752 | | | $ | 98,910 | | | $ | 3,878 | | | $ | — | | | $ | 994,769 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | For the year ended December 31, 2012 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
Beginning balance | | $ | 2,776 | | | $ | 8,267 | | | $ | 2,104 | | | $ | 87 | | | $ | 1,707 | | | $ | 14,941 | | | | | |
Charge-offs | | | (1,401 | ) | | | (1,190 | ) | | | (1,054 | ) | | | (19 | ) | | | — | | | | (3,664 | ) | | | | |
Recoveries | | | 1,917 | | | | 55 | | | | 1,188 | | | | 8 | | | | — | | | | 3,168 | | | | | |
Provision (reclassification) | | | 554 | | | | 2,324 | | | | (251 | ) | | | (6 | ) | | | (721 | ) | | | 1,900 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 3,846 | | | $ | 9,456 | | | $ | 1,987 | | | $ | 70 | | | $ | 986 | | | $ | 16,345 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | Balances as of December 31, 2012 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
Ending allowance: collectively evaluated for impairment | | $ | 3,844 | | | $ | 9,456 | | | $ | 1,987 | | | $ | 70 | | | $ | 986 | | | $ | 16,343 | | | | | |
Ending allowance: individually evaluated for impairment | | | 2 | | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total ending allowance | | $ | 3,846 | | | $ | 9,456 | | | $ | 1,987 | | | $ | 70 | | | $ | 986 | | | $ | 16,345 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending loan balance: collectively evaluated for impairment | | $ | 322,677 | | | $ | 455,206 | | | $ | 79,619 | | | $ | 3,581 | | | $ | — | | | $ | 861,083 | | | | | |
Ending loan balance: individually evaluated for impairment | | | 4,039 | | | | 6,034 | | | | 101 | | | | — | | | | — | | | | 10,174 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total ending loan balance | | $ | 326,716 | | | $ | 461,240 | | | $ | 79,720 | | | $ | 3,581 | | | $ | — | | | $ | 871,257 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | For the year ended December 31, 2011 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
Beginning balance | | $ | 2,230 | | | $ | 10,042 | | | $ | 3,040 | | | $ | 64 | | | $ | 1,194 | | | $ | 16,570 | | | | | |
Charge-offs | | | (1,403 | ) | | | (5,555 | ) | | | (8,792 | ) | | | (54 | ) | | | — | | | | (15,804 | ) | | | | |
Recoveries | | | 581 | | | | 176 | | | | 498 | | | | 20 | | | | — | | | | 1,275 | | | | | |
Provision (reclassification) | | | 1,368 | | | | 3,604 | | | | 7,358 | | | | 57 | | | | 513 | | | | 12,900 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 2,776 | | | $ | 8,267 | | | $ | 2,104 | | | $ | 87 | | | $ | 1,707 | | | $ | 14,941 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The 2013 ending allowance includes $57 in specific allowance for $10,008 of impaired loans ($8,705 net of government guarantees). At December 31, 2012, the Company had $10,174 of impaired loans ($9,493 net of government guarantees) with a specific allowance of $2 assigned. Management believes that the allowance for loan losses was adequate as of December 31, 2013. However, future loan losses may exceed the levels provided for in the allowance for loan losses and could possibly result in additional charges to the provision for loan losses. |
Credit Quality Indicators |
The Company uses the following loan grades, which are also often used by regulators when assessing the credit quality of a loan portfolio. |
Pass – Credit exposure in this category range between the highest credit quality to average credit quality. Primary repayment sources generate satisfactory debt service coverage under normal conditions. Cash flow from recurring sources is expected to continue to produce adequate debt service capacity. There are many levels of credit quality contained in the pass definition, but none of the loans contained in this category rise to the level of special mention. |
Special Mention – A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. The Bank strictly and carefully employs the FDIC definition in assessing assets that may apply to this category. It is apparent that in many cases asset weaknesses relevant to this definition either, (1) better fit a definition of a “well-defined weakness,” or (2) in our experience ultimately migrate to worse risk grade categories, such as Substandard and Doubtful. Consequently, management elects to downgrade most potential Special Mention credits to Substandard or Doubtful, and therefore adopts a conservative risk grade process in the use of the Special Mention risk grade. |
Substandard – A substandard asset is inadequately protected by the current sound worth and paying capacity of the Borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans in this category are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. |
Doubtful – An asset classified doubtful has all the weaknesses inherent in one classified 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. |
Management strives to consistently apply these definitions when allocating its loans by loan grade. The loan portfolio is continuously monitored for changes in credit quality and management takes appropriate action to update the loan risk ratings accordingly. Management has not changed the Company’s policy towards its use of credit quality indicators during the periods reported. |
