Loans Not Covered by FDIC Shared-Loss Agreement (Non-Covered Loans) and Related Allowance for Loan Losses | 6 Months Ended |
Jun. 30, 2014 |
Receivables [Abstract] | ' |
Loans Not Covered by FDIC Shared-Loss Agreement (Non-Covered Loans) and Related Allowance for Loan Losses | ' |
3 | LOANS NOT COVERED BY FDIC SHARED-LOSS AGREEMENT (NON-COVERED LOANS) AND RELATED ALLOWANCE FOR LOAN LOSSES | | | | | | | | | | | | | | | | | | | | | | | |
The Company’s non-covered loans at June 30, 2014 and December 31, 2013 were comprised of the following (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | | December 31, 2013 | | | | | | | | | |
| | Amount | | | % of Non- | | | Amount | | | % of Non- | | | | | | | | | |
Covered Loans | Covered Loans | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 156,173 | | | | 24.69 | % | | $ | 144,382 | | | | 24.21 | % | | | | | | | | |
Commercial | | | 275,286 | | | | 43.52 | | | | 247,284 | | | | 41.47 | | | | | | | | | |
Construction and land development | | | 59,385 | | | | 9.39 | | | | 55,278 | | | | 9.27 | | | | | | | | | |
Second mortgages | | | 6,459 | | | | 1.02 | | | | 6,854 | | | | 1.15 | | | | | | | | | |
Multifamily | | | 33,898 | | | | 5.36 | | | | 35,774 | | | | 6 | | | | | | | | | |
Agriculture | | | 8,127 | | | | 1.28 | | | | 9,565 | | | | 1.6 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 539,328 | | | | 85.26 | | | | 499,137 | | | | 83.7 | | | | | | | | | |
Commercial loans | | | 86,446 | | | | 13.67 | | | | 90,142 | | | | 15.12 | | | | | | | | | |
Consumer installment loans | | | 5,379 | | | | 0.85 | | | | 5,623 | | | | 0.94 | | | | | | | | | |
All other loans | | | 1,390 | | | | 0.22 | | | | 1,435 | | | | 0.24 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross loans | | | 632,543 | | | | 100 | % | | | 596,337 | | | | 100 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less unearned income on loans | | | (200 | ) | | | | | | | (164 | ) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Non-covered loans, net of unearned income | | $ | 632,343 | | | | | | | $ | 596,173 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
The Company held $26.7 million and $38.5 million in balances of loans guaranteed by the United States Department of Agriculture (USDA), which are included in various categories in the table above, at June 30, 2014 and December 31, 2013, respectively. As these loans are 100% guaranteed by the USDA, no loan loss provision is required. These loan balances included an unamortized purchase premium of $1.6 million and $2.5 million at June 30, 2014 and December 31, 2013, respectively. Unamortized purchase premium is recognized as an adjustment of the related loan yield on a straight line basis, which is substantially equivalent to the results obtained using the effective interest method. |
At June 30, 2014 and December 31, 2013, the Company’s allowance for credit losses was comprised of the following: (i) specific valuation allowances calculated in accordance with FASB ASC 310, Receivables, (ii) general valuation allowances calculated in accordance with FASB ASC 450, Contingencies, based on economic conditions and other qualitative risk factors, and (iii) historical valuation allowances calculated using historical loan loss experience. Management identified loans subject to impairment in accordance with ASC 310. |
The Purchase and Assumption Agreement into which the Company and the Federal Deposit Insurance Corporation (FDIC) entered in January 2009 that provided for the Company’s assumption of all of the deposits and certain other liabilities and acquisition of substantially all assets of Suburban Federal Savings Bank (SFSB) included two shared-loss agreements with respect to certain covered loans and foreclosed real estate assets. See Notes 4 and 5 for more information on the Purchase and Assumption Agreement and the shared-loss agreements. The shared-loss agreement for loans other than those secured by single family, residential 1-4 family mortgages expired March 31, 2014. These loans, which had an outstanding principal balance of $10.0 million and a carrying value of $5.5 million at March 31, 2014, are being accounted for in accordance with FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, commonly referred to as purchased credit impaired loans, and were classified as non-covered loans effective April 1, 2014 (the “PCI loans”). |
