Loans, Allowance for Loan Losses, and Credit Quality Indicators | 3 Months Ended |
Mar. 31, 2014 |
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 period-end loans are as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, | | | % of gross | | | December 31, | | | % of gross | | | March 31, | | | % of gross | | | | | |
2014 | loans | 2013 | loans | 2013 | loans | | | | |
Real estate secured loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Permanent Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | 51,182 | | | | 5.01 | % | | $ | 46,217 | | | | 4.65 | % | | $ | 43,805 | | | | 4.61 | % | | | | |
Residential 1-4 family | | | 46,557 | | | | 4.56 | % | | | 46,438 | | | | 4.67 | % | | | 54,615 | | | | 5.74 | % | | | | |
Owner-occupied commercial | | | 250,211 | | | | 24.5 | % | | | 249,311 | | | | 25.06 | % | | | 234,083 | | | | 24.62 | % | | | | |
Nonowner-occupied commercial | | | 168,888 | | | | 16.54 | % | | | 158,786 | | | | 15.96 | % | | | 164,725 | | | | 17.32 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total permanent real estate loans | | | 516,838 | | | | 50.61 | % | | | 500,752 | | | | 50.34 | % | | | 497,228 | | | | 52.29 | % | | | | |
Construction Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | 22,717 | | | | 2.22 | % | | | 23,419 | | | | 2.35 | % | | | 23,162 | | | | 2.44 | % | | | | |
Residential 1-4 family | | | 25,859 | | | | 2.53 | % | | | 26,512 | | | | 2.67 | % | | | 22,550 | | | | 2.37 | % | | | | |
Commercial real estate | | | 34,936 | | | | 3.42 | % | | | 30,516 | | | | 3.07 | % | | | 25,866 | | | | 2.72 | % | | | | |
Commercial bare land and acquisition & development | | | 11,456 | | | | 1.12 | % | | | 11,473 | | | | 1.15 | % | | | 10,874 | | | | 1.14 | % | | | | |
Residential bare land and acquisition & development | | | 7,011 | | | | 0.71 | % | | | 6,990 | | | | 0.7 | % | | | 9,000 | | | | 0.95 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction real estate loans | | | 101,979 | | | | 10 | % | | | 98,910 | | | | 9.94 | % | | | 91,452 | | | | 9.62 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 618,817 | | | | 60.61 | % | | | 599,662 | | | | 60.28 | % | | | 588,680 | | | | 61.91 | % | | | | |
Commercial loans | | | 397,738 | | | | 38.95 | % | | | 390,301 | | | | 39.24 | % | | | 357,089 | | | | 37.56 | % | | | | |
Consumer loans | | | 3,518 | | | | 0.34 | % | | | 3,878 | | | | 0.39 | % | | | 4,020 | | | | 0.42 | % | | | | |
Other loans | | | 1,042 | | | | 0.1 | % | | | 928 | | | | 0.09 | % | | | 1,039 | | | | 0.11 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross loans | | | 1,021,115 | | | | 100 | % | | | 994,769 | | | | 100 | % | | | 950,828 | | | | 100 | % | | | | |
Deferred loan origination fees | | | (970 | ) | | | | | | | (924 | ) | | | | | | | (745 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 1,020,145 | | | | | | | | 993,845 | | | | | | | | 950,083 | | | | | | | | | |
Allowance for loan losses | | | (15,394 | ) | | | | | | | (15,917 | ) | | | | | | | (16,312 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans, net of allowance for loan losses and net deferred fees | | $ | 1,004,751 | | | | | | | $ | 977,928 | | | | | | | $ | 933,771 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At March 31, 2014, outstanding loans to dental professionals totaled $305,755 and represented 29.94% of total outstanding loans compared to dental professional loans of $307,268 or 30.89% of total outstanding loans at December 31, 2013, and $279,980 or 29.45% of total outstanding loans at March 31, 2013. See Note 4 for additional information on the dental loan portfolio. There are no other industry concentrations in excess of 10.00% of the total loan portfolio. However, as of March 31, 2014, 60.61% of the Company’s loan portfolio was collateralized by real estate and is, therefore, susceptible to changes in real estate market conditions. |
|
Allowance for loan losses |
A summary of activity in the allowance for loan losses for the three months ended March 31, 2014, and 2013 is as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | | | | | | | | | | | | | | | | | | | | |
March 31, | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 15,917 | | | $ | 16,345 | | | | | | | | | | | | | | | | | | | | | |
