Loans and Allowance for Loan and Lease Losses | 6 Months Ended |
Jun. 30, 2014 |
Receivables [Abstract] | ' |
Loans and Allowance for Loan Losses | ' |
Loans and Allowance for Loan and Lease Losses |
The loan portfolio consisted of the following at: |
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| 30-Jun-14 | | 31-Dec-13 | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | Amount | | Percent | | Amount | | Percent | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 253,442 | | | 31.4 | % | | $ | 226,450 | | | 29.2 | % | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – owner occupied | 191,143 | | | 23.7 | % | | 174,221 | | | 22.4 | % | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – all other | 178,562 | | | 22.1 | % | | 177,884 | | | 22.9 | % | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – multi-family | 94,405 | | | 11.7 | % | | 96,565 | | | 12.4 | % | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – single family | 72,919 | | | 9 | % | | 75,660 | | | 9.7 | % | | | | | | | | | | | | | | | | | | |
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Land development loans | 9,966 | | | 1.2 | % | | 18,458 | | | 2.4 | % | | | | | | | | | | | | | | | | | | |
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Consumer loans | 6,210 | | | 0.8 | % | | 7,599 | | | 1 | % | | | | | | | | | | | | | | | | | | |
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Gross loans | 806,647 | | | 100 | % | | 776,837 | | | 100 | % | | | | | | | | | | | | | | | | | | |
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Deferred fee income, net | (247 | ) | | | | (53 | ) | | | | | | | | | | | | | | | | | | | | |
Allowance for loan and lease losses | (12,580 | ) | | | | (11,358 | ) | | | | | | | | | | | | | | | | | | | | |
Loans, net | $ | 793,820 | | | | | $ | 765,426 | | | | | | | | | | | | | | | | | | | | | |
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At June 30, 2014 and December 31, 2013, real estate loans of approximately $222 million and $230 million, respectively, were pledged to secure borrowings obtained from the FHLB. |
Allowance for Loan and Lease Losses |
The ALLL represents our estimate of credit losses in our loan and lease portfolio that are probable and estimable at the balance sheet date. We employ economic models that are based on bank regulatory guidelines, industry standards and our own historical loan loss experience, as well as a number of more subjective qualitative factors, to determine both the sufficiency of the ALLL and the amount of the provisions that are required to be made for potential loan losses to increase or replenish the ALLL. |
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The ALLL is first determined by (i) analyzing all classified loans (graded as “Substandard” or “Doubtful” under our internal credit quality grading parameters) on non-accrual status for loss exposure and (ii) establishing specific reserves as needed. ASC 310-10 defines loan impairment as the existence of uncertainty concerning collection of all principal and interest in accordance with the contractual terms of a loan. For collateral dependent loans, impairment is typically measured by comparing the loan amount to the fair value of collateral, less estimated costs to sell, with any "shortfall" amount charged off. Other methods can be used in estimating impairment, including market price and the present value of expected future cash flows discounted at the loan’s original interest rate. We are an active lender with the U.S. Small Business Administration and many of the loans originated have a guaranteed percentage of the balances. The ALLL reserves are calculated against the non-guaranteed loan balances. |
On a quarterly basis, we utilize a classification migration model and individual loan review analytical tools as starting points for determining the adequacy of the ALLL for homogenous pools of loans that are not subject to specific reserve allocations. Our loss migration analysis tracks a certain number of quarters of loan loss history and industry loss factors to determine historical losses by classification category for each loan type, except certain consumer loans. We then apply these calculated loss factors, together with qualitative factors based on external economic conditions and trends and internal assessments, to the outstanding loan balances in each homogenous group of loans, and then, using our internal credit quality grading parameters, we grade the loans as “Pass,” “Special Mention,” “Substandard” or “Doubtful”. We also conduct individual loan review analysis, as part of the ALLL allocation process, applying specific monitoring policies and procedures in analyzing the existing loan portfolio. This grading is based on the credit classifications of assets as prescribed by government regulations and industry standards and is separated into the following groups: |