The PCI loans were not classified as nonperforming assets as of June 30, 2014, as the loans are accounted for on a pooled basis, and interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, is being recognized on all PCI loans. |
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The following table reflects the outstanding principal balance and carrying amounts of the PCI loans as of June 30, 2014 (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | 30-Jun-14 | | | | | | | | | | | | | | | | | |
| | Unpaid balance | | | Carrying Value | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 2,218 | | | $ | 1,019 | | | | | | | | | | | | | | | | | |
Commercial | | | 3,290 | | | | 1,244 | | | | | | | | | | | | | | | | | |
Construction and land development | | | 4,085 | | | | 2,896 | | | | | | | | | | | | | | | | | |
Second mortgages | | | 37 | | | | 19 | | | | | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | | | | | | | | | | | | | | |
Agriculture | | | — | | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 9,630 | | | | 5,178 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total PCI loans | | $ | 9,630 | | | $ | 5,178 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
The allowance for loan losses related to PCI loans was $98,000 as of March 31, 2014 and was transferred from the allowance for loan losses on covered loans effective April 1, 2014. This allowance was related to commercial real estate loans. There was no other activity in the allowance for loan losses related to PCI loans for either of the three or the six month periods ended June 30, 2014. |
The change in the accretable yield balance for the PCI loans for the three months ended June 30, 2014 (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
Balance transferred from covered loans, April 1, 2014 | | $ | 4,773 | | | | | | | | | | | | | | | | | | | | | |
Accretion | | | (187 | ) | | | | | | | | | | | | | | | | | | | | |
Reclassification from nonaccretable yield | | | 808 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2014 | | $ | 5,394 | | | | | | | | | | | | | | | | | | | | | |
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The following table summarizes information related to impaired loans as of June 30, 2014 (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Unpaid Principal | | | Related Allowance | | | | | | | | | | | | | |
Investment (1) | Balance (2) | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 3,493 | | | $ | 3,620 | | | $ | 911 | | | | | | | | | | | | | |
Commercial | | | 542 | | | | 714 | | | | 101 | | | | | | | | | | | | | |
Construction and land development | | | 4,168 | | | | 5,320 | | | | 512 | | | | | | | | | | | | | |
Second mortgages | | | 223 | | | | 226 | | | | 41 | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Agriculture | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 8,426 | | | | 9,880 | | | | 1,565 | | | | | | | | | | | | | |
Commercial loans | | | 36 | | | | 683 | | | | 7 | | | | | | | | | | | | | |
Consumer installment loans | | | 91 | | | | 93 | | | | 17 | | | | | | | | | | | | | |
All other loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Subtotal impaired loans with a valuation allowance | | | 8,553 | | | | 10,656 | | | | 1,589 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | | 1,447 | | | | 1,513 | | | | — | | | | | | | | | | | | | |
Commercial | | | 455 | | | | 562 | | | | — | | | | | | | | | | | | | |
Construction and land development | | | 1,169 | | | | 3,022 | | | | — | | | | | | | | | | | | | |
Second mortgages | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Agriculture | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 3,071 | | | | 5,097 | | | | — | | | | | | | | | | | | | |
Commercial loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer installment loans | | | 5 | | | | 6 | | | | — | | | | | | | | | | | | | |
All other loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal impaired loans without a valuation allowance | | | 3,076 | | | | 5,103 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | | 4,940 | | | | 5,133 | | | | 911 | | | | | | | | | | | | | |
Commercial | | | 997 | | | | 1,276 | | | | 101 | | | | | | | | | | | | | |
Construction and land development | | | 5,337 | | | | 8,342 | | | | 512 | | | | | | | | | | | | | |
Second mortgages | | | 223 | | | | 226 | | | | 41 | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Agriculture | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 11,497 | | | | 14,977 | | | | 1,565 | | | | | | | | | | | | | |
