Loans And Allowance For Loan Losses | 6 Months Ended |
Jun. 30, 2014 |
Loans And Allowance For Loan Losses [Abstract] | ' |
Loans And Allowance For Loan Losses | ' |
NOTE E - Loans and Allowance for Loan Losses |
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The Company offers a full range of commercial, real estate, and consumer loans. Our loan portfolio is comprised of the following categories: commercial and industrial, construction, real estate-commercial mortgage, real estate-residential mortgage, and installment. Our primary lending objective is to meet business and consumer needs in our market areas while maintaining our standards of profitability and credit quality and enhancing client relationships. All lending decisions are based upon a thorough evaluation of the financial strength and credit history of the borrower and the quality and value of the collateral securing the loan. Personal guarantees are required on most loans; however, prudent exceptions are made on occasion based upon the financial viability of the borrowing entity or the underlying project that is being financed. |
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The total of our loans by segment at June 30, 2014 and December 31, 2013 are as follows. |
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(in thousands) | | 30-Jun-14 | | 31-Dec-13 | | | | | | | | | | | | | | | |
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Commercial and Industrial | | $ | 198,110 | | $ | 225,492 | | | | | | | | | | | | | | | |
Construction | | | 138,083 | | | 158,473 | | | | | | | | | | | | | | | |
Real estate - commercial mortgage | | | 628,764 | | | 590,475 | | | | | | | | | | | | | | | |
Real estate - residential mortgage | | | 347,780 | | | 354,035 | | | | | | | | | | | | | | | |
Installment | | | 52,161 | | | 57,623 | | | | | | | | | | | | | | | |
Deferred loan fees and related costs | | | -1,101 | | | -1,567 | | | | | | | | | | | | | | | |
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Total loans | | $ | 1,363,797 | | $ | 1,384,531 | | | | | | | | | | | | | | | |
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Allowance for Loan Losses |
A rollforward of the activity within the allowance for loan losses by loan type and recorded investment in loans for the three and six months ended June 30, 2014, and 2013 is as follows. |
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| | Three Months Ended June 30, 2014 |
| | | | | | | | Real Estate | | | | | | | | | |
| | Commercial | | | | | Commercial | | Residential | | | | | | | | | |
(in thousands) | | and Industrial | | Construction | | Mortgage | | Mortgage | | Installment | | Unallocated | | Total |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 2,956 | | $ | 6,471 | | $ | 8,007 | | $ | 8,463 | | $ | 1,470 | | $ | 3,893 | | $ | 31,260 |
Charge-offs | | | -1,028 | | | -2,604 | | | -578 | | | -1,755 | | | -445 | | | - | | | -6,410 |
Recoveries | | | 173 | | | 619 | | | 51 | | | 307 | - | | 62 | | | - | | | 1,212 |
Provision | | | -573 | | | -502 | | | 172 | | | 119 | | | 473 | | | 311 | | | - |
Ending balance | | $ | 1,528 | | $ | 3,984 | | $ | 7,652 | | $ | 7,134 | | $ | 1,560 | | $ | 4,204 | | $ | 26,062 |
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| | Three Months Ended June 30, 2013 |
| | | | | | | | Real Estate | | | | | | | | | |
| | Commercial | | | | | Commercial | | Residential | | | | | | | | | |
(in thousands) | | and Industrial | | Construction | | Mortgage | | Mortgage | | Installment | | Unallocated | | Total |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 4,842 | | $ | 14,869 | | $ | 7,315 | | $ | 9,263 | | $ | 1,038 | | $ | 6,382 | | $ | 43,709 |
Charge-offs | | | -2,254 | | | -2,581 | | | -331 | | | -3,276 | | | -59 | | | - | | | -8,501 |
Recoveries | | | 415 | | | 507 | | | 135 | | | 929 | | | 40 | | | - | | | 2,026 |
Provision | | | 427 | | | -1,572 | | | 981 | | | 1,754 | | | -318 | | | -272 | | | 1,000 |
Ending balance | | $ | 3,430 | | $ | 11,223 | | $ | 8,100 | | $ | 8,670 | | $ | 701 | | $ | 6,110 | | $ | 38,234 |
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| | Six Months Ended June 30, 2014 |
| | | | | | | | Real Estate | | | | | | | | | |
| | Commercial | | | | | Commercial | | Residential | | | | | | | | | |
(in thousands) | | and Industrial | | Construction | | Mortgage | | Mortgage | | Installment | | Unallocated | | Total |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 2,404 | | $ | 9,807 | | $ | 10,135 | | $ | 7,914 | | $ | 521 | | $ | 4,250 | | $ | 35,031 |
Charge-offs | | | -1,160 | | | -5,428 | | | -2,208 | | | -2,256 | | | -525 | | | - | | | -11,577 |
Recoveries | | | 270 | | | 1,283 | | | 268 | | | 557 | - | | 130 | | | - | | | 2,508 |
