LOANS | 3 Months Ended |
Mar. 31, 2015 |
Receivables [Abstract] | |
LOANS | NOTE 4 – LOANS |
The components of loans were as follows (dollars in thousands): |
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| | March 31, | | | December 31, | | | | | | | | | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | | | | | | | | | |
Agricultural loans | | $ | 408,217 | | | $ | 415,164 | | | | | | | | | | | | | | | | | |
Commercial real estate loans | | | 137,227 | | | | 137,517 | | | | | | | | | | | | | | | | | |
Commercial loans | | | 49,416 | | | | 53,745 | | | | | | | | | | | | | | | | | |
Residential real estate loans | | | 39,895 | | | | 40,885 | | | | | | | | | | | | | | | | | |
Installment and consumer other | | | 312 | | | | 811 | | | | | | | | | | | | | | | | | |
Total gross loans | | | 635,067 | | | | 648,122 | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (10,269 | ) | | | (10,603 | ) | | | | | | | | | | | | | | | | |
Loans, net | | $ | 624,798 | | | $ | 637,519 | | | | | | | | | | | | | | | | | |
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Changes in the allowance for loan losses by segment at March 31, 2015 and 2014 were as follows (dollars in thousands) : |
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| | March 31, | | | March 31, | | | | | | | | | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | | | | | | | | | |
Balance, beginning of year | | $ | 10,603 | | | $ | 10,495 | | | | | | | | | | | | | | | | | |
Recovery for loan losses | | | (602 | ) | | | - | | | | | | | | | | | | | | | | | |
Loans charged off | | | (149 | ) | | | (3 | ) | | | | | | | | | | | | | | | | |
Recoveries | | | 417 | | | | 32 | | | | | | | | | | | | | | | | | |
Balance, end of period | | $ | 10,269 | | | $ | 10,524 | | | | | | | | | | | | | | | | | |
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The following table presents the balances in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2015 and December 31, 2014 (dollars in thousands) : |
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| | 31-Mar-15 | | | | | | | | | | | | | |
| | Individually | | | Collectively | | | Total | | | | | | | | | | | | | |
Evaluated for | Evaluated for | | | | | | | | | | | | |
Impairment | Impairment | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | $ | 198 | | | $ | 3,494 | | | $ | 3,692 | | | | | | | | | | | | | |
Commercial real estate loans | | | 338 | | | | 2,548 | | | | 2,886 | | | | | | | | | | | | | |
Commercial loans | | | 1,746 | | | | 575 | | | | 2,321 | | | | | | | | | | | | | |
Residential real estate loans | | | 227 | | | | 1,140 | | | | 1,367 | | | | | | | | | | | | | |
Installment and consumer other | | | - | | | | 3 | | | | 3 | | | | | | | | | | | | | |
Total ending allowance for loan losses | | | 2,509 | | | | 7,760 | | | | 10,269 | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | | 10,270 | | | | 397,947 | | | | 408,217 | | | | | | | | | | | | | |
Commercial real estate loans | | | 4,043 | | | | 133,184 | | | | 137,227 | | | | | | | | | | | | | |
Commercial loans | | | 8,834 | | | | 40,582 | | | | 49,416 | | | | | | | | | | | | | |
Residential real estate loans | | | 1,781 | | | | 38,114 | | | | 39,895 | | | | | | | | | | | | | |
Installment and consumer other | | | — | | | | 312 | | | | 312 | | | | | | | | | | | | | |
Total loans | | | 24,928 | | | | 610,139 | | | | 635,067 | | | | | | | | | | | | | |
Net loans | | $ | 22,419 | | | $ | 602,379 | | | $ | 624,798 | | | | | | | | | | | | | |
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| | 31-Dec-14 | | | | | | | | | | | | | |
| | Individually | | | Collectively | | | Total | | | | | | | | | | | | | |
Evaluated for | Evaluated for | | | | | | | | | | | | |
Impairment | Impairment | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | $ | 242 | | | $ | 3,214 | | | $ | 3,456 | | | | | | | | | | | | | |
Commercial real estate loans | | | 519 | | | | 2,807 | | | | 3,326 | | | | | | | | | | | | | |
Commercial loans | | | 1,848 | | | | 572 | | | | 2,420 | | | | | | | | | | | | | |
Residential real estate loans | | | 285 | | | | 1,107 | | | | 1,392 | | | | | | | | | | | | | |
Installment and consumer other | | | — | | | | 9 | | | | 9 | | | | | | | | | | | | | |
Total ending allowance for loan losses | | | 2,894 | | | | 7,709 | | | | 10,603 | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | | 10,897 | | | | 404,267 | | | | 415,164 | | | | | | | | | | | | | |
Commercial real estate loans | | | 3,041 | | | | 134,476 | | | | 137,517 | | | | | | | | | | | | | |
Commercial loans | | | 8,910 | | | | 44,835 | | | | 53,745 | | | | | | | | | | | | | |
Residential real estate loans | | | 1,996 | | | | 38,889 | | | | 40,885 | | | | | | | | | | | | | |
Installment and consumer other | | | — | | | | 811 | | | | 811 | | | | | | | | | | | | | |