Commercial loans | | | 36 | | | | 683 | | | | 7 | | | | | | | | | | | | | |
Consumer installment loans | | | 96 | | | | 99 | | | | 17 | | | | | | | | | | | | | |
All other loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 11,629 | | | $ | 15,759 | | | $ | 1,589 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
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-1 | The amount of the investment in a loan, which is not net of a valuation allowance, but which does reflect any direct write-down of the investment | | | | | | | | | | | | | | | | | | | | | | | |
-2 | The contractual amount due, which reflects paydowns applied in accordance with loan documents, but which does not reflect any direct write-downs | | | | | | | | | | | | | | | | | | | | | | | |
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The following table summarizes information related to impaired loans as of December 31, 2013 (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Unpaid Principal | | | Related Allowance | | | | | | | | | | | | | |
Investment (1) | Balance (2) | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 3,485 | | | $ | 3,739 | | | $ | 881 | | | | | | | | | | | | | |
Commercial | | | 920 | | | | 1,091 | | | | 150 | | | | | | | | | | | | | |
Construction and land development | | | 4,148 | | | | 5,298 | | | | 508 | | | | | | | | | | | | | |
Second mortgages | | | 225 | | | | 226 | | | | 40 | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Agriculture | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 8,778 | | | | 10,354 | | | | 1,579 | | | | | | | | | | | | | |
Commercial loans | | | 127 | | | | 794 | | | | 16 | | | | | | | | | | | | | |
Consumer installment loans | | | 49 | | | | 51 | | | | 9 | | | | | | | | | | | | | |
All other loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal impaired loans with a valuation allowance | | | 8,954 | | | | 11,199 | | | | 1,604 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | | 1,189 | | | | 1,228 | | | | — | | | | | | | | | | | | | |
Commercial | | | 1,714 | | | | 1,969 | | | | — | | | | | | | | | | | | | |
Construction and land development | | | 1,734 | | | | 4,335 | | | | — | | | | | | | | | | | | | |
Second mortgages | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Agriculture | | | 204 | | | | 222 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 4,841 | | | | 7,754 | | | | — | | | | | | | | | | | | | |
Commercial loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer installment loans | | | 6 | | | | 6 | | | | — | | | | | | | | | | | | | |
All other loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal impaired loans without a valuation allowance | | | 4,847 | | | | 7,760 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | | 4,674 | | | | 4,967 | | | | 881 | | | | | | | | | | | | | |
Commercial | | | 2,634 | | | | 3,060 | | | | 150 | | | | | | | | | | | | | |
Construction and land development | | | 5,882 | | | | 9,633 | | | | 508 | | | | | | | | | | | | | |
Second mortgages | | | 225 | | | | 226 | | | | 40 | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Agriculture | | | 204 | | | | 222 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 13,619 | | | | 18,108 | | | | 1,579 | | | | | | | | | | | | | |
Commercial loans | | | 127 | | | | 794 | | | | 16 | | | | | | | | | | | | | |
Consumer installment loans | | | 55 | | | | 57 | | | | 9 | | | | | | | | | | | | | |
All other loans | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 13,801 | | | $ | 18,959 | | | $ | 1,604 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
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-1 | The amount of the investment in a loan, which is not net of a valuation allowance, but which does reflect any direct write-down of the investment | | | | | | | | | | | | | | | | | | | | | | | |
-2 | The contractual amount due, which reflects paydowns applied in accordance with loan documents, but which does not reflect any direct write-downs | | | | | | | | | | | | | | | | | | | | | | | |
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The following table summarizes average recorded investment of impaired loans for the three and six months ended June 30, 2014 and 2013 (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | | Six months ended | | | | | | | | | |
| | June 30, 2014 | | | June 30, 2013 | | | June 30, 2014 | | | June 30, 2013 | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 4,813 | | | $ | 6,327 | | | $ | 4,807 | | | $ | 6,092 | | | | | | | | | |