Provision | | | 14 | | | -1,678 | | | -543 | | | 919 | | | 1,434 | | | -46 | | | 100 |
Ending balance | | $ | 1,528 | | $ | 3,984 | | $ | 7,652 | | $ | 7,134 | | $ | 1,560 | | $ | 4,204 | | $ | 26,062 |
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Ending balance: attributable to | | | | | | | | | | | | | | | | | | | | | |
loans individually evaluated | | | | | | | | | | | | | | | | | | | | | |
for impairment | | $ | 219 | | $ | 1,038 | | $ | 2,482 | | $ | 2,864 | | $ | 206 | | | | | $ | 6,809 |
Recorded investment: loans | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for | | | | | | | | | | | | | | | | | | | | | |
impairment | | $ | 2,366 | | $ | 7,669 | | $ | 30,614 | | $ | 20,150 | | $ | 374 | | | | | | |
Ending balance: attributable to | | | | | | | | | | | | | | | | | | | | | |
loans collectively evaluated | | | | | | | | | | | | | | | | | | | | | |
for impairment | | $ | 1,309 | | $ | 2,946 | | $ | 5,170 | | $ | 4,270 | | $ | 1,354 | | $ | 4,204 | | $ | 19,253 |
Recorded investment: loans | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for | | | | | | | | | | | | | | | | | | | | | |
impairment | | $ | 195,744 | | $ | 130,414 | | $ | 598,150 | | $ | 327,630 | | $ | 51,787 | | | | | | |
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| | Six Months Ended June 30, 2013 |
| | | | | | | | Real Estate | | | | | | | | | |
| | Commercial | | | | | Commercial | | Residential | | | | | | | | | |
(in thousands) | | and Industrial | | Construction | | Mortgage | | Mortgage | | Installment | | Unallocated | | Total |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 6,253 | | $ | 15,728 | | $ | 9,862 | | $ | 9,953 | | $ | 887 | | $ | 5,699 | | $ | 48,382 |
Charge-offs | | | -4,453 | | | -3,668 | | | -753 | | | -5,405 | | | -244 | | | - | | | -14,523 |
Recoveries | | | 1,089 | | | 733 | | | 407 | | | 1,013 | | | 133 | | | - | | | 3,375 |
Provision | | | 541 | | | -1,570 | | | -1,416 | | | 3,109 | | | -75 | | | 411 | | | 1,000 |
Ending balance | | $ | 3,430 | | $ | 11,223 | | $ | 8,100 | | $ | 8,670 | | $ | 701 | | $ | 6,110 | | $ | 38,234 |
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Ending balance: attributable to | | | | | | | | | | | | | | | | | | | | | |
loans individually evaluated | | | | | | | | | | | | | | | | | | | | | |
for impairment | | $ | 817 | | $ | 2,842 | | $ | 2,294 | | $ | 3,499 | | $ | 56 | | | | | $ | 9,508 |
Recorded investment: loans | | | | | | | | | | | | | | | | | | | | | |
individually evaluated for | | | | | | | | | | | | | | | | | | | | | |
impairment | | $ | 14,155 | | $ | 20,666 | | $ | 31,709 | | $ | 25,584 | | $ | 241 | | | | | | |
Ending balance: attributable to | | | | | | | | | | | | | | | | | | | | | |
loans collectively evaluated | | | | | | | | | | | | | | | | | | | | | |
for impairment | | $ | 2,613 | | $ | 8,381 | | $ | 5,806 | | $ | 5,171 | | $ | 645 | | $ | 6,110 | | $ | 28,726 |
Recorded investment: loans | | | | | | | | | | | | | | | | | | | | | |
collectively evaluated for | | | | | | | | | | | | | | | | | | | | | |
impairment | | $ | 225,138 | | $ | 162,847 | | $ | 528,526 | | $ | 329,984 | | $ | 62,439 | | | | | | |
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Impaired Loans |
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Total impaired loans were $61.2 million and $67.6 million at June 30, 2014, and December 31, 2013, respectively. The Company continues to resolve its troubled loans through charge-offs, curtailments, pay offs, and returns of loans to performing status. Because new defaults and newly identified impaired loans were modest in the second quarter of 2014, impaired loans decreased by $9.7 million or 13.7% compared to the first quarter of 2014. |
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Collateral dependent impaired loans were $55.5 million and $61.9 million at June 30, 2014, and December 31, 2013, respectively, and are measured at the fair value of the underlying collateral less costs to sell. Impaired loans for which no allowance is provided totaled $34.0 million and $34.7 million at June 30, 2014, and December 31, 2013, respectively. Loans written down to their estimated fair value of collateral less the costs to sell account for $7.8 million and $9.4 million of the impaired loans for which no allowance has been provided as of June 30, 2014, and December 31, 2013, respectively, and the weighted average age of appraisals for these loans is 0.55 years at June 30, 2014. The remaining impaired loans for which no allowance is provided are expected to be fully covered by the fair value of the collateral, and therefore, no loss is expected on these loans. |