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• | Pass: Loans classified as pass include current loans performing in accordance with contractual terms, installment/consumer loans that are not individually risk rated, and loans which exhibit certain risk factors that require greater than usual monitoring by management. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Special mention: Loans classified as special mention, while generally not delinquent, have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank’s credit position at some future date. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Substandard: Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard loan, and may also be at delinquency status and have defined weaknesses based on currently existing facts, conditions and values making collection or liquidation in full highly questionable and improbable. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Set forth below is a summary of the activity in the ALLL during the three and six months ended June 30, 2014 and 2013: |
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(Dollars in thousands) | Commercial | | Real Estate | | Land | | Consumer and | | Total | | | | | | | | | | | | |
Development | Single Family | | | | | | | | | | | | |
| Mortgages | | | | | | | | | | | | |
ALLL in the six months ended June 30, 2014: | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 5,812 | | | $ | 4,517 | | | $ | 165 | | | $ | 864 | | | $ | 11,358 | | | | | | | | | | | | | |
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Charge offs | (276 | ) | | — | | | — | | | (102 | ) | | (378 | ) | | | | | | | | | | | | |
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Recoveries | 452 | | | 19 | | | — | | | 79 | | | 550 | | | | | | | | | | | | | |
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Provision | 489 | | | 861 | | | (80 | ) | | (220 | ) | | 1,050 | | | | | | | | | | | | | |
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Balance at end of period | $ | 6,477 | | | $ | 5,397 | | | $ | 85 | | | $ | 621 | | | $ | 12,580 | | | | | | | | | | | | | |
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ALLL in the three months ended June 30, 2014: | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 5,988 | | | $ | 5,039 | | | $ | 154 | | | $ | 759 | | | $ | 11,940 | | | | | | | | | | | | | |
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Charge offs | (166 | ) | | — | | | — | | | (2 | ) | | (168 | ) | | | | | | | | | | | | |
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Recoveries | 169 | | | 1 | | | — | | | 38 | | | 208 | | | | | | | | | | | | | |
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Provision | 486 | | | 357 | | | (69 | ) | | (174 | ) | | 600 | | | | | | | | | | | | | |
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Balance at end of period | $ | 6,477 | | | $ | 5,397 | | | $ | 85 | | | $ | 621 | | | $ | 12,580 | | | | | | | | | | | | | |
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ALLL in the six months ended June 30, 2013: | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 6,340 | | | $ | 3,487 | | | $ | 248 | | | $ | 806 | | | $ | 10,881 | | | | | | | | | | | | | |
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Charge offs | (2,603 | ) | | (308 | ) | | (5 | ) | | (2 | ) | | (2,918 | ) | | | | | | | | | | | | |
Recoveries | 1,932 | | | 2 | | | 54 | | | 22 | | | 2,010 | | | | | | | | | | | | | |
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Provision | 1,284 | | | (327 | ) | | — | | | 193 | | | 1,150 | | | | | | | | | | | | | |
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Balance at end of period | $ | 6,953 | | | $ | 2,854 | | | $ | 297 | | | $ | 1,019 | | | $ | 11,123 | | | | | | | | | | | | | |
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ALLL in the three months ended June 30, 2013: | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 6,850 | | | $ | 3,053 | | | $ | 216 | | | $ | 899 | | | $ | 11,018 | | | | | | | | | | | | | |
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Charge offs | $ | (1,433 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | (1,433 | ) | | | | | | | | | | | | |
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Recoveries | 1,532 | | | 1 | | | — | | | 5 | | | 1,538 | | | | | | | | | | | | | |
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Provision | 4 | | | (200 | ) | | 81 | | | 115 | | | — | | | | | | | | | | | | | |
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Balance at end of period | $ | 6,953 | | | $ | 2,854 | | | $ | 297 | | | $ | 1,019 | | | $ | 11,123 | | | | | | | | | | | | | |