Provision charged to income | | | — | | | | 250 | | | | | | | | | | | | | | | | | | | | | |
Loans charged against allowance | | | (601 | ) | | | (597 | ) | | | | | | | | | | | | | | | | | | | | |
Recoveries credited to allowance | | | 78 | | | | 314 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, end of period | | $ | 15,394 | | | $ | 16,312 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 or 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 and on an ongoing basis by management. 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 provide 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, and | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | 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 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, and | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| • | | Peer comparison loss rates. | | | | | | | | | | | | | | | | | | | | | | | | | |
A summary of the activity in the allowance for loan losses by major loan classification follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended March 31, 2014 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
| | | | | | | | | | |
Beginning balance | | $ | 5,113 | | | $ | 7,668 | | | $ | 1,493 | | | $ | 68 | | | $ | 1,575 | | | $ | 15,917 | | | | | |
Charge-offs | | | (417 | ) | | | (24 | ) | | | (155 | ) | | | (5 | ) | | | — | | | | (601 | ) | | | | |
Recoveries | | | 72 | | | | 1 | | | | 3 | | | | 2 | | | | — | | | | 78 | | | | | |
Provision (reclassification) | | | 635 | | | | (416 | ) | | | 242 | | | | (2 | ) | | | (459 | ) | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance | | $ | 5,403 | | | $ | 7,229 | | | $ | 1,583 | | | $ | 63 | | | $ | 1,116 | | | $ | 15,394 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended March 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 | | | (591 | ) | | | (5 | ) | | | — | | | | (1 | ) | | | — | | | | (597 | ) | | | | |
Recoveries | | | 101 | | | | 202 | | | | 9 | | | | 2 | | | | — | | | | 314 | | | | | |
Provision (reclassification) | | | 764 | | | | (605 | ) | | | 97 | | | | (1 | ) | | | (5 | ) | | | 250 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending balance | | $ | 4,120 | | | $ | 9,048 | | | $ | 2,093 | | | $ | 70 | | | $ | 981 | | | $ | 16,312 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balances as of March 31, 2014 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
Ending allowance: collectively evaluated for impairment | | $ | 5,286 | | | $ | 7,229 | | | $ | 1,457 | | | $ | 63 | | | $ | 1,116 | | | $ | 15,151 | | | | | |
Ending allowance: individually evaluated for impairment | | | 117 | | | | — | | | | 126 | | | | — | | | | — | | | | 243 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Total ending allowance | | $ | 5,403 | | | $ | 7,229 | | | $ | 1,583 | | | $ | 63 | | | $ | 1,116 | | | $ | 15,394 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending loan balance: collectively evaluated for impairment | | $ | 392,976 | | | $ | 511,951 | | | $ | 101,609 | | | $ | 3,518 | | | $ | — | | | $ | 1,010,054 | | | | | |
Ending loan balance: individually evaluated for impairment | | | 5,804 | | | | 4,887 | | | | 370 | | | | — | | | | — | | | | 11,061 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Total ending loan balance | | $ | 398,780 | | | $ | 516,838 | | | $ | 101,979 | | | $ | 3,518 | | | $ | — | | | $ | 1,021,115 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Balances as of March 31, 2013 | | | | | |
| | Commercial | | | Real Estate | | | Construction | | | Consumer | | | Unallocated | | | Total | | | | | |
and Other | | | | |
Ending allowance: collectively evaluated for impairment | | $ | 4,118 | | | $ | 9,040 | | | $ | 2,093 | | | $ | 70 | | | $ | 981 | | | $ | 16,302 | | | | | |
Ending allowance: individually evaluated for impairment | | | 2 | | | | 8 | | | | — | | | | — | | | | — | | | | 10 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Total ending allowance | | $ | 4,120 | | | $ | 9,048 | | | $ | 2,093 | | | $ | 70 | | | $ | 981 | | | $ | 16,312 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Ending loan balance: collectively evaluated for impairment | | $ | 354,355 | | | $ | 489,751 | | | $ | 90,876 | | | $ | 4,020 | | | $ | — | | | $ | 939,002 | | | | | |