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The following charts show recorded investment, unpaid balance, and related allowance, as of June 30, 2014 and December 31, 2013, as well as average investment and interest recognized for the three and six months ended June 30, 2014 and 2013, for impaired loans by major segment and class. |
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| | | | Three Months Ended | | Six Months Ended |
| | 30-Jun-14 | | 30-Jun-14 | | 30-Jun-14 |
| | Recorded | | Unpaid | | Related | | Average | | Interest | | Average | | Interest |
(in thousands) | | Investment | | Balance | | Allowance | | Investment | | Recognized | | Investment | | Recognized |
With no related | | | | | | | | | | | | | | | | | | | | | |
allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Commercial & Industrial | | $ | 1,666 | | $ | 2,822 | | $ | - | | $ | 1,830 | | $ | 2 | | $ | 1,857 | | $ | 4 |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | - | | | - | | | - | | | - | | | - | | | - | | | - |
Commercial construction | | | 4,529 | | | 8,684 | | | - | | | 5,022 | | | 10 | | | 5,182 | | | 23 |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 17,079 | | | 18,248 | | | - | | | 17,609 | | | 100 | | | 17,677 | | | 199 |
Non-owner occupied | | | 2,430 | | | 5,350 | | | - | | | 2,548 | | | 4 | | | 2,566 | | | 8 |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 5,899 | | | 7,010 | | | - | | | 6,572 | | | 16 | | | 6,592 | | | 32 |
Junior lien | | | 2,315 | | | 3,556 | | | - | | | 2,558 | | | 1 | | | 2,562 | | | 3 |
Installment | | | 61 | | | 124 | | | - | | | 65 | | | - | | | 65 | | | - |
| | $ | 33,979 | | $ | 45,794 | | $ | - | | $ | 36,204 | | $ | 133 | | $ | 36,501 | | $ | 269 |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Commercial & Industrial | | $ | 700 | | $ | 700 | | $ | 219 | | $ | 727 | | $ | 1 | | $ | 730 | | $ | 3 |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | - | | | - | | | - | | | - | | | - | | | - | | | - |
Commercial construction | | | 3,140 | | | 5,782 | | | 1,038 | | | 3,346 | | | 18 | | | 3,367 | | | 37 |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 6,980 | | | 6,980 | | | 720 | | | 7,025 | | | 59 | | | 7,053 | | | 115 |
Non-owner occupied | | | 4,125 | | | 4,338 | | | 1,762 | | | 5,126 | | | - | | | 5,138 | | | - |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 9,619 | | | 10,673 | | | 1,604 | | | 9,655 | | | 50 | | | 9,667 | | | 100 |
Junior lien | | | 2,317 | | | 2,317 | | | 1,260 | | | 2,345 | | | 4 | | | 2,350 | | | 7 |
Installment | | | 313 | | | 313 | | | 206 | | | 313 | | | 2 | | | 354 | | | 3 |
| | $ | 27,194 | | $ | 31,103 | | $ | 6,809 | | $ | 28,537 | | $ | 134 | | $ | 28,659 | | $ | 265 |
Total: | | | | | | | | | | | | | | | | | | | | | |
Commercial & Industrial | | $ | 2,366 | | $ | 3,522 | | $ | 219 | | $ | 2,557 | | $ | 3 | | $ | 2,587 | | $ | 7 |
Construction | | | 7,669 | | | 14,466 | | | 1,038 | | | 8,368 | | | 28 | | | 8,549 | | | 60 |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgage | | | 30,614 | | | 34,916 | | | 2,482 | | | 32,308 | | | 163 | | | 32,434 | | | 322 |
Residential mortgage | | | 20,150 | | | 23,556 | | | 2,864 | | | 21,130 | | | 71 | | | 21,171 | | | 142 |
Installment | | | 374 | | | 437 | | | 206 | | | 378 | | | 2 | | | 419 | | | 3 |
Total | | $ | 61,173 | | $ | 76,897 | | $ | 6,809 | | $ | 64,741 | | $ | 267 | | $ | 65,160 | | $ | 534 |
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| | | | | Three Months Ended | | | Six Months Ended |
| | 31-Dec-13 | | 30-Jun-13 | | 30-Jun-13 |
| | | Recorded | | | Unpaid | | | Related | | | Average | | | Interest | | | Average | | | Interest |
(in thousands) | | | Investment | | | Balance | | | Allowance | | | Investment | | | Recognized | | | Investment | | | Recognized |
With no related | | | | | | | | | | | | | | | | | | | | | |
allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Commercial & Industrial | | $ | 2,049 | | $ | 3,108 | | $ | - | | $ | 8,434 | | $ | - | | $ | 13,444 | | $ | 4 |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | - | | | - | | | - | | | 1,560 | | | - | | | 796 | | | - |
Commercial construction | | | 6,437 | | | 9,398 | | | - | | | 14,956 | | | - | | | 15,256 | | | 1 |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 13,565 | | | 14,784 | | | - | | | 15,562 | | | 2 | | | 16,580 | | | 79 |
Non-owner occupied | | | 2,998 | | | 5,767 | | | - | | | 4,163 | | | 29 | | | 4,857 | | | 43 |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 7,931 | | | 9,372 | | | - | | | 12,943 | | | 25 | | | 14,041 | | | 33 |
Junior lien | | | 1,598 | | | 2,805 | | | - | | | 3,308 | | | - | | | 2,933 | | | - |
Installment | | | 80 | | | 175 | | | - | | | 156 | | | - | | | 120 | | | - |