|
The following tables present the Company’s loan portfolio information by loan type and credit grade at December 31, 2013, and December 31, 2012: |
Credit Quality Indicators |
As of December 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Loan Grade | | | | | | | | | | | | |
| | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | Totals | | | | | | | | | |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | 44,677 | | | $ | — | | | $ | 1,540 | | | $ | — | | | $ | 46,217 | | | | | | | | | |
Residential 1-4 family | | | 37,831 | | | | — | | | | 8,607 | | | | — | | | | 46,438 | | | | | | | | | |
Owner-occupied commercial | | | 239,539 | | | | 4,278 | | | | 5,494 | | | | — | | | | 249,311 | | | | | | | | | |
Nonowner-occupied commercial | | | 153,055 | | | | — | | | | 5,731 | | | | — | | | | 158,786 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 475,102 | | | | 4,278 | | | | 21,372 | | | | — | | | | 500,752 | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | 23,419 | | | | — | | | | — | | | | — | | | | 23,419 | | | | | | | | | |
Residential 1-4 family | | | 26,145 | | | | — | | | | 367 | | | | — | | | | 26,512 | | | | | | | | | |
Commercial real estate | | | 28,978 | | | | — | | | | 1,538 | | | | — | | | | 30,516 | | | | | | | | | |
Commercial bare land and acquisition & development | | | 11,223 | | | | — | | | | 250 | | | | — | | | | 11,473 | | | | | | | | | |
Residential bare land and acquisition & development | | | 4,346 | | | | — | | | | 2,644 | | | | — | | | | 6,990 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 94,111 | | | | — | | | | 4,799 | | | | — | | | | 98,910 | | | | | | | | | |
Commercial and other | | | 378,828 | | | | — | | | | 12,401 | | | | — | | | | 391,229 | | | | | | | | | |
Consumer | | | 3,856 | | | | — | | | | 22 | | | | — | | | | 3,878 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Totals | | $ | 951,897 | | | $ | 4,278 | | | $ | 38,594 | | | $ | — | | | $ | 994,769 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Credit Quality Indicators |
As of December 31, 2012 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Loan Grade | | | | | | | | | | | | |
| | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | Totals | | | | | | | | | |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | 43,883 | | | $ | — | | | $ | 1,329 | | | $ | — | | | $ | 45,212 | | | | | | | | | |
Residential 1-4 family | | | 43,458 | | | | — | | | | 7,979 | | | | — | | | | 51,437 | | | | | | | | | |
Owner-occupied commercial | | | 208,713 | | | | — | | | | 10,563 | | | | — | | | | 219,276 | | | | | | | | | |
Nonowner-occupied commercial | | | 141,762 | | | | — | | | | 3,553 | | | | — | | | | 145,315 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 437,816 | | | | — | | | | 23,424 | | | | — | | | | 461,240 | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | 17,022 | | | | — | | | | — | | | | — | | | | 17,022 | | | | | | | | | |
Residential 1-4 family | | | 20,278 | | | | — | | | | 112 | | | | — | | | | 20,390 | | | | | | | | | |
Commercial real estate | | | 21,646 | | | | — | | | | 1,589 | | | | — | | | | 23,235 | | | | | | | | | |
Commercial bare land and acquisition & development | | | 10,668 | | | | — | | | | — | | | | — | | | | 10,668 | | | | | | | | | |
Residential bare land and acquisition & development | | | 5,449 | | | | — | | | | 2,956 | | | | — | | | | 8,405 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 75,063 | | | | — | | | | 4,657 | | | | — | | | | 79,720 | | | | | | | | | |
Commercial and other | | | 317,250 | | | | — | | | | 9,466 | | | | — | | | | 326,716 | | | | | | | | | |
Consumer | | | 3,544 | | | | — | | | | 37 | | | | — | | | | 3,581 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Totals | | $ | 833,673 | | | $ | — | | | $ | 37,584 | | | $ | — | | | $ | 871,257 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Past Due and Nonaccrual Loans |
The Company uses the terms “past due” and “delinquent” interchangeably. Amortizing loans are considered past due or delinquent based upon the number of contractually required payments not made. Delinquency status for all contractually matured loans, commercial and commercial real estate loans with non-monthly amortization, and all other extensions of credit is determined based upon the number of calendar months past due. |
The following tables present an aged analysis of past due and nonaccrual loans at December 31, 2013, and December 31, 2012: |
Aged Analysis of Loans Receivable |
As of December 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 30-59 Days | | | 60-89 Days | | | Greater | | | Nonaccrual | | | Total Past | | | Total | | | Total Loans | |
Past Due | Past Due | Than | Due and | Current | Receivable |
Still Accruing | Still Accruing | 90 Days | Nonaccrual | | |
| | Still Accruing | | | |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 46,217 | | | $ | 46,217 | |
Residential 1-4 family | | | 137 | | | | — | | | | — | | | | 636 | | | | 773 | | | | 45,665 | | | | 46,438 | |
Owner-occupied commercial | | | 488 | | | | — | | | | — | | | | 1,685 | | | | 2,173 | | | | 247,138 | | | | 249,311 | |