Total loans | | | 24,844 | | | | 623,278 | | | | 648,122 | | | | | | | | | | | | | |
Net loans | | $ | 21,950 | | | $ | 615,569 | | | $ | 637,519 | | | | | | | | | | | | | |
The following table presents the aging of the recorded investment in past due loans at March 31, 2015 and December 31, 2014: |
| | 30-59 Days | | | 60-89 Days | | | 90+ Days | | | Total | | | Loans Not | | | Total | |
Past Due | Past Due | Past Due | Past Due | Past Due | Loans |
31-Mar-15 | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | $ | 2,743 | | | $ | - | | | $ | 392 | | | $ | 3,135 | | | $ | 405,082 | | | $ | 408,217 | |
Commercial real estate loans | | | - | | | | - | | | | 2,418 | | | | 2,418 | | | | 134,809 | | | | 137,227 | |
Commercial loans | | | 132 | | | | - | | | | 3,140 | | | | 3,272 | | | | 46,144 | | | | 49,416 | |
Residential real estate loans | | | 50 | | | | - | | | | 352 | | | | 402 | | | | 39,493 | | | | 39,895 | |
Installment and consumer other | | | - | | | | - | | | | - | | | | - | | | | 312 | | | | 312 | |
Total | | $ | 2,925 | | | $ | - | | | $ | 6,302 | | | $ | 9,227 | | | $ | 625,840 | | | $ | 635,067 | |
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31-Dec-14 | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural loans | | $ | 355 | | | $ | 9 | | | $ | 238 | | | $ | 602 | | | $ | 414,562 | | | $ | 415,164 | |
Commercial real estate loans | | | - | | | | - | | | | 2,592 | | | | 2,592 | | | | 134,925 | | | | 137,517 | |
Commercial loans | | | - | | | | 42 | | | | 3,366 | | | | 3,408 | | | | 50,337 | | | | 53,745 | |
Residential real estate loans | | | 6 | | | | - | | | | 534 | | | | 540 | | | | 40,345 | | | | 40,885 | |
Installment and consumer other | | | - | | | | - | | | | - | | | | - | | | | 811 | | | | 811 | |
Total | | $ | 361 | | | $ | 51 | | | $ | 6,730 | | | $ | 7,142 | | | $ | 640,980 | | | $ | 648,122 | |
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The following table lists information on nonaccrual, restructured, and certain past due loans: |
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| | March 31, | | | December 31, | | | | | | | | | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | | | | | | | | | |
Nonaccrual loans, 90 days or more past due | | $ | 6,302 | | | $ | 6,730 | | | | | | | | | | | | | | | | | |
Nonaccrual loans 30-89 days past due | | | 132 | | | | 200 | | | | | | | | | | | | | | | | | |
Nonaccrual loans, less than 30 days past due | | | 6,400 | | | | 4,625 | | | | | | | | | | | | | | | | | |
Restructured loans not on nonaccrual status | | | 826 | | | | 846 | | | | | | | | | | | | | | | | | |
90 days or more past due and still accruing | | | - | | | | - | | | | | | | | | | | | | | | | | |
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The following table presents the recorded investment in nonaccrual and loans past due over 90 days at March 31, 2015 and December 31, 2014 (in thousands): |
| | March 31, | | | December 31, | | | | | | | | | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | | | | | | | | | |
Agricultural loans | | $ | 1,058 | | | $ | 1,293 | | | | | | | | | | | | | | | | | |
Commercial real estate loans | | | 5,992 | | | | 5,163 | | | | | | | | | | | | | | | | | |
Commercial loans | | | 4,278 | | | | 3,409 | | | | | | | | | | | | | | | | | |
Residential real estate loans | | | 1,506 | | | | 1,690 | | | | | | | | | | | | | | | | | |
Total | | $ | 12,834 | | | $ | 11,555 | | | | | | | | | | | | | | | | | |
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Troubled Debt Restructurings |
The Company has allocated approximately $326,000 and $538,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDR”) at March 31, 2015 and December 31, 2014, respectively. The Company has no additional lending commitments at March 31, 2015 and December 31, 2014 to customers with outstanding loans that are classified as troubled debt restructurings. |
A TDR on nonaccrual status is classified as a nonaccrual loan until evaluation supports reasonable assurance of repayment and of performance according to the modified terms of the loan. Once this assurance is reached, the TDR is classified as a restructured loan; At March 31, 2015, there were $4,509,000 TDR loans, of which $3,683,000 were classified as nonaccrual and $826,000 were classified as restructured and accruing. There were no unfunded commitments on these loans. At December 31, 2014, there were $4,573,000 TDR loans, of which $3,727,000 were classified as nonaccrual and $846,000 were classified as restructured and accruing, and there were no unfunded commitments on these loans. |
Credit Quality Indicators |