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Set forth below is information regarding loan balances and the related ALLL, by portfolio type, as of June 30, 2014 and December 31, 2013 (excluding LHFS). |
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(Dollars in thousands) | Commercial | | Real Estate | | Land | | Consumer and | | Total | | | | | | | | | | | | |
Development | Single Family | | | | | | | | | | | | |
| Mortgages | | | | | | | | | | | | |
ALLL balance at June 30, 2014 related to: | | | | | | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | $ | 1,820 | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,820 | | | | | | | | | | | | | |
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Loans collectively evaluated for impairment | 4,657 | | | 5,397 | | | 85 | | | 621 | | | 10,760 | | | | | | | | | | | | | |
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Total | $ | 6,477 | | | $ | 5,397 | | | $ | 85 | | | $ | 621 | | | $ | 12,580 | | | | | | | | | | | | | |
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Loans balance at June 30, 2014 related to: | | | | | | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | $ | 9,111 | | | $ | 9,429 | | | $ | 368 | | | $ | 2,931 | | | $ | 21,839 | | | | | | | | | | | | | |
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Loans collectively evaluated for impairment | 244,331 | | | 454,681 | | | 9,598 | | | 76,198 | | | 784,808 | | | | | | | | | | | | | |
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Total | $ | 253,442 | | | $ | 464,110 | | | $ | 9,966 | | | $ | 79,129 | | | $ | 806,647 | | | | | | | | | | | | | |
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ALLL Balance at December 31, 2013 related to: | | | | | | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | |
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Loans collectively evaluated for impairment | 5,812 | | | 4,517 | | | 165 | | | 864 | | | 11,358 | | | | | | | | | | | | | |
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Total | $ | 5,812 | | | $ | 4,517 | | | $ | 165 | | | $ | 864 | | | $ | 11,358 | | | | | | | | | | | | | |
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Loans balance at December 31, 2013 related to: | | | | | | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | $ | 10,484 | | | $ | 8,451 | | | $ | 391 | | | $ | 4,834 | | | $ | 24,160 | | | | | | | | | | | | | |
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Loans collectively evaluated for impairment | 215,966 | | | 440,219 | | | 18,067 | | | 78,425 | | | 752,677 | | | | | | | | | | | | | |
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Total | $ | 226,450 | | | $ | 448,670 | | | $ | 18,458 | | | $ | 83,259 | | | $ | 776,837 | | | | | | | | | | | | | |
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Credit Quality |
The amounts of nonperforming assets and delinquencies that occur within our loan portfolio factors in our evaluation of the adequacy of the ALLL. |
The following table provides a summary of the delinquency status of loans by portfolio type at June 30, 2014 and December 31, 2013: |
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(Dollars in thousands) | 30-59 Days Past Due | | 60-89 Days Past Due | | 90 Days and Greater | | Total Past Due | | Current | | Total Loans Outstanding | | Loans >90 Days and Accruing | | | | |
At June 30, 2014 | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 3,998 | | | $ | 253 | | | $ | 1,647 | | | $ | 5,898 | | | $ | 247,544 | | | $ | 253,442 | | | $ | — | | | | | |
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Commercial real estate loans – owner-occupied | 485 | | | — | | | — | | | 485 | | | 190,658 | | | 191,143 | | | — | | | | | |
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Commercial real estate loans – all other | — | | | — | | | 2,117 | | | 2,117 | | | 176,445 | | | 178,562 | | | — | | | | | |
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Residential mortgage loans – multi-family | — | | | — | | | — | | | — | | | 94,405 | | | 94,405 | | | — | | | | | |
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Residential mortgage loans – single family | — | | | 264 | | | — | | | 264 | | | 72,655 | | | 72,919 | | | — | | | | | |
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Land development loans | — | | | 368 | | | — | | | 368 | | | 9,598 | | | 9,966 | | | — | | | | | |
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Consumer loans | — | | | — | | | — | | | — | | | 6,210 | | | 6,210 | | | — | | | | | |
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Total | $ | 4,483 | | | $ | 885 | | | $ | 3,764 | | | $ | 9,132 | | | $ | 797,515 | | | $ | 806,647 | | | $ | — | | | | | |
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At December 31, 2013 | | | | | |