| | $ | 34,658 | | $ | 45,409 | | $ | - | | $ | 61,082 | | $ | 56 | | $ | 68,027 | | $ | 160 |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Commercial & Industrial | | $ | 932 | | $ | 932 | | $ | 505 | | $ | 6,915 | | $ | 9 | | $ | 1,927 | | $ | 18 |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | - | | | - | | | - | | | 70 | | | - | | | 140 | | | - |
Commercial construction | | | 7,306 | | | 7,305 | | | 5,108 | | | 8,433 | | | 38 | | | 6,238 | | | 90 |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 6,868 | | | 6,945 | | | 849 | | | 11,976 | | | 26 | | | 8,831 | | | 111 |
Non-owner occupied | | | 5,609 | | | 5,627 | | | 3,231 | | | 2,869 | | | 18 | | | 4,760 | | | 19 |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 9,695 | | | 9,779 | | | 2,221 | | | 8,974 | | | 49 | | | 6,990 | | | 138 |
Junior lien | | | 2,332 | | | 2,332 | | | 1,178 | | | 1,544 | | | 5 | | | 1,331 | | | 11 |
Installment | | | 158 | | | 295 | | | 49 | | | 120 | | | 2 | | | 125 | | | 3 |
| | $ | 32,900 | | $ | 33,215 | | $ | 13,141 | | $ | 40,901 | | $ | 147 | | $ | 30,342 | | $ | 390 |
Total: | | | | | | | | | | | | | | | | | | | | | |
Commercial & Industrial | | $ | 2,981 | | $ | 4,040 | | $ | 505 | | $ | 15,349 | | $ | 9 | | $ | 15,371 | | $ | 22 |
Construction | | | 13,743 | | | 16,703 | | | 5,108 | | | 25,019 | | | 38 | | | 22,430 | | | 91 |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial mortgage | | | 29,040 | | | 33,123 | | | 4,080 | | | 34,570 | | | 75 | | | 35,028 | | | 252 |
Residential mortgage | | | 21,556 | | | 24,288 | | | 3,399 | | | 26,769 | | | 79 | | | 25,295 | | | 182 |
Installment | | | 238 | | | 470 | | | 49 | | | 276 | | | 2 | | | 245 | | | 3 |
Total | | $ | 67,558 | | $ | 78,624 | | $ | 13,141 | | $ | 101,983 | | $ | 203 | | $ | 98,369 | | $ | 550 |
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Non-performing Assets |
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Non-performing assets consist of loans 90 days past due and still accruing interest, nonaccrual loans, and other real estate owned and repossessed assets. Our non-performing assets ratio, defined as the ratio of non-performing assets to gross loans plus loans held for sale plus other real estate owned and repossessed assets was 4.19% and 5.29% at June 30, 2014 and December 31, 2013, respectively. Non-performing assets as of June 30, 2014 and December 31, 2013, were as follows. |
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(in thousands) | | 30-Jun-14 | | 31-Dec-13 | | | | | | | | | | | | | | | |
Loans 90 days past due and still accruing interest | | $ | 843 | | $ | - | | | | | | | | | | | | | | | |
Nonaccrual loans, including nonaccrual impaired loans | | | 36,127 | | | 39,854 | | | | | | | | | | | | | | | |
Other real estate owned and repossessed assets | | | 22,419 | | | 36,665 | | | | | | | | | | | | | | | |
Non-performing assets | | $ | 59,389 | | $ | 76,519 | | | | | | | | | | | | | | | |
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Nonaccrual Loans |
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A reconciliation of nonaccrual loans to impaired loans as of June 30, 2014 and December 31, 2013 is as follows. |
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(in thousands) | | 30-Jun-14 | | 31-Dec-13 | | | | | | | | | | | | | | | |
Nonaccrual loans, including nonaccrual impaired loans | | $ | 36,127 | | $ | 39,854 | | | | | | | | | | | | | | | |
TDRs on accrual | | | 22,039 | | | 23,282 | | | | | | | | | | | | | | | |
Impaired loans on accrual | | | 3,007 | | | 4,422 | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 61,173 | | $ | 67,558 | | | | | | | | | | | | | | | |
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Nonaccrual loans were $36.1 million at June 30, 2014 compared to $39.9 million at December 31, 2013. If income on nonaccrual loans had been recorded under original terms, $873 thousand and $2.2 million of additional interest income would have been recorded for the six months ended June 30, 2014, and 2013 respectively. |
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The following table provides a rollforward of nonaccrual loans for the six months ended June 30, 2014. |
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| | | | | | | | Real Estate | | | | | | | | | |
(in thousands) | | Commercial & Industrial | | Construction | | Commercial Mortgage | | Residential Mortgage | | Installment | | Total | | | |
Balance at December 31, 2013 | | $ | 2,794 | | $ | 10,614 | | $ | 12,633 | | $ | 13,679 | | $ | 134 | | $ | 39,854 | | | |
Transfers in | | | 1,011 | | | 1,347 | | | 5,298 | | | 5,470 | | | 1,225 | | | 14,351 | | | |
Transfers to OREO | | | - | | | -284 | | | -143 | | | -1,075 | | | - | | | -1,502 | | | |
Charge-offs | | | -1,160 | | | -5,428 | | | -2,208 | | | -2,256 | | | -525 | | | -11,577 | | | |
Payments | | | -90 | | | -611 | | | -1,019 | | | -1,794 | | | -564 | | | -4,078 | | | |
