Loans Receivable and the Allowance for Loan Losses | 12 Months Ended |
Dec. 31, 2014 |
Loans Receivable and the Allowance for Loan Losses [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Loans Receivable and the Allowance for Loan Losses |
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The composition of allowance for loan losses, loans, and loan pool participations by portfolio segment, as of and for the years ended December 31, 2014 and 2013, were as follows: |
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| Allowance for Loan Losses and Recorded Investment in Loan Receivables | | |
| For the Years Ended December 31, 2014 and 2013 | | |
(in thousands) | Agricultural | | Commercial and Industrial | | Commercial Real Estate | | Residential Real Estate | | Consumer | | Unallocated | | Total | | |
2014 | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 88 | | | $ | 206 | | | $ | 226 | | | $ | 623 | | | $ | 2 | | | $ | — | | | $ | 1,145 | | | |
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Collectively evaluated for impairment | 1,418 | | | 5,574 | | | 4,173 | | | 2,544 | | | 321 | | | 1,188 | | | 15,218 | | | |
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Total | $ | 1,506 | | | $ | 5,780 | | | $ | 4,399 | | | $ | 3,167 | | | $ | 323 | | | $ | 1,188 | | | $ | 16,363 | | | |
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Loans acquired with deteriorated credit quality (loan pool participations) | $ | — | | | $ | 70 | | | $ | 669 | | | $ | 82 | | | $ | 9 | | | $ | 1,304 | | | $ | 2,134 | | | |
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Loans receivable | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 3,027 | | | $ | 3,168 | | | $ | 3,916 | | | $ | 3,341 | | | $ | 34 | | | $ | — | | | $ | 13,486 | | | |
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Collectively evaluated for impairment | 101,782 | | | 301,732 | | | 422,605 | | | 269,270 | | | 23,644 | | | — | | | 1,119,033 | | | |
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Total | $ | 104,809 | | | $ | 304,900 | | | $ | 426,521 | | | $ | 272,611 | | | $ | 23,678 | | | $ | — | | | $ | 1,132,519 | | | |
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Loans acquired with deteriorated credit quality (loan pool participations)* | $ | 4 | | | $ | 935 | | | $ | 14,246 | | | $ | 3,340 | | | $ | 12 | | | $ | 2,929 | | | $ | 21,466 | | | |
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(in thousands) | Agricultural | | Commercial and Industrial | | Commercial Real Estate | | Residential Real Estate | | Consumer | | Unallocated | | Total | | |
2013 | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 125 | | | $ | 559 | | | $ | 513 | | | $ | 220 | | | $ | 6 | | | $ | — | | | $ | 1,423 | | | |
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Collectively evaluated for impairment | 1,233 | | | 4,421 | | | 4,781 | | | 2,965 | | | 269 | | | 1,087 | | | 14,756 | | | |
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Total | $ | 1,358 | | | $ | 4,980 | | | $ | 5,294 | | | $ | 3,185 | | | $ | 275 | | | $ | 1,087 | | | $ | 16,179 | | | |
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Loans acquired with deteriorated credit quality (loan pool participations) | $ | 3 | | | $ | 64 | | | $ | 627 | | | $ | 88 | | | $ | 6 | | | $ | 1,346 | | | $ | 2,134 | | | |
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Loans receivable | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 3,146 | | | $ | 3,521 | | | $ | 5,079 | | | $ | 1,664 | | | $ | 50 | | | $ | — | | | $ | 13,460 | | | |
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Collectively evaluated for impairment | 94,021 | | | 260,130 | | | 429,345 | | | 272,462 | | | 18,994 | | | — | | | 1,074,952 | | | |
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Total | $ | 97,167 | | | $ | 263,651 | | | $ | 434,424 | | | $ | 274,126 | | | $ | 19,044 | | | $ | — | | | $ | 1,088,412 | | | |
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Loans acquired with deteriorated credit quality (loan pool participations)* | $ | 49 | | | $ | 1,302 | | | $ | 18,168 | | | $ | 3,823 | | | $ | 18 | | | $ | 4,307 | | | $ | 27,667 | | | |
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* The amount shown as “Unallocated” represents the carrying value of other real estate owned within the loan pool participation portfolio total. |
Loans with unpaid principal in the amount of $404.4 million at December 31, 2014 were pledged to the FHLB as collateral for borrowings. |
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The changes in the allowance for loan losses by portfolio segment, as of and for the years ended December 31, 2014, 2013, and 2012 were as follows: |
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| Allowance for Loan Loss Activity | | |
| For the Years Ended December 31, 2014, 2013, and 2012 | | |
(in thousands) | Agricultural | | Commercial and Industrial | | Commercial Real Estate | | Residential Real Estate | | Consumer | | Unallocated | | Total | | |
2014 | | | | | | | | | | | | | | | |
Beginning balance | $ | 1,358 | | | $ | 4,980 | | | $ | 5,294 | | | $ | 3,185 | | | $ | 275 | | | $ | 1,087 | | | $ | 16,179 | | | |
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Charge-offs | (26 | ) | | (685 | ) | | (165 | ) | | (409 | ) | | (76 | ) | | — | | | (1,361 | ) | | |
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Recoveries | 10 | | | 217 | | | 61 | | | 22 | | | 35 | | | — | | | 345 | | | |
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Provision | 164 | | | 1,268 | | | (791 | ) | | 369 | | | 89 | | | 101 | | | 1,200 | | | |
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Ending balance | $ | 1,506 | | | $ | 5,780 | | | $ | 4,399 | | | $ | 3,167 | | | $ | 323 | | | $ | 1,188 | | | $ | 16,363 | | | |
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2013 | | | | | | | | | | | | | | | |
Beginning balance | $ | 1,026 | | | $ | 4,599 | | | $ | 5,767 | | | $ | 3,007 | | | $ | 356 | | | $ | 1,202 | | | $ | 15,957 | | | |
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Charge-offs | (39 | ) | | (790 | ) | | (545 | ) | | (286 | ) | | (147 | ) | | — | | | (1,807 | ) | | |
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Recoveries | 36 | | | 70 | | | 479 | | | 67 | | | 27 | | | — | | | 679 | | | |
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Provision | 335 | | | 1,101 | | | (407 | ) | | 397 | | | 39 | | | (115 | ) | | 1,350 | | | |
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Ending balance | $ | 1,358 | | | $ | 4,980 | | | $ | 5,294 | | | $ | 3,185 | | | $ | 275 | | | $ | 1,087 | | | $ | 16,179 | | | |