The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes agricultural, commercial, and commercial real estate loans individually by classifying the credits as to credit risk. The process of analyzing loans for changes in risk rating is ongoing through routine monitoring of the portfolio and annual internal credit reviews for credits with total exposure in excess of $300,000. The Company uses the following definitions for credit risk ratings: |
Sound. Credits classified as sound show very good probability of ongoing ability to meet and/or exceed obligations. |
Acceptable. Credits classified as acceptable show a good probability of ongoing ability to meet and/or exceed obligations. |
Satisfactory. Credits classified as satisfactory show fair probability of ongoing ability to meet and/or exceed obligations. |
Low Satisfactory. Credits classified as low satisfactory show fair probability of ongoing ability to meet and/or exceed obligations. Low satisfactory credits may be newer to the bank or have less of an established track record of financial performance, inconsistent earnings, or may be going through an expansion. |
Watch. Credits classified as watch show some questionable probability of ongoing ability to meet and/or exceed obligations. |
Special Mention. Credits classified as special mention show potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date. |
Substandard. Credits classified as substandard generally have well-defined weaknesses that jeopardize the repayment of the debt. They have a distinct possibility that a loss will be sustained if the deficiencies are not corrected. |
Doubtful. Credits classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable. |
The Company categorizes residential real estate, installment and consumer other loans as satisfactory at the time of origination based on information obtained as to the ability of the borrower(s) to service their debt, such as current financial information, employment status and history, historical payment experience, credit scores and type and amount of collateral among other factors. The Company updates relevant information on these types of loans at the time of refinance, troubled debt restructuring or other indications of financial difficulty, downgrading as needed using the same category descriptions as for agricultural, commercial, and commercial real estate loans. In addition, the Company further considers current payment status as an indicator of which risk category to assign the borrower. |
The greater the level of deteriorated risk as indicated by a loan’s assigned risk category, the greater the likelihood a loss will occur in the future. If the loan is impaired then the loan loss reserves for the loan is recorded at the loss level of impairment. If the loan is not impaired, then its loan loss reserves are determined by the application of a loss rate that increases with risk in accordance with the allowance for loan loss analysis. |
Based on the most recent analysis performed by management, the risk category of loans by class of loans is as follows as of March 31, 2015 and December 31, 2014 (dollars in thousands): |
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| | As of March 31, 2015 | | | | | |
| | Sound/ | | | Watch | | | Special | | | Substandard | | | Total | | | | | |
Acceptable/ | Mention | Loans | | | | |
Satisfactory/ | | | | | | |
Low Satisfactory | | | | | | |
Agricultural loans | | $ | 347,736 | | | $ | 43,108 | | | $ | 7,103 | | | $ | 10,270 | | | $ | 408,217 | | | | | |
Commercial real estate loans | | | 117,270 | | | | 9,655 | | | | 6,259 | | | | 4,043 | | | | 137,227 | | | | | |
Commercial loans | | | 35,761 | | | | 3,752 | | | | 1,069 | | | | 8,834 | | | | 49,416 | | | | | |
Residential real estate loans | | | 30,126 | | | | 4,540 | | | | 3,448 | | | | 1,781 | | | | 39,895 | | | | | |
Installment and consumer other | | | 312 | | | | — | | | | — | | | | — | | | | 312 | | | | | |
Total | | $ | 531,205 | | | $ | 61,055 | | | $ | 17,879 | | | $ | 24,928 | | | $ | 635,067 | | | | | |
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| | As of December 31, 2014 | | | | | |
| | Sound/ | | | Watch | | | Special | | | Substandard | | | Total | | | | | |
Acceptable/ | Mention | Loans | | | | |
Satisfactory/ | | | | | | |
Low Satisfactory | | | | | | |
Agricultural loans | | $ | 342,598 | | | $ | 59,078 | | | $ | 2,591 | | | $ | 10,897 | | | $ | 415,164 | | | | | |
Commercial real estate loans | | | 104,609 | | | | 23,540 | | | | 6,327 | | | | 3,041 | | | | 137,517 | | | | | |
Commercial loans | | | 36,205 | | | | 7,568 | | | | 1,062 | | | | 8,910 | | | | 53,745 | | | | | |
Residential real estate loans | | | 29,738 | | | | 6,288 | | | | 2,863 | | | | 1,996 | | | | 40,885 | | | | | |
Installment and consumer other | | | 811 | | | | — | | | | — | | | | — | | | | 811 | | | | | |
Total | | $ | 513,961 | | | $ | 96,474 | | | $ | 12,843 | | | $ | 24,844 | | | $ | 648,122 | | | | | |
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