Commercial loans | $ | — | | | $ | — | | | $ | 2,192 | | | $ | 2,192 | | | $ | 224,258 | | | $ | 226,450 | | | $ | — | | | | | |
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Commercial real estate loans – owner-occupied | — | | | — | | | — | | | — | | | 174,221 | | | 174,221 | | | — | | | | | |
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Commercial real estate loans – all other | — | | | — | | | 2,117 | | | 2,117 | | | 175,767 | | | 177,884 | | | — | | | | | |
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Residential mortgage loans – multi-family | — | | | — | | | — | | | — | | | 96,565 | | | 96,565 | | | — | | | | | |
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Residential mortgage loans – single family | 748 | | | — | | | — | | | 748 | | | 74,912 | | | 75,660 | | | — | | | | | |
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Land development loans | — | | | — | | | — | | | — | | | 18,458 | | | 18,458 | | | — | | | | | |
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Consumer loans | 450 | | | — | | | — | | | 450 | | | 7,149 | | | 7,599 | | | — | | | | | |
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Total | $ | 1,198 | | | $ | — | | | $ | 4,309 | | | $ | 5,507 | | | $ | 771,330 | | | $ | 776,837 | | | $ | — | | | | | |
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Generally, the accrual of interest on a loan is discontinued when principal or interest payments become more than 90 days past due, unless we believe that the loan is adequately collateralized and it is in the process of collection. There were no loans 90 days or more past due and still accruing interest at June 30, 2014 or December 31, 2013. In certain instances, when a loan is placed on non-accrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectability of principal is probable, in which case such payments are applied to accrued and unpaid interest, which is credited to income. Non-accrual loans may be restored to accrual status when principal and interest become current and full repayment becomes expected. |
The following table provides information with respect to loans on nonaccrual status, by portfolio type, as of June 30, 2014 and December 31, 2013: |
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| June 30, 2014 | | December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 5,044 | | | $ | 5,371 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – owner occupied | 2,735 | | | 1,773 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – all other | 3,800 | | | 2,117 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – single family | 66 | | | 1,874 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Land development loans | — | | | 391 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total | $ | 11,645 | | | $ | 11,526 | | | | | | | | | | | | | | | | | | | | | | | | | |
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We classify our loan portfolio using internal credit quality ratings. The following table provides a summary of loans by portfolio type and our internal credit quality ratings as of June 30, 2014 and December 31, 2013: |
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| June 30, 2014 | | December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Pass: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 232,471 | | | $ | 212,938 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – owner occupied | 185,404 | | | 167,947 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – all other | 159,191 | | | 161,970 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – multi family | 89,300 | | | 91,375 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – single family | 71,158 | | | 73,786 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Land development loans | 7,816 | | | 10,047 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Consumer loans | 6,210 | | | 7,599 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total pass loans | $ | 751,550 | | | $ | 725,662 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Special Mention: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 10,731 | | | $ | 52 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – all other | 2,421 | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – multi family | — | | | 5,190 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – single family | 425 | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