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2012 | | | | | | | | | | | | | | | |
Beginning balance | $ | 1,209 | | | $ | 5,380 | | | $ | 5,171 | | | $ | 3,501 | | | $ | 167 | | | $ | 248 | | | $ | 15,676 | | | |
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Charge-offs | — | | | (2,345 | ) | | (129 | ) | | (537 | ) | | (90 | ) | | — | | | (3,101 | ) | | |
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Recoveries | 507 | | | 423 | | | 24 | | | 31 | | | 18 | | | — | | | 1,003 | | | |
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Provision | (690 | ) | | 1,141 | | | 701 | | | 12 | | | 261 | | | 954 | | | 2,379 | | | |
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Ending balance | $ | 1,026 | | | $ | 4,599 | | | $ | 5,767 | | | $ | 3,007 | | | $ | 356 | | | $ | 1,202 | | | $ | 15,957 | | | |
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Loan Portfolio Segment Risk Characteristics |
Agricultural - Agricultural loans, most of which are secured by crops, livestock, and machinery, are provided to finance capital improvements and farm operations as well as acquisitions of livestock and machinery. The ability of the borrower to repay may be affected by many factors outside of the borrower's control including adverse weather conditions, loss of livestock due to disease or other factors, declines in market prices for agricultural products and the impact of government regulations. The ultimate repayment of agricultural loans is dependent upon the profitable operation or management of the agricultural entity. Collateral for these loans generally includes accounts receivable, inventory, equipment and real estate. However, depending on the overall financial condition of the borrower, some loans are made on an unsecured basis. The collateral securing these loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. |
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Commercial and Industrial - Commercial and industrial loans are primarily made based on the reported cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The collateral support provided by the borrower for most of these loans and the probability of repayment are based on the liquidation of the pledged collateral and enforcement of a personal guarantee, if any exists. The primary repayment risks of commercial and industrial loans are that the cash flows of the borrower may be unpredictable, and the collateral securing these loans may fluctuate in value. The size of the loans the Company can offer to commercial customers is less than the size of the loans that competitors with larger lending limits can offer. This may limit the Company's ability to establish relationships with the largest businesses in the areas in which the Company operates. As a result, the Company may assume greater lending risks than financial institutions that have a lesser concentration of such loans and tend to make loans to larger businesses. Collateral for these loans generally includes accounts receivable, inventory, equipment and real estate. However, depending on the overall financial condition of the borrower, some loans are made on an unsecured basis. The collateral securing these loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. In addition, if the U.S. economy does not continue to improve, this could harm or continue to harm the businesses of the Company’s commercial and industrial customers and reduce the value of the collateral securing these loans. |
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Commercial Real Estate - The Company offers mortgage loans to commercial and agricultural customers for the acquisition of real estate used in their businesses, such as offices, warehouses and production facilities, and to real estate investors for the acquisition of apartment buildings, retail centers, office buildings and other commercial buildings. The market value of real estate securing commercial real estate loans can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located. Adverse developments affecting real estate values in one or more of the Company's markets could increase the credit risk associated with its loan portfolio. Additionally, real estate lending typically involves higher loan principal amounts than other loans, and the repayment of the loans generally is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events or governmental regulations outside of the Company’s control or that of the borrower could negatively impact the future cash flow and market values of the affected properties. |
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Residential Real Estate - The Company generally retains short-term residential mortgage loans that are originated for its own portfolio but sells most long-term loans to other parties while retaining servicing rights on the majority of those loans. The market value of real estate securing residential real estate loans can fluctuate as a result of market conditions in the geographic area in which the real estate is located. Adverse developments affecting real estate values in one or more of the Company's markets could increase the credit risk associated with its loan portfolio. Additionally, real estate lending typically involves higher loan principal amounts than other loans, and the repayment of the loans generally is dependent, in large part, on the borrower's continuing financial stability, and is therefore more likely to be affected by adverse personal circumstances. |
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Consumer - Consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than real estate related loans. Consumer loan collections are dependent on the borrower's continuing financial stability, and are therefore more likely to be affected by adverse personal circumstances. Collateral for these loans generally includes automobiles, boats, recreational vehicles, mobile homes, and real estate. However, depending on the overall financial condition of the borrower, some loans are made on an unsecured basis. The collateral securing these loans may depreciate over time, may be difficult to recover and may fluctuate in value based on condition. In addition, a decline in the United States economy could result in reduced employment, impacting the ability of customers to repay their obligations. |