Ending loan balance: individually evaluated for impairment | | | 3,773 | | | | 7,477 | | | | 576 | | | | — | | | | — | | | | 11,826 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Total ending loan balance | | $ | 358,128 | | | $ | 497,228 | | | $ | 91,452 | | | $ | 4,020 | | | $ | — | | | $ | 950,828 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management believes that the allowance for loan losses was adequate as of March 31, 2014. 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 ranges 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 management’s 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 as 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 March 31, 2014, December 31, 2013, and March 31, 2013: |
Credit Quality Indicators |
As of March 31, 2014 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Loan Grade | | | | | | | | | | | | |
| | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | Totals | | | | | | | | | |
| | | | | | | | | | | | | |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | 49,648 | | | $ | — | | | $ | 1,534 | | | $ | — | | | $ | 51,182 | | | | | | | | | |
Residential 1-4 family | | | 38,433 | | | | — | | | | 8,124 | | | | — | | | | 46,557 | | | | | | | | | |
Owner-occupied commercial | | | 240,330 | | | | 4,254 | | | | 5,627 | | | | — | | | | 250,211 | | | | | | | | | |
Nonowner-occupied commercial | | | 163,401 | | | | — | | | | 5,487 | | | | — | | | | 168,888 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 491,812 | | | | 4,254 | | | | 20,772 | | | | — | | | | 516,838 | | | | | | | | | |
| | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | 22,717 | | | | — | | | | — | | | | — | | | | 22,717 | | | | | | | | | |
Residential 1-4 family | | | 25,425 | | | | — | | | | 434 | | | | — | | | | 25,859 | | | | | | | | | |
Commercial real estate | | | 33,398 | | | | — | | | | 1,538 | | | | — | | | | 34,936 | | | | | | | | | |
Commercial bare land and acquisition & development | | | 11,234 | | | | — | | | | 222 | | | | — | | | | 11,456 | | | | | | | | | |
Residential bare land and acquisition & development | | | 4,378 | | | | — | | | | 2,633 | | | | — | | | | 7,011 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 97,152 | | | | — | | | | 4,827 | | | | — | | | | 101,979 | | | | | | | | | |
| | | | | | | | | | | | | |
Commercial and other | | | 385,605 | | | | — | | | | 12,216 | | | | 959 | | | | 398,780 | | | | | | | | | |
| | | | | | | | | | | | | |
Consumer | | | 3,499 | | | | — | | | | 19 | | | | — | | | | 3,518 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Totals | | $ | 978,068 | | | $ | 4,254 | | | $ | 37,834 | | | $ | 959 | | | $ | 1,021,115 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 March 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Loan Grade | | | | | | | | | | | | |
| | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | Totals | | | | | | | | | |
| | | | | | | | | | | | | |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | 42,483 | | | $ | — | | | $ | 1,322 | | | $ | — | | | $ | 43,805 | | | | | | | | | |
Residential 1-4 family | | | 44,337 | | | | — | | | | 10,278 | | | | — | | | | 54,615 | | | | | | | | | |
Owner-occupied commercial | | | 224,212 | | | | — | | | | 9,871 | | | | — | | | | 234,083 | | | | | | | | | |
Nonowner-occupied commercial | | | 159,589 | | | | — | | | | 5,136 | | | | — | | | | 164,725 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 470,621 | | | | — | | | | 26,607 | | | | — | | | | 497,228 | | | | | | | | | |
| | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | 23,162 | | | | — | | | | — | | | | — | | | | 23,162 | | | | | | | | | |
Residential 1-4 family | | | 22,368 | | | | — | | | | 182 | | | | — | | | | 22,550 | | | | | | | | | |
Commercial real estate | | | 24,286 | | | | — | | | | 1,580 | | | | — | | | | 25,866 | | | | | | | | | |
Commercial bare land and acquisition & development | | | 10,682 | | | | — | | | | 192 | | | | — | | | | 10,874 | | | | | | | | | |
Residential bare land and acquisition & development | | | 5,585 | | | | — | | | | 3,415 | | | | — | | | | 9,000 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 86,083 | | | | — | | | | 5,369 | | | | — | | | | 91,452 | | | | | | | | | |
| | | | | | | | | | | | | |