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Land development loans | 1,782 | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total special mention loans | $ | 15,359 | | | $ | 5,242 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Substandard: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 10,240 | | | $ | 13,396 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – owner occupied | 5,739 | | | 6,274 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial real estate loans – all other | 16,950 | | | 15,914 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – multi family | 5,105 | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential mortgage loans – single family | 1,336 | | | 1,874 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Land development loans | 368 | | | 8,410 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total substandard loans | $ | 39,738 | | | $ | 45,868 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Doubtful: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | — | | | $ | 65 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total doubtful loans | $ | — | | | $ | 65 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total Outstanding Loans, gross: | $ | 806,647 | | | $ | 776,837 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loans |
A loan generally is classified as impaired and placed on nonaccrual status when, in our opinion, principal or interest is not likely to be collected in accordance with the contractual terms of the loan agreement. We measure for impairments on a loan-by-loan basis, using either the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral if the loan is collateral dependent. |
The following table sets forth information regarding impaired loans, at June 30, 2014 and December 31, 2013: |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2014 | | December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonaccruing loans | $ | 8,235 | | | $ | 5,590 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Nonaccruing restructured loans | 3,410 | | | 5,936 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Accruing restructured loans (1) | 11,244 | | | 12,634 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Accruing impaired loans | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | $ | 22,889 | | | $ | 24,160 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans less than 90 days delinquent and included in total impaired loans | $ | 19,125 | | | $ | 21,968 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | See "Troubled Debt Restructurings" below for a description of accruing restructured loans at June 30, 2014 and December 31, 2013. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The table below contains additional information with respect to impaired loans, by portfolio type, as of June 30, 2014 and December 31, 2013: |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 30-Jun-14 | | 31-Dec-13 | | | | | | | | |
| Recorded Investment | | Unpaid Principal Balance | | Related Allowance (1) | | Recorded Investment | | Unpaid Principal Balance | | Related Allowance (1) | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | |
No allowance recorded: | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 7,516 | | | $ | 7,858 | | | $ | — | | | $ | 10,484 | | | $ | 13,908 | | | $ | — | | | | | | | | | |
| | | | | | | |
Commercial real estate loans – owner occupied | 2,250 | | | 2,447 | | | — | | | 1,773 | | | 1,872 | | | — | | | | | | | | | |
| | | | | | | |
Commercial real estate loans – all other | 6,810 | | | 6,843 | | | — | | | 6,678 | | | 6,711 | | | — | | | | | | | | | |
| | | | | | | |
Residential mortgage loans – multi-family | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Residential mortgage loans – single family | 2,996 | | | 3,208 | | | — | | | 4,834 | | | 5,263 | | | — | | | | | | | | | |
| | | | | | | |
Land development loans | 368 | | | 401 | | | — | | | 391 | | | 409 | | | — | | | | | | | | | |
| | | | | | | |
Consumer loans | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Total | 19,940 | | | 20,757 | | | — | | | 24,160 | | | 28,163 | | | — | | | | | | | | | |
| | | | | | | |
With allowance recorded: | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 2,464 | | | $ | 2,741 | | | $ | 1,361 | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | |
| | | | | | | |
Commercial real estate loans – owner occupied | 485 | | | 485 | | | 459 | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Commercial real estate loans – all other | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Residential mortgage loans – multi-family | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Residential mortgage loans – single family | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Land development loans | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Consumer loans | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Total | 2,949 | | | 3,226 | | | 1,820 | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Total | | | | | | | | | | | | | | | | | | | |