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Loans acquired with deteriorated credit quality (loan pool participations) - The underlying loans in the loan pool participations include both fixed-rate and variable-rate instruments. No amounts for interest due are reflected in the carrying value of the loan pool participations. Based on historical experience, the average period of collectibility for loans underlying loan pool participations, many of which have exceeded contractual maturity dates, is approximately three to five years. Loan pool balances are affected by the payment and refinancing activities of the borrowers resulting in pay-offs of the underlying loans and reduction in the balances. Collections from the individual borrowers are managed by the loan pool servicer and are affected by the borrower's financial ability and willingness to pay, foreclosure and legal action, collateral value, and the economy in general. |
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Charge-off Policy |
The Company requires a loan to be charged-off as soon as it becomes apparent that some loss will be incurred, or when its collectability is sufficiently questionable that it no longer is considered a bankable asset. The primary considerations when determining if and how much of a loan should be charged-off are as follows: (1) the potential for future cash flows; (2) the value of any collateral; and (3) the strength of any co-makers or guarantors. |
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When it is determined that a loan requires a partial or full charge-off, a request for approval of a charge-off is submitted to the Bank's President, Executive Vice President and Chief Credit Officer, and the Senior Regional Loan officer. The Bank's board of directors formally approves all loan charge-offs. Once a loan is charged-off, it cannot be restructured and returned to the Bank's books. |
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The Allowance for Loan and Lease Losses - Bank Loans |
The Company requires the maintenance of an adequate allowance for loan and lease losses (“ALLL”) in order to cover estimated probable losses without eroding the Company's capital base. Calculations are done at each quarter end, or more frequently if warranted, to analyze the collectability of loans and to ensure the adequacy of the allowance. In line with FDIC directives, the ALLL calculation does not include consideration of loans held for sale or off-balance-sheet credit exposures (such as unfunded letters of credit). Determining the appropriate level for the ALLL relies on the informed judgment of management, and as such, is subject to inaccuracy. Given the inherently imprecise nature of calculating the necessary ALLL, the Company's policy permits an "unallocated" allowance between 15% above and 5% below the “indicated reserve.” These unallocated amounts are due to those overall factors impacting the ALLL that are not captured in detailed loan category calculations. |
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Loans Reviewed Individually for Impairment |
The Company identifies loans to be reviewed and evaluated individually for impairment based on current information and events and the probability that the borrower will be unable to repay all amounts due according to the contractual terms of the loan agreement. Specific areas of consideration include: size of credit exposure, risk rating, delinquency, nonaccrual status, and loan classification. |
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The level of individual impairment is measured using one of the following methods: (1) the fair value of the collateral less costs to sell; (2) the present value of expected future cash flows, discounted at the loan's effective interest rate; or (3) the loan's observable market price. Loans that are deemed fully collateralized or have been charged down to a level corresponding with any of the three measurements require no assignment of reserves from the ALLL. |
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All loans deemed troubled debt restructure or “TDR” are considered impaired. A loan is considered a TDR when the Bank, for economic or legal reasons related to a borrower's financial difficulties, grants a concession to the borrower that the Bank would not otherwise consider. All of the following factors are potential indicators that the Bank has granted a concession (one or multiple items may be present): |
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• | The borrower receives a reduction of the stated interest rate for the remaining original life of the debt. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | The borrower receives an extension of the maturity date or dates at a stated interest rate lower that the current market interest rate for new debt with similar risk characteristics. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | The borrower receives a reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | The borrower receives a deferral of required payments (principal and/or interest). | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | The borrower receives a reduction of the accrued interest. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following tables set forth information on the Company's TDRs by class of financing receivable occurring during the stated periods: |
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| For the Year Ended December 31, |
| 2014 | | 2013 | | 2012 |
| Number of Contracts | | Pre-Modification Outstanding Recorded Investment | | Post-Modification Outstanding Recorded Investment | | Number of Contracts | | Pre-Modification Outstanding Recorded Investment | | Post-Modification Outstanding Recorded Investment | | Number of Contracts | | Pre-Modification Outstanding Recorded Investment | | Post-Modification Outstanding Recorded Investment |
(dollars in thousands) | | | | | | | | | | | | | | | | | |
Troubled Debt Restructurings(1): | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | |
Amortization or maturity date change | 1 | | 1,405 | | | 1,405 | | | 10 | | 1,546 | | | 1,546 | | | 1 | | 551 | | | 551 | |
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Commercial real estate: | | | | | | | | | | | | | | | | | |
Farmland | | | | | | | | | | | | | | | | | |
Interest rate reduction | 0 | | — | | | — | | | 0 | | — | | | — | | | 2 | | 2,475 | | | 2,388 | |
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Commercial real estate-other | | | | | | | | | | | | | | | | | |
Amortization or maturity date change | 0 | | — | | | — | | | 2 | | 165 | | | 136 | | | 0 | | — | | | — | |
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Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | | | | | | | | | | | | | | | | | |
Interest rate reduction | 1 | | 285 | | | 292 | | | 2 | | 164 | | | 169 | | | 0 | | — | | | — | |
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Amortization or maturity date change | 0 | | — | | | — | | | 1 | | 66 | | | 69 | | | 0 | | — | | | — | |