Commercial | | | 2,228 | | | | 3,270 | | | | 1,815 | | | | 4,252 | | | | | | | | | |
Construction and land development | | | 5,622 | | | | 8,801 | | | | 5,609 | | | | 8,728 | | | | | | | | | |
Second mortgages | | | 224 | | | | 165 | | | | 224 | | | | 166 | | | | | | | | | |
Multifamily | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Agriculture | | | — | | | | 229 | | | | 102 | | | | 237 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 12,887 | | | | 18,792 | | | | 12,557 | | | | 19,475 | | | | | | | | | |
Commercial loans | | | 46 | | | | 199 | | | | 82 | | | | 312 | | | | | | | | | |
Consumer installment loans | | | 97 | | | | 77 | | | | 76 | | | | 74 | | | | | | | | | |
All other loans | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 13,030 | | | $ | 19,068 | | | $ | 12,715 | | | $ | 19,861 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
The majority of impaired loans are also nonaccruing for which no interest income was recognized during each of the three and six months ended June 30, 2014 and 2013. No significant amounts of interest income were recognized on accruing impaired loans for each of the three and six months ended June 30, 2014 and 2013. |
Interest income on nonaccrual loans, if recognized, is recorded using the cash basis method of accounting. Cash basis income of $158,000 and $297,000 was recognized during the three and six months ended June 30, 2014, respectively. There were no significant amounts recognized during either of the three or six months ended June 30, 2013. For the three months ended June 30, 2014 and 2013, estimated interest income of $230,000 and $298,000, respectively, would have been recorded if all such loans had been accruing interest according to their original contractual terms. For the six months ended June 30, 2014 and 2013, estimated interest income of $454,000 and $590,000, respectively, would have been recorded if all such loans had been accruing interest according to their original contractual terms. |
The following table presents non-covered nonaccrual loans, excluding PCI loans, by loan category as of June 30, 2014 and December 31, 2013 (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | | December 31, 2013 | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 4,617 | | | $ | 4,229 | | | | | | | | | | | | | | | | | |
Commercial | | | 874 | | | | 1,382 | | | | | | | | | | | | | | | | | |
Construction and land development | | | 5,337 | | | | 5,882 | | | | | | | | | | | | | | | | | |
Second mortgages | | | 223 | | | | 225 | | | | | | | | | | | | | | | | | |
Multifamily | | | — | | | | — | | | | | | | | | | | | | | | | | |
Agriculture | | | — | | | | 205 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 11,051 | | | | 11,923 | | | | | | | | | | | | | | | | | |
Commercial loans | | | 36 | | | | 127 | | | | | | | | | | | | | | | | | |
Consumer installment loans | | | 96 | | | | 55 | | | | | | | | | | | | | | | | | |
All other loans | | | — | | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 11,183 | | | $ | 12,105 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
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Troubled debt restructures still accruing interest are loans that management expects to ultimately collect all principal and interest due, but not under the terms of the original contract. A reconciliation of impaired loans to nonaccrual loans at June 30, 2014 and December 31, 2013, is set forth in the table below (dollars in thousands): |
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| | June 30, 2014 | | | December 31, 2013 | | | | | | | | | | | | | | | | | |
Nonaccruals | | $ | 11,183 | | | $ | 12,105 | | | | | | | | | | | | | | | | | |
Trouble debt restructure and still accruing | | | 446 | | | | 1,696 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired | | $ | 11,629 | | | $ | 13,801 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
The following tables present an age analysis of past due status of non-covered loans, excluding PCI loans, by category as of June 30, 2014 and December 31, 2013 (dollars in thousands): |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | |
| | 30-89 | | | 90 Days | | | Total | | | Current | | | Total Loans | | | Recorded | |
Days | Past Due | Past Due | Investment |
Past | | | 90 Days |
Due | | | Past Due |
| | | and |