Nonowner-occupied commercial | | | 1,188 | | | | — | | | | — | | | | 136 | | | | 1,324 | | | | 157,462 | | | | 158,786 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 1,813 | | | | — | | | | — | | | | 2,457 | | | | 4,270 | | | | 496,482 | | | | 500,752 | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,419 | | | | 23,419 | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,512 | | | | 26,512 | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | 30,516 | | | | 30,516 | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,473 | | | | 11,473 | |
Residential bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,990 | | | | 6,990 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | 98,910 | | | | 98,910 | |
Commercial and other | | | 436 | | | | — | | | | — | | | | 2,886 | | | | 3,322 | | | | 387,907 | | | | 391,229 | |
Consumer | | | 5 | | | | 1 | | | | — | | | | — | | | | 6 | | | | 3,872 | | | | 3,878 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 2,254 | | | $ | 1 | | | $ | — | | | $ | 5,343 | | | $ | 7,598 | | | $ | 987,171 | | | $ | 994,769 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aged Analysis of Loans Receivable |
As of December 31, 2012 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 30-59 Days | | | 60-89 Days | | | Greater | | | Nonaccrual | | | Total Past | | | Total | | | Total | |
Past Due | Past Due | Than 90 Days | Due and | Current | Loans |
Still Accruing | Still Accruing | Still Accruing | Nonaccrual | | Receivable |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 45,212 | | | $ | 45,212 | |
Residential 1-4 family | | | 351 | | | | 318 | | | | — | | | | 1,140 | | | | 1,809 | | | | 49,628 | | | | 51,437 | |
Owner-occupied commercial | | | — | | | | — | | | | — | | | | 3,805 | | | | 3,805 | | | | 215,471 | | | | 219,276 | |
Nonowner-occupied commercial | | | 1,404 | | | | — | | | | — | | | | — | | | | 1,404 | | | | 143,911 | | | | 145,315 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 1,755 | | | | 318 | | | | — | | | | 4,945 | | | | 7,018 | | | | 454,222 | | | | 461,240 | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | 17,022 | | | | 17,022 | |
Residential 1-4 family | | | 234 | | | | — | | | | — | | | | — | | | | 234 | | | | 20,156 | | | | 20,390 | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,235 | | | | 23,235 | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,668 | | | | 10,668 | |
Residential bare land and acquisition & development | | | — | | | | — | | | | — | | | | 101 | | | | 101 | | | | 8,304 | | | | 8,405 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 234 | | | | — | | | | — | | | | 101 | | | | 335 | | | | 79,385 | | | | 79,720 | |
Commercial and other | | | 264 | | | | — | | | | — | | | | 4,315 | | | | 4,579 | | | | 322,137 | | | | 326,716 | |
Consumer | | | 8 | | | | — | | | | — | | | | — | | | | 8 | | | | 3,573 | | | | 3,581 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 2,261 | | | $ | 318 | | | $ | — | | | $ | 9,361 | | | $ | 11,940 | | | $ | 859,317 | | | $ | 871,257 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Impaired Loans |
Regular credit reviews of the portfolio are performed to identify loans that are considered potentially impaired. Potentially impaired loans are referred to the ALCO Committee for review and are included in the specific calculation of allowance for loan losses. A loan is considered impaired when, based on current information and events, the Company is unlikely to collect all principal and interest due according to the terms of the loan agreement. When the amount of the impairment represents a confirmed loss it is charged off against the allowance for loan losses. Impaired loans are often reported net of government guarantees to the extent that the guarantees are expected to be collected. Impaired loans generally include all loans classified as nonaccrual and troubled debt restructurings. |
Accrual of interest is discontinued on impaired loans when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of principal or interest is doubtful. Accrued, but uncollected interest is generally reversed when loans are placed on nonaccrual status. Interest income is subsequently recognized only to the extent cash payments are received satisfying all delinquent principal and interest amounts, and the prospects for future payments in accordance with the loan agreement appear relatively certain. In accordance with GAAP, payments received on nonaccrual loans are applied to the principal balance and no interest income is recognized. Interest income may be recognized on impaired loans that are not on nonaccrual status. |
|
The following tables display an analysis of the Company’s impaired loans at December 31, 2013, and 2012: |
Impaired Loan Analysis |
As of December 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Recorded | | | Recorded | | | Unpaid | | | Average | | | Related | | | | | |
Investment | Investment | Investment | Principal | Recorded | Specific | | | | |
With No Specific | With Specific | | Balance | Investment | Allowance | | | | |
Allowance | Allowance | | | | Valuation | | | | |