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One- to four- family junior liens | | | | | | | | | | | | | | | | | |
Interest rate reduction | 0 | | — | | | — | | | 1 | | 8 | | | 13 | | | 1 | | 135 | | | 138 | |
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Total | 2 | | $ | 1,690 | | | $ | 1,697 | | | 16 | | $ | 1,949 | | | $ | 1,933 | | | 4 | | $ | 3,161 | | | $ | 3,077 | |
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(1) TDRs may include multiple concessions and the disclosure classifications are based on the primary concession provided to the borrower. |
Loans by class of financing receivable modified as TDRs within the previous 12 months and for which there was a payment default during the stated periods were: |
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| For the Year Ended December 31, | | | | | | | | | | | | |
| 2014 | | 2013 | | 2012 | | | | | | | | | | | | |
| Number of Contracts | | Recorded Investment | | Number of Contracts | | Recorded Investment | | Number of Contracts | | Recorded Investment | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | |
Troubled Debt Restructurings(1) That Subsequently Defaulted: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | |
Amortization or maturity date change | 0 | | — | | | 0 | | — | | | 1 | | $ | 547 | | | | | | | | | | | | | |
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Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate-other | | | | | | | | | | | | | | | | | | | | | | | |
Amortization or maturity date change | 0 | | — | | | 1 | | 69 | | | 0 | | — | | | | | | | | | | | | | |
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Residential real estate: | | | | | | | | | | | | | | | | | | | | | | | |
One- to four- family first liens | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate reduction | 0 | | — | | | 1 | | 111 | | | 0 | | — | | | | | | | | | | | | | |
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Total | 0 | | $ | — | | | 2 | | $ | 180 | | | 1 | | $ | 547 | | | | | | | | | | | | | |
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(1) TDRs may include multiple concessions and the disclosure classifications are based on the primary concession provided to the borrower. |
Loans Reviewed Collectively for Impairment |
All loans not evaluated individually for impairment are grouped together by type (i.e. commercial, agricultural, consumer, etc.) and further segmented within each subset by risk classification (i.e. pass, special mention, and substandard). Homogeneous loans past due 60-89 days and 90 days and over are classified special mention and substandard, respectively, for allocation purposes. |
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The Company's historical loss experience for each loan type is calculated using the fiscal quarter-end data for the most recent 20 quarters as a starting point for estimating losses. In addition, other prevailing qualitative or environmental factors likely to cause probable losses to vary from historical data are incorporated in the form of adjustments to increase or decrease the loss rate applied to each group. These adjustments are documented and fully explain how the current information, events, circumstances, and conditions impact the historical loss measurement assumptions. |
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Although not a comprehensive list, the following are considered key factors and are evaluated with each calculation of the ALLL to determine if adjustments to historical loss rates are warranted: |
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• | Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Changes in the nature and volume of the portfolio and in the terms of loans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Changes in the experience, ability and depth of lending management and other relevant staff. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Changes in the quality of our loan review system. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | Changes in the value of underlying collateral for collateral-dependent loans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | The existence and effect of any concentrations of credit, and changes in the level of such concentrations. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | The effect of other external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the Bank’s existing portfolio. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The items listed above are used to determine the pass percentage for loans evaluated collectively and, as such, are applied to the loans risk rated pass. Due to the inherent risks associated with special mention risk rated loans (i.e. early stages of financial deterioration, technical exceptions, etc.), this subset is reserved at two times the pass allocation factor to reflect this increased risk exposure. In addition, non-impaired loans classified as substandard loans carry greater risk than special mention loans, and as such, this subset is reserved at six times the pass allocation. Further, non-impaired loans less than $0.2 million that are past due 60 - 89 days or 90 days and over, are respectively classified as special mention or substandard. They are given an increased loan loss allocation of 25% or 50%, respectively, above the five-year historical loss rate of the specific loan type. |
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The Allowance for Loan and Lease Losses - Loan Pool Participations |
The Company requires the maintenance of an adequate allowance for loan pool participation losses (“ALLL”) in order to cover estimated probable losses. Currently, charge-offs are netted against the income the Company receives, thus the balance in the loan pool reserve is not affected and remains stable. In essence, a provision for loan losses is made that is equal to the quarterly charge-offs, which is deducted from income received from the loan pools. By maintaining a sufficient reserve to cover the next quarter’s charge-offs, the Company will have sufficient reserves in place should no income be collected from the loan pools during the quarter. In the event the estimated charge-offs provided by the servicer are greater than the loan pool ALLL, an additional provision is made to cover the difference between the current ALLL and the estimated charge-offs provided by the servicer. |
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Loans Reviewed Individually for Impairment |