| | | Accruing |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 957 | | | $ | 4,617 | | | $ | 5,574 | | | $ | 149,580 | | | $ | 155,154 | | | $ | — | |
Commercial | | | 328 | | | | 874 | | | | 1,202 | | | | 272,840 | | | | 274,042 | | | | — | |
Construction and land development | | | 28 | | | | 5,337 | | | | 5,365 | | | | 51,124 | | | | 56,489 | | | | — | |
Second mortgages | | | — | | | | 223 | | | | 223 | | | | 6,217 | | | | 6,440 | | | | — | |
Multifamily | | | — | | | | — | | | | — | | | | 33,898 | | | | 33,898 | | | | — | |
Agriculture | | | — | | | | — | | | | — | | | | 8,127 | | | | 8,127 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 1,313 | | | | 11,051 | | | | 12,364 | | | | 521,786 | | | | 534,150 | | | | — | |
Commercial loans | | | 191 | | | | 36 | | | | 227 | | | | 86,219 | | | | 86,446 | | | | — | |
Consumer installment loans | | | 11 | | | | 96 | | | | 107 | | | | 5,272 | | | | 5,379 | | | | — | |
All other loans | | | — | | | | — | | | | — | | | | 1,390 | | | | 1,390 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,515 | | | $ | 11,183 | | | $ | 12,698 | | | $ | 614,667 | | | $ | 627,365 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | December 31, 2013 | |
| | 30-89 | | | 90 Days | | | Total | | | Current | | | Total Loans | | | Recorded | |
Days | Past Due | Past Due | Investment |
Past | | | 90 Days |
Due | | | Past Due |
| | | and |
| | | Accruing |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 1,455 | | | $ | 4,229 | | | $ | 5,684 | | | $ | 138,698 | | | $ | 144,382 | | | $ | — | |
Commercial | | | — | | | | 1,382 | | | | 1,382 | | | | 245,902 | | | | 247,284 | | | | — | |
Construction and land development | | | 242 | | | | 5,882 | | | | 6,124 | | | | 49,154 | | | | 55,278 | | | | — | |
Second mortgages | | | — | | | | 225 | | | | 225 | | | | 6,629 | | | | 6,854 | | | | — | |
Multifamily | | | — | | | | — | | | | — | | | | 35,774 | | | | 35,774 | | | | — | |
Agriculture | | | — | | | | 205 | | | | 205 | | | | 9,360 | | | | 9,565 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 1,697 | | | | 11,923 | | | | 13,620 | | | | 485,517 | | | | 499,137 | | | | — | |
Commercial loans | | | 115 | | | | 127 | | | | 242 | | | | 89,900 | | | | 90,142 | | | | — | |
Consumer installment loans | | | 58 | | | | 55 | | | | 113 | | | | 5,510 | | | | 5,623 | | | | — | |
All other loans | | | — | | | | — | | | | — | | | | 1,435 | | | | 1,435 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,870 | | | $ | 12,105 | | | $ | 13,975 | | | $ | 582,362 | | | $ | 596,337 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Activity in the allowance for loan losses on non-covered loans, excluding PCI loans, by segment for the periods presented is presented in the following tables (dollars in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2014 | | | | | |
| | Beginning of | | | Provision | | | Charge-offs | | | Recoveries | | | End of Period | | | | | |
Period | Allocation | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 3,707 | | | $ | (77 | ) | | $ | — | | | $ | 40 | | | $ | 3,670 | | | | | |
Commercial | | | 2,964 | | | | 355 | | | | (412 | ) | | | 12 | | | | 2,919 | | | | | |
Construction and land development | | | 1,894 | | | | (270 | ) | | | — | | | | — | | | | 1,624 | | | | | |
Second mortgages | | | 114 | | | | (17 | ) | | | — | | | | 1 | | | | 98 | | | | | |
Multifamily | | | 208 | | | | (32 | ) | | | — | | | | — | | | | 176 | | | | | |
Agriculture | | | 57 | | | | 7 | | | | — | | | | — | | | | 64 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 8,944 | | | | (34 | ) | | | (412 | ) | | | 53 | | | | 8,551 | | | | | |
Commercial loans | | | 1,332 | | | | 31 | | | | — | | | | 115 | | | | 1,478 | | | | | |
Consumer installment loans | | | 110 | | | | 2 | | | | (34 | ) | | | 24 | | | | 102 | | | | | |
All other loans | | | 24 | | | | 1 | | | | — | | | | — | | | | 25 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 10,410 | | | $ | — | | | $ | (446 | ) | | $ | 192 | | | $ | 10,156 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | Three Months Ended June 30, 2013 | | | | | |
| | Beginning of | | | Provision | | | Charge-offs | | | Recoveries | | | End of Period | | | | | |
Period | Allocation | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 4,008 | | | $ | 52 | | | $ | (127 | ) | | $ | 5 | | | $ | 3,938 | | | | | |
Commercial | | | 2,414 | | | | 1,002 | | | | (913 | ) | | | 5 | | | | 2,508 | | | | | |