Commercial and other | | | 349,999 | | | | — | | | | 8,129 | | | | — | | | | 358,128 | | | | | | | | | |
| | | | | | | | | | | | | |
Consumer | | | 3,964 | | | | — | | | | 56 | | | | — | | | | 4,020 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Totals | | $ | 910,667 | | | $ | — | | | $ | 40,161 | | | $ | — | | | $ | 950,828 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At March 31, 2014, December 31, 2013, and March 31, 2013, the Company had $420, $532 and $136, respectively, in contingent liabilities on its classified loans. |
|
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 March 31, 2014, December 31, 2013, and March 31, 2013: |
Age Analysis of Loans Receivable |
As of March 31, 2014 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 30-59 Days | | | 60-89 Days | | | Greater | | | Nonaccrual | | | Total Past | | | Total | | | Total Loans | |
Past Due | Past Due | Than 90 days | Due and | Current | Receivable |
Still Accruing | Still Accruing | Past Due | Nonaccrual | | |
| | Still Accruing | | | |
| | | | | | | |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 51,182 | | | $ | 51,182 | |
Residential 1-4 family | | | 198 | | | | — | | | | — | | | | 752 | | | | 950 | | | | 45,607 | | | | 46,557 | |
Owner-occupied commercial | | | — | | | | — | | | | — | | | | 1,651 | | | | 1,651 | | | | 248,560 | | | | 250,211 | |
Nonowner-occupied commercial | | | 1,068 | | | | — | | | | — | | | | 136 | | | | 1,204 | | | | 167,684 | | | | 168,888 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 1,266 | | | | — | | | | — | | | | 2,539 | | | | 3,805 | | | | 513,033 | | | | 516,838 | |
| | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,717 | | | | 22,717 | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,859 | | | | 25,859 | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | 34,936 | | | | 34,936 | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,456 | | | | 11,456 | |
Residential bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,011 | | | | 7,011 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | 101,979 | | | | 101,979 | |
| | | | | | | |
Commercial and other | | | 747 | | | | — | | | | — | | | | 2,623 | | | | 3,370 | | | | 395,410 | | | | 398,780 | |
| | | | | | | |
Consumer | | | 1 | | | | 5 | | | | — | | | | — | | | | 6 | | | | 3,512 | | | | 3,518 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Total | | $ | 2,014 | | | $ | 5 | | | $ | — | | | $ | 5,162 | | | $ | 7,181 | | | $ | 1,013,934 | | | $ | 1,021,115 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Age 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 90 days | Due and | Current | Receivable |
Still Accruing | Still Accruing | Past Due | 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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Age Analysis of Loans Receivable |
As of March 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 30-59 Days | | | 60-89 Days | | | Greater | | | Nonaccrual | | | Total Past | | | Total | | | Total Loans | |
Past Due | Past Due | Than 90 days | Due and | Current | Receivable |
Still Accruing | Still Accruing | Past Due | Nonaccrual | | |
| | Still Accruing | | | |
| | | | | | | |
Real estate loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 43,805 | | | $ | 43,805 | |
Residential 1-4 family | | | 421 | | | | 80 | | | | — | | | | 1,269 | | | | 1,770 | | | | 52,845 | | | | 54,615 | |
Owner-occupied commercial | | | — | | | | — | | | | — | | | | 3,148 | | | | 3,148 | | | | 230,935 | | | | 234,083 | |
Nonowner-occupied commercial | | | — | | | | — | | | | — | | | | — | | | | — | | | | 164,725 | | | | 164,725 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 421 | | | | 80 | | | | — | | | | 4,417 | | | | 4,918 | | | | 492,310 | | | | 497,228 | |
| | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,162 | | | | 23,162 | |
Residential 1-4 family | | | 234 | | | | — | | | | — | | | | — | | | | 234 | | | | 22,316 | | | | 22,550 | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,866 | | | | 25,866 | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,874 | | | | 10,874 | |
Residential bare land and acquisition & development | | | — | | | | — | | | | — | | | | 101 | | | | 101 | | | | 8,899 | | | | 9,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 234 | | | | — | | | | — | | | | 101 | | | | 335 | | | | 91,117 | | | | 91,452 | |