Return to accrual | | | - | | | -502 | | | - | | | -419 | | | - | | | -921 | | | |
Loan type reclassification | | | -370 | | | - | | | 370 | | | - | | | - | | | - | | | |
Balance at June 30, 2014 | | $ | 2,185 | | $ | 5,136 | | $ | 14,931 | | $ | 13,605 | | $ | 270 | | $ | 36,127 | | | |
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Age Analysis of Past Due Loans |
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An age analysis of past due loans as of June 30, 2014 and December 31, 2013 is as follows. |
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| | 30-Jun-14 |
| | | | | | | | | | | | | | | | | | | | 90 Days or |
| | | | | | | | | | | | | | | | | | | More Past |
| | 30-59 Days | | 60-89 Days | | 90 Days | | Total | | | | | Total | | Due and |
(in thousands) | | Past Due | | Past Due | | Past Due | | Past Due | | Current | | Loans | | Accruing |
Commercial & Industrial | | $ | 184 | | $ | - | | $ | 2,185 | | $ | 2,369 | | $ | 195,741 | | $ | 198,110 | | $ | - |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | - | | | - | | | - | | | - | | | 17,158 | | | 17,158 | | | - |
Commercial construction | | | 236 | | | - | | | 5,136 | | | 5,372 | | | 115,553 | | | 120,925 | | | - |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 632 | | | - | | | 8,645 | | | 9,277 | | | 249,244 | | | 258,521 | | | - |
Non-owner occupied | | | - | | | - | | | 6,286 | | | 6,286 | | | 363,957 | | | 370,243 | | | - |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 627 | | | 478 | | | 10,416 | | | 11,521 | | | 211,669 | | | 223,190 | | | 843 |
Junior lien | | | 490 | | | 49 | | | 4,032 | | | 4,571 | | | 120,019 | | | 124,590 | | | - |
Installment | | | - | | | - | | | 270 | | | 270 | | | 51,891 | | | 52,161 | | | - |
Deferred loan fees | | | | | | | | | | | | | | | | | | | | | |
and related costs | | | - | | | - | | | - | | | - | | | -1,101 | | | -1,101 | | | - |
Total | | $ | 2,169 | | $ | 527 | | $ | 36,970 | | $ | 39,666 | | $ | 1,324,131 | | $ | 1,363,797 | | $ | 843 |
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| | | | | | | | | | | | | | | | | | | | | |
| | 31-Dec-13 |
| | | | | | | | | | | | | | | | | | | | 90 Days or |
| | | | | | | | | | | | | | | | | | | More Past |
| | 30-59 Days | | 60-89 Days | | 90 Days | | Total | | | | | Total | | Due and |
(in thousands) | | Past Due | | Past Due | | Past Due | | Past Due | | Current | | Loans | | Accruing |
Commercial & Industrial | | $ | 317 | | $ | - | | $ | 2,794 | | $ | 3,111 | | $ | 222,381 | | $ | 225,492 | | $ | - |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | 298 | | | - | | | - | | | 298 | | | 17,879 | | | 18,177 | | | - |
Commercial construction | | | 1,031 | | | 132 | | | 10,614 | | | 11,777 | | | 128,519 | | | 140,296 | | | - |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 1,961 | | | 360 | | | 4,932 | | | 7,253 | | | 266,661 | | | 273,914 | | | - |
Non-owner occupied | | | 200 | | | 517 | | | 7,701 | | | 8,418 | | | 308,143 | | | 316,561 | | | - |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 2,983 | | | 237 | | | 10,877 | | | 14,097 | | | 209,564 | | | 223,661 | | | - |
Junior lien | | | 367 | | | 2 | | | 2,802 | | | 3,171 | | | 127,203 | | | 130,374 | | | - |
Installment | | | 1 | | | - | | | 134 | | | 135 | | | 57,488 | | | 57,623 | | | - |
Deferred loan fees | | | | | | | | | | | | | | | | | | | | | |
and related costs | | | - | | | - | | | - | | | - | | | -1,567 | | | -1,567 | | | - |
Total | | $ | 7,158 | | $ | 1,248 | | $ | 39,854 | | $ | 48,260 | | $ | 1,336,271 | | $ | 1,384,531 | | $ | - |
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Credit Quality |
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The following tables provide information on June 30, 2014 and December 31, 2013 about the credit quality of the loan portfolio using the Company’s internal rating system as an indicator. |
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| | | | | | | | | | | | | | | | | | | | | |
| | 30-Jun-14 | | | | | | |
| | | | | Special | | | | | Nonaccrual | | | | | | | | | |
(in thousands) | | Pass | | Mention | | Substandard | | Loans | | Total | | | | | | |
Commercial & Industrial | | $ | 175,031 | | $ | 19,022 | | $ | 1,872 | | $ | 2,185 | | $ | 198,110 | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | 16,062 | | | 241 | | | 855 | | | - | | | 17,158 | | | | | | |
Commercial construction | | | 84,197 | | | 28,835 | | | 2,757 | | | 5,136 | | | 120,925 | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 220,688 | | | 22,770 | | | 6,418 | | | 8,645 | | | 258,521 | | | | | | |
Non-owner occupied | | | 347,265 | | | 11,788 | | | 4,904 | | | 6,286 | | | 370,243 | | | | | | |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 184,738 | | | 21,659 | | | 7,220 | | | 9,573 | | | 223,190 | | | | | | |