Construction and land development | | | 3,357 | | | | (862 | ) | | | (157 | ) | | | 527 | | | | 2,865 | | | | | |
Second mortgages | | | 105 | | | | (34 | ) | | | — | | | | 1 | | | | 72 | | | | | |
Multifamily | | | 316 | | | | (170 | ) | | | — | | | | — | | | | 146 | | | | | |
Agriculture | | | 62 | | | | — | | | | (6 | ) | | | — | | | | 56 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 10,262 | | | | (12 | ) | | | (1,203 | ) | | | 538 | | | | 9,585 | | | | | |
Commercial loans | | | 1,816 | | | | (17 | ) | | | (45 | ) | | | 18 | | | | 1,772 | | | | | |
Consumer installment loans | | | 152 | | | | 32 | | | | (54 | ) | | | 11 | | | | 141 | | | | | |
All other loans | | | 28 | | | | (3 | ) | | | — | | | | — | | | | 25 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 12,258 | | | $ | — | | | $ | (1,302 | ) | | $ | 567 | | | $ | 11,523 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | Six Months Ended June 30, 2014 | | | | | |
| | Beginning of | | | Provision | | | Charge-offs | | | Recoveries | | | End of Period | | | | | |
Period | Allocation | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 3,853 | | | $ | (120 | ) | | $ | (110 | ) | | $ | 47 | | | $ | 3,670 | | | | | |
Commercial | | | 2,333 | | | | 917 | | | | (412 | ) | | | 81 | | | | 2,919 | | | | | |
Construction and land development | | | 2,252 | | | | (629 | ) | | | — | | | | 1 | | | | 1,624 | | | | | |
Second mortgages | | | 101 | | | | (5 | ) | | | — | | | | 2 | | | | 98 | | | | | |
Multifamily | | | 151 | | | | 25 | | | | — | | | | — | | | | 176 | | | | | |
Agriculture | | | 81 | | | | (17 | ) | | | — | | | | — | | | | 64 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 8,771 | | | | 171 | | | | (522 | ) | | | 131 | | | | 8,551 | | | | | |
Commercial loans | | | 1,546 | | | | (187 | ) | | | — | | | | 119 | | | | 1,478 | | | | | |
Consumer installment loans | | | 101 | | | | 17 | | | | (76 | ) | | | 60 | | | | 102 | | | | | |
All other loans | | | 26 | | | | (1 | ) | | | — | | | | — | | | | 25 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 10,444 | | | $ | — | | | $ | (598 | ) | | $ | 310 | | | $ | 10,156 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2013 | | | | | |
| | Beginning of | | | Provision | | | Charge-offs | | | Recoveries | | | End of Period | | | | | |
Period | Allocation | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 3,985 | | | $ | 63 | | | $ | (161 | ) | | $ | 51 | | | $ | 3,938 | | | | | |
Commercial | | | 2,482 | | | | 1,508 | | | | (1,492 | ) | | | 10 | | | | 2,508 | | | | | |
Construction and land development | | | 3,773 | | | | (1,427 | ) | | | (157 | ) | | | 676 | | | | 2,865 | | | | | |
Second mortgages | | | 142 | | | | (75 | ) | | | — | | | | 5 | | | | 72 | | | | | |
Multifamily | | | 303 | | | | (157 | ) | | | — | | | | — | | | | 146 | | | | | |
Agriculture | | | 61 | | | | 1 | | | | (6 | ) | | | — | | | | 56 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 10,746 | | | | (87 | ) | | | (1,816 | ) | | | 742 | | | | 9,585 | | | | | |
Commercial loans | | | 1,961 | | | | 69 | | | | (297 | ) | | | 39 | | | | 1,772 | | | | | |
Consumer installment loans | | | 195 | | | | 11 | | | | (97 | ) | | | 32 | | | | 141 | | | | | |
All other loans | | | 18 | | | | 7 | | | | — | | | | — | | | | 25 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 12,920 | | | $ | — | | | $ | (2,210 | ) | | $ | 813 | | | $ | 11,523 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
The following tables present information on the non-covered loans evaluated for impairment in the allowance for loan losses as of June 30, 2014 and December 31, 2013 (dollars in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | | | | | | | | |
| | Allowance for Loan Losses | | | | | | | | | |
| | Individually | | | Collectively | | | Related to PCI | | | Total | | | | | | | | | |
Evaluated for | Evaluated for | loans | | | | | | | | |
Impairment (1) | Impairment | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 961 | | | $ | 2,709 | | | $ | — | | | $ | 3,670 | | | | | | | | | |
Commercial | | | 108 | | | | 2,811 | | | | 98 | | | | 3,017 | | | | | | | | | |
Construction and land development | | | 540 | | | | 1,084 | | | | — | | | | 1,624 | | | | | | | | | |
Second mortgages | | | 45 | | | | 53 | | | | — | | | | 98 | | | | | | | | | |
Multifamily | | | — | | | | 176 | | | | — | | | | 176 | | | | | | | | | |
Agriculture | | | — | | | | 64 | | | | — | | | | 64 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 1,654 | | | | 6,897 | | | | 98 | | | | 8,649 | | | | | | | | | |