Valuation | Valuation | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential 1-4 family | | | 912 | | | | 317 | | | | 1,229 | | | | 1,633 | | | | 2,229 | | | | 1 | | | | | |
Owner-occupied commercial | | | 2,767 | | | | — | | | | 2,767 | | | | 3,000 | | | | 3,359 | | | | — | | | | | |
Nonowner-occupied commercial | | | 832 | | | | — | | | | 832 | | | | 835 | | | | 799 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 4,511 | | | | 317 | | | | 4,828 | | | | 5,468 | | | | 6,387 | | | | 1 | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | 133 | | | | — | | | | | |
Residential bare land and acquisition & development | | | — | | | | 283 | | | | 283 | | | | 373 | | | | 413 | | | | 38 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | 283 | | | | 283 | | | | 373 | | | | 546 | | | | 38 | | | | | |
Commercial and other | | | 4,368 | | | | 529 | | | | 4,897 | | | | 10,627 | | | | 4,100 | | | | 18 | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 8,879 | | | $ | 1,129 | | | $ | 10,008 | | | $ | 16,468 | | | $ | 11,033 | | | $ | 57 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loan Analysis |
As of December 31, 2012 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Recorded | | | Recorded | | | Unpaid | | | Average | | | Related | | | | | |
Investment | Investment | Investment | Principal | Recorded | Specific | | | | |
With No Specific | With Specific | | Balance | Investment | Allowance | | | | |
Allowance | Allowance | | | | Valuation | | | | |
Valuation | Valuation | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential 1-4 family | | | 1,447 | | | | — | | | | 1,447 | | | | 2,032 | | | | 3,086 | | | | — | | | | | |
Owner-occupied commercial | | | 4,229 | | | | — | | | | 4,229 | | | | 5,069 | | | | 4,838 | | | | — | | | | | |
Nonowner-occupied commercial | | | 358 | | | | — | | | | 358 | | | | 358 | | | | 165 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 6,034 | | | | — | | | | 6,034 | | | | 7,459 | | | | 8,089 | | | | — | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | 544 | | | | — | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | 1,219 | | | | — | | | | | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | 5,621 | | | | — | | | | | |
Residential bare land and acquisition & development | | | 101 | | | | — | | | | 101 | | | | 173 | | | | 1,024 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 101 | | | | — | | | | 101 | | | | 173 | | | | 8,408 | | | | — | | | | | |
Commercial and other | | | 3,921 | | | | 118 | | | | 4,039 | | | | 9,546 | | | | 5,204 | | | | 2 | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 10,056 | | | $ | 118 | | | $ | 10,174 | | | $ | 17,178 | | | $ | 21,701 | | | $ | 2 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The impaired balances reported above are not adjusted for government guarantees of $1,532 and $681 at December 31, 2013, and December 31, 2012, respectively. The recorded investment in impaired loans, net of government guarantees totaled $8,476 and $9,493 at December 31, 2013, and December 31, 2012, respectively. |
Troubled Debt Restructurings |
In the normal course of business, the Company may modify the terms of certain loans, attempting to protect as much of its investment as possible. Management evaluates the circumstances surrounding each modification to determine whether it is a troubled debt restructuring (“TDR”). TDRs exist when 1) the restructuring constitutes a concession, and 2) the debtor is experiencing financial difficulties. The Company adopted the amendments of Accounting Standards Update No. 2012-02, “Receivables – A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring” during the third quarter 2012. The Update requires retrospective application to the beginning of the annual period of adoption. |
The following table displays the Company’s TDRs by class at December 31, 2013, and 2012: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Troubled Debt Restructurings as of | | | | | | | | | | | | | |
| | December 31, 2013 | | | December 31, 2012 | | | | | | | | | | | | | |
| | Number of | | | Outstanding Recorded | | | Number of | | | Outstanding Recorded | | | | | | | | | | | | | |
Contracts | Investment | Contracts | Investment | | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | | — | | | $ | — | | | | — | | | $ | — | | | | | | | | | | | | | |
Residential 1-4 family | | | 7 | | | | 819 | | | | 8 | | | | 565 | | | | | | | | | | | | | |
Owner-occupied commercial | | | 5 | | | | 1,949 | | | | 5 | | | | 2,095 | | | | | | | | | | | | | |
Non owner-occupied commercial | | | 2 | | | | 714 | | | | 1 | | | | 140 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 14 | | | | 3,482 | | | | 14 | | | | 2,800 | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential bare land and acquisition & development | | | — | | | | — | | | | 5 | | | | 101 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | — | | | | 5 | | | | 101 | | | | | | | | | | | | | |