Junior lien | | | 113,554 | | | 5,200 | | | 1,804 | | | 4,032 | | | 124,590 | | | | | | |
Installment | | | 50,788 | | | 998 | | | 105 | | | 270 | | | 52,161 | | | | | | |
Deferred loan fees | | | | | | | | | | | | | | | | | | | | | |
and related costs | | | -1,101 | | | - | | | - | | | - | | | -1,101 | | | | | | |
Total | | $ | 1,191,222 | | $ | 110,513 | | $ | 25,935 | | $ | 36,127 | | $ | 1,363,797 | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | |
| | 31-Dec-13 | | | | | | |
| | | | | Special | | | | | Nonaccrual | | | | | | | | | |
(in thousands) | | Pass | | Mention | | Substandard | | Loans | | Total | | | | | | |
Commercial & Industrial | | $ | 202,490 | | $ | 17,371 | | $ | 2,837 | | $ | 2,794 | | $ | 225,492 | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | | | | | | | | | | | | | | | | | | | | |
construction | | | 17,288 | | | 277 | | | 612 | | | - | | | 18,177 | | | | | | |
Commercial construction | | | 87,237 | | | 39,298 | | | 3,147 | | | 10,614 | | | 140,296 | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | | 224,261 | | | 31,615 | | | 13,106 | | | 4,932 | | | 273,914 | | | | | | |
Non-owner occupied | | | 278,124 | | | 23,924 | | | 6,812 | | | 7,701 | | | 316,561 | | | | | | |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family | | | | | | | | | | | | | | | | | | | | | |
1st lien | | | 177,649 | | | 26,695 | | | 8,440 | | | 10,877 | | | 223,661 | | | | | | |
Junior lien | | | 120,143 | | | 4,790 | | | 2,639 | | | 2,802 | | | 130,374 | | | | | | |
Installment | | | 56,289 | | | 1,096 | | | 104 | | | 134 | | | 57,623 | | | | | | |
Deferred loan fees | | | | | | | | | | | | | | | | | | | | | |
and related costs | | | -1,567 | | | - | | | - | | | - | | | -1,567 | | | | | | |
Total | | $ | 1,161,914 | | $ | 145,066 | | $ | 37,697 | | $ | 39,854 | | $ | 1,384,531 | | | | | | |
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Modifications |
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Loans meeting the criteria to be classified as Troubled Debt Restructurings (“TDRs”) are included in impaired loans. As of June 30, 2014 and December 31, 2013, loans classified as TDRs were $26.6 million and $31.0 million, respectively. The following table shows the loans classified as TDRs at June 30, 2014 and December 31, 2013. |
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| | | | | | | | | | | | | | | | | | | | | |
(in thousands except number of contracts) | | 30-Jun-14 | | 31-Dec-13 | | | | | | | | | | | |
| | Number of | | Recorded | | Number of | | Recorded | | | | | | | | | | | |
Troubled Debt Restructurings | | Contracts | | Investment | | Contracts | | Investment | | | | | | | | | | | |
Commercial & Industrial | | 2 | | $ | 175 | | 2 | | $ | 180 | | | | | | | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential construction | | - | | | - | | - | | | - | | | | | | | | | | | |
Commercial construction | | 13 | | | 4,861 | | 14 | | | 8,192 | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | 14 | | | 15,562 | | 14 | | | 15,466 | | | | | | | | | | | |
Non-owner occupied | | 1 | | | 268 | | 1 | | | 272 | | | | | | | | | | | |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family, 1st lien | | 12 | | | 5,344 | | 14 | | | 6,561 | | | | | | | | | | | |
Secured by 1-4 family, junior lien | | 5 | | | 355 | | 5 | | | 361 | | | | | | | | | | | |
Installment | | 1 | | | 5 | | 1 | | | 4 | | | | | | | | | | | |
Total | | 48 | | $ | 26,570 | | 51 | | $ | 31,036 | | | | | | | | | | | |
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Of total TDRs, $22.0 million was accruing and $4.5 million was nonaccruing at June 30, 2014 and $23.3 million was accruing and $7.8 million was nonaccruing at December 31, 2013. Loans that are on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months before management considers whether such loans may return to accrual status. TDRs in nonaccrual status are returned to accrual status after a period of performance under which the borrower demonstrates the ability and willingness to repay the loan in accordance with the modified terms. For the six months ended June 30, 2014, $0 of the nonaccrual TDRs were returned to accrual status and for the year ended December 31, 2013, $647 thousand of the nonaccrual TDRs were returned to accrual status. |
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The following table shows a rollforward of accruing and nonaccruing TDRs for the six months ended June 30, 2014. |
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| | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | Accruing | | Nonaccruing | | Total | | | | | | | | | | | | |
Balance at December 31, 2013 | | $ | 23,282 | | $ | 7,754 | | $ | 31,036 | | | | | | | | | | | | |