Commercial loans | | | 417 | | | | 1,061 | | | | — | | | | 1,478 | | | | | | | | | |
Consumer installment loans | | | 18 | | | | 84 | | | | — | | | | 102 | | | | | | | | | |
All other loans | | | — | | | | 25 | | | | — | | | | 25 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 2,089 | | | $ | 8,067 | | | $ | 98 | | | $ | 10,254 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | | | | | | | | |
| | Recorded Investment in Loans | | | | | | | | | |
| | Individually | | | Collectively | | | Related to PCI | | | Total | | | | | | | | | |
Evaluated for | Evaluated for | loans | | | | | | | | |
Impairment (1) | Impairment | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 7,262 | | | $ | 147,892 | | | $ | 1,019 | | | $ | 156,173 | | | | | | | | | |
Commercial | | | 9,400 | | | | 264,642 | | | | 1,244 | | | | 275,286 | | | | | | | | | |
Construction and land development | | | 5,849 | | | | 50,640 | | | | 2,896 | | | | 59,385 | | | | | | | | | |
Second mortgages | | | 252 | | | | 6,188 | | | | 19 | | | | 6,459 | | | | | | | | | |
Multifamily | | | — | | | | 33,898 | | | | — | | | | 33,898 | | | | | | | | | |
Agriculture | | | — | | | | 8,127 | | | | — | | | | 8,127 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 22,763 | | | | 511,387 | | | | 5,178 | | | | 539,328 | | | | | | | | | |
Commercial loans | | | 9,117 | | | | 77,329 | | | | — | | | | 86,446 | | | | | | | | | |
Consumer installment loans | | | 102 | | | | 5,277 | | | | — | | | | 5,379 | | | | | | | | | |
All other loans | | | — | | | | 1,390 | | | | — | | | | 1,390 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 31,982 | | | $ | 595,383 | | | $ | 5,178 | | | $ | 632,543 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 | |
| | Allowance for Loan Losses | | | Recorded Investment in Loans | |
| | Individually | | | Collectively | | | Total | | | Individually | | | Collectively | | | Total | |
Evaluated for | Evaluated for | Evaluated for | Evaluated for |
Impairment (1) | Impairment | Impairment (1) | Impairment |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 923 | | | $ | 2,930 | | | $ | 3,853 | | | $ | 6,708 | | | $ | 137,674 | | | $ | 144,382 | |
Commercial | | | 200 | | | | 2,133 | | | | 2,333 | | | | 8,016 | | | | 239,268 | | | | 247,284 | |
Construction and land development | | | 651 | | | | 1,601 | | | | 2,252 | | | | 8,619 | | | | 46,659 | | | | 55,278 | |
Second mortgages | | | 42 | | | | 59 | | | | 101 | | | | 254 | | | | 6,600 | | | | 6,854 | |
Multifamily | | | — | | | | 151 | | | | 151 | | | | — | | | | 35,774 | | | | 35,774 | |
Agriculture | | | — | | | | 81 | | | | 81 | | | | 205 | | | | 9,360 | | | | 9,565 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 1,816 | | | | 6,955 | | | | 8,771 | | | | 23,802 | | | | 475,335 | | | | 499,137 | |
Commercial loans | | | 18 | | | | 1,528 | | | | 1,546 | | | | 192 | | | | 89,950 | | | | 90,142 | |
Consumer installment loans | | | 9 | | | | 92 | | | | 101 | | | | 57 | | | | 5,566 | | | | 5,623 | |
All other loans | | | — | | | | 26 | | | | 26 | | | | — | | | | 1,435 | | | | 1,435 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,843 | | | $ | 8,601 | | | $ | 10,444 | | | $ | 24,051 | | | $ | 572,286 | | | $ | 596,337 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
(1) | The category “Individually Evaluated for Impairment” includes loans individually evaluated for impairment and determined not to be impaired. These loans totalled $20.4 million and $10.3 million at June 30, 2014 and December 31, 2013, respectively. The allowance for loans losses allocated to these loans was $500,000 and $239,000 at June 30, 2014 and December 31, 2013, respectively. | | | | | | | | | | | | | | | | | | | | | | | |
Non-covered loans are monitored for credit quality on a recurring basis. These credit quality indicators are defined as follows: |
Pass - A pass loan is not adversely classified, as it does not display any of the characteristics for adverse classification. This category includes purchased loans that are 100% guaranteed by U.S. Government agencies of $26.7 million and $38.5 million at June 30, 2014 and December 31, 2013, respectively. |
Special Mention - A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention loans are not adversely classified and do not warrant adverse classification. |