The loan servicer reviews the portfolio quarterly on a loan-by-loan basis, and loans that are deemed to be impaired are charged-down to their estimated value during the next calendar quarter. All loans that are to be charged-down are reserved against in the ALLL adequacy calculation. Loans that continue to have an investment basis that have been charged-down are monitored, and, if additional impairment is noted, the reserve requirement is increased on the individual loan. |
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Loans Reviewed Collectively for Impairment |
The Company utilizes the annualized average of portfolio loan (not loan pool participation) historical loss per risk category over a two year period of time. Supporting documentation for the technique used to develop the historical loss rate for each group of loans is required to be maintained. It is management’s assessment that the two year rate is most reflective of the estimated credit losses in the current loan pool portfolio. |
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The following table sets forth the composition of the Company’s loans and loan pool participations by internally assigned credit quality indicators at December 31, 2014 and 2013: |
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| Pass | | Special Mention/Watch | | Substandard | | Doubtful | | Loss | | Total | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | |
2014 | | | | | | | | | | | | | | | | | |
Agricultural | $ | 98,096 | | | $ | 5,032 | | | $ | 1,681 | | | $ | — | | | $ | — | | | $ | 104,809 | | | | | | | |
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Commercial and industrial | 273,290 | | | 7,468 | | | 22,350 | | | — | | | — | | | 303,108 | | | | | | | |
| | | | | |
Credit cards | 1,240 | | | 6 | | | — | | | — | | | — | | | 1,246 | | | | | | | |
| | | | | |
Overdrafts | 373 | | | 262 | | | 109 | | | — | | | — | | | 744 | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 56,963 | | | 1,151 | | | 1,269 | | | — | | | — | | | 59,383 | | | | | | | |
| | | | | |
Farmland | 79,629 | | | 1,778 | | | 2,293 | | | — | | | — | | | 83,700 | | | | | | | |
| | | | | |
Multifamily | 54,708 | | | 178 | | | — | | | — | | | — | | | 54,886 | | | | | | | |
| | | | | |
Commercial real estate-other | 215,268 | | | 11,216 | | | 2,068 | | | — | | | — | | | 228,552 | | | | | | | |
| | | | | |
Total commercial real estate | 406,568 | | | 14,323 | | | 5,630 | | | — | | | — | | | 426,521 | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 211,390 | | | 3,933 | | | 3,991 | | | — | | | — | | | 219,314 | | | | | | | |
| | | | | |
One- to four- family junior liens | 53,039 | | | 48 | | | 210 | | | — | | | — | | | 53,297 | | | | | | | |
| | | | | |
Total residential real estate | 264,429 | | | 3,981 | | | 4,201 | | | — | | | — | | | 272,611 | | | | | | | |
| | | | | |
Consumer | 23,431 | | | 8 | | | 41 | | | — | | | — | | | 23,480 | | | | | | | |
| | | | | |
Total | $ | 1,067,427 | | | $ | 31,080 | | | $ | 34,012 | | | $ | — | | | $ | — | | | $ | 1,132,519 | | | | | | | |
| | | | | |
Loans acquired with deteriorated credit quality (loan pool participations) | $ | 10,256 | | | $ | — | | | $ | 11,202 | | | $ | — | | | $ | 8 | | | $ | 21,466 | | | | | | | |
| | | | | |
2013 | | | | | | | | | | | | | | | | | |
Agricultural | $ | 93,187 | | | $ | 460 | | | $ | 3,520 | | | $ | — | | | $ | — | | | $ | 97,167 | | | | | | | |
| | | | | |
Commercial and industrial | 239,485 | | | 11,097 | | | 11,786 | | | — | | | — | | | 262,368 | | | | | | | |
| | | | | |
Credit cards | 1,010 | | | 1 | | | 17 | | | — | | | — | | | 1,028 | | | | | | | |
| | | | | |
Overdrafts | 326 | | | 123 | | | 88 | | | — | | | — | | | 537 | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 56,112 | | | 14,984 | | | 1,493 | | | — | | | — | | | 72,589 | | | | | | | |
| | | | | |
Farmland | 80,044 | | | 3,091 | | | 2,340 | | | — | | | — | | | 85,475 | | | | | | | |
| | | | | |
Multifamily | 53,315 | | | 1,732 | | | 396 | | | — | | | — | | | 55,443 | | | | | | | |
| | | | | |
Commercial real estate-other | 205,914 | | | 12,994 | | | 2,009 | | | — | | | — | | | 220,917 | | | | | | | |
| | | | | |
Total commercial real estate | 395,385 | | | 32,801 | | | 6,238 | | | — | | | — | | | 434,424 | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 213,815 | | | 3,994 | | | 2,859 | | | — | | | — | | | 220,668 | | | | | | | |
| | | | | |
One- to four- family junior liens | 53,225 | | | 38 | | | 195 | | | — | | | — | | | 53,458 | | | | | | | |
| | | | | |
Total residential real estate | 267,040 | | | 4,032 | | | 3,054 | | | — | | | — | | | 274,126 | | | | | | | |
| | | | | |
Consumer | 18,643 | | | 57 | | | 62 | | | — | | | — | | | 18,762 | | | | | | | |
| | | | | |
Total | $ | 1,015,076 | | | $ | 48,571 | | | $ | 24,765 | | | $ | — | | | $ | — | | | $ | 1,088,412 | | | | | | | |
| | | | | |
Loans acquired with deteriorated credit quality (loan pool participations) | $ | 13,569 | | | $ | — | | | $ | 14,093 | | | $ | — | | | $ | 5 | | | $ | 27,667 | | | | | | | |
| | | | | |
|
Special Mention/Watch - A special mention/watch asset has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company's credit position at some future date. Special mention/watch assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. |
|
Substandard - Substandard loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. |
|
Doubtful - Loans classified doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. |
|
Loss - Loans classified loss are generally considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future. |
|
The following tables set forth the amounts and categories of the Company’s impaired loans as of December 31, 2014 and 2013: |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, | | | | | | |
| 2014 | | 2013 | | | | | | |
| Recorded Investment | | Unpaid Principal Balance | | Related Allowance | | Recorded Investment | | Unpaid Principal Balance | | Related Allowance | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | |
Agricultural | $ | 1,410 | | | $ | 1,910 | | | $ | — | | | $ | 1,475 | | | $ | 1,975 | | | $ | — | | | | | | | |
| | | | | |
Commercial and industrial | 2,169 | | | 2,270 | | | — | | | 1,919 | | | 2,020 | | | — | | | | | | | |
| | | | | |
Credit cards | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Overdrafts | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 49 | | | 176 | | | — | | | 132 | | | 601 | | | — | | | | | | | |
| | | | | |
Farmland | 2,270 | | | 2,433 | | | — | | | 93 | | | 107 | | | — | | | | | | | |
| | | | | |
Multifamily | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate-other | 939 | | | 1,064 | | | — | | | 587 | | | 612 | | | — | | | | | | | |
| | | | | |