Charge-offs | | | - | | | -2,727 | | | -2,727 | | | | | | | | | | | | |
Payments | | | -1,762 | | | -724 | | | -2,486 | | | | | | | | | | | | |
New TDR designation | | | 519 | | | 228 | | | 747 | | | | | | | | | | | | |
Release TDR designation | | | - | | | - | | | - | | | | | | | | | | | | |
Transfer | | | - | | | - | | | - | | | | | | | | | | | | |
Balance at June 30, 2014 | | $ | 22,039 | | $ | 4,531 | | $ | 26,570 | | | | | | | | | | | | |
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The allowance for loan losses allocated to TDRs was $1.7 million and $4.2 million at June 30, 2014 and December 31, 2013, respectively. The total of TDRs charged off and the allocated portion of allowance for loan losses associated with TDRs charged off were $2.7 million and $2.7 million, respectively, during the six months ended June 30, 2014, and $970 thousand and $632 thousand, respectively, during the year ended December 31, 2013. The improvement in the general reserve since December 31, 2013 has been enough to compensate for increased impairments against new and remaining TDRs. |
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At a minimum, TDRs are reported as such during the calendar year in which the restructuring or modification takes place. In subsequent years, troubled debt restructured loans may be removed from this disclosure classification if the loan did not involve a below market rate concession and the loan is not deemed to be impaired based on the terms specified in the restructuring agreement. |
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The following table shows a summary of the primary reason and pre- and post-modification outstanding recorded investment for loan modifications that were classified as TDRs during the three and six months ended June 30, 2014 and June 30, 2013. These tables include modifications made to existing TDRs as well as new modifications that are considered TDRs for the periods presented. TDRs made with a below market rate that also include a modification of loan structure are included under rate change. |
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| | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended June 30, 2014 | | | | | |
(in thousands except number of contracts) | | Rate | | Structure | | | | | |
| | | | Pre- | | Post- | | | | Pre- | | Post- | | | | | |
| | | | Modification | | Modification | | | | Modification | | Modification | | | | | |
| | Number | | Outstanding | | Outstanding | | Number | | Outstanding | | Outstanding | | | | | |
| | of | | Recorded | | Recorded | | of | | Recorded | | Recorded | | | | | |
Troubled Debt Restructurings | | Contracts | | Investment | | Investment | | Contracts | | Investment | | Investment | | | | | |
Commercial & Industrial | | - | | $ | - | | $ | - | | 1 | | $ | 68 | | $ | 68 | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Commercial construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | 1 | | | 451 | | | 451 | | - | | | - | | | - | | | | | |
Non-owner occupied | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family, 1st lien | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Secured by 1-4 family, junior lien | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Installment | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Total | | 1 | | $ | 451 | | $ | 451 | | 1 | | $ | 68 | | $ | 68 | | | | | |
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| | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended June 30, 2013 | | | | | |
(in thousands except number of contracts) | | Rate | | Structure | | | | | |
| | | | Pre- | | Post- | | | | Pre- | | Post- | | | | | |
| | | | Modification | | Modification | | | | Modification | | Modification | | | | | |
| | Number | | Outstanding | | Outstanding | | Number | | Outstanding | | Outstanding | | | | | |
| | of | | Recorded | | Recorded | | of | | Recorded | | Recorded | | | | | |
Troubled Debt Restructurings | | Contracts | | Investment | | Investment | | Contracts | | Investment | | Investment | | | | | |
Commercial & Industrial | | - | | $ | - | | $ | - | | - | | $ | - | | $ | - | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Commercial construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Non-owner occupied | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family, 1st lien | | 1 | | | 2,010 | | | 2,010 | | - | | | - | | | - | | | | | |
Secured by 1-4 family, junior lien | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Installment | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Total | | 1 | | $ | 2,010 | | $ | 2,010 | | - | | $ | - | | $ | - | | | | | |
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| | | | | | | | | | | | | | | | | | | | | |
| | For the Six Months Ended June 30, 2014 | | | | | |