Commercial loans | $ | 9,980 | | | $ | 10,599 | | | $ | 1,361 | | | $ | 10,484 | | | $ | 13,908 | | | $ | — | | | | | | | | | |
| | | | | | | |
Commercial real estate loans – owner occupied | 2,735 | | | 2,932 | | | 459 | | | 1,773 | | | 1,872 | | | — | | | | | | | | | |
| | | | | | | |
Commercial real estate loans – all other | 6,810 | | | 6,843 | | | — | | | 6,678 | | | 6,711 | | | — | | | | | | | | | |
| | | | | | | |
Residential mortgage loans – multi-family | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Residential mortgage loans – single family | 2,996 | | | 3,208 | | | — | | | 4,834 | | | 5,263 | | | — | | | | | | | | | |
| | | | | | | |
Land development loans | 368 | | | 401 | | | — | | | 391 | | | 409 | | | — | | | | | | | | | |
| | | | | | | |
Consumer loans | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | | | | | | |
Total | 22,889 | | | 23,983 | | | 1,820 | | | 24,160 | | | 28,163 | | | — | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | When the discounted cash flows, collateral value or market price equals or exceeds the recorded investment in the loan, then specific reserves are not required to be set aside for the loan within the ALLL. This typically occurs when the impaired loans have been partially charged-off and/or there have been interest payments received and applied to the balance of the principal outstanding. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
At June 30, 2014 and December 31, 2013, there were $19.9 million and $24.2 million, respectively, of impaired loans for which no specific reserves had been allocated because these loans, in our judgment, were sufficiently collateralized. Of the impaired loans at June 30, 2014 for which no specific reserves were allocated, $15.8 million had been deemed impaired in the prior year. |
Average balances and interest income recognized on impaired loans, by portfolio type, for the three and six months ended June 30, 2014 and 2013 were as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
| Average Balance | | Interest Income Recognized | | Average Balance | | Interest Income Recognized | | Average Balance | | Interest Income Recognized | | Average Balance | | Interest Income Recognized |
| (Dollars in thousands) |
No allowance recorded: | | | | | | | | | | | | | | | |
Commercial loans | $ | 7,420 | | | $ | 54 | | | $ | 10,866 | | | $ | 54 | | | $ | 8,441 | | | $ | 168 | | | $ | 9,762 | | | $ | 104 | |
|
Commercial real estate loans – owner occupied | 2,002 | | | — | | | 4,487 | | | 14 | | | 1,926 | | | 22 | | | 4,059 | | | 28 | |
|
Commercial real estate loans – all other | 6,574 | | | 70 | | | 17,291 | | | 153 | | | 6,608 | | | 188 | | | 16,464 | | | 290 | |
|
Residential mortgage loans – single family | 3,075 | | | 30 | | | 834 | | | — | | | 3,661 | | | 60 | | | 819 | | | — | |
|
Land development loans | 374 | | | — | | | 157 | | | — | | | 380 | | | — | | | 243 | | | 15 | |
|
Total | 19,445 | | | 154 | | | 33,635 | | | 221 | | | 21,016 | | | 438 | | | 31,347 | | | 437 | |
|
With allowance recorded: | | | | | | | | | | | | | | | |
Commercial loans | 1,827 | | | 28 | | | 4,398 | | | 42 | | | 1,218 | | | 27 | | | 4,369 | | | 64 | |
|
Commercial real estate loans – owner occupied | 3,993 | | | 156 | | | — | | | — | | | 3,912 | | | 156 | | | — | | | — | |
|
Total | 5,820 | | | 184 | | | 4,398 | | | 42 | | | 5,130 | | | 183 | | | 4,369 | | | 64 | |
|
Total | | | | | | | | | | | | | | | |
Commercial loans | 9,247 | | | 82 | | | 15,264 | | | 96 | | | 9,659 | | | 195 | | | 14,131 | | | 168 | |
|
Commercial real estate loans – owner occupied | 5,995 | | | 156 | | | 4,487 | | | 14 | | | 5,838 | | | 178 | | | 4,059 | | | 28 | |
|
Commercial real estate loans – all other | 6,574 | | | 70 | | | 17,291 | | | 153 | | | 6,608 | | | 188 | | | 16,464 | | | 290 | |
|
Residential mortgage loans – single family | 3,075 | | | 30 | | | 834 | | | — | | | 3,661 | | | 60 | | | 819 | | | — | |
|
Land development loans | 374 | | | — | | | 157 | | | — | | | 380 | | | — | | | 243 | | | 15 | |
|
Total | $ | 25,265 | | | $ | 338 | | | $ | 38,033 | | | $ | 263 | | | $ | 26,146 | | | $ | 621 | | | $ | 35,716 | | | $ | 501 | |
|
The interest that would have been earned had the impaired loans remained current in accordance with their original terms was $142 thousand and $325 thousand during the three months ended June 30, 2014 and 2013, respectively. The interest that would have been earned had the impaired loans remained current in accordance with their original terms was $206 thousand and $555 thousand during the six months ended June 30, 2014 and 2013, respectively. |
Troubled Debt Restructurings (“TDRs”) |