Total commercial real estate | 3,258 | | | 3,673 | | | — | | | 812 | | | 1,320 | | | — | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 535 | | | 773 | | | — | | | 622 | | | 741 | | | — | | | | | | | |
| | | | | |
One- to four- family junior liens | 134 | | | 157 | | | — | | | 50 | | | 50 | | | — | | | | | | | |
| | | | | |
Total residential real estate | 669 | | | 930 | | | — | | | 672 | | | 791 | | | — | | | | | | | |
| | | | | |
Consumer | 6 | | | 22 | | | — | | | 10 | | | 26 | | | — | | | | | | | |
| | | | | |
Total | $ | 7,512 | | | $ | 8,805 | | | $ | — | | | $ | 4,888 | | | $ | 6,132 | | | $ | — | | | | | | | |
| | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | |
Agricultural | $ | 1,617 | | | $ | 1,617 | | | $ | 88 | | | $ | 1,671 | | | $ | 1,671 | | | $ | 125 | | | | | | | |
| | | | | |
Commercial and industrial | 999 | | | 999 | | | 206 | | | 1,602 | | | 1,657 | | | 559 | | | | | | | |
| | | | | |
Credit cards | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Overdrafts | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 34 | | | 34 | | | 34 | | | 7 | | | 7 | | | 3 | | | | | | | |
| | | | | |
Farmland | 74 | | | 74 | | | 4 | | | 2,311 | | | 2,461 | | | 219 | | | | | | | |
| | | | | |
Multifamily | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate-other | 550 | | | 550 | | | 188 | | | 1,949 | | | 2,164 | | | 291 | | | | | | | |
| | | | | |
Total commercial real estate | 658 | | | 658 | | | 226 | | | 4,267 | | | 4,632 | | | 513 | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 2,600 | | | 2,600 | | | 594 | | | 902 | | | 902 | | | 170 | | | | | | | |
| | | | | |
One- to four- family junior liens | 72 | | | 72 | | | 29 | | | 90 | | | 90 | | | 50 | | | | | | | |
| | | | | |
Total residential real estate | 2,672 | | | 2,672 | | | 623 | | | 992 | | | 992 | | | 220 | | | | | | | |
| | | | | |
Consumer | 28 | | | 28 | | | 2 | | | 40 | | | 40 | | | 6 | | | | | | | |
| | | | | |
Total | $ | 5,974 | | | $ | 5,974 | | | $ | 1,145 | | | $ | 8,572 | | | $ | 8,992 | | | $ | 1,423 | | | | | | | |
| | | | | |
Total: | | | | | | | | | | | | | | | | | |
Agricultural | $ | 3,027 | | | $ | 3,527 | | | $ | 88 | | | $ | 3,146 | | | $ | 3,646 | | | $ | 125 | | | | | | | |
| | | | | |
Commercial and industrial | 3,168 | | | 3,269 | | | 206 | | | 3,521 | | | 3,677 | | | 559 | | | | | | | |
| | | | | |
Credit cards | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Overdrafts | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 83 | | | 210 | | | 34 | | | 139 | | | 608 | | | 3 | | | | | | | |
| | | | | |
Farmland | 2,344 | | | 2,507 | | | 4 | | | 2,404 | | | 2,568 | | | 219 | | | | | | | |
| | | | | |
Multifamily | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate-other | 1,489 | | | 1,614 | | | 188 | | | 2,536 | | | 2,776 | | | 291 | | | | | | | |
| | | | | |
Total commercial real estate | 3,916 | | | 4,331 | | | 226 | | | 5,079 | | | 5,952 | | | 513 | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 3,135 | | | 3,373 | | | 594 | | | 1,524 | | | 1,643 | | | 170 | | | | | | | |
| | | | | |
One- to four- family junior liens | 206 | | | 229 | | | 29 | | | 140 | | | 140 | | | 50 | | | | | | | |
| | | | | |
Total residential real estate | 3,341 | | | 3,602 | | | 623 | | | 1,664 | | | 1,783 | | | 220 | | | | | | | |
| | | | | |
Consumer | 34 | | | 50 | | | 2 | | | 50 | | | 66 | | | 6 | | | | | | | |
| | | | | |
Total | $ | 13,486 | | | $ | 14,779 | | | $ | 1,145 | | | $ | 13,460 | | | $ | 15,124 | | | $ | 1,423 | | | | | | | |
| | | | | |
|
The following table sets forth the average recorded investment and interest income recognized for each category of the Company’s impaired loans during the stated periods: |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Year Ended December 31, | | | | | | |
| 2014 | | 2013 | | 2012 | | | | | | |
| Average Recorded Investment | | Interest Income Recognized | | Average Recorded Investment | | Interest Income Recognized | | Average Recorded Investment | | Interest Income Recognized | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | |
Agricultural | $ | 1,413 | | | $ | 211 | | | $ | 1,128 | | | $ | 114 | | | $ | 1,600 | | | $ | 60 | | | | | | | |
| | | | | |
Commercial and industrial | 2,234 | | | 160 | | | 2,025 | | | 76 | | | 965 | | | 52 | | | | | | | |
| | | | | |
Credit cards | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Overdrafts | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 49 | | | — | | | 149 | | | 21 | | | 316 | | | — | | | | | | | |
| | | | | |
Farmland | 2,288 | | | 456 | | | 101 | | | 8 | | | 83 | | | 8 | | | | | | | |
| | | | | |
Multifamily | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate-other | 975 | | | (3 | ) | | 593 | | | 25 | | | 1,770 | | | 72 | | | | | | | |
| | | | | |
Total commercial real estate | 3,312 | | | 453 | | | 843 | | | 54 | | | 2,169 | | | 80 | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 547 | | | 32 | | | 669 | | | 14 | | | 143 | | | 4 | | | | | | | |
| | | | | |
One- to four- family junior liens | 134 | | | 6 | | | 50 | | | 1 | | | 43 | | | 3 | | | | | | | |
| | | | | |
Total residential real estate | 681 | | | 38 | | | 719 | | | 15 | | | 186 | | | 7 | | | | | | | |
| | | | | |
Consumer | 8 | | | — | | | 12 | | | — | | | 16 | | | — | | | | | | | |
| | | | | |
Total | $ | 7,648 | | | $ | 862 | | | $ | 4,727 | | | $ | 259 | | | $ | 4,936 | | | $ | 199 | | | | | | | |
| | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | |
Agricultural | $ | 1,627 | | | $ | 203 | | | $ | 1,681 | | | $ | 51 | | | $ | 1,723 | | | $ | 50 | | | | | | | |
| | | | | |
Commercial and industrial | 1,044 | | | 104 | | | 1,697 | | | 75 | | | 1,044 | | | 36 | | | | | | | |
| | | | | |
Credit cards | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Overdrafts | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 35 | | | 3 | | | 7 | | | — | | | 526 | | | 30 | | | | | | | |
| | | | | |
Farmland | 74 | | | 3 | | | 2,315 | | | 110 | | | 2,504 | | | 114 | | | | | | | |
| | | | | |
Multifamily | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate-other | 551 | | | 43 | | | 1,921 | | | 55 | | | 559 | | | 18 | | | | | | | |
| | | | | |
Total commercial real estate | 660 | | | 49 | | | 4,243 | | | 165 | | | 3,589 | | | 162 | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 2,612 | | | 203 | | | 909 | | | 38 | | | 645 | | | 33 | | | | | | | |
| | | | | |
One- to four- family junior liens | 74 | | | — | | | 92 | | | 1 | | | 68 | | | 2 | | | | | | | |
| | | | | |
Total residential real estate | 2,686 | | | 203 | | | 1,001 | | | 39 | | | 713 | | | 35 | | | | | | | |
| | | | | |
Consumer | 31 | | | 5 | | | 41 | | | 2 | | | 24 | | | 2 | | | | | | | |
| | | | | |
Total | $ | 6,048 | | | $ | 564 | | | $ | 8,663 | | | $ | 332 | | | $ | 7,093 | | | $ | 285 | | | | | | | |