(in thousands except number of contracts) | | Rate | | Structure | | | | | |
| | | | Pre- | | Post- | | | | Pre- | | Post- | | | | | |
| | | | Modification | | Modification | | | | Modification | | Modification | | | | | |
| | Number | | Outstanding | | Outstanding | | Number | | Outstanding | | Outstanding | | | | | |
| | of | | Recorded | | Recorded | | of | | Recorded | | Recorded | | | | | |
Troubled Debt Restructurings | | Contracts | | Investment | | Investment | | Contracts | | Investment | | Investment | | | | | |
Commercial & Industrial | | - | | $ | - | | $ | - | | 1 | | $ | 68 | | $ | 68 | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Commercial construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | 1 | | | 451 | | | 451 | | - | | | - | | | - | | | | | |
Non-owner occupied | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family, 1st lien | | - | | | - | | | - | | 2 | | | 408 | | | 226 | | | | | |
Secured by 1-4 family, junior lien | | - | | | - | | | - | | 1 | | | 2 | | | 2 | | | | | |
Installment | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Total | | 1 | | $ | 451 | | $ | 451 | | 4 | | $ | 478 | | $ | 296 | | | | | |
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| | | | | | | | | | | | | | | | | | | | | |
| | For the Six Months Ended June 30, 2013 | | | | | |
(in thousands except number of contracts) | | Rate | | Structure | | | | | |
| | | | Pre- | | Post- | | | | Pre- | | Post- | | | | | |
| | | | Modification | | Modification | | | | Modification | | Modification | | | | | |
| | Number | | Outstanding | | Outstanding | | Number | | Outstanding | | Outstanding | | | | | |
| | of | | Recorded | | Recorded | | of | | Recorded | | Recorded | | | | | |
Troubled Debt Restructurings | | Contracts | | Investment | | Investment | | Contracts | | Investment | | Investment | | | | | |
Commercial & Industrial | | - | | $ | - | | $ | - | | - | | $ | - | | $ | - | | | | | |
Construction | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Commercial construction | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | | |
Commercial Mortgage | | | | | | | | | | | | | | | | | | | | | |
Owner occupied | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Non-owner occupied | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Residential Mortgage | | | | | | | | | | | | | | | | | | | | | |
Secured by 1-4 family, 1st lien | | 1 | | | 2,010 | | | 2,010 | | - | | | - | | | - | | | | | |
Secured by 1-4 family, junior lien | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Installment | | - | | | - | | | - | | - | | | - | | | - | | | | | |
Total | | 1 | | $ | 2,010 | | $ | 2,010 | | - | | $ | - | | $ | - | | | | | |
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For the three and six months ended June 30, 2014 and 2013, the Company had no loans for which there was a payment default and subsequent movement to nonaccrual status, that were modified as TDR’s within the previous twelve months. |
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Loans that are considered TDRs are considered specifically impaired and the primary consideration for measurement of impairment is the present value of the expected cash flows. However, given the prevalence of real estate secured loans in the Company’s portfolio of troubled assets, the majority of the Company’s TDR loans are ultimately considered collateral-dependent. As a practical expedient, impairments are, therefore, calculated based upon the estimated fair value of the underlying collateral. Observable market prices for the sale of the respective notes are not considered as a basis for impairment for any of the Company’s impaired loans. |
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In determining the estimated fair value of collateral dependent impaired loans, the Company uses third party appraisals and, if necessary, utilizes a proprietary database of its own historical property appraisals in conjunction with external data and applies a relevant discount derived from analysis of appraisals of similar property type, vintage, and geographic location (for example, in situations where the most recent available appraisal is aged and an updated appraisal has not yet been received). |
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The Company does not participate in any government or company sponsored TDR programs and holds no corresponding assets. Rather, loans are individually modified in situations where the Company believes it will minimize the probability of losses to the Company. Additionally, the Company had no commitments to lend additional funds to debtors owing receivables whose terms have been modified in TDRs at June 30, 2014. |
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