Pursuant to the FASB's ASU No. 2011-2, A Creditor's Determination of whether a Restructuring is a Troubled Debt Restructuring, the Bank's TDRs totaled $14.7 million and $18.6 million at June 30, 2014 and December 31, 2013, respectively. TDRs consist of loans to which modifications have been made for the purpose of alleviating temporary impairments of the borrower's financial condition and cash flows. Those modifications have come in the forms of changes in amortization terms, reductions in interest rates, interest only payments and, in limited cases, concessions to outstanding loan balances. The modifications are made as part of workout plans we enter into with the borrower that are designed to provide a bridge for the borrower's cash flow shortfalls in the near term. If a borrower works through the near term issues, then in most cases, the original contractual terms of the borrower's loan will be reinstated. |
Of the $14.7 million of TDRs outstanding at June 30, 2014, $11.2 million were performing in accordance with their terms and accruing interest, and $3.4 million were not. Our impairment analysis determined no specific reserves were required on the TDR balances outstanding at June 30, 2014. |
The following table presents loans restructured as TDRs during the three and six months ended June 30, 2014 and 2013: |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | | | | | | | | | |
| 30-Jun-14 | | 30-Jun-13 | | | | | | | | | | |
(Dollars in thousands) | Number of | | Pre-Modification | | Post-Modification | | Number of | | Pre-Modification | | Post-Modification | | | | | | | | | | |
Loans | Outstanding | Outstanding | loans | Outstanding | Outstanding | | | | | | | | | | |
| Recorded | Recorded | | Recorded | Recorded | | | | | | | | | | |
| Investment | Investment | | Investment | Investment | | | | | | | | | | |
Performing | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate – all other | — | | | $ | — | | | $ | — | | | 1 | | | $ | 613 | | | $ | 607 | | | | | | | | | | | |
| | | | | | | | | |
| — | | | — | | | — | | | 1 | | | 613 | | | 607 | | | | | | | | | | | |
| | | | | | | | | |
Nonperforming | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | 1 | | | 300 | | | 193 | | | 1 | | | 84 | | | 59 | | | | | | | | | | | |
| | | | | | | | | |
Land development loans | — | | | — | | | — | | | 1 | | | 439 | | | 414 | | | | | | | | | | | |
| | | | | | | | | |
| 1 | | | 300 | | | 193 | | | 2 | | | 523 | | | 473 | | | | | | | | | | | |
| | | | | | | | | |
Total Troubled Debt Restructurings | 1 | | | $ | 300 | | | $ | 193 | | | 3 | | | $ | 1,136 | | | $ | 1,080 | | | | | | | | | | | |
| | | | | | | | | |
| Six Months Ended | | | | | | | | | | |
| 30-Jun-14 | | 30-Jun-13 | | | | | | | | | | |
(Dollars in thousands) | Number of | | Pre-Modification | | Post-Modification | | Number of | | Pre-Modification | | Post-Modification | | | | | | | | | | |
loans | Outstanding | Outstanding | loans | Outstanding | Outstanding | | | | | | | | | | |
| Recorded | Recorded | | Recorded | Recorded | | | | | | | | | | |
| Investment | Investment | | Investment | Investment | | | | | | | | | | |
Performing | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate – all other | — | | | $ | — | | | $ | — | | | 1 | | | $ | 613 | | | $ | 607 | | | | | | | | | | | |
| | | | | | | | | |
| — | | | — | | | — | | | 1 | | | 613 | | | 607 | | | | | | | | | | | |
| | | | | | | | | |
Nonperforming | | | | | | | | | | | | | | | | | | | | | |
Commercial loans | 1 | | | 300 | | | 193 | | | 1 | | | 84 | | | 59 | | | | | | | | | | | |
| | | | | | | | | |
Land development loans | — | | | — | | | — | | | 1 | | | 439 | | | 414 | | | | | | | | | | | |
| | | | | | | | | |
| 1 | | | 300 | | | 193 | | | 2 | | | 523 | | | 473 | | | | | | | | | | | |
| | | | | | | | | |
Total troubled debt restructurings | 1 | | | $ | 300 | | | $ | 193 | | | 3 | | | $ | 1,136 | | | $ | 1,080 | | | | | | | | | | | |
| | | | | | | | | |
As of June 30, 2014, TDRs totaled $14.7 million as compared to $18.6 million at December 31, 2013. |
During the three and six months ended June 30, 2014 and 2013, TDRs that were modified within the preceding 12-month period which subsequently defaulted were as follows: |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | | | | |
| June 30, 2014 | | June 30, 2013 | | June 30, 2014 | | June 30, 2013 | | | | |
| Number of loans | | Recorded Investment | | Number of loans | | Recorded Investment | | Number of loans | | Recorded Investment | | Number of loans | | Recorded Investment | | | | |
| (Dollars in thousands) | | | | |
Commercial loans | — | | | $ | — | | | 1 | | | $ | 519 | | | — | | | $ | — | | | 2 | | | $ | 1,494 | | | | | |
| | | |
Total | — | | | $ | — | | | 1 | | | $ | 519 | | | — | | | $ | — | | | 2 | | | $ | 1,494 | | | | | |
| | | |
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