| | | | | |
Total: | | | | | | | | | | | | | | | | | |
Agricultural | $ | 3,040 | | | $ | 414 | | | $ | 2,809 | | | $ | 165 | | | $ | 3,323 | | | $ | 110 | | | | | | | |
| | | | | |
Commercial and industrial | 3,278 | | | 264 | | | 3,722 | | | 151 | | | 2,009 | | | 88 | | | | | | | |
| | | | | |
Credit cards | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Overdrafts | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | |
Construction & development | 84 | | | 3 | | | 156 | | | 21 | | | 842 | | | 30 | | | | | | | |
| | | | | |
Farmland | 2,362 | | | 459 | | | 2,416 | | | 118 | | | 2,587 | | | 122 | | | | | | | |
| | | | | |
Multifamily | — | | | — | | | — | | | — | | | — | | | — | | | | | | | |
| | | | | |
Commercial real estate-other | 1,526 | | | 40 | | | 2,514 | | | 80 | | | 2,329 | | | 90 | | | | | | | |
| | | | | |
Total commercial real estate | 3,972 | | | 502 | | | 5,086 | | | 219 | | | 5,758 | | | 242 | | | | | | | |
| | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 3,159 | | | 235 | | | 1,578 | | | 52 | | | 788 | | | 37 | | | | | | | |
| | | | | |
One- to four- family junior liens | 208 | | | 6 | | | 142 | | | 2 | | | 111 | | | 5 | | | | | | | |
| | | | | |
Total residential real estate | 3,367 | | | 241 | | | 1,720 | | | 54 | | | 899 | | | 42 | | | | | | | |
| | | | | |
Consumer | 39 | | | 5 | | | 53 | | | 2 | | | 40 | | | 2 | | | | | | | |
| | | | | |
Total | $ | 13,696 | | | $ | 1,426 | | | $ | 13,390 | | | $ | 591 | | | $ | 12,029 | | | $ | 484 | | | | | | | |
| | | | | |
|
The following table sets forth the composition and past due status of the Company’s loans at December 31, 2014 and 2013: |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 30 - 59 Days Past Due | | 60 - 89 Days Past Due | | 90 Days or More Past Due | | Total Past Due | | Current | | Total Loans Receivable | | Recorded Investment > 90 Days Past Due and Accruing | | |
(in thousands) | | | | | | | | | | | | | | | |
2014 | | | | | | | | | | | | | | | |
Agricultural | $ | 58 | | | $ | 30 | | | $ | — | | | $ | 88 | | | $ | 104,721 | | | $ | 104,809 | | | $ | — | | | |
| |
Commercial and industrial | 897 | | | 603 | | | 515 | | | 2,015 | | | 301,093 | | | 303,108 | | | 66 | | | |
| |
Credit cards | 3 | | | 3 | | | — | | | 6 | | | 1,240 | | | 1,246 | | | — | | | |
| |
Overdrafts | 104 | | | 2 | | | 4 | | | 110 | | | 634 | | | 744 | | | — | | | |
| |
Commercial real estate: | | | | | | | | | | | | | | | |
Construction & development | — | | | — | | | 83 | | | 83 | | | 59,300 | | | 59,383 | | | — | | | |
| |
Farmland | 503 | | | — | | | — | | | 503 | | | 83,197 | | | 83,700 | | | — | | | |
| |
Multifamily | — | | | — | | | — | | | — | | | 54,886 | | | 54,886 | | | — | | | |
| |
Commercial real estate-other | 168 | | | 57 | | | 1,200 | | | 1,425 | | | 227,127 | | | 228,552 | | | — | | | |
| |
Total commercial real estate | 671 | | | 57 | | | 1,283 | | | 2,011 | | | 424,510 | | | 426,521 | | | — | | | |
| |
Residential real estate: | | | | | | | | | | | | | | | |
One- to four- family first liens | 1,481 | | | 581 | | | 2,023 | | | 4,085 | | | 215,229 | | | 219,314 | | | 780 | | | |
| |
One- to four- family junior liens | 105 | | | 48 | | | 192 | | | 345 | | | 52,952 | | | 53,297 | | | — | | | |
| |
Total residential real estate | 1,586 | | | 629 | | | 2,215 | | | 4,430 | | | 268,181 | | | 272,611 | | | 780 | | | |
| |
Consumer | 35 | | | 8 | | | 23 | | | 66 | | | 23,414 | | | 23,480 | | | 2 | | | |
| |
Total | $ | 3,354 | | | $ | 1,332 | | | $ | 4,040 | | | $ | 8,726 | | | $ | 1,123,793 | | | $ | 1,132,519 | | | $ | 848 | | | |
| |
2013 | | | | | | | | | | | | | | | |
Agricultural | $ | 65 | | | $ | 23 | | | $ | 52 | | | $ | 140 | | | $ | 97,027 | | | $ | 97,167 | | | $ | — | | | |
| |
Commercial and industrial | 610 | | | 876 | | | 960 | | | 2,446 | | | 259,922 | | | 262,368 | | | 213 | | | |
| |
Credit cards | — | | | 1 | | | 17 | | | 18 | | | 1,010 | | | 1,028 | | | 17 | | | |
| |
Overdrafts | 40 | | | 1 | | | 48 | | | 89 | | | 448 | | | 537 | | | — | | | |
| |
Commercial real estate: | | | | | | | | | | | | | | | |
Construction & development | 84 | | | — | | | 56 | | | 140 | | | 72,449 | | | 72,589 | | | — | | | |
| |
Farmland | — | | | — | | | — | | | — | | | 85,475 | | | 85,475 | | | — | | | |
| |
Multifamily | — | | | — | | | 395 | | | 395 | | | 55,048 | | | 55,443 | | | 395 | | | |
| |
Commercial real estate-other | 604 | | | 190 | | | 1,740 | | | 2,534 | | | 218,383 | | | 220,917 | | | 164 | | | |
| |
Total commercial real estate | 688 | | | 190 | | | 2,191 | | | 3,069 | | | 431,355 | | | 434,424 | | | 559 | | | |
| |
Residential real estate: | | | | | | | | | | | | | | | |
One- to four- family first liens | 1,891 | | | 869 | | | 984 | | | 3,744 | | | 216,924 | | | 220,668 | | | 540 | | | |
| |
One- to four- family junior liens | 316 | | | 38 | | | 175 | | | 529 | | | 52,929 | | | 53,458 | | | 49 | | | |
| |
Total residential real estate | 2,207 | | | 907 | | | 1,159 | | | 4,273 | | | 269,853 | | | 274,126 | | | 589 | | | |
| |
Consumer | 17 | | | 62 | | | 36 | | | 115 | | | 18,647 | | | 18,762 | | | 7 | | | |
| |
Total | $ | 3,627 | | | $ | 2,060 | | | $ | 4,463 | | | $ | 10,150 | | | $ | 1,078,262 | | | $ | 1,088,412 | | | $ | 1,385 | | | |
| |
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Non-accrual and Delinquent Loans |
Loans are placed on non-accrual when (1) payment in full of principal and interest is no longer expected or (2) principal or interest has been in default for 90 days or more (unless the loan is both well secured with marketable collateral and in the process of collection). All loans rated doubtful or worse, and certain loans rated substandard, are placed on non-accrual. |
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A non-accrual asset may be restored to an accrual status when (1) all past due principal and interest has been paid (excluding renewals and modifications that involve the capitalizing of interest) or (2) the loan becomes well secured with marketable collateral and is in the process of collection. An established track record of performance is also considered when determining accrual status. |
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Delinquency status of a loan is determined by the number of days that have elapsed past the loan's payment due date, using the following classification groupings: 30-59 days, 60-89 days and 90 days or more. Loans shown in the 30-59 days and 60-89 days columns in the table above reflect contractual delinquency status of loans not considered nonperforming due to classification as a TDR or being placed on non-accrual. |