| | | | | | | |
Commercial and other | | | 1,118 | | | | 38 | | | | — | | | | 3,344 | | | | 4,500 | | | | 353,628 | | | | 358,128 | |
| | | | | | | |
Consumer | | | 6 | | | | 5 | | | | — | | | | — | | | | 11 | | | | 4,009 | | | | 4,020 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Total | | $ | 1,779 | | | $ | 123 | | | $ | — | | | $ | 7,862 | | | $ | 9,764 | | | $ | 941,064 | | | $ | 950,828 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loans |
Regular credit reviews of the portfolio are performed to identify loans that are considered potentially impaired. Potentially impaired loans are reviewed and included in the specific calculation of allowance for loan losses if considered impaired. 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 March 31, 2014, December 31, 2013, and March 31, 2013: |
Impaired Loan Analysis |
As of March 31, 2014 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | | | 1,019 | | | | 317 | | | | 1,336 | | | | 1,764 | | | | 1,260 | | | | 1 | | | | | |
Owner-occupied commercial | | | 2,723 | | | | — | | | | 2,723 | | | | 2,956 | | | | 2,737 | | | | — | | | | | |
Nonowner-occupied commercial | | | 828 | | | | — | | | | 828 | | | | 830 | | | | 829 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 4,570 | | | | 317 | | | | 4,887 | | | | 5,550 | | | | 4,826 | | | | 1 | | | | | |
| | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial bare land and acquisition & development | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential bare land and acquisition & development | | | — | | | | 370 | | | | 370 | | | | 370 | | | | 372 | | | | 125 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | — | | | | 370 | | | | 370 | | | | 370 | | | | 372 | | | | 125 | | | | | |
| | | | | | | | | | |
Commercial and other | | | 4,320 | | | | 1,484 | | | | 5,804 | | | | 11,523 | | | | 5,394 | | | | 117 | | | | | |
| | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 8,890 | | | $ | 2,171 | | | $ | 11,061 | | | $ | 17,443 | | | $ | 10,592 | | | $ | 243 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
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 March 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 | | | 2,674 | | | | 318 | | | | 2,992 | | | | 4,001 | | | | 2,876 | | | | 8 | | | | | |
Owner-occupied commercial | | | 3,571 | | | | — | | | | 3,571 | | | | 4,144 | | | | 3,492 | | | | — | | | | | |
Nonowner-occupied commercial | | | 914 | | | | — | | | | 914 | | | | 914 | | | | 532 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 7,159 | | | | 318 | | | | 7,477 | | | | 9,059 | | | | 6,900 | | | | 8 | | | | | |
| | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial bare land and acquisition & development | | | 192 | | | | — | | | | 192 | | | | 253 | | | | 170 | | | | — | | | | | |
Residential bare land and acquisition & development | | | 384 | | | | — | | | | 384 | | | | 547 | | | | 608 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | | 576 | | | | — | | | | 576 | | | | 800 | | | | 778 | | | | — | | | | | |
| | | | | | | | | | |
Commercial and other | | | 3,643 | | | | 130 | | | | 3,773 | | | | 9,055 | | | | 3,777 | | | | 2 | | | | | |
| | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 11,378 | | | $ | 448 | | | $ | 11,826 | | | $ | 18,914 | | | $ | 11,455 | | | $ | 10 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The impaired balances reported above are not adjusted for government guarantees of $2,194, $1,532, and $1,122 at March 31, 2014, December 31, 2013, and March 31, 2013, respectively. The recorded investment in impaired loans, net of government guarantees, totaled $8,867, $8,476 and $10,704 at March 31, 2014, December 31, 2013, and March 31, 2013, 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 March 31, 2014, December 31, 2013, and March 31, 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Troubled Debt Restructurings as of | | | | | |
| | March 31, 2014 | | | December 31, 2013 | | | March 31, 2013 | | | | | |
| | Number of | | | Post-Modification | | | Number of | | | Post-Modification | | | Number of | | | Post-Modification | | | | | |
Contracts | Outstanding Recorded | Contracts | Outstanding Recorded | Contracts | Outstanding Recorded | | | | |