Commercial and other | | | 10 | | | | 2,379 | | | | 8 | | | | 589 | | | | | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 24 | | | $ | 5,861 | | | | 27 | | | $ | 3,490 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The recorded investment in TDRs in nonaccrual status totaled $1,597 and $2,336 at December 31, 2013, and December 31, 2012, respectively. The Bank’s policy is that loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appear relatively certain. The Bank’s policy generally refers to six months of payment performance as sufficient to warrant a return to accrual status. |
For the twelve months ended December 31, 2013, the Company identified 10 TDRs that are newly considered impaired for which impairment was previously measured under the Company’s general loan loss allowance methodology. The total recorded investment in such receivables was $3,130, and the associated allowance for loan losses was $19 at December 31, 2013. |
The types of modifications offered can generally be described in the following categories: |
Rate Modification—A modification in which the interest rate is modified. |
Term Modification—A modification in which the maturity date, timing of payments, or frequency of payments is changed. |
Interest Only Modification—A modification in which the loan is converted to interest only payments for a period of time. |
Combination Modification—Any other type of modification, including the use of multiple types of modifications. |
|
The following tables present newly non-covered restructured loans that occurred during the twelve months ended December 31, 2013, and 2012, respectively: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Troubled Debt Restructurings | | | | | | | | | | | | | |
| | Identified during the twelve months ended December 31, 2013 | | | | | | | | | | | | | |
| | Rate | | | Term | | | Interest Only | | | Combination | | | | | | | | | | | | | |
Modification | Modification | Modification | Modification | | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | |
Residential 1-4 family | | | 317 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Owner-occupied commercial | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Non owner-occupied commercial | | | 578 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 895 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial and other | | | — | | | | 773 | | | | 524 | | | | 674 | | | | | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 895 | | | $ | 773 | | | $ | 524 | | | $ | 674 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Troubled Debt Restructurings | | | | | | | | | | | | | |
| | Identified during the twelve months ended December 31, 2012 | | | | | | | | | | | | | |
| | Rate | | | Term | | | Interest Only | | | Combination | | | | | | | | | | | | | |
Modification | Modification | Modification | Modification | | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | |
Residential 1-4 family | | | — | | | | — | | | | 121 | | | | — | | | | | | | | | | | | | |
Owner-occupied commercial | | | — | | | | 112 | | | | — | | | | 303 | | | | | | | | | | | | | |
Non owner-occupied commercial | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | — | | | | 112 | | | | 121 | | | | 303 | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential bare land and acquisition & development | | | — | | | | 127 | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | 127 | | | | — | | | | — | | | | | | | | | | | | | |
Commercial and other | | | — | | | | 228 | | | | 230 | | | | 69 | | | | | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | 467 | | | $ | 351 | | | $ | 372 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Subsequent to a loan being classified as a TDR, a borrower may become unwilling or unable to abide by the terms of the modified agreement. In such cases of default, the Company takes appropriate action to secure additional payments including the use of foreclosure proceedings. The following table presents loans receivable modified as troubled debt restructurings that subsequently defaulted within twelve months during the period: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Troubled Debt Restructurings | | | | | | | | | | | | | |
| | That Subsequently Defaulted within the | | | | | | | | | | | | | |
| | 12 Month Period Ended December 31, | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Number of | | | Recorded | | | | | | | | | | | | | |
Contracts | Investment | Contracts | Investment | | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | | — | | | $ | — | | | | — | | | $ | — | | | | | | | | | | | | | |
Residential 1-4 family | | | — | | | | — | | | | 2 | | | | 340 | | | | | | | | | | | | | |
Owner-occupied commercial | | | 1 | | | | 303 | | | | 1 | | | | 411 | | | | | | | | | | | | | |
Non owner-occupied commercial | | | 1 | | | | 136 | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 2 | | | | 439 | | | | 3 | | | | 751 | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Residential bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Commercial and other | | | 3 | | | | 144 | | | | 1 | | | | 194 | | | | | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 5 | | | $ | 583 | | | | 4 | | | $ | 945 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At December 31, 2013, and December 31, 2012, the Company had no commitments to lend additional funds on loans restructured as TDRs. |