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The following table sets forth the composition of the Company’s recorded investment in loans on nonaccrual status as of December 31, 2014 and 2013: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, | | | | | | | | | | | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural | $ | — | | | $ | 52 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | 479 | | | 746 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Credit cards | — | | | — | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Overdrafts | — | | | — | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction & development | 83 | | | 139 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Farmland | 24 | | | 29 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Multifamily | — | | | — | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Commercial real estate-other | 1,200 | | | 1,576 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | 1,307 | | | 1,744 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | | | | | | | | | |
One- to four- family first liens | 1,261 | | | 543 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
One- to four- family junior liens | 192 | | | 126 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total residential real estate | 1,453 | | | 669 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Consumer | 16 | | | 29 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total | $ | 3,255 | | | $ | 3,240 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
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As of December 31, 2014, the Company had no commitments to lend additional funds to borrowers who have had a TDR. |
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A summary of the changes in the carrying value of loan pool participations for the years ended December 31, 2014 and 2013, is as follows: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of year | $ | 25,533 | | | $ | 35,650 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Principal payments | (4,724 | ) | | (8,687 | ) | | | | | | | | | | | | | | | | | | | | | | |
Net charge-offs | (1,477 | ) | | (1,430 | ) | | | | | | | | | | | | | | | | | | | | | | |
Balance at end of year | $ | 19,332 | | | $ | 25,533 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total face value at end of year | $ | 68,376 | | | $ | 80,902 | | | | | | | | | | | | | | | | | | | | | | | |
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Loan Pool Participations |
ASC Topic 310 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. The loans underlying the loan pool participations were evaluated individually when purchased for application of ASC Topic 310, utilizing various criteria including: past-due status, late payments, legal status of the loan (not in foreclosure, judgment against the borrower, or referred to legal counsel), frequency of payments made, collateral adequacy and the borrower’s financial condition. If all the criteria were met, the individual loan utilized the accounting treatment required by ASC Topic 310 with the accretable yield difference between the expected cash flows and the purchased basis accreted into income on the level yield basis over the anticipated life of the loan. If any of the six criteria were not met at the time of purchase, the loan was accounted for on the cash basis of accounting. |
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The loan servicer reviews the portfolio quarterly on a loan-by-loan basis, and loans that are deemed to be impaired are charged-down to their estimated value. As of December 31, 2014, approximately 70% of the loans were contractually current or less than 90 days past due, while 30% were contractually past due 90 days or more. Many of the loans were acquired in a contractually past due status, which is reflected in the discounted purchase price of the loans. Performance status is monitored on a monthly basis. The 30% of loans contractually past due includes loans in litigation and foreclosed property. |
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The Company evaluated all loans under the ASC Topic 310 criteria as of December 31, 2014 and 2013 and determined that certain loans did not meet the criteria for level-yield income recognition required by ASC Topic 310. The outstanding balance of those loans was $65.0 million with a carrying value of $18.9 million as of December 31, 2014, and $76.9 million and $24.6 million, respectively, as of December 31, 2013. Income from these loans is realized on a cash basis, or when payments are actually received from the borrower. |
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The outstanding balances and carrying values as of December 31, 2014 and 2013, of the loans purchased that met the level-yield income recognition criteria under ASC Topic 310 are as follows: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, | | | | | | | | | | | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | 477 | | | 502 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residences | 201 | | | 229 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Commercial | 1,930 | | | 2,320 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total real estate | 2,131 | | | 2,549 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total | $ | 2,608 | | | $ | 3,051 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Allowance | (56 | ) | | (48 | ) | | | | | | | | | | | | | | | | | | | | | | |
Carrying amount, net of allowance | $ | 2,552 | | | $ | 3,003 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
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Changes in accretable yield on the loans that met the level-yield income recognition criteria under ASC Topic 310 were as follows: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Accretable Yield December 31, | | | | | | | | | | | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at beginning of year | $ | 2,244 | | | $ | 2,627 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Additions | — | | | — | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Accretions | (665 | ) | | (383 | ) | | | | | | | | | | | | | | | | | | | | | | |
Reclassifications to nonaccretable differences | — | | | — | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Balance at end of year | $ | 1,579 | | | $ | 2,244 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Cash flows expected to be collected at acquisition | $ | 7,913 | | | $ | 8,128 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Basis in acquired loans at acquisition | $ | 4,482 | | | $ | 4,638 | | | | | | | | | | | | | | | | | | | | | | | |
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