| Investment | | Investment | | Investment | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily residential | | | — | | | $ | — | | | | — | | | $ | — | | | | — | | | $ | — | | | | | |
Residential 1-4 family | | | 7 | | | | 805 | | | | 7 | | | | 819 | | | | 10 | | | | 868 | | | | | |
Owner-occupied commercial | | | 5 | | | | 1,925 | | | | 5 | | | | 1,949 | | | | 5 | | | | 2,050 | | | | | |
Non owner-occupied commercial | | | 2 | | | | 714 | | | | 2 | | | | 714 | | | | 2 | | | | 699 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 14 | | | | 3,444 | | | | 14 | | | | 3,482 | | | | 17 | | | | 3,617 | | | | | |
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 | | | | 2,488 | | | | 10 | | | | 2,379 | | | | 9 | | | | 597 | | | | | |
| | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 24 | | | $ | 5,932 | | | | 24 | | | $ | 5,861 | | | | 31 | | | $ | 4,315 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The recorded investment in TDRs on nonaccrual status totaled $1,475, $1,597, and $2,144 at March 31, 2014, December 31, 2013, and March 31, 2013, respectively. The Bank’s policy is that loans placed on nonaccrual will typically remain on nonaccrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appears relatively certain. The Company’s policy generally refers to six months of payment performance as sufficient to warrant a return to accrual status. |
For the three months ended March 31, 2014, the Company identified two TDRs that were newly considered impaired for which impairment was previously measured under the Company’s general loan loss allowance methodology. At March 31, 2014, the total recorded investment in such receivables was $781, and the associated allowance for loan losses was $0. |
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 restructured loans that occurred during the three months ended March 31, 2014, and 2013, respectively: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Troubled Debt Restructurings | | | | | | | | | | | | | |
Identified during the three months ended March 31, 2014 | | | | | | | | | | | | |
| | Rate | | | Term | | | Interest-only | | | Combination | | | | | | | | | | | | | |
Modification | Modification | Modification | Modification | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | |
Residential 1-4 family | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Owner-occupied commercial | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Nonowner-occupied commercial | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family 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 | | | — | | | | 285 | | | | 496 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | — | | | $ | 285 | | | $ | 496 | | | $ | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Troubled Debt Restructurings | | | | | | | | | | | | | |
Identified during the three months ended March 31, 2013 | | | | | | | | | | | | |
| | Rate | | | Term | | | Interest-only | | | Combination | | | | | | | | | | | | | |
Modification | Modification | Modification | Modification | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family residential | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | |
Residential 1-4 family | | | 318 | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Owner-occupied commercial | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Nonowner-occupied commercial | | | — | | | | — | | | | — | | | | 559 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 318 | | | | — | | | | — | | | | 559 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family 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 | | | — | | | | — | | | | — | | | | 145 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 318 | | | $ | — | | | $ | — | | | $ | 704 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
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 recover principal and interest payments including the use of foreclosure proceedings. During the three months ended March 31, 2014 and 2013 there were no loans receivable modified as TDRs that subsequently defaulted within the first 12 months of restructure. |
At March 31, 2014, December 31, 2013, and March 31, 2013, the Company had no commitments to lend additional funds on loans restructured as TDRs. |
|