Substandard - A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard generally have a well defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These loans are characterized by the distinct possibility of loss if the deficiencies are not corrected. |
|
Doubtful - A doubtful loan has all the weaknesses inherent in a loan classified as substandard with the added characteristics that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. |
The following tables present the composition of non-covered loans, excluding PCI loans, by credit quality indicator at June 30, 2014 and December 31, 2013 (dollars in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2014 | | | | | |
| | Pass | | | Special | | | Substandard | | | Doubtful | | | Total | | | | | |
Mention | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 139,621 | | | $ | 9,551 | | | $ | 5,982 | | | $ | — | | | $ | 155,154 | | | | | |
Commercial | | | 255,148 | | | | 13,127 | | | | 5,767 | | | | — | | | | 274,042 | | | | | |
Construction and land development | | | 50,421 | | | | 219 | | | | 5,849 | | | | — | | | | 56,489 | | | | | |
Second mortgages | | | 5,238 | | | | 951 | | | | 251 | | | | — | | | | 6,440 | | | | | |
Multifamily | | | 33,898 | | | | — | | | | — | | | | — | | | | 33,898 | | | | | |
Agriculture | | | 8,127 | | | | — | | | | — | | | | — | | | | 8,127 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 492,453 | | | | 23,848 | | | | 17,849 | | | | — | | | | 534,150 | | | | | |
Commercial loans | | | 74,994 | | | | 2,335 | | | | 9,117 | | | | — | | | | 86,446 | | | | | |
Consumer installment loans | | | 5,250 | | | | 29 | | | | 100 | | | | — | | | | 5,379 | | | | | |
All other loans | | | 1,390 | | | | — | | | | — | | | | — | | | | 1,390 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 574,087 | | | $ | 26,212 | | | $ | 27,066 | | | $ | — | | | $ | 627,365 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 | | | | | |
| | Pass | | | Special | | | Substandard | | | Doubtful | | | Total | | | | | |
Mention | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Residential 1-4 family | | $ | 129,482 | | | $ | 8,193 | | | $ | 6,707 | | | $ | — | | | $ | 144,382 | | | | | |
Commercial | | | 229,168 | | | | 11,348 | | | | 6,768 | | | | — | | | | 247,284 | | | | | |
Construction and land development | | | 44,482 | | | | 2,178 | | | | 8,618 | | | | — | | | | 55,278 | | | | | |
Second mortgages | | | 6,172 | | | | 428 | | | | 254 | | | | — | | | | 6,854 | | | | | |
Multifamily | | | 35,774 | | | | — | | | | — | | | | — | | | | 35,774 | | | | | |
Agriculture | | | 9,361 | | | | — | | | | 204 | | | | — | | | | 9,565 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total real estate loans | | | 454,439 | | | | 22,147 | | | | 22,551 | | | | — | | | | 499,137 | | | | | |
Commercial loans | | | 87,208 | | | | 2,742 | | | | 192 | | | | — | | | | 90,142 | | | | | |
Consumer installment loans | | | 5,344 | | | | 222 | | | | 57 | | | | — | | | | 5,623 | | | | | |
All other loans | | | 1,435 | | | | — | | | | — | | | | — | | | | 1,435 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 548,426 | | | $ | 25,111 | | | $ | 22,800 | | | $ | — | | | $ | 596,337 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
In accordance with FASB ASU 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring, the Company assesses all loan modifications to determine whether they are considered troubled debt restructurings (TDRs) under the guidance. |
During the three and six months ended June 30, 2014, there were no loans modified, that were considered to be TDRs. During each of the three and six months ended June 30, 2013, the Company modified one residential 1-4 family loan that was considered to be a TDR. The Company extended the terms and lowered the interest rate for this loan, which had a pre- and post-modification balance of $174,000. |
A loan is considered to be in default if it is 90 days or more past due. There were no TDRs that had been restructured during the previous 12 months that resulted in default during the three and six months ended June 30, 2014 and 2013. |
In the determination of the allowance for loan losses, management considers TDRs and subsequent defaults in these restructures by reviewing for impairment in accordance with FASB ASC 310-10-35, Receivables, Subsequent Measurement. |
At June 30, 2014 the Company had 1-4 family mortgages in the amount of $144.8 million pledged as collateral to the Federal Home Loan Bank for a total borrowing capacity of $108